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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): November 14, 2024
EASTSIDE
DISTILLING, INC.
(Exact
name of registrant as specified in its charter)
| Nevada |
|
001-38182 |
|
20-3937596 |
(State
or other jurisdiction
of
incorporation) |
|
(Commission
File
Number) |
|
(IRS
Employer
Identification
No.) |
755
Main Street, Building 4, Suite 3
Monroe,
CT 06468
(Address
of principal executive offices)
(Zip
Code)
Registrant’s
telephone number, including area code: (484) 800-9154
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:
| Common
Stock, $0.0001 par value |
|
EAST |
|
The
Nasdaq Stock Market LLC |
| (Title
of Each Class) |
|
(Trading
Symbol) |
|
(Name
of Each Exchange on Which Registered) |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (CFR §230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (CFR §240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
1.01 Entry into a Material Definitive Agreement
On
November 14, 2024 (the “Closing Date”), Eastside Distilling, Inc. (the “Company”) sold $1,938,000 in
aggregate principal amount of Senior Secured Notes (the “Notes”) and Pre-Funded Warrants to purchase a total of 363,602 shares
of Common Stock (the “Warrants”) for total gross proceeds of $1,615,000 in connection with a private placement offering (the
“Offering”).The Notes and Warrants were sold pursuant to a Securities Purchase Agreement (the “Purchase Agreement”)
with accredited investors (each, an “Investor” and together the “Investors”). The Company intends to use
the net proceeds from the Offering for, among other things, working capital and general corporate expenses.
The
Notes have a maturity date of 120 days from issuance, were issued with a 20% original issue discount and do not bear interest unless
and until one or more of the customary events of default set forth therein (an “Event of Default”) occurs, whereupon each
Note will bear interest at a rate of 18% per annum. If the Note remains outstanding for 180 days, the Note also requires a special one-time
interest payment of 30% which will increase the principal of each Note accordingly. Upon the occurrence of an Event of Default, each
Investor also has the right to require the Company to pay all or any portion of the Note at a 25% premium. Further, the Company is required
to prepay the Notes in connection with certain sales of securities or assets at each Investor’s election in an amount equal to
35% of the gross proceeds from such sales. The Company also has the right to prepay all, but not less than all, of the outstanding amounts
under the Notes, at its election. The Notes contain certain restrictive covenants, including covenants precluding the Company and its
subsidiaries from incurring indebtedness, transferring assets, changing the nature of its business, and engaging in certain other actions,
subject to certain exceptions.
The
Warrants have a term of five years from issuance and are exercisable at an exercise price of $0.50 per share (of which $0.499 per share
was pre-funded by each Investor). The Warrants will be exercisable beginning upon shareholder approval of the issuance of the Common
Stock issuable upon exercise of such Warrants in accordance with the rules of The Nasdaq Capital Market and an increase in the authorized
Common Stock of the Company. If at any time after exercising the Warrants, there is no effective registration statement registering,
or the prospectus contained therein is not available for use, then the Warrants may also be exercised, in whole or in part, by means
of a “cashless exercise.”
The
Company is required to convene a meeting of its shareholders within 150 days of the Closing Date and solicit proxies in favor of resolutions
increasing the number of authorized shares of Common Stock and approving the issuance of the Common Stock upon exercise of the Warrants.
Pursuant
to the Purchase Agreement, the Company entered into a Shareholder Pledge Agreement by and among the Company and the Investors, under
which the Company pledged the Company’s equity in Bridgetown Spirits Corp., the Company’s wholly-owned subsidiary (“Bridgetown”),
to secure its obligations under the Purchase Agreement, Notes, Warrants, and the Registration Rights Agreement (collectively, the “Transaction
Documents”). Bridgetown concurrently entered into a Security and Pledge Agreement by and between Bridgetown and the Investors,
under which Bridgetown granted a security interest in all of its property and assets to secure the obligations of the Company under the
Transaction Documents. Further, Bridgetown and Nicholas Liuzza, Chief Executive Officer of Beeline Financial Holdings, Inc., the Company’s
wholly-owned subsidiary, entered into a Guaranty in favor of the Investors pursuant to the Purchase Agreement. Under the Guaranty, both
Bridgetown and Mr. Liuzza guaranteed the Company’s obligations under the Transaction Documents.
Concurrently
with the Purchase Agreement, the Company entered into a Registration Rights Agreement with each Investor under which the Company agreed
to file a registration statement to register the shares of Common Stock underlying the Warrants within 30 days of the closing, and to
cause such registration to be declared effective within 60 days thereafter (or 120 days thereafter if such registration statement is
subject to a full review).
The
Company also entered in three forms of side letters with the Investors which (i) permitted one Investor which with an affiliate
invested $448,333.33 to exchange that amount of stated value of shares of Series F Convertible Preferred Stock (the “Series
F”) for a $448,333.33 120-day promissory note to another affiliate, which note was issued immediately prior to the
closing of the Offering and has substantially identical terms to the Notes issued therein, except it is subordinated with respect
to its security interest, (ii) permit two Investors to convert Series D Preferred Stock beginning on April 7, 2025, and (iii) permit
two Investors to receive a number of shares of Series F equal to 50% of their investment amount, or $125,000 each, using the stated value
of the Series F, which is $0.50 per share, to determine the number of shares of Series F.
Joseph
Gunnar & Co., LLC acted as placement agent receiving a commission of $115,908 and reimbursement of $50,000 in legal fees. The Company
entered into a Placement Agency Agreement with the placement agent in connection with the transactions described above. The placement
agent received a 12-month right of first refusal with respect to future financings.
The
foregoing descriptions of the Purchase Agreement, Notes, Warrants, Registration Rights Agreement, Shareholder Pledge Agreement, Security
and Pledge Agreement, Guaranty, side letters and Placement Agency Agreement do not purport to be complete and are qualified in their
entirety by reference to the full text of the respective documents, forms of which are filed as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5,
10.6, 10.7, 10.8, 10.9, 10.10 and 10.11 to this Current Report on Form 8-K and are incorporated by reference herein.
Item
3.02 Unregistered Sales of Equity Securities
To
the extent required by Item 3.02, the information contained in Item 1.01 is incorporated herein by reference.
All
of the securities were issued and sold in reliance upon the exemption from registration contained in Section 4(a)(2) of the Securities
Act of 1933 and Rule 506(b) of Regulation D promulgated thereunder.
Item
7.01 Regulation FD Disclosure
On
November 15, 2024, the Company issued a press release announcing the closing of the Offering, a copy of which is furnished as
Exhibit 99.1 of this Current Report on Form 8-K.
The
information in this Item 7.01 (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under such section, and shall not be deemed
to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act.
Item
9.01 Financial Statements and Exhibits
*Certain
schedules, appendices and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of
any omitted schedule and/or exhibit will be furnished supplementally to the Securities and Exchange Commission staff upon request.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated:
November 15, 2024
| |
Eastside
Distilling, Inc. |
| |
|
|
| |
By: |
/s/
Geoffrey Gwin |
| |
Name: |
Geoffrey
Gwin |
| |
Title: |
Chief
Executive Officer |
Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
This
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of November __, 2024, is by and among Eastside Distilling,
Inc., a Nevada corporation with offices located at 755 Main Street, Monroe, CT 06468 (the “Company”), and each of
the investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively, the “Buyers”).
RECITALS
A.
The Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506(b) of Regulation D (“Regulation
D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.
B.
The Company has authorized a new series of senior notes of the Company to be issued pursuant to this Agreement and pursuant to the
Note Side Letter (as defined below), in the aggregate original principal amount of $2,476,000, substantially in the form attached
hereto as Exhibit A (the “Notes”).
C.
Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) a Note in
the aggregate original principal amount set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers, and (ii)
a warrant to initially acquire up to that aggregate number of additional shares of Common Stock set forth opposite such Buyer’s
name in column (4) on the Schedule of Buyers, substantially in the form attached hereto as Exhibit B (the “Warrants”)
(as exercised, collectively, the “Warrant Shares”).
D.
At the Closing, the parties hereto shall execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit
C (the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide certain registration
rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement), under the 1933 Act and the rules
and regulations promulgated thereunder, and applicable state securities laws.
E.
The Notes, the Warrants and the Warrant Shares are collectively referred to herein as the “Securities.”
F.
The Notes will rank senior to all outstanding and future indebtedness of the Company, and its Subsidiaries (as defined below) (other
than Permitted Indebtedness (as defined in the Notes) secured by Permitted Liens (as defined in the Notes)) and the Notes will be secured
by (i) a first priority perfected security interest in all of the existing and future assets of Bridgetown Spirits Corp., a Nevada corporation
(“BSI”) and any subsidiary of BSI (each, a “BSI Subsidiary”, and together with BSI, the “BSI
Entities”), including a pledge of all of the capital stock of BSI, as evidenced by a security agreement in the form attached
hereto as Exhibit D (the “Security Agreement” and together with the Perfection Certificate (as defined
below) and the other security documents and agreements entered into in connection with this Agreement and each of such other documents
and agreements, as each may be amended or modified from time to time, collectively, the “Security Documents”), (ii)
a personal guarantee of any Notes with an initial principal amount of at least $250,000 (any Buyer of any such Notes, each a “Major
Buyer”) from Nicholas R. Liuzza, Jr., a natural person with primary address at 188 Valley Street, Providence, RI 02909 (“Liuzza”)
in the form attached hereto as Exhibit E (the “Personal Guaranty”) and (iii) a guaranty executed by
each Subsidiary of the Company, in the form attached hereto as Exhibit F (collectively, the “Subsidiary Guaranties”,
and together with the Personal Guaranty, the “Guarantees”) pursuant to which each of them guarantees the obligations
of the Company under the Transaction Documents (as defined below).
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:
1.
PURCHASE AND SALE OF NOTES AND WARRANTS.
(a)
Purchase of Notes and Warrants. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below,
the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the
Closing Date (as defined below) a Note in the original principal amount as is set forth opposite such Buyer’s name in column (3)
on the Schedule of Buyers along with Warrants to initially acquire up to that aggregate number of Warrant Shares as is set forth opposite
such Buyer’s name in column (4) on the Schedule of Buyers.
(b)
Closing. The closing (the “Closing”) of the purchase of the Notes and the Warrants by the Buyers shall occur
at the offices of Kelley Drye & Warren LLP, 3 World Trade Center, 175 Greenwich Street, New York, NY 10007. The date and time of
the Closing (the “Closing Date”) shall be 10:00 a.m., New York time, on the first (1st) Business Day on which the
conditions to the Closing set forth in Sections 6 and 7 below are satisfied or waived (or such other date as is mutually agreed to by
the Company and each Buyer). As used herein “Business Day” means any day other than Saturday, Sunday or other day
on which commercial banks in The City of New York are authorized or required by law to remain closed; provided,
however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay
at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the
closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems
(including for wire transfers) of commercial banks in The City of New York generally are open for use by customers on such day.
(c)
Purchase Price. The aggregate purchase price for the Notes and the Warrants to be purchased by each Buyer (the “Purchase
Price”) shall be the amount set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers. Each Buyer
shall pay approximately $833.33 for each $1,000 of principal amount of Notes and related Warrants to be purchased by such Buyer at the
Closing. Each Buyer and the Company agree that the Notes and the Warrants constitute an “investment unit” for purposes of
Section 1273(c)(2) of the Internal Revenue Code of 1986, as amended (the “Code”). The Buyers and the Company mutually
agree that the allocation of the issue price of such investment unit between the Notes and the Warrants in accordance with Section 1273(c)(2)
of the Code and Treasury Regulation Section 1.1273-2(h) shall be an aggregate amount of $0.0043 allocated to each Warrant Share and the
balance of the Purchase Price allocated to the Notes, and neither the Buyers nor the Company shall take any position inconsistent with
such allocation in any tax return or in any judicial or administrative proceeding in respect of taxes.
(d)
Form of Payment. On the Closing Date, (i) each Buyer shall pay its respective Purchase Price (less, in the case of any Buyer,
the amounts withheld pursuant to Section 4(g)) to the Company for the Notes and the Warrants to be issued and sold to such Buyer at the
Closing, by wire transfer of immediately available funds in accordance with the Flow of Funds Letter (as defined below) and (ii) the
Company shall deliver to each Buyer (A) a Note in the aggregate original principal amount as is set forth opposite such Buyer’s
name in column (3) of the Schedule of Buyers, and (B) a Warrant pursuant to which such Buyer shall have the right to initially acquire
up to such aggregate number of Warrant Shares as is set forth opposite such Buyer’s name in column (4) of the Schedule of Buyers,
in each case, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.
2.
BUYER’S REPRESENTATIONS AND WARRANTIES.
Each
Buyer, severally and not jointly, represents and warrants to the Company with respect to only itself that, as of the date hereof and
as of the Closing Date:
(a)
Organization; Authority. Such Buyer is either (i) an individual with sufficient legal capacity or (ii) an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its organization, as applicable, with the requisite power
and authority, and has taken all requisite corporate or other action, as applicable, to enter into and to consummate the transactions
contemplated by the Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder
and thereunder.
(b)
No Public Sale or Distribution. Such Buyer (i) is acquiring its Note and Warrants and (ii) upon exercise of its Warrants (other
than pursuant to a Cashless Exercise (as defined in the Warrants)) will acquire the Warrant Shares issuable upon exercise thereof, in
each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof
in violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by
making the representations herein, such Buyer does not agree, or make any representation or warranty, to hold any of the Securities for
any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to
a registration statement or an exemption from registration under the 1933 Act. Such Buyer does not presently have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the Securities in violation of applicable securities laws. For purposes
of this Agreement, “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization, any other entity and any Governmental Entity or any department or agency thereof.
(c)
Accredited Investor Status. Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation
D.
(d)
Reliance on Exemptions. Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the
truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings
of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire
the Securities.
(e)
Information. Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the Securities that have been requested by such Buyer. Such
Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other
due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such
Buyer’s right to rely on the Company’s representations and warranties contained herein. Such Buyer understands that its investment
in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary
to make an informed investment decision with respect to its acquisition of the Securities.
(f)
No Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in
the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
(g)
Transfer or Resale. Such Buyer understands that except as provided in the Registration Rights Agreement and Section 4(h) hereof:
(i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered
for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company
(if requested by the Company) an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such Securities
to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such
Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or
Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of
the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be
deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company nor any other Person is under any obligation
to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption
thereunder. Notwithstanding the foregoing, the Securities may be pledged in connection with a bona fide margin account or other loan
or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment
of the Securities hereunder, and no Buyer effecting a pledge of Securities shall be required to provide the Company with any notice thereof
or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document (as defined in Section 3(b)),
including, without limitation, this Section 2(g).
(h)
Validity; Enforcement. This Agreement and the Registration Rights Agreement have been duly and validly authorized, executed and
delivered on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such
Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies.
(i)
No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the Registration Rights Agreement and
the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational
documents of such Buyer, or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture
or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Buyer to perform its obligations hereunder.
3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants to each of the Buyers that, as of the date hereof and as of the Closing Date:
(a)
Organization and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and validly existing
and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their
properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company and each
of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership
of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect (as defined below). As used
in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets,
liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any Subsidiary,
individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or any other
agreements or instruments to be entered into in connection herewith or therewith or (iii) the authority or ability of the Company or
any of its Subsidiaries to perform any of their respective obligations under any of the Transaction Documents (as defined below). Other
than the Persons (as defined below) set forth on Schedule 3(a), the Company has no Subsidiaries. “Subsidiaries” means
any Person in which the Company, directly or indirectly, (I) owns a majority of the outstanding capital stock or holds any equity or
similar interest of such Person or (II) controls or operates all or any part of the business, operations or administration of such Person,
and each of the foregoing, is individually referred to herein as a “Subsidiary.”
(b)
Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations
under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof.
Each Subsidiary has the requisite power and authority to enter into and perform its obligations under the Transaction Documents to which
it is a party. The execution and delivery of this Agreement and the other Transaction Documents by the Company and its Subsidiaries,
and the consummation by the Company and its Subsidiaries of the transactions contemplated hereby and thereby (including, without limitation,
the issuance of the Notes and the issuance of the Warrants and the reservation for issuance and issuance of the Warrant Shares issuable
upon exercise of the Warrants) have been duly authorized by the Company’s board of directors and each of its Subsidiaries’
board of directors or other governing body, as applicable, and (other than the Shareholder Approval (as defined below), the filing with
the SEC of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, a Form D with
the SEC and any other filings as may be required by any state securities agencies) no further filing, consent or authorization is required
by the Company, its Subsidiaries, their respective boards of directors or their shareholders or other governing body. This Agreement
has been, and the other Transaction Documents to which it is a party will be prior to the Closing, duly executed and delivered by the
Company, and each constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance
with its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. Prior
to the Closing, the Transaction Documents to which each Subsidiary is a party will be duly executed and delivered by each such Subsidiary,
and shall constitute the legal, valid and binding obligations of each such Subsidiary, enforceable against each such Subsidiary in accordance
with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. “Transaction
Documents” means, collectively, this Agreement, the Notes, the Warrants, the Guaranties, the Security Documents, the Registration
Rights Agreement, the Irrevocable Transfer Agent Instructions (as defined below) and each of the other agreements and instruments entered
into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended
from time to time.
(c)
Issuance of Securities. The issuance of the Notes and the Warrants are duly authorized and upon issuance in accordance with the
terms of the Transaction Documents shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights,
mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances
(collectively “Liens”) with respect to the issuance thereof. As of the Closing, the Company shall have reserved from
its duly authorized capital stock not less than 100% of the maximum number of Warrant Shares initially issuable upon exercise of the
Warrants (without taking into account any limitations on the exercise of the Warrants set forth therein). Subject to the Shareholder
Approval, upon issuance or exercise in accordance with the Warrants, the Warrant Shares when issued, will be validly issued, fully paid
and nonassessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled
to all rights accorded to a holder of Common Stock. Subject to the accuracy of the representations and warranties of the Buyers in this
Agreement, the offer and issuance by the Company of the Securities is exempt from registration under the 1933 Act.
(d)
No Conflicts. Except as set forth on Schedule 3(d), the execution, delivery and performance of the Transaction Documents
by the Company and its Subsidiaries and the consummation by the Company and its Subsidiaries of the transactions contemplated hereby
and thereby (including, without limitation, the issuance of the Notes, the Warrants and the Warrant Shares and the reservation for issuance
of the Warrant Shares) will not (i) result in a violation of the Articles of Incorporation (as defined below) (including, without limitation,
any certificate of designation contained therein), Bylaws (as defined below), certificate of formation, memorandum of association, articles
of association, bylaws or other organizational documents of the Company or any of its Subsidiaries, or any capital stock or other securities
of the Company or any of its Subsidiaries, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time
or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation
of any law, rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state securities laws and
regulations and the rules and regulations of the Nasdaq Capital Market (the “Principal Market”) and including all
applicable foreign, federal and state laws, rules and regulations) applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or affected.
(e)
Consents. Except as set forth on Schedule 3(e), neither the Company nor any Subsidiary is required to obtain any consent
from, authorization or order of, or make any filing or registration with (other than the Shareholder Approval, the filing with the SEC
of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, a Form D with the SEC
and any other filings as may be required by any state securities agencies), any Governmental Entity (as defined below) or any regulatory
or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under
or contemplated by the Transaction Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations,
orders, filings and registrations which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been
or will be obtained or effected on or prior to the Closing Date, and neither the Company nor any of its Subsidiaries are aware of any
facts or circumstances which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration,
application or filings contemplated by the Transaction Documents. Except as set forth on Schedule 3(e), the Company is not in
violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances which could reasonably lead
to delisting or suspension of the Common Stock in the foreseeable future. “Governmental Entity” means any nation,
state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local, municipal, foreign,
or other government, governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise,
any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality
of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international organization
or any of the foregoing.
(f)
Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely
in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby
and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate”
(as defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner” of more
than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the
“1934 Act”)). The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the
Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated
hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents
and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s purchase of the Securities. The Company
further represents to each Buyer that the Company’s and each Subsidiary’s decision to enter into the Transaction Documents
to which it is a party has been based solely on the independent evaluation by the Company, each Subsidiary and their respective representatives.
(g)
No General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of its Subsidiaries or affiliates, nor any
Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation
D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any placement agent’s
fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Buyer or its investment advisor)
relating to or arising out of the transactions contemplated hereby, including, without limitation, placement agent fees payable to Joseph
Gunnar & Co., LLC, as placement agent (the “Placement Agent”) in connection with the sale of the Securities. The
fees and expenses of the Placement Agent to be paid by the Company or any of its Subsidiaries are as set forth on Schedule 3(g)
attached hereto. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation,
attorney’s fees and out-of-pocket expenses) arising in connection with any such claim. The Company acknowledges that it has engaged
the Placement Agent in connection with the sale of the Securities. Other than the Placement Agent, neither the Company nor any of its
Subsidiaries has engaged any placement agent or other agent in connection with the offer or sale of the Securities.
(h)
No Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances
that would require registration of the issuance of any of the Securities under the 1933 Act, whether through integration with prior offerings
or otherwise, or, except as set forth on Schedule 3(h), cause this offering of the Securities to require approval of shareholders
of the Company for purposes of the 1933 Act or under any applicable shareholder approval provisions, including, without limitation, under
the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated
for quotation. None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or
steps that would require registration of the issuance of any of the Securities under the 1933 Act (other than pursuant to the Registration
Rights Agreement) or cause the offering of any of the Securities to be integrated with other offerings of securities of the Company.
(i)
Dilutive Effect. The Company understands and acknowledges that the number of Warrant Shares will increase in certain circumstances.
The Company further acknowledges that its obligation to issue the Warrant Shares upon exercise of the Warrants in accordance with this
Agreement and the Warrants is, in each case, absolute and unconditional regardless of the dilutive effect that such issuance may have
on the ownership interests of other shareholders of the Company.
(j)
Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action,
if any, in order to render inapplicable any control share acquisition, interested shareholder, business combination, poison pill (including,
without limitation, any distribution under a rights agreement), shareholder rights plan or other similar anti-takeover provision under
the Articles of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its incorporation or otherwise
which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation,
the Company’s issuance of the Securities and any Buyer’s ownership of the Securities. The Company and its board of directors
have taken all necessary action, if any, in order to render inapplicable any shareholder rights plan or similar arrangement relating
to accumulations of beneficial ownership of shares of Common Stock or a change in control of the Company or any of its Subsidiaries.
(k)
SEC Documents; Financial Statements. Except as set forth on Schedule 3(k), during the two (2) years prior to the date hereof,
the Company has timely filed all reports, schedules, forms, proxy statements, statements and other documents required to be filed by
it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits
and appendices included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein
being hereinafter referred to as the “SEC Documents”). The Company has delivered or has made available to the Buyers
or their respective representatives true, correct and complete copies of each of the SEC Documents not available on the EDGAR system.
As of their respective dates, except as set forth on Schedule 3(k), the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none
of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC
Documents complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC
with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with generally
accepted accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they
may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of
the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments which will not be material, either individually or in the aggregate). The
reserves, if any, established by the Company or the lack of reserves, if applicable, are reasonable based upon facts and circumstances
known by the Company on the date hereof and there are no loss contingencies that are required to be accrued by the Statement of Financial
Accounting Standard No. 5 of the Financial Accounting Standards Board which are not provided for by the Company in its financial statements
or otherwise. No other information provided by or on behalf of the Company to any of the Buyers which is not included in the SEC Documents
(including, without limitation, information referred to in Section 2(e) of this Agreement or in the disclosure schedules to this Agreement)
contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein
not misleading, in the light of the circumstance under which they are or were made. The Company is not currently contemplating to amend
or restate any of the financial statements (including, without limitation, any notes or any letter of the independent accountants of
the Company with respect thereto) included in the SEC Documents (the “Financial Statements”), nor is the Company currently
aware of facts or circumstances which would require the Company to amend or restate any of the Financial Statements, in each case, in
order for any of the Financials Statements to be in compliance with GAAP and the rules and regulations of the SEC. The Company has not
been informed by its independent accountants that they recommend that the Company amend or restate any of the Financial Statements or
that there is any need for the Company to amend or restate any of the Financial Statements.
(l)
Absence of Certain Changes. Except as set forth on Schedule 3(l), since the date of the Company’s most recent audited
financial statements contained in a Form 10-K, there has been no material adverse change and no material adverse development in the business,
assets, liabilities, properties, operations (including results thereof), condition (financial or otherwise) or prospects of the Company
or any of its Subsidiaries. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K,
neither the Company nor any of its Subsidiaries has (i) except as set forth on Schedule 3(l), declared or paid any dividends,
(ii) except as set forth on Schedule 3(l), sold any assets, individually or in the aggregate, outside of the ordinary course of
business or (iii) made any capital expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither
the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy,
insolvency, reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge or reason
to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any
fact which would reasonably lead a creditor to do so. Except as set forth on Schedule 3(l), the Company and its Subsidiaries,
individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby
to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(l), “Insolvent”
means, (i) with respect to the Company and its Subsidiaries, on a consolidated basis, (A) the present fair saleable value of the Company’s
and its Subsidiaries’ assets is less than the amount required to pay the Company’s and its Subsidiaries’ total Indebtedness
(as defined below), (B) the Company and its Subsidiaries are unable to pay their debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured or (C) the Company and its Subsidiaries intend to incur or believe that they
will incur debts that would be beyond their ability to pay as such debts mature; and (ii) with respect to the Company and each Subsidiary,
individually, (A) the present fair saleable value of the Company’s or such Subsidiary’s (as the case may be) assets is less
than the amount required to pay its respective total Indebtedness, (B) the Company or such Subsidiary (as the case may be) is unable
to pay its respective debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and
matured or (C) the Company or such Subsidiary (as the case may be) intends to incur or believes that it will incur debts that would be
beyond its respective ability to pay as such debts mature. Neither the Company nor any of its Subsidiaries has engaged in any business
or in any transaction, and is not about to engage in any business or in any transaction, for which the Company’s or such Subsidiary’s
remaining assets constitute unreasonably small capital with which to conduct the business in which it is engaged as such business is
now conducted and is proposed to be conducted.
(m)
No Undisclosed Events, Liabilities, Developments or Circumstances. Except as set forth on Schedule 3(m), no event, liability,
development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its
Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition
(financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration
statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly
announced, (ii) could have a material adverse effect on any Buyer’s investment hereunder or (iii) could have a Material Adverse
Effect.
(n)
Conduct of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in
default under its Articles of Incorporation, any certificate of designation, preferences or rights of any other outstanding series of
preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation, memorandum
of association, articles of association, Articles of Incorporation or certificate of incorporation or bylaws, respectively. Except as
set forth on Schedule 3(n), neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or
any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its
Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases for possible violations which could
not, individually or in the aggregate, have a Material Adverse Effect. Without limiting the generality of the foregoing, except as set
forth on Schedule 3(n), the Company is not in violation of any of the rules, regulations or requirements of the Principal Market
and has no knowledge of any facts or circumstances that could reasonably lead to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future. During the two years prior to the date hereof, except as set forth on Schedule 3(n), (i) the
Common Stock has been listed or designated for quotation on the Principal Market, (ii) trading in the Common Stock has not been suspended
by the SEC or the Principal Market and (iii) the Company has received no communication, written or oral, from the SEC or the Principal
Market regarding the suspension or delisting of the Common Stock from the Principal Market. The Company and each of its Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate,
a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation
or modification of any such certificate, authorization or permit. There is no agreement, commitment, judgment, injunction, order or decree
binding upon the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is a party which has or would
reasonably be expected to have the effect of prohibiting or materially impairing any business practice of the Company or any of its Subsidiaries,
any acquisition of property by the Company or any of its Subsidiaries or the conduct of business by the Company or any of its Subsidiaries
as currently conducted other than such effects, individually or in the aggregate, which have not had and would not reasonably be expected
to have a Material Adverse Effect on the Company or any of its Subsidiaries.
(o)
Foreign Corrupt Practices. Neither the Company, the Company’s subsidiary or any director, officer, agent, employee, nor any
other person acting for or on behalf of the foregoing (individually and collectively, a “Company Affiliate”) have
violated the U.S. Foreign Corrupt Practices Act (the “FCPA”) or any other applicable anti-bribery or anti-corruption
laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given, promised
to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official capacity for
any Governmental Entity to any political party or official thereof or to any candidate for political office (individually and collectively,
a “Government Official”) or to any person under circumstances where such Company Affiliate knew or was aware of a
high probability that all or a portion of such money or thing of value would be offered, given or promised, directly or indirectly, to
any Government Official, for the purpose of:
(i)
(A) influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to
do or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government Official
to influence or affect any act or decision of any Governmental Entity, or
(ii)
assisting the Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the Company or its
Subsidiaries.
(p)
Sarbanes-Oxley Act. The Company and each Subsidiary is in compliance with any and all applicable requirements of the Sarbanes-Oxley
Act of 2002, as amended, and any and all applicable rules and regulations promulgated by the SEC thereunder.
(q)
Transactions With Affiliates. No current or former employee, partner, director, officer or shareholder (direct or indirect) of
the Company or its Subsidiaries, or any associate, or, to the knowledge of the Company, any affiliate of any thereof, or any relative
with a relationship no more remote than first cousin of any of the foregoing, is presently, or has ever been, (i) a party to any transaction
with the Company or its Subsidiaries (including any contract, agreement or other arrangement providing for the furnishing of services
by, or rental of real or personal property from, or otherwise requiring payments to, any such director, officer or shareholder or such
associate or affiliate or relative Subsidiaries (other than for ordinary course services as employees, officers or directors of the Company
or any of its Subsidiaries)) or (ii), except as set forth on Schedule 3(q), the direct or indirect owner of an interest in any
corporation, firm, association or business organization which is a competitor, supplier or customer of the Company or its Subsidiaries
(except for a passive investment (direct or indirect) in less than 5% of the common stock of a company whose securities are traded on
or quoted through an Eligible Market (as defined in the Warrants)), nor does any such Person receive income from any source other than
the Company or its Subsidiaries which relates to the business of the Company or its Subsidiaries or should properly accrue to the Company
or its Subsidiaries. No employee, officer, shareholder or director of the Company or any of its Subsidiaries or member of his or her
immediate family is indebted to the Company or its Subsidiaries, as the case may be, nor is the Company or any of its Subsidiaries indebted
(or committed to make loans or extend or guarantee credit) to any of them, other than (i) for payment of salary for services rendered,
(ii) reimbursement for reasonable expenses incurred on behalf of the Company, and (iii) except as set forth on Schedule 3(q), for
other standard employee benefits made generally available to all employees or executives (including stock option agreements outstanding
under any stock option plan approved by the Board of Directors of the Company).
(r)
Equity Capitalization.
(i)
Definitions:
(A)
“Common Stock” means (x) the Company’s shares of common stock, $0.0001 par value per share, and (y) any capital
stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(B)
“Preferred Stock” means (x) the Company’s blank check preferred stock, $0.0001 par value per share, the terms
of which may be designated by the board of directors of the Company in a certificate of designations and (y) any capital stock into which
such preferred stock shall have been changed or any share capital resulting from a reclassification of such preferred stock (other than
a conversion of such preferred stock into Common Stock in accordance with the terms of such certificate of designations).
(ii)
Authorized and Outstanding Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of (A) 6,000,000
shares of Common Stock, of which, 4,991,065 are issued and outstanding and 42,500 shares are reserved for issuance pursuant to Convertible
Securities (as defined below) (other than the Notes and the Warrants) exercisable or exchangeable for, or convertible into, shares of
Common Stock and (B) 100,000,000 shares of Preferred Stock, 2,500,000 shares of which are designated as Series B Preferred Stock, of
which 2,500,000 are issued and outstanding, (C) 240,000 shares of which are designated as Series C Preferred Stock, of which 73,306 are
issued and outstanding, 255,474 shares of which are designated as Series D Preferred Stock, of which 255,474 are issued and outstanding,
200,000 shares of which are designated as Series E Preferred Stock, of which 200,000 are issued and outstanding, 70,000,000 shares of
which are designated as Series F Preferred Stock, of which 69,482,229 are issued and outstanding and 1,000,000 shares of which are designated
as Series F-1 Preferred Stock, of which 517,775 are issued and outstanding. No shares of Common Stock are held in the treasury of the
Company. “Convertible Securities” means any capital stock or other security of the Company or any of its Subsidiaries
that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise
entitles the holder thereof to acquire, any capital stock or other security of the Company (including, without limitation, Common Stock)
or any of its Subsidiaries.
(iii)
Valid Issuance; Available Shares; Affiliates. Subject to the Shareholder Approval, all of such outstanding shares are duly authorized
and have been, or upon issuance will be, validly issued and are fully paid and nonassessable. Schedule 3(r)(iii) sets forth the
number of shares of Common Stock that are (A) reserved for issuance pursuant to Convertible Securities (as defined below) (other than
the Notes and the Warrants) and (B) that are, as of the date hereof, owned by Persons who are “affiliates” (as defined in
Rule 405 of the 1933 Act and calculated based on the assumption that only officers, directors and holders of at least 10% of the Company’s
issued and outstanding Common Stock are “affiliates” without conceding that any such Persons are “affiliates”
for purposes of federal securities laws) of the Company or any of its Subsidiaries. Except as set forth on Schedule 3(r)(iii),
to the Company’s knowledge, no Person owns 10% or more of the Company’s issued and outstanding shares of Common Stock (calculated
based on the assumption that all Convertible Securities (as defined below), whether or not presently exercisable or convertible, have
been fully exercised or converted (as the case may be) taking account of any limitations on exercise or conversion (including “blockers”)
contained therein without conceding that such identified Person is a 10% shareholder for purposes of federal securities laws).
(iv)
Existing Securities; Obligations. Except as disclosed in the SEC Documents or as set forth on Schedule 3(r)(iv): (A) none
of the Company’s or any Subsidiary’s shares, interests or capital stock is subject to preemptive rights or any other similar
rights or Liens suffered or permitted by the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable
or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings
or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares, interests or capital
stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital
stock of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act (except pursuant to the Registration Rights Agreement);
(D) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is
or may become bound to redeem a security of the Company or any of its Subsidiaries; (E) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of the Securities; and (F) neither the Company nor any Subsidiary
has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
(v)
Organizational Documents. The Company has furnished to the Buyers true, correct and complete copies of the Company’s Articles
of Incorporation, as amended and as in effect on the date hereof (the “Articles of Incorporation”), and the Company’s
bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all Convertible Securities
and the material rights of the holders thereof in respect thereto.
(s)
Indebtedness and Other Contracts. Neither the Company nor any of its Subsidiaries, (i) except as set forth on Schedule 3(s),
has any outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing
Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound, (ii)
is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such
contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) has any financing statements
securing obligations in any amounts filed in connection with the Company or any of its Subsidiaries; (iv) is in violation of any term
of, or in default under, any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults
would not result, individually or in the aggregate, in a Material Adverse Effect, or (v) is a party to any contract, agreement or instrument
relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a
Material Adverse Effect. Except as set forth on Schedule 3(s), neither the Company nor any of its Subsidiaries have any liabilities
or obligations required to be disclosed in the SEC Documents which are not so disclosed in the SEC Documents, other than those incurred
in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate,
do not or could not have a Material Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services (including, without limitation, “capital leases” in accordance with GAAP) (other than
trade payables entered into in the ordinary course of business consistent with past practice), (C) all reimbursement or payment obligations
with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses,
(E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either
case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations
under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified
as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and
contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for
the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above; and (y) “Contingent Obligation” means, as to any Person, any direct
or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation
of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide
assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will
be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
(t)
Litigation. Except as set forth on Schedule 3(t), there is no action, suit, arbitration, proceeding, inquiry or investigation
before or by the Principal Market, any court, public board, other Governmental Entity, self-regulatory organization or body pending or,
to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the
Company’s or its Subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise, in their capacities
as such. No director, officer or employee of the Company or any of its subsidiaries has willfully violated 18 U.S.C. §1519 or engaged
in spoliation in reasonable anticipation of litigation. Without limitation of the foregoing, there has not been, and to the knowledge
of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company, any of its Subsidiaries or
any current or, to its knowledge, former director or officer of the Company or any of its Subsidiaries. The SEC has not issued any stop
order or other order suspending the effectiveness of any registration statement filed by the Company under the 1933 Act or the 1934 Act.
After reasonable inquiry of its employees, the Company is not aware of any fact which might result in or form the basis for any such
action, suit, arbitration, investigation, inquiry or other proceeding. Neither the Company nor any of its Subsidiaries is subject to
any order, writ, judgment, injunction, decree, determination or award of any Governmental Entity.
(u)
Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the
Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought
or applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will be unable to renew its existing
insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse Effect.
(v)
Employee Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs
any member of a union. The Company and its Subsidiaries believe that their relations with their employees are good. No executive officer
(as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company or any of its Subsidiaries has notified
the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such
officer’s employment with the Company or any such Subsidiary. No current (or former) executive officer or other key employee of
the Company or any of its Subsidiaries is, or is now expected to be, in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant,
and the continued employment of each such executive officer or other key employee (as the case may be) does not subject the Company or
any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms
and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(w)
Title.
(i)
Real Property. Each of the Company and its Subsidiaries holds good title to all real property, leases in real property, facilities
or other interests in real property owned or held by the Company or any of its Subsidiaries (the “Real Property”)
owned by the Company or any of its Subsidiaries (as applicable). The Real Property is free and clear of all Liens and is not subject
to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except for (a) Liens
for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of
the property subject thereto. Any Real Property held under lease by the Company or any of its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company or any of its Subsidiaries.
(ii)
Fixtures and Equipment. Each of the Company and its Subsidiaries (as applicable) has good title to, or a valid leasehold interest
in, the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances that are used by
the Company or its Subsidiary in connection with the conduct of its business (the “Fixtures and Equipment”). The Fixtures
and Equipment are structurally sound, are in good operating condition and repair, are adequate for the uses to which they are being put,
are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient for the conduct of
the Company’s and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted prior to the Closing. Except
as set forth on Schedule 3(w)(ii), each of the Company and its Subsidiaries owns all of its Fixtures and Equipment free and clear
of all Liens except for (a) liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair
the present or anticipated use of the property subject thereto.
(x)
Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications
and registrations therefor (“Intellectual Property Rights”) necessary to conduct their respective businesses as now
conducted and presently proposed to be conducted. Each of patents owned by the Company or any of its Subsidiaries is listed on Schedule
3(x)(i). Except as set forth on Schedule 3(x)(ii), none of the Company’s Intellectual Property Rights have expired or
terminated or have been abandoned or are expected to expire or terminate or are expected to be abandoned, within three years from the
date of this Agreement. The Company does not have any knowledge of any infringement by the Company or its Subsidiaries of Intellectual
Property Rights of others. Except as set forth on Schedule 3(x)(iii), there is no claim, action or proceeding being made or brought,
or to the knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding
its Intellectual Property Rights. Neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might
give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.
(y)
Environmental Laws. (i) The Company and its Subsidiaries (A) are in compliance with any and all Environmental Laws (as defined
below), (B) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (C) are in compliance with all terms and conditions of any such permit, license or approval where, in each
of the foregoing clauses (A), (B) and (C), the failure to so comply could be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect. The term “Environmental Laws” means all federal, state, local or foreign laws relating
to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”)
into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
(ii)
No Hazardous Materials:
(A)
have been disposed of or otherwise released from any Real Property of the Company or any of its Subsidiaries in violation of any Environmental
Laws; or
(B)
are present on, over, beneath, in or upon any Real Property or any portion thereof in quantities that would constitute a violation of
any Environmental Laws. No prior use by the Company or any of its Subsidiaries of any Real Property has occurred that violates any Environmental
Laws, which violation would have a material adverse effect on the business of the Company or any of its Subsidiaries.
(iii)
Neither the Company nor any of its Subsidiaries knows of any other person who or entity which has stored, treated, recycled, disposed
of or otherwise located on any Real Property any Hazardous Materials, including, without limitation, such substances as asbestos and
polychlorinated biphenyls.
(iv)
None of the Real Properties are on any federal or state “Superfund” list or Liability Information System (“CERCLIS”)
list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental related Liens.
(z)
Subsidiary Rights. The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed
by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such
Subsidiary.
(aa)
Tax Status. Except as set forth on Schedule 3(aa), the Company and each of its Subsidiaries (i) has timely made or filed
all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) has timely paid all taxes and other governmental assessments and charges that are material in amount, shown or determined
to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books
provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations
apply. Except as set forth on Schedule 3(aa), there are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company and its Subsidiaries know of no basis for any such claim. The Company
is not operated in such a manner as to qualify as a passive foreign investment company, as defined in Section 1297 of the Code. The net
operating loss carryforwards (“NOLs”) for United States federal income tax purposes of the consolidated group of which
the Company is the common parent, if any, shall not be adversely effected by the transactions contemplated hereby. The transactions contemplated
hereby do not constitute an “ownership change” within the meaning of Section 382 of the Code, thereby preserving the Company’s
ability to utilize such NOLs.
(bb)
Internal Accounting and Disclosure Controls. Except as set forth on Schedule 3(bb), the Company and each of its Subsidiaries
maintains internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles, including that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities
is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets
and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect
to any difference. Except as set forth on Schedule 3(bb), the Company maintains disclosure controls and procedures (as such term
is defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company
in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified
in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Company’s
management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to
allow timely decisions regarding required disclosure. Except as set forth on Schedule 3(bb), neither the Company nor any of its
Subsidiaries has received any notice or correspondence from any accountant, Governmental Entity or other Person relating to any potential
material weakness or significant deficiency in any part of the internal controls over financial reporting of the Company or any of its
Subsidiaries.
(cc)
Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any of its
Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act
filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.
(dd)
Investment Company Status. The Company is not, and upon consummation of the sale of the Securities will not be, an “investment
company,” an affiliate of an “investment company,” a company controlled by an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company”
as such terms are defined in the Investment Company Act of 1940, as amended.
(ee)
Acknowledgement Regarding Buyers’ Trading Activity. It is understood and acknowledged by the Company that (i) following
the public disclosure of the transactions contemplated by the Transaction Documents, in accordance with the terms thereof, none of the
Buyers have been asked by the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the Company or any of its Subsidiaries,
to desist from effecting any transactions in or with respect to (including, without limitation, purchasing or selling, long and/or short)
any securities of the Company, or “derivative” securities based on securities issued by the Company or to hold any of the
Securities for any specified term; (ii) any Buyer, and counterparties in “derivative” transactions to which any such Buyer
is a party, directly or indirectly, presently may have a “short” position in the Common Stock which was established prior
to such Buyer’s knowledge of the transactions contemplated by the Transaction Documents; (iii) each Buyer shall not be deemed to
have any affiliation with or control over any arm’s length counterparty in any “derivative” transaction; and (iv) each
Buyer may rely on the Company’s obligation to timely deliver shares of Common Stock upon exercise or exchange, as applicable, of
the Securities as and when required pursuant to the Transaction Documents for purposes of effecting trading in the Common Stock of the
Company. The Company further understands and acknowledges that following the public disclosure of the transactions contemplated by the
Transaction Documents pursuant to the Press Release (as defined below) one or more Buyers may engage in hedging and/or trading activities
(including, without limitation, the location and/or reservation of borrowable shares of Common Stock) at various times during the period
that the Securities are outstanding, including, without limitation, during the periods that the value and/or number of the Warrant Shares
deliverable with respect to the Securities are being determined and such hedging and/or trading activities (including, without limitation,
the location and/or reservation of borrowable shares of Common Stock), if any, can reduce the value of the existing shareholders’
equity interest in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges
that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the Notes, the Warrants or any
other Transaction Document or any of the documents executed in connection herewith or therewith.
(ff)
Manipulation of Price. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person acting
on their behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company or any of its Subsidiaries to facilitate the sale or resale of any of the Securities, (ii)
sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities (other than the Placement Agent),
(iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company or
any of its Subsidiaries or (iv) paid or agreed to pay any Person for research services with respect to any securities of the Company
or any of its Subsidiaries.
(gg)
U.S. Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries is, or has ever been, and so long as any
of the Securities are held by any of the Buyers, shall become, a U.S. real property holding corporation within the meaning of Section
897 of the Code, and the Company and each Subsidiary shall so certify upon any Buyer’s request.
(hh)
Registration Eligibility. The Company is eligible to register the Registrable Securities (defined in the Registration Rights Agreement)
for resale by the Buyers using Form S-1 promulgated under the 1933 Act.
(ii)
Transfer Taxes. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required
to be paid in connection with the issuance, sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will have
been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
(jj)
Bank Holding Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956,
as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent
(5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of
a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries
or affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and
to regulation by the Federal Reserve.
(kk)
[Intentionally Omitted].
(ll)
Illegal or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the best of
the Company’s knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees, agents
or other representatives of the Company or any of its Subsidiaries or any other business entity or enterprise with which the Company
or any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution
or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person
or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive public office except for personal
political contributions not involving the direct or indirect use of funds of the Company or any of its Subsidiaries.
(mm)
Money Laundering. The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot Act
of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws,
regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, but not
limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR,
Subtitle B, Chapter V.
(nn)
Management. Except as set forth on Schedule 3(nn) hereto, during the past five year period, no current or, to its knowledge,
former officer or director or, to the knowledge of the Company, no current ten percent (10%) or greater shareholder of the Company or
any of its Subsidiaries has been the subject of:
(i)
a petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal agent
or similar officer for such Person, or any partnership in which such person was a general partner at or within two years before the filing
of such petition or such appointment, or any corporation or business association of which such person was an executive officer at or
within two years before the time of the filing of such petition or such appointment;
(ii)
a conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do not relate
to driving while intoxicated or driving under the influence);
(iii)
any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining any such person from, or otherwise limiting, the following activities:
(1)
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of
any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director
or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct
or practice in connection with such activity;
(2)
Engaging in any particular type of business practice; or
(3)
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of
securities laws or commodities laws;
(iv)
any order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise limiting
for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph, or to
be associated with persons engaged in any such activity;
(v)
a finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities law,
regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently reversed,
suspended or vacated; or
(vi)
a finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or vacated.
(oo)
Stock Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable
stock option plan of the Company and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date
such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s stock
option plan has been backdated. The Company has not knowingly granted, and there is no and has been no policy or practice of the Company
to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public
announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
(pp)
No Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company
and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability
to perform any of its obligations under any of the Transaction Documents. In addition, on or prior to the date hereof, the Company had
discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions, except as
set forth on Schedule 3(pp), the Company has no reason to believe that it will need to restate any such financial statements or
any part thereof.
(qq)
No Disqualification Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under the
1933 Act (“Regulation D Securities”), none of the Company, any of its predecessors, any affiliated issuer, any director,
executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more
of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term
is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer
Covered Person” and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except
for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any
Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure
obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.
(rr)
Other Covered Persons. The Company is not aware of any Person (other than the Placement Agent) that has been or will be paid
(directly or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any Regulation
D Securities.
(ss)
No Additional Agreements. Except as set forth on Schedule 3(ss), the Company does not have any agreement or understanding
with any Buyer with respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction
Documents.
(tt)
Public Utility Holding Act. None of the Company nor any of its Subsidiaries is a “holding company,” or an “affiliate”
of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.
(uu)
Federal Power Act. None of the Company nor any of its Subsidiaries is subject to regulation as a “public utility”
under the Federal Power Act, as amended.
(vv)
Ranking of Notes. Other than Permitted Indebtedness (as defined in the Notes) secured by Permitted Liens (as defined in the Notes),
no Indebtedness of the Company, at the Closing, will be senior to, or pari passu with, the Notes in right of payment, whether
with respect to payment or redemptions, interest, damages, upon liquidation or dissolution or otherwise.
(ww)
Cybersecurity. The Company and its Subsidiaries’ information technology assets and equipment, computers, systems, networks,
hardware, software, websites, applications, and databases (collectively, “IT Systems”) are adequate for, and operate
and perform in all material respects as required in connection with the operation of the business of the Company and its subsidiaries
as currently conducted, free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants
that would reasonably be expected to have a Material Adverse Effect on the Company’s business. The Company and its Subsidiaries
have implemented and maintained commercially reasonable physical, technical and administrative controls, policies, procedures, and safeguards
to maintain and protect their material confidential information and the integrity, continuous operation, redundancy and security of all
IT Systems and data, including “Personal Data,” used in connection with their businesses. “Personal Data”
means (i) a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax
identification number, driver’s license number, passport number, credit card number, bank information, or customer or account number;
(ii) any information which would qualify as “personally identifying information” under the Federal Trade Commission Act,
as amended; (iii) “personal data” as defined by the European Union General Data Protection Regulation (“GDPR”)
(EU 2016/679); (iv) any information which would qualify as “protected health information” under the Health Insurance Portability
and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (collectively, “HIPAA”);
and (v) 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 data related to an identified person’s health or sexual orientation. There have been no breaches, violations,
outages or unauthorized uses of or accesses to same, except for those that have been remedied without material cost or liability or the
duty to notify any other person or such, nor any incidents under internal review or investigations relating to the same except in each
case, where such would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. The
Company and its 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 Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use, access,
misappropriation or modification except in each case, where such would not, either individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.
(xx)
Compliance with Data Privacy Laws. The Company and its Subsidiaries are, and at all prior times were, in compliance with all applicable
state and federal data privacy and security laws and regulations, including without limitation HIPAA, and the Company and its Subsidiaries
have taken commercially reasonable actions to prepare to comply with, and since May 25, 2018, have been and currently are in compliance
with, the GDPR (EU 2016/679) (collectively, the “Privacy Laws”) except in each case, where such would not, either
individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. To ensure compliance with the Privacy
Laws, the Company and its Subsidiaries have in place, comply with, and take appropriate steps reasonably designed to ensure compliance
in all material respects with their policies and procedures relating to data privacy and security and the collection, storage, use, disclosure,
handling, and analysis of Personal Data (the “Policies”). The Company and its Subsidiaries have at all times made
all disclosures to users or customers required by applicable laws and regulatory rules or requirements, and none of such disclosures
made or contained in any Policy have, to the knowledge of the Company, been inaccurate or in violation of any applicable laws and regulatory
rules or requirements in any material respect. The Company further certifies that neither it nor any Subsidiary: (i) has received notice
of any actual or potential liability under or relating to, or actual or potential violation of, any of the Privacy Laws, and has no knowledge
of any event or condition that would reasonably be expected to result in any such notice; (ii) is currently conducting or paying for,
in whole or in part, any investigation, remediation, or other corrective action pursuant to any Privacy Law; or (iii) is a party to any
order, decree, or agreement that imposes any obligation or liability under any Privacy Law.
