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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 26, 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,
Connecticut 06468
(Address
of principal executive offices)
(Zip
Code)
Registrant’s
telephone number, including area code: (484) 800-9154
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) |
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:
| ☐ |
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)) |
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
The
disclosure set forth in Items 3.02 and 5.03 are incorporated into this Item 1.01 by reference.
Item
3.02. Recent Sales of Unregistered Securities
From
November 26 to December 2, 2024, Eastside
Distilling, Inc. (“Eastside” or the “Company”) entered into a Securities Purchase Agreement with two accredited
investors pursuant to which the Company sold units comprised of a total of 1,166,667 shares of a newly designated Series G Convertible
Preferred Stock (“Series G”) and five-year warrants to purchase a total of 583,333 shares of the Company’s Common
Stock for total gross proceeds of $595,000. The Company intends to use the net proceeds, after deducting offering expenses and
related costs, for working capital and general corporate purposes.
In
connection with the foregoing, the Company entered into a registration rights agreement with the investors pursuant to which the Company
agreed file a registration statement to register the shares of Common Stock underlying the Series G and Warrants within 30 trading days
following the later of the final closing or termination of the offering, 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
Warrants are exercisable at an exercise price of $0.65 per share beginning on the effective date of (i) an increase in authorized Common
Stock of the Company as necessary to permit full issuance of the shares of Common Stock underlying the Warrants and the Series G sold
pursuant to the Purchase Agreement together with other common stock equivalents outstanding as of the date of the Purchase Agreement
and (ii) the approval of the issuance of all of the securities as may be required by the rules and regulations of The Nasdaq Stock Market
LLC (collectively, the “Shareholder Approval”). A summary of the material terms of the Series G is included under Item 5.03
and incorporated into this Item 3.02 by reference.
The
offer and sale of the units were exempt from registration Section 4(a)(2) of the Securities Act of 1933 and Rule 506(b) promulgated thereunder.
Item
5.03. Amendments to Articles of Incorporation.
Certificate
of Designation of Series G Preferred Stock
On
November 26, 2024 Eastside filed with the Nevada Secretary of State a Certificate of Designation of 6,000,000 shares of Series G Preferred
Stock. The material terms of the Series G Preferred Stock are summarized below:
Each
share of Series G has a stated value of $0.51. The holder of Series G shares has no conversion or voting rights prior to stockholder
approval of such actions. In the event of a liquidation of Eastside, the holders of Series G shares will share in the distribution of
Eastside’s net assets on an as-converted basis, subordinate only to the Series B, Series C, Series D and Series E shares.
Subject
to the Shareholder Approval, each share of Series G will be convertible into Common Stock by a conversion ratio equal to the stated value
of the Series G share divided by the Series G conversion price. The initial Series G conversion price is $0.51 per share, subject to
adjustment as provided therein including in the event of an issuance by Eastside of Common Stock or Common Stock equivalents at a price
per share that is less than the conversion price. The Series G conversion price is subject to equitable adjustment in the event of a
stock split, reverse split and similar events. The number of shares of Common Stock into which a holder may convert Series G shares will
be limited by a beneficial ownership limitation, which restricts the number of shares of Eastside Common Stock that the holder and its
affiliates may beneficially own after a conversion to 4.99%.
On
December 2, 2024, Eastside filed with the Nevada Secretary of State a Certificate of Correction of the Certificate of Designation of
the Series G Preferred Stock to include a floor price under which the conversion price of the Series G cannot be reduced, which floor
price is equal to 20% of the Minimum Price as that term is defined by the rules and regulations of The Nasdaq Stock Market LLC.
Certificate
of Correction of Series F Preferred Stock
On
November 27, 2024 Eastside filed with the Nevada Secretary of State a Certificate of Correction of the Certificate of Designation of
the Series F Preferred Stock. The Certificate of Correction recites that, due to a scrivener’s error, the beneficial ownership
limitation on conversion set forth in Section 3(e) of the Certificate of Designation was given excessive scope, contrary to the intent
of the Eastside Board of Directors. The Certificate of Correction corrects the error by adding text to Section 3(e) providing that the
beneficial ownership limitation will not apply to any shareholder who became subject to Section 16 of the Securities Exchange Act of
1934 by reason of being an executive officer or director of Eastside.