(yy)
Disclosure. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their
agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information
concerning the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the
other Transaction Documents. The Company understands and confirms that each of the Buyers will rely on the foregoing representations
in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company and its Subsidiaries,
their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the
Company or any of its Subsidiaries is true and correct and does not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made,
not misleading. All of the written information furnished after the date hereof by or on behalf of the Company or any of its Subsidiaries
to each Buyer pursuant to or in connection with this Agreement and the other Transaction Documents, taken as a whole, will be true and
correct in all material respects as of the date on which such information is so provided and will not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each press release issued by the Company or any of its Subsidiaries during the twelve (12)
months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they are made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or
any of its Subsidiaries or its or their business, properties, liabilities, prospects, operations (including results thereof) or conditions
(financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure at or before the date hereof or
announcement by the Company but which has not been so publicly disclosed. All financial projections and forecasts that have been prepared
by or on behalf of the Company or any of its Subsidiaries and made available to any of the Buyers have been prepared in good faith based
upon reasonable assumptions and represented, at the time each such financial projection or forecast was delivered to each Buyer, the
Company’s reasonable best estimate of future financial performance (it being recognized that such financial projections or forecasts
are not to be viewed as facts and that the actual results during the period or periods covered by any such financial projections or forecasts
may differ from the projected or forecasted results). The Company acknowledges and agrees that no Buyer makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 2.
4.
COVENANTS.
(a)
Reasonable Best Efforts. Each Buyer shall use its reasonable best efforts to timely satisfy each of the covenants hereunder and
conditions to be satisfied by it as provided in Section 6 of this Agreement. The Company shall use its reasonable best efforts to timely
satisfy each of the covenants hereunder and conditions to be satisfied by it as provided in Section 7 of this Agreement.
(b)
Form D and Blue Sky. The Company shall file a Form D with respect to the Securities as required under Regulation D and to provide
a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Securities for sale to the Buyers at
the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States
(or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or prior
to the Closing Date. Without limiting any other obligation of the Company under this Agreement, the Company shall timely make all filings
and reports relating to the offer and sale of the Securities required under all applicable securities laws (including, without limitation,
all applicable federal securities laws and all applicable “Blue Sky” laws), and the Company shall comply with all applicable
foreign, federal, state and local laws, statutes, rules, regulations and the like relating to the offering and sale of the Securities
to the Buyers.
(c)
Reporting Status. Until the date on which the Buyers shall have sold all of the Registrable Securities (the “Reporting
Period”), the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company
shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would no longer require or otherwise permit such termination. From the time Form S-3 is available to the Company for the registration
of the Registrable Securities, the Company shall take all actions necessary to maintain its eligibility to register the Registrable Securities
for resale by the Buyers on Form S-3.
(d)
Use of Proceeds. The Company will use the proceeds from the sale of the Securities for general corporate purposes and as set forth
on Schedule 4(d), but not, directly or indirectly, except as set forth on Schedule 4(d), for (i) the satisfaction of any
indebtedness of the Company or any of its Subsidiaries, (ii) the redemption or repurchase of any securities of the Company or any of
its Subsidiaries, or (iii) the settlement of any outstanding litigation.
(e)
Financial Information. The Company agrees to send the following to each Investor (as defined in the Registration Rights Agreement)
during the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the
EDGAR system, within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly
Reports on Form 10-Q, any interim reports or any consolidated balance sheets, income statements, shareholders’ equity statements
and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K and any registration statements (other
than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless the following are either filed with the SEC through EDGAR
or are otherwise widely disseminated via a recognized news release service (such as PR Newswire), on the same day as the release thereof,
e-mail copies of all press releases issued by the Company or any of its Subsidiaries and (iii) unless the following are filed with the
SEC through EDGAR, copies of any notices and other information made available or given to the shareholders of the Company generally,
contemporaneously with the making available or giving thereof to the shareholders.
(f)
Listing. Subject to the Shareholder Approval, the Company shall promptly secure the listing or designation for quotation (as the
case may be) of all of the Registrable Securities upon each national securities exchange and automated quotation system, if any, upon
which the Common Stock is then listed or designated for quotation (as the case may be) (subject to official notice of issuance) and shall
maintain such listing or designation for quotation (as the case may be) of all Registrable Securities from time to time issuable under
the terms of the Transaction Documents on such national securities exchange or automated quotation system. The Company shall maintain
the Common Stock’s listing or authorization for quotation (as the case may be) on the Principal Market, The New York Stock Exchange,
the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market (each, an “Eligible
Market”). Neither the Company nor any of its Subsidiaries shall take any action which could be reasonably expected to result
in the delisting or suspension of the Common Stock on an Eligible Market. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 4(f).
(g)
Fees. The Company shall reimburse Kelley Drye & Warren LLP a non-accountable amount of $175,000 for all costs and expenses
incurred in connection with the structuring, documentation, negotiation and closing of the transactions contemplated by the Transaction
Documents (the “Transaction Expenses”) and shall be withheld by the lead Buyer from its Purchase Price at the Closing;
provided, that the Company shall promptly reimburse Kelley Drye & Warren LLP on demand for all Transaction Expenses not so reimbursed
through such withholding at the Closing. The Company shall be responsible for the payment of any placement agent’s fees, financial
advisory fees, transfer agent fees, DTC (as defined below) fees or broker’s commissions (other than for Persons engaged by any
Buyer) relating to or arising out of the transactions contemplated hereby (including, without limitation, any fees or commissions payable
to the Placement Agent, who is the Company’s sole placement agent in connection with the transactions contemplated by this Agreement).
The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable
attorneys’ fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise
set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities
to the Buyers.
(h)
Pledge of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees
that the Securities may be pledged by an Investor in connection with a bona fide margin agreement or other loan or financing arrangement
that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities
hereunder, and no Investor effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise
make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, Section
2(g) hereof; provided that an Investor and its pledgee shall be required to comply with the provisions of Section 2(g) hereof
in order to effect a sale, transfer or assignment of Securities to such pledgee. The Company hereby agrees to execute and deliver such
documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by
a Buyer.
(i)
Disclosure of Transactions and Other Material Information.
(i)
Disclosure of Transaction. The Company shall, on or before 9:00 a.m., New York time, on the first (1st) Business Day after the
date of this Agreement, issue a press release (the “Press Release”) reasonably acceptable to the Buyers disclosing
all the material terms of the transactions contemplated by the Transaction Documents. On or before 9:00 a.m., New York time, on the first
(1st) Business Day after the date of this Agreement, the Company shall file a Current Report on Form 8-K describing all the
material terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching all the
material Transaction Documents (including, without limitation, this Agreement (and all schedules to this Agreement), the form of Notes,
the form of the Warrants, the form of Guaranties, the form of Security Documents and the form of the Registration Rights Agreement) (including
all attachments, the “8-K Filing”). From and after the filing of the 8-K Filing, the Company shall have disclosed
all material, non-public information (if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their
respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In
addition, effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar
obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers,
directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall
terminate.
(ii)
Limitations on Disclosure. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their
respective officers, directors, employees and agents not to, provide any Buyer with any material, non-public information regarding the
Company or any of its Subsidiaries from and after the date hereof without the express prior written consent of such Buyer (which may
be granted or withheld in such Buyer’s sole discretion). In the event of a breach of any of the foregoing covenants, including,
without limitation, Section 4(n) of this Agreement, or any of the covenants or agreements contained in any other Transaction Document,
by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents (as determined in
the reasonable good faith judgment of such Buyer), in addition to any other remedy provided herein or in the Transaction Documents, such
Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such breach
or such material, non-public information, as applicable, without the prior approval by the Company, any of its Subsidiaries, or any of
its or their respective officers, directors, employees or agents. No Buyer shall have any liability to the Company, any of its Subsidiaries,
or any of its or their respective officers, directors, employees, affiliates, shareholders or agents, for any such disclosure. To the
extent that the Company delivers any material, non-public information to a Buyer without such Buyer’s consent, the Company hereby
covenants and agrees that such Buyer shall not have any duty of confidentiality with respect to, or a duty not to trade on the basis
of, such material, non-public information. Subject to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue
any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, the Company
shall be entitled, without the prior approval of any Buyer, to make the Press Release and any press release or other public disclosure
with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required
by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted by the Company in connection
with any such press release or other public disclosure prior to its release). Without the prior written consent of the applicable Buyer
(which may be granted or withheld in such Buyer’s sole discretion), the Company shall not (and shall cause each of its Subsidiaries
and affiliates to not) disclose the name of such Buyer in any filing, announcement, release or otherwise. Notwithstanding anything contained
in this Agreement to the contrary and without implication that the contrary would otherwise be true, the Company expressly acknowledges
and agrees that no Buyer shall have (unless expressly agreed to by a particular Buyer after the date hereof in a written definitive and
binding agreement executed by the Company and such particular Buyer (it being understood and agreed that no Buyer may bind any other
Buyer with respect thereto)), any duty of confidentiality with respect to, or a duty not to trade on the basis of, any material, non-public
information regarding the Company or any of its Subsidiaries.
(j)
Additional Registration Statements. Except as set forth on Schedule 4(j), until the Applicable Date (as defined below)
and at any time thereafter while any Registration Statement is not effective or the prospectus contained therein is not available for
use or any Current Public Information Failure (as defined in the Registration Rights Agreement) exists, the Company shall not file a
registration statement or an offering statement under the 1933 Act relating to securities that are not the Registrable Securities (other
than a registration statement on Form S-8 or such supplements or amendments to registration statements that are outstanding and have
been declared effective by the SEC as of the date hereof (solely to the extent necessary to keep such registration statements effective
and available and not with respect to any Subsequent Placement)). “Applicable Date” means the earlier of (x) the first
date on which the resale by the Buyers of all the Registrable Securities required to be filed on the initial Registration Statement (as
defined in the Registration Rights Agreement) pursuant to the Registration Rights Agreement is declared effective by the SEC (and each
prospectus contained therein is available for use on such date) or (y) the first date on which all of the Registrable Securities are
eligible to be resold by the Buyers pursuant to Rule 144 (or, if a Current Public Information Failure has occurred and is continuing,
such later date after which the Company has cured such Current Public Information Failure).
(k)
Reservation of Shares. Beginning on the Shareholder Approval Date, so long as any of the Notes or Warrants remain outstanding,
the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 100%
of the maximum number of Warrant Shares issuable upon exercise of all the Warrants then outstanding (without regard to any limitations
on the exercise of the Warrants set forth therein) (collectively, the “Required Reserve Amount”); provided that at
no time shall the number of shares of Common Stock reserved pursuant to this Section 4(k) be reduced other than proportionally in connection
with any exercise and/or redemption, as applicable, of Warrants. If at any time the number of shares of Common Stock authorized and reserved
for issuance is not sufficient to meet the Required Reserve Amount, the Company will promptly take all corporate action necessary to
authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of shareholders to authorize
additional shares to meet the Company’s obligations pursuant to the Transaction Documents, in the case of an insufficient number
of authorized shares, obtain shareholder approval of an increase in such authorized number of shares, and voting the management shares
of the Company in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares is sufficient
to meet the Required Reserve Amount.
(l)
Conduct of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance
or regulation of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually
or in the aggregate, in a Material Adverse Effect.
(m)
Other Notes; Variable Securities. Except as set forth on Schedule 4(m), so long as any Notes remain outstanding, the Company
and each Subsidiary shall be prohibited from effecting or entering into an agreement to effect any Subsequent Placement involving a Variable
Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company or any Subsidiary (i) issues
or sells any Convertible Securities either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies
with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such Convertible Securities,
or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of
such Convertible Securities or upon the occurrence of specified or contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock, other than pursuant to a customary “weighted average” anti-dilution provision
or (ii) enters into any agreement (including, without limitation, an equity line of credit or an “at-the-market” offering)
whereby the Company or any Subsidiary may sell securities at a future determined price (other than standard and customary “preemptive”
or “participation” rights). Each Buyer shall be entitled to obtain injunctive relief against the Company and its Subsidiaries
to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
(n)
Dilutive Issuances. For so long as any Warrants remain outstanding, the Company shall not, in any manner, enter into or affect
any Dilutive Issuance (as defined in the Warrants) if the effect of such Dilutive Issuance is to cause the Company to be required to
issue upon exercise of any Warrant any shares of Common Stock in excess of that number of shares of Common Stock which the Company may
issue upon exercise of the Warrants without breaching the Company’s obligations under the rules or regulations of the Principal
Market.
(o)
Passive Foreign Investment Company. The Company shall conduct its business, and shall cause its Subsidiaries to conduct their
respective businesses, in such a manner as will ensure that the Company will not be deemed to constitute a passive foreign investment
company within the meaning of Section 1297 of the Code.
(p)
Restriction on Redemption and Cash Dividends. So long as any Notes are outstanding, the Company shall not, directly or indirectly,
redeem, or declare or pay any cash dividend or distribution on, any securities of the Company without the prior express written consent
of the Buyers, except as required by the certificate of designations for the Series B Preferred Stock, as in effect on the date hereof.
(q)
Corporate Existence. So long as any Buyer beneficially owns any Notes or Warrants, the Company shall not be party to any Fundamental
Transaction (as defined in the Notes) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions
set forth in the Notes and the Warrants.
(r)
Stock Splits. Except for one time after the date hereof as needed to meet the listing requirements of the Principal Market, until
the Notes and all notes issued pursuant to the terms thereof are no longer outstanding, the Company shall not effect any stock combination,
reverse stock split or other similar transaction (or make any public announcement or disclosure with respect to any of the foregoing)
without the prior written consent of the Required Holders (as defined below).
(s)
Exercise Procedures. Each of the form of Exercise Notice (as defined in the Warrants) included in the Warrants set forth the totality
of the procedures required of the Buyers in order to exercise the Warrants. Except as provided in Section 5(d), no additional legal opinion,
other information or instructions shall be required of the Buyers to exercise their Warrants. The Company shall honor exercises of the
Warrants and shall deliver the Warrant Shares in accordance with the terms, conditions and time periods set forth in the Warrants.
(t)
Collateral Agent. Each Buyer hereby (i) appoints _________, as the collateral agent hereunder and under the other Security Documents
(in such capacity, the “Collateral Agent”), and (ii) authorizes the Collateral Agent (and its officers, directors,
employees and agents) to take such action on such Buyer’s behalf in accordance with the terms hereof and thereof. The Collateral
Agent shall not have, by reason hereof or any of the other Security Documents, a fiduciary relationship in respect of any Buyer. Neither
the Collateral Agent nor any of its officers, directors, employees or agents shall have any liability to any Buyer for any action taken
or omitted to be taken in connection hereof or any other Security Document except to the extent caused by its own gross negligence or
willful misconduct, and each Buyer agrees to defend, protect, indemnify and hold harmless the Collateral Agent and all of its officers,
directors, employees and agents (collectively, the “Collateral Agent Indemnitees”) from and against any losses, damages,
liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses (including, without limitation, reasonable attorneys’
fees, costs and expenses) incurred by such Collateral Agent Indemnitee, whether direct, indirect or consequential, arising from or in
connection with the performance by such Collateral Agent Indemnitee of the duties and obligations of Collateral Agent pursuant hereto
or any of the Security Documents. The Collateral Agent shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions
of the Required Holders, and such instructions shall be binding upon all holders of Notes; provided, however, that the Collateral Agent
shall not be required to take any action which, in the reasonable opinion of the Collateral Agent, exposes the Collateral Agent to liability
or which is contrary to this Agreement or any other Transaction Document or applicable law. The Collateral Agent shall be entitled to
rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith
to be genuine and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this
Agreement or any of the other Transaction Documents and its duties hereunder or thereunder, upon advice of counsel selected by it.
(u)
Successor Collateral Agent.
(i)
The Collateral Agent may resign from the performance of all its functions and duties hereunder and under the other Transaction Documents
at any time by giving at least ten (10) Business Days’ prior written notice to the Company and each holder of Notes. Such resignation
shall take effect upon the acceptance by a successor Collateral Agent of appointment pursuant to clauses (ii) and (iii) below or as otherwise
provided below. If at any time the Collateral Agent (together with its affiliates) beneficially owns less than $100,000 in aggregate
principal amount of Notes, the Required Holders may, by written consent, remove the Collateral Agent from all its functions and duties
hereunder and under the other Transaction Documents.
(ii)
Upon any such notice of resignation or removal, the Required Holders shall appoint a successor collateral agent. Upon the acceptance
of any appointment as Collateral Agent hereunder by a successor agent, such successor collateral agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the collateral agent, and the Collateral Agent shall be discharged
from its duties and obligations under this Agreement and the other Transaction Documents. After the Collateral Agent’s resignation
or removal hereunder as the collateral agent, the provisions of this Section 4(u) shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Collateral Agent under this Agreement and the other Transaction Documents.
(iii)
If a successor collateral agent shall not have been so appointed within ten (10) Business Days of receipt of a written notice of resignation
or removal, the Collateral Agent shall then appoint a successor collateral agent who shall serve as the Collateral Agent until such time,
if any, as the Required Holders appoint a successor collateral agent as provided above.
(iv)
In the event that a successor Collateral Agent is appointed pursuant to the provisions of this Section 4(u) that is not a Buyer or an
affiliate of any Buyer (or the Required Holders or the Collateral Agent (or its successor), as applicable, notify the Company that they
or it wants to appoint such a successor Collateral Agent pursuant to the terms of this Section 4(u)), the Company and each Subsidiary
thereof covenants and agrees to promptly take all actions reasonably requested by the Required Holders or the Collateral Agent (or its
successor), as applicable, from time to time, to secure a successor Collateral Agent satisfactory to the requesting part(y)(ies), in
their sole discretion, including, without limitation, by paying all reasonable and customary fees and expenses of such successor Collateral
Agent, by having the Company and each Subsidiary thereof agree to indemnify any successor Collateral Agent pursuant to reasonable and
customary terms and by each of the Company and each Subsidiary thereof executing a collateral agency agreement or similar agreement and/or
any amendment to the Security Documents reasonably requested or required by the successor Collateral Agent.
(v)
Regulation M. The Company will not take any action prohibited by Regulation M under the 1934 Act, in connection with the distribution
of the Securities contemplated hereby.
(w)
General Solicitation. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act) or any person
acting on behalf of the Company or such affiliate will solicit any offer to buy or offer or sell the Securities by means of any form
of general solicitation or general advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice
or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio; and (ii) any seminar
or meeting whose attendees have been invited by any general solicitation or general advertising.
(x)
Integration. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act), or any person acting
on behalf of the Company or such affiliate will sell, offer for sale, or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the 1933 Act) which will be integrated with the sale of the Securities in a manner which would require the registration
of the Securities under the 1933 Act or require shareholder approval under the rules and regulations of the Principal Market and the
Company will take all action that is appropriate or necessary to assure that its offerings of other securities will not be integrated
for purposes of the 1933 Act or, except as set forth in Schedule 4(x), the rules and regulations of the Principal Market, with
the issuance of Securities contemplated hereby.
(y)
Notice of Disqualification Events. The Company will notify the Buyers in writing, prior to the Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event
relating to any Issuer Covered Person.
(z)
Shareholder Approval. The Company shall either (x) if the Company shall have obtained the prior written consent of the requisite
shareholders (the “Shareholder Consent”) to obtain the Shareholder Approval, inform the shareholders of the Company
of the receipt of the Shareholder Consent by preparing and filing with the SEC, as promptly as practicable after the date hereof, but
prior to the forty-fifth (45th) calendar day after the Closing Date (or, if such filing is delayed by a court or regulatory agency, in
no event later than 90 calendar days after the Closing), an information statement with respect thereto or (y) provide each shareholder
entitled to vote at a special meeting of shareholders of the Company (the “Shareholder Meeting”), which shall be promptly
called and held not later than 150 days after the Closing Date (the “Shareholder Meeting Deadline”), a proxy statement,
in each case, in a form reasonably acceptable to the Buyers and Kelley Drye & Warren LLP, at the expense of the Company, with the
Company obligated to reimburse the expenses of Kelley Drye & Warren LLP incurred in connection therewith in an amount not exceed
$5,000. The proxy statement, if any, shall solicit each of the Company’s shareholder’s affirmative vote at the Shareholder
Meeting for approval of resolutions (“Shareholder Resolutions”) providing for (A) an increase in authorized Common
Stock and (B) the approval of the issuance of all of the Securities in compliance with the rules and regulations of the Principal Market
(without regard to any limitations on conversion or exercise set forth in the Notes or Warrants, respectively) (such affirmative approval
being referred to herein as the “Shareholder Approval”, and the date such Shareholder Approval is obtained, the “Shareholder
Approval Date”), and the Company shall use its reasonable best efforts to solicit its shareholders’ approval of such
resolutions and to cause the Board of Directors of the Company to recommend to the shareholders that they approve such resolutions. The
Company shall be obligated to seek to obtain the Shareholder Approval by the Shareholder Meeting Deadline. If, despite the Company’s
reasonable best efforts the Shareholder Approval is not obtained on or prior to the Shareholder Meeting Deadline, the Company shall cause
an additional Shareholder Meeting to be held on or prior to 240 days after the Closing Date. If, despite the Company’s reasonable
best efforts the Shareholder Approval is not obtained after such subsequent shareholder meetings, the Company shall cause an additional
Shareholder Meeting to be held semi-annually thereafter until such Shareholder Approval is obtained.
(aa)
BSI Subsidiary Guarantee. For so long as any Notes remain outstanding, upon any entity becoming a direct, or indirect, BSI
Subsidiary, the Company shall cause each such BSI Subsidiary to become party to the Guaranty by executing a joinder to the Guaranty reasonably
satisfactory in form and substance to the Required Holders.
(bb)
Closing Documents. On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver, or cause
to be delivered, to each Buyer and Kelley Drye & Warren LLP a complete closing set of the executed Transaction Documents, Securities
and any other document required to be delivered to any party pursuant to Section 7 hereof or otherwise.
(cc)
Post-Closing Conditions; Controlled Account Agreements. Unless the dates set forth below are extended with the written consent
of the Required Holder:
(i)
On or prior to the Shareholder Approval Date, the Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent
Instructions, in the form acceptable to such Buyer, which instructions shall have been delivered to and acknowledged in writing by the
Company’s transfer agent.
(ii)
On or prior to the Shareholder Approval Date, The Common Stock (A) shall be designated for quotation or listed (as applicable) on the
Principal Market and (B) shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the
Principal Market nor, except as disclosed in the SEC Documents, shall suspension by the SEC or the Principal Market have been threatened,
as of the Closing Date, either (I) in writing by the SEC or the Principal Market or (II) by falling below the minimum maintenance requirements
of the Principal Market.
5.
REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.
(a)
Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may
designate by notice to each holder of Securities), a register for the Notes and the Warrants in which the Company shall record the name
and address of the Person in whose name the Notes and the Warrants have been issued (including the name and address of each transferee),
the principal amount of the Notes held by such Person and the number of Warrant Shares issuable upon exercise of the Warrants held by
such Person. The Company shall keep the register open and available at all times during business hours for inspection of any Buyer or
its legal representatives.
(b)
Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent and any subsequent transfer
agent (as applicable, the “Transfer Agent”) in a form acceptable to each of the Buyers (the “Irrevocable
Transfer Agent Instructions”) to issue certificates or credit shares to the applicable balance accounts at The Depository Trust
Company (“DTC”), registered in the name of each Buyer or its respective nominee(s), for the Warrant Shares in such
amounts as specified from time to time by each Buyer to the Company upon the exercise of the Warrants. The Company represents and warrants
that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and stop transfer instructions
to give effect to Section 2(g) hereof, will be given by the Company to its transfer agent with respect to the Securities, and that the
Securities shall otherwise be freely transferable on the books and records of the Company, as applicable, to the extent provided in this
Agreement and the other Transaction Documents. If a Buyer effects a sale, assignment or transfer of the Securities in accordance with
Section 2(g), the Company shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates
or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by such Buyer to effect
such sale, transfer or assignment. In the event that such sale, assignment or transfer involves Warrant Shares sold, assigned or transferred
pursuant to an effective registration statement or in compliance with Rule 144, the transfer agent shall issue such shares to such Buyer,
assignee or transferee (as the case may be) without any restrictive legend in accordance with Section 5(d) below. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5(b) will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section 5(b), that a Buyer shall be entitled, in addition to all other available remedies,
to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required. The Company shall cause its counsel to issue the legal opinion referred
to in the Irrevocable Transfer Agent Instructions to the Company’s transfer agent on each Effective Date (as defined in the Registration
Rights Agreement). Any fees (with respect to the transfer agent, counsel to the Company or otherwise) associated with the issuance of
such opinion or the removal of any legends on any of the Securities shall be borne by the Company.
(c)
Legends. Each Buyer understands that the Securities have been issued (or will be issued in the case of the Warrant Shares) pursuant
to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forth below,
the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially
the following form (and a stop-transfer order may be placed against transfer of such stock certificates):
[NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A)
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO
THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
(d)
Removal of Legends. Certificates evidencing Securities shall not be required to contain the legend set forth in Section 5(c) above
or any other legend (i) while a registration statement (including a Registration Statement) covering the resale of such Securities is
effective under the 1933 Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming the transferor is not an affiliate
of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 (provided that a Buyer provides
the Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer under Rule 144 which shall
not include an opinion of Buyer’s counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule
144), provided that such Buyer provides the Company with an opinion of counsel to such Buyer, in a generally acceptable form, to the
effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of
the 1933 Act or (v) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling
judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing, the Company shall
no later than one (1) Trading Day (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation
for the settlement of a trade initiated on the date such Buyer delivers such legended certificate representing such Securities to the
Company) following the delivery by a Buyer to the Company or the transfer agent (with notice to the Company) of a legended certificate
representing such Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect
the reissuance and/or transfer, if applicable), together with any other deliveries from such Buyer as may be required above in this Section
5(d), as directed by such Buyer, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated
Securities Transfer Program (“FAST”) and such Securities are Warrant Shares, credit the aggregate number of shares
of Common Stock to which such Buyer shall be entitled to such Buyer’s or its designee’s balance account with DTC through
its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in FAST, issue and deliver
(via reputable overnight courier) to such Buyer, a certificate representing such Securities that is free from all restrictive and other
legends, registered in the name of such Buyer or its designee (the date by which such credit is so required to be made to the balance
account of such Buyer’s or such Buyer’s designee with DTC or such certificate is required to be delivered to such Buyer pursuant
to the foregoing is referred to herein as the “Required Delivery Date”, and the date such shares of Common Stock are
actually delivered without restrictive legend to such Buyer or such Buyer’s designee with DTC, as applicable, the “Share
Delivery Date”). The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance of Securities
or the removal of any legends with respect to any Securities in accordance herewith.
(e)
Failure to Timely Deliver; Buy-In. If the Company fails to fail, for any reason or for no reason, to issue and deliver (or cause
to be delivered) to a Buyer (or its designee) by the Required Delivery Date, either (I) if the Transfer Agent is not participating in
FAST, a certificate for the number of Warrant Shares to which such Buyer is entitled and register such Warrant Shares on the Company’s
share register or, if the Transfer Agent is participating in FAST, to credit the balance account of such Buyer or such Buyer’s
designee with DTC for such number of Warrant Shares submitted for legend removal by such Buyer pursuant to Section 5(d) above or (II)
if the Registration Statement covering the resale of the Warrant Shares submitted for legend removal by such Buyer pursuant to Section
5(d) above (the “Unavailable Shares”) is not available for the resale of such Unavailable Shares and the Company fails
to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x) so notify such Buyer and (y) deliver
the Warrant Shares electronically without any restrictive legend by crediting such aggregate number of Warrant Shares submitted for legend
removal by such Buyer pursuant to Section 5(d) above to such Buyer’s or its designee’s balance account with DTC through its
Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a “Notice
Failure” and together with the event described in clause (I) above, a “Delivery Failure”), then, in addition
to all other remedies available to such Buyer, the Company shall pay in cash to such Buyer on each day after the Share Delivery Date
and during such Delivery Failure an amount equal to 2% of the product of (A) the sum of the number of shares of Common Stock not issued
to such Buyer on or prior to the Required Delivery Date and to which such Buyer is entitled, and (B) any trading price of the Common
Stock selected by such Buyer in writing as in effect at any time during the period beginning on the date of the delivery by such Buyer
to the Company of the applicable Warrant Shares and ending on the applicable Share Delivery Date. In addition to the foregoing, if on
or prior to the Required Delivery Date either (I) if the Transfer Agent is not participating in FAST, the Company shall fail to issue
and deliver a certificate to a Buyer and register such shares of Common Stock on the Company’s share register or, if the Transfer
Agent is participating in FAST, credit the balance account of such Buyer or such Buyer’s designee with DTC for the number of shares
of Common Stock to which such Buyer submitted for legend removal by such Buyer pursuant to Section 5(d) above (ii) below or (II) a Notice
Failure occurs, and if on or after such Trading Day such Buyer acquires (in an open market transaction, stock loan or otherwise) shares
of Common Stock corresponding to all or any portion of the number of shares of Common Stock the Holder is entitled to receive from the
Company and has not received from the Company in connection with such Delivery Failure or Notice Failure, as applicable (a “Buy-In”),
then the Company shall, within one (1) Trading Day after such Buyer’s request and in such Buyer’s discretion, either (i)
pay cash to such Buyer in an amount equal to such Buyer’s total purchase price (including brokerage commissions, stock loan costs
and other out-of-pocket expenses, if any, for the shares of Common Stock so acquired) (the “Buy-In Price”), at which
point the Company’s obligation to so deliver such certificate or credit such Buyer’s balance account shall terminate and
such shares shall be cancelled, or (ii) promptly honor its obligation to so deliver to such Buyer a certificate or certificates or credit
the balance account of such Buyer or such Buyer’s designee with DTC representing such number of shares of Common Stock that would
have been so delivered if the Company timely complied with its obligations hereunder and pay cash to such Buyer in an amount equal to
the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Warrant Shares that the Company was required
to deliver to such Buyer by the Required Delivery Date multiplied by (B) the lowest Closing Sale Price (as defined in the Warrants) of
the Common Stock on any Trading Day during the period commencing on the date of the delivery by such Buyer to the Company of the applicable
Warrant Shares and ending on the date of such delivery and payment under this clause (ii). Nothing shall limit such Buyer’s right
to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock
(or to electronically deliver such shares of Common Stock) as required pursuant to the terms hereof. Notwithstanding anything herein
to the contrary, with respect to any given Notice Failure and/or Delivery Failure, this Section 5(e) shall not apply to the applicable
Buyer the extent the Company has already paid such amounts in full to such Buyer with respect to such Notice Failure and/or Delivery
Failure, as applicable, pursuant to the analogous sections of the Note or the Warrant, as applicable, held by such Buyer.
(f)
FAST Compliance. While any Warrants remain outstanding, the Company shall maintain a transfer agent that participates in FAST.
6.
CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
(a)
The obligation of the Company hereunder to issue and sell the Notes and the related Warrants to each Buyer at the Closing is subject
to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s
sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:
(i)
Such Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.
(ii)
Such Buyer and each other Buyer shall have delivered to the Company the Purchase Price (less, in the case of any Buyer, the amounts withheld
pursuant to Section 4(g)) for the Note and the related Warrants being purchased by such Buyer at the Closing by wire transfer of immediately
available funds in accordance with the Flow of Funds Letter.
(iii)
The representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of
the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such
Buyer at or prior to the Closing Date.
7.
CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.
(a)
The obligation of each Buyer hereunder to purchase its Note and its related Warrants at the Closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit
and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(i)
The Company and each Subsidiary (as the case may be) shall have duly executed and delivered to such Buyer each of the Transaction Documents
to which it is a party and the Company shall have duly executed and delivered to such Buyer (A) a Note in such original principal amount
as is set forth across from such Buyer’s name in column (3) of the Schedule of Buyers and (B) a Warrant initially exercisable for
such aggregate number of Warrant Shares as is set forth across from such Buyer’s name in column (4) of the Schedule of Buyers,
in each case, as being purchased by such Buyer at the Closing pursuant to this Agreement.
(ii)
Such Buyer shall have received the opinion of each of Nason Yeager Gerson Harris & Fumero, P.A., and Robert Brantl, Esq., the Company’s
counsel, dated as of the Closing Date, in the form acceptable to such Buyer.
(iii)
[Intentionally Omitted.]
(iv)
The Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company, BSI and Beeline
Financial Holdings, Inc., a Delaware corporation (“Beeline Financial”) in each such entity’s jurisdiction of
formation issued by the Secretary of State (or comparable office) of such jurisdiction of formation as of a date within ten (10) days
of the Closing Date.
(v)
[Intentionally Omitted.]
(vi)
The Company shall have delivered to such Buyer a certified copy of the Articles of Incorporation as certified by the Nevada Secretary
of State within ten (10) days of the Closing Date.
(vii)
BSI and Beeline Financial shall have delivered to such Buyer a certified copy of its certificate of incorporation (or such equivalent
organizational document) as certified by the Secretary of State (or comparable office) of such Subsidiary’s jurisdiction of incorporation
within ten (10) days of the Closing Date.
(viii)
The Company and BSI shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Secretary
of the Company and each Subsidiary and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted
by the Company’s and each Subsidiary’s board of directors in a form reasonably acceptable to such Buyer, (ii) the Articles
of Incorporation of the Company and the organizational documents of each Subsidiary and (iii) the Bylaws of the Company and the bylaws
of each Subsidiary, each as in effect at the Closing.
(ix)
Each and every representation and warranty of the Company shall be true and correct as of the date when made and as of the Closing Date
as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true
and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects with the covenants,
agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to the Closing Date. Such Buyer
shall have received a certificate, duly executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form acceptable to such Buyer.
(x)
The Company shall have delivered to such Buyer a letter from the Company’s transfer agent certifying the number of shares of Common
Stock outstanding on the Closing Date immediately prior to the Closing.
(xi)
[Intentionally Omitted.]
(xii)
The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of
the Securities, except those required by the Principal Market, if any.
(xiii)
No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated
by the Transaction Documents.
(xiv)
Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result
in a Material Adverse Effect.
(xv)
[Intentionally Omitted.]
(xvi)
In accordance with the terms of the Security Documents, the Company shall have delivered to the Collateral Agent (A) original certificates
(I) representing BSI’s shares of capital stock to the extent BSI has certificated equity and (II) representing all other equity
interests and all promissory notes required to be pledged thereunder, in each case, accompanied by undated stock powers and allonges
executed in blank and other proper instruments of transfer and (B) appropriate financing statements on Form UCC-1 to be duly filed in
such office or offices as may be necessary or, in the opinion of the Collateral Agent, desirable to perfect the security interests purported
to be created by each Security Document (the “Perfection Certificate”).
(xvii)
Within two (2) Business Days prior to the Closing, the Company shall have delivered or caused to be delivered to each Buyer and the Collateral
Agent (A) certified copies of requests for copies of information on Form UCC-11, listing all effective financing statements which name
as debtor the Company or any of its Subsidiaries and which are filed in such office or offices as may be necessary or, in the opinion
of the Collateral Agent or the Buyers, desirable to perfect the security interests purported to be created by the Security Agreement,
together with copies of such financing statements, none of which, except as otherwise agreed in writing by the Collateral Agent, shall
cover any of the Collateral (as defined in the Security Agreement), and the results of searches for any tax Lien and judgment Lien filed
against such Person or its property, which results, except as otherwise agreed to in writing by the Collateral Agent and the Buyers,
shall not show any such Liens; and (B) a perfection certificate, duly completed and executed by the Company and each of its Subsidiaries,
in form and substance satisfactory to the Buyers.
(xviii)
The Collateral Agent shall have received the Security Agreement, duly executed by the Company and each of the BSI Entities, together
with the original stock certificates representing all of the equity interests and all promissory notes required to be pledged thereunder,
accompanied by undated stock powers and allonges executed in blank and other proper instruments of transfer.
(xix)
With respect to the Intellectual Property Rights, if any, of the BSI Entities, as applicable, shall have duly executed and delivered
to such Buyer each Assignment For Security for the Intellectual Property Rights of the Company and the BSI Entities, in the form attached
as Exhibit A to the Security Agreement.
(xx)
Liuzza shall have duly executed and delivered to each Major Buyer a Personal Guaranty with respect to the Notes of such Major Buyer.
(xxi)
The Company shall have duly executed and delivered to such Buyer side letter agreements (x) in the form of Exhibit G-1
hereof (the “Note Side Letter”), (y) in the form of Exhibit G-2 hereof (the “Preferred Stock
Side Letter”), and (z) in the form of Exhibit G-3 hereof (the “Beeline Side Letter”, and collectively
with the Note Side Letter and the Preferred Stock Side Letter, the “Side Letter Agreements”), by and between the Company
and the applicable holders listed on Schedule 7(a)(xxi) (the “Existing Holders”) and the Existing Holders shall
have duly executed and delivered to such Buyer the Side Letter Agreements.
(xxii)
Such Buyer shall have received a letter on the letterhead of the Company, duly executed by the Chief Executive Officer of the Company,
setting forth the wire amounts of each Buyer and the wire transfer instructions of the Company (the “Flow of Funds Letter”).
(xxiii)
The Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to the
transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.
8.
TERMINATION.
In
the event that the Closing shall not have occurred with respect to a Buyer within five (5) days of the date hereof, then such Buyer shall
have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business
on such date without liability of such Buyer to any other party; provided, however, (i) the right to terminate this Agreement under this
Section 8 shall not be available to such Buyer if the failure of the transactions contemplated by this Agreement to have been consummated
by such date is the result of such Buyer’s breach of this Agreement and (ii) the abandonment of the sale and purchase of the Notes
and the Warrants shall be applicable only to such Buyer providing such written notice, provided further that no such termination shall
affect any obligation of the Company under this Agreement to reimburse such Buyer for the expenses described in Section 4(g) above. Nothing
contained in this Section 8 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions
of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other
party of its obligations under this Agreement or the other Transaction Documents.
9.
MISCELLANEOUS.
(a)
Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of
this Agreement shall be governed by the internal laws of the State of Delaware, without giving effect to any provision or rule (whether
of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the
State of Delaware. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Wilmington,
Delaware, for the adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction Documents or
with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in
an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party
at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Nothing contained herein shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal
action against the Company in any other jurisdiction to collect on the Company’s obligations to such Buyer or to enforce a judgment
or other court ruling in favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST,
A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT
OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(b)
Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event
that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an
executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such signature page were an original thereof.
(c)
Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation
of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine,
neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words
of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in
which they are found.
(d)
Severability; Maximum Payment Amounts. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid
or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall
be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues
to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature,
invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties
will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). Notwithstanding anything
to the contrary contained in this Agreement or any other Transaction Document (and without implication that the following is required
or applicable), it is the intention of the parties that in no event shall amounts and value paid by the Company and/or any of its Subsidiaries
(as the case may be), or payable to or received by any of the Buyers, under the Transaction Documents (including without limitation,
any amounts that would be characterized as “interest” under applicable law) exceed amounts permitted under any applicable
law. Accordingly, if any obligation to pay, payment made to any Buyer, or collection by any Buyer pursuant the Transaction Documents
is finally judicially determined to be contrary to any such applicable law, such obligation to pay, payment or collection shall be deemed
to have been made by mutual mistake of such Buyer, the Company and its Subsidiaries and such amount shall be deemed to have been adjusted
with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by the applicable
law. Such adjustment shall be effected, to the extent necessary, by reducing or refunding, at the option of such Buyer, the amount of
interest or any other amounts which would constitute unlawful amounts required to be paid or actually paid to such Buyer under the Transaction
Documents. For greater certainty, to the extent that any interest, charges, fees, expenses or other amounts required to be paid to or
received by such Buyer under any of the Transaction Documents or related thereto are held to be within the meaning of “interest”
or another applicable term to otherwise be violative of applicable law, such amounts shall be pro-rated over the period of time to which
they relate.
(e)
Entire Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and
thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyers, the
Company, its Subsidiaries, their affiliates and Persons acting on their behalf, including, without limitation, any transactions by any
Buyer with respect to Common Stock or the Securities, and the other matters contained herein and therein, and this Agreement, the other
Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein contain
the entire understanding of the parties solely with respect to the matters covered herein and therein; provided, however, nothing contained
in this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect on any agreements any Buyer has
entered into with, or any instruments any Buyer has received from, the Company or any of its Subsidiaries prior to the date hereof with
respect to any prior investment made by such Buyer in the Company or (ii) waive, alter, modify or amend in any respect any obligations
of the Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or any other Person, in any agreement entered into
prior to the date hereof between or among the Company and/or any of its Subsidiaries and any Buyer, or any instruments any Buyer received
from the Company and/or any of its Subsidiaries prior to the date hereof, and all such agreements and instruments shall continue in full
force and effect. Except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. For clarification purposes, the Recitals are part of this Agreement. No provision
of this Agreement may be amended other than by an instrument in writing signed by the Company and the Required Holders (as defined below),
and any amendment to any provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on
all Buyers and holders of Securities, as applicable; provided that no such amendment shall be effective to the extent that it (A) applies
to less than all of the holders of the Securities then outstanding or (B) imposes any obligation or liability on any Buyer without such
Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion); and provided further that
the provisions of Sections 4(t) and 4(u) above cannot be amended or waived without the additional prior written approval of the Collateral
Agent or its successor. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving
party, provided that the Required Holders may waive any provision of this Agreement, and any waiver of any provision of this Agreement
made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities, as applicable,
provided that no such waiver shall be effective to the extent that it (1) applies to less than all of the holders of the Securities then
outstanding (unless a party gives a waiver as to itself only) or (2) imposes any obligation or liability on any Buyer without such Buyer’s
prior written consent (which may be granted or withheld in such Buyer’s sole discretion). No consideration (other than reimbursement
of legal fees) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction Documents, all holders of
the Notes or all holders of the Warrants (as the case may be). From the date hereof and while any Notes or Warrants are outstanding,
the Company shall not be permitted to receive any consideration from a Buyer or a holder of Notes or Warrants that is not otherwise contemplated
by the Transaction Documents in order to, directly or indirectly, induce the Company or any Subsidiary (i) to treat such Buyer or holder
of Notes or Warrants in a manner that is more favorable than to other similarly situated Buyers or holders of Notes or Warrants, as applicable,
or (ii) to treat any Buyer(s) or holder(s) of Notes or Warrants in a manner that is less favorable than the Buyer or holder of Notes
or Warrants that is paying such consideration; provided, however, that the determination of whether a Buyer has been treated more or
less favorably than another Buyer shall disregard any securities of the Company purchased or sold by any Buyer. The Company has not,
directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the
Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, except as set forth on Schedule
9(e), the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other
obligation to provide any financing to the Company, any Subsidiary or otherwise. As a material inducement for each Buyer to enter into
this Agreement, the Company expressly acknowledges and agrees that (x) no due diligence or other investigation or inquiry conducted by
a Buyer, any of its advisors or any of its representatives shall affect such Buyer’s right to rely on, or shall modify or qualify
in any manner or be an exception to any of, the Company’s representations and warranties contained in this Agreement or any other
Transaction Document and (y) unless a provision of this Agreement or any other Transaction Document is expressly preceded by the phrase
“except as disclosed in the SEC Documents,” nothing contained in any of the SEC Documents shall affect such Buyer’s
right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties
contained in this Agreement or any other Transaction Document. “Required Holders” means (I) prior to the Closing Date,
each Buyer entitled to purchase Notes at the Closing and (II) on or after the Closing Date, holders of a majority of the Registrable
Securities as of such time (excluding any Registrable Securities held by the Company or any of its Subsidiaries as of such time) issued
or issuable hereunder or pursuant to the Notes and/or the Warrants; provided, that such majority must include _________.
(f)
Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent
by electronic mail (provided that such sent email is kept on file (whether electronically or otherwise) by the sending party and the
sending party does not receive an automatically generated message from the recipient’s email server that such e-mail could not
be delivered to such recipient); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery
specified, in each case, properly addressed to the party to receive the same. The mailing addresses and e-mail addresses for such communications
shall be:
If
to the Company:
Eastside
Distilling, Inc.,
755
Main Street
Monroe, CT 06468
Telephone: _______
Attention: Chief Executive Officer
E-Mail: _________
With
a copy (for informational purposes only) to:
Nason
Yeager Gerson Harris & Fumero, P.A.
3001
PGA Boulevard, Suite 035
Palm
Beach Gardens, FL 33410
Telephone:
__________
Attention:
____________
E-Mail:
___________
If
to the Transfer Agent:
Transfer
Online, Inc.
512
SE Salmon Street
Portland,
Oregon 97214
Telephone:
___________
Attention:
____________
E-Mail:
______________
If
to a Buyer, to its mailing address and e-mail address set forth on the Schedule of Buyers, with copies to such Buyer’s representatives
as set forth on the Schedule of Buyers,
with
a copy (for informational purposes only) to:
Kelley
Drye & Warren LLP
3 World Trade Center
175 Greenwich Street
New York, NY 10007
Telephone: ____________ _____________
Attention: ____________
E-mail: ____________
or
to such other mailing address and/or e-mail address and/or to the attention of such other Person as the recipient party has specified
by written notice given to each other party five (5) days prior to the effectiveness of such change, provided that Kelley Drye &
Warren LLP shall only be provided copies of notices sent to the lead Buyer. Written confirmation of receipt (A) given by the recipient
of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s e-mail containing
the time, date and recipient’s e-mail or (C) provided by an overnight courier service shall be rebuttable evidence of personal
service, receipt by e-mail or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
(g)
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors
and assigns, including any purchasers of any of the Notes and Warrants. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Required Holders, including, without limitation, by way of a Fundamental
Transaction (as defined in the Warrants) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions
set forth in the Warrants) or a Fundamental Transaction (as defined in the Notes) (unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the Notes). A Buyer may assign some or all of its rights hereunder in connection
with any transfer of any of its Securities without the consent of the Company, in which event such assignee shall be deemed to be a Buyer
hereunder with respect to such assigned rights.
(h)
No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than the
Indemnitees referred to in Section 9(k).
(i)
Survival. The representations, warranties, agreements and covenants shall survive the Closing. Each Buyer shall be responsible
only for its own representations, warranties, agreements and covenants hereunder.
(j)
Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.
(k)
Indemnification. In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the
Securities thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless each Buyer and each holder of any Securities and all of their shareholders, partners, members,
officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for
which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified
Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (i) any misrepresentation or breach
of any representation or warranty made by the Company or any Subsidiary in any of the Transaction Documents, (ii) any breach of any covenant,
agreement or obligation of the Company or any Subsidiary contained in any of the Transaction Documents or (iii) any cause of action,
suit, proceeding or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company or any Subsidiary) or which otherwise involves such Indemnitee that arises out of or results from (A)
the execution, delivery, performance or enforcement of any of the Transaction Documents, (B) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (C) any disclosure properly made by
such Buyer pursuant to Section 4(i), or (D) the status of such Buyer or holder of the Securities either as an investor in the Company
pursuant to the transactions contemplated by the Transaction Documents or as a party to this Agreement (including, without limitation,
as a party in interest or otherwise in any action or proceeding for injunctive or other equitable relief). To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable law. Except as otherwise set forth herein, the mechanics
and procedures with respect to the rights and obligations under this Section 9(k) shall be the same as those set forth in Section 6 of
the Registration Rights Agreement.
(l)
Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the
generality or applicability of a more general representation or warranty. Each and every reference to share prices, shares of Common
Stock and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for any stock splits, stock
dividends, stock combinations, recapitalizations or other similar transactions that occur with respect to the Common Stock after the
date of this Agreement. Notwithstanding anything in this Agreement to the contrary, for the avoidance of doubt, nothing contained herein
shall constitute a representation or warranty against, or a prohibition of, any actions with respect to the borrowing of, arrangement
to borrow, identification of the availability of, and/or securing of, securities of the Company in order for such Buyer (or its broker
or other financial representative) to effect short sales or similar transactions in the future.
(m)
Remedies. Each Buyer and in the event of assignment by Buyer of its rights and obligations hereunder, each holder of Securities,
shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any
rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security),
to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore,
the Company recognizes that in the event that it or any Subsidiary fails to perform, observe, or discharge any or all of its or such
Subsidiary’s (as the case may be) obligations under the Transaction Documents, any remedy at law would inadequate relief to the
Buyers. The Company therefore agrees that the Buyers shall be entitled to specific performance and/or temporary, preliminary and permanent
injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual
damages and without posting a bond or other security. The remedies provided in this Agreement and the other Transaction Documents shall
be cumulative and in addition to all other remedies available under this Agreement and the other Transaction Documents, at law or in
equity (including a decree of specific performance and/or other injunctive relief).
(n)
Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the Company or any Subsidiary
does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw, in its
sole discretion from time to time upon written notice to the Company or such Subsidiary (as the case may be), any relevant notice, demand
or election in whole or in part without prejudice to its future actions and rights.
(o)
Payment Set Aside; Currency. To the extent that the Company makes a payment or payments to any Buyer hereunder or pursuant to
any of the other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or thereunder, and such payment
or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent
or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law,
common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff
had not occurred. Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other Transaction Documents
are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement and all other Transaction
Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar
equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation
to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in
the Wall Street Journal on the relevant date of calculation.
(p)
Judgment Currency.
(i)
If for the purpose of obtaining or enforcing judgment against the Company in connection with this Agreement or any other Transaction
Document in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter
in this Section 9(p) referred to as the “Judgment Currency”) an amount due in US Dollars under this Agreement, the
conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding:
(1)
the date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or
(2)
the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of
which such conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter referred to as the “Judgment Conversion
Date”).
(ii)
If in the case of any proceeding in the court of any jurisdiction referred to in Section 9(p)(i)(2) above, there is a change in the Exchange
Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay
such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate
prevailing on the date of payment, will produce the amount of US Dollars which could have been purchased with the amount of Judgment
Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(iii)
Any amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Agreement or any other Transaction Document.
(q)
Independent Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents are
several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the
obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no
action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that
the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption
that the Buyers are in any way acting in concert or as a group or entity, and the Company shall not assert any such claim with respect
to such obligations or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the
Buyers are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or
the transactions contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities pursuant to the Transaction
Documents has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that no other Buyer has acted as agent
for such Buyer in connection with such Buyer making its investment hereunder and that no other Buyer will be acting as agent of such
Buyer in connection with monitoring such Buyer’s investment in the Securities or enforcing its rights under the Transaction Documents.
The Company and each Buyer confirms that each Buyer has independently participated with the Company and its Subsidiaries in the negotiation
of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction
Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose.
The use of a single agreement to effectuate the purchase and sale of the Securities contemplated hereby was solely in the control of
the Company, not the action or decision of any Buyer, and was done solely for the convenience of the Company and its Subsidiaries and
not because it was required or requested to do so by any Buyer. It is expressly understood and agreed that each provision contained in
this Agreement and in each other Transaction Document is between the Company, each Subsidiary and a Buyer, solely, and not between the
Company, its Subsidiaries and the Buyers collectively and not between and among the Buyers.
[signature
pages follow]
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as
of the date first written above.
| |
COMPANY: |
| |
|
| |
EASTSIDE
DISTILLING, INC., |
| |
|
|
| |
By: |
|
| |
Name: |
Geoffrey
Gwin |
| |
Title: |
Chief
Executive Officer |
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as
of the date first written above.
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as
of the date first written above.
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as
of the date first written above.
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as
of the date first written above.
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as
of the date first written above.
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as
of the date first written above.
Exhibit 10.2
THE
ISSUANCE AND SALE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
THIS NOTE MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY),
IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THIS NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW
THE TERMS OF THIS NOTE, INCLUDING SECTIONS 9 AND 15(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE LESS THAN THE AMOUNTS
SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 9 OF THIS NOTE.
THIS
NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”). PURSUANT TO TREASURY REGULATION §1.1275-3(b)(1), CHRISTOPHER
MOE, A REPRESENTATIVE OF THE COMPANY HEREOF WILL, BEGINNING TEN DAYS AFTER THE ISSUANCE DATE OF THIS NOTE, PROMPTLY MAKE AVAILABLE TO
THE HOLDER UPON REQUEST THE INFORMATION DESCRIBED IN TREASURY REGULATION §1.1275-3(b)(1)(i). MR. MOE MAY BE REACHED AT TELEPHONE
NUMBER _____.
Eastside
Distilling, Inc.
Senior
Secured Note
| Issuance
Date: November __, 2024 |
Original
Principal Amount: U.S. $_______ |
FOR
VALUE RECEIVED, Eastside Distilling, Inc., a Nevada corporation (the “Company”), hereby promises to pay to the
order of __________________ or its registered assigns (“Holder”) the amount set forth above as the Original Principal
Amount (as reduced pursuant to the terms hereof pursuant to redemption or otherwise, the “Principal”) when due, whether
upon the Maturity Date (as defined below), or upon acceleration, redemption or otherwise (in each case in accordance with the terms hereof)
and, upon the occurrence of an Event of Default (as defined below), to pay interest (“Interest”) on any outstanding
Principal at the Default Rate (as defined below) (or such applicable Special Interest (as defined below) as otherwise provided in Section
2 below), as applicable, from and after the date set forth above as the Issuance Date (the “Issuance Date”) until
the same becomes due and payable, whether upon the Maturity Date, or upon acceleration, redemption or otherwise (in each case in accordance
with the terms hereof). This Senior Secured Note (including all Senior Secured Notes issued in exchange, transfer or replacement hereof,
this “Note”) is one of an issue of Senior Secured Notes issued pursuant to the Securities Purchase Agreement, dated
as of November __, 2024 (the “Subscription Date”), by and among the Company and the investors (the “Buyers”)
referred to therein, as amended from time to time (collectively, the “Notes”, and such other Senior Secured Notes,
the “Other Notes”). Certain capitalized terms used herein are defined in Section 28.
1.
PAYMENTS OF PRINCIPAL. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding
Principal, accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section 21(c)) on such Principal and Interest.
Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal, accrued and unpaid
Interest or accrued and unpaid Late Charges on Principal and Interest, if any.
2.
INTEREST; DEFAULT RATE. Except as otherwise provided in this Section 2, no Interest shall accrue hereunder unless and until an
Event of Default (as defined below) has occurred. From and after the occurrence and during the continuance of any Event of Default, Interest
shall accrue hereunder at eighteen percent (18.0%) per annum (the “Default Rate”) and shall be computed on the basis
of a 360-day year and twelve 30-day months, shall compound each calendar month and shall be payable in arrears on the first Trading Day
of each such calendar month in which Interest accrues hereunder (each, an “Interest Date”). Accrued and unpaid Interest,
if any, shall also be payable upon any redemption in accordance with Section 9 or any required payment upon any Bankruptcy Event of Default
(as defined in Section 3(a) below). In the event that such Event of Default is subsequently cured (and no other Event of Default then
exists (including, without limitation, for the Company’s failure to pay such Interest at the Default Rate on the applicable Interest
Date, unless waived in writing by the Holder)), the adjustment referred to in the preceding sentence shall cease to be effective as of
the calendar day immediately following the date of such cure or waiver; provided that the Interest as calculated and unpaid at such increased
rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence
of such Event of Default through and including the date of such cure or waiver of such Event of Default, unless waived in writing by
the Holder. In addition to the foregoing, if this Note remains outstanding as of May __, 2025 (the “180th Day Anniversary”),
a special one-time interest payment of 30% of the Outstanding Amount shall automatically accrue hereunder, compound, and increase the
Principal of this Note hereunder accordingly, on a dollar-for-dollar basis, on such 180th Day Anniversary (the “Special
Interest”).
3.
RIGHTS UPON EVENT OF DEFAULT.
(a)
Event of Default. Each of the following events shall constitute an “Event of Default” and each of the events
in clauses (vii), (viii) and (ix) shall constitute a “Bankruptcy Event of Default”:
(i)
the suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on an Eligible Market for a period
of five (5) consecutive Business Days;
(ii)
Company’s (A) failure to cure a Delivery Failure (as defined in the Warrants) by delivery of the required number of shares of Common
Stock within five (5) Trading Days after the applicable exercise date or (B) notice, written or oral, to any holder of the Warrants,
including, without limitation, by way of public announcement or through any of its agents, at any time, of its intention not to comply,
as required, with a request for exercise of any Warrants for shares of Common Stock in accordance with the provisions of the Warrants;
(iii)
except to the extent the Company is in compliance with Section 1(g) of the Warrants, at any time following the tenth (10th)
consecutive day that the Holder’s Authorized Share Allocation (as defined in the Warrants) is less than the number of shares of
Common Stock that the Holder would be entitled to receive upon exercise in full of the Holder’s Warrants (without regard to any
limitations on exercise set forth in the Warrants and assuming the Company has extended the Stated Maturity Date in accordance herewith);
(iv)
the Company’s or any Subsidiary’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts
when and as due under this Note (including, without limitation, the Company’s or any Subsidiary’s failure to pay any redemption
payments or amounts hereunder) or any other Transaction Document (as defined in the Securities Purchase Agreement) or any other agreement,
document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby, except, in the
case of a failure to pay Interest and Late Charges when and as due, in which case only if such failure remains uncured for a period of
at least two (2) Business Days;
(v)
the Company fails to remove any restrictive legend on any certificate or any shares of Common Stock (as defined in the Securities Purchase
Agreement) issued to the Holder under the Securities Purchase Agreement as and when required by the Securities Purchase Agreement, unless
otherwise then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five (5) days;
(vi)
the occurrence of any default under, redemption of (other than voluntary prepayments of Indebtedness described in Schedule 11(g),
including arising from the sale of collateral owned by an officer of a Subsidiary) or acceleration prior to maturity of at least an aggregate
of $500,000 of Indebtedness (as defined in the Securities Purchase Agreement) of the Company and/or any of its Subsidiaries, other than
with respect to any Other Notes;
(vii)
bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted
by or against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed
within thirty (30) days of their initiation;
(viii)
the commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign bankruptcy,
insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company or any Subsidiary in an involuntary
case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal, state or foreign law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of
creditors, or the execution of a composition of debts, or the occurrence of any other similar federal, state or foreign proceeding, or
the admission by it in writing of its inability to pay its debts generally as they become due, the taking of corporate action by the
Company or any Subsidiary in furtherance of any such action or the taking of any action by any Person to commence a Uniform Commercial
Code foreclosure sale or any other similar action under federal, state or foreign law;
(ix)
the entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of a voluntary
or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar
law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or insolvent, or
approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition of or in respect of
the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order, judgment or other similar
document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any
Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance
of any such decree, order, judgment or other similar document or any such other decree, order, judgment or other similar document unstayed
and in effect for a period of thirty (30) consecutive days;
(x)
a final judgment or judgments for the payment of money aggregating in excess of $500,000 are rendered against the Company and/or any
of its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged, settled or stayed
pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment which
is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $500,000 amount set forth
above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement
shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company
or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance
of such judgment;
(xi)
the Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable grace
period, any payment with respect to any Indebtedness in excess of $500,000 due to any third party (other than, with respect to unsecured
Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper proceedings
and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or is otherwise in breach
or violation of any agreement for monies owed or owing in an amount in excess of $500,000, which breach or violation permits the other
party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer to exist any other circumstance or
event that would, with or without the passage of time or the giving of notice, result in a default or event of default under any agreement
binding the Company or any Subsidiary, which default or event of default would or is likely to have a material adverse effect on the
business, assets, operations (including results thereof), liabilities, properties, condition (including financial condition) or prospects
of the Company or any of its Subsidiaries, individually or in the aggregate;
(xii)
other than as specifically set forth in another clause of this Section 3(a), the Company or any Subsidiary breaches any representation
or warranty, in any material respect (other than representations or warranties subject to material adverse effect or materiality, which
may not be breached in any respect) or any covenant or other term or condition of any Transaction Document, except, in the case of a
breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of five (5) consecutive
Business Days;
(xiii)
a false or inaccurate certification (including a false or inaccurate deemed certification) by the Company as to whether any Event of
Default has occurred;
(xiv)
any breach or failure in any respect by the Company or any Subsidiary to comply with any provision of Section 11 of this Note;
(xv)
any Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs;
(xvi)
any Change of Control occurs;
(xvii)
any provision of any Transaction Document (including, without limitation, the Security Documents and the Guaranties) shall at any time
for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against the parties
thereto, or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by the
Company or any Subsidiary or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or
unenforceability thereof, or the Company or any Subsidiary shall deny in writing that it has any liability or obligation purported to
be created under any Transaction Document (including, without limitation, the Security Documents and the Guaranties);
(xviii)
any Security Document shall for any reason fail or cease to create a separate valid and perfected and, except to the extent permitted
by the terms hereof or thereof, first priority Lien (as defined in the Securities Purchase Agreement) on the Collateral (as defined in
the Security Documents) in favor of the Collateral Agent (as defined in the Securities Purchase Agreement) or any material provision
of any Security Document shall at any time for any reason cease to be valid and binding on or enforceable against the Company or the
validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Company or any
governmental authority having jurisdiction over the Company, seeking to establish the invalidity or unenforceability thereof;
(xix)
any material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, or any strike, lockout, labor dispute,
embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than fifteen (15) consecutive days, the cessation
or substantial curtailment of revenue producing activities at any facility of the Company or any Subsidiary, if any such event or circumstance
could have a Material Adverse Effect; or
(xx)
any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.
(b)
Notice of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note or any Other
Note, the Company shall within one (1) Business Day deliver written notice thereof via facsimile or electronic mail and overnight courier
(with next day delivery specified) (an “Event of Default Notice”) to the Holder. At any time after the earlier of
the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default (such earlier date, the
“Event of Default Right Commencement Date”) and ending (such ending date, the “Event of Default Right Expiration
Date”, and each such period, an “Event of Default Redemption Right Period”) on the twentieth (20th) Trading
Day after the later of (x) the date such Event of Default is cured and (y) the Holder’s receipt of an Event of Default Notice that
includes (I) a reasonable description of the applicable Event of Default, (II) a certification as to whether, in the opinion of the Company,
such Event of Default is capable of being cured and, if applicable, a reasonable description of any existing plans of the Company to
cure such Event of Default and (III) a certification as to the date the Event of Default occurred and, if cured on or prior to the date
of such Event of Default Notice, the applicable Event of Default Right Expiration Date, the Holder may require the Company to redeem
(regardless of whether such Event of Default has been cured on or prior to the Event of Default Right Expiration Date) all or any portion
of this Note by delivering written notice thereof (the “Event of Default Redemption Notice”) to the Company, which
Event of Default Redemption Notice shall indicate the portion of this Note the Holder is electing to redeem. Each portion of this Note
subject to redemption by the Company pursuant to this Section 3(b) shall be redeemed by the Company at a price in cash equal to the product
of (A) the Outstanding Amount to be redeemed multiplied by (B) the Redemption Premium (the “Event of Default Redemption Price”).
Redemptions required by this Section 3(b) shall be made in accordance with the provisions of Section 9. To the extent redemptions required
by this Section 3(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the Company, such
redemptions shall be deemed to be voluntary prepayments. In the event of the Company’s redemption of any portion of this Note under
this Section 3(b), the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to
predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder.
Accordingly, any redemption premium due under this Section 3(b) is intended by the parties to be, and shall be deemed, a reasonable estimate
of the Holder’s actual loss of its investment opportunity and not as a penalty. Any redemption upon an Event of Default shall not
constitute an election of remedies by the Holder, and all other rights and remedies of the Holder shall be preserved.
(c)
Mandatory Redemption upon Bankruptcy Event of Default. Notwithstanding anything to the contrary herein, upon any Bankruptcy Event
of Default, whether occurring prior to or following the Maturity Date, the Company shall immediately pay to the Holder an amount in cash
representing (i) all outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges on such Principal and Interest,
multiplied by (ii) the Redemption Premium, in addition to any and all other amounts due hereunder, without the requirement for any notice
or demand or other action by the Holder or any other person or entity, provided that the Holder may, in its sole discretion, waive such
right to receive payment upon a Bankruptcy Event of Default, in whole or in part, and any such waiver shall not affect any other rights
of the Holder hereunder, including any other rights in respect of such Bankruptcy Event of Default, and any right to payment of the Event
of Default Redemption Price or any other Redemption Price, as applicable.
4.
RIGHTS UPON FUNDAMENTAL TRANSACTION.
(a)
Assumption. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing
all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section
4(a) pursuant to written agreements in form and substance satisfactory to the Required Holders (as defined in the Securities Purchase
Agreement) and approved by the Required Holders prior to such Fundamental Transaction, including agreements to deliver to each holder
of Notes in exchange for such Notes a security of the Successor Entity evidenced by a written instrument substantially similar in form
and substance to the Notes, including, without limitation, having a principal amount and interest rate equal to the principal amounts
then outstanding and the interest rates of the Notes held by such holder, having similar ranking and security to the Notes, and satisfactory
to the Required Holders. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted
for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents
referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company
and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if
such Successor Entity had been named as the Company herein. The provisions of this Section 4 shall apply similarly and equally to successive
Fundamental Transactions.
5.
REDEMPTIONS AT THE COMPANY’S ELECTION.
(a)
Company Optional Redemption. At any time, the Company shall have the right to redeem all, but not less than all, of the Outstanding
Amount then remaining under this Note (the “Company Optional Redemption Amount”) on the Company Optional Redemption
Date (each as defined below) (a “Company Optional Redemption”). The portion of this Note subject to redemption pursuant
to this Section 5(a) shall be redeemed by the Company in cash at a price (the “Company Optional Redemption Price”)
equal to the Outstanding Amount being redeemed as of the Company Optional Redemption Date. The Company may exercise its right to require
redemption under this Section 5(a) by delivering a written notice thereof by facsimile or electronic mail and overnight courier to all,
but not less than all, of the holders of Notes (the “Company Optional Redemption Notice” and the date all of the holders
of Notes received such notice is referred to as the “Company Optional Redemption Notice Date”). The Company may deliver
only one Company Optional Redemption Notice hereunder and such Company Optional Redemption Notice shall be irrevocable. The Company Optional
Redemption Notice shall (x) state the date on which the Company Optional Redemption shall occur (the “Company Optional Redemption
Date”) which date shall not be less than five (5) Business Days nor more than twenty (20) Business Days following the Company
Optional Redemption Notice Date, any (y) state the aggregate Outstanding Amount of the Notes which is being redeemed in such Company
Optional Redemption from the Holder and all of the other holders of the Notes pursuant to this Section 5(a) (and analogous provisions
under the Other Notes) on the Company Optional Redemption Date. Redemptions made pursuant to this Section 5(a) shall be made in accordance
with Section 9. In the event of the Company’s redemption of any portion of this Note under this Section 5, the Holder’s damages
would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty
of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this
Section 5 is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment
opportunity and not as a penalty. For the avoidance of doubt, the Company shall have no right to effect a Company Optional Redemption
if any Event of Default has occurred and continuing.
(b)
Pro Rata Redemption Requirement. If the Company elects to cause a Company Optional Redemption of this Note pursuant to Section
5(a), then it must simultaneously take the same action with respect to all of the Other Notes.
6.
SUBSEQUENT PLACEMENT OPTIONAL REDEMPTION
(a)
General. At any time from and after the earlier of (x) the date the Holder becomes aware of the occurrence of a Subsequent Placement
(the “Holder Subsequent Placement Notice Date”) and (y) the time of consummation of a Subsequent Placement (in each
case, other than with respect to Excluded Securities (but, for the avoidance of doubt, including any equity line of credit or at-the-market
offering)) (each, an “Eligible Subsequent Placement”), the Holder shall have the right, in its sole discretion, to
require that the Company redeem (each an “Subsequent Placement Optional Redemption”) all, or any portion, of the Outstanding
Amount under this Note not in excess of (together with any Subsequent Placement Optional Redemption Amount (as defined in the applicable
other Note of the Holder) of any other Notes of the Holder) the Holder’s Holder Pro Rata Amount of 35% of the gross proceeds of
such Eligible Subsequent Placement (the “Eligible Subsequent Placement Optional Redemption Amount”) by delivering
written notice thereof (an “Subsequent Placement Optional Redemption Notice”) to the Company. Notwithstanding the
foregoing, upon the written request of the Holder, the Company shall permit the Holder to participate in such Eligible Subsequent Placement
(other than an equity line of credit or at-the-market offering) and the Company shall apply all, or any part, as set forth in such written
request, of any amounts that would otherwise be payable to the Holder in such Subsequent Placement Optional Redemption, on a dollar-for-dollar
basis, against the purchase price of the securities to be purchased by the Holder in such Eligible Subsequent Placement (which, for the
avoidance of doubt, shall not be less than securities with a purchase price equal to the portion of the Subsequent Placement Optional
Redemption Amount the Holder elects to apply against thereto).
(b)
Mechanics. Each Subsequent Placement Optional Redemption Notice shall indicate that all, or such applicable portion, as set forth
in the applicable Subsequent Placement Optional Redemption Notice, of the Eligible Subsequent Placement Optional Redemption Amount the
Holder is electing to have redeemed (the “Subsequent Placement Optional Redemption Amount”) and the date of such Subsequent
Placement Optional Redemption (the “Subsequent Placement Optional Redemption Date”), which shall be the later of (x)
the fifth (5th) Business Day after the date of the applicable Subsequent Placement Optional Redemption Notice and (y) the
date of the consummation of such Eligible Subsequent Placement. The portion of the Outstanding Amount of this Note subject to redemption
pursuant to this Section 6 shall be redeemed by the Company in cash at a price equal to the Subsequent Placement Optional Redemption
Amount being redeemed as of the Subsequent Placement Optional Redemption Date (the “Subsequent Placement Optional Redemption
Price”). Redemptions required by this Section 6 shall be made in accordance with the provisions of Section 9.
7.
ASSET SALE OPTIONAL REDEMPTION
(a)
General. At any time from and after the earlier of (x) the date the Holder becomes aware of the occurrence of an Asset Sale (including
any insurance and condemnation proceeds thereof) (the “Holder Asset Sale Notice Date”) and (y) the time of consummation
of an Asset Sale (other than sales of inventory and product in the ordinary course of business) (each, an “Eligible Asset Sale”),
the Holder shall have the right, in its sole discretion, to require that the Company redeem (each an “Asset Sale Optional Redemption”)
all, or any portion, of the Outstanding Amount under this Note not in excess of (together with any Asset Sale Optional Redemption Amount
(as defined in the applicable other Note of the Holder) of any other Notes of the Holder) the Holder’s Holder Pro Rata Amount of
35% of the gross proceeds (including any insurance and condemnation proceeds with respect thereto) of such Eligible Asset Sale (the “Eligible
Asset Sale Optional Redemption Amount”) by delivering written notice thereof (an “Asset Sale Optional Redemption Notice”)
to the Company.
(b)
Mechanics. Each Asset Sale Optional Redemption Notice shall indicate that all, or such applicable portion, as set forth in the
applicable Asset Sale Optional Redemption Notice, of the Eligible Asset Sale Optional Redemption Amount the Holder is electing to have
redeemed (the “Asset Sale Optional Redemption Amount”) and the date of such Asset Sale Optional Redemption (the “Asset
Sale Optional Redemption Date”), which shall be the later of (x) the fifth (5th) Business Day after the date of
the applicable Asset Sale Optional Redemption Notice and (y) the date of the consummation of such Eligible Asset Sale. The portion of
the Outstanding Amount of this Note subject to redemption pursuant to this Section 7 shall be redeemed by the Company in cash at a price
equal to the Asset Sale Optional Redemption Amount being redeemed as of the Asset Sale Optional Redemption Date (the “Asset
Sale Optional Redemption Price”). Redemptions required by this Section 7 shall be made in accordance with the provisions of
Section 9.
8.
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation
(as defined in the Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase Agreement) or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out
all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note.
9.
REDEMPTIONS.
(a)
Mechanics. The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within five (5) Business
Days after the Company’s receipt of the Holder’s Event of Default Redemption Notice. The Company shall deliver the applicable
Company Optional Redemption Price to the Holder in cash on the applicable Company Optional Redemption Date. The Company shall deliver
the applicable Asset Sale Optional Redemption Price to the Holder in cash on the applicable Asset Sale Optional Redemption Date. The
Company shall deliver the applicable Subsequent Placement Optional Redemption Price to the Holder in cash on the applicable Subsequent
Placement Optional Redemption Date. Notwithstanding anything herein to the contrary, in connection with any redemption hereunder at a
time the Holder is entitled to receive a cash payment under any of the other Transaction Documents, at the option of the Holder delivered
in writing to the Company, the applicable Redemption Price hereunder shall be increased by the amount of such cash payment owed to the
Holder under such other Transaction Document and, upon payment in full in accordance herewith, shall satisfy the Company’s payment
obligation under such other Transaction Document. In the event of a redemption of less than all of the Outstanding Amount of this Note,
the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section 15(d)) representing
the outstanding Principal which has not been redeemed. In the event that the Company does not pay the applicable Redemption Price to
the Holder within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the
Holder shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion of this
Note representing the Outstanding Amount that was submitted for redemption and for which the applicable Redemption Price (together with
any Late Charges thereon) has not been paid. Upon the Company’s receipt of such notice, (x) the applicable Redemption Notice shall
be null and void with respect to such Outstanding Amount, and (y) the Company shall immediately return this Note, or issue a new Note
(in accordance with Section 15(d)), to the Holder, and in each case the principal amount of this Note or such new Note (as the case may
be) shall be increased by an amount equal to the difference between (1) the applicable Redemption Price (as the case may be, and as adjusted
pursuant to this Section 9, if applicable) minus (2) the Principal portion of the Outstanding Amount submitted for redemption. The Holder’s
delivery of a notice voiding a Redemption Notice and exercise of its rights following such notice shall not affect the Company’s
obligations to make any payments of Late Charges which have accrued prior to the date of such notice with respect to the Outstanding
Amount subject to such notice.
(b)
Redemption by Other Holders. Upon the Company’s receipt of notice from any of the holders of the Other Notes for redemption
or repayment as a result of an event or occurrence substantially similar to the events or occurrences described in Section 3(b) (each,
an “Other Redemption Notice”), the Company shall immediately, but no later than one (1) Business Day of its receipt
thereof, forward to the Holder by facsimile or electronic mail a copy of such notice. If the Company receives a Redemption Notice and
one or more Other Redemption Notices, during the seven (7) Business Day period beginning on and including the date which is two (2) Business
Days prior to the Company’s receipt of the Holder’s applicable Redemption Notice and ending on and including the date which
is two (2) Business Days after the Company’s receipt of the Holder’s applicable Redemption Notice and the Company is unable
to redeem all principal, interest and other amounts designated in such Redemption Notice and such Other Redemption Notices received during
such seven (7) Business Day period, then the Company shall redeem a pro rata amount from each holder of the Notes (including the Holder)
based on the principal amount of the Notes submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices
received by the Company during such seven (7) Business Day period.
10.
VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law and as expressly provided
in this Note.
11.
COVENANTS. Until all of the Notes have been redeemed or otherwise satisfied in accordance with their terms:
(a)
Rank. All payments due under this Note (a) shall rank pari passu with all Other Notes and (b) shall be senior to all other
Indebtedness of the Company and its Subsidiaries (other than Permitted Indebtedness secured by Permitted Liens).
(b)
Incurrence of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
incur or guarantee, assume or suffer to exist any Indebtedness (other than (i) the Indebtedness evidenced by this Note and the Other
Notes and (ii) other Permitted Indebtedness).
(c)
Existence of Liens. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, “Liens”) other
than Permitted Liens.
(d)
Restricted Payments. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part,
whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness (other
than the Notes and Permitted Senior Indebtedness) whether by way of payment in respect of principal of (or premium, if any) or interest
on, such Indebtedness if at the time such payment is due or is otherwise made or, after giving effect to such payment, (i) an event constituting
an Event of Default has occurred and is continuing or (ii) an event that with the passage of time and without being cured would constitute
an Event of Default has occurred and is continuing.
(e)
Restriction on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries to not,
directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock (other than
pursuant to the terms of the certificate of designations for the Series B Preferred Stock as in effect as of the Subscription Date (the
“Series B Certificate of Designations”)).
(f)
Restriction on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any assets or rights
of the Company or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions (each,
an “Asset Sale”), other than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions
of such assets or rights by the Company and its Subsidiaries in the ordinary course of business consistent with its past practice, (ii)
sales of inventory and product in the ordinary course of business, and (iii) any sales or transfers of data by Beeline Financial Holdings,
Inc. or any subsidiary thereof the proceeds of which are used to repay outstanding Indebtedness secured by such data.
(g)
Maturity of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
permit any Indebtedness of the Company or any of its Subsidiaries to mature or accelerate prior to the Maturity Date other than as set
forth on Schedule 11(g) attached hereto.
(h)
Change in Nature of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or
indirectly, engage in any material line of business substantially different from those lines of business conducted by or publicly contemplated
to be conducted by the Company and each of its Subsidiaries on the Subscription Date or any business substantially related or incidental
thereto. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their
corporate structure or purpose in any material respect.
(i)
Preservation of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve,
its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and
in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its
business makes such qualification necessary.
(j)
Maintenance of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve,
all of its properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary
wear and tear excepted, and comply, and cause each of its Subsidiaries to comply in all material respects, at all times with the provisions
of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or
thereunder.
(k)
Maintenance of Intellectual Property. The Company will, and will cause each of its Subsidiaries to, take all action necessary
or advisable to maintain all of the Intellectual Property Rights (as defined in the Securities Purchase Agreement) of the Company and/or
any of its Subsidiaries that are necessary or material to the conduct of its business in full force and effect.
(l)
Maintenance of Insurance. The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible
and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business
interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts
and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally
in accordance with sound business practice by companies in similar businesses similarly situated.
(m)
Transactions with Affiliates. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend
or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer
or exchange of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except transactions in the
ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation
of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable
arm’s length transaction with a Person that is not an Affiliate thereof.
(n)
Restricted Issuances. The Company shall not, directly or indirectly, without the prior written consent of the holders of a majority
in aggregate principal amount of the Notes then outstanding, (i) issue any Notes (other than as contemplated by the Securities Purchase
Agreement and the Notes) or (ii) issue any other securities that would cause a breach or default under the Notes.
(o)
Change in Collateral; Collateral Records. The Company shall (i) give the Collateral Agent not less than thirty (30) days’
prior written notice of any change in the location of any Collateral (as defined in the Security Documents), other than to locations
set forth in the Perfection Certificate (as defined in the Securities Purchase Agreement) hereto and with respect to which the Collateral
Agent has filed financing statements and otherwise fully perfected its Liens thereon, (ii) advise the Collateral Agent promptly, in sufficient
detail, of any material adverse change relating to the type, quantity or quality of the Collateral or the Lien granted thereon and (iii)
execute and deliver, and cause each of its Subsidiaries to execute and deliver, to the Collateral Agent for the benefit of the Holder
and holders of the Other Notes from time to time, solely for the Collateral Agent’s convenience in maintaining a record of Collateral,
such written statements and schedules as the Collateral Agent or any Holder may reasonably require, designating, identifying or describing
the Collateral.
(p)
Independent Investigation. At the request of the Holder either (x) at any time when an Event of Default has occurred and is continuing,
(y) upon the occurrence of an event that with the passage of time or giving of notice would constitute an Event of Default or (z) at
any time the Holder reasonably believes an Event of Default may have occurred or be continuing, the Company shall hire an independent,
reputable investment bank selected by the Company and approved by the Holder to investigate as to whether any breach of this Note has
occurred (the “Independent Investigator”). If the Independent Investigator determines that such breach of this Note
has occurred, the Independent Investigator shall notify the Company of such breach and the Company shall deliver written notice to each
holder of a Note of such breach. In connection with such investigation, the Independent Investigator may, during normal business hours,
inspect all contracts, books, records, personnel, offices and other facilities and properties of the Company and its Subsidiaries and,
to the extent available to the Company after the Company uses reasonable efforts to obtain them, the records of its legal advisors and
accountants (including the accountants’ work papers) and any books of account, records, reports and other papers not contractually
required of the Company to be confidential or secret, or subject to attorney-client or other evidentiary privilege, and the Independent
Investigator may make such copies and inspections thereof as the Independent Investigator may reasonably request. The Company shall furnish
the Independent Investigator with such financial and operating data and other information with respect to the business and properties
of the Company as the Independent Investigator may reasonably request. The Company shall permit the Independent Investigator to discuss
the affairs, finances and accounts of the Company with, and to make proposals and furnish advice with respect thereto to, the Company’s
officers, directors, key employees and independent public accountants or any of them (and by this provision the Company authorizes said
accountants to discuss with such Independent Investigator the finances and affairs of the Company and any Subsidiaries), all at such
reasonable times, upon reasonable notice, and as often as may be reasonably requested.
12.
SECURITY. This Note and the Other Notes are secured to the extent and in the manner set forth in the Transaction Documents (including,
without limitation, the Security Agreement, the other Security Documents and the Guaranties).
13.
AMENDING THE TERMS OF THIS NOTE. The prior written consent of the Required Holders shall be required for any amendment, modification
or waiver to this Note. Any amendment, modification or waiver so approved shall be binding upon all existing and future holders of this
Note and any Other Notes; provided, however, that no such change, waiver or, as applied to any of the Notes held by any particular holder
of Notes, shall, without the written consent of that particular holder, (i) reduce the amount of Principal or reduce the amount of accrued
and unpaid Interest of the Notes, (ii) disproportionally and adversely affect any rights under the Notes of any holder of Notes; or (iii)
modify any of the provisions of, or impair the right of any holder of Notes under, this Section 13.
14.
TRANSFER. This Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject only
to the provisions of Section 2(g) of the Securities Purchase Agreement.
15.
REISSUANCE OF THIS NOTE.
(a)
Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Note (in accordance with Section 15(d)), registered as the Holder may request, representing
the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a
new Note (in accordance with Section 15(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and
any assignee, by acceptance of this Note, acknowledge and agree that, following redemption of any portion of this Note, the outstanding
Principal represented by this Note may be less than the Principal stated on the face of this Note.
(b)
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice
as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in
customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute
and deliver to the Holder a new Note (in accordance with Section 15(d)) representing the outstanding Principal.
(c)
Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Note or Notes (in accordance with Section 15(d) and in principal amounts of at least $1,000) representing
in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal
as is designated by the Holder at the time of such surrender.
(d)
Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note
(i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding
(or in the case of a new Note being issued pursuant to Section 15(a) or Section 15(c), the Principal designated by the Holder which,
when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal
remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated
on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as
this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal and Interest of this Note, from the
Issuance Date.
16.
REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including
a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual
and consequential damages for any failure by the Company to comply with the terms of this Note. No failure on the part of the Holder
to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise by the Holder of any right, power or remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. In addition, the exercise of any right or remedy of the Holder at law or equity or under this Note or any
of the documents shall not be deemed to be an election of Holder’s rights or remedies under such documents or at law or equity.
The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided
herein. Amounts set forth or provided for herein with respect to payments, redemptions and the like (and the computation thereof) shall
be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of
the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable
harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event
of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to specific performance
and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such
case without the necessity of proving actual damages and without posting a bond or other security. The Company shall provide all information
and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the
terms and conditions of this Note.
17.
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement
or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note
or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings
affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the
Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding,
including, without limitation, attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts
due under this Note shall be affected, or limited, by the fact that the purchase price paid for this Note was less than the original
Principal amount hereof.
18.
CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the initial Holder and shall not be
construed against any such Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form
part of, or affect the interpretation of, this Note. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed
to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,”
“include” and words of like import shall be construed broadly as if followed by the words “without limitation.”
The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Note instead
of just the provision in which they are found. Unless expressly indicated otherwise, all section references are to sections of this Note.
Terms used in this Note and not otherwise defined herein, but defined in the other Transaction Documents, shall have the meanings ascribed
to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.
19.
FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party.
20.
DISPUTE RESOLUTION.
(a)
Submission to Dispute Resolution.
(i)
In the case of a dispute relating to a fair market value or the arithmetic calculation of the applicable Redemption Price (as the case
may be) (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company or the Holder (as
the case may be) shall submit the dispute to the other party via facsimile or electronic mail (A) if by the Company, within two (2) Business
Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder at any time after the Holder learned
of the circumstances giving rise to such dispute. If the Holder and the Company are unable to promptly resolve such dispute relating
to such fair market value, or the arithmetic calculation of such applicable Redemption Price (as the case may be), at any time after
the second (2nd) Business Day following such initial notice by the Company or the Holder (as the case may be) of such dispute
to the Company or the Holder (as the case may be), then the Holder may, at its sole option, select an independent, reputable investment
bank to resolve such dispute.
(ii)
The Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in accordance
with the first sentence of this Section 20 and (B) written documentation supporting its position with respect to such dispute, in each
case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date on which the
Holder selected such investment bank (the “Dispute Submission Deadline”) (the documents referred to in the immediately
preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being
understood and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute
Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and
hereby waives its right to) deliver or submit any written documentation or other support to such investment bank with respect to such
dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to
such investment bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder
or otherwise requested by such investment bank, neither the Company nor the Holder shall be entitled to deliver or submit any written
documentation or other support to such investment bank in connection with such dispute (other than the Required Dispute Documentation).
(iii)
The Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and the
Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees and expenses
of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute shall be final
and binding upon all parties absent manifest error.
(b)
Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 20 constitutes an agreement to arbitrate between
the Company and the Holder (and constitutes an arbitration agreement) under the Delaware Rapid Arbitration Act, as amended, (ii) the
terms of this Note and each other applicable Transaction Document shall serve as the basis for the selected investment bank’s resolution
of the applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations
and the like that such investment bank determines are required to be made by such investment bank in connection with its resolution of
such dispute and in resolving such dispute such investment bank shall apply such findings, determinations and the like to the terms of
this Note and any other applicable Transaction Documents, (iii) the Holder (and only the Holder), in its sole discretion, shall have
the right to submit any dispute described in this Section 20 to any state or federal court sitting in Wilmington, Delaware in lieu of
utilizing the procedures set forth in this Section 20 and (iv) nothing in this Section 20 shall limit the Holder from obtaining any injunctive
relief or other equitable remedies (including, without limitation, with respect to any matters described in this Section 20).
21.
NOTICES; CURRENCY; PAYMENTS.
(a)
Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given
in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice
of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore.
(b)
Currency. All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all
amounts owing under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted
into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate”
means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange rate as
published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated
with reference to, or over, a period of time, the date of calculation shall be the final date of such period of time).
(c)
Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly
set forth herein, such payment shall be made in lawful money of the United States of America by a certified check drawn on the account
of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing
(which address, in the case of each of the Buyers, shall initially be as set forth on the Schedule of Buyers attached to the Securities
Purchase Agreement), provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds
by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions. Whenever
any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due
on the next succeeding day which is a Business Day. Any amount of Principal or other amounts due under the Transaction Documents which
is not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount
at the rate of eighteen percent (18%) per annum from the date such amount was due until the same is paid in full (“Late Charge”).
22.
CANCELLATION. After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have been paid
in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
23.
WAIVER OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and
all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities
Purchase Agreement.
24.
GOVERNING LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal laws of the State of Delaware, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of Delaware. Except as otherwise required by Section 20 above,
the Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Wilmington, Delaware
for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of
such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Nothing contained herein (i) shall be deemed or operate to preclude the Holder from bringing suit or taking other legal
action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral
or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder or (ii) shall limit,
or shall be deemed or construed to limit, any provision of Section 20. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS
NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
25.
JUDGMENT CURRENCY.
(a)
If for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes necessary to convert
into any other currency (such other currency being hereinafter in this Section 25 referred to as the “Judgment Currency”)
an amount due in U.S. dollars under this Note, the conversion shall be made at the Exchange Rate prevailing on the Business Day immediately
preceding:
(i)
the date actual payment of the amount due, in the case of any proceeding in the courts of Delaware or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or
(ii)
the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of
which such conversion is made pursuant to this Section 25(a)(ii) being hereinafter referred to as the “Judgment Conversion Date”).
(b)
If in the case of any proceeding in the court of any jurisdiction referred to in Section 25(a)(ii) above, there is a change in the Exchange
Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay
such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate
prevailing on the date of payment, will produce the amount of US dollars which could have been purchased with the amount of Judgment
Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(c)
Any amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Note.
26.
SEVERABILITY. If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court
of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply
to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material change,
the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations
to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible
to that of the prohibited, invalid or unenforceable provision(s).
27.
MAXIMUM PAYMENTS. Without limiting Section 9(d) of the Securities Purchase Agreement, nothing contained herein shall be deemed
to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the
event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments
in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.
28.
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a)
“1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b)
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled
by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a
Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of
directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
(c)
“Approved Stock Plan” means any employee benefit plan, equity incentive plan or stock option plan which has been approved
by the board of directors of the Company prior to or subsequent to the Settlement Date pursuant to which shares of Common Stock, standard
options to purchase Common Stock, restricted stock and restricted stock units may be issued to any employee, officer or director for
services provided to the Company in their capacity as such.
(d)
“Bloomberg” means Bloomberg, L.P.
(e)
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New
York are authorized or required by law to remain closed; provided, however, for clarification,
commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”,
“non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the
direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial
banks in The City of New York generally are open for use by customers on such day.
(f)
“Change of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct
or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification
of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization
or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and,
directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities with the
authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity
or entities) after such reorganization, recapitalization or reclassification, (iii) pursuant to a migratory merger effected solely for
the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries or (iv) an acquisition, merger, sale
or similar transaction (or series of acquisitions, mergers or similar transactions, as applicable) (each, an “Excluded Acquisition”)
in which holders of the Company’s voting power immediately prior to such Excluded Acquisition continue after such Excluded Acquisition
to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the majority of the voting
power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their
equivalent if other than a corporation) of such entity or entities) after such applicable Excluded Acquisition.
(g)
“Closing Date” shall have the meaning set forth in the Securities Purchase Agreement, which date is the date the Company
initially issued Notes pursuant to the terms of the Securities Purchase Agreement.
(h)
“Common Stock” means (i) the Company’s shares of common stock, $0.0001 par value per share, and (ii) any capital
stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(i)
“Convertible Securities” means any stock or other security (other than Options) that is at any time and under any
circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof
to acquire, any shares of Common Stock.
(a)
“Eligible Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq
Global Market, the Nasdaq Capital Market.
(j)
“Excluded Securities” means (i) shares of Common Stock, standard options to purchase Common Stock, restricted stock
and restricted stock units issued to directors, officers or employees of the Company for services rendered to the Company in their capacity
as such pursuant to an Approved Stock Plan (as defined above), provided that (A) all such issuances (taking into account the shares of
Common Stock issuable upon exercise of such options) after the Subscription Date pursuant to this clause (i) do not, in the aggregate,
exceed more than 10% of the Common Stock issued and outstanding immediately prior to the Subscription Date and (B) the exercise price
of any such options is not lowered, none of such options are amended to increase the number of shares issuable thereunder and none of
the terms or conditions of any such options are otherwise materially changed in any manner that adversely affects any of the Buyers;
or (ii) shares of Common Stock issued upon the conversion or exercise of Convertible Securities or Options (other than standard options
to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) issued prior to the Subscription
Date, provided that the conversion price of any such Convertible Securities (other than standard options to purchase Common Stock issued
pursuant to an Approved Stock Plan that are covered by clause (i) above) is not lowered, none of such Convertible Securities or Options
(other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above)
are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities
or Options (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause
(i) above) are otherwise materially changed in any manner that adversely affects any of the Buyers, and (iii) in connection with any
bona fide strategic or commercial alliances, acquisitions, mergers, licensing arrangements, strategic transactions and strategic partnerships
(including, without limitation, joint ventures, marketing or distribution arrangements, collaboration agreements or intellectual property
license agreements) approved by a majority of the disinterested directors of the Company, provided that such securities are issued as
“restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any
registration statement in connection therewith, provided, further, that (w) the primary purpose of such issuance is not to raise capital,
and (x) the purchaser or acquirer or recipient of the securities in such issuance solely consists of either (I) the actual participants
in such strategic or commercial alliance, strategic or commercial licensing arrangement or strategic or commercial partnership, (II)
the actual owners of such assets or securities acquired in such acquisition or merger or (III) the shareholders, partners, employees,
consultants, officers, directors or members of the foregoing Persons, in each case, which is, itself or through its subsidiaries, an
operating company or an owner of an asset, in a business synergistic with the business of the Company and shall provide to the Company
additional benefits in addition to the investment of funds, and (y) the number or amount of securities issued to such Persons by the
Company shall not be disproportionate to each such Person’s actual participation in (or fair market value of the contribution to)
such strategic or commercial alliance or strategic or commercial partnership or ownership of such assets or securities to be acquired
by the Company, as applicable.
(k)
“Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the
surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all
of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation
S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject
to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that
is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of
Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject
Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock
such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or
exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding
shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities,
individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the
outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or
Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding;
or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in
Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify
its Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one
or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment,
conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination,
reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise
in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common
Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such
Subject Entities as of the date of this Note calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding,
or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity
securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring
other stockholders of the Company to surrender their shares of Common Stock without approval of the stockholders of the Company or (C)
directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of
or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this
definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the
terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective
or inconsistent with the intended treatment of such instrument or transaction.
(l)
“GAAP” means United States generally accepted accounting principles, consistently applied.
(m)
“Group” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5
thereunder.
(n)
“Holder Pro Rata Amount” means a fraction (i) the numerator of which is the original Principal amount of this Note
on the Closing Date and (ii) the denominator of which is the aggregate original principal amount of all Notes issued to the initial purchasers
pursuant to the Securities Purchase Agreement on the Closing Date.
(o)
“Maturity Date” shall mean March __, 2025 (the “Stated Maturity Date”); provided, however, the
Maturity Date may be extended at the option of the Holder (i) in the event that, and for so long as, an Event of Default shall have occurred
and be continuing or any event shall have occurred and be continuing that with the passage of time and the failure to cure would result
in an Event of Default or (ii) through the date that is twenty (20) Business Days after the consummation of a Fundamental Transaction
in the event that a Fundamental Transaction is publicly announced or an Event of Default Redemption Notice is delivered prior to the
Maturity Date.
(p)
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities.
(q)
“Outstanding Amount” means the sum of (A) the portion of the Principal to be redeemed or otherwise with respect to
which this determination is being made, (B) accrued and unpaid Interest with respect to such Principal and (C) accrued and unpaid Late
Charges with respect to such Principal and Interest.
(r)
“Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose
common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent
Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(s)
“Permitted Indebtedness” means (i) Indebtedness evidenced by this Note and the Other Notes, (ii) Indebtedness set
forth on Schedule 3(s) to the Securities Purchase Agreement, as in effect as of the Subscription Date, (iii) Permitted Subordinated
Indebtedness, (iv) Indebtedness secured by Permitted Liens or unsecured but as described in clauses (iv) and (v) of the definition of
Permitted Liens and (v) Permitted Senior Indebtedness.
(t)
“Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate
proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary
course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation
of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business
with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings, (iv)
Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to secure the purchase price of such equipment
or Indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment, or (B) existing on such equipment
at the time of its acquisition, provided that the Lien is confined solely to the property so acquired and improvements thereon, and the
proceeds of such equipment, in either case, with respect to Indebtedness in an aggregate amount not to exceed $500,000, (v) Liens incurred
in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type described in clause (iv) above,
provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal
amount of the Indebtedness being extended, renewed or refinanced does not increase, (vi) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payments of custom duties in connection with the importation of goods, and (vii) Liens arising from
judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 3(a)(x).
(u)
“Permitted Subordinated Indebtedness” means unsecured Indebtedness (other than Convertible Securities) incurred by
the Company or any Subsidiary that is made expressly subordinate in right of payment to the Indebtedness evidenced by this Note, as reflected
in a written agreement reasonably acceptable to the Holder, which does not include any equity or equity-linked features or the issuance
or transfer of any securities (including, with limitation, any Options or the right to convert, exchange or otherwise satisfy the payment
of such Indebtedness with any equity security of the Company or any of its Subsidiaries) and which Indebtedness does not provide at any
time for (1) the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal or premium, if any,
thereon until at least ninety-one (91) days after the Maturity Date and (2) total interest and fees at a rate in excess of 12% per annum.
(v)
“Permitted Senior Indebtedness” means (i) the secured Indebtedness set forth on Schedule 3(s) the Securities
Purchase Agreement (other than Permitted Warehouse Secured Indebtedness), as in effect as of the Subscription Date, provided,
however, that the aggregate outstanding principal amount of such Indebtedness permitted hereunder does not at any time exceed
$1 million and (ii) Permitted Warehouse Secured Indebtedness.
(w)
“Permitted Warehouse Secured Indebtedness” means a warehouse line of credit for Beeline Financial Holdings, Inc. and/or
one or more its Subsidiaries, provided, however, that the aggregate outstanding principal amount of such Indebtedness permitted
hereunder does not at any time exceed $15 million.
(x)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization, any other entity or a government or any department or agency thereof.
(y)
“Principal Market” means the Nasdaq Capital Market.
(z)
“Redemption Notices” means, collectively, the Event of Default Redemption Notices, the Asset Sale Optional Redemption
Notices, the Subsequent Placement Optional Redemption Notices and the Company Optional Redemption Notices and each of the foregoing,
individually, a “Redemption Notice.”
(aa)
“Redemption Premium” means 125%.
(bb)
“Redemption Prices” means, collectively, Event of Default Redemption Prices, the Asset Sale Optional Redemption Prices,
the Subsequent Placement Optional Redemption Prices and the Company Optional Redemption Prices, and each of the foregoing, individually,
a “Redemption Price.”
(cc)
“SEC” means the United States Securities and Exchange Commission or the successor thereto.
(dd)
“Securities Purchase Agreement” means that certain securities purchase agreement, dated as of the Subscription Date,
by and among the Company and the initial holders of the Notes and Warrants pursuant to which the Company issued the Notes and the Warrants,
as may be amended from time to time.
(ee)
“Security Agreement” shall have the meaning as set forth in the Securities Purchase Agreement.
(ff)
“Subscription Date” means November __, 2024.
(gg)
“Subsidiaries” shall have the meaning as set forth in the Securities Purchase Agreement.
(hh)
“Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(ii)
“Subsequent Placement” means any direct or indirect issuance, offer, sale, grant of any option or right to purchase,
or otherwise dispose of (or announce any issuance, offer, sale, grant of any option or right to purchase or other disposition of) by
the Company and/or any of its Subsidiaries of any equity security and/or any equity-linked and/or related security (including, without
limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the 1933 Act), any Convertible
Securities, any Options, any debt, any preferred stock and/or any purchase rights).
(jj)
“Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from
or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental
Transaction shall have been entered into.
(kk)
“VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal
Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange
or securities market on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00
p.m., New York time, as reported by Bloomberg through its “VAP” function (set to 09:30 start time and 16:00 end time) or,
if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic
bulletin board for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as
reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the
average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in
The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the VWAP cannot be calculated
for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved in accordance with the procedures in Section 20. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period.
(ll)
“Warrants” has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all warrants
issued in exchange therefor or replacement thereof.
29.
DISCLOSURE. Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice in accordance
with the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute
material, non-public information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 am, New York
city time on the Business Day immediately following such notice delivery date, publicly disclose such material, non-public information
on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information
relating to the Company or any of its Subsidiaries, the Company so shall indicate to the Holder explicitly in writing in such notice
(or immediately upon receipt of notice from the Holder, as applicable), and in the absence of any such written indication in such notice
(or notification from the Company immediately upon receipt of notice from the Holder), the Holder shall be entitled to presume that information
contained in the notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing
contained in this Section 29 shall limit any obligations of the Company, or any rights of the Holder, under Section 4(i) of the Securities
Purchase Agreement.
30.
ABSENCE OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees that the Holder is not a fiduciary or agent
of the Company and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company
or (b) refrain from trading any securities while in possession of such information in the absence of a written non-disclosure agreement
signed by an officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such
an executed, written non-disclosure agreement, the Company acknowledges that the Holder may freely trade in any securities issued by
the Company, may possess and use any information provided by the Company in connection with such trading activity, and may disclose any
such information to any third party.
[signature
page follows]
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.
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EASTSIDE DISTILLING, INC.
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By:
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Name: |
Geoffrey Gwin |
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Title: |
Chief Executive Officer |
Exhibit
10.3
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO
THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 1(a)
OF THIS WARRANT.
Eastside
Distilling, Inc.
Prepaid
Warrant To Purchase Common Stock
Warrant
No.: __
Date
of Issuance: November __, 2024 (“Issuance Date”)
Eastside
Distilling, Inc., a Nevada corporation (the “Company”), hereby certifies that, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, ______________, the registered holder hereof or its permitted assigns (the
“Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price
(as defined below) then in effect, upon exercise of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common
Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any time or times on or after the Shareholder
Approval Date (as defined below), but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), ______ (subject
to adjustment as provided herein) fully paid and non-assessable shares of Common Stock (as defined below) (the “Warrant Shares”,
and such number of Warrant Shares, the “Warrant Number”). Except as otherwise defined herein, capitalized terms in
this Warrant shall have the meanings set forth in Section 19. This Warrant is one of the Warrants to Purchase Common Stock (the “SPA
Warrants”) issued pursuant to Section 1 of that certain Securities Purchase Agreement, dated as of November __, 2024 (the “Subscription
Date”), by and among the Company and the investors (the “Buyers”) referred to therein, as amended from time
to time (the “Securities Purchase Agreement”).
Notwithstanding
anything herein to the contrary, the Aggregate Exercise Price (as defined below) of this Warrant, except for a nominal exercise price
of $0.001 per Warrant Share, was pre-funded to the Company on or prior to the initial Issuance Date and, consequently, no additional
consideration (other than the nominal exercise price of $0.001 per Warrant Share) shall be required to be paid by the Holder to any Person
to effect any exercise of this Warrant.
1.
EXERCISE OF WARRANT.