Certificate
of Correction of Series F-1 Preferred Stock
On
November 27, 2024 Eastside filed with the Nevada Secretary of State a Certificate of Correction of the Certificate of Designation of
the Series F-1 Preferred Stock. The Certificate of Correction recites that, due to a scrivener’s error, the beneficial ownership
limitation on conversion set forth in Section 3(e) of the Certificate of Designation was given excessive scope, contrary to the intent
of the Eastside Board of Directors. The Certificate of Correction corrects the error by adding text to Section 3(e) providing that the
beneficial ownership limitation on conversion will not apply to any shareholder who became subject to Section 16 of the Securities Exchange
Act of 1934 by reason of being an executive officer or director of Eastside. In addition, the Certificate of Correction clarifies that
the corrective language added to Section 3(e) will also govern the provision of voting rights on an as-converted basis set forth in Section
6 of the Certificate of Designation.
The
foregoing descriptions do not purport to be complete and are qualified in their entirety by the full text of the referenced documents,
copies of which are filed as Exhibits 3(a) – 3(c), 4(a) and 10(a) – 10(b) of this Current Report on Form 8-K.
Item 9.01.
Financial Statements and Exhibits.
(d)
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.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date:
December 3, 2024
| |
EASTSIDE
DISTILLING, INC. |
| |
|
|
| |
By:
|
/s/
Geoffrey Gwin |
| |
|
Geoffrey
Gwin |
| |
|
Chief
Executive Officer |
Exhibit 3(a)(1)
EXHIBIT
A TO
Certificate
of Designations, Preferences and Rights of the
Series
G Convertible Preferred Stock of
Eastside
Distilling, Inc.
Pursuant
to the authority expressly conferred upon the Board of Directors (the “Board”) of Eastside Distilling, Inc. (the “Company”)
by the Company’s Articles of Incorporation, as amended, the Board on November 26, 2024 hereby designates the Series G Convertible
Preferred Stock and the number of shares constituting such series, and fixes the rights, powers, preferences, privileges, limitations
and restrictions relating to such series in addition to any set forth in the Articles of Incorporation as follows: Capitalized words
and terms not defined herein and are not descriptive shall have the meaning as set forth in Section 17 below.
1.
Designation and Number of Shares. There shall hereby be created and established a series of preferred stock of the Company designated
as “Series G Convertible Preferred Stock” (the “Preferred Shares”). The authorized number of Preferred
Shares shall be 6,000,000 shares. Each Preferred Share shall have a par value of $0.0001. Each Preferred Share shall have a stated value
equal to $0.51 (the “Stated Value”).
2.
Ranking. All shares of capital stock of the Company, both common stock and any other series of preferred stock other than the
Company’s Series B Preferred Stock, which shall rank senior to the Preferred Shares, and Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, Series F Preferred Stock and Series F-1 Preferred Stock, all of which shall rank pari passu with the
Preferred Shares, shall be junior in rank to all Preferred Shares with respect to the preferences as to dividends, distributions and
payments upon the liquidation, dissolution and winding up of the Company (collectively, the “Junior Stock”). The rights
of all such shares of Junior Stock of the Company shall be subject to the rights, powers, preferences and privileges of the Preferred
Shares. In the event of the merger or consolidation of the Company with or into another corporation, the Preferred Shares shall maintain
their relative rights, powers, designations, privileges and preferences provided for herein and no such merger or consolidation shall
result inconsistent therewith. For the avoidance of doubt, in no circumstance will a Preferred Share have any rights subordinate or otherwise
inferior to the rights of shares of any Junior Stock (as defined above).
3.
Conversion.
(a)
Holder’s Conversion Right. Subject to the provisions of Section 3(e), at any time or times on or after the later of (i)
Charter Amendment Effectiveness Date and (ii) the Shareholder Approval Date (such date, the “Initial Conversion Date”),
each holder of a Preferred Share (each, a “Holder” and collectively, the “Holders”) shall be entitled
to convert any whole number of Preferred Shares into validly issued, fully paid and non-assessable shares of Common Stock in accordance
with Section 3(c) determined based on the Conversion Rate (as defined below).
(b)
Conversion Rate. Each Preferred Share shall be convertible, at the option of the Holder thereof, at any time and from time to
time, and without the payment of additional consideration by the Holder thereof, into such number of fully paid and non-assessable shares
of Common Stock equal to the ratio determined by dividing (A) the Stated Value of such Preferred Share by (B) the Conversion Price (as
defined below) in effect at the time of conversion (the “Conversion Rate”). The “Conversion Price”
shall initially be $0.51. The Conversion Price shall be subject to adjustment as provided below, and for the avoidance of doubt, any
adjustment to the Conversion Price as provided below shall result in a concordant adjustment to the number of shares of Common Stock
into which each Preferred Share may be converted pursuant to the Conversion Rate.