(a)
Mechanics of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in
Section 1(f)), this Warrant may be exercised by the Holder on any day on or after the Shareholder Approval Date (each, an “Exercise
Date”), in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form attached hereto
as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant. Within
one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the Company of an amount
equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares as to which this Warrant
was so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of immediately available funds if the
Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant to a Cashless Exercise (as defined in
Section 1(d)). The Holder shall not be required to deliver the original of this Warrant in order to effect an exercise hereunder. Execution
and delivery of an Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of
the original of this Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. Execution
and delivery of an Exercise Notice for all of the then-remaining Warrant Shares shall have the same effect as cancellation of the original
of this Warrant after delivery of the Warrant Shares in accordance with the terms hereof. On or prior to the Trading Day following the
date on which the Company has received an Exercise Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment
of confirmation of receipt of such Exercise Notice, in the form attached hereto as Exhibit B, to the Holder and the Company’s
transfer agent (the “Transfer Agent”), which confirmation shall constitute an instruction to the Transfer Agent to
process such Exercise Notice in accordance with the terms herein. On or before the second (2nd) Trading Day following the date on which
the Company has received such Exercise Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule
or regulation for the settlement of a trade of such Warrant Shares initiated on the applicable Exercise Date), the Company shall (X)
provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities
Transfer Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled
pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian
system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program (“FAST”),
upon the request of the Holder, issue and deliver (via reputable overnight courier) to the address as specified in the Exercise Notice,
a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall
be entitled pursuant to such exercise. Upon delivery of an Exercise Notice, the Holder shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date
such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant
Shares (as the case may be) provided, that the Holder shall be deemed to have waived any voting rights of any such Warrant Shares that
may arise with respect to the period commencing on such Exercise Date, through, and including, such applicable Share Delivery Date (as
defined below) (each, an “Exercise Period”), as necessary, such that the aggregate voting rights of any shares of
Common Stock (including such Warrant Shares) beneficially owned by the Holder and/or any Attribution Parties, collectively, on any such
date of determination shall not exceed the Maximum Percentage (as defined below) as a result of any such exercise of this Warrant. If
this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented
by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise and upon surrender
of this Warrant to the Company by the Holder, then, at the request of the Holder, the Company shall as soon as practicable and in no
event later than one (1) Business Day after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a
new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately
prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional
shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock to be issued
shall be rounded up to the nearest whole number. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs
and expenses (including, without limitation, fees and expenses of the Transfer Agent) that may be payable with respect to the issuance
and delivery of Warrant Shares upon exercise of this Warrant. Notwithstanding the foregoing, except in the case where an exercise of
this Warrant is validly made pursuant to a Cashless Exercise, the Company’s failure to deliver Warrant Shares to the Holder on
or prior to the later of (i) one (1) Trading Day after receipt of the applicable Exercise Notice (or such earlier date as required pursuant
to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade of such Warrant Shares initiated on the applicable
Exercise Date) and (ii) the date of the Company’s receipt of the Aggregate Exercise Price (or valid notice of a Cashless Exercise)
(such later date, the “Share Delivery Date”) shall not be deemed to be a breach of this Warrant. Notwithstanding anything
to the contrary contained in this Warrant or the Registration Rights Agreement, after the effective date of the Registration Statement
(as defined in the Registration Rights Agreement) and prior to the Holder’s receipt of the notice of a Grace Period (as defined
in the Registration Rights Agreement), the Company shall cause the Transfer Agent to deliver unlegended shares of Common Stock to the
Holder (or its designee) in connection with any sale of Registrable Securities (as defined in the Registration Rights Agreement) with
respect to which the Holder has entered into a contract for sale, and delivered a copy of the prospectus included as part of the particular
Registration Statement to the extent applicable, and for which the Holder has not yet settled. From the Issuance Date through and including
the Expiration Date, the Company shall maintain a transfer agent that participates in FAST.
(b)
Exercise Price. For purposes of this Warrant, “Exercise Price” means $0.50, subject to adjustment as provided
herein.
(c)
Company’s Failure to Timely Deliver Securities. If the Company shall fail, for any reason or for no reason, on or prior
to the Share Delivery Date, either (I) if the Transfer Agent is not participating in FAST, to issue and deliver to the Holder (or its
designee) a certificate for the number of Warrant Shares to which the Holder is entitled and register such Warrant Shares on the Company’s
share register or, if the Transfer Agent is participating in FAST, to credit the balance account of the Holder or the Holder’s
designee with DTC for such number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise of this Warrant
(as the case may be) or (II) if a Registration Statement covering the resale of the Warrant Shares that are the subject of the Exercise
Notice (the “Unavailable Warrant Shares”) is not available for the resale of such Unavailable Warrant Shares and the
Company fails to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x) so notify the Holder
and (y) deliver the Warrant Shares electronically without any restrictive legend by crediting such aggregate number of Warrant Shares
to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through
its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a
“Notice Failure” and together with the event described in clause (I) above, a “Delivery Failure”),
then, in addition to all other remedies available to the Holder, (X) the Company shall pay in cash to the Holder on each day after the
Share Delivery Date and during such Delivery Failure an amount equal to 2% of the product of (A) the sum of the number of shares of Common
Stock not issued to the Holder on or prior to the Share Delivery Date and to which the Holder is entitled, multiplied by (B) any trading
price of the Common Stock selected by the Holder in writing as in effect at any time during the period beginning on the applicable Exercise
Date and ending on the applicable Share Delivery Date, and (Y) the Holder, upon written notice to the Company, may void its Exercise
Notice with respect to, and retain or have returned, as the case may be, any portion of this Warrant that has not been exercised pursuant
to such Exercise Notice; provided that the voiding of an Exercise Notice shall not affect the Company’s obligations to make any
payments which have accrued prior to the date of such notice pursuant to this Section 1(c) or otherwise. In addition to the foregoing,
if on or prior to the Share Delivery Date either (I) the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer
Program, the Company shall fail to issue and deliver to the Holder (or its designee) a certificate and register such shares of Common
Stock on the Company’s share register or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer
Program, the Transfer Agent shall fail to credit the balance account of the Holder or the Holder’s designee with DTC for the number
of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder or pursuant to the Company’s
obligation pursuant to clause (ii) below or (II) a Notice Failure occurs, and if on or after such Share Delivery Date the Holder acquires
(in an open market transaction, stock loan or otherwise) shares of Common Stock corresponding to all or any portion of the number of
shares of Common Stock issuable upon such exercise that the Holder is entitled to receive from the Company and has not received from
the Company in connection with such Delivery Failure or Notice Failure, as applicable (a “Buy-In”), then, in addition
to all other remedies available to the Holder, the Company shall, within one (1) Business Day after the Holder’s request and in
the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including
brokerage commissions, stock loan costs and other out-of-pocket expenses, if any) for the shares of Common Stock so acquired (including,
without limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point
the Company’s obligation to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit the balance
account of such Holder or such Holder’s designee, as applicable, with DTC for the number of Warrant Shares to which the Holder
is entitled upon the Holder’s exercise hereunder (as the case may be) (and to issue such Warrant Shares) shall terminate, or (ii)
promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such Warrant Shares or
credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of Warrant Shares to
which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in an amount
equal to the excess (if any) of the Buy-In Price over the product of (A) such number of Warrant Shares multiplied by (B) the lowest Closing
Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Exercise Notice and ending
on the date of such issuance and payment under this clause (ii) (the “Buy-In Payment Amount”). Nothing shall limit
the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates
representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the exercise of this Warrant as required
pursuant to the terms hereof. While this Warrant is outstanding, the Company shall cause its transfer agent to participate in FAST. In
addition to the foregoing rights, (i) if the Company fails to deliver the applicable number of Warrant Shares upon an exercise pursuant
to Section 1 by the applicable Share Delivery Date, then the Holder shall have the right to rescind such exercise in whole or in part
and retain and/or have the Company return, as the case may be, any portion of this Warrant that has not been exercised pursuant to such
Exercise Notice; provided that the rescission of an exercise shall not affect the Company’s obligation to make any payments that
have accrued prior to the date of such notice pursuant to this Section 1(c) or otherwise, and (ii) if a registration statement covering
the issuance or resale of the Warrant Shares that are subject to an Exercise Notice is not available for the issuance or resale, as applicable,
of such Warrant Shares and the Holder has submitted an Exercise Notice prior to receiving notice of the non-availability of such registration
statement and the Company has not already delivered the Warrant Shares underlying such Exercise Notice electronically without any restrictive
legend by crediting such aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its Deposit / Withdrawal At Custodian system, the Holder shall have the option,
by delivery of notice to the Company, to (x) rescind such Exercise Notice in whole or in part and retain or have returned, as the case
may be, any portion of this Warrant that has not been exercised pursuant to such Exercise Notice; provided that the rescission of an
Exercise Notice shall not affect the Company’s obligation to make any payments that have accrued prior to the date of such notice
pursuant to this Section 1(c) or otherwise, and/or (y) switch some or all of such Exercise Notice from a cash exercise to a Cashless
Exercise. Notwithstanding anything herein to the contrary, with respect to any given Notice Failure or Delivery Failure (a “Failure”),
this Section 1(c) shall not apply to the Holder to the extent the Company has already paid such amounts in full to the Holder with respect
to such Failure pursuant to the analogous sections of any other Transaction Document.
(d)
Cashless Exercise. Notwithstanding anything contained herein to the contrary (other than Section 1(f) below), if at the time of
exercise hereof a Registration Statement (as defined in the Registration Rights Agreement) is not effective (or the prospectus contained
therein is not available for use) for the resale by the Holder of all of the Warrant Shares, then the Holder may, in its sole discretion,
exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon
such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of
Warrant Shares determined according to the following formula (a “Cashless Exercise”):
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Net
Number = (A x B) - (A x C) |
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B |
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For
purposes of the foregoing formula:
A=
the total number of shares with respect to which this Warrant is then being exercised.
B
= as elected by the Holder: (i) the VWAP of the shares of Common Stock on the Trading Day immediately preceding the date of the applicable
Exercise Notice if such Exercise Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that is not a Trading
Day or (2) both executed and delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening of “regular trading
hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii)
at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Exercise Notice
or (z) the Bid Price of the shares of Common Stock as of the time of the Holder’s execution of the applicable Exercise Notice if
such Exercise Notice is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter
pursuant to Section 1(a) hereof, or (iii) the Closing Sale Price of the Common Stock on the date of the applicable Exercise Notice if
the date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed and delivered pursuant to Section 1(a) hereof
after the close of “regular trading hours” on such Trading Day.
C
= $0.001 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events).
If
the Warrant Shares are issued in a Cashless Exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the
1933 Act, the Warrant Shares take on the registered characteristics of the Warrants being exercised. For purposes of Rule 144(d) promulgated
under the 1933 Act, as in effect on the Subscription Date, it is intended that the Warrant Shares issued in a Cashless Exercise shall
be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the
date this Warrant was originally issued pursuant to the Securities Purchase Agreement.
(e)
Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of
Warrant Shares to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Warrant Shares
that are not disputed and resolve such dispute in accordance with Section 15.
(f)
Limitations on Exercises. The Company shall not effect the exercise of any portion of this Warrant, and the Holder shall not have
the right to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant and any such exercise shall be
null and void and treated as if never made, to the extent that after giving effect to such exercise, the Holder together with the other
Attribution Parties collectively would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares
of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number
of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include the number of shares of Common
Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock issuable upon exercise of this Warrant
with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable
upon (A) exercise of the remaining, unexercised portion of this Warrant beneficially owned by the Holder or any of the other Attribution
Parties and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without
limitation, any convertible notes or convertible preferred stock or warrants, including other SPA Warrants) beneficially owned by the
Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this
Section 1(f). For purposes of this Section 1(f)(i), beneficial ownership shall be calculated in accordance with Section 13(d) of the
1934 Act. For purposes of determining the number of outstanding shares of Common Stock the Holder may acquire upon the exercise of this
Warrant without exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected
in (x) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other
public filing with the SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written notice
by the Company or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the “Reported
Outstanding Share Number”). If the Company receives an Exercise Notice from the Holder at a time when the actual number of
outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall (i) notify the Holder in writing
of the number of shares of Common Stock then outstanding and, to the extent that such Exercise Notice would otherwise cause the Holder’s
beneficial ownership, as determined pursuant to this Section 1(f), to exceed the Maximum Percentage, the Holder must notify the Company
of a reduced number of Warrant Shares to be acquired pursuant to such Exercise Notice (the number of shares by which such purchase is
reduced, the “Reduction Shares”) and (ii) as soon as reasonably practicable, the Company shall return to the Holder
any exercise price paid by the Holder for the Reduction Shares. For any reason at any time, upon the written or oral request of the Holder,
the Company shall within one (1) Business Day confirm orally and in writing or by electronic mail to the Holder the number of shares
of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect
to the conversion or exercise of securities of the Company, including this Warrant, by the Holder and any other Attribution Party since
the date as of which the Reported Outstanding Share Number was reported. In the event that the issuance of shares of Common Stock to
the Holder upon exercise of this Warrant results in the Holder and the other Attribution Parties being deemed to beneficially own, in
the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d)
of the 1934 Act), the number of shares so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial
ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled
ab initio, and the Holder shall not have the power to vote or to transfer the Excess Shares. As soon as reasonably practicable after
the issuance of the Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price paid by the
Holder for the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase (with such
increase not effective until the sixty-first (61st) day after delivery of such notice) or decrease the Maximum Percentage
to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage
will not be effective until the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such increase
or decrease will apply only to the Holder and the other Attribution Parties and not to any other holder of SPA Warrants that is not an
Attribution Party of the Holder. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of this Warrant in
excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes of
Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Warrant pursuant to this paragraph shall have
any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability. The
provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this
Section 1(f) to the extent necessary to correct this paragraph or any portion of this paragraph which may be defective or inconsistent
with the intended beneficial ownership limitation contained in this Section 1(f) or to make changes or supplements necessary or desirable
to properly give effect to such limitation. The limitation contained in this paragraph may not be amended, modified or waived and shall
apply to a successor holder of this Warrant.
(g)
Reservation of Shares.
(i)
Required Reserve Amount. At any time after the Shareholder Approval Date, so long as this Warrant remains outstanding, the Company
shall at all times keep reserved for issuance under this Warrant a number of shares of Common Stock at least equal to 100% of the maximum
number of shares of Common Stock as shall be necessary to satisfy the Company’s obligation to issue shares of Common Stock under
the SPA Warrants then outstanding (without regard to any limitations on exercise) (the “Required Reserve Amount”);
provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section 1(g)(i) be reduced other than proportionally
in connection with any exercise or redemption of SPA Warrants or such other event covered by Section 2(a) below. The Required Reserve
Amount (including, without limitation, each increase in the number of shares so reserved) shall be allocated pro rata among the holders
of the SPA Warrants based on number of shares of Common Stock issuable upon exercise of SPA Warrants held by each holder on the Closing
Date (without regard to any limitations on exercise) or increase in the number of reserved shares, as the case may be (the “Authorized
Share Allocation”). In the event that a holder shall sell or otherwise transfer any of such holder’s SPA Warrants, each
transferee shall be allocated a pro rata portion of such holder’s Authorized Share Allocation. Any shares of Common Stock reserved
and allocated to any Person which ceases to hold any SPA Warrants shall be allocated to the remaining holders of SPA Warrants, pro rata
based on the number of shares of Common Stock issuable upon exercise of the SPA Warrants then held by such holders (without regard to
any limitations on exercise).
(ii)
Insufficient Authorized Shares. If, notwithstanding Section 1(g)(i) above, and not in limitation thereof, at any time after the
Shareholder Approval Date, while any of the SPA Warrants remain outstanding, the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve the Required Reserve Amount (an “Authorized Share
Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares of
Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for all the SPA Warrants then outstanding.
Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share
Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting
of its shareholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting,
the Company shall provide each shareholder with a proxy statement and shall use its best efforts to solicit its shareholders’ approval
of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the shareholders that they
approve such proposal. Notwithstanding the foregoing, if any such time of an Authorized Share Failure, the Company is able to obtain
the written consent of a majority of the shares of its issued and outstanding shares of Common Stock to approve the increase in the number
of authorized shares of Common Stock, the Company may satisfy this obligation by obtaining such consent and submitting for filing with
the SEC an Information Statement on Schedule 14C. In the event that the Company is prohibited from issuing shares of Common Stock upon
an exercise of this Warrant due to the failure by the Company to have sufficient shares of Common Stock available out of the authorized
but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the “Authorization Failure Shares”),
in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash in exchange for the cancellation of
such portion of this Warrant exercisable into such Authorization Failure Shares at a price equal to the sum of (i) the product of (x)
such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the
period commencing on the date the Holder delivers the applicable Exercise Notice with respect to such Authorization Failure Shares to
the Company and ending on the date of such issuance and payment under this Section 1(g); and (ii) to the extent the Holder purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorization
Failure Shares, any Buy-In Payment Amount, brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in
connection therewith. Nothing contained in this Section 1(g) shall limit any obligations of the Company under any provision of the Securities
Purchase Agreement.
2.
ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and
number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section
2.
(a)
Stock Dividends and Splits. Without limiting any provision of Section 3 or Section 4, if the Company, at any time on or after
the Subscription Date, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock or otherwise makes
a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its then outstanding shares of Common Stock into a larger number of shares or (iii)
combines (by combination, reverse stock split or otherwise) one or more classes of its then outstanding shares of Common Stock into a
smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares
of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution, and any adjustment
pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this paragraph occurs during the period that an Exercise Price is calculated
hereunder, then the calculation of such Exercise Price shall be adjusted appropriately to reflect such event.
(b)
Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 2, the number of Warrant
Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment
the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise
Price in effect immediately prior to such adjustment (without regard to any limitations on exercise contained herein).
(c)
Calculations. All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th
of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of any such shares shall be considered an issuance or sale of Common Stock.
(d)
Voluntary Adjustment By Company. Subject to the rules and regulations of the Principal Market, the Company may at any time during
the term of this Warrant, with the prior written consent of the Required Holders (as defined in the Securities Purchase Agreement), reduce
the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.
3.
RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to
Section 2 above, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash,
stock or other securities, property, options, evidence of indebtedness or any other assets by way of a dividend, spin off, reclassification,
corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent
that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without limitation,
the Maximum Percentage) immediately before the date on which a record is taken for such Distribution, or, if no such record is taken,
the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided,
however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder and the
other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution
to the extent of the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result
of such Distribution (and beneficial ownership) to the extent of any such excess) and the portion of such Distribution shall be held
in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and
the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such Distribution
(and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to
the same extent as if there had been no such limitation).
4.
PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.
(a)
Purchase Rights. In addition to any adjustments pursuant to Sections 2 or 3 above, if at any time the Company grants, issues or
sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the
number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions
on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights (provided, however, that to
the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to the extent of
the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase
Right (and beneficial ownership) to the extent of any such excess) and such Purchase Right to such extent shall be held in abeyance for
the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right granted,
issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance) to the same extent as if
there had been no such limitation).
(b)
Fundamental Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity
assumes in writing all of the obligations of the Company under this Warrant and the other Transaction Documents (as defined in the Securities
Purchase Agreement) in accordance with the provisions of this Section 4(b) pursuant to written agreements in form and substance satisfactory
to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to the Holder in exchange
for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to
this Warrant, including, without limitation, which is exercisable for a corresponding number of shares of capital stock equivalent to
the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise
of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such
shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction
and the value of such shares of capital stock, such adjustments to the number of shares of capital stock and such exercise price being
for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction)
and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed
for trading on an Eligible Market. Upon the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and
be substituted for (so that from and after the date of the applicable Fundamental Transaction, the provisions of this Warrant and the
other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every
right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents
with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of each Fundamental Transaction,
the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after
the consummation of the applicable Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets
or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter))
issuable upon the exercise of this Warrant prior to the applicable Fundamental Transaction, such shares of publicly traded common stock
(or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the
happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction
(without regard to any limitations on the exercise of this Warrant), as adjusted in accordance with the provisions of this Warrant. Notwithstanding
the foregoing, and without limiting Section 1(f) hereof, the Holder may elect, at its sole option, by delivery of written notice to the
Company to waive this Section 4(b) to permit the Fundamental Transaction without the assumption of this Warrant. In addition to and not
in substitution for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant to which holders of
shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a
“Corporate Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the
right to receive upon an exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction but prior
to the Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property (except such items
still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of the
Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including
warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of the applicable
Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to
any limitations on the exercise of this Warrant). Provision made pursuant to the preceding sentence shall be in a form and substance
reasonably satisfactory to the Holder.
(c)
Application. The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and Corporate
Events and shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without regard to any limitations
on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit of the Maximum Percentage, applied
however with respect to shares of capital stock registered under the 1934 Act and thereafter receivable upon exercise of this Warrant
(or any such other warrant)).
5.
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will
not, by amendment of its Articles of Incorporation (as defined in the Securities Purchase Agreement), Bylaws (as defined in the Securities
Purchase Agreement) or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issuance
or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect
the rights of the Holder. Without limiting the generality of the foregoing, the Company (a) shall not increase the par value of any shares
of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, and (b) shall take all such actions
as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common
Stock upon the exercise of this Warrant. Notwithstanding anything herein to the contrary, if after the Shareholder Approval Date, the
Holder is not permitted to exercise this Warrant in full for any reason (other than pursuant to restrictions set forth in Section 1(f)
hereof), the Company shall use its best efforts to promptly remedy such failure, including, without limitation, obtaining such consents
or approvals as necessary to permit such exercise into shares of Common Stock.
6.
WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided
herein, the Holder, solely in its capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed
the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon
the Holder, solely in its capacity as the Holder of this Warrant, any of the rights of a shareholder of the Company or any right to vote,
give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance
to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of this Warrant. In addition, nothing
contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this
Warrant or otherwise) or as a shareholder of the Company, whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other information given
to the shareholders of the Company generally, contemporaneously with the giving thereof to the shareholders.
7.
REISSUANCE OF WARRANTS.
(a)
Transfer of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the
Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as
the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less
than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section
7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.
(b)
Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant (as to which a written certification and the indemnification contemplated below shall
suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company
in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute
and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the right to purchase the Warrant Shares then
underlying this Warrant.
(c)
Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office
of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of
such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, no warrants for fractional shares
of Common Stock shall be given.
(d)
Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such
new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right
to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a) or
Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other
new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii)
shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have
the same rights and conditions as this Warrant.
8.
NOTICES. Whenever notice is required to be given under this Warrant, unless otherwise
provided herein, such notice shall be given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide
the Holder with prompt written notice of all actions taken pursuant to this Warrant (other than the issuance of shares of Common Stock
upon exercise in accordance with the terms hereof), including in reasonable detail a description of such action and the reason therefor.
Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon each adjustment
of the Exercise Price and the number of Warrant Shares, setting forth in reasonable detail, and certifying, the calculation of such adjustment(s),
(ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend
or distribution upon the shares of Common Stock, or (B) for determining rights to vote with respect to any Fundamental Transaction, dissolution
or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice
being provided to the Holder, and (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental Transaction. To the
extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of
its Subsidiaries, the Company shall simultaneously file such notice with the SEC (as defined in the Securities Purchase Agreement) pursuant
to a Current Report on Form 8-K. If the Company or any of its Subsidiaries provides material non-public information to the Holder that
is not simultaneously filed in a Current Report on Form 8-K and the Holder has not agreed to receive such material non-public information,
the Company hereby covenants and agrees that the Holder shall not have any duty of confidentiality to the Company, any of its Subsidiaries
or any of their respective officers, directors, employees, affiliates or agents with respect to, or a duty to any of the foregoing not
to trade on the basis of, such material non-public information. It is expressly understood and agreed that the time of execution specified
by the Holder in each Exercise Notice shall be definitive and may not be disputed or challenged by the Company.
9.
DISCLOSURE. Upon delivery by the Company to the Holder (or receipt by the Company
from the Holder) of any notice in accordance with the terms of this Warrant, unless the Company has in good faith determined that the
matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries,
the Company shall on or prior to 9:00 am, New York city time on the Business Day immediately following such notice delivery date, publicly
disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that
a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate
to the Holder explicitly in writing in such notice (or immediately upon receipt of notice from the Holder, as applicable), and in the
absence of any such written indication in such notice (or notification from the Company immediately upon receipt of notice from the Holder),
the Holder shall be entitled to presume that information contained in the notice does not constitute material, non-public information
relating to the Company or any of its Subsidiaries. Nothing contained in this Section 9 shall limit any obligations of the Company, or
any rights of the Holder, under Section 4(i) of the Securities Purchase Agreement.
10.
ABSENCE OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees that the Holder is not a fiduciary or agent
of the Company and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company
or (b) refrain from trading any securities while in possession of such information in the absence of a written non-disclosure agreement
signed by an officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such
an executed, written non-disclosure agreement, the Company acknowledges that the Holder may freely trade in any securities issued by
the Company, may possess and use any information provided by the Company in connection with such trading activity, and may disclose any
such information to any third party.
11.
AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this
Warrant (other than Section 1(f) and this Section 11, which may not be amended, modified or waived) may be amended and the Company may
take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained
the written consent of the Holder. No waiver shall be effective unless it is in writing and signed by an authorized representative of
the waiving party.
12.
SEVERABILITY. If any provision of this Warrant is prohibited by law or otherwise
determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid
or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant
as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof
and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred
upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
13.
GOVERNING LAW. This Warrant shall be governed by and construed and enforced in
accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed
by, the internal laws of the State of Delaware, without giving effect to any provision or rule (whether of the State of Delaware or any
other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. The Company
hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to the Company at the address set forth in Section 9(f) of the Securities Purchase Agreement and agrees that such
service shall constitute good and sufficient service of process and notice thereof. The Company hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Wilmington, Delaware, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall
be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction
to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS
WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
14.
CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by the
Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Warrant are for convenience
of reference and shall not form part of, or affect the interpretation of, this Warrant. Terms used in this Warrant but defined in the
other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date (as defined in the Securities Purchase
Agreement) in such other Transaction Documents unless otherwise consented to in writing by the Holder.
15.
DISPUTE RESOLUTION.
(a)
Submission to Dispute Resolution.
(i)
In the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Bid Price or fair market value or the arithmetic
calculation of the number of Warrant Shares (as the case may be) (including, without limitation, a dispute relating to the determination
of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute to the other party via facsimile (A)
if by the Company, within two (2) Business Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the
Holder, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable
to promptly resolve such dispute relating to such Exercise Price, such Closing Sale Price, such Bid Price or such fair market value or
such arithmetic calculation of the number of Warrant Shares (as the case may be), at any time after the second (2nd) Business
Day following such initial notice by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as
the case may be), then the Holder may, at its sole option, select an independent, reputable investment bank to resolve such dispute.
(ii)
The Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in accordance
with the first sentence of this Section 15 and (B) written documentation supporting its position with respect to such dispute, in each
case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date on which the
Holder selected such investment bank (the “Dispute Submission Deadline”) (the documents referred to in the immediately
preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being
understood and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute
Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and
hereby waives its right to) deliver or submit any written documentation or other support to such investment bank with respect to such
dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to
such investment bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder
or otherwise requested by such investment bank, neither the Company nor the Holder shall be entitled to deliver or submit any written
documentation or other support to such investment bank in connection with such dispute (other than the Required Dispute Documentation).
(iii)
The Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and the
Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees and expenses
of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute shall be final
and binding upon all parties absent manifest error.
(b)
Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 15 constitutes an agreement to arbitrate between
the Company and the Holder (and constitutes an arbitration agreement) under the rules then in effect under the Delaware Rapid Arbitration
Act, as amended, (ii) the terms of this Warrant and each other applicable Transaction Document shall serve as the basis for the selected
investment bank’s resolution of the applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized)
to make all findings, determinations and the like that such investment bank determines are required to be made by such investment bank
in connection with its resolution of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations
and the like to the terms of this Warrant and any other applicable Transaction Documents, (iii) the Holder (and only the Holder), in
its sole discretion, shall have the right to submit any dispute described in this Section 15 to any state or federal court sitting in
Wilmington, Delaware in lieu of utilizing the procedures set forth in this Section 15 and (v) nothing in this Section 15 shall limit
the Holder from obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect to any matters
described in this Section 15).
16.
REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The
remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant and the other
Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein
shall limit the right of the Holder to pursue actual and consequential damages for any failure by the Company to comply with the terms
of this Warrant. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as
expressly provided herein. Amounts set forth or provided for herein with respect to payments, exercises and the like (and the computation
thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that,
in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available
remedies, to specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of
competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security.
The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm
the Company’s compliance with the terms and conditions of this Warrant (including, without limitation, compliance with Section
2 hereof). The issuance of shares and certificates for shares as contemplated hereby upon the exercise of this Warrant shall be made
without charge to the Holder or such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not
be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in
a name other than the Holder or its agent on its behalf.
17.
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Warrant is placed
in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the holder otherwise
takes action to collect amounts due under this Warrant or to enforce the provisions of this Warrant or (b) there occurs any bankruptcy,
reorganization, receivership of the company or other proceedings affecting company creditors’ rights and involving a claim under
this Warrant, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection
with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements.
18.
TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned without
the consent of the Company, except as may otherwise be required by Section 2(g) of the Securities Purchase Agreement.
19.
CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have
the following meanings:
(a)
“1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b)
“1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c)
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled
by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a
Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of
directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
(d)
“Attribution Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including,
any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed
or advised by the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of
the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or
any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated
with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose of
the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.
(e)
“Bid Price” means, for any security as of the particular time of determination, the bid price for such security on
the Principal Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the bid price of such security on the principal securities exchange or trading market where
such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply, the
bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg
as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination, the
average of the bid prices of any market makers for such security as reported in The Pink Open Market (or a similar organization or agency
succeeding to its functions of reporting prices) as of such time of determination. If the Bid Price cannot be calculated for a security
as of the particular time of determination on any of the foregoing bases, the Bid Price of such security as of such time of determination
shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree
upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 15. All
such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction
during such period.
(f)
“Bloomberg” means Bloomberg, L.P.
(g)
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New
York are authorized or required by law to remain closed; provided, however, for clarification,
commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”,
“non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the
direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial
banks in The City of New York generally are open for use by customers on such day.
(h)
“Closing Sale Price” means, for any security as of any date, the last closing trade price for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate
the closing trade price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or,
if the Principal Market is not the principal securities exchange or trading market for such security, the last trade price of such security
on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing
does not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the ask prices of any
market makers for such security as reported in The Pink Open Market (or a similar organization or agency succeeding to its functions
of reporting prices). If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases,
the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.
If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in
accordance with the procedures in Section 15. All such determinations shall be appropriately adjusted for any stock dividend, stock split,
stock combination or other similar transaction during such period.
(i)
“Common Stock” means (i) the Company’s shares of common stock, $0.0001 par value per share, and (ii) any capital
stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(j)
“Convertible Securities” means any stock or other security (other than Options) that is at any time and under any
circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof
to acquire, any shares of Common Stock.
(k)
“Eligible Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq
Global Market, the Nasdaq Capital Market or the Principal Market.
(l)
“Expiration Date” means the date that is the fifth (5th) anniversary of the Issuance Date or, if such date
falls on a day other than a Trading Day or on which trading does not take place on the Principal Market (a “Holiday”),
the next date that is not a Holiday.
(m)
“Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the
surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all
of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation
S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject
to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that
is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of
Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject
Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock
such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or
exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding
shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities,
individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the
outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or
Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding;
or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in
Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify
its Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one
or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment,
conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination,
reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise
in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common
Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such
Subject Entities as of the date of this Warrant calculated as if any shares of Common Stock held by all such Subject Entities were not
outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock
or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other
transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders
of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions,
the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the
intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective
or inconsistent with the intended treatment of such instrument or transaction.
(n)
“Group” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5
thereunder.
(o)
“Notes” has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all notes issued
in exchange therefor or replacement thereof.
(p)
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities.
(q)
“Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose
common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent
Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(r)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization, any other entity or a government or any department or agency thereof.
(s)
“Principal Market” means the Nasdaq Capital Market.
(t)
“Registration Rights Agreement” means that certain registration rights agreement, dated as of the Closing Date, by
and among the Company and the initial holders of the Preferred Shares relating to, among other things, the registration of the resale
of the Common Stock issuable upon exercise of the SPA Warrants, as may be amended from time to time.
(u)
“SEC” means the United States Securities and Exchange Commission or the successor thereto.
(v)
“Shareholder Approval” has the meaning set forth in the Securities Purchase Agreement.
(w)
“Shareholder Approval Date” has the meaning set forth in the Securities Purchase Agreement.
(x)
“Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(y)
“Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from
or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental
Transaction shall have been entered into.
(z)
“Trading Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to the
Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded,
provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or
market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange
or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during
the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or
(y) with respect to all determinations other than price or trading volume determinations relating to the Common Stock, any day on which
The New York Stock Exchange (or any successor thereto) is open for trading of securities.
(aa)
“VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal
Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange
or securities market on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00
p.m., New York time, as reported by Bloomberg through its “VAP” function (set to 09:30 start time and 16:00 end time) or,
if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic
bulletin board for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as
reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the
average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in
The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the VWAP cannot be calculated
for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved in accordance with the procedures in Section 15. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period.
[signature
page follows]
IN
WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out
above.
| |
Eastside
Distilling, Inc. |
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|
|
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By: |
|
| |
Name: |
Geoffrey
Gwin |
| |
Title: |
Chief
Executive Officer |
Exhibit
10.4
REGISTRATION
RIGHTS AGREEMENT
This
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of November __, 2024, is by and among Eastside Distilling,
Inc., a Nevada corporation with offices located at 755 Main Street, Monroe, CT 06468 (the “Company”), and the undersigned
buyers (each, a “Buyer,” and collectively, the “Buyers”).
RECITALS
A.
In connection with the Securities Purchase Agreement by and among the parties hereto, dated as of November __, 2024 (the “Securities
Purchase Agreement”), the Company has agreed, upon the terms and subject to the conditions of the Securities Purchase Agreement,
among other things, to issue and sell to each Buyer the Warrants (as defined in the Securities Purchase Agreement) which will be exercisable
to purchase Warrant Shares (as defined in the Securities Purchase Agreement) in accordance with the terms of the Warrants.
B. To
induce the Buyers to consummate the transactions contemplated by the Securities Purchase Agreement, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the “1933 Act”), and applicable state securities laws.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and each of the Buyers hereby agree as follows:
1. Definitions.
Capitalized
terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement.
As used in this Agreement, the following terms shall have the following meanings:
(a) “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally
are open for use by customers on such day.
(b) “Closing
Date” shall have the meaning set forth in the Securities Purchase Agreement.
(c) “Effective
Date” means the date that the applicable Registration Statement has been declared effective by the SEC.
(d) “Effectiveness
Deadline” means (i) with respect to the initial Registration Statement required to be filed pursuant to Section 2(a), the earlier
of the (A) 60th calendar day (or the 120th calendar day if such initial Registration Statement is subject to a
full review by the SEC) after the Closing Date and (B) 2nd Business Day after the date the Company is notified (orally or in writing,
whichever is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject to further review and (ii)
with respect to any additional Registration Statements that may be required to be filed by the Company pursuant to this Agreement, the
earlier of the (A) 60th calendar day (or the 120th calendar day if such additional Registration Statement is subject
to a full review by the SEC) following the date on which the Company was required to file such additional Registration Statement and
(B) 2nd Business Day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such
Registration Statement will not be reviewed or will not be subject to further review.
(e) “Filing
Deadline” means (i) with respect to the initial Registration Statement required to be filed pursuant to Section 2(a), the 30th
calendar day after the Closing Date and (ii) with respect to any additional Registration Statements that may be required to be
filed by the Company pursuant to this Agreement, the date on which the Company was required to file such additional Registration Statement
pursuant to the terms of this Agreement.
(f) “Investor”
means a Buyer or any transferee or assignee of any Registrable Securities or Warrants, as applicable, to whom a Buyer assigns its rights
under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 and any transferee
or assignee thereof to whom a transferee or assignee of any Registrable Securities or Warrants, as applicable, assigns its rights under
this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9.
(g) “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization
or a government or any department or agency thereof.
(h) “register,”
“registered,” and “registration” refer to a registration effected by preparing and filing one or
more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 and the declaration of effectiveness of such Registration
Statement(s) by the SEC.
(i) “Registrable
Securities” means (i) the Warrant Shares, and (ii) any capital stock of the Company issued or issuable with respect to the
Warrant Shares or the Warrants, including, without limitation, (1) as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise and (2) shares of capital stock of the Company into which the shares of Common Stock (as defined
in the Warrants) are execised or exchanged and shares of capital stock of a Successor Entity (as defined in the Warrants) into which
the shares of Common Stock are exercised or exchanged, in each case, without regard to any limitations on exercise of the Warrants.
(j) “Registration
Statement” means a registration statement or registration statements of the Company filed under the 1933 Act covering Registrable
Securities.
(k) “Required
Holders” means, as of any given time, the holders of a majority of the Registrable Securities as of such time (excluding any
Registrable Securities held by the Company or any of its Subsidiaries as of such time).
(l) “Required
Registration Amount” means 150% of the maximum number of Warrant Shares issuable upon exercise of the Warrants (assuming for
purposes hereof that any such exercise shall not take into account any limitations on the exercise of the Warrants set forth therein),
all subject to adjustment as provided in Section 2(d) and/or Section 2(f).
(m) “Rule
144” means Rule 144 promulgated by the SEC under the 1933 Act, as such rule may be amended from time to time, or any other
similar or successor rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the
public without registration.
(n) “Rule
415” means Rule 415 promulgated by the SEC under the 1933 Act, as such rule may be amended from time to time, or any other
similar or successor rule or regulation of the SEC providing for offering securities on a continuous or delayed basis.
(o) “SEC”
means the United States Securities and Exchange Commission or any successor thereto.
2. Registration.
(a) Mandatory
Registration. The Company shall prepare and, as soon as practicable, but in no event later than the Filing Deadline, file with the
SEC an initial Registration Statement on Form S-3 covering the resale of all of the Registrable Securities, provided that such initial
Registration Statement shall register for resale at least the number of shares of Common Stock equal to the Required Registration Amount
as of the date such Registration Statement is initially filed with the SEC; provided further that if Form S-3 is unavailable for such
a registration, the Company shall use such other form as is required by Section 2(c). Such initial Registration Statement, and each other
Registration Statement required to be filed pursuant to the terms of this Agreement, shall contain (except if otherwise directed by the
Required Holders) the “Selling Stockholders” and “Plan of Distribution” sections in substantially
the form attached hereto as Exhibit B. The Company shall use its reasonable best efforts to have such initial Registration Statement,
and each other Registration Statement required to be filed pursuant to the terms of this Agreement, declared effective by the SEC as
soon as practicable, but in no event later than the applicable Effectiveness Deadline for such Registration Statement.
(b) Legal
Counsel. Subject to Section 5 hereof, Kelley Drye & Warren LLP, counsel solely to the lead investor (“Legal Counsel”)
shall review and oversee any registration, solely on behalf of the lead investor, pursuant to this Section 2.
(c) Ineligibility
to Use Form S-3. In the event that Form S-3 is not available for the registration of the resale of Registrable Securities hereunder,
the Company shall (i) register the resale of the Registrable Securities on Form S-1 or another appropriate form reasonably acceptable
to the Required Holders and (ii) undertake to register the resale of the Registrable Securities on Form S-3 as soon as such form is available,
provided that the Company shall maintain the effectiveness of all Registration Statements then in effect until such time as a Registration
Statement on Form S-3 covering the resale of all the Registrable Securities has been declared effective by the SEC and the prospectus
contained therein is available for use.
(d) Sufficient
Number of Shares Registered. In the event the number of shares available under any Registration Statement is insufficient to cover
all of the Registrable Securities required to be covered by such Registration Statement or an Investor’s allocated portion of the
Registrable Securities pursuant to Section 2(h), the Company shall amend such Registration Statement (if permissible), or file with the
SEC a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover at least the Required
Registration Amount as of the Trading Day (as defined in the Securities Purchase Agreement) immediately preceding the date of the filing
of such amendment or new Registration Statement, in each case, as soon as practicable, but in any event not later than fifteen (15) days
after the necessity therefor arises (but taking account of any Staff position with respect to the date on which the Staff will permit
such amendment to the Registration Statement and/or such new Registration Statement (as the case may be) to be filed with the SEC). The
Company shall use its reasonable best efforts to cause such amendment to such Registration Statement and/or such new Registration Statement
(as the case may be) to become effective as soon as practicable following the filing thereof with the SEC, but in no event later than
the applicable Effectiveness Deadline for such Registration Statement. For purposes of the foregoing provision, the number of shares
available under a Registration Statement shall be deemed “insufficient to cover all of the Registrable Securities” if at
any time the number of shares of Common Stock available for resale under the applicable Registration Statement is less than the product
determined by multiplying (i) the Required Registration Amount as of such time by (ii) 0.90. The calculation set forth in the foregoing
sentence shall be made without regard to any limitations on exercise of the Warrants.
(e) Effect
of Failure to File and Obtain and Maintain Effectiveness of any Registration Statement. If (i) a Registration Statement covering
the resale of all of the Registrable Securities required to be covered thereby (disregarding any reduction pursuant to Section 2(f))
and required to be filed by the Company pursuant to this Agreement is (A) not filed with the SEC on or before the Filing Deadline for
such Registration Statement (a “Filing Failure”) (it being understood that if the Company files a Registration Statement
without affording each Investor and Legal Counsel the opportunity to review and comment on the same as required by Section 3(c) hereof,
the Company shall be deemed to not have satisfied this clause (i)(A) and such event shall be deemed to be a Filing Failure) or (B) not
declared effective by the SEC on or before the Effectiveness Deadline for such Registration Statement (an “Effectiveness Failure”)
(it being understood that if on the Business Day immediately following the Effective Date for such Registration Statement the Company
shall not have filed a “final” prospectus for such Registration Statement with the SEC under Rule 424(b) in accordance with
Section 3(b) (whether or not such a prospectus is technically required by such rule), the Company shall be deemed to not have satisfied
this clause (i)(B) and such event shall be deemed to be an Effectiveness Failure), (ii) other than during an Allowable Grace Period (as
defined below), on any day after the Effective Date of a Registration Statement sales of all of the Registrable Securities required to
be included on such Registration Statement (disregarding any reduction pursuant to Section 2(f)) cannot be made pursuant to such Registration
Statement (including, without limitation, because of a failure to keep such Registration Statement effective, a failure to disclose such
information as is necessary for sales to be made pursuant to such Registration Statement, a suspension or delisting of (or a failure
to timely list) the shares of Common Stock on the Principal Market (as defined in the Securities Purchase Agreement) or any other limitations
imposed by the Principal Market, or a failure to register a sufficient number of shares of Common Stock or by reason of a stop order)
or the prospectus contained therein is not available for use for any reason (a “Maintenance Failure”), or (iii) if
a Registration Statement is not effective for any reason or the prospectus contained therein is not available for use for any reason,
and either (x) the Company fails for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the failure
to satisfy the current public information requirement under Rule 144(c) or (y) the Company has ever been an issuer described in Rule
144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2)
(a “Current Public Information Failure”) as a result of which any of the Investors are unable to sell Registrable
Securities without restriction under Rule 144 (including, without limitation, volume restrictions), then, as partial relief for the damages
to any holder by reason of any such delay in, or reduction of, its ability to sell the underlying shares of Common Stock (which remedy
shall not be exclusive of any other remedies available at law or in equity, including, without limitation, specific performance), the
Company shall pay to each holder of Registrable Securities relating to such Registration Statement an amount in cash equal to two percent
(2%) of such Investor’s original Purchase Price (as defined in the Securiteis Purchase Agreement) (1) on the date of such Filing
Failure, Effectiveness Failure, Maintenance Failure or Current Public Information Failure, as applicable, and (2) on every thirty (30)
day anniversary of (I) a Filing Failure until such Filing Failure is cured; (II) an Effectiveness Failure until such Effectiveness Failure
is cured; (III) a Maintenance Failure until such Maintenance Failure is cured; and (IV) a Current Public Information Failure until the
earlier of (i) the date such Current Public Information Failure is cured and (ii) such time that such public information is no longer
required pursuant to Rule 144 (in each case, pro rated for periods totaling less than thirty (30) days). The payments to which a holder
of Registrable Securities shall be entitled pursuant to this Section 2(e) are referred to herein as “Registration Delay Payments.”
Following the initial Registration Delay Payment for any particular event or failure (which shall be paid on the date of such event or
failure, as set forth above), without limiting the foregoing, if an event or failure giving rise to the Registration Delay Payments is
cured prior to any thirty (30) day anniversary of such event or failure, then such Registration Delay Payment shall be made on the third
(3rd) Business Day after such cure. In the event the Company fails to make Registration Delay Payments in a timely manner
in accordance with the foregoing, such Registration Delay Payments shall bear interest at the rate of two percent (2%) per month (prorated
for partial months) until paid in full. Notwithstanding the foregoing, no Registration Delay Payments shall be owed to an Investor (other
than with respect to a Maintenance Failure resulting from a suspension or delisting of (or a failure to timely list) the shares of Common
Stock on the Principal Market) with respect to any period during which all of such Investor’s Registrable Securities may be sold
by such Investor without restriction under Rule 144 (including, without limitation, volume restrictions) and without the need for current
public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable).
(f) Offering.
Notwithstanding anything to the contrary contained in this Agreement, but subject to the payment of the Registration Delay Payments pursuant
to Section 2(e), in the event the staff of the SEC (the “Staff”) or the SEC seeks to characterize any offering pursuant
to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities by, or on behalf of, the Company,
or in any other manner, such that the Staff or the SEC do not permit such Registration Statement to become effective and used for resales
in a manner that does not constitute such an offering and that permits the continuous resale at the market by the Investors participating
therein (or as otherwise may be acceptable to each Investor) without being named therein as an “underwriter,” then the Company
shall reduce the number of shares to be included in such Registration Statement by all Investors until such time as the Staff and the
SEC shall so permit such Registration Statement to become effective as aforesaid. In making such reduction, the Company shall reduce
the number of shares to be included by all Investors on a pro rata basis (based upon the number of Registrable Securities otherwise required
to be included for each Investor) unless the inclusion of shares by a particular Investor or a particular set of Investors are resulting
in the Staff or the SEC’s “by or on behalf of the Company” offering position, in which event the shares held by such
Investor or set of Investors shall be the only shares subject to reduction (and if by a set of Investors on a pro rata basis by such
Investors or on such other basis as would result in the exclusion of the least number of shares by all such Investors); provided, that,
with respect to such pro rata portion allocated to any Investor, such Investor may elect the allocation of such pro rata portion among
the Registrable Securities of such Investor. In addition, in the event that the Staff or the SEC requires any Investor seeking to sell
securities under a Registration Statement filed pursuant to this Agreement to be specifically identified as an “underwriter”
in order to permit such Registration Statement to become effective, and such Investor does not consent to being so named as an underwriter
in such Registration Statement, then, in each such case, the Company shall reduce the total number of Registrable Securities to be registered
on behalf of such Investor, until such time as the Staff or the SEC does not require such identification or until such Investor accepts
such identification and the manner thereof. Any reduction pursuant to this paragraph will first reduce all Registrable Securities other
than those issued pursuant to the Securities Purchase Agreement. In the event of any reduction in Registrable Securities pursuant to
this paragraph, an affected Investor shall have the right to require, upon delivery of a written request to the Company signed by such
Investor, the Company to file a registration statement within twenty (20) days of such request (subject to any restrictions imposed by
Rule 415 or required by the Staff or the SEC) for resale by such Investor in a manner acceptable to such Investor, and the Company shall
following such request cause to be and keep effective such registration statement in the same manner as otherwise contemplated in this
Agreement for registration statements hereunder, in each case until such time as: (i) all Registrable Securities held by such Investor
have been registered and sold pursuant to an effective Registration Statement in a manner acceptable to such Investor or (ii) all Registrable
Securities may be resold by such Investor without restriction (including, without limitation, volume limitations) pursuant to Rule 144
(taking account of any Staff position with respect to “affiliate” status) and without the need for current public information
required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (iii) such Investor agrees to be named as an underwriter in any such
Registration Statement in a manner acceptable to such Investor as to all Registrable Securities held by such Investor and that have not
theretofore been included in a Registration Statement under this Agreement (it being understood that the special demand right under this
sentence may be exercised by an Investor multiple times and with respect to limited amounts of Registrable Securities in order to permit
the resale thereof by such Investor as contemplated above).
(g) Piggyback
Registrations. Without limiting any obligation of the Company hereunder or under the Securities Purchase Agreement, if there is not
an effective Registration Statement covering all of the Registrable Securities or the prospectus contained therein is not available for
use and the Company shall determine to prepare and file with the SEC a registration statement or offering statement relating to an offering
for its own account or the account of others under the 1933 Act of any of its equity securities (other than on Form S-4 or Form S-8 (each
as promulgated under the 1933 Act) or their then equivalents relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee
benefit plans), then the Company shall deliver to each Investor a written notice of such determination and, if within fifteen (15) days
after the date of the delivery of such notice, any such Investor shall so request in writing, the Company shall include in such registration
statement or offering statement all or any part of such Registrable Securities such Investor requests to be registered; provided, however,
the Company shall not be required to register any Registrable Securities pursuant to this Section 2(g) that are eligible for resale pursuant
to Rule 144 without restriction (including, without limitation, volume restrictions) and without the need for current public information
required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or that are the subject of a then-effective Registration Statement.
(h) Allocation
of Registrable Securities. The initial number of Registrable Securities included in any Registration Statement and any increase in
the number of Registrable Securities included therein shall be allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time such Registration Statement covering such initial number of Registrable Securities or increase
thereof is declared effective by the SEC. In the event that an Investor sells or otherwise transfers any of such Investor’s Registrable
Securities, each transferee or assignee (as the case may be) that becomes an Investor shall be allocated a pro rata portion of the then-remaining
number of Registrable Securities included in such Registration Statement for such transferor or assignee (as the case may be). Any shares
of Common Stock included in a Registration Statement and which remain allocated to any Person which ceases to hold any Registrable Securities
covered by such Registration Statement shall be allocated to the remaining Investors, pro rata based on the number of Registrable Securities
then held by such Investors which are covered by such Registration Statement.
(i) No
Inclusion of Other Securities. The Company shall in no event include any securities other than Registrable Securities on any Registration
Statement filed in accordance herewith without the prior written consent of the Required Holders. Except for such securities as set forth
on Schedule 2(i), until the Applicable Date (as defined in the Securities Purchase Agreement), the Company shall not enter into
any agreement providing any registration rights to any of its security holders, except as otherwise permitted under the Securities Purchase
Agreement.
3. Related Obligations.
The
Company shall use its reasonable best efforts to effect the registration of the Registrable Securities in accordance with the intended
method of disposition thereof, and, pursuant thereto, the Company shall have the following obligations:
(a) The
Company shall promptly prepare and file with the SEC a Registration Statement with respect to all the Registrable Securities (but in
no event later than the applicable Filing Deadline) and use its reasonable best efforts to cause such Registration Statement to become
effective as soon as practicable after such filing (but in no event later than the Effectiveness Deadline). Subject to Allowable Grace
Periods, the Company shall keep each Registration Statement effective (and the prospectus contained therein available for use) pursuant
to Rule 415 for resales by the Investors on a delayed or continuous basis at then-prevailing market prices (and not fixed prices) at
all times until the earlier of (i) the date as of which all of the Investors may sell all of the Registrable Securities required to be
covered by such Registration Statement (disregarding any reduction pursuant to Section 2(f)) without restriction pursuant to Rule 144
(including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or
Rule 144(i)(2), if applicable) or (ii) the date on which the Investors shall have sold all of the Registrable Securities covered by such
Registration Statement (the “Registration Period”). Notwithstanding anything to the contrary contained in this Agreement,
the Company shall ensure that, when filed and at all times while effective, each Registration Statement (including, without limitation,
all amendments and supplements thereto) and the prospectus (including, without limitation, all amendments and supplements thereto) used
in connection with such Registration Statement (1) shall not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances
in which they were made) not misleading and (2) will disclose (whether directly or through incorporation by reference to other SEC filings
to the extent permitted) all material information regarding the Company and its securities. The Company shall submit to the SEC, within
one (1) Business Day after the later of the date that (i) the Company learns that no review of a particular Registration Statement will
be made by the Staff or that the Staff has no further comments on a particular Registration Statement (as the case may be) and (ii) the
consent of Legal Counsel is obtained pursuant to Section 3(c) (which consent shall be immediately sought), a request for acceleration
of effectiveness of such Registration Statement to a time and date not later than forty eight (48) hours after the submission of such
request. The Company shall respond in writing to comments made by the SEC in respect of a Registration Statement as soon as practicable,
but in no event later than fifteen (15) days after the receipt of comments by or notice from the SEC that an amendment is required in
order for a Registration Statement to be declared effective.
(b) Subject
to Section 3(r) of this Agreement, the Company shall prepare and file with the SEC such amendments (including, without limitation, post-effective
amendments) and supplements to each Registration Statement and the prospectus used in connection with each such Registration Statement,
which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep each such Registration
Statement effective at all times during the Registration Period for such Registration Statement, and, during such period, comply with
the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company required to be covered by
such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement; provided, however, by 8:30
a.m. (New York, N.Y. time) on the Business Day immediately following each Effective Date, the Company shall file with the SEC in accordance
with Rule 424(b) under the 1933 Act the final prospectus to be used in connection with sales pursuant to the applicable Registration
Statement (whether or not such a prospectus is technically required by such rule). In the case of amendments and supplements to any Registration
Statement which are required to be filed pursuant to this Agreement (including, without limitation, pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 8-K, Form 10-Q or Form 10-K or any analogous report under the Securities Exchange Act of
1934, as amended (the “1934 Act”), the Company shall, if permitted under the applicable rules and regulations of the
SEC, have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements
with the SEC on the same day on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement
such Registration Statement.
(c) The
Company shall (A) permit Legal Counsel and legal counsel for each other Investor to review and comment upon (i) each Registration Statement
at least five (5) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to each Registration Statement
(including, without limitation, the prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K, and any similar or successor reports) within a reasonable number of days prior to their filing with
the SEC, and (B) not file any Registration Statement or amendment or supplement thereto in a form to which Legal Counsel or any legal
counsel for any other Investor reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of a
Registration Statement or any amendment or supplement thereto or to any prospectus contained therein without the prior consent of Legal
Counsel, which consent shall not be unreasonably withheld or delayed. The Company shall promptly furnish to Legal Counsel and legal counsel
for each other Investor, without charge, (i) copies of any correspondence from the SEC or the Staff to the Company or its representatives
relating to each Registration Statement, provided that such correspondence shall not contain any material, non-public information regarding
the Company or any of its Subsidiaries (as defined in the Securities Purchase Agreement), (ii) after the same is prepared and filed with
the SEC, one (1) copy of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial
statements and schedules, all documents incorporated therein by reference, if requested by an Investor, and all exhibits and (iii) upon
the effectiveness of each Registration Statement, one (1) copy of the prospectus included in such Registration Statement and all amendments
and supplements thereto. The Company shall reasonably cooperate with Legal Counsel and legal counsel for each other Investor in performing
the Company’s obligations pursuant to this Section 3.
(d) The
Company shall promptly furnish to each Investor whose Registrable Securities are included in any Registration Statement, without charge,
(i) after the same is prepared and filed with the SEC, at least one (1) copy of each Registration Statement and any amendment(s) and
supplement(s) thereto, including, without limitation, financial statements and schedules, all documents incorporated therein by reference,
if requested by an Investor, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of each Registration Statement,
ten (10) copies of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number
of copies as such Investor may reasonably request from time to time) and (iii) such other documents, including, without limitation, copies
of any preliminary or final prospectus, as such Investor may reasonably request from time to time in order to facilitate the disposition
of the Registrable Securities owned by such Investor.
(e) The
Company shall use its reasonable best efforts to (i) register and qualify, unless an exemption from registration and qualification applies,
the resale by Investors of the Registrable Securities covered by a Registration Statement under such other securities or “blue
sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions, such amendments (including,
without limitation, post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain
the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable
to qualify the Registrable Securities for sale in such jurisdictions; provided, however, the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(e), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service
of process in any such jurisdiction. The Company shall promptly notify Legal Counsel, legal counsel for each other Investor and each
Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration
or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction
in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
(f) The
Company shall notify Legal Counsel, legal counsel for each other Investor and each Investor in writing of the happening of any event,
as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement,
as then in effect, may include an untrue statement of a material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that
in no event shall such notice contain any material, non-public information regarding the Company or any of its Subsidiaries), and, subject
to Section 3(r), promptly prepare a supplement or amendment to such Registration Statement and such prospectus contained therein to correct
such untrue statement or omission and deliver ten (10) copies of such supplement or amendment to Legal Counsel, legal counsel for each
other Investor and each Investor (or such other number of copies as Legal Counsel, legal counsel for each other Investor or such Investor
may reasonably request). The Company shall also promptly notify Legal Counsel, legal counsel for each other Investor and each Investor
in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, when a Registration Statement
or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Legal Counsel, legal counsel
for each other Investor and each Investor by e-mail on the same day of such effectiveness and by overnight mail), and when the Company
receives written notice from the SEC that a Registration Statement or any post-effective amendment will be reviewed by the SEC, (ii)
of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, (iii)
of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate; and
(iv) of the receipt of any request by the SEC or any other federal or state governmental authority for any additional information relating
to the Registration Statement or any amendment or supplement thereto or any related prospectus. The Company shall respond as promptly
as practicable to any comments received from the SEC with respect to each Registration Statement or any amendment thereto (it being understood
and agreed that the Company’s response to any such comments shall be delivered to the SEC no later than fifteen (15) Business Days
after the receipt thereof).
(g) The
Company shall (i) use its reasonable best efforts to prevent the issuance of any stop order or other suspension of effectiveness of each
Registration Statement or the use of any prospectus contained therein, or the suspension of the qualification, or the loss of an exemption
from qualification, of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued,
to obtain the withdrawal of such order or suspension at the earliest possible moment and (ii) notify Legal Counsel, legal counsel for
each other Investor and each Investor who holds Registrable Securities of the issuance of such order and the resolution thereof or its
receipt of actual notice of the initiation or threat of any proceeding for such purpose.
(h) If
any Investor may be required under applicable securities law to be described in any Registration Statement as an underwriter and such
Investor consents to so being named an underwriter, at the request of any Investor, the Company shall furnish to such Investor, on the
date of the effectiveness of such Registration Statement and thereafter from time to time on such dates as an Investor may reasonably
request (i) a letter, dated such date, from the Company’s independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the Investors,
and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form,
scope and substance as is customarily given in an underwritten public offering, addressed to the Investors.
(i) If
any Investor may be required under applicable securities law to be described in any Registration Statement as an underwriter and such
Investor consents to so being named an underwriter, upon the written request of such Investor, the Company shall make available for inspection
by (i) such Investor, (ii) legal counsel for such Investor and (iii) one (1) firm of accountants or other agents retained by such Investor
(collectively, the “Inspectors”), all pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”), as shall be reasonably deemed necessary by each Inspector,
and cause the Company’s officers, directors and employees to supply all information which any Inspector may reasonably request;
provided, however, each Inspector shall agree in writing to hold in strict confidence and not to make any disclosure (except to such
Investor) or use of any Record or other information which the Company’s board of directors determines in good faith to be confidential,
and of which determination the Inspectors are so notified, unless (1) the disclosure of such Records is necessary to avoid or correct
a misstatement or omission in any Registration Statement or is otherwise required under the 1933 Act, (2) the release of such Records
is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (3) the
information in such Records has been made generally available to the public other than by disclosure in violation of this Agreement or
any other Transaction Document (as defined in the Securities Purchase Agreement). Such Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. Nothing herein (or in any other confidentiality agreement between the Company
and such Investor, if any) shall be deemed to limit any Investor’s ability to sell Registrable Securities in a manner which is
otherwise consistent with applicable laws and regulations.
(j) The
Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required to be disclosed in
such Registration Statement pursuant to the 1933 Act, (iii) the release of such information is ordered pursuant to a subpoena or other
final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this Agreement or any other Transaction Document. The Company agrees
that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body
of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at such Investor’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.
(k) Without
limiting any obligation of the Company under the Securities Purchase Agreement, the Company shall use its reasonable best efforts either
to (i) cause all of the Registrable Securities covered by each Registration Statement to be listed on each securities exchange on which
securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is
then permitted under the rules of such exchange, (ii) secure designation and quotation of all of the Registrable Securities covered by
each Registration Statement on an Eligible Market (as defined in the Securities Purchase Agreement), or (iii) if, despite the Company’s
reasonable best efforts to satisfy the preceding clauses (i) or (ii) the Company is unsuccessful in satisfying the preceding clauses
(i) or (ii), without limiting the generality of the foregoing, to use its reasonable best efforts to arrange for at least two market
makers to register with the Financial Industry Regulatory Authority (“FINRA”) as such with respect to such Registrable
Securities. In addition, the Company shall cooperate with each Investor and any broker or dealer through which any such Investor proposes
to sell its Registrable Securities in effecting a filing with FINRA pursuant to FINRA Rule 5110 as requested by such Investor. The Company
shall pay all fees and expenses in connection with satisfying its obligations under this Section 3(k).
(l) The
Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, facilitate the
timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts (as the case may be) as the
Investors may reasonably request from time to time and registered in such names as the Investors may request.
(m) If
requested by an Investor, the Company shall as soon as practicable after receipt of notice from such Investor and subject to Section
3(r) hereof, (i) incorporate in a prospectus supplement or post-effective amendment such information as an Investor reasonably requests
to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with
respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of
the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement
or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment;
and (iii) supplement or make amendments to any Registration Statement or prospectus contained therein if reasonably requested by an Investor
holding any Registrable Securities.
(n) The
Company shall use its reasonable best efforts to cause the Registrable Securities covered by a Registration Statement to be registered
with or approved by such other governmental agencies or authorities in the United States as may be necessary to consummate the disposition
of such Registrable Securities.
(o) The
Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after the close
of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of Rule 158
under the 1933 Act) covering a twelve-month period beginning not later than the first day of the Company’s fiscal quarter next
following the applicable Effective Date of each Registration Statement.
(p) The
Company shall otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC in connection
with any registration hereunder.
(q) Within
one (1) Business Day after a Registration Statement which covers Registrable Securities is declared effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with
copies to the Investors whose Registrable Securities are included in such Registration Statement) confirmation that such Registration
Statement has been declared effective by the SEC in the form attached hereto as Exhibit A.
(r) Notwithstanding
anything to the contrary herein (but subject to the last sentence of this Section 3(r)), at any time after the Effective Date of a particular
Registration Statement, the Company may delay the disclosure of material, non-public information concerning the Company or any of its
Subsidiaries the disclosure of which at the time is not, in the good faith opinion of the board of directors of the Company, in the best
interest of the Company and, in the opinion of counsel to the Company, otherwise required (a “Grace Period”), provided
that the Company shall promptly notify the Investors in writing of the (i) existence of material, non-public information giving rise
to a Grace Period (provided that in each such notice the Company shall not disclose the content of such material, non-public information
to any of the Investors) and the date on which such Grace Period will begin and (ii) date on which such Grace Period ends, provided further
that (I) no Grace Period shall exceed ten (10) consecutive days and during any three hundred sixty five (365) day period all such Grace
Periods shall not exceed an aggregate of thirty (30) days, (II) the first day of any Grace Period must be at least five (5) Trading Days
after the last day of any prior Grace Period and (III) no Grace Period may exist during the sixty (60) Trading Day period immediately
following the Effective Date of such Registration Statement (provided that such sixty (60) Trading Day period shall be extended by the
number of Trading Days during such period and any extension thereof contemplated by this proviso during which such Registration Statement
is not effective or the prospectus contained therein is not available for use) (each, an “Allowable Grace Period”).
For purposes of determining the length of a Grace Period above, such Grace Period shall begin on and include the date the Investors receive
the notice referred to in clause (i) above and shall end on and include the later of the date the Investors receive the notice referred
to in clause (ii) above and the date referred to in such notice. The provisions of Section 3(g) hereof shall not be applicable during
the period of any Allowable Grace Period. Upon expiration of each Grace Period, the Company shall again be bound by the first sentence
of Section 3(f) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable.
Notwithstanding anything to the contrary contained in this Section 3(r), the Company shall cause its transfer agent to deliver unlegended
shares of Common Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement in connection
with any sale of Registrable Securities with respect to which such Investor has entered into a contract for sale, and delivered a copy
of the prospectus included as part of the particular Registration Statement to the extent applicable, prior to such Investor’s
receipt of the notice of a Grace Period and for which the Investor has not yet settled.
(s) The
Company shall take all other reasonable actions necessary to expedite and facilitate disposition by each Investors of its Registrable
Securities pursuant to each Registration Statement.
(t) Neither
the Company nor any Subsidiary or affiliate thereof shall identify any Investor as an underwriter in any public disclosure or filing
with the SEC, the Principal Market or any Eligible Market (as defined in the Securities Purchase Agreement) and any Buyer being deemed
an underwriter by the SEC shall not relieve the Company of any obligations it has under this Agreement or any other Transaction Document
(as defined in the Securities Purchase Agreement); provided, however, that the foregoing shall not prohibit the Company from including
the disclosure found in the “Plan of Distribution” section attached hereto as Exhibit B in the Registration Statement.
(u) Neither
the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after
the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights
granted to the Buyers in this Agreement or otherwise conflicts with the provisions hereof.
4. Obligations of the Investors.
(a) At
least five (5) Business Days prior to the first anticipated filing date of each Registration Statement, the Company shall notify each
Investor in writing of the information the Company requires from each such Investor with respect to such Registration Statement. It shall
be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably
required to effect and maintain the effectiveness of the registration of such Registrable Securities and shall execute such documents
in connection with such registration as the Company may reasonably request.
(b) Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested
by the Company in connection with the preparation and filing of each Registration Statement hereunder, unless such Investor has notified
the Company in writing of such Investor’s election to exclude all of such Investor’s Registrable Securities from such Registration
Statement.
(c) Each
Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(g)
or the first sentence of 3(f), such Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration
Statement(s) covering such Registrable Securities until such Investor’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(g) or the first sentence of Section 3(f) or receipt of notice that no supplement or amendment is required.
Notwithstanding anything to the contrary in this Section 4(c), the Company shall cause its transfer agent to deliver unlegended shares
of Common Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement in connection with any
sale of Registrable Securities with respect to which such Investor has entered into a contract for sale prior to the Investor’s
receipt of a notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of Section
3(f) and for which such Investor has not yet settled.
5. Expenses of Registration.
All
reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting
fees, FINRA filing fees (if any) and fees and disbursements of counsel for the Company shall be paid by the Company. The Company shall
reimburse Legal Counsel for its fees and disbursements in connection with registration, filing or qualification pursuant to Sections
2 and 3 of this Agreement which amount shall be limited to $10,000 for each such registration, filing or qualification.
6. Indemnification.
(a) To
the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor and each of
its directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) and each Person,
if any, who controls such Investor within the meaning of the 1933 Act or the 1934 Act and each of the directors, officers, shareholders,
members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding the lack of such title or any other title) of such controlling Persons (each, an “Indemnified
Person”), against any losses, obligations, claims, damages, liabilities, contingencies, judgments, fines, penalties, charges,
costs (including, without limitation, court costs, reasonable attorneys’ fees and costs of defense and investigation), amounts
paid in settlement or expenses, joint or several, (collectively, “Claims”) incurred in investigating, preparing or
defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental,
administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an Indemnified Person is or
may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement
or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made
in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue Sky Filing”), or the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement,
or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with
the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light
of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement or (iv) any violation of
this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”). Subject
to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due and payable,
for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim
by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished
in writing to the Company by such Indemnified Person for such Indemnified Person expressly for use in connection with the preparation
of such Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the
Company pursuant to Section 3(d); and (ii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer
of any of the Registrable Securities by any of the Investors pursuant to Section 9.
(b) In
connection with any Registration Statement in which an Investor is participating, such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the
1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified Damages to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or
are based upon any Violation, in each case, to the extent, and only to the extent, that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration
Statement; and, subject to Section 6(c) and the below provisos in this Section 6(b), such Investor will reimburse an Indemnified Party
any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such Claim;
provided, however, the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in
Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent
of such Investor, which consent shall not be unreasonably withheld or delayed, provided further that such Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result
of the applicable sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of any of the Registrable
Securities by any of the Investors pursuant to Section 9.
(c) Promptly
after receipt by an Indemnified Person or Indemnified Party (as the case may be) under this Section 6 of notice of the commencement of
any action or proceeding (including, without limitation, any governmental action or proceeding) involving a Claim, such Indemnified Person
or Indemnified Party (as the case may be) shall, if a Claim in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed,
to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the
Indemnified Party (as the case may be); provided, however, an Indemnified Person or Indemnified Party (as the case may be) shall have
the right to retain its own counsel with the fees and expenses of such counsel to be paid by the indemnifying party if: (i) the indemnifying
party has agreed in writing to pay such fees and expenses; (ii) the indemnifying party shall have failed promptly to assume the defense
of such Claim and to employ counsel reasonably satisfactory to such Indemnified Person or Indemnified Party (as the case may be) in any
such Claim; or (iii) the named parties to any such Claim (including, without limitation, any impleaded parties) include both such Indemnified
Person or Indemnified Party (as the case may be) and the indemnifying party, and such Indemnified Person or such Indemnified Party (as
the case may be) shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Person or such Indemnified Party and the indemnifying party (in which case, if such Indemnified Person or such Indemnified
Party (as the case may be) notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the
indemnifying party, then the indemnifying party shall not have the right to assume the defense thereof and such counsel shall be at the
expense of the indemnifying party), provided further that in the case of clause (iii) above the indemnifying party shall not be responsible
for the reasonable fees and expenses of more than one (1) separate legal counsel for such Indemnified Person or Indemnified Party (as
the case may be). The Indemnified Party or Indemnified Person (as the case may be) shall reasonably cooperate with the indemnifying party
in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or Indemnified Person (as the case may be) which relates to such
action or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person (as the case may be) reasonably apprised
at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable
for any settlement of any action, claim or proceeding effected without its prior written consent; provided, however, the indemnifying
party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent
of the Indemnified Party or Indemnified Person (as the case may be), consent to entry of any judgment or enter into any settlement or
other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified
Party or Indemnified Person (as the case may be) of a release from all liability in respect to such Claim or litigation, and such settlement
shall not include any admission as to fault on the part of the Indemnified Party. Following indemnification as provided for hereunder,
the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person (as the case may be) with respect
to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified Party (as the case may be) under this Section 6, except to the extent
that the indemnifying party is materially and adversely prejudiced in its ability to defend such action.
(d) The
indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
(e) The
indemnity and contribution agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified
Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject
to pursuant to the law.
7. Contribution.
To
the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable Securities which
Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall
be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation;
and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the amount of net proceeds received by such
seller from the applicable sale of such Registrable Securities pursuant to such Registration Statement. Notwithstanding the provisions
of this Section 7, no Investor shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net
proceeds actually received by such Investor from the applicable sale of the Registrable Securities subject to the Claim exceeds the amount
of any damages that such Investor has otherwise been required to pay, or would otherwise be required to pay under Section 6(b), by reason
of such untrue or alleged untrue statement or omission or alleged omission.
8. Reports Under the 1934 Act.
With
a view to making available to the Investors the benefits of Rule 144, the Company agrees to:
(a) make
and keep public information available, as those terms are understood and defined in Rule 144;
(b) file
with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood and agreed that nothing herein shall limit any obligations of the
Company under the Securities Purchase Agreement) and the filing of such reports and other documents is required for the applicable provisions
of Rule 144 (which reports may be filed after the original filing deadline pursuant to an extension permitted by Rule 12b-25 under the
1934 Act); and
(c) furnish
to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company,
if true, that it has complied with the reporting, submission and posting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii)
a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company with
the SEC if such reports are not publicly available via EDGAR, and (iii) such other information as may be reasonably requested to permit
the Investors to sell such securities pursuant to Rule 144 without registration.
9. Assignment of Registration Rights.
All
or any portion of the rights under this Agreement shall be automatically assignable by each Investor to any transferee or assignee (as
the case may be) of all or any portion of such Investor’s Registrable Securities or Warrants if: (i) such Investor agrees in writing
with such transferee or assignee (as the case may be) to assign all or any portion of such rights, and a copy of such agreement is furnished
to the Company within a reasonable time after such transfer or assignment (as the case may be); (ii) the Company is, within a reasonable
time after such transfer or assignment (as the case may be), furnished with written notice of (a) the name and address of such transferee
or assignee (as the case may be), and (b) the securities with respect to which such registration rights are being transferred or assigned
(as the case may be); (iii) immediately following such transfer or assignment (as the case may be) the further disposition of such securities
by such transferee or assignee (as the case may be) is restricted under the 1933 Act or applicable state securities laws if so required;
(iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence such transferee or assignee
(as the case may be) agrees in writing with the Company to be bound by all of the provisions contained herein; (v) such transfer or assignment
(as the case may be) shall have been made in accordance with the applicable requirements of the Securities Purchase Agreement and the
Warrants (as the case may be); and (vi) such transfer or assignment (as the case may be) shall have been conducted in accordance with
all applicable federal and state securities laws.
10. Amendment of Registration Rights.
Provisions
of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and the Required Holders; provided that any such amendment or waiver
that complies with the foregoing, but that disproportionately, materially and adversely affects the rights and obligations of any Investor
relative to the comparable rights and obligations of the other Investors shall require the prior written consent of such adversely affected
Investor. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company, provided
that no such amendment shall be effective to the extent that it (1) applies to less than all of the holders of Registrable Securities
or (2) imposes any obligation or liability on any Investor without such Investor’s prior written consent (which may be granted
or withheld in such Investor’s sole discretion). No waiver shall be effective unless it is in writing and signed by an authorized
representative of the waiving party. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification
of any provision of this Agreement unless the same consideration (other than the reimbursement of legal fees) also is offered to all
of the parties to this Agreement.
11. Miscellaneous.
(a) Solely
for purposes of this Agreement, a Person is deemed to be a holder of Registrable Securities whenever such Person owns, or is deemed to
own, of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons
with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from
such record owner of such Registrable Securities.
(b) Any
notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic mail
(provided that such sent email is kept on file (whether electronically or otherwise) by the sending party and the sending party does
not receive an automatically generated message from the recipient’s email server that such e-mail could not be delivered to such
recipient); or (iii) one (1) Business Day after deposit with a nationally recognized overnight delivery service with next day delivery
specified, in each case, properly addressed to the party to receive the same. The mailing addresses and e-mail addresses for such communications
shall be:
If
to the Company:
Eastside
Distilling, Inc..
755
Main Street
Monroe,
CT 06468
Telephone:
____________
Attention:
____________
Email:
____________
With
a copy (for informational purposes only) to:
Nason
Yeager Gerson Harris & Fumero, P.A.
3001
PBG Boulevard, Suite 305
Palm
Beach Gardens, FL 33410
Telephone:
_____________
Attention:
____________
Email:
____________
If
to the Transfer Agent:
Transfer
Online, Inc.
512
SE Salmon Street
Portland,
Oregon 97214
Telephone:
___________
Attention:
____________
Email:
_______________
If
to Legal Counsel:
Kelley
Drye & Warren LLP
3
World Trade Center
175
Greenwich Street
New
York, NY 10007
Telephone:
__________
Attention:
____________
E-mail:
____________
If
to a Buyer, to its mailing address and/or email address set forth on the Schedule of Buyers attached to the Securities Purchase Agreement,
with copies to such Buyer’s representatives as set forth on the Schedule of Buyers, or to such other mailing address and/or email
address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party
five (5) days prior to the effectiveness of such change, provided that Kelley Drye & Warren LLP shall only be provided notices sent
to the lead investor. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s e-mail containing the time, date and recipient’s e-mail or (C)
provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by e-mail or receipt from
a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
(c) Failure
of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof. The Company and each Investor acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that each party hereto shall be entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement by any other party hereto and to enforce specifically the terms and provisions hereof (without the necessity
of showing economic loss and without any bond or other security being required), this being in addition to any other remedy to which
any party may be entitled by law or equity.
(d) All
questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws
of the State of Delaware, without giving effect to any provision or rule (whether of the State of Delaware or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of Delaware. Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in Wilmington, Delaware, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.
Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT
TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.
(e) If
any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction,
the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that
it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining
provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions
of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question
does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the
benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited,
invalid or unenforceable provision(s).
(f) This
Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein
and therein constitute the entire agreement among the parties hereto and thereto solely with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein.
This Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced
herein and therein supersede all prior agreements and understandings among the parties hereto solely with respect to the subject matter
hereof and thereof; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed
to) (i) have any effect on any agreements any Investor has entered into with the Company or any of its Subsidiaries prior to the date
hereof with respect to any prior investment made by such Investor in the Company, (ii) waive, alter, modify or amend in any respect any
obligations of the Company or any of its Subsidiaries or any rights of or benefits to any Investor or any other Person in any agreement
entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries and any Investor and all such agreements
shall continue in full force and effect or (iii) limit any obligations of the Company under any of the other Transaction Documents.
(g) Subject
to compliance with Section 9 (if applicable), this Agreement shall inure to the benefit of and be binding upon the permitted successors
and assigns of each of the parties hereto. This Agreement is not for the benefit of, nor may any provision hereof be enforced by, any
Person, other than the parties hereto, their respective permitted successors and assigns and the Persons referred to in Sections 6 and
7 hereof.
(h) The
headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Unless the
context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural
forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed
broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof”
and words of like import refer to this entire Agreement instead of just the provision in which they are found.
(i) This
Agreement may be executed in two or more identical counterparts, each of which shall be deemed an original, but all of which shall be
considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the
other party. In the event that any signature is delivered by facsimile transmission or by an email which contains a portable document
format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
(j) Each
party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents as any other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(k) The
language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party. Notwithstanding anything to the contrary set forth in Section 10, terms used in
this Agreement but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date in such
other Transaction Documents unless otherwise consented to in writing by each Investor.
(l) All
consents and other determinations required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise specified
in this Agreement, by the Required Holders, determined as if all of the outstanding Warrants then held by the Investors have been exercised
for Registrable Securities without regard to any limitations on exercise of the Warrants then held by Investors.
(m) This
Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
(n) The
obligations of each Investor under this Agreement and the other Transaction Documents are several and not joint with the obligations
of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under
this Agreement or any other Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken
by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as, and the Company acknowledges that the Investors
do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that
the Investors are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated
by the Transaction Documents or any matters, and the Company acknowledges that the Investors are not acting in concert or as a group,
and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated by this Agreement
or any of the other the Transaction Documents. Each Investor shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary
for any other Investor to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect
to the obligations of the Company contained herein was solely in the control of the Company, not the action or decision of any Investor,
and was done solely for the convenience of the Company and not because it was required or requested to do so by any Investor. It is expressly
understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and
an Investor, solely, and not between the Company and the Investors collectively and not between and among Investors.
[signature
page follows]
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to
be duly executed as of the date first written above.
| |
COMPANY: |
| |
EASTSIDE
DISTILLING, INC. |
| |
|
|
| |
By: |
|
| |
Name: |
Geoffrey
Gwin |
| |
Title: |
Chief
Executive Officer |
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to
be duly executed as of the date first written above.
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to
be duly executed as of the date first written above.
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to
be duly executed as of the date first written above.
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to
be duly executed as of the date first written above.
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to
be duly executed as of the date first written above.
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to
be duly executed as of the date first written above.
Exhibit
10.5
shareholder
PLEDGE AGREEMENT
SECURITY
AND PLEDGE AGREEMENT, dated as of November __, 2024 (this “Agreement”), made by Eastside Distilling, Inc., a Nevada
corporation (the “Pledgor”) with offices located at 755 Main Street, Monroe, CT 06468, in favor of __________,
a ______________, with offices located at _________________, in its capacity as collateral agent (together with its successors and assignees,
in such capacity, the “Collateral Agent”) for the Noteholders (as defined below) party to the Securities Purchase
Agreement (as defined below).
W
I T N E S S E T H:
WHEREAS,
the Pledgor is party to that certain Securities Purchase Agreement, dated as of November __, 2024 (as amended, modified, supplemented,
extended, renewed, restated or replaced from time to time in accordance with the terms thereof, the “Securities Purchase Agreement”)
by and among the Pledgor and each party listed as a “Buyer” on the Schedule of Buyers attached thereto (each a “Buyer”
and collectively, the “Buyers”), pursuant to which the Pledgor shall sell, and the Buyers shall purchase, the “Notes”
issued pursuant thereto (as such Notes may be amended, modified, supplemented, extended, renewed, restated or replaced from time to time
in accordance with the terms thereof, collectively, the “Notes”);
WHEREAS,
it is a condition precedent to the Buyers’ obligation to purchase the Notes that Pledgor shall have executed and delivered to the
Collateral Agent this Agreement providing for the grant to the Collateral Agent, for the ratable benefit of itself and the Noteholders,
of a valid, enforceable, and perfected security interest in the Pledged Collateral to secure all of Obligations (as defined below) under
the Transaction Documents; and
NOW,
THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Buyers to perform under the Securities
Purchase Agreement, Pledgor agrees with the Collateral Agent, for the ratable benefit of the Collateral Agent and the Noteholders, as
follows:
Section
1. Definitions.
(a) Reference
is hereby made to the Securities Purchase Agreement and the Notes for a statement of the terms thereof. All terms used in this Agreement
and the recitals hereto which are defined in the Securities Purchase Agreement, the Notes or in the Code, and which are not otherwise
defined herein shall have the same meanings herein as set forth therein; provided that terms used herein which are defined in
the Code on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of the Code.
(b) Without
limiting the generality of, and subject to the proviso at the end of, Section 1(a) of this Agreement, the following terms shall
have the respective meanings provided for in the Code: “Documents”, “Instruments”, “Investment Property”,
“Proceeds”, “Security”, “Record” and “Uncertificated Securities”.
(c) As
used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally
to both the singular and plural forms of such terms:
“Affiliate”
of any Person means any other Person which, directly or indirectly, controls or is controlled by or is under common control with such
Person and any officer or director of such Person. Without limiting the generality of the foregoing, a Person shall be deemed to be “controlled
by” any other Person if such Person possesses, directly or indirectly, power to vote 10% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of directors or managers or power to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
“Bankruptcy
Code” means Chapter 11 of Title 11 of the United States Code, 11 U.S.C §§ 101 et seq. (or other applicable bankruptcy,
insolvency or similar laws).
“Bankruptcy
Event of Default” has the meaning set forth in the Note.
“Business
Day” has the meaning set forth in the Securities Purchase Agreement.
“Buyer”
or “Buyers” shall have the meaning set forth in the recitals hereto.
“Capital
Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock (including, without limitation, any warrants, options, rights or other
securities exercisable or convertible into equity interests or securities of such Person), and (ii) with respect to any Person that is
not an individual or a corporation, any and all partnership, membership, trust or other equity interests of such Person.
“Closing
Date” means the date the Company initially issues the Notes pursuant to the terms of the Securities Purchase Agreement.
“Code”
means Articles 8 or 9 of the Uniform Commercial Code as in effect from time to time in the State of Nevada; provided that, if
perfection or the effect of perfection or non-perfection or the priority of any security interest in any Pledged Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Nevada, “Code” means the Uniform Commercial
Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect
of perfection or non-perfection or priority.
“Collateral
Agent” shall have the meaning set forth in the preamble hereto.
“Company”
shall have the meaning set forth in the preamble hereto.
“Event
of Default” shall have the meaning set forth in Section 3(a) of the Notes.
“GAAP”
means U.S. generally accepted accounting principles consistently applied.
“Governmental
Authority” means any nation or government, any Federal, state, city, town, municipality, county, local, foreign or other political
subdivision thereof or thereto and any department, commission, board, bureau, court, tribunal, instrumentality, agency or other entity
exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guarantor”
or “Guarantors” shall have the meaning set forth in the recitals hereto.
“Guaranty”
or “Guaranties” shall have the meaning set forth in the recitals hereto.
“Insolvency
Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any
other bankruptcy or insolvency law or law for the relief of debtors, any proceeding relating to assignments for the benefit of creditors,
formal or informal moratoria, compositions, or extensions generally with creditors, or any proceeding seeking reorganization, arrangement,
or other similar relief.
“Lien”
means any mortgage, lien, pledge, charge, security interest, adverse claim or other encumbrance upon or in any property or assets.
“Noteholders”
means, at any time, the holders of the Notes at such time.
“Notes”
shall have the meaning set forth in the recitals hereto.
“Obligations”
shall have the meaning set forth in Section 3 of this Agreement.
“Paid
in Full” or “Payment in Full” means the indefeasible payment in full in cash of all of the Obligations.
“Perfection
Requirement” or “Perfection Requirements” shall have the meaning set forth in Section 4(i) of this Agreement.
“Permitted
Liens” shall have the meaning set forth in the Notes.
“Person”
means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization,
joint venture or other enterprise or entity or Governmental Authority.
“Pledged
Collateral” shall have the meaning set forth in Section 2(a).
“Pledged
Entity” means, each Person listed from time to time on Schedule II hereto as a “Pledged Entity,” together
with each other Person, any right in or interest in or to all or a portion of whose Securities or Capital Stock is acquired or otherwise
owned by a Pledgor after the date hereof.
“Pledged
Equity” means all of Pledgor’s right, title and interest in and to all of the Securities and Capital Stock now or hereafter
owned by Pledgor (including, without limitation, those interests listed opposite the name of Pledgor on Schedule II), regardless
of class or designation, including all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating
thereto, also including, without limitation, any certificates representing such Securities and/or Capital Stock, the right to receive
any certificates representing any of such Securities and/or Capital Stock, all warrants, options, subscription, share appreciation rights
and other rights, contractual or otherwise, in respect thereof, and the right to receive dividends, distributions of income, profits,
surplus, or other compensation by way of income or liquidating distributions, in cash or in kind, and cash, instruments, and other property
from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of,
or in exchange for any or all of the foregoing.
“Pledged
Operating Agreements” means all of Pledgor’s rights, powers and remedies under the limited liability company operating
agreements of each of the Pledged Entities that is a limited liability company, as may be amended, modified, supplemented, extended,
renewed, restated or replaced from time to time.
“Pledged
Partnership Agreements” means all of Pledgor’s rights, powers, and remedies under the general or limited partnership
agreements of each of the Pledged Entities that is a general or limited partnership, as may be amended, modified, supplemented, extended,
renewed, restated or replaced from time to time.
“Pledged
Securities” means any stock certificates, limited liability membership interests or other Securities, certificates or Instruments
now or hereafter included in the Pledged Collateral, including all Pledged Equity, and all other certificates, instruments or other documents
representing or evidencing any Pledged Collateral.
“Securities
Purchase Agreement” shall have the meaning set forth in the recitals hereto.
“Subsidiary”
means any Person in which a Pledgor directly or indirectly, (i) owns any of the outstanding Capital Stock or holds any equity or
similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person,
and all of the foregoing, collectively, “Subsidiaries”.
Section
2. Pledge of Pledged Collateral.
(a) As
collateral security for the due and punctual payment and performance in full of the Obligations, as and when due, Pledgor hereby assigns
and pledges to the Collateral Agent, its successors and permitted assigns, and hereby grants to the Collateral Agent, its successors
and permitted assigns, for the ratable benefit of the Collateral Agent and the Noteholders, a continuing Lien on and security interest
in, all of Pledgor’s right, title and interest in, to and under all of the following, wherever located and whether now or hereafter
existing and whether now owned or hereafter acquired: (i) the Pledged Equity; (ii) subject to Section 2(f), all payments of principal
or interest, dividends, distributions, cash, Securities, Instruments and other property from time to time received, receivable or otherwise
distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds received in respect of, the Pledged Equity;
(iii) all rights and privileges of Pledgor with respect to the Securities and other property referred to in clauses (i) and (ii); and
(iv) all Proceeds of, and Security Entitlements in respect of, any of the foregoing (the items referred to in clauses (a)(i) through
(iv) above being collectively referred to as the “Pledged Collateral”).
(b) On
the Closing Date, Pledgor shall deliver or cause to be delivered to the Collateral Agent any and all Pledged Securities (other than any
Uncertificated Securities, but only for so long as such Securities remain uncertificated).
(c) Upon
delivery to the Collateral Agent, (i) any Pledged Securities required to be delivered pursuant to Section 2(b) shall be accompanied
by an undated stock power duly executed by Pledgor in blank or other instruments of transfer reasonably satisfactory to the Collateral
Agent and by such other instruments and documents as the Collateral Agent may reasonably request in order to effect the transfer of such
Pledged Securities and (ii) all other property comprising part of the Pledged Collateral required to be delivered pursuant to Section
2(b) shall be accompanied by undated proper instruments of assignment duly executed by Pledgor and such other instruments or documents
as the Collateral Agent may reasonably request in order to effect transfer of such Pledged Collateral.
(d) The
assignment, pledge, Lien and security interest granted in Section 2(a) are granted as security only and shall not subject the
Collateral Agent or any Noteholder to, or in any way alter or modify, any obligation or liability of Pledgor with respect to or arising
out of the Pledged Collateral.
(e) If
an Event of Default shall occur and be continuing and, other than in the case of a Bankruptcy Event of Default, the Collateral Agent
shall have notified the Company of its intent to exercise such rights, (a) the Collateral Agent, shall have the right (in its sole and
absolute discretion) to cause each of the Pledged Securities to be transferred of record into the name of the Collateral Agent or into
the name of its nominee (as pledgee or as sub-agent) or the name of Pledgor, endorsed or assigned in blank or in favor of the Collateral
Agent and (b) to the extent permitted by the documentation governing such Pledged Securities and applicable law, the Collateral Agent
shall have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations
for any purpose consistent with this Agreement. Pledgor will promptly give to the Collateral Agent copies of any material notices received
by it with respect to Pledged Securities registered in the name of Pledgor. Pledgor will take any and all actions reasonably requested
by the Collateral Agent to facilitate compliance with this Section 2(e).
(f) Unless
and until an Event of Default shall have occurred and be continuing and, other than in the case of a Bankruptcy Event of Default, the
Collateral Agent shall have notified Pledgor that the rights of Pledgor under this Section 2(f) are being suspended:
(i)
Pledgor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Collateral
or any part thereof for any purpose consistent with the terms of this Agreement and the other Transaction Documents;
(ii)
The Collateral Agent shall promptly execute and deliver to Pledgor, or cause to be executed and delivered to Pledgor, all such proxies,
powers of attorney and other instruments as Pledgor may reasonably request in writing for the purpose of enabling Pledgor to exercise
the voting and/or consensual rights and powers it is entitled to exercise pursuant to Section 2(f)(i), in each case as shall be
specified in such request; and
(iii)
Pledgor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed
in respect of the Pledged Collateral, to the extent (and only to the extent) that such dividends, interest, principal and other distributions
are permitted by, the other Transaction Documents and applicable laws; provided that any noncash dividends, interest, principal
or other distributions that would constitute Pledged Equity, whether resulting from a subdivision, combination or reclassification of
the outstanding equity interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof,
or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may
be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by Pledgor, shall be held in trust for
the benefit of the Collateral Agent and shall, to the extent required by Section 2(b) be forthwith delivered to the Collateral
Agent in the same form as so received (with any necessary endorsement or documents set forth in Section 2(c) or as otherwise reasonably
requested by the Collateral Agent). So long as no Event of Default has occurred and is continuing, the Collateral Agent shall promptly
deliver to Pledgor any Pledged Securities in its possession if requested to be delivered to the issuer thereof in connection with any
exchange or redemption of such Pledged Securities.
(g) Upon
the occurrence and during the continuance of an Event of Default and, other than in the case of a Bankruptcy Event of Default, after
the Collateral Agent shall have notified the Pledgors of the suspension of the rights of the Pledgors under Section 2(f)(iii),
all rights of Pledgor to dividends, interest, principal or other distributions that Pledgor is authorized to receive pursuant to Section
2(f)(iii) shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive
right and authority to receive and retain such dividends, interest, principal or other distributions as part of the Pledged Collateral,
subject to Section 2(j) and the last sentence of this Section 2(g). All dividends, interest, principal or other distributions
received by Pledgor contrary to the provisions of Section 2(f) or this Section 2(g) shall be held in trust for the benefit
of the Collateral Agent and shall be forthwith delivered to the Collateral Agent upon demand in the same form as so received (with any
necessary endorsement reasonably requested by the Collateral Agent). Any and all money and other property paid over to or received by
the Collateral Agent pursuant to the provisions of Section 2(h) and/or this Section 2(g) shall be retained by the Collateral
Agent in an account to be established by the Collateral Agent upon receipt of such money or other property, shall be held as security
for the payment and performance of the Obligations and shall be applied in accordance with the provisions of Section 7. After
all Events of Default have been cured or waived, and the Pledgors have delivered to the Collateral Agent a certificate of an executive
officer to such effect, the Collateral Agent shall promptly repay to Pledgor (without interest) all dividends, interest, principal or
other distributions that Pledgor would otherwise be permitted to retain pursuant to the terms of Section 2(h)(iii) in the absence
of an Event of Default and that remain in such account.
(h) Upon
the occurrence and during the continuance of an Event of Default and, other than in the case of a Bankruptcy Event of Default, after
the Collateral Agent shall have notified the Pledgors of the suspension of the rights of the Pledgors under Section 2(f)(i), all
rights of Pledgor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to Section 2(f)(i),
and the obligations of the Collateral Agent under Section 2(f)(ii), shall cease, and all such rights shall thereupon become vested
in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and
powers subject to Section 2(j) and the last sentence of this Section 2(h); provided that, the Collateral Agent shall
have the right from time to time following and during the continuance of an Event of Default to permit the Pledgors to exercise such
rights. After all Events of Default have been cured or waived, and the Pledgors have delivered to the Collateral Agent a certificate
of an executive officer to such effect, Pledgor shall have the exclusive right to exercise the voting and/or consensual rights and powers
that Pledgor would otherwise be entitled to exercise pursuant to the terms of Section 2(f)(i), and the obligations of the Collateral
Agent under Section 2(f)(ii) shall be reinstated.
(i) Any
notice given by the Collateral Agent to the Pledgors under Section 2(e), Section 2(f), Section 2(g), or Section
2(h) (i) may be given by telephone if promptly confirmed in writing, (ii) may be given with respect to one or more of the Pledgors
at the same or different times and (iii) may suspend the rights of the Pledgors under Section 2(f) in part without suspending
all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise affecting
the Collateral Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default
has occurred and is continuing.
(j) Nothing
contained in this Agreement shall be construed to make the Collateral Agent or any Noteholder liable as a member of any limited liability
company or as a partner of any partnership, and neither the Collateral Agent nor any Noteholder by virtue of this Agreement or otherwise
(except as referred to in the following sentence) shall have any of the duties, obligations or liabilities of a member of any limited
liability company or as a partner in any partnership. The parties hereto expressly agree that, unless the Collateral Agent shall become
the absolute owner of Pledged Equity consisting of a limited liability company interest or a partnership interest pursuant hereto, this
Agreement shall not be construed as creating a partnership or joint venture among the Collateral Agent, any Noteholder, Pledgor and/or
any other Person.
Section
3. Security for Obligations. The Lien and
security interest created in the Pledged Collateral under this Agreement constitutes continuing collateral security for all of the following
obligations, whether direct or indirect, absolute or contingent, and whether now existing or hereafter incurred (collectively, the “Obligations”):
(a) (i)
the payment by the Pledgor, each Grantor, as and when due and payable (by scheduled maturity, required prepayment, acceleration, demand
or otherwise), of all amounts from time to time owing by it in respect of the Securities Purchase Agreement, this Agreement, the Notes
and the other Transaction Documents (including the Warrants and the Registration Rights Agreement until such time the Notes are indefeasibly
paid in full), and (ii) in the case of the Guarantors, the payment by such Guarantors, as and when due and payable of all Obligations
(as defined in the Guaranties) under the Guaranties, including, without limitation, in both cases, (A) all principal of, interest, make-whole
and other amounts on the Notes (including, without limitation, all interest, make-whole and other amounts that accrues after the commencement
of any Insolvency Proceeding of Pledgor, whether or not the payment of such interest is enforceable or is allowable in such Insolvency
Proceeding), and (B) all fees, interest, premiums, penalties, contract causes of action, costs, commissions, expense reimbursements,
indemnifications and all other amounts due or to become due under this Agreement or any of the Transaction Documents (including the Warrants
and the Registration Rights Agreement until such time the Notes are indefeasibly paid in full); and
(b) the
due and punctual performance and observance by Pledgor of all of its other obligations from time to time existing in respect of any of
the Transaction Documents (including the Warrants and the Registration Rights Agreement until such time the Notes are indefeasibly paid
in full), including without limitation, with respect to any conversion or redemption rights of the Noteholders under the Notes.
Section
4. Representations and Warranties. Pledgor
represents and warrants as follows:
(a) Schedule
I hereto sets forth (i) the exact legal name of Pledgor, and (ii) the state of incorporation, organization or formation and the organizational
identification number of Pledgor in such state. The information set forth in Schedule I hereto with respect to Pledgor is true
and accurate in all respects. Such Pledgor has not previously changed its name (or operated under any other name), jurisdiction of organization
or organizational identification number from those set forth in Schedule I hereto except as disclosed in Schedule I hereto.
(b) There
is no pending or, to its knowledge, written notice threatening any action, suit, proceeding or claim affecting Pledgor before any Governmental
Authority or any arbitrator, or any order, judgment or award issued by any Governmental Authority or arbitrator, in each case, that may
adversely affect the grant by Pledgor, or the perfection, of the Lien and security interest purported to be created hereby in the Pledged
Collateral, or the exercise by the Collateral Agent of any of its rights or remedies hereunder.
(c) All
Federal, state and local tax returns and other reports required by applicable law to be filed by Pledgor have been filed, or extensions
have been obtained, and all taxes, assessments and other governmental charges or levies imposed upon Pledgor or any property of Pledgor
(including, without limitation, all federal income and social security taxes on employees’ wages) and which have become due and
payable on or prior to the date hereof have been paid, except to the extent contested in good faith by proper proceedings which stay
the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves have been
set aside for the payment thereof in accordance with GAAP, or otherwise provided in the Securities Purchase Agreement.
(d) Pledgor’s
principal place of business and chief executive office, the place where Pledgor keeps its Records concerning the Pledged Collateral are
located and will continue to be located at the addresses specified therefor in Schedule III hereto.
(e) Set
forth in Schedule III hereto is a complete and correct list of each trade name used by Pledgor and the name of, and each trade
name used by, each Person from which Pledgor has acquired any substantial part of the Pledged Collateral.
(f) Pledgor
is and will be at all times the sole and exclusive owner of the Pledged Collateral in which Pledgor has granted a Lien and security interest
hereunder free and clear of any Liens, except for Permitted Liens thereon. No effective financing statement or other instrument similar
in effect covering all or any part of the Pledged Collateral is on file in any recording or filing office except such as (i) may have
been filed in favor of the Collateral Agent and/or the Noteholders relating to this Agreement or the other Transaction Documents, or
(ii) are intended to perfect Permitted Liens existing as of the date hereof and disclosed on Schedule III hereto.
(g) To
the knowledge of Pledgor, the exercise by the Collateral Agent of any of its rights and remedies hereunder will not contravene any law
or any contractual restriction binding on or otherwise affecting Pledgor or any of its properties and will not result in or require the
creation of any Lien, upon or with respect to any of its properties other than as granted pursuant to this Agreement.
(h) No
authorization or approval or other action by, and no notice to or filing with, any Governmental Authority, is required for (i) the grant
by Pledgor, or the perfection, of the Lien and security interest purported to be created hereby in the Pledged Collateral, or (ii) the
exercise by the Collateral Agent of any of its rights and remedies hereunder, except for (A) the filing under the Code as in effect in
the applicable jurisdiction of the financing statements described in Schedule III hereto, (B) with respect to any uncertificated
securities, Pledgor causing the issuer thereof either (i) to register the Collateral Agent as the registered owner of such securities
or (ii) to agree in an authenticated record with Pledgor and the Collateral Agent that such issuer will comply with instructions with
respect to such securities originated by the Collateral Agent without further consent of Pledgor, such authenticated record to be in
form and substance satisfactory to the Collateral Agent, (C) with respect certificated securities or instruments, such items to be delivered
to and held by or on behalf of the Collateral Agent pursuant hereto in suitable form for transfer by delivery or accompanied by duly
executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Collateral Agent, and (D) the
Collateral Agent having possession of all Documents and Instruments constituting Collateral (subclauses (A) through (D) each a “Perfection
Requirement” and collectively, the “Perfection Requirements”).
(i) This
Agreement creates in favor of the Collateral Agent a legal, valid and enforceable Lien on and security interest in the Pledged Collateral,
as security for the Obligations. The performance of the Perfection Requirements shall result in the perfection of such Lien on and security
interest in the Pledged Collateral. Such Lien and security interest is (or in the case of Collateral in which Pledgor obtains any right,
title or interest after the date hereof, will be), subject only to Permitted Liens and the Perfection Requirements, a first priority,
valid, enforceable and perfected Lien on and security interest in all personal property of Pledgor. Subject to the performance of the
Perfection Requirements as contemplated herein, such recordings and filings and all other action necessary to perfect and protect such
Lien and security interest have been duly taken (and, in the case of Collateral in which Pledgor obtains right, title or interest after
the date hereof , will be duly taken), except for the Collateral Agent’s having possession of all Documents, and Instruments constituting
Collateral after the date hereof and the other actions, filings and recordations described above.
(j) All
of the Pledged Equity is presently owned by Pledgor as set forth in Schedule II free and clear of all Liens other than Permitted
Liens, and is presently represented by the certificates listed on Schedule II hereto (if applicable). As of the date hereof, except
as set forth in Schedule II, there are no existing options, warrants, calls or commitments of any character whatsoever relating
to the Pledged Equity other than as contemplated and permitted by the Transaction Documents. Pledgor is the sole holder of record and
the sole beneficial owner of the Pledged Equity, as applicable. None of the Pledged Equity has been issued or transferred in violation
of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject.
The Pledged Equity constitutes 100% or such other percentage as set forth on Schedule II of the issued and outstanding shares
of Capital Stock of the Pledged Entity. All of the Pledged Equity has been duly and validly authorized and issued by the issuer thereof
and (i) in the case of Pledged Equity (other than Pledged Equity consisting of limited liability company interests or partnership interests
which, pursuant to the relevant organizational or formation documents, cannot be fully paid and non-assessable), is fully paid and non-assessable.