No
fractional shares of Common Stock are to be issued upon the conversion of any Preferred Shares. If the issuance would result in the issuance
of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share.
(c)
Mechanics of Conversion. The conversion of each Preferred Share shall be conducted in the following manner:
(i)
Holder’s Conversion. To convert a Preferred Share into validly issued, fully paid and non-assessable share of Common Stock,
on any date (a “Conversion Date”), a Holder shall deliver (whether via email or otherwise), for receipt on or prior
to 11:59 p.m., New York, N.Y. time, on such date, a copy of an executed notice of conversion of the share(s) of Preferred Shares subject
to such conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to the Company.
No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization)
of any Notice of Conversion form be required. The calculations and entries set forth in the Notice of Conversion shall control in the
absence of manifest or mathematical error. To effect conversions of Preferred Shares, a Holder shall not be required to surrender the
certificate(s) representing the Preferred Shares to the Company unless all of the Preferred Shares represented thereby are so converted,
in which case, such Holder shall surrender to a nationally recognized overnight delivery service for delivery to the Company the original
certificates representing the share(s) of Preferred Shares (the “Preferred Share Certificates”) so converted as aforesaid.
(ii)
Company’s Response. On or before the first Trading Day following the date of receipt by the Company of such Conversion Notice,
the Company shall (1) provided that (x) the Transfer Agent is participating in the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer Program and (y) shares of Common Stock to be so issued are otherwise eligible for resale pursuant
to Rule 144 promulgated under the Securities Act of 1933, as amended, credit such aggregate number of shares of Common Stock to which
such Holder shall be entitled to such Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal
at Custodian system, or (2) if either of the immediately preceding clauses (x) or (y) are not satisfied, issue and deliver (via reputable
overnight courier) to the address as specified in such Conversion Notice, a certificate, registered in the name of such Holder or its
designee, for the number of shares of Common Stock to which such Holder shall be entitled. If the number of Preferred Shares represented
by the Preferred Share Certificate(s) submitted for conversion pursuant to Section 3(c)(ii) is greater than the number of Preferred Shares
being converted, then the Company shall if requested by such Holder, as soon as practicable and in no event later than three Trading
Days after receipt of the Preferred Share Certificate(s) and at its own expense, issue and deliver to such Holder (or its designee) a
new Preferred Share Certificate representing the number of Preferred Shares not converted.
(iii)
Record Holder. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of Preferred Shares
shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.
(iv)
Company’s Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, to issue to a Holder within
three Trading Days after the Company’s receipt of a Conversion Notice (whether via email or otherwise) (the “Share Delivery
Deadline”), a certificate for the number of shares of Common Stock to which such Holder is entitled and register such shares
of Common Stock on the Company’s share register or to credit such Holder’s or its designee’s balance account with DTC
for such number of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion of any Preferred Shares
(as the case may be) (a “Conversion Failure”), then, in addition to all other remedies available to such Holder, such
Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the case
may be) any Preferred Shares that have not been converted pursuant to such Holder’s Conversion Notice, provided that the voiding
of a Conversion Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date of
such notice pursuant to the terms of this Certificate of Designations or otherwise. In addition to the foregoing, if within three Trading
Days after the Company’s receipt of a Conversion Notice (whether via email or otherwise), the Company shall fail to issue and deliver
a certificate to such Holder and register such shares of Common Stock on the Company’s share register or credit such Holder’s
or its designee’s balance account with DTC for the number of shares of Common Stock to which such Holder is entitled upon such
Holder’s conversion hereunder (as the case may be), and if on or after such third Trading Day such Holder (or any other Person
in respect, or on behalf, of such Holder) purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by such Holder of all or any portion of the number of shares of Common Stock, or a sale of a number of shares
of Common Stock equal to all or any portion of the number of shares of Common Stock, issuable upon such conversion that such Holder so
anticipated receiving from the Company, then, in addition to all other remedies available to such Holder, the Company shall, within three