(k) Pledgor
(i) is a corporation, limited liability company or limited partnership, as applicable, duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, organization or formation, (ii) has all requisite corporate, limited liability
company or limited partnership power and authority to conduct its business as now conducted and as presently contemplated and to execute
and deliver this Agreement and each other Transaction Document to which Pledgor is a party, and to consummate the transactions contemplated
hereby and thereby and (iii) is duly qualified to do business and is in good standing in each jurisdiction in which the character of
the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except where the
failure to be so qualified would not result in a Material Adverse Effect.
(l) The
execution, delivery and performance by Pledgor of this Agreement (i) have been duly authorized by all necessary corporate, limited liability
company or limited partnership action, (ii) do not and will not contravene its charter or by-laws, limited liability company or operating
agreement, certificate of partnership or partnership agreement, as applicable, or any applicable law or any contractual restriction binding
on Pledgor or its properties, (iii) do not and will not result in or require the creation of any Lien (other than pursuant to any Transaction
Document) upon or with respect to any of its assets or properties, and (iv) do not and will not result in any default, noncompliance,
suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to
it or its operations or any of its material assets or properties.
(m) This
Agreement has been duly executed and delivered by Pledgor and is the legal, valid and binding obligation of Pledgor, enforceable against
Pledgor in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, suretyship or other similar laws and equitable principles (regardless of whether enforcement is sought in equity or at law).
Section
5. Covenants as to the Pledged Collateral.
Until all of the Obligations shall have been fully performed and Paid in Full, unless the Collateral Agent shall otherwise consent in
writing (in its sole and absolute discretion):
(a) Further
Assurances. Pledgor will, at its expense, at any time and from time to time, promptly execute and deliver all further instruments
and documents and take all further action that the Collateral Agent may reasonably request in order to: (i) perfect and protect the Lien
and security interest of the Collateral Agent created hereby; (ii) enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder in respect of the Pledged Collateral; or (iii) otherwise effect the purposes of this Agreement, including, without
limitation, taking all actions required by the Code or by other law, as applicable, in any relevant Code jurisdiction, or by other law
as applicable in any foreign jurisdiction.
(b) Provisions
Concerning Name, Organization, Location, Accounts and Licenses.
(i) Pledgor
will (A) give the Collateral Agent at least twenty days’ prior written notice of any change in Pledgor’s name, identity or
organizational structure, (B) maintain its jurisdiction of incorporation, organization or formation as set forth in Schedule I
hereto, (C) immediately notify the Collateral Agent upon obtaining an organizational identification number, if on the date hereof Pledgor
did not have such identification number, and (D) keep adequate records concerning the Pledged Collateral and permit representatives of
the Collateral Agent during normal business hours on reasonable notice to Pledgor, to inspect and make abstracts from such records.
(c) Control.
Pledgor hereby agrees to take any or all action that may be necessary or that the Collateral Agent may reasonably request in order for
the Collateral Agent to obtain “control” in accordance with Sections 9-106 of the Code with respect to Investment Property.
Section
6. Additional Provisions Concerning the Pledged
Collateral.
(a) To
the maximum extent permitted by applicable law, and for the purpose of taking any action that the Collateral Agent may deem necessary
or advisable to accomplish the purposes of this Agreement, Pledgor hereby (i) authorizes the Collateral Agent to execute any such agreements,
instruments or other documents in Pledgor’s name and to file such agreements, instruments or other documents in Pledgor’s
name and in any appropriate filing office, (ii) authorizes the Collateral Agent at any time and from time to time to file, one or more
financing or continuation statements, and amendments thereto, relating to the Pledged Collateral and (iii) ratifies such authorization
to the extent that the Collateral Agent has filed any such financing or continuation statements, or amendments thereto, prior to the
date hereof. A photocopy or other reproduction of this Agreement or any financing statement covering the Pledged Collateral or any part
thereof shall be sufficient as a financing statement where permitted by law.
(b) Pledgor
hereby irrevocably appoints the Collateral Agent as its attorney-in-fact and proxy, with full authority in the place and stead of Pledgor
and in the name of Pledgor or otherwise, from time to time in the Collateral Agent’s discretion, to take any action and to execute
any instrument which the Collateral Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including, without
limitation, (i) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to
become due under or in respect of any Pledged Collateral, (ii) to receive, endorse, and collect any drafts or other Instruments and Documents
in connection with clause (i) above, (iii) to file any claims or take any action or institute any action, suit or proceedings which the
Collateral Agent may deem necessary or desirable for the collection of any Pledged Collateral or otherwise to enforce the rights of the
Collateral Agent and the Noteholders with respect to any Pledged Collateral and (iv) to execute assignments, licenses and other documents
to enforce the rights of the Collateral Agent and the Noteholders with respect to any Collateral. This power is coupled with an interest
and is irrevocable until all of the Obligations are fully performed and Paid in Full.
(c) If
Pledgor fails to perform any agreement or obligation contained herein, the Collateral Agent may itself perform, or cause performance
of, such agreement or obligation, in the name of Pledgor or the Collateral Agent, and the expenses of the Collateral Agent incurred in
connection therewith shall be payable by Pledgor pursuant to Section 8 hereof and such obligation shall be secured by the Pledged
Collateral.
(d) The
powers conferred on the Collateral Agent hereunder are solely to protect its interest in the Pledged Collateral and shall not impose
any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining to any Collateral.
Section
7. Remedies Upon Event of Default; Application of
Proceeds. If any Event of Default shall have occurred and be continuing:
(a) The
Collateral Agent may exercise in respect of the Pledged Collateral, in addition to any other rights and remedies provided for herein,
in any other Transaction Document or otherwise available to it, all of the rights and remedies of a secured party upon default under
the Code (whether or not the Code applies to the affected Collateral), and also may (i) take absolute control of the Pledged Collateral,
including, without limitation, transfer into the Collateral Agent’s name or into the name of its nominee or nominees (to the extent
the Collateral Agent has not theretofore done so) and thereafter receive, for the ratable benefit of itself and the Noteholders, all
payments made thereon, give all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though
it were the outright owner thereof and (ii) without notice except as specified below and without any obligation to prepare or process
the Pledged Collateral for sale, (A) sell the Pledged Collateral or any part thereof in one or more parcels at public or private sale
(including, without limitation, by credit bid), at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for
future delivery, and at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable and/or
(B) lease, license or dispose of the Pledged Collateral or any part thereof upon such terms as the Collateral Agent may deem commercially
reasonable. Pledgor agrees that, to the extent notice of sale or any other disposition of its respective Collateral shall be required
by law, at least ten (10) days’ notice to Pledgor of the time and place of any public sale or the time after which any private
sale or other disposition of its respective Collateral is to be made shall constitute reasonable notification. The Collateral Agent shall
not be obligated to make any sale or other disposition of any Collateral regardless of notice of sale having been given. The Collateral
Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so adjourned. Pledgor hereby waives any claims against the Collateral
Agent and the Noteholders arising by reason of the fact that the price at which its respective Collateral may have been sold at a private
sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations,
even if the Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree, and waives
all rights that Pledgor may have to require that all or any part of such Collateral be marshaled upon any sale (public or private) thereof.
Pledgor hereby acknowledges that (i) any such sale of its respective Collateral by the Collateral Agent shall be made without warranty,
(ii) the Collateral Agent may specifically disclaim any warranties of title, possession, quiet enjoyment or the like, and (iii) such
actions set forth in clauses (i) and (ii) above shall not adversely affect the commercial reasonableness of any such sale of Collateral.
(b) In
the event that the proceeds of any such sale, disposition, collection or realization are insufficient to pay all amounts to which the
Collateral Agent and the Noteholders are legally entitled, Pledgor shall be, jointly and severally, liable for the deficiency, together
with interest thereon at the highest rate specified in the Notes for interest on overdue principal thereof or such other rate as shall
be fixed by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other charges of any attorneys
employed by the Collateral Agent to collect such deficiency.
(c) The
Collateral Agent shall not be required to marshal any present or future collateral security (including, but not limited to, this Agreement
and the Pledged Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security
or other assurances of payment in any particular order, and all of the Collateral Agent’s rights and remedies hereunder and in
respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies,
however existing or arising. To the extent that Pledgor lawfully may, Pledgor hereby agrees that it will not invoke any law relating
to the marshaling of collateral which might cause delay in or impede the enforcement of the Collateral Agent’s rights and remedies
under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations
is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully
may, Pledgor hereby irrevocably waives the benefits of all such laws.
Section
8. Indemnity and Expenses.
(a) Pledgor
agrees to defend, protect, indemnify and hold the Collateral Agent and each of the Noteholders harmless from and against any and all
claims, damages, losses, liabilities, obligations, penalties, fees, costs and expenses (including, without limitation, reasonable legal
fees, costs, expenses, and disbursements of such Person’s counsel) to the extent that they arise out of or otherwise result from
this Agreement (including, without limitation, enforcement of this Agreement), except to the extent resulting from such Person’s
gross negligence or willful misconduct, as determined by a final judgment of a court of competent jurisdiction no longer subject to appeal.
(b) Pledgor
agrees to pay to the Collateral Agent upon demand the amount of any and all costs and expenses, including the reasonable fees, costs,
expenses and disbursements of counsel for the Collateral Agent and of any experts and agents (including, without limitation, any collateral
trustee which may act as agent of the Collateral Agent), which the Collateral Agent may incur in connection with (i) the preparation,
negotiation, execution, delivery, recordation, administration, amendment, waiver or other modification or termination of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any Pledged Collateral,
(iii) the exercise or enforcement of any of the rights or remedies of the Collateral Agent hereunder, or (iv) the failure by Pledgor
to perform or observe any of the provisions hereof.
Section
9. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing and shall be mailed (by certified mail, first-class postage prepaid and return receipt requested),
telecopied, e-mailed or delivered, if to Pledgor, to the Company’s address, or if to the Collateral Agent or any Noteholder, to
it at its respective address, each as set forth in Section 9(f) of the Securities Purchase Agreement; or as to any such Person,
at such other address as shall be designated by such Person in a written notice to all other parties hereto complying as to delivery
with the terms of this Section 9. All such notices and other communications shall be effective (a) if sent by certified mail,
return receipt requested, when received or five Business Days after deposited in the mails, whichever occurs first, (b) if telecopied
or e-mailed, when transmitted (during normal business hours) and confirmation is received, and otherwise, the day after the notice or
communication was transmitted and confirmation is received, or (c) if delivered in person, upon delivery.
Section
10. Miscellaneous.
(a) No
amendment of any provision of this Agreement shall be effective unless it is in writing and signed by Pledgor and the Collateral Agent
(and approved by the Required Holders), and no waiver of any provision of this Agreement, and no consent to any departure by Pledgor
therefrom, shall be effective unless it is in writing and signed by Pledgor and the Collateral Agent (and approved by the Required Holders),
and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment,
modification or waiver of this Agreement shall be effective to the extent that it (1) applies to fewer than all of the holders of Notes
or (2) imposes any obligation or liability on any holder of Notes without such holder’s prior written consent (which may be granted
or withheld in such holder’s sole and absolute discretion).
(b) No
failure on the part of the Collateral Agent to exercise, and no delay in exercising, any right or remedy hereunder or under any of the
other Transaction Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right or remedy preclude
any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies of the Collateral Agent or
any Noteholder provided herein and in the other Transaction Documents are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law. The rights and remedies of the Collateral Agent or any Noteholder under any of the other Transaction
Documents against any party thereto are not conditional or contingent on any attempt by such Person to exercise any of its rights or
remedies under any of the other Transaction Documents against such party or against any other Person, including but not limited to, Pledgor.
(c) Any
provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
(d) This
Agreement shall create a continuing Lien on and security interest in the Pledged Collateral and shall (i) remain in full force and effect
until the full performance and Payment in Full of the Obligations, and (ii) be binding on Pledgor and all other Persons who become bound
as debtor to this Agreement in accordance with Section 9-203(d) of the Code and shall inure, together with all rights and remedies of
the Collateral Agent and the Noteholders hereunder, to the ratable benefit of the Collateral Agent and the Noteholders and their respective
permitted successors, transferees and assigns. Without limiting the generality of clause (ii) of the immediately preceding sentence,
without notice to Pledgor, the Collateral Agent and the Noteholders may assign or otherwise transfer their rights and obligations under
this Agreement and any of the other Transaction Documents, to any other Person and such other Person shall thereupon become vested with
all of the benefits in respect thereof granted to the Collateral Agent and the Noteholders herein or otherwise. Upon any such assignment
or transfer, all references in this Agreement to the Collateral Agent or any such Noteholder shall mean the assignee of the Collateral
Agent or such Noteholder. None of the rights or obligations of Pledgor hereunder may be assigned, delegated or otherwise transferred
without the prior written consent of the Collateral Agent in its sole and absolute discretion, and any such assignment, delegation or
transfer without such consent of the Collateral Agent shall be null and void.
(e) Upon
the full performance and Payment in Full of the Obligations, (i) this Agreement and the security interests created hereby shall terminate
and all rights to the Pledged Collateral shall revert to the respective Pledgor that granted such security interests hereunder, and (ii)
the Collateral Agent will, upon Pledgor’s request and at Pledgor’s expense, (A) return to Pledgor such of the Pledged Collateral
as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof and (B) execute and deliver to Pledgor such
documents as Pledgor shall reasonably request to evidence such termination, all without any representation, warranty or recourse whatsoever.
(f) Governing
Law; Jurisdiction; Jury Trial.
(i) All
questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws
of the State of Delaware, without giving effect to any provision or rule of law (whether of the State of Delaware or any other jurisdictions)
that would cause the application of the laws of any jurisdiction other than the State of Delaware.
(ii) Pledgor
hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Wilmington, Delaware for the adjudication
of any dispute hereunder or in connection herewith or under any of the other Transaction Documents or with any transaction contemplated
hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim, defense or objection
that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for
such notices to it under Section 9 hereunder and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by
law. Nothing contained herein shall be deemed or operate to preclude the Collateral Agent or the Noteholders from bringing suit or taking
other legal action against Pledgor in any other jurisdiction to collect on a Pledgor’s obligations or to enforce a judgment or
other court ruling in favor of the Collateral Agent or a Noteholder.
(iii) WAIVER
OF JURY TRIAL, ETC. EACH GRANTOR IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(iv) Pledgor
irrevocably and unconditionally waives any right it may have to claim or recover in any legal action, suit or proceeding referred to
in this Section any special, exemplary, indirect, incidental, punitive or consequential damages.
(g) Section
headings herein are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.
(h) This
Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall
be deemed to be an original, but all of which taken together constitute one and the same Agreement. Delivery of any executed counterpart
of a signature page of this Agreement by pdf, facsimile or other electronic transmission shall be effective as delivery of a manually
executed counterpart of this Agreement.
(i) This
Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations is
rescinded or must otherwise be returned by the Collateral Agent, any Noteholder or any other Person (upon (i) the occurrence of any Insolvency
Proceeding of any of the Company or Pledgor or (ii) otherwise, in all cases as though such payment had not been made).
Section
11. Material Non-Public Information. Upon
receipt or delivery by Pledgor of any notice in accordance with the terms of this Agreement, unless Pledgor has in good faith determined
that the matters relating to such notice do not constitute material, non-public information relating to the Pledgor or any of its Subsidiaries,
the Company shall within one (1) Business Days after any such receipt or delivery publicly disclose such material, non-public information
on a Current Report on Form 8-K or otherwise. In the event that Pledgor believes that a notice contains material, non-public information
relating to Pledgor or any of its Subsidiaries, Pledgor so shall indicate to the Collateral Agent and any applicable Noteholder contemporaneously
with delivery of such notice, and in the absence of any such indication, the Collateral Agent and each Noteholder shall be allowed to
presume that all matters relating to such notice do not constitute material, non-public information relating to Pledgor or its Subsidiaries.
Nothing contained in this Section 11 shall limit any obligations of Pledgor, or any rights or remedies of the Collateral Agent
or any Noteholder, under Section 4(i) of the Securities Purchase Agreement.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, Pledgor has caused this Agreement to be executed and delivered by its officer thereunto duly authorized, as of the date
first above written.
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EASTSIDE DISTILLING, INC. |
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Exhibit
10.6
SECURITY
AND PLEDGE AGREEMENT
SECURITY
AND PLEDGE AGREEMENT, dated as of November __, 2024 (this “Agreement”), made by Bridgetown Spirits Corp., a Nevada
corporation (the “Company”) with offices located at 755 Main Street, Monroe, CT 06468, and each of the undersigned
direct and indirect Subsidiaries (as defined below) that may from time to time become parties hereto (each a “Grantor”
and together with the Company, collectively, the “Grantors”), in favor of _____________, a ______________, with offices
located at _______________________, in its capacity as collateral agent (together with its successors and assignees, in such capacity,
the “Collateral Agent”) for the Noteholders (as defined below) party to the Securities Purchase Agreement (as defined
below).
W I T N E S S E T H:
WHEREAS,
the Eastside Distilling, Inc., a Nevada corporation (“Eastside”), is party to that certain Securities Purchase Agreement,
dated as of November __, 2024 (as amended, modified, supplemented, extended, renewed, restated or replaced from time to time in accordance
with the terms thereof, the “Securities Purchase Agreement”) by and among Eastside and each party listed as a “Buyer”
on the Schedule of Buyers attached thereto (each a “Buyer” and collectively, the “Buyers”), pursuant
to which Eastside shall sell, and the Buyers shall purchase, the “Notes” issued pursuant thereto (as such Notes may be amended,
modified, supplemented, extended, renewed, restated or replaced from time to time in accordance with the terms thereof, collectively,
the “Notes”);
WHEREAS,
certain Grantors from time to time (each a “Guarantor” and collectively, the “Guarantors”) may
execute and deliver one or more guarantees (each, a “Guaranty” and collectively, the “Guaranties”)
in form and substance acceptable to and in favor of the Collateral Agent, for the ratable benefit of itself and the Noteholders, with
respect to the Obligations (as defined below);
WHEREAS,
it is a condition precedent to the Buyers’ obligation to purchase the Notes that the Grantors shall have executed and delivered
to the Collateral Agent this Agreement providing for the grant to the Collateral Agent, for the ratable benefit of itself and the Noteholders,
of a valid, enforceable, and perfected security interest in the Collateral to secure all of the Company’s obligations under the
Transaction Documents and the Guarantors’ obligations under the Guaranties, as applicable; and
WHEREAS,
the Grantors are Affiliates that are part of a common enterprise such that each Grantor will derive substantial direct and indirect financial
and other benefits from the consummation of the transactions contemplated under the Transaction Documents and, accordingly, the consummation
of such transactions are in the best interests of each Grantor;
NOW,
THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Buyers to perform under the Securities
Purchase Agreement, each Grantor agrees with the Collateral Agent, for the ratable benefit of the Collateral Agent and the Noteholders,
as follows:
Section
1. Definitions.
(a)
Reference is hereby made to the Securities Purchase Agreement and the Notes for a statement of the terms thereof. All terms used in this
Agreement and the recitals hereto which are defined in the Securities Purchase Agreement, the Notes or in the Code, and which are not
otherwise defined herein shall have the same meanings herein as set forth therein; provided that terms used herein which are defined
in the Code on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of the Code.
(b)
Without limiting the generality of, and subject to the proviso at the end of, Section 1(a) of this Agreement, the following terms shall
have the respective meanings provided for in the Code: “Accounts”, “Account Debtor”, “Cash Proceeds”,
“Certificate of Title”, “Chattel Paper”, “Commercial Tort Claim”, “Commodity Account”,
“Commodity Contracts”, “Deposit Account”, “Documents”, “Electronic Chattel Paper”, “Equipment”,
“Fixtures”, “General Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment
Property”, “Letter-of-Credit Rights”, “Noncash Proceeds”, “Payment Intangibles”, “Proceeds”,
“Promissory Notes”, “Security”, “Record”, “Security Account”, “Software”,
“Supporting Obligations” and “Uncertificated Securities”.
(c)
As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally
to both the singular and plural forms of such terms:
“Affiliate”
of any Person means any other Person which, directly or indirectly, controls or is controlled by or is under common control with such
Person and any officer or director of such Person. Without limiting the generality of the foregoing, a Person shall be deemed to be “controlled
by” any other Person if such Person possesses, directly or indirectly, power to vote 10% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of directors or managers or power to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
“Bankruptcy
Code” means Chapter 11 of Title 11 of the United States Code, 11 U.S.C §§ 101 et seq. (or other applicable bankruptcy,
insolvency or similar laws).
“Bankruptcy
Event of Default” has the meaning set forth in the Note.
“Business
Day” has the meaning set forth in the Securities Purchase Agreement.
“Buyer”
or “Buyers” shall have the meaning set forth in the recitals hereto.
“Capital
Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock (including, without limitation, any warrants, options, rights or other
securities exercisable or convertible into equity interests or securities of such Person), and (ii) with respect to any Person that is
not an individual or a corporation, any and all partnership, membership, trust or other equity interests of such Person.
“Closing
Date” means the date the Company initially issues the Notes pursuant to the terms of the Securities Purchase Agreement.
“Code”
means Articles 8 or 9 of the Uniform Commercial Code as in effect from time to time in the State of Nevada; provided that, if
perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of Nevada, “Code” means the Uniform Commercial
Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect
of perfection or non-perfection or priority.
“Collateral”
shall have the meaning set forth in Section 3(a) of this Agreement.
“Collateral
Agent” shall have the meaning set forth in the preamble hereto.
“Company”
shall have the meaning set forth in the preamble hereto.
“Controlled
Account Agreement” means a deposit account control agreement or securities account control agreement with respect to a Pledged
Account, pursuant to which the Collateral Agent is granted control over such Pledged Account in a manner that perfects its security interest
in such Pledged Account under applicable law, all in form and substance satisfactory to the Collateral Agent, as the same may be amended,
modified, supplemented, extended, renewed, restated or replaced from time to time.
“Controlled
Account Bank” shall have the meaning set forth in Section 6(i) of this Agreement.
“Controlled
Accounts” means the Deposit Accounts, Commodity Accounts, Securities Accounts, and/or Foreign Currency Controlled Account of
the Grantors, including the accounts listed on Schedule IV attached hereto.
“Copyright
Licenses” means all material licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee
or licensor and providing for the grant of any right to use or sell any works covered by any Copyright (including, without limitation,
all Copyright Licenses set forth in Schedule II hereto).
“Copyrights”
means all domestic and foreign copyrights, whether registered or not, including, without limitation, all copyright rights throughout
the universe (whether now or hereafter arising) in any and all media (whether now or hereafter developed), in and to all original works
of authorship fixed in any tangible medium of expression, acquired or used by any Grantor (including, without limitation, all copyrights
described in Schedule II hereto), all applications, registrations and recordings thereof (including, without limitation, applications,
registrations and recordings in the United States Copyright Office or in any similar office or agency of the United States or any other
country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals
thereof.
“Event
of Default” shall have the meaning set forth in Section 4(a) of the Notes.
“Foreign
Currency Controlled Accounts” means any Controlled Account of a Grantor or any of its Subsidiaries holding a deposit denominated
in a currency other than United States dollar.
“Foreign
Subsidiary” means any Subsidiary of a Grantor organized under the laws of a jurisdiction other than the United States, any
of the states thereof, Puerto Rico or the District of Columbia.
“GAAP”
means U.S. generally accepted accounting principles consistently applied.
“Governmental
Authority” means any nation or government, any Federal, state, city, town, municipality, county, local, foreign or other political
subdivision thereof or thereto and any department, commission, board, bureau, court, tribunal, instrumentality, agency or other entity
exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guarantor”
or “Guarantors” shall have the meaning set forth in the recitals hereto.
“Guaranty”
or “Guaranties” shall have the meaning set forth in the recitals hereto.
“Insolvency
Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any
other bankruptcy or insolvency law or law for the relief of debtors, any proceeding relating to assignments for the benefit of creditors,
formal or informal moratoria, compositions, or extensions generally with creditors, or any proceeding seeking reorganization, arrangement,
or other similar relief.
“Intellectual
Property” means, collectively, all intellectual property rights and assets, and all rights, interests and protections that
are associated with, similar to, or required for the exercise of, any of the foregoing, however arising, under the applicable laws of
any jurisdiction throughout the world, whether registered or unregistered, including, without limitation, any and all: (a) Trademarks;
(b) internet domain names, whether or not trademarks, registered in any top-level domain by any authorized private registrar or Governmental
Authority, web addresses, web pages, websites and related content; (c) accounts with YouTube, LinkedIn, Twitter, Instagram, Facebook
and other social media companies and the content found thereon (to the extent that such accounts and content are transferable pursuant
to the terms, conditions, and policies of each applicable social media platform); (d) Copyrights; (e) Patents; and (f) business and technical
information, databases, data collections and other confidential and proprietary information and all rights therein.
“Intellectual
Property Security Agreement” means the Intellectual Property Security Agreement required to be delivered pursuant to Section
6(h)(i) of this Agreement, substantially in the form attached hereto as Exhibit A.
“Licenses”
means, collectively, the Copyright Licenses, the Trademark Licenses and the Patent Licenses.
“Lien”
means any mortgage, lien, pledge, charge, security interest, adverse claim or other encumbrance upon or in any property or assets.
“Noteholders”
means, at any time, the holders of the Notes at such time.
“Notes”
shall have the meaning set forth in the recitals hereto.
“Obligations”
shall have the meaning set forth in Section 4 of this Agreement.
“Paid
in Full” or “Payment in Full” means the indefeasible payment in full in cash of all of the Obligations.
“Patent
Licenses” means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee or licensor
and providing for the grant of any right to manufacture, use or sell any invention covered by any Patent (including, without limitation,
all Patent Licenses set forth in Schedule II hereto).
“Patents”
means all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas,
concepts, methods, techniques, processes, proprietary information, technology, know-how, formulae, rights of publicity and other general
intangibles of like nature, now existing or hereafter acquired (including, without limitation, all domestic and foreign letters patent,
design patents, utility patents, industrial designs, inventions, trade secrets, ideas, concepts, methods, techniques, processes, proprietary
information, technology, know-how and formulae described in Schedule II hereto), all applications, registrations and recordings
thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office,
or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues,
reexaminations, divisions, continuations, continuations in part and extensions or renewals thereof.
“Perfection
Requirement” or “Perfection Requirements” shall have the meaning set forth in Section 5(j) of this Agreement.
“Permitted
Liens” shall have the meaning set forth in the Notes.
“Person”
means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization,
joint venture or other enterprise or entity or Governmental Authority.
“Pledged
Accounts” means all of each Grantor’s right, title and interest in all of its Deposit Accounts, Commodity Accounts and
Securities Accounts (in all cases, including, without limitation, all Controlled Accounts and Foreign Currency Control Accounts).
“Pledged
Collateral” shall have the meaning set forth in Section 2(a).
“Pledged
Debt” shall have the meaning set forth in Section 2(a).
“Pledged
Entity” means, each Person listed from time to time on Schedule IV hereto as a “Pledged Entity,” together
with each other Person, any right in or interest in or to all or a portion of whose Securities or Capital Stock is acquired or otherwise
owned by a Grantor after the date hereof.
“Pledged
Equity” means all of each Grantor’s right, title and interest in and to all of the Securities and Capital Stock now or
hereafter owned by such Grantor (including, without limitation, those interests listed opposite the name of such Grantor on Schedule
IV), regardless of class or designation, including all substitutions therefor and replacements thereof, all proceeds thereof and
all rights relating thereto, also including, without limitation, any certificates representing such Securities and/or Capital Stock,
the right to receive any certificates representing any of such Securities and/or Capital Stock, all warrants, options, subscription,
share appreciation rights and other rights, contractual or otherwise, in respect thereof, and the right to receive dividends, distributions
of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or in kind, and cash, instruments,
and other property from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution
of, on account of, or in exchange for any or all of the foregoing.
“Pledged
Operating Agreements” means all of each Grantor’s rights, powers and remedies under the limited liability company operating
agreements of each of the Pledged Entities that is a limited liability company, as may be amended, modified, supplemented, extended,
renewed, restated or replaced from time to time.
“Pledged
Partnership Agreements” means all of each Grantor’s rights, powers, and remedies under the general or limited partnership
agreements of each of the Pledged Entities that is a general or limited partnership, as may be amended, modified, supplemented, extended,
renewed, restated or replaced from time to time.
“Pledged
Securities” means any Promissory Notes, stock certificates, limited liability membership interests or other Securities, certificates
or Instruments now or hereafter included in the Pledged Collateral, including all Pledged Equity, Pledged Debt and all other certificates,
instruments or other documents representing or evidencing any Pledged Collateral.
“Securities
Purchase Agreement” shall have the meaning set forth in the recitals hereto.
“Subsidiary”
means any Person in which a Grantor directly or indirectly, (i) owns any of the outstanding Capital Stock or holds any equity or
similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person,
and all of the foregoing, collectively, “Subsidiaries”.
“Trademark
Licenses” means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensor or licensee
and providing for the grant of any right concerning any Trademark, together with any goodwill connected with and symbolized by any such
licenses, contracts or agreements and the right to prepare for sale or lease and sell or lease any and all Inventory now or hereafter
owned by any Grantor and now or hereafter covered by such licenses, contracts or agreements (including, without limitation, all Trademark
Licenses described in Schedule II hereto).
“Trademarks”
means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s,
assumed names, Internet domain names, trade styles, designs, logos and other source or business identifiers and all general intangibles
of like nature, now or hereafter owned, adopted, acquired or used by any Grantor (including, without limitation, all domestic and foreign
trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s, assumed names, Internet
domain names, trade styles, designs, logos and other source or business identifiers described in Schedule II hereto), all applications,
registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political
subdivision thereof), and all reissues, extensions or renewals thereof, together with all goodwill of the business symbolized by such
marks and all customer lists, formulae and other Records of any Grantor relating to the distribution of products and services in connection
with which any of such marks are used.
Section
2. Pledge of Pledged Collateral.
(a)
As collateral security for the due and punctual payment and performance in full of the Obligations, as and when due, each Grantor hereby
assigns and pledges to the Collateral Agent, its successors and permitted assigns, and hereby grants to the Collateral Agent, its successors
and permitted assigns, for the ratable benefit of the Collateral Agent and the Noteholders, a continuing Lien on and security interest
in, all of such Grantor’s right, title and interest in, to and under all of the following, wherever located and whether now or
hereafter existing and whether now owned or hereafter acquired: (i) the Pledged Equity; (ii) all Promissory Notes, Security and Instruments
evidencing debt now owned or at any time hereafter acquired by it (including, without limitation, those listed opposite the name of such
Grantor on Schedule IV) (the “Pledged Debt”); (iii) subject to Section 2(g) and 2(h), all payments
of principal or interest, dividends, distributions, cash, Promissory Notes, Securities, Instruments and other property from time to time
received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds received
in respect of, the Pledged Equity and the Pledged Debt; (iv) all rights and privileges of such Grantor with respect to the Securities
and other property referred to in clauses (i), (ii), and (iii) above; and (v) all Proceeds of, and Security Entitlements in respect of,
any of the foregoing (the items referred to in clauses (a) through (v) above being collectively referred to as the “Pledged
Collateral”). Notwithstanding anything to the foregoing, Pledged Collateral shall not include any Excluded Subsidiaries.
(b)
On the Closing Date (in the case of any Grantor that grants a Lien on any of its assets hereunder on the Closing Date) or on the date
on which it becomes a party to this Agreement pursuant to Section 6(m) (in the case of any other Grantor), each Grantor shall
deliver or cause to be delivered to the Collateral Agent any and all Pledged Securities (other than any Uncertificated Securities, but
only for so long as such Securities remain uncertificated) to the extent such Pledged Securities, in the case of Promissory Notes and
other Instruments evidencing debt, are required to be delivered pursuant to Section 2(c). Thereafter, whenever such Grantor acquires
any other Pledged Security (other than any Uncertificated Securities, but only for so long as such Uncertificated Securities remain uncertificated),
such Grantor shall promptly, and in any event within 30 days (or such longer period as the Collateral Agent may agree to in writing),
deliver or cause to be delivered to the Collateral Agent such Pledged Security as Collateral hereunder to the extent such Pledged Securities,
in the case of Promissory Notes and Instruments evidencing debt, are required to be delivered pursuant to Section 2(c).
(c)
Each Grantor will cause all debt for borrowed money in an aggregate principal amount of $10,000 or more owed to such Grantor by any other
Person to be evidenced by a duly executed Promissory Note, and shall cause each such Promissory Note to be pledged and delivered to the
Collateral Agent, (i) on the date hereof, in the case of any such debt existing on the date hereof (or, in the case of any Grantor that
becomes a party hereto after the date hereof, on the date such Grantor becomes a party hereto, in the case of any such debt existing
on such date) or (ii) promptly following the incurrence thereof, in the case of any such debt incurred after the date hereof (or such
other date), in each case pursuant to the terms hereof.
(d)
Upon delivery to the Collateral Agent, (i) any Pledged Securities required to be delivered pursuant to Section 2(b) and/or 2(c)
shall be accompanied by undated stock or note powers duly executed by the applicable Grantor in blank or other instruments of transfer
reasonably satisfactory to the Collateral Agent and by such other instruments and documents as the Collateral Agent may reasonably request
in order to effect the transfer of such Pledged Securities and (ii) all other property comprising part of the Pledged Collateral required
to be delivered pursuant to Section 2(b) and/or 2(c) shall be accompanied by undated proper instruments of assignment duly
executed by the applicable Grantor and such other instruments or documents as the Collateral Agent may reasonably request in order to
effect transfer of such Pledged Collateral. Each delivery of Pledged Securities or other Pledged Collateral shall be accompanied by a
schedule describing such Pledged Securities or Pledged Collateral, as the case may be, which schedule shall be deemed to supplement Schedule
IV and be made a part hereof; provided that failure to attach any such schedule hereto shall not affect the validity of such
pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.
(e)
The assignment, pledge, Lien and security interest granted in Section 2(a) are granted as security only and shall not subject the Collateral
Agent or any Noteholder to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out
of the Pledged Collateral.
(f)
If an Event of Default shall occur and be continuing and, other than in the case of a Bankruptcy Event of Default, the Collateral Agent
shall have notified the Company of its intent to exercise such rights, (a) the Collateral Agent, shall have the right (in its sole and
absolute discretion) to cause each of the Pledged Securities to be transferred of record into the name of the Collateral Agent or into
the name of its nominee (as pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or assigned in blank or in favor
of the Collateral Agent and (b) to the extent permitted by the documentation governing such Pledged Securities and applicable law, the
Collateral Agent shall have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger
denominations for any purpose consistent with this Agreement. Each Grantor will promptly give to the Collateral Agent copies of any material
notices received by it with respect to Pledged Securities registered in the name of such Grantor. Each Grantor will take any and all
actions reasonably requested by the Collateral Agent to facilitate compliance with this Section 2(f).
(g)
Unless and until an Event of Default shall have occurred and be continuing and, other than in the case of a Bankruptcy Event of Default,
the Collateral Agent shall have notified the Grantors that the rights of the Grantors under this Section 2(g) are being suspended:
(i)
Each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged
Collateral or any part thereof for any purpose consistent with the terms of this Agreement and the other Transaction Documents;
(ii)
The Collateral Agent shall promptly execute and deliver to each Grantor, or cause to be executed and delivered to such Grantor, all such
proxies, powers of attorney and other instruments as such Grantor may reasonably request in writing for the purpose of enabling such
Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to Section 2(g)(i), in
each case as shall be specified in such request; and
(iii)
Each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed
in respect of the Pledged Collateral, to the extent (and only to the extent) that such dividends, interest, principal and other distributions
are permitted by, the other Transaction Documents and applicable laws; provided that any noncash dividends, interest, principal
or other distributions that would constitute Pledged Equity or Pledged Debt, whether resulting from a subdivision, combination or reclassification
of the outstanding equity interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part
thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such
issuer may be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by any Grantor, shall be held
in trust for the benefit of the Collateral Agent and shall, to the extent required by Section 2(b) and/or 2(c) be forthwith
delivered to the Collateral Agent in the same form as so received (with any necessary endorsement or documents set forth in Section
2(d) or as otherwise reasonably requested by the Collateral Agent). So long as no Event of Default has occurred and is continuing,
the Collateral Agent shall promptly deliver to each Grantor any Pledged Securities in its possession if requested to be delivered to
the issuer thereof in connection with any exchange or redemption of such Pledged Securities.
(h)
Upon the occurrence and during the continuance of an Event of Default and, other than in the case of a Bankruptcy Event of Default, after
the Collateral Agent shall have notified the Grantors of the suspension of the rights of the Grantors under Section 2(g)(iii), all rights
of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to Section
2(g)(iii) shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive
right and authority to receive and retain such dividends, interest, principal or other distributions as part of the Pledged Collateral,
subject to Section 2(k) and the last sentence of this Section 2(h). All dividends, interest, principal or other distributions
received by any Grantor contrary to the provisions of Section 2(g) or this Section 2(h) shall be held in trust for the
benefit of the Collateral Agent and shall be forthwith delivered to the Collateral Agent upon demand in the same form as so received
(with any necessary endorsement reasonably requested by the Collateral Agent). Any and all money and other property paid over to or received
by the Collateral Agent pursuant to the provisions of Section 2(g) and/or this Section 2(h) shall be retained by the Collateral
Agent in an account to be established by the Collateral Agent upon receipt of such money or other property, shall be held as security
for the payment and performance of the Obligations and shall be applied in accordance with the provisions of Section 8. After
all Events of Default have been cured or waived, and the Grantors have delivered to the Collateral Agent a certificate of an executive
officer to such effect, the Collateral Agent shall promptly repay to each Grantor (without interest) all dividends, interest, principal
or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of Section 2(g)(iii) in
the absence of an Event of Default and that remain in such account.
(i)
Upon the occurrence and during the continuance of an Event of Default and, other than in the case of a Bankruptcy Event of Default, after
the Collateral Agent shall have notified the Grantors of the suspension of the rights of the Grantors under Section 2(g)(i), all
rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to Section 2(g)(i),
and the obligations of the Collateral Agent under Section 2(g)(ii), shall cease, and all such rights shall thereupon become vested
in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and
powers subject to Section 2(k) and the last sentence of this Section 2(i); provided that, the Collateral Agent shall
have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such
rights. After all Events of Default have been cured or waived, and the Grantors have delivered to the Collateral Agent a certificate
of an executive officer to such effect, each Grantor shall have the exclusive right to exercise the voting and/or consensual rights and
powers that such Grantor would otherwise be entitled to exercise pursuant to the terms of Section 2(g)(i), and the obligations
of the Collateral Agent under Section 2(g)(ii) shall be reinstated.
(j)
Any notice given by the Collateral Agent to the Grantors under Section 2(f), Section 2(g), Section 2(h), or Section
2(i) (i) may be given by telephone if promptly confirmed in writing, (ii) may be given with respect to one or more of the Grantors
at the same or different times and (iii) may suspend the rights of the Grantors under Section 2(g) in part without suspending
all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise affecting
the Collateral Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default
has occurred and is continuing.
(k)
Nothing contained in this Agreement shall be construed to make the Collateral Agent or any Noteholder liable as a member of any limited
liability company or as a partner of any partnership, and neither the Collateral Agent nor any Noteholder by virtue of this Agreement
or otherwise (except as referred to in the following sentence) shall have any of the duties, obligations or liabilities of a member of
any limited liability company or as a partner in any partnership. The parties hereto expressly agree that, unless the Collateral Agent
shall become the absolute owner of Pledged Equity consisting of a limited liability company interest or a partnership interest pursuant
hereto, this Agreement shall not be construed as creating a partnership or joint venture among the Collateral Agent, any Noteholder,
any Grantor and/or any other Person.
Section
3. Grant of Security Interest
(a)
As collateral security for the due and punctual payment and performance in full of the Obligations, as and when due, each Grantor hereby
pledges and assigns to the Collateral Agent, its successors and permitted assigns, and hereby grants to the Collateral Agent, its successors
and permitted assigns, for the ratable benefit of the Collateral Agent and the Noteholders, a continuing Lien on and security interest
in, all of such Grantor’s right, title and interest in, to and under all personal property and assets of such Grantor, wherever
located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind, nature and description, whether
tangible or intangible (together with the Pledged Collateral, the “Collateral”), including, without limitation, the
following:
(i)
all Accounts;
(ii)
all Chattel Paper (whether tangible or Electronic Chattel Paper);
(iii)
all Commercial Tort Claims, including, without limitation, those specified on Schedule VI hereto;
(iv)
all Documents;
(v)
all Equipment;
(vi)
all Fixtures;
(vii)
all General Intangibles (including, without limitation, all Payment Intangibles);
(viii)
all Goods;
(ix)
all Instruments;
(x)
all Inventory;
(xi)
all Investment Property (and, regardless of whether classified as Investment Property under the Code, all Pledged Equity, Pledged Operating
Agreements and Pledged Partnership Agreements);
(xii)
all Intellectual Property and all Licenses;
(xiii)
all Letter-of-Credit Rights;
(xiv)
all Pledged Accounts, all cash and other property from time to time deposited therein, and all monies and property in the possession
or under the control of the Collateral Agent or any Noteholder or any Affiliate, representative, agent or correspondent of the Collateral
Agent or any such Noteholder;
(xv)
all Supporting Obligations;
(xvi)
all other tangible and intangible personal property of each Grantor (whether or not subject to the Code), including, without limitation,
all Deposit Accounts and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions, rents,
profits, income, benefits, substitutions and replacements of and to any of the property of any Grantor described in the preceding clauses
of this Section 3(a) (including, without limitation, any proceeds of insurance thereon and all causes of action, claims and warranties
now or hereafter held by each Grantor in respect of any of the items listed above), and all books, correspondence, files and other Records,
including, without limitation, all tapes, desks, cards, Software, data and computer programs in the possession or under the control of
any Grantor or any other Person from time to time acting for any Grantor, in each case, to the extent of such Grantor’s rights
therein, that at any time evidence or contain information relating to any of the property described in the preceding clauses of this
Section 3(a) or are otherwise necessary or helpful in the collection or realization thereof; and
(xvii)
all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any and all of the foregoing Collateral; in
each case howsoever any Grantor’s interest therein may arise or appear (whether by ownership, security interest, claim or
otherwise).
(b)
Except for the Permitted Liens, each Grantor agrees not to further encumber, or permit any other Lien to exist that encumbers, any of
its Intellectual Property, including, without limitation, any of its Copyrights, Copyright applications, Copyright registrations and
like protections in each work of authorship and derivative work, whether published or unpublished, Licenses, Patents, Patent applications
and like protections, including, without limitation, improvements, divisions, continuations, renewals, reissues, extensions, and continuations-in-part
of the same, Trademarks, service marks and, to the extent permitted under applicable law, any applications therefor, whether registered
or not, and the goodwill of the business of such Grantor connected with and symbolized thereby, know-how, operating manuals, trade secret
rights, rights to unpatented inventions, and any claims for damage by way of any past, present, or future infringement of any of the
foregoing, in each case without the Collateral Agent’s prior written consent (which consent may be withheld or given in the Collateral
Agent’s sole and absolute discretion).
(c)
Each Grantor agrees that the pledge of the shares of Capital Stock acquired by such Grantor of any and all Persons now or hereafter existing
that is a Foreign Subsidiary may be supplemented by one or more separate pledge agreements, deeds of pledge, share charges or other similar
agreements or instruments, executed and delivered by such Grantor in favor of the Collateral Agent, which agreements or instruments will
provide for the pledge of such shares of Capital Stock and perfection of the Lien on such shares in accordance with the laws of the applicable
foreign jurisdiction. With respect to such shares of Capital Stock, the Collateral Agent may, at any time and from time to time, in its
sole and absolute discretion, take such actions in such foreign jurisdictions that will result in the perfection of the Lien created
in such shares of Capital Stock.
(d)
In addition, to secure the due and punctual payment and performance in full of the Obligations, as and when due, and in order to induce
the Buyers as aforesaid, each Grantor hereby grants to the Collateral Agent, its successors and permitted assigns, for the ratable benefit
of the Collateral Agent and the Noteholders, a right of set-off against the property of such Grantor held by the Collateral Agent, for
itself and for the ratable benefit of the Noteholders, consisting of property described above in Section 2(a) and/or Section
3(a) now or hereafter in the possession or custody of or in transit to the Collateral Agent, for any purpose, including safekeeping,
collection or pledge, for the account of such Grantor, or as to which such Grantor may have any right or power; provided that such right
shall only to be exercised after an Event of Default has occurred and is continuing.
Section
4. Security for Obligations. The Lien and security
interest created in the Collateral under this Agreement constitutes continuing collateral security for all of the following obligations,
whether direct or indirect, absolute or contingent, and whether now existing or hereafter incurred (collectively, the “Obligations”):
(a)
(i) the payment by Eastside, the Company and each other Grantor, as and when due and payable (by scheduled maturity, required prepayment,
acceleration, demand or otherwise), of all amounts from time to time owing by it in respect of the Securities Purchase Agreement, this
Agreement, the Notes and the other Transaction Documents (including the Warrants and the Registration Rights Agreement until such time
the Notes are indefeasibly paid in full), and (ii) in the case of the Guarantors, the payment by such Guarantors, as and when due and
payable of all Obligations (as defined in the Guaranties) under the Guaranties, including, without limitation, in both cases, (A) all
principal of, interest, make-whole and other amounts on the Notes (including, without limitation, all interest, make-whole and other
amounts that accrues after the commencement of any Insolvency Proceeding of any Grantor, whether or not the payment of such interest
is enforceable or is allowable in such Insolvency Proceeding), and (B) all fees, interest, premiums, penalties, contract causes of action,
costs, commissions, expense reimbursements, indemnifications and all other amounts due or to become due under this Agreement or any of
the Transaction Documents (including the Warrants and the Registration Rights Agreement until such time the Notes are indefeasibly paid
in full); and
(b)
the due and punctual performance and observance by each Grantor of all of its other obligations from time to time existing in respect
of any of the Transaction Documents (including the Warrants and the Registration Rights Agreement until such time the Notes are indefeasibly
paid in full), including without limitation, with respect to any conversion or redemption rights of the Noteholders under the Notes.
Section
5. Representations and Warranties. Each Grantor
represents and warrants as follows:
(a)
Schedule I hereto sets forth (i) the exact legal name of each Grantor, and (ii) the state of incorporation, organization or formation
and the organizational identification number of each Grantor in such state. The information set forth in Schedule I hereto with
respect to such Grantor is true and accurate in all respects. Such Grantor has not previously changed its name (or operated under any
other name), jurisdiction of organization or organizational identification number from those set forth in Schedule I hereto except
as disclosed in Schedule I hereto.
(b)
There is no pending or, to its knowledge, written notice threatening any action, suit, proceeding or claim affecting any Grantor before
any Governmental Authority or any arbitrator, or any order, judgment or award issued by any Governmental Authority or arbitrator, in
each case, that may adversely affect the grant by any Grantor, or the perfection, of the Lien and security interest purported to be created
hereby in the Collateral, or the exercise by the Collateral Agent of any of its rights or remedies hereunder.
(c)
All Federal, state and local tax returns and other reports required by applicable law to be filed by any Grantor have been filed, or
extensions have been obtained, and all taxes, assessments and other governmental charges or levies imposed upon any Grantor or any property
of any Grantor (including, without limitation, all federal income and social security taxes on employees’ wages) and which have
become due and payable on or prior to the date hereof have been paid, except to the extent contested in good faith by proper proceedings
which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves
have been set aside for the payment thereof in accordance with GAAP, or otherwise provided in the Securities Purchase Agreement.
(d)
All Equipment, Fixtures, Goods and Inventory of each Grantor now existing are, and all Equipment, Fixtures, Goods and Inventory of each
Grantor hereafter existing will be, located and/or based at the addresses specified therefor in Schedule III hereto, except that
each Grantor will give the Collateral Agent written notice of any change in the location of any such Collateral within 20 days of such
change, other than to locations set forth on Schedule III hereto (and with respect to which the Collateral Agent has filed financing
statements and otherwise fully perfected its Liens thereon). Each Grantor’s principal place of business and chief executive office,
the place where each Grantor keeps its Records concerning the Collateral and all originals of all Chattel Paper in which any Grantor
has any right, title or interest are located and will continue to be located at the addresses specified therefor in Schedule III
hereto. None of the Accounts in which any Grantor has any right, title or interest is or will be evidenced by Promissory Notes or other
Instruments.
(e)
Set forth in Schedule IV hereto is a complete and accurate list, as of the date of this Agreement, of (i) all Pledged Debt, specifying
the debtor thereof and the outstanding principal amount thereof as of the Closing Date, Securities and other Instruments in which any
Grantor has any right, title or interest, (ii) each Pledged Account of each Grantor, together with the name and address of each institution
at which each such Pledged Account is maintained, the account number for each such Pledged Account and a description of the purpose of
each such Pledged Account and (iii) the name of each Foreign Currency Controlled Account of each Grantor, together with the name and
address of each institution at which each such Foreign Currency Controlled Account is maintained and the amount of cash or cash equivalents
held in each such Foreign Currency Controlled Account. Set forth in Schedule II hereto is a complete and correct list of each
trade name used by each Grantor and the name of, and each trade name used by, each Person from which each Grantor has acquired any substantial
part of the Collateral. All of the Pledged Debt, to the Grantors’ knowledge (provided that no such knowledge qualification applies
to Pledged Debt issued by a Grantor or a Subsidiary), is the legal, valid and binding obligation of the issuer thereof, enforceable against
such issuer in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws.
(f)
Each Grantor has delivered to the Collateral Agent complete and correct copies of each License described in Schedule II hereto,
including all schedules and exhibits thereto, which represent all of the Licenses of the Grantors existing on the date of this Agreement.
Each such License sets forth the entire agreement and understanding of the parties thereto relating to the subject matter thereof, and
there are no other agreements, arrangements or understandings, written or oral, relating to the matters covered thereby or the rights
of such Grantor or any of its Affiliates in respect thereof. Each material License now existing is, and any material License entered
into in the future will be, the legal, valid and binding obligation of the parties thereto, enforceable against such parties in accordance
with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws. No default under any material License by any such party has occurred, nor does any defense, offset, deduction or counterclaim
exist thereunder in favor of any such party.
(g)
Each Grantor owns and controls, or otherwise possesses adequate rights to use, all of its Intellectual Property, which is the only Intellectual
Property necessary to conduct its business in substantially the same manner as conducted as of the date hereof. Schedule II hereto
sets forth a true and complete list of all Intellectual Property and Licenses owned or used by each Grantor as of the date hereof, and
applications for grant or registration of Intellectual Property. To the knowledge of each Grantor, all such Intellectual Property of
such Grantor is subsisting and in full force and effect, has not been adjudged invalid or unenforceable, is valid and enforceable and
has not been abandoned in whole or in part. Except as set forth in Schedule II, no such Intellectual Property is the subject of
any licensing or franchising agreement. Except as set forth in Schedule II, no Grantor has any knowledge of any infringement upon
or conflict with the Patent, Trademark, Copyright, trade secret rights of others and, no Grantor has any knowledge that it is infringing
or in conflict with any Patent, Trademark, Copyright, trade secret or similar rights of others, and to the knowledge of each Grantor,
no other Person is now infringing or in conflict in any material respect with any such properties, assets and rights owned or used by
each Grantor. The Grantor has not received any written notice and has no knowledge of any oral notice that it is violating or has violated
the Trademarks, Patents, Copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of
publicity or other intellectual property rights of any third party.