Trading Days after such Holder’s request, which request shall include reasonable documentation of all fees, costs and expenses,
and in such Holder’s discretion, either (i) pay cash to such Holder in an amount equal to such Holder’s total purchase price
(including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without
limitation, by any other Person in respect, or on behalf, of such Holder) (the “Buy-In Price”), at which point the
Company’s obligation to so issue and deliver such certificate or credit such Holder’s balance account with DTC for the number
of shares of Common Stock to which such Holder is entitled upon such Holder’s conversion hereunder (as the case may be) (and to
issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to so issue and deliver to such Holder a certificate
or certificates representing such shares of Common Stock or credit such Holder’s balance account with DTC for the number of shares
of Common Stock to which such Holder is entitled upon such Holder’s conversion hereunder (as the case may be) and pay cash to such
Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock 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
Conversion Notice and ending on the date of such issuance and payment under this clause (ii). In addition to Holder’s other available
remedies, the Company shall pay to Holder, in cash, as partial liquidated damages and not as a penalty, for each $1,000 of shares of
Common Stock (based on Closing Sale Price of the shares of Common Stock which should be issued upon the Preferred Shares for which conversion
had been requested, $10 per Trading Day for each Trading Day following the Share Delivery Deadline and increasing to $20 per Trading
Day after the fifth Trading Day until such shares of Common Stock are delivered and registered. Nothing herein shall limit Holder’s
right to pursue actual damages for the Company failure to timely deliver certificates representing Common Stock as required hereby and
Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief. Further, in the event the Company refuses to honor any Conversion or makes it known it will not
honor any Conversion (the “Conversion Default Date”), the Holder will be entitled to damages at the higher of: (i) actual
provable damages; or (ii) an amount determined as the product of N*H, where N is the number of shares that would have been issued upon
conversion Preferred Share held by the Holder on the Conversion Default Date and H is the average closing price of the Common Stock during
the time the Company fails or refuses to honor any Conversion until such time as the Holder elects to void its Conversion Notice.
(v)
Book-Entry. Notwithstanding anything to the contrary set forth in this Section 2, upon conversion of any Preferred Shares in accordance
with the terms hereof, no Holder thereof shall be required to physically surrender the certificate representing the Preferred Shares
to the Company following conversion thereof unless (A) the full or remaining number of Preferred Shares represented by the certificate
are being converted (in which event such certificate(s) shall be delivered to the Company as contemplated by this Section 3(c)(v) or
(B) such Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance
of Preferred Shares upon physical surrender of any Preferred Shares. Each Holder and the Company shall maintain records showing the number
of Preferred Shares so converted by such Holder and the dates of such conversions or shall use such other method, reasonably satisfactory
to such Holder and the Company, so as not to require physical surrender of the certificate representing the Preferred Shares upon each
such conversion. In the event of any dispute or discrepancy, such records of such Holder establishing the number of Preferred Shares
to which the record holder is entitled shall be controlling and determinative in the absence of manifest error. A Holder and any transferee
or assignee, by acceptance of a certificate, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion
of any Preferred Shares, the number of Preferred Shares represented by such certificate may be less than the number of Preferred Shares
stated on the face thereof. Each certificate for Preferred Shares shall bear the following legend:
ANY
TRANSFEREE OR ASSIGNEE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE TERMS OF THE COMPANY’S CERTIFICATE OF DESIGNATIONS RELATING
TO THE SHARES OF SERIES F-1 PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE, INCLUDING SECTION 3(c) THEREOF. THE NUMBER OF SHARES OF
SERIES F-1 PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE NUMBER OF SHARES OF SERIES F-1 PREFERRED STOCK STATED
ON THE FACE HEREOF PURSUANT TO SECTION 3(c) OF THE CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF SERIES F-1 PREFERRED STOCK REPRESENTED
BY THIS CERTIFICATE.
(d)
Taxes. The Company shall pay any and all documentary, stamp, transfer (but only in respect of the registered holder thereof),
transfer agent fees, issuance and other similar taxes that may be payable with respect to the issuance and delivery of shares of Common
Stock upon the conversion of Preferred Shares.