(h)
Each Grantor is and will be at all times the sole and exclusive owner of the Collateral in which such Grantor has granted a Lien and
security interest hereunder free and clear of any Liens, except for (i) Permitted Liens thereon and (ii) certain Intellectual Property
rights of the Company which is jointly owned by the Company with certain third parties as described in Schedule II hereto. No
effective financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any recording
or filing office except such as (i) may have been filed in favor of the Collateral Agent and/or the Noteholders relating to this Agreement
or the other Transaction Documents, or (ii) are intended to perfect Permitted Liens existing as of the date hereof and disclosed on Schedule
VII hereto.
(i)
To the knowledge of each Grantor, the exercise by the Collateral Agent of any of its rights and remedies hereunder will not contravene
any law or any contractual restriction binding on or otherwise affecting any Grantor or any of its properties and will not result in
or require the creation of any Lien, upon or with respect to any of its properties other than as granted pursuant to this Agreement.
(j)
No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority, is required for (i) the
grant by each Grantor, or the perfection, of the Lien and security interest purported to be created hereby in the Collateral, or (ii)
the exercise by the Collateral Agent of any of its rights and remedies hereunder, except for (A) the filing under the Code as in effect
in the applicable jurisdiction of the financing statements described in Schedule V hereto, (B) with respect to all Pledged Accounts,
and all cash and other property from time to time deposited therein, the execution of a Controlled Account Agreement with the depository
or other institution with which the applicable Pledged Accounts are maintained, as provided in Section 6(i), (C) with respect to the
perfection of the security interest created hereby in the United States Intellectual Property and Licenses, the recording of the appropriate
Intellectual Property Security Agreement in the United States Patent and Trademark Office or the United States Copyright Office, as applicable,
(D) with respect to the perfection of the security interest created hereby in foreign Intellectual Property and Licenses, registrations
and filings in jurisdictions located outside of the United States and covering rights in such jurisdictions relating to such foreign
Intellectual Property and Licenses, (E) with respect to the perfection of the security interest created hereby in any Letter-of-Credit
Rights, the consent of the issuer of the applicable letter of credit to the assignment of proceeds as provided in the Code as in effect
in the applicable jurisdiction, (F) with respect to Investment Property constituting uncertificated securities, the applicable Grantor
causing the issuer thereof either (i) to register the Collateral Agent as the registered owner of such securities or (ii) to agree in
an authenticated record with such Grantor and the Collateral Agent that such issuer will comply with instructions with respect to such
securities originated by the Collateral Agent without further consent of such Grantor, such authenticated record to be in form and substance
satisfactory to the Collateral Agent, (G) with respect to Investment Property constituting certificated securities or instruments, such
items to be delivered to and held by or on behalf of the Collateral Agent pursuant hereto in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Collateral
Agent, (H) with respect to any action that may be necessary to obtain control of Collateral constituting Commodity Contracts, Electronic
Chattel Paper or Letter of Credit Rights, the taking of such actions, and (I) the Collateral Agent having possession of all Documents,
Chattel Paper, Instruments and cash constituting Collateral (subclauses (A) through (I) each a “Perfection Requirement”
and collectively, the “Perfection Requirements”).
(k)
This Agreement creates in favor of the Collateral Agent a legal, valid and enforceable Lien on and security interest in the Collateral,
as security for the Obligations. The performance of the Perfection Requirements shall result in the perfection of such Lien on and security
interest in the Collateral. Such Lien and security interest is (or in the case of Collateral in which any Grantor obtains any right,
title or interest after the date hereof, will be), subject only to Permitted Liens and the Perfection Requirements, a first priority,
valid, enforceable and perfected Lien on and security interest in all personal property of each Grantor. Subject to the performance of
the Perfection Requirements as contemplated herein, such recordings and filings and all other action necessary to perfect and protect
such Lien and security interest have been duly taken (and, in the case of Collateral in which any Grantor obtains right, title or interest
after the date hereof, will be duly taken), except for the Collateral Agent’s having possession of all Documents, Chattel Paper,
Instruments and cash constituting Collateral after the date hereof and the other actions, filings and recordations described above.
(l)
As of the date hereof, no Grantor holds any Commercial Tort Claims or has knowledge of any pending Commercial Tort Claims, except for
the Commercial Tort Claims described in Schedule VI.
(m)
All of the Pledged Equity is presently owned by the applicable Grantor as set forth in Schedule IV free and clear of all Liens
other than Permitted Liens, and is presently represented by the certificates listed on Schedule IV hereto (if applicable). As
of the date hereof, except as set forth in Schedule IV, there are no existing options, warrants, calls or commitments of any character
whatsoever relating to the Pledged Equity other than as contemplated and permitted by the Transaction Documents. Each Grantor is the
sole holder of record and the sole beneficial owner of the Pledged Equity, as applicable. None of the Pledged Equity has been issued
or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance
or transfer may be subject. The Pledged Equity constitutes 100% or such other percentage as set forth on Schedule IV of the issued
and outstanding shares of Capital Stock of the applicable Pledged Entity. All of the Pledged Equity has been duly and validly authorized
and issued by the issuer thereof and (i) in the case of Pledged Equity (other than Pledged Equity consisting of limited liability company
interests or partnership interests which, pursuant to the relevant organizational or formation documents, cannot be fully paid and non-assessable),
is fully paid and non-assessable.
(n)
Such Grantor (i) is a corporation, limited liability company or limited partnership, as applicable, duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation, organization or formation, (ii) has all requisite corporate,
limited liability company or limited partnership power and authority to conduct its business as now conducted and as presently contemplated
and to execute and deliver this Agreement and each other Transaction Document to which such Grantor is a party, and to consummate the
transactions contemplated hereby and thereby and (iii) is duly qualified to do business and is in good standing in each jurisdiction
in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary,
except where the failure to be so qualified would not result in a Material Adverse Effect.
(o)
The execution, delivery and performance by each Grantor of this Agreement and each other Transaction Document to which such Grantor is
a party (i) have been duly authorized by all necessary corporate, limited liability company or limited partnership action, (ii) do not
and will not contravene its charter or by-laws, limited liability company or operating agreement, certificate of partnership or partnership
agreement, as applicable, or any applicable law or any contractual restriction binding on such Grantor or its properties, (iii) do not
and will not result in or require the creation of any Lien (other than pursuant to any Transaction Document) upon or with respect to
any of its assets or properties, and (iv) do not and will not result in any default, noncompliance, suspension, revocation, impairment,
forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to it or its operations or any of its
material assets or properties.
(p)
This Agreement has been duly executed and delivered by each Grantor and is the legal, valid and binding obligation of such Grantor, enforceable
against such Grantor in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, suretyship or other similar laws and equitable principles (regardless of whether enforcement is sought in equity
or at law). Each of the other Transaction Documents to which any Grantor is or will be a party, when delivered, duly executed and delivered
by such Grantor and the legal, valid and binding obligation of such Grantor, enforceable against such Grantor in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or
other similar laws and equitable principles (regardless of whether enforcement is sought in equity or at law).
Section
6. Covenants as to the Collateral. Until all
of the Obligations shall have been fully performed and Paid in Full, unless the Collateral Agent shall otherwise consent in writing
(in its sole and absolute discretion):
(a)
Further Assurances. Each Grantor will, at its expense, at any time and from time to time, promptly execute and deliver all further
instruments and documents and take all further action that the Collateral Agent may reasonably request in order to: (i) perfect and protect
the Lien and security interest of the Collateral Agent created hereby; (ii) enable the Collateral Agent to exercise and enforce its rights
and remedies hereunder in respect of the Collateral, including, without limitation, the Controlled Accounts; or (iii) otherwise effect
the purposes of this Agreement, including, without limitation: (A) marking conspicuously all Chattel Paper and each License and, at the
request of the Collateral Agent, each of its Records pertaining to the Collateral with a legend, in form and substance satisfactory to
the Collateral Agent, indicating that such Chattel Paper, License or Collateral is subject to the Lien and security interest created
hereby, (B) delivering and pledging to the Collateral Agent each Promissory Note, Security (subject to the limitations set forth in Section
3), Chattel Paper or other Instrument, now or hereafter owned by any Grantor, duly endorsed and accompanied by executed instruments
of transfer or assignment, all in form and substance satisfactory to the Collateral Agent, (C) executing and filing (to the extent, if
any, that any Grantor’s signature is required thereon) or authenticating the filing of, such financing or continuation statements,
or amendments thereto, as may be necessary or that the Collateral Agent may reasonably request in order to perfect and preserve the security
interest created hereby, (D) furnishing to the Collateral Agent from time to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral in each case as the Collateral Agent may reasonably request,
all in reasonable detail, (E) if any Collateral shall be in the possession of a third party, notifying such Person of the Collateral
Agent’s security interest created hereby and obtaining a written acknowledgment from such Person, in form and substance satisfactory
to the Collateral Agent, that such Person holds possession of the Collateral for the benefit of the Collateral Agent (for the ratable
benefit of the Collateral Agent and the Noteholders), (F) if at any time after the date hereof, any Grantor acquires or holds any Commercial
Tort Claim, promptly notifying the Collateral Agent in a writing signed by such Grantor setting forth a brief description of such Commercial
Tort Claim and granting to the Collateral Agent a Lien and security interest therein and in the Proceeds thereof, which writing shall
incorporate the provisions hereof and shall be in form and substance satisfactory to the Collateral Agent, (G) upon the acquisition after
the date hereof by any Grantor of any motor vehicle or other Equipment subject to a certificate of title or ownership (other than a motor
vehicle or Equipment that is subject to a purchase money security interest), causing the Collateral Agent to be listed as the lienholder
on such certificate of title or ownership and delivering evidence of the same to the Collateral Agent in accordance with Section 6(j)
hereof; and (H) taking all actions required by the Code or by other law, as applicable, in any relevant Code jurisdiction, or by
other law as applicable in any foreign jurisdiction.
(b)
Location of Collateral. Each Grantor will keep the Collateral (i) at the locations specified therefor on Schedule III hereto,
or (ii) at such other locations set forth on Schedule III and with respect to which the Collateral Agent has filed financing statements
and otherwise fully perfected its Liens thereon, or (iii) at such other locations in the United States, provided that twenty (20) days
prior to any change in the location of any Collateral to such other location, or upon the acquisition of any Collateral to be kept at
such other locations, the Grantors shall give the Collateral Agent written notice thereof and deliver to the Collateral Agent a new Schedule
III indicating such new locations and such other written statements and schedules as the Collateral Agent may reasonably require.
(c)
Condition of Equipment. Each Grantor will maintain or cause to be maintained and preserved in good condition, repair and working
order, ordinary wear and tear excepted, the Equipment (necessary or useful to its business) and will forthwith, or in the case of any
loss or damage to any Equipment of any Grantor within a commercially reasonable time after the occurrence thereof, make or cause to be
made all repairs, replacements and other improvements in connection therewith which are necessary or desirable, consistent with past
practice, or which the Collateral Agent may request to such end. Any Grantor will promptly furnish to the Collateral Agent a statement
describing in reasonable detail any such loss or damage in excess of $25,000 per occurrence to any Equipment.
(d)
Taxes, Etc. Each Grantor agrees to pay promptly when due all property and other taxes, assessments and governmental charges or
levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Equipment and Inventory, except
to the extent the validity thereof is being contested in good faith by proper proceedings which stay the imposition of any penalty, fine
or Lien resulting from the non-payment thereof and with respect to which adequate reserves in accordance with GAAP have been set aside
for the payment thereof, or otherwise provided in the Securities Purchase Agreement.
(e)
Insurance.
(i)
Each Grantor will, at its own expense, maintain insurance (including, without limitation, comprehensive general liability, hazard, rent
and business interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business,
in such amounts and covering such risks, in such form and with responsible and reputable insurance companies or associations as is required
by any Governmental Authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice
by companies in similar businesses similarly situated and in any event, in amount, adequacy and scope reasonably satisfactory to the
Collateral Agent.
(ii)
To the extent requested by the Collateral Agent, at any time and from time to time, each such policy for liability insurance shall provide
for all losses to be paid on behalf of the Collateral Agent and any Grantor as their respective interests may appear, and each policy
for property damage insurance shall provide for all losses to be adjusted with, and paid directly to, the Collateral Agent. In addition
to and without limiting the foregoing, to the extent requested by the Collateral Agent at any time and from time to time, each such policy
shall in addition (A) name the Collateral Agent as an additional insured party and/or loss payee, as applicable, thereunder (without
any representation or warranty by or obligation upon the Collateral Agent) as its interests may appear, (B) contain an agreement by the
insurer that any loss thereunder shall be payable to the Collateral Agent on its own account notwithstanding any action, inaction or
breach of representation or warranty by any Grantor, (C) provide that there shall be no recourse against the Collateral Agent for payment
of premiums or other amounts with respect thereto, and (D) provide that at least 30 days’ prior written notice of cancellation,
lapse, expiration or other adverse change shall be given to the Collateral Agent by the insurer. Any Grantor will, if so requested by
the Collateral Agent, deliver to the Collateral Agent original or duplicate policies of such insurance (including certificates demonstrating
compliance with this Section 6(e)) and, as often as the Collateral Agent may reasonably request, a report of a reputable insurance broker
with respect to such insurance. Any Grantor will also, at the request of the Collateral Agent, execute and deliver instruments of assignment
of such insurance policies and cause the respective insurers to acknowledge notice of such assignment.
(iii)
Reimbursement under any liability insurance maintained by any Grantor pursuant to this Section 6(e) may be paid directly to the
Person who shall have incurred liability covered by such insurance. In the case of any loss involving damage to Equipment or Inventory,
to the extent paragraph (iv) of this Section 6(e) is not applicable, any proceeds of insurance involving such damage shall be
paid to the Collateral Agent, and any Grantor will make or cause to be made the necessary repairs to or replacements of such Equipment
or Inventory, and any proceeds of insurance maintained by any Grantor pursuant to this Section 6(e) (except as otherwise provided
in paragraph (iv) in this Section 6(e)) shall be paid by the Collateral Agent to any Grantor as reimbursement for the actual costs
of such repairs or replacements.
(iv)
Notwithstanding anything to the contrary in subsection 6(e)(iii) above, following and during the continuance of an Event of Default,
all insurance payments in respect of each Grantor’s properties and business shall be paid to the Collateral Agent and applied as
specified in Section 8(b) hereof.
(f)
Provisions Concerning Name, Organization, Location, Accounts and Licenses.
(i)
Each Grantor will (A) give the Collateral Agent at least twenty days’ prior written notice of any change in such Grantor’s
name, identity or organizational structure, (B) maintain its jurisdiction of incorporation, organization or formation as set forth in
Schedule I hereto, (C) immediately notify the Collateral Agent upon obtaining an organizational identification number, if on the
date hereof such Grantor did not have such identification number, and (D) keep adequate records concerning the Collateral and permit
representatives of the Collateral Agent during normal business hours on reasonable notice to such Grantor, to inspect and make abstracts
from such records.
(ii)
Each Grantor will (except as otherwise provided in this subsection (f)), continue to collect, at its own expense, all amounts due or
to become due under the Accounts. In connection with such collections, any Grantor may (and, at the Collateral Agent’s direction,
will) take such action as any Grantor or the Collateral Agent may deem necessary or advisable to enforce collection or performance of
the Accounts; provided, however, that the Collateral Agent shall have the right at any time following the occurrence and
during the continuance of an Event of Default to notify the Account Debtors or obligors under any Accounts of the assignment of such
Accounts to the Collateral Agent and to direct such Account Debtors or obligors to make payment of all amounts due or to become due to
any Grantor thereunder directly to the Collateral Agent or its designated agent and, upon such notification and at the expense of any
Grantor and to the extent permitted by applicable law, to enforce collection of any such Accounts and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent as any Grantor might have done. After receipt by any Grantor
of a notice from the Collateral Agent that the Collateral Agent has notified, intends to notify, or has enforced or intends to enforce
any Grantor’s rights against the Account Debtors or obligors under any Accounts as referred to in the proviso to the immediately
preceding sentence, (A) all amounts and proceeds (including, without limitation, Instruments) received by any Grantor in respect of the
Accounts shall be received in trust for the benefit of the Collateral Agent hereunder (for the ratable benefit of the Collateral Agent
and the Noteholders), shall be segregated from other funds of any Grantor and shall be forthwith paid over to the Collateral Agent in
the same form as so received (with any necessary endorsement) to be applied as specified in Section 8(b) hereof, and (B) no Grantor
will adjust, settle or compromise the amount or payment of any Account or release wholly or partly any Account Debtor or obligor thereof
or allow any credit or discount thereon. In addition, upon the occurrence and during the continuance of an Event of Default, the Collateral
Agent may (in its sole and absolute discretion) direct any or all of the banks and financial institutions with which any Grantor either
maintains a Deposit Account or a lockbox (including, without limitation, any Controlled Account) or deposits the proceeds of any Accounts
to send immediately to the Collateral Agent by wire transfer (to such deposit account as the Collateral Agent shall specify, or in such
other manner as the Collateral Agent shall direct) all or a portion of such Securities, cash, investments and other items held by such
institution. Any such Securities, cash, investments and other items so received by the Collateral Agent shall be applied as specified
in accordance with Section 8(b) hereof.
(iii)
Upon the occurrence and during the continuance of any breach or default under any material License referred to in Schedule II
hereto by any party thereto other than any Grantor, each Grantor party thereto will, promptly after obtaining knowledge thereof, give
the Collateral Agent written notice of the nature and duration thereof, specifying what action, if any, it has taken and proposes to
take with respect thereto and thereafter will take reasonable steps to protect and preserve its rights and remedies in respect of such
breach or default, or will obtain or acquire an appropriate substitute License.
(iv)
Each Grantor will, at its expense, promptly deliver to the Collateral Agent a copy of each notice or other communication received by
it by which any other party to any material License referred to in Schedule II hereto purports to exercise any of its rights or
affect any of its obligations thereunder, together with a copy of any reply by such Grantor thereto.
(v)
Each Grantor will exercise promptly and diligently each and every right which it may have under each material License (other than any
right of termination) and will duly perform and observe in all respects all of its obligations under each material License and will take
all action reasonably necessary to maintain such Licenses in full force and effect. No Grantor will, without the prior written consent
of the Collateral Agent (in its sole and absolute discretion), cancel, terminate, amend or otherwise modify in any respect, or waive
any provision of, any material License referred to in Schedule II hereto.
(g)
Transfers and Other Liens.
(i)
Except as otherwise expressly permitted in the other Transaction Documents, no Grantor shall, directly or indirectly, sell, lease, license,
assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any Collateral whether in a single transaction or a series
of related transactions, other than (A) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets
or rights by such Grantor for fair value in the ordinary course of business consistent with past practices or (B) sales of Inventory
and product in the ordinary course of business.
(ii)
Except as expressly provided in the Notes, no Grantor shall, directly or indirectly, redeem, repurchase or declare or pay any cash dividend
or distribution on any of its Capital Stock.
(iii)
Except as expressly provided in the Notes, no Grantor shall, directly or indirectly, without the prior written consent of the Required
Holders, (A) issue any Notes (other than as contemplated by the Securities Purchase Agreement and the Notes) or (B) issue any other Securities
that would cause a breach or default under the Notes.
(iv)
Except as expressly provided in the Notes, no Grantor shall enter into, renew, extend or be a party to, any transaction or series of
related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind
or the rendering of services of any kind) with any Affiliate, except in the ordinary course of business in a manner and to an extent
consistent with past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms
no less favorable to it than would be obtainable in a comparable arm’s length transaction with a Person that is not an Affiliate
thereof.
(v)
No Grantor will create, suffer to exist or grant any Lien upon or with respect to any Collateral other than a Permitted Lien.
(h)
Intellectual Property.
(i)
If applicable, each Grantor shall duly execute and deliver the applicable Intellectual Property Security Agreement. Each Grantor (either
itself or through licensees) will, and will cause each licensee thereof to, take all action necessary to maintain all of the Intellectual
Property in full force and effect, including, without limitation, using the proper statutory notices, numbers and markings (relating
to patent, trademark and copyright rights) and using the Trademarks on each applicable trademark class of goods in order to so maintain
the Trademarks in full force and free from any claim of abandonment for non-use, and each Grantor will not (nor permit any licensee thereof
to) do any act or knowingly omit to do any act whereby any Intellectual Property may become abandoned, cancelled or invalidated; provided,
however, that so long as no Event of Default has occurred and is continuing, no Grantor shall have an obligation to use or to
maintain any Intellectual Property (A) that relates solely to any product or work, that is no longer necessary or material and has been,
or is in the process of being, discontinued, abandoned or terminated in the ordinary course of business and consistent with the exercise
of reasonable business judgment, (B) that is being replaced with Intellectual Property substantially similar to the Intellectual Property
that may be abandoned or otherwise become invalid, so long as the failure to use or maintain such Intellectual Property does not materially
adversely affect the validity of such replacement Intellectual Property and so long as such replacement Intellectual Property is subject
to the Lien created by this Agreement and does not have a material adverse effect on the business of any Grantor or (C) that is substantially
the same as other Intellectual Property that is in full force, so long the failure to use or maintain such Intellectual Property does
not materially adversely affect the validity of such replacement Intellectual Property and so long as such other Intellectual Property
is subject to the Lien and security interest created by this Agreement and does not have a material adverse effect on the business of
any Grantor. Each Grantor will cause to be taken all necessary steps in any proceeding before the United States Patent and Trademark
Office and the United States Copyright Office or any similar office or agency in any other country or political subdivision thereof to
maintain each registration of the Intellectual Property and application for registration of Intellectual Property (other than the Intellectual
Property described in the proviso to the immediately preceding sentence), including, without limitation, filing of renewals, affidavits
of use, affidavits of incontestability and opposition, interference and cancellation proceedings and payment of maintenance fees, filing
fees, taxes or other governmental charges or fees. If any Intellectual Property (other than Intellectual Property described in the proviso
to the second sentence of subsection (i) of this clause (h)) is infringed, misappropriated, diluted or otherwise violated in any material
respect by a third party, each Grantor shall (x) upon learning of such infringement, misappropriation, dilution or other violation, promptly
notify the Collateral Agent and (y) where it is commercially reasonable to, promptly sue for infringement, misappropriation, dilution
or other violation, seek injunctive relief where appropriate and recover any and all damages for such infringement, misappropriation,
dilution or other violation, or take such other actions as such Grantor shall deem appropriate under the circumstances to protect such
Intellectual Property. Each Grantor shall furnish to the Collateral Agent from time to time upon its request statements and schedules
further identifying and describing the Intellectual Property and Licenses and such other reports in connection with the Intellectual
Property and Licenses as the Collateral Agent may reasonably request, all in reasonable detail and promptly upon request of the Collateral
Agent, following receipt by the Collateral Agent of any such statements, schedules or reports, each Grantor shall modify this Agreement
by amending Schedule II hereto, as the case may be, to include any Intellectual Property and License, as the case may be, which
is or hereafter becomes part of the Collateral under this Agreement and shall execute and authenticate such documents and do such acts
as shall be necessary or, in the reasonable judgment of the Collateral Agent, desirable to subject such Intellectual Property and Licenses
to the Lien and security interest created by this Agreement. Notwithstanding anything herein to the contrary, upon the occurrence and
during the continuance of an Event of Default, no Grantor may abandon, surrender or cancel or otherwise permit any Intellectual Property
to become abandoned, surrendered, cancelled or invalid without the prior written consent of the Collateral Agent (in its sole and absolute
discretion), and if any Intellectual Property is infringed, misappropriated, diluted or otherwise violated in any material respect by
a third party, each Grantor will take such reasonable action as the Collateral Agent shall deem appropriate under the circumstances to
protect such Intellectual Property.
(ii)
In no event shall any Grantor, either itself or through any agent, employee, licensee or designee, file an application for the registration
of any Patent, Trademark or Copyright or the United States Copyright Office or the United States Patent and Trademark Office, as applicable,
or in any similar office or agency of the United States or any country or any political subdivision thereof unless it gives the Collateral
Agent prior written notice thereof. Upon request of the Collateral Agent, any Grantor shall execute, authenticate and deliver any and
all assignments, agreements, instruments, documents and papers as the Collateral Agent may reasonably request to evidence the Collateral
Agent’s security interest hereunder in such Intellectual Property and the General Intangibles of any Grantor relating thereto or
represented thereby, and each Grantor hereby appoints the Collateral Agent its attorney-in-fact to execute and/or authenticate and file
all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed, and such power (being coupled
with an interest) shall be irrevocable until all Obligations are fully performed and Paid in Full.
(i)
Pledged Accounts.
(A)
Each Grantor shall cause each bank and other financial institution which maintains a Controlled Account (each a “Controlled
Account Bank”) to execute and deliver to the Collateral Agent, in form and substance satisfactory to the Collateral Agent,
a Controlled Account Agreement with respect to such Controlled Account, duly executed by each Grantor and such Controlled Account
Bank, pursuant to which such Controlled Account Bank among other things shall irrevocably agree, with respect to such Controlled
Account, that (i) at any time after any Grantor or the Collateral Agent shall have notified such Controlled Account Bank that an
Event of Default has occurred or is continuing, such Controlled Account Bank will comply with any and all instructions originated by
the Collateral Agent directing the disposition of the funds in such Controlled Account without further consent by such Grantor, (ii)
such Controlled Account Bank shall waive, subordinate or agree not to exercise any rights of setoff or recoupment or any other claim
against the applicable Controlled Account other than for payment of its service fees and other charges directly related to the
administration of such Controlled Account and for returned checks or other items of payment, (iii) at any time after any Grantor or
the Collateral Agent shall have notified such Controlled Account Bank that an Event of Default has occurred or is continuing, with
respect to each such Controlled Account, such Controlled Account Bank shall not comply with any instructions, directions or orders
of any form with respect to such Controlled Accounts other than instructions, directions or orders originated by the Collateral
Agent, (iv) all funds deposited by any Grantor with such Controlled Account Bank shall be subject to a perfected, first priority
security interest in favor of the Collateral Agent, subject to the Permitted Liens, and (v) upon receipt of written notice from the
Collateral Agent during the continuance of an Event of Default, such Controlled Account Bank shall promptly send to the Collateral
Agent by wire transfer (to such account as the Collateral Agent shall specify, or in such other manner as the Collateral Agent shall
direct) all such funds and other items held by it. No Grantor shall create or maintain any Pledged Account without the prior written
consent of the Collateral Agent (in its sole and absolute discretion) and complying with the terms of this Agreement.
(B)
If at any time after the date of this Agreement, the average daily balance of any Account that is not subject to a Controlled Account
Agreement exceeds $10,000 during any calendar month (including the calendar month in which the date of this Agreement occurs), the Company
shall, either (x) within two (2) Business Days following such date, transfer to a Controlled Account an amount sufficient to reduce the
total aggregate amount of the cash in such Account to an amount not in excess of $10,000 or (y) within twenty-one (21) calendar days
following the last day of such calendar month, deliver to the Collateral Agent a Controlled Account Agreement with respect to such Account,
duly executed by such Grantor and the depositary bank in which such Account is maintained.
(C)
Notwithstanding anything to the contrary contained in Section 6(i)(B) above, and without limiting any of the foregoing, if at
any time on or after the date that is twenty-one (21) calendar days following the Closing Date, the total aggregate amount of the cash
of the Company and any of its Subsidiaries, in the aggregate, that is not held in a Controlled Account exceeds $100,000 (the “Maximum
Free Cash Amount”), the Company shall within two (2) Business Days following such date, either (x) transfer to a Controlled
Account an amount sufficient to reduce the total aggregate amount of the cash that is not held in a Controlled Account to an amount not
in excess of the Maximum Free Cash Amount or (y) deliver to the Collateral Agent a Controlled Account Agreement with respect to such
Account (or Accounts), duly executed by such Grantor and the depositary bank in which such Account (or Accounts) is maintained, as necessary
to reduce the total aggregate amount of the cash that is not held in a Controlled Account to an amount not in excess of the Maximum Free
Cash Amount.
(j)
Motor Vehicles.
(i)
Upon the Collateral Agent’s written request, each Grantor shall deliver to the Collateral Agent originals of the certificates of
title or ownership for each motor vehicle with a value in excess of $10,000 owned by it, with the Collateral Agent listed as lienholder,
for the ratable benefit of the Collateral Agent and the Noteholders.
(ii)
Each Grantor hereby appoints the Collateral Agent as its attorney-in-fact for the purpose of (A) executing on behalf of such Grantor
title or ownership applications for filing with appropriate Governmental Authorities to enable motor vehicles now owned or hereafter
acquired by such Grantor to be retitled and the Collateral Agent listed as lienholder thereof, (B) filing such applications with such
Governmental Authorities, and (C) executing such other agreements, documents and instruments on behalf of, and taking such other action
in the name of, such Grantor as the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof (including, without
limitation, for the purpose of creating in favor of the Collateral Agent a perfected Lien on the motor vehicles and exercising the rights
and remedies of the Collateral Agent hereunder). This appointment as attorney-in-fact is coupled with an interest and is irrevocable
until all of the Obligations are fully performed and Paid in Full.
(iii)
Any certificates of title or ownership delivered pursuant to the terms hereof shall be accompanied by accurate odometer statements for
each motor vehicle covered thereby.
(iv)
So long as no Event of Default shall have occurred and be continuing, upon the request of any Grantor, the Collateral Agent shall execute
and deliver to any Grantor such instruments as such Grantor shall reasonably request to remove the notation of the Collateral Agent as
lienholder on any certificate of title for any motor vehicle; provided, however, that any such instruments shall be delivered,
and the release effective, only upon receipt by the Collateral Agent of a certificate from any Grantor stating that such motor vehicle
is to be sold or has suffered a casualty loss (with title thereto in such case passing to the casualty insurance company therefor in
settlement of the claim for such loss) and the amount that any Grantor will receive as sale proceeds or insurance proceeds. Any proceeds
of such sale or casualty loss shall be paid to the Collateral Agent hereunder immediately upon receipt, to be applied to the Obligations
then outstanding.
(k)
Control. Each Grantor hereby agrees to take any or all action that may be necessary or that the Collateral Agent may reasonably
request in order for the Collateral Agent to obtain “control” in accordance with Sections 9-105 through 9-107 of the Code
with respect to the following Collateral: (i) Electronic Chattel Paper, (ii) Investment Property, and (iii) Letter-of-Credit Rights.
(l)
Inspection and Reporting. Each Grantor shall permit the Collateral Agent, or any agent or representatives thereof or such attorneys,
accountant or other professionals or other Persons (the “Representatives”) as the Collateral Agent may designate (at
Grantors’ sole cost and expense), upon prior reasonable notice (except where an Event of Default has occurred, such prior written
notice shall not apply) (i) to examine and make copies of and abstracts from any Grantor’s Records and books of account, (ii) to
visit and inspect its properties, (iii) to verify materials, leases, Instruments, Accounts, Inventory and other assets of any Grantor
from time to time, and (iv) to conduct audits, physical counts, appraisals, valuations and/or examinations at the locations of any Grantor.
Each Grantor shall also permit the Collateral Agent, or any agent or representatives thereof or such attorneys, accountants or other
professionals or other Persons as the Collateral Agent may designate to discuss such Grantor’s affairs, finances and accounts with
any of its directors, officers, managerial employees, attorneys, independent accountants or any of its other representatives. Without
limiting the foregoing, the Collateral Agent may, at any time (with reasonable prior notice to a Grantor (except, if an Event of Default
shall have occurred, no such notice shall be required), in the Collateral Agent’s own name or in the name of a nominee of the Collateral
Agent communicate (by mail, telephone, facsimile or otherwise) with the Account Debtors of such Grantor, parties to contracts with such
Grantor and/or obligors in respect of Instruments or Pledged Debt of such Grantor to verify with such Persons, to the Collateral Agent’s
satisfaction, the existence, amount, terms of, and any other matter relating to, Accounts, Instruments, Pledged Debt, Chattel Paper,
payment intangibles and/or other receivables. The Grantor may require any such Representative to execute the Grantor’s standard
form of non-disclosure agreement to perform the services contemplated hereunder under terms and conditions no more restrictive than is
required of the Collateral Agent under any Transaction Document and for which the intention or consequence is to limit the Collateral
Agent’s right to inspection and reporting as set forth in this Section 6(l).
(m)
Future Subsidiaries. If any Grantor hereafter creates or acquires any Subsidiary, simultaneously with the creation or acquisition
of such Subsidiary, such Grantor shall (i) cause such Subsidiary to become a party to this Agreement as an additional “Grantor”
hereunder, (ii) deliver to the Collateral Agent updated Schedules to this Agreement, as appropriate (including, without limitation, an
updated Schedule IV to reflect the grant by such Grantor of a Lien on and security interest in all Pledged Debt and Pledged Equity
now or hereafter owned by such Grantor), (iii) cause such Subsidiary to duly execute and deliver a guaranty of the Obligations in favor
of the Collateral Agent in form and substance acceptable to the Collateral Agent, (iv) deliver to the Collateral Agent the stock certificates
representing all of the Capital Stock of such Subsidiary, along with undated stock powers for each such certificates, executed in blank
(or, if any such shares of Capital Stock are uncertificated, confirmation and evidence reasonably satisfactory to the Collateral Agent
that the security interest in such uncertificated securities has been transferred to and perfected by the Collateral Agent, in accordance
with Sections 8-313, 8-321 and 9-115 of the Code or any other similar or local or foreign law that may be applicable), and (v) duly execute
and/or cause to be delivered to the Collateral Agent, in form and substance reasonably acceptable to the Collateral Agent, such opinions
of counsel and other documents as the Collateral Agent shall reasonably request with respect thereto. Each Grantor hereby authorizes
the Collateral Agent to attach such updated Schedules to this Agreement and agrees that all Pledged Equity and Pledged Debt listed on
any updated Schedule delivered to the Collateral Agent shall for all purposes hereunder be considered Collateral. The Grantors agree
that the pledge of the shares of Capital Stock acquired by a Grantor of Foreign Subsidiary may be supplemented by one or more separate
pledge agreements, deeds of pledge, share charges, or other similar agreements or instruments, executed and delivered by the relevant
Grantor in favor of the Collateral Agent, which pledge agreements will provide for the pledge of such shares of Capital Stock in accordance
with the laws of the applicable foreign jurisdiction. With respect to such shares of Capital Stock, the Collateral Agent may, at any
time and from time to time, in its sole discretion, take actions in such foreign jurisdictions that will result in the perfection of
the Lien created in such shares of Capital Stock.
Section
7. Additional Provisions Concerning the
Collateral.
(a)
To the maximum extent permitted by applicable law, and for the purpose of taking any action that the Collateral Agent may deem necessary
or advisable to accomplish the purposes of this Agreement, each Grantor hereby (i) authorizes the Collateral Agent to execute any such
agreements, instruments or other documents in such Grantor’s name and to file such agreements, instruments or other documents in
such Grantor’s name and in any appropriate filing office, (ii) authorizes the Collateral Agent at any time and from time to time
to file, one or more financing or continuation statements, and amendments thereto, relating to the Collateral (including, without limitation,
any such financing statements that (A) describe the Collateral as “all assets” or “all personal property” (or
words of similar effect) or that describe or identify the Collateral by type or in any other manner as the Collateral Agent may determine
regardless of whether any particular asset of such Grantor falls within the scope of Article 9 of the Code or whether any particular
asset of such Grantor constitutes part of the Collateral, and (B) contain any other information required by Part 5 of Article 9 of the
Code for the sufficiency or filing office acceptance of any financing statement, continuation statement or amendment, including, without
limitation, whether such Grantor is an organization, the type of organization and any organizational identification number issued to
such Grantor) and (iii) ratifies such authorization to the extent that the Collateral Agent has filed any such financing or continuation
statements, or amendments thereto, prior to the date hereof. A photocopy or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.
(b)
Each Grantor hereby irrevocably appoints the Collateral Agent as its attorney-in-fact and proxy, with full authority in the place and
stead of such Grantor and in the name of such Grantor or otherwise, from time to time in the Collateral Agent’s discretion, to
take any action and to execute any instrument which the Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation, (i) to obtain and adjust insurance required to be paid to the Collateral Agent pursuant
to Section 6(e) hereof, (ii) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for
moneys due and to become due under or in respect of any Collateral, (iii) to receive, endorse, and collect any drafts or other Instruments,
Documents and Chattel Paper in connection with clause (i) or (ii) above, (iv) to file any claims or take any action or institute any
action, suit or proceedings which the Collateral Agent may deem necessary or desirable for the collection of any Collateral or otherwise
to enforce the rights of the Collateral Agent and the Noteholders with respect to any Collateral, (v) to execute assignments, licenses
and other documents to enforce the rights of the Collateral Agent and the Noteholders with respect to any Collateral, and (vi) to verify
any and all information with respect to any and all Accounts. This power is coupled with an interest and is irrevocable until all of
the Obligations are fully performed and Paid in Full.
(c)
For the purpose of enabling the Collateral Agent to exercise rights and remedies hereunder, at such time as the Collateral Agent shall
be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants to the Collateral Agent,
to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to any
Grantor) to use, assign, license or sublicense any Intellectual Property in which such Grantor now or hereafter has any right, title
or interest, wherever the same may be located, including, without limitation, in such license reasonable access to all media in which
any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof. Notwithstanding
anything contained herein to the contrary, but subject to the provisions of the Securities Purchase Agreement that limit the right of
any Grantor to dispose of its property, and Section 6(g) and Section 6(h) hereof, so long as no Event of Default shall
have occurred and be continuing, any Grantor may exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take
other actions with respect to the Intellectual Property in the ordinary course of its business and as otherwise expressly permitted by
any of the other Transaction Documents. In furtherance of the foregoing, unless an Event of Default shall have occurred and be continuing,
the Collateral Agent shall from time to time, upon the request of any Grantor, execute and deliver any instruments, certificates or other
documents, in the form so requested, which such Grantor shall have certified are appropriate (in such Grantor’s judgment) to allow
it to take any action permitted above (including relinquishment of the license provided pursuant to this clause (c) as to any Intellectual
Property). Further, upon the full performance and Payment in Full of all of the Obligations, the Collateral Agent (subject to Section
11(e) hereof) shall release and reassign to any Grantor all of the Collateral Agent’s right, title and interest in and to the
Intellectual Property, and the Licenses, all without recourse, representation or warranty whatsoever. The exercise of rights and remedies
hereunder by the Collateral Agent shall not terminate the rights of the holders of any licenses or sublicenses theretofore granted by
each Grantor in accordance with the second sentence of this clause (c). Each Grantor hereby releases the Collateral Agent from any claims,
causes of action and demands at any time arising out of or with respect to any actions taken or omitted to be taken by the Collateral
Agent under the powers of attorney granted herein other than actions taken or omitted to be taken through the Collateral Agent’s
gross negligence or willful misconduct, as determined by a final judgment of a court of competent jurisdiction no longer subject to appeal.
(d)
If any Grantor fails to perform any agreement or obligation contained herein, the Collateral Agent may itself perform, or cause performance
of, such agreement or obligation, in the name of such Grantor or the Collateral Agent, and the expenses of the Collateral Agent incurred
in connection therewith shall be payable by such Grantor pursuant to Section 9 hereof and such obligation shall be secured by
the Collateral.
(e)
The powers conferred on the Collateral Agent hereunder are solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining to any Collateral.
(f)
Anything herein to the contrary notwithstanding (i) each Grantor shall remain liable under the Licenses and otherwise with respect to
any of the Collateral to the extent set forth therein to perform all of its obligations thereunder to the same extent as if this Agreement
had not been executed, (ii) the exercise by the Collateral Agent of any of its rights or remedies hereunder shall not release any Grantor
from any of its obligations under the Licenses or otherwise in respect of the Collateral, and (iii) the Collateral Agent shall not have
any obligation or liability by reason of this Agreement under the Licenses or with respect to any of the other Collateral, nor shall
the Collateral Agent be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
(g)
As long as no Event of Default shall have occurred and be continuing and, other than in the case of a Bankruptcy Event of Default, until
written notice shall be given to the applicable Grantor:
(i)
Each Grantor shall have the right, from time to time, to vote and give consents with respect to the Pledged Equity, or any part thereof
for all purposes not inconsistent with the provisions of this Agreement, the Securities Purchase Agreement or any other Transaction Document;
provided, however, that no vote shall be cast, and no consent shall be given or action taken, which would have the effect of impairing
the position or interest of the Collateral Agent in respect of the Pledged Equity or which would authorize, effect or consent to (unless
and to the extent expressly permitted by the Securities Purchase Agreement):
(A)
the dissolution or liquidation, in whole or in part, of a Pledged Entity;
(B)
the consolidation or merger of a Pledged Entity with any other Person;
(C)
the sale, disposition or encumbrance of all or substantially all of the assets of a Pledged Entity, except for Liens in favor of the
Collateral Agent;
(D)
any change in the authorized number of shares, the stated capital or the authorized share capital of a Pledged Entity or the issuance
of any additional shares of its Capital Stock; or
(E)
the alteration of the voting rights with respect to the Capital Stock of a Pledged Entity.
(h)
(i) Each Grantor shall be entitled, from time to time, to collect and receive for its own use all cash dividends and interest paid
in respect of the Pledged Equity to the extent not in violation of the Securities Purchase Agreement other than any and all: (A) dividends
and interest paid or payable other than in cash in respect of any Pledged Equity, and instruments and other property received, receivable
or otherwise distributed in respect of, or in exchange for, any Pledged Equity; (B) dividends and other distributions paid or payable
in cash in respect of any Pledged Equity in connection with a partial or total liquidation or dissolution or in connection with a reduction
of capital, capital surplus or paid-in capital of a Pledged Entity; and (C) cash paid, payable or otherwise distributed, in respect of
principal of, or in redemption of, or in exchange for, any Pledged Equity; provided, however, that until actually paid all rights to
such distributions shall remain subject to the Lien created by this Agreement; and
(ii)
all dividends and interest (other than such cash dividends and interest as are permitted to be paid to any Grantor in accordance with
clause (i) above) and all other distributions in respect of any of the Pledged Equity, whenever paid or made, shall be delivered to the
Collateral Agent to hold as Pledged Equity and shall, if received by any Grantor, be received in trust for the benefit of the Collateral
Agent (for the ratable benefit of the Collateral Agent and the Noteholders), be segregated from the other property or funds of such Grantor,
and be forthwith delivered to the Collateral Agent as Pledged Equity in the same form as so received (with any necessary endorsement).
Section
8. Remedies Upon Event of Default; Application
of Proceeds. If any Event of Default shall have occurred and be continuing:
(a)
The Collateral Agent may exercise in respect of the Collateral, in addition to any other rights and remedies provided for herein, in
any other Transaction Document or otherwise available to it, all of the rights and remedies of a secured party upon default under the
Code (whether or not the Code applies to the affected Collateral), and also may (i) take absolute control of the Collateral, including,
without limitation, transfer into the Collateral Agent’s name or into the name of its nominee or nominees (to the extent the Collateral
Agent has not theretofore done so) and thereafter receive, for the ratable benefit of itself and the Noteholders, all payments made thereon,
give all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though it were the outright
owner thereof, (ii) require each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of the Collateral
Agent forthwith, assemble all or part of its respective Collateral as directed by the Collateral Agent and make it available to the Collateral
Agent at a place or places to be designated by the Collateral Agent that is reasonably convenient to both parties, and the Collateral
Agent may enter into and occupy any premises owned or leased by any Grantor where the Collateral or any part thereof is located or assembled
for a reasonable period in order to effectuate the Collateral Agent’s rights and remedies hereunder or under law, without obligation
to any Grantor in respect of such occupation, and (iii) without notice except as specified below and without any obligation to prepare
or process the Collateral for sale, (A) sell the Collateral or any part thereof in one or more parcels at public or private sale (including,
without limitation, by credit bid), at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery,
and at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable and/or (B) lease, license
or dispose of the Collateral or any part thereof upon such terms as the Collateral Agent may deem commercially reasonable. Each Grantor
agrees that, to the extent notice of sale or any other disposition of its respective Collateral shall be required by law, at least ten
(10) days’ notice to any Grantor of the time and place of any public sale or the time after which any private sale or other disposition
of its respective Collateral is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated to make
any sale or other disposition of any Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any
public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Each Grantor hereby waives any claims against the Collateral Agent and the
Noteholders arising by reason of the fact that the price at which its respective Collateral may have been sold at a private sale was
less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if
the Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree, and waives all rights
that any Grantor may have to require that all or any part of such Collateral be marshaled upon any sale (public or private) thereof.
Each Grantor hereby acknowledges that (i) any such sale of its respective Collateral by the Collateral Agent shall be made without warranty,
(ii) the Collateral Agent may specifically disclaim any warranties of title, possession, quiet enjoyment or the like, and (iii) such
actions set forth in clauses (i) and (ii) above shall not adversely affect the commercial reasonableness of any such sale of Collateral.
In addition to the foregoing, (1) upon written notice to any Grantor from the Collateral Agent after and during the continuance of an
Event of Default, such Grantor shall cease any use of the Intellectual Property or any trademark, patent or copyright similar thereto
for any purpose described in such notice; (2) the Collateral Agent may, at any time and from time to time after and during the continuance
of an Event of Default, upon 10 days’ prior notice to such Grantor, license, whether general, special or otherwise, and whether
on an exclusive or non-exclusive basis, any of the Intellectual Property, throughout the universe for such term or terms, on such conditions,
and in such manner, as the Collateral Agent shall in its sole discretion determine; and (3) the Collateral Agent may, at any time, pursuant
to the authority granted in Section 7 hereof or otherwise (such authority being effective upon the occurrence and during the continuance
of an Event of Default), execute and deliver on behalf of such Grantor, one or more instruments of assignment of the Intellectual Property
(or any application or registration thereof), in form suitable for filing, recording or registration in any country.
(b)
Any cash held by the Collateral Agent as Collateral and all Cash Proceeds received by the Collateral Agent in respect of any sale or
disposition of or collection from, or other realization upon, all or any part of the Collateral shall be applied as follows (subject
to the provisions of the Securities Purchase Agreement): first, to pay any fees, indemnities or expense reimbursements then due
to the Collateral Agent (including, without limitation, those described in Section 9 hereof); second, to pay any fees,
indemnities or expense reimbursements then due to the Noteholders, on a pro rata basis; third to pay interest due under the Notes
owing to the Noteholders, on a pro rata basis; fourth, to pay or prepay principal in respect of the Notes, whether or not then
due, owing to the Noteholders, on a pro rata basis; fifth, to pay or prepay any other Obligations, whether or not then due, in
such order and manner as the Collateral Agent shall elect, consistent with the provisions of the Securities Purchase Agreement. Any surplus
of such cash or Cash Proceeds held by the Collateral Agent and remaining after the full performance and Payment in Full of all of the
Obligations shall be paid over to whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall
direct.
(c)
In the event that the proceeds of any such sale, disposition, collection or realization are insufficient to pay all amounts to which
the Collateral Agent and the Noteholders are legally entitled, each Grantor shall be, jointly and severally, liable for the deficiency,
together with interest thereon at the highest rate specified in the Notes for interest on overdue principal thereof or such other rate
as shall be fixed by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other charges
of any attorneys employed by the Collateral Agent to collect such deficiency.
(d)
To the extent that applicable law imposes duties on the Collateral Agent to exercise rights and remedies in a commercially reasonable
manner, each Grantor acknowledges and agrees that it is commercially reasonable for the Collateral Agent (i) to fail to incur expenses
deemed significant by the Collateral Agent to prepare Collateral for disposition or otherwise to transform raw material or work in process
into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral
to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection
or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Account Debtors or
other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies
against Account Debtors and other Persons obligated on Collateral directly or through the use of collection agencies and other collection
specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral
is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as any Grantor, for expressions of interest
in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that
provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match
buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties,
such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Collateral Agent against
risks of loss, collection or disposition of Collateral or to provide to the Collateral Agent a guaranteed return from the collection
or disposition of Collateral, or (xii) to the extent deemed reasonably appropriate by the Collateral Agent, to obtain the services of
brokers, investment bankers, consultants, attorneys and other professionals to assist the Collateral Agent in the collection or disposition
of any of the Collateral. Each Grantor acknowledges that the purpose of this section is to provide non-exhaustive indications of what
actions or omissions by the Collateral Agent would be commercially reasonable in the Collateral Agent’s exercise of rights and
remedies against the Collateral and that other actions or omissions by the Collateral Agent shall not be deemed commercially unreasonable
solely on account of not being indicated in this section. Without limitation of the foregoing, nothing contained in this section shall
be construed to grant any rights to any Grantor or to impose any duties on the Collateral Agent that would not have been granted or imposed
by this Agreement or by applicable law in the absence of this section.
(e)
The Collateral Agent shall not be required to marshal any present or future collateral security (including, but not limited to, this
Agreement and the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral
security or other assurances of payment in any particular order, and all of the Collateral Agent’s rights and remedies hereunder
and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and
remedies, however existing or arising. To the extent that any Grantor lawfully may, each Grantor hereby agrees that it will not invoke
any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Collateral Agent’s
rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any
of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.
Section
9. Indemnity and Expenses.
(a)
Each Grantor agrees, jointly and severally, to defend, protect, indemnify and hold the Collateral Agent and each of the Noteholders harmless
from and against any and all claims, damages, losses, liabilities, obligations, penalties, fees, costs and expenses (including, without
limitation, reasonable legal fees, costs, expenses, and disbursements of such Person’s counsel) to the extent that they arise out
of or otherwise result from this Agreement (including, without limitation, enforcement of this Agreement), except to the extent resulting
from such Person’s gross negligence or willful misconduct, as determined by a final judgment of a court of competent jurisdiction
no longer subject to appeal.
(b)
Each Grantor agrees, jointly and severally, to pay to the Collateral Agent upon demand the amount of any and all costs and expenses,
including the reasonable fees, costs, expenses and disbursements of counsel for the Collateral Agent and of any experts and agents (including,
without limitation, any collateral trustee which may act as agent of the Collateral Agent), which the Collateral Agent may incur in connection
with (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver or other modification or termination
of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any
Collateral, (iii) the exercise or enforcement of any of the rights or remedies of the Collateral Agent hereunder, or (iv) the failure
by any Grantor to perform or observe any of the provisions hereof.
Section
10. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing and shall be mailed (by certified mail, first-class postage prepaid and
return receipt requested), telecopied, e-mailed or delivered, if to any Grantor, to the Company’s address, or if to the
Collateral Agent or any Noteholder, to it at its respective address, each as set forth in Section 9(f) of the Securities Purchase
Agreement; or as to any such Person, at such other address as shall be designated by such Person in a written notice to all other
parties hereto complying as to delivery with the terms of this Section 10. All such notices and other communications shall be
effective (a) if sent by certified mail, return receipt requested, when received or five Business Days after deposited in the mails,
whichever occurs first, (b) if telecopied or e-mailed, when transmitted (during normal business hours) and confirmation is received,
and otherwise, the day after the notice or communication was transmitted and confirmation is received, or (c) if delivered in
person, upon delivery. For the avoidance of doubt, all Foreign Subsidiaries, as Grantors, hereby appoint the Company as its agent
for receipt of service of process and all notices and other communications in the United States at the address specified
below.
Section
11. Miscellaneous.
(a)
No amendment of any provision of this Agreement shall be effective unless it is in writing and signed by each Grantor and the Collateral
Agent (and approved by the Required Holders), and no waiver of any provision of this Agreement, and no consent to any departure by each
Grantor therefrom, shall be effective unless it is in writing and signed by each Grantor and the Collateral Agent (and approved by the
Required Holders), and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for
which given. No amendment, modification or waiver of this Agreement shall be effective to the extent that it (1) applies to fewer than
all of the holders of Notes or (2) imposes any obligation or liability on any holder of Notes without such holder’s prior written
consent (which may be granted or withheld in such holder’s sole and absolute discretion).
(b)
No failure on the part of the Collateral Agent to exercise, and no delay in exercising, any right or remedy hereunder or under any of
the other Transaction Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right or remedy
preclude any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies of the Collateral
Agent or any Noteholder provided herein and in the other Transaction Documents are cumulative and are in addition to, and not exclusive
of, any rights or remedies provided by law. The rights and remedies of the Collateral Agent or any Noteholder under any of the other
Transaction Documents against any party thereto are not conditional or contingent on any attempt by such Person to exercise any of its
rights or remedies under any of the other Transaction Documents against such party or against any other Person, including but not limited
to, any Grantor.
(c)
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
(d)
This Agreement shall create a continuing Lien on and security interest in the Collateral and shall (i) remain in full force and effect
until the full performance and Payment in Full of the Obligations, and (ii) be binding on each Grantor and all other Persons who become
bound as debtor to this Agreement in accordance with Section 9-203(d) of the Code and shall inure, together with all rights and remedies
of the Collateral Agent and the Noteholders hereunder, to the ratable benefit of the Collateral Agent and the Noteholders and their respective
permitted successors, transferees and assigns. Without limiting the generality of clause (ii) of the immediately preceding sentence,
without notice to any Grantor, the Collateral Agent and the Noteholders may assign or otherwise transfer their rights and obligations
under this Agreement and any of the other Transaction Documents, to any other Person and such other Person shall thereupon become vested
with all of the benefits in respect thereof granted to the Collateral Agent and the Noteholders herein or otherwise. Upon any such assignment
or transfer, all references in this Agreement to the Collateral Agent or any such Noteholder shall mean the assignee of the Collateral
Agent or such Noteholder. None of the rights or obligations of any Grantor hereunder may be assigned, delegated or otherwise transferred
without the prior written consent of the Collateral Agent in its sole and absolute discretion, and any such assignment, delegation or
transfer without such consent of the Collateral Agent shall be null and void.
(e)
Upon the full performance and Payment in Full of the Obligations, (i) this Agreement and the security interests created hereby shall
terminate and all rights to the Collateral shall revert to the respective Grantor that granted such security interests hereunder, and
(ii) the Collateral Agent will, upon any Grantor’s request and at such Grantor’s expense, (A) return to such Grantor such
of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof and (B) execute and deliver
to such Grantor such documents as such Grantor shall reasonably request to evidence such termination, all without any representation,
warranty or recourse whatsoever.
(f)
Governing Law; Jurisdiction; Jury Trial.
(i)
All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal
laws of the State of Delaware, without giving effect to any provision or rule of law (whether of the State of Delaware or any other jurisdictions)
that would cause the application of the laws of any jurisdiction other than the State of Delaware.
(ii)
Each Grantor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Wilmington, Delaware,
for the adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction Documents or with any transaction
contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim,
defense or objection that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under Section 10 hereunder and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Collateral Agent or the Noteholders from
bringing suit or taking other legal action against any Grantor in any other jurisdiction to collect on a Grantor’s obligations
or to enforce a judgment or other court ruling in favor of the Collateral Agent or a Noteholder.
(iii)
WAIVER OF JURY TRIAL, ETC. EACH GRANTOR IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR
THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT,
ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(iv)
Each Grantor irrevocably and unconditionally waives any right it may have to claim or recover in any legal action, suit or proceeding
referred to in this Section any special, exemplary, indirect, incidental, punitive or consequential damages.
(g)
Section headings herein are included for convenience of reference only and shall not constitute a part of this Agreement for any other
purpose.
(h)
This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which
shall be deemed to be an original, but all of which taken together constitute one and the same Agreement. Delivery of any executed counterpart
of a signature page of this Agreement by pdf, facsimile or other electronic transmission shall be effective as delivery of a manually
executed counterpart of this Agreement.
(i)
This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations
is rescinded or must otherwise be returned by the Collateral Agent, any Noteholder or any other Person (upon (i) the occurrence of any
Insolvency Proceeding of any of the Company or any Grantor or (ii) otherwise, in all cases as though such payment had not been made).
Section
12. Material Non-Public Information. Upon
receipt or delivery by any Grantor of any notice in accordance with the terms of this Agreement, unless such Grantor has in good
faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Grantor
or any of its Subsidiaries, the Company shall within one (1) Business Days after any such receipt or delivery publicly disclose such
material, non-public information on a Current Report on Form 8-K or otherwise. In the event that such Grantor believes that a notice
contains material, non-public information relating to such Grantor or any of its Subsidiaries, such Grantor so shall indicate to the
Collateral Agent and any applicable Noteholder contemporaneously with delivery of such notice, and in the absence of any such
indication, the Collateral Agent and each Noteholder shall be allowed to presume that all matters relating to such notice do not
constitute material, non-public information relating to such Grantor or its Subsidiaries. Nothing contained in this Section
12 shall limit any obligations of any Grantor, or any rights or remedies of the Collateral Agent or any Noteholder, under
Section 4(i) of the Securities Purchase Agreement.
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IN
WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and delivered by its officer thereunto duly authorized, as of
the date first above written.
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Collateral Agent |
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Exhibit
10.7
GUARANTY
GUARANTY,
dated as of November __, 2024 (this “Guaranty”), made by each of the signatories hereto (together with any other entity
that may become a party hereto as provided herein, the “Guarantors”), in favor of ____________, in its capacity as
collateral agent under the Purchase Agreement (defined below) (the “Collateral Agent”) for itself and the purchasers
signatory (the Collateral Agent together with such purchasers and their permitted assigns, the “Purchasers”) to that
certain Securities Purchase Agreement, dated November __, 2024, between Eastside Distilling, Inc., a Nevada corporation (the “Company”)
and the Purchasers (the “Purchase Agreement”).
W
I T N E S S E T H:
WHEREAS,
pursuant to the Purchase Agreement, the Company has agreed to sell and issue to the Purchasers, and the Purchasers have agreed to purchase
from the Company, the Notes (as defined in the Purchase Agreement), subject to the terms and conditions set forth therein; and
WHEREAS,
each Guarantor will directly or indirectly benefit from the extension of credit to the Company represented by the issuance of the Notes;
NOW,
THEREFORE, in consideration of the premises and to induce the Purchasers to enter into the Purchase Agreement and to carry out the transactions
contemplated thereby, each Guarantor hereby agrees with the Purchasers as follows:
1.
Definitions. Unless otherwise defined herein, terms defined in the Purchase Agreement and used herein shall have the meanings
given to them in the Purchase Agreement. The words “hereof,” “herein,” “hereto” and “hereunder”
and words of similar import when used in this Guaranty shall refer to this Guaranty as a whole and not to any particular provision of
this Guaranty, and Section and Schedule references are to this Guaranty unless otherwise specified. The meanings given to terms defined
herein shall be equally applicable to both the singular and plural forms of such terms. The following terms shall have the following
meanings:
“Guaranty”
means this Guaranty, as the same may be amended, supplemented or otherwise modified from time to time.
“Obligations”
means, in addition to all other costs and expenses of collection incurred by Purchasers in enforcing any of such Obligations and/or this
Guaranty, all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due,
or that are now or may be hereafter contracted or acquired, or owing to, of the Company or any Guarantor to the Purchasers, pursuant
to this Guaranty and the other Transaction Documents (including the Warrants and the Registration Rights Agreement until such time that
the Notes are indefeasibly paid in full), in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to
the extent all or any part of such payment is avoided or recovered directly or indirectly from any of the Purchasers as a preference,
fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time.
Without limiting the generality of the foregoing, the term “Obligations” shall include, without limitation: (i) principal
of, and interest on the Notes and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and
liabilities of the Company or any Guarantor from time to time under or in connection with this Guaranty and the other Transaction Documents
(including the Warrants and the Registration Rights Agreement until such time that the Notes are indefeasibly paid in full); and (iii)
all amounts (including but not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact
that the obligations to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Company or any Guarantor.
2.
Guaranty.
(a)
Guaranty.
(i)
The Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantee to Collateral Agent, for the benefit of the
Collateral Agent and the Purchasers and their respective successors, endorsees, transferees and assigns, the prompt and complete payment
and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.
(ii)
Anything herein or in any other Transaction Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder
and under the other Transaction Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable
federal and state laws, including laws relating to the insolvency of debtors, fraudulent conveyance or transfer or laws affecting the
rights of creditors generally (after giving effect to the right of contribution established in Section 2(b)).
(iii)
Each Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guaranty contained in this Section 2 or affecting the rights and remedies of the Purchasers.
(iv)
The guaranty contained in this Section 2 shall remain in full force and effect until all the Obligations and the obligations of each
Guarantor under the guaranty contained in this Section 2 shall have been satisfied by indefeasible payment in full (other than inchoate
indemnity obligations or indemnification obligations for which no claim or demand for payment, whether oral or written has been made
at such time). Notwithstanding the foregoing and for the avoidance of doubt, upon payment in full (other than inchoate indemnity obligations
or indemnification obligations for which no claim or demand for payment, whether oral or written has been made at such time), this Guaranty
shall automatically terminate, and the Collateral Agent shall at the Guarantors’ sole cost and expense, execute and deliver to
the Guarantors such documents as the Guarantors shall reasonably request to evidence such termination, all without any representation,
warranty or recourse whatsoever.
(v)
No payment made by the Company, any of the Guarantors, any other guarantor or any other Person or received or collected by the Collateral
Agent or the Purchasers from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding
or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such
payment (other than any payment made by such Guarantor in respect of the Obligations or any payment received or collected from such Guarantor
in respect of the Obligations), remain liable for the Obligations up to the maximum liability of such Guarantor hereunder until the Obligations
are indefeasibly paid in full.
(vi)
Notwithstanding anything to the contrary in this Guaranty, with respect to any defaulted non-monetary Obligations the specific performance
of which by the Guarantors is not reasonably possible (e.g., the issuance of the Company’s Common Stock), the Guarantors
shall only be liable for making the Purchasers whole on a monetary basis for the Company’s failure to perform such Obligations
in accordance with the Transaction Documents.
(b)
Right of Contribution. Subject to Section 2(c), as among the Guarantor, each Guarantor hereby agrees that to the extent that a
Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment. Each
Guarantor’s right of contribution shall be subject to the terms and conditions of Section 2(c). The provisions of this Section
2(b) shall in no respect limit the joint and several obligations and liabilities of any Guarantor to the Purchasers, and each Guarantor
shall remain liable to the Purchasers for the full amount of the Obligations guaranteed hereunder.
(c)
No Subrogation. Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor
by the Purchasers, no Guarantor shall be entitled to be subrogated to any of the rights of the Purchasers against the Company or any
other Guarantor or any collateral security or guaranty or right of offset held by the Purchasers for the payment of the Obligations,
nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other Guarantor in respect
of payments made by such Guarantor hereunder, until all amounts owing to the Purchasers by the Company on account of the Obligations
are indefeasibly paid in full (other than inchoate indemnity obligations or indemnification obligations for which no claim or demand
for payment, whether oral or written has been made at such time). If any amount shall be paid to any Guarantor on account of such subrogation
rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust
for the Collateral Agent, on behalf of itself and the Purchasers, segregated from other funds of such Guarantor, and shall, forthwith
upon receipt by such Guarantor, be turned over to the Collateral Agent, on behalf of itself and the Purchasers, in the exact form received
by such Guarantor (duly indorsed by such Guarantor to the Collateral Agent, on behalf of itself and the Purchasers, if required), to
be applied against the Obligations, whether matured or unmatured, in such order as the Purchasers may determine. If (a) any Guarantor
shall make payment to the Collateral Agent of all or any part of the Obligations, and (b) the Obligations shall have been paid in full
(other than inchoate indemnity obligations or indemnification obligations for which no claim or demand for payment, whether oral or written
has been made at such time), the Collateral Agent will, at such Guarantor’s request and expense, promptly execute and deliver to
such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by
subrogation to such Guarantor of an interest in the Obligations resulting from such payment by such Guarantor.
(d)
Amendments, Etc. with Respect to the Obligations. Each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any
of the Obligations made by the Collateral Agent, on behalf of itself and the Purchasers may be rescinded by the Collateral Agent, on
behalf of itself and the Purchasers and any of the Obligations continued, and the Obligations, or the liability of any other Person upon
or for any part thereof, or any collateral security or guaranty therefor or right of offset with respect thereto, may, from time to time,
in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Purchasers,
and the Transaction Documents may be amended, modified, supplemented or terminated, in whole or in part, as the Collateral Agent, on
behalf of itself and the Purchasers may deem advisable from time to time, and any collateral security, guaranty or right of offset at
any time held by the Collateral Agent, on behalf of itself and the Purchasers for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released. The Purchasers shall have no obligation to protect, secure, perfect or insure any Lien at any time held
by them as security for the Obligations or for the guaranty contained in this Section 2 or any property subject thereto.
(e)
Guaranty Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of
any of the Obligations and notice of or proof of reliance by the Purchasers upon the guaranty contained in this Section 2 or acceptance
of the guaranty contained in this Section 2; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted
or incurred, or renewed, extended, amended or waived, in reliance upon the guaranty contained in this Section 2; and all dealings between
the Company and any of the Guarantors, on the one hand, and the Collateral Agent, on behalf of itself and the Purchasers, on the other
hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guaranty contained in this Section
2. Each Guarantor waives, to the extent permitted by law, diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Company or any of the Guarantors with respect to the Obligations. Each Guarantor understands and agrees that
the guaranty contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment and performance
without regard to (i) the validity or enforceability of the Purchase Agreement or any other Transaction Document, any of the Obligations
or any other collateral security therefor or guaranty or right of offset with respect thereto at any time or from time to time held by
the Purchasers, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance or fraud by Purchasers) which
may at any time be available to or be asserted by the Company or any other Person against the Purchasers, or (iii) any other circumstance
whatsoever (with or without notice to or knowledge of the Company or such Guarantor) which constitutes, or might be construed to constitute,
an equitable or legal discharge of the Company for the Obligations, or of such Guarantor under the guaranty contained in this Section
2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against
any Guarantor, the Collateral Agent, on behalf of itself and the Purchasers may, but shall be under no obligation to, make a similar
demand on or otherwise pursue such rights and remedies as they may have against the Company, any other Guarantor or any other Person
or against any collateral security or guaranty for the Obligations or any right of offset with respect thereto, and any failure by the
Collateral Agent, on behalf of itself and the Purchasers to make any such demand, to pursue such other rights or remedies or to collect
any payments from the Company, any other Guarantor or any other Person or to realize upon any such collateral security or guaranty or
to exercise any such right of offset, or any release of the Company, any other Guarantor or any other Person or any such collateral security,
guaranty or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect
the rights and remedies, whether express, implied or available as a matter of law, of the Purchasers against any Guarantor. For the purposes
hereof, “demand” shall include the commencement and continuance of any legal proceedings.
(f)
Reinstatement. The guaranty contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be,
if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the
Purchasers upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or any Guarantor, or upon or as
a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Company or any Guarantor
or any substantial part of its property, or otherwise, all as though such payments had not been made.
(g)
Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the Collateral Agent, on behalf of itself and
the Purchasers without set-off or counterclaim in U.S. dollars at the address set forth or referred to in the signature pages to the
Purchase Agreement.
3.
Representations and Warranties. Each Guarantor hereby makes the following representations and warranties to Purchasers as of the
date hereof, as applicable:
(a)
Organization and Qualification. Each Guarantor is (A) an individual with full capacity, who has knowledge and a complete understanding
of the terms set forth in this Guaranty and each other Transaction Document to which Guarantor is a party; or (B)(1) a corporation, limited
liability company or limited partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of
its organization as set forth on the signature pages hereto, (2) has all requisite corporate, limited liability company or limited partnership
power and authority to conduct its business as now conducted and as presently contemplated and to execute, deliver and perform its obligations
under this Guaranty and each other Transaction Document to which such Guarantor is a party, and to consummate the transactions contemplated
hereby and thereby and (3) is duly qualified to do business and is in good standing in each jurisdiction in which the character of the
properties owned or leased by it or in which the transaction of its business makes such qualification necessary except where the failure
to be so qualified (individually or in the aggregate) would not result in a Material Adverse Effect.
(b)
Authorization; Enforcement. The Guarantor has the requisite power and authority to enter into and to consummate the transactions
contemplated by this Guaranty, and otherwise to carry out its obligations hereunder. The execution and delivery of this Guaranty by any
Guarantor that is an entity and the consummation by it of the transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of the Guarantor. This Guaranty has been duly executed and delivered by the Guarantor and constitutes the
valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting
generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.
(c)
No Conflicts. The execution, delivery and performance of this Guaranty by the Guarantor and the consummation by the Guarantor
of the transactions contemplated thereby do not and will not (i) in the case of a Guarantor that is an entity, conflict with or violate
any provision of its certificate or articles of incorporation, operating agreement, bylaws or other organizational documents, or (ii)
conflict with, constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Guarantor
is a party, or (iii) 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 Guarantor is subject (including federal and state securities laws and regulations),
or by which any material property or asset of the Guarantor is bound or affected, except in the case of each of clauses (ii) and (iii),
such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as could not, individually or in the
aggregate, have or result in a Material Adverse Effect. The business of any Guarantor that is an entity is not being conducted in violation
of any law, ordinance or regulation of any governmental authority, except for violations which, individually or in the aggregate, do
not have a Material Adverse Effect.
(d)
Consents and Approvals. The Guarantor is not required to obtain any consent, waiver, authorization or order of, or make any filing
or registration with, any court or other federal, state, local, foreign or other governmental authority or other Person in connection
with the execution, delivery and performance by the Guarantor of this Guaranty.
(f)
Foreign Law. Each Guarantor has consulted with appropriate foreign legal counsel with respect to any of the above representations
for which non-U.S. law is applicable. As applicable, such foreign counsel has advised each applicable Guarantor that such counsel knows
of no reason why any of the above representations would not be true and accurate. Such foreign counsel was provided with copies of this
Guaranty and the Transaction Documents prior to rendering its advice, as applicable.
4.
Covenants.
(a)
Each Guarantor covenants and agrees with the Purchasers that, from and after the date of this Guaranty until the Obligations shall have
been indefeasibly paid in full (other than inchoate indemnity obligations or indemnification obligations for which no claim or demand
for payment, whether oral or written has been made at such time), such Guarantor shall take, and/or shall refrain from taking, as the
case may be, each commercially reasonable action that is necessary to be taken or not taken, as the case may be, so that no Event of
Default (as defined in the Notes) is caused by the failure to take such action or to refrain from taking such action by such Guarantor.
5.
Miscellaneous.
(a)
Amendments in Writing. None of the terms or provisions of this Guaranty may be waived, amended, supplemented or otherwise modified
except in writing by the Collateral Agent on behalf of itself and the Purchasers.
(b)
Notices. All notices, requests and demands to or upon the Collateral Agent on behalf of itself and the Purchasers or any Guarantor
hereunder shall be effected in the manner provided for in the Purchase Agreement, provided that any such notice, request or demand to
or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 5(b).
(c)
No Waiver by Course of Conduct; Cumulative Remedies. The Collateral Agent on behalf of the Purchasers shall not by any act (except
by a written instrument pursuant to Section 5(a)), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default under the Transaction Documents, including any Event of Default (as defined in the Notes).
No failure to exercise, nor any delay in exercising, on the part of the Collateral Agent on behalf of itself and the Purchasers, any
right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the
Collateral Agent on behalf of itself and the Purchasers of any right or remedy hereunder on any one occasion shall not be construed as
a bar to any right or remedy which the Collateral Agent on behalf of itself and the Purchasers would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights
or remedies provided by law.
(d)
Enforcement Expenses; Indemnification.
(i)
Each Guarantor agrees to pay, or reimburse the Purchasers and the Collateral Agent for, all its documented, reasonable costs and expenses
incurred in collecting against such Guarantor under the guaranty contained in Section 2 or otherwise enforcing or preserving any rights
under this Guaranty and the other Transaction Documents to which such Guarantor is a party, including, without limitation, the reasonable
fees and disbursements of counsel to the Purchasers.
(ii)
Each Guarantor agrees to pay, and to save the Collateral Agent and the Purchasers harmless from, any and all liabilities with respect
to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable
in connection with any of the transactions contemplated by this Guaranty.
(iii)
Each Guarantor agrees to pay, and to save the Collateral Agent and the Purchasers harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this Guaranty to the extent the Company would be required
to do so pursuant to the Notes, except to the extent resulting from the Purchasers gross negligence or willful misconduct as determined
by a final judgment of a court of competent jurisdiction no longer subject to appeal.
(iv)
The agreements in this Section 5(d) shall survive repayment of the Obligations.
(e)
Successor and Assigns. This Guaranty shall be binding upon the successors and assigns of each Guarantor and shall inure to the
benefit of the Purchasers and their respective successors and assigns; provided that no Guarantor may assign, transfer or delegate any
of its rights or obligations under this Guaranty without the prior written consent of the Purchasers.
(f)
Set-Off. Each Guarantor hereby irrevocably authorizes the Collateral Agent, on behalf of itself and the Purchasers at any time
and from time to time while an Event of Default (as defined in the Notes) or other default under any of the Transaction Documents shall
have occurred and be continuing, without notice to such Guarantor or any other Guarantor, any such notice being expressly waived by each
Guarantor, to set off and appropriate and apply any and all deposits, credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Purchasers to or for the credit
or the account of such Guarantor, or any part thereof in such amounts as the Collateral Agent, on behalf of itself and the Purchasers
may elect, against and on account of the obligations and liabilities of such Guarantor to the Purchasers hereunder and claims of every
nature and description of the Purchasers against such Guarantor, in any currency, whether arising hereunder, under the Purchase Agreement,
any other Transaction Document or otherwise, as the Collateral Agent, on behalf of itself and the Purchasers may elect, whether or not
the Collateral Agent, on behalf of itself and the Purchasers have made any demand for payment and although such obligations, liabilities
and claims may be contingent or unmatured. The Collateral Agent, on behalf of itself and the Purchasers shall notify such Guarantor promptly
of any such set-off and the application made by the Collateral Agent, on behalf of itself and the Purchasers of the proceeds thereof,
provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Collateral
Agent, on behalf of itself and the Purchasers under this Section 5(f) are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Purchasers may have.
(g)
Counterparts. This Guaranty may be executed by two or more of the parties to this Guaranty on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
(h)
Severability. Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
(i)
Section Headings. The section headings used in this Guaranty are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
(j)
Integration. This Guaranty represent the agreement of the Guarantors and the Collateral Agent, on behalf of itself and the Purchasers
with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the
Purchasers relative to the subject matter hereof and thereof not expressly set forth or referred to herein or in the other Transaction
Documents.
(k)
Governing Laws. All questions concerning the construction, validity, enforcement and interpretation of this Guaranty shall be
governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles
of conflicts of law thereof. Each of the Collateral Agent, on behalf of itself and the Purchasers and the Guarantors agree that all proceedings
concerning the interpretations, enforcement and defense of the transactions contemplated by this Guaranty (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 state and federal courts sitting in Wilmington, Delaware. Each of the Collateral Agent, on behalf
of itself and the Purchasers and each Guarantor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in the state and federal courts sitting in Wilmington, Delaware for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such proceeding is improper.
Each party hereto 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 Guaranty and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by
law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Guaranty or the transactions contemplated hereby.
(l)
Acknowledgements. Each Guarantor hereby acknowledges that:
(i)
it has been advised by counsel in the negotiation, execution and delivery of this Guaranty and the other Transaction Documents to which
it is a party;
(ii)
the Purchasers have no fiduciary relationship with or duty to any Guarantor arising out of or in connection with this Guaranty or any
of the other Transaction Documents, and the relationship between the Guarantors, on the one hand, and the Purchasers, on the other hand,
in connection herewith or therewith is solely that of debtor and creditor; and
(iii)
no joint venture is created hereby or by the other Transaction Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Guarantors and the Purchasers.
(n)
Release of Guarantors. Each Guarantor will be released from all liability hereunder concurrently with the indefeasible repayment
in full of the Obligations (other than inchoate indemnity obligations or indemnification obligations for which no claim or demand for
payment, whether oral or written has been made at such time).
(p)
WAIVER OF JURY TRIAL. EACH GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE PURCHASERS, HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTY AND FOR ANY COUNTERCLAIM THEREIN.
*********************
(Signature
Pages Follow)
IN
WITNESS WHEREOF, each of the undersigned has caused this Guaranty to be duly executed and delivered as of the date first above written.
| |
BRIDGETOWN
SPIRITS, CORP. |
| |
|
|
| |
By: |
|
| |
Name:
|
|
| |
Title:
|
|
| Accepted
by: |
|
| |
|
| as
Collateral Agent |
|
Exhibit
10.8
Eastside
Distilling, Inc.
2321
NE Argyle Street, Unit D
Portland,
Oregon 97211
November
__, 2024
_______________
_______________
_______________
Re:
Eastside Distilling, Inc.
Ladies
and Gentlemen:
This
letter agreement documents our understanding regarding your investments in Eastside Distilling, Inc. (the “Company”) through
that certain Securities Purchase Agreement by and between you and the Company (the “SPA”).
Reference
is made to your or an affiliated entity’s ownership of shares of the Company’s Series F Convertible Preferred Stock (the
“Series F”). Reference is also made to that certain SPA, under which each of you agreed to invest in the Company by acquiring
a Senior Secured Note in exchange for a loan.
In
consideration of ______’s payment to the Company of $____, and _____’s payment to the Company of $____, for a total of $____
(the “Investment Amount”), we agree that you or an affiliated entity can exchange a number of shares of Series F which have
the stated value equal to the Investment Amount for a promissory note with the principal equal to the Investment Amount, a form of which
is attached hereto as Exhibit A.
Please
execute and return this letter to the Company via email to _____ Attention: Geoffrey Gwin, CEO, with a copy to _____.
| |
Sincerely
yours, |
| |
|
| |
|
| |
Geoffrey
Gwin, Chief Executive Officer |
I
hereby agree to and acknowledge the foregoing:
Date:
November __, 2024
Exhibit
10.9
Eastside
Distilling, Inc.
755
Main Street, Building 4, Suite 3
Monroe,
CT 06468
November
__, 2024
________________
________________
________________
Re:
Eastside Distilling, Inc.
Ladies
and Gentlemen:
This
letter agreement documents our understanding regarding your investment in Eastside Distilling, Inc. (the “Company”) and your
agreement to make another investment through that certain Securities Purchase Agreement by and between you and the Company, dated November
__, 2024 (the “SPA”).
Reference
is made to your ownership of _____ shares of the Company’s Series D Preferred Stock (the “Series D”). Pursuant to the
SPA, you have agreed to lend the Company $____ in exchange for a $____ Senior Secured Note (the “Note”).
By
acquiring the Note under the SPA, you hereby agree that a number of shares of Series D equal to $____ of the stated value of the Series
D shall be eligible for conversion into shares of the Company’s Common Stock (the “Series D Conversion Shares”). The
Series D Conversion Shares shall be convertible on April 7, 2025. The Series D Conversion Shares will have a conversion price equal to
the lower of (i) $0.50 per share; or (ii) the five-day volume-weighted average price ending on April 7, 2025, but in no event shall the
conversion price be less than $0.25 per share.
Further,
in consideration of the promises herein and those made under the SPA, the Company hereby agrees that upon the Company’s repayment
of the Note it shall not create any future debt that would encumber or use as collateral any of the assets of Bridgetown Spirits Corp.
where any of the proceeds from such debt would be advanced to or used to support Beeline Financial Holdings, Inc.’s business.
Please
execute and return this letter to the Company via email to ____ Attention: Geoffrey Gwin, CEO, with a copy to ______.
| |
Sincerely
yours, |
| |
|
| |
|
| |
Geoffrey
Gwin, Chief Executive Officer |
I
hereby agree to and acknowledge the foregoing:
Exhibit
10.10
Eastside
Distilling, Inc.
755
Main Street, Building 4, Suite 3
Monroe,
CT 06468
November
__, 2024
____________________
____________________
____________________
| |
Re:
|
Eastside
Distilling, Inc. |
Ladies
and Gentlemen:
This
letter agreement documents our understanding regarding your investment in Eastside Distilling, Inc. (the “Company”) through
that certain Securities Purchase Agreement by and between you and the Company (the “SPA”).
Reference
is made to your ownership of a Senior Secured Debenture of Beeline Financial Holdings, Inc. You agreed to make a loan to the Company
of $____ (the “Investment Amount”) and acquire a Senior Secured Note pursuant to the SPA.
By
acquiring the Senior Secured Note under the SPA, you will also receive shares of the Company’s Series F Convertible Preferred Stock
having a stated value equal to 50% of your Investment Amount. The form of the Certificate of Designations is filed as Exhibit 3-c to
the Company’s Current Report on Form 8-K filed on October 7, 2024, which can be accessed here: https://www.sec.gov/edgar/browse/?CIK=1534708&owner=exclude.
Please
execute and return this letter to the Company via email to _____ Attention: Geoffrey Gwin, CEO, with a copy to _____.
| |
Sincerely
yours, |
| |
|
| |
|
| |
Geoffrey
Gwin, Chief Executive Officer |
I
hereby agree to and acknowledge the foregoing:
Date:
November __, 2024
Exhibit
10.11
November
12, 2024
Eastside
Distilling, Inc.
2321
NE Argyle Street, Unit D
Portland,
OR 97211
Ladies
and Gentlemen:
This
letter (the “Agreement”) constitutes the agreement between Joseph Gunnar & Co., LLC (“Joseph Gunnar”
or the “Placement Agent”) and Eastside Distilling, Inc., a corporation organized under the laws of the State of Nevada
(the “Company”), that Joseph Gunnar shall serve as the exclusive placement agent for the Company, on a “commercially
reasonable efforts” basis, in connection with the proposed placement (the “Placement”) of up to $1,921,200 in
principal amount of senior secured non-interest bearing notes (“Notes”) (representing aggregate subscription amounts
from purchasers of $1,601,000, based on a 20% original issue discount on the Notes) and warrants (“Warrants”) to shares
of common stock, $0.0001 par value per share (“Warrant Shares”), of the Company. The Notes, Warrants, and Warrant
Shares are collectively referred to herein as the “Securities.”
The
terms of the Placement shall be mutually agreed upon by the Company, Joseph Gunnar and the purchasers of the Notes and Warrants (each,
a “Purchaser” and collectively, the “Purchasers”) and nothing herein constitutes that Joseph Gunnar
would have the power or authority to bind the Company or any Purchaser or an obligation for the Company to issue any Securities or complete
the Placement. This Agreement and the documents executed and delivered by the Company or the Purchasers in connection with the Placement
(including but not limited to the Purchase Agreement as defined below) shall be collectively referred to herein as the “Transaction
Documents.” The closing of the sale of Securities, pursuant to the Placement shall be referred to herein as (the “Closing”).
The Company expressly acknowledges and agrees that Joseph Gunnar’s obligations hereunder are on a commercially reasonable efforts
basis only and that the execution of this Agreement does not constitute a legal or binding commitment by Joseph Gunnar to purchase the
Securities or introduce the Company to investors and does not ensure the successful placement of the Securities or any portion thereof
or the success of Joseph Gunnar with respect to securing any other financing on behalf of the Company. The Placement Agent may retain
other brokers or dealers to act as sub-agents or selected-dealers on its behalf in connection with the Placement. The sale of the Securities
to any Purchaser will be evidenced by a purchase agreement (the “Purchase Agreement”) by and among the Company and
such Purchasers in a form reasonably acceptable to the Company and Joseph Gunnar. Prior to the signing of the Purchase Agreement, officers
of the Company will be available to answer inquiries from prospective Purchasers.
SECTION
1. COMPENSATION. As compensation for the services provided by Joseph Gunnar hereunder, the Company agrees to pay to Joseph
Gunnar:
(A)
A cash fee payable in U.S. dollars equal to the sum of (i) ten percent (10.0%) of the gross proceeds that the Company receives for the
purchase of the Securities from Purchasers, in the Placement from the sale of the Securities at the Closing (in the aggregate, the “Cash
Compensation”). The Cash Compensation shall be paid at the Closing from the gross proceeds of the Securities sold.
(B)
Reserved.
(C)
Subject to compliance with FINRA Rule 5110(f)(2)(D) and the closing of the Placement, the Company also agrees to reimburse Joseph Gunnar
for all of Joseph Gunnar’s actual out-of-pocket accountable expenses upon receipt of reasonably acceptable evidence of such expenditures,
including the reasonable fees of legal counsel of Joseph Gunnar of $50,000 at the Closing.
(D)
The Placement Agent reserves the right to reduce any item of compensation or adjust terms thereof as specified therein in the event that
a determination shall be made by FINRA to the effect that the Placement Agent’s aggregate compensation is in excess of FINRA Rules
or that the terms thereof require adjustment.
SECTION
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Each of the representations and warranties (together with any related disclosures
in the disclosure schedules appended thereto) made by the Company to the Purchasers in the Transaction Documents, is hereby incorporated
herein by reference (as though fully restated herein including the related disclosure schedules) and is, as of the date of this Agreement,
hereby made to, and in favor of, the Placement Agent. In addition to the foregoing, the Company represents and warrants to the Placement
Agent that:
(A)
(i) the Company has the requisite corporate power and authority to enter into this Agreement and to perform all of its obligations hereunder;
(ii) this Agreement has been duly authorized and executed and constitutes a legal, valid and binding agreement of such party enforceable
in accordance with its terms, except (x) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (y) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies, and (z) insofar as indemnification and contribution
provisions may be limited by applicable law; and (iii) the execution and delivery of this Agreement and the consummation of the transactions
contemplated hereby does not conflict with or result in a breach of (y) the Company’s articles of incorporation or by-laws or (z)
any agreement to which the Company is a party or by which any of its property or assets is bound that would result in the creation of
any material lien upon the property or other assets of the Company, or give to others any rights of termination, amendment, acceleration
or cancellation of, any material agreement to which the Company is a party or by which any property or asset of the Company is bound,
except such as would not reasonably be expected to result in a material adverse effect to the Company.
(B)
To the knowledge of the Company, all disclosure provided by or on behalf of the Company to the Placement Agent regarding the Company,
its business 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 the light of the circumstances
under which they were made, not misleading; provided, however, that the foregoing does not apply to any statements or omissions made
solely in reliance on and in conformity with written information furnished to the Company by the Placement Agent specifically for use
in the preparation thereof.
(C)
The Company has not taken and will not take any action, directly or indirectly, so as to cause the Placement not to be entitled to the
exemption from registration afforded by Section 4(a)(2) and/or Rule 506(b) of the Securities Act of 1933, as amended (the “Act”).
In effecting the Placement, the Company agrees to comply in all material respects with applicable provisions of the Act and any regulations
thereunder and any applicable laws, rules, regulations and requirements (including, without limitation, all U.S. state law and all national,
provincial, city or other legal requirements).
(D)
The Securities, upon issuance in accordance with the terms herein, will be issued in compliance with all applicable federal and state
securities laws. The Warrant Shares issuable upon exercise of the Warrants have been duly reserved for issuance, and upon issuance in
accordance with the terms of the Warrants and payment of the exercise price therefor, will be validly issued, fully paid and nonassessable.
SECTION
3. REPRESENTATIONS OF JOSEPH GUNNAR. Joseph Gunnar represents and warrants that it (i) is a member in good standing of FINRA,
(ii) is registered as a broker/dealer under the Securities Exchange Act of 1934, as amended, (iii) is licensed as a broker/dealer under
the laws of the states applicable to the offers and sales of the Securities by Joseph Gunnar, (iv) is a limited liability company validly
existing under the laws of its place of incorporation or formation, and (v) has full power and authority to enter into and perform its
obligations under this Agreement. Joseph Gunnar will immediately notify the Company in writing of any change in its status as such. Joseph
Gunnar covenants that it will use its commercially reasonable efforts to conduct the Placement in compliance with the provisions of this
Agreement and the requirements of applicable law.
SECTION
4. INDEMNIFICATION. The Company agrees to the indemnification and other agreements set forth in the Indemnification provisions
(the “Indemnification”) attached hereto as Addendum A, the provisions of which are incorporated herein by reference
and shall survive the termination or expiration of this Agreement.
SECTION
5. ENGAGEMENT TERM. The Placement Agent’s engagement hereunder shall be until the earlier of (i) November 29, 2024 and
(ii) the Closing of the Placement (such date, the “Termination Date” and the period of time during which this Agreement
remains in effect is referred to herein as the “Term”); provided, however, that any party hereto may terminate this
Agreement upon ten (10) days written notice to the other party. Notwithstanding anything to the contrary contained herein, the provisions
concerning any obligation of the Company to pay any fees pursuant to Section 1 hereof, any expense reimbursement pursuant to Section
1 hereof, confidentiality, indemnification and contribution, or Right of First Refusal contained herein and the Company’s obligations
contained in the Indemnification Provisions will survive any expiration or termination of this Agreement on the terms thereof. If this
Agreement is terminated prior to the completion of the Placement, all fees and expense reimbursement due to the Placement Agent, if any,
shall be paid by the Company to the Placement Agent on or before the Termination Date (in the event such fees are earned or owed as of
the Termination Date).
SECTION
6. CONFIDENTIAL INFORMATION. The Placement Agent agrees not to use any confidential information concerning the Company provided
to such Placement Agent by the Company for any purposes other than those contemplated under this Agreement and, except as otherwise required
by applicable law, rule or regulation, the Placement Agent will not disclose or otherwise refer to any confidential information in any
manner without the Company’s prior written consent. The Company agrees that any information or advice rendered by Joseph Gunnar
in connection with this engagement is for the confidential use of the Company only in its evaluation of the Placement and, except as
otherwise required by applicable law, rule or regulation, the Company will not disclose or otherwise refer to the advice or information
in any manner without Joseph Gunnar’s prior written consent.
SECTION
7. NO FIDUCIARY RELATIONSHIP. This Agreement does not create, and shall not be construed as creating rights enforceable by
any person or entity not a party hereto, except those entitled hereto by virtue of the Indemnification provisions hereof. The Company
acknowledges and agrees that Joseph Gunnar is not and shall not be construed as a fiduciary of the Company and shall have no duties or
liabilities to the equity holders or the creditors of the Company or any other person by virtue of this Agreement or the retention of
Joseph Gunnar hereunder, all of which are hereby expressly waived.
SECTION
8. CLOSING. The obligations of the Placement Agent hereunder, and the Closing of the sale of the applicable Securities pursuant
to the Purchase Agreement, are subject to the accuracy, when made and on the date of the Closing, of the representations and warranties
on the part of the Company and its subsidiaries contained herein and in the Purchase Agreement, to the accuracy of the statements of
the Company and its subsidiaries made in any certificates pursuant to the provisions hereof, to the performance by the Company and its
subsidiaries of their obligations hereunder, and to each of the following additional terms and conditions, except as otherwise disclosed
to and acknowledged and waived by the Placement Agent or by the Company:
(A)
All corporate proceedings and other legal matters incident to the authorization, form, execution, delivery and validity of each of this
Agreement, the Securities and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Placement Agent, and the Company shall have furnished to such counsel all documents
and information that such counsel may reasonably request to enable them to pass upon such matters.
(B)
The Placement Agent shall have received, as of the Closing, the written opinion from Nason, Yeager, Gerson, Harris & Fumero, P.A.
as legal counsel to the Company, dated as of the Closing, addressed to the Placement Agent in a form and substance reasonably acceptable
to Joseph Gunnar.
(C)
Reserved.
(D)
Except as set forth in or contemplated by the Purchase Agreement for the Placement of the Securities (i) the Company shall not have sustained,
any material loss or interference with its business from fire, explosion, flood, terrorist act or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order or decree nor (ii) there shall have been any change in
the capital stock or long-term debt of the Company or any of its subsidiaries or any change, or any development involving a prospective
change, in or affecting the business, general affairs, financial condition, or results of operations of the Company and its subsidiaries,
the effect of which, in any such case described in clause (i) or (ii), is, in the reasonable judgment of the Placement Agent, so material
and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the Securities on the terms and in the
manner contemplated by the Purchase Agreement.
(E)
Reserved.
(F)
Subsequent to the execution and delivery of this Agreement and up to the Closing, there shall not have occurred any of the following:
(i) a general moratorium on commercial banking activities declared by Federal or New York State authorities or a material disruption
in commercial banking or securities settlement or clearance services in the United States, (ii) the United States has become engaged
in hostilities in which it is not currently engaged, the subject of a significant act of terrorism, an escalation in hostilities involving
the United States, or a declaration of a national emergency or war by the United States, or (iii) any other national calamity or crisis,
if the effect of any such event in clause (ii) or (iii) makes it, in the reasonable judgment of the Placement Agent, impracticable or
inadvisable to proceed with the sale or delivery of the Securities on the terms and in the manner contemplated by the Purchase Agreement.
(G)
No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing, prevent the issuance or sale of the Securities or materially adversely affect the business
or operations of the Company; and no injunction, restraining order or order of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing which would prevent the issuance or sale of the Securities or materially adversely
affect the business or operations of the Company.
(H)
The Company shall have entered into a Purchase Agreement with each of the Purchasers and such agreements shall be in full force and effect
and shall contain representations, warranties and covenants of the Company as agreed between the Company and the Purchasers.
(I)
On or prior to the Closing, the Company shall have furnished to the Placement Agent such further information, certificates and documents
as the Placement Agent may reasonably request.
(J)
Reserved.
(K)
Reserved.
(L)
The Placement Agent shall have completed its due diligence investigation of the Company to the satisfaction of the Placement Agent and
its counsel, including without limitation, its due diligence investigation and analysis of: (i) the Company’s officers, directors,
employees, affiliates, customers and suppler; and (ii) the Company’s audited historical financial statements as may be required
by the Act and rules and regulations of the Commission thereunder; and (iii) the Company’s prospects.
(M)
FINRA shall have raised no objection to the fairness and reasonableness of the terms and arrangements of this Agreement that may not
otherwise be cured. In addition, the Company shall, if requested by the Placement Agent, make or authorize Placement Agent’s counsel
to make on the Company’s behalf, an issuer filing with FINRA pursuant to FINRA Rule 5123 with respect to the Placement and pay
filing fees required in connection therewith, if any.
All
opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Placement Agent.
SECTION
9. COVENANTS AND OBLIGATIONS.
(A)
Unless the Company terminates this Agreement for Good Reason or by payment of the Termination Fee, the Placement Agent shall be entitled
to the compensation set forth in Section 1.
(B)
The Placement Agent shall have an irrevocable right of first refusal (the “Right of First Refusal”), for a period
of twelve (12) months after the later of the termination of this Agreement or the Closing of the Placement, to act as sole investment
banker, sole book-runner, sole placement agent, or sole advisor, whichever is applicable and at the Placement Agent’s sole discretion,
for each and every public equity and debt offering (each, a “Subject Transaction”), during such twelve (12) month
period, by the Company, or any successor to or any current or future subsidiary of the Company, on terms no worse than the terms provided
by any other bank selected by the Company. The Placement Agent shall notify the Company of its decision to exercise its Right of First
Refusal within three (3) Business Days of receipt of written terms of a Subject Transaction. If the Placement Agent is engaged for any
Subject Transaction, then the Placement Agent shall have the sole right to determine whether or not any other broker dealer shall have
the right to participate in the Subject Transactions and the economic terms of such participation. The Placement Agent’s decision
not to act in any such roles for any Subject Transaction shall not be deemed a waiver of this Section 9(B). For the avoidance of any
doubt, in the event of a closing of the Placement, the Company shall not retain, engage or solicit any additional investment bankers,
book-runners, underwriters and/or placement agents in a Subject Transaction without the express written consent of the Placement Agent
during such twelve (12) month period.
(C)
As used herein, the term “Good Reason” means: (i) the failure of the Placement Agent to proceed with the Placement
in good faith, (ii) gross negligence or willful misconduct of the Placement Agent, (iii) the occurrence of any domestic or international
event or act or occurrence which materially disrupts, or in the Placement Agent’s sole opinion will, in the immediate future, materially
disrupt, general securities markets in the United States, (iv) the Company will have sustained a material loss by fire, flood, accident,
hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether or not such loss will have been insured, will,
in Placement Agent’s sole judgment make it inadvisable to proceed with this Placement.
SECTION
10. GOVERNING LAW. This Agreement will be governed as to validity, interpretation, construction, effect and in all other respects
by the internal law of the State of New York. The Company and the Placement Agent each (i) agree that any legal suit, action or proceeding
arising out of or relating to this Agreement shall be instituted exclusively in the New York State Supreme Court, County of New York,
or in the United States District Court for the Southern District of New York, (ii) waives any objection to the venue of any such suit,
action or proceeding, and the right to assert that such forum is an inconvenient forum, and (iii) irrevocably consents to the jurisdiction
of the New York State 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 Company and the Placement Agent further agrees to accept and acknowledge service of
any and all process that may be served in any such suit, action or proceeding in the New York State Supreme Court, County of New York,
or in the United States District Court for the Southern District of New York and agree that service of process upon it mailed by certified
mail to its address shall be deemed in every respect effective service of process in any such suit, action or proceeding. The parties
hereby expressly waive all rights to trial by jury in any suit, action or proceeding arising under this Agreement.
SECTION
11. ENTIRE AGREEMENT/MISC. This Agreement (including the attached Indemnification provisions) embody the entire agreement
and understanding between the parties hereto, and supersedes all prior agreements and understandings, relating to the subject matter
hereof. Notwithstanding anything herein to the contrary, the Engagement Agreement, dated July 9, 2024 (“Engagement Agreement”),
by and 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. If any provision of this Agreement is determined to be invalid or
unenforceable in any respect, such determination will not affect such provision in any other respect or any other provision of this Agreement,
which will remain in full force and effect. This Agreement may not be amended or otherwise modified or waived except by an instrument
in writing signed by both Joseph Gunnar and the Company. The representations, warranties, agreements and covenants contained herein shall
survive the closing of the Placement and delivery of the Securities, as applicable. 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 the other party, it being understood that both parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission or a .pdf format 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. The Company agrees that the Placement Agent may rely upon, and is a third party beneficiary
of, the representations and warranties, and applicable covenants set forth in any such purchase, subscription or other agreement with
the Purchasers in the Placement. All amounts stated in this Agreement are in US dollars unless expressly stated.
SECTION
12. 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 date of transmission, if such notice or communication
is sent to the email address specified on the signature pages attached hereto prior to 6:30 p.m. (New York City time) on a Business Day,
(b) the next Business Day after the date of transmission, if such notice or communication is sent to the email address on the signature
pages attached hereto on a day that is not a Business Day or later than 6:30 p.m. (New York City time) on any Business Day, (c) the third
Business Day following the date of mailing, if sent by U.S. internationally recognized air courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given. “Business Day” means any day other than Saturday, Sunday or other
day on which commercial banks in the City of New York are authorized or required by law to remain closed; provided that banks shall not
be deemed to be authorized or obligated to be closed due to a “shelter in place,” “non-essential employee” or
similar closure of physical branch locations at the direction of any governmental authority if such banks’ electronic funds transfer
systems (including for wire transfers) are open for use by customers on such day. The address for such notices and communications shall
be as set forth on the signature pages hereto.
SECTION
13. PRESS ANNOUNCEMENTS. The Company agrees that the Placement Agent shall, from and after the Closing, have the right to
reference the Placement and the Placement Agent’s role in connection therewith in the Placement Agent’s marketing materials
and on its website and to place advertisements in financial and other newspapers and journals, in each case at its own expense, provided
such publicizing shall not impact the Company’s ability to conduct the Placement pursuant to all applicable securities laws.
SECTION
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and permitted assigns. This Agreement or any obligations or rights hereunder may not be assigned without the other party’s prior
written consent.
SECTION
15. HEADINGS; LANGUAGE. 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. The official language of this Agreement is the English language
and it shall be interpreted in the English language for all purposes.
[The
remainder of this page has been intentionally left blank.]
Please
confirm that the foregoing correctly sets forth our agreement by signing and returning to Joseph Gunnar the enclosed copy of this Agreement.
| |
Very
truly yours, |
| |
JOSEPH
GUNNAR & CO., LLC |
| |
|
| |
By:
|
|
| |
Name:
|
Stephen
Stein |
| |
Title:
|
President |
| |
Address
for notice: |
| |
|
| |
1000
RXR Plaza |
| |
Uniondale,
New York 11556 |
| |
Attention:
|
Stephan
Stein |
| |
Email:
|
|
Accepted
and agreed to as of
the date first written above: |
|
| |
|
| EASTSIDE
DISTILLING, INC |
|
| |
|
|
| By: |
|
|
| Name:
|
Geoffrey
Gwin |
|
| Title:
|
Chief
Executive Officer |
|
| Address
for notice: |
|
| |
|
| 2321
NE Argyle Street, Unit D |
|
| Portland,
OR 97211 |
|
| email: |
|
|
Exhibit
99.1
Eastside
Distilling, Inc. Announces Private Placement Offering
Portland,
OR and Providence, RI, November 15, 2024 /PRNewswire/ — Eastside Distilling, Inc. (NASDAQ: EAST) (“Eastside” or the
“Company”), a holding company for Bridgetown Spirits Corp., a consumer-focused beverage company that builds craft inspired
experiential brands and for Beeline Financial Holdings, Inc. (“Beeline”), a digital mortgage technology and lending company,
announces the completion of a private placement offering (the “Offering”) with accredited investors, resulting in gross proceeds
of $1,615,000. Under the terms of a Securities Purchase Agreement, the Company sold $1,938,000 in original issue discount Senior Secured
Notes (the “Notes”) and Pre-Funded Warrants to purchase 363,602 shares of Common Stock (the “Warrants”).
Joseph
Gunnar & Co., LLC acted as the exclusive placement agent in connection with the Offering.
For
an overview of the terms of the securities and transactions involved in the Offering, and copies of the forms of transaction documents
entered into in connection therewith, please refer to the Company’s Current Report on Form 8-K filed on November 15, 2024 with
the Securities and Exchange Commission. The Company plans to utilize the net proceeds for working capital and general corporate expenses,
among other uses.
About
Eastside Distilling
Eastside
Distilling, Inc. (Nasdaq: EAST) is a producer of award-winning craft spirits, including whiskey, vodka, and rum. Founded in Portland,
Oregon, Eastside is committed to quality, innovation, and sustainability, delivering exceptional products that reflect the spirit of
the Pacific Northwest.
About
Beeline Financial Holdings, Inc.
The
Company recently closed on a merger with Beeline Financial Holdings, Inc. Beeline is a technology-driven mortgage lender offering a fully
digital, AI-enhanced, platform that simplifies and accelerates the home financing process for homeowners and property investors. Based
in Providence, RI, Beeline is dedicated to transforming the mortgage industry through innovative technology and customer-centric solutions.
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