(e)
Limitation on Beneficial Ownership. Notwithstanding anything to the contrary contained in this Certificate of Designations, the
Preferred Shares held by a Holder shall not be convertible by such Holder, and the Company shall not effect any conversion of any Preferred
Shares held by such Holder, to the extent (but only to the extent) that such Holder or any of its affiliates would beneficially own in
excess of 4.99% (the “Maximum Percentage”) of the Common Stock. To the extent the above limitation applies, the determination
of whether the Preferred Shares held by such Holder shall be convertible (vis-à-vis other convertible, exercisable or exchangeable
securities owned by such Holder or any of its affiliates) and of which such securities shall be convertible, exercisable or exchangeable
(as among all such securities owned by such Holder and its affiliates) shall, subject to such Maximum Percentage limitation, be determined
on the basis of the first submission to the Company for conversion, exercise or exchange (as the case may be). No prior inability of
a Holder to convert Preferred Shares, or of the Company to issue shares of Common Stock to such Holder, pursuant to this Section 3(e)
shall have any effect on the applicability of the provisions of this Section 3(e) with respect to any subsequent determination of convertibility
or issuance (as the case may be). For purposes of this Section 3(e), beneficial ownership and all determinations and calculations (including,
without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the
1934 Act and the rules and regulations promulgated thereunder. The provisions of this Section 3(e) shall be implemented in a manner otherwise
than in strict conformity with the terms of this Section 3(e) to correct this Section 3(e) (or any portion hereof) which may be defective
or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this Section 3(e)
shall apply to a successor holder of Preferred Shares. For any reason at any time, upon the written or oral request of a Holder, the
Company shall within one Trading Day confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding,
including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock, including, without
limitation, pursuant to this Certificate of Designations. By written notice to the Company, any Holder may increase or decrease the Maximum
Percentage to any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be effective
until the 61st day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to such Holder
sending such notice and not to any other Holder. Notwithstanding the foregoing and for avoidance of doubt, to comply with the rules and
regulations of the Principal Market, the Company shall not effect any conversion of any Preferred Shares prior to the Shareholder Approval
Date, to the extent such conversion would result in the issuance of shares of Common Stock, in the aggregate and taking into account
prior conversions of Preferred Shares and other issuances of Common Stock pursuant to or in connection with (A) the Merger and the transactions
contemplated thereby, and (B) shares of Common Stock issued or issuable in connection with the exercise of Warrants issued by the Company
from November 14, 2024 through the Initial Issuance Date, in excess of 19.99% of the Company’s outstanding Common Stock as of the
Initial Issuance Date, or such other lesser percentage, if required by the Principal Market, such that the conversion does not violate
the rules and regulations of the Principal Market without first obtaining Shareholder Approval in accordance with the Principal Market
rules and regulations. Provided, however, the limitation in the prior shall not apply to the extent that the staff of the
Principal Market has advised the Company that the Common Stock issuable upon conversion of the Preferred Stock is not subject to any
shareholder approval requirements (the “Principal Market Notice”).
4.
Adjustments.
(a)
Adjustment of Conversion Rate upon Subdivision or Combination of Common Stock. With respect to any unconverted Preferred Shares,
if the Company at any time on or after the Initial Issuance Date subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price for any
unconverted shares in effect immediately prior to such subdivision will be proportionately decreased so that the number of shares of
Common Stock issuable on conversion of each Preferred Share shall be increased in proportion to such increase in the aggregate number
of shares of Common Stock outstanding. With respect to any unconverted Preferred Shares, if the Company at any time on or after the Initial
Issuance Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock
into a smaller number of shares, the Conversion Price for any unconverted shares in effect immediately prior to such combination will
be proportionately increased so that the number of shares of Common Stock issuable on conversion of each Preferred Share shall be decreased
in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment pursuant to this Section
4(a) shall become effective immediately after the effective date of such subdivision or combination.
(b)
Rights Upon 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 Certificate of Designations in accordance with the
provisions of this Section 4(b) pursuant to written agreements in form and substance satisfactory to the Required Holders and approved
by the Required Holders prior to such Fundamental Transaction, including agreements to deliver to each holder of Preferred Shares in
exchange for such Preferred Shares a security of the Successor Entity evidenced by a written instrument substantially similar in form
and substance to this Certificate of Designations, including, without limitation, having a dividend rate equal to dividend rate of the
Preferred Shares held by the Holders and having similar ranking to the Preferred Shares, and reasonably satisfactory to the Required
Holders and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose shares of common stock are
quoted on or listed for trading on an Eligible Market. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall
succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Certificate
of Designations 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 Certificate of Designations with the same effect
as if such Successor Entity had been named as the Company herein and therein. In addition to the foregoing, upon consummation of a Fundamental
Transaction, the Successor Entity shall deliver to each Holder confirmation that there shall be issued upon conversion of the Preferred
Shares at any time after the consummation of such Fundamental Transaction, in lieu of the shares of Common Stock (or other securities,
cash, assets or other property (except such items still issuable under Section 4(a), which shall continue to be receivable thereafter))
issuable upon the conversion of the Preferred Shares prior to such Fundamental Transaction, such shares of publicly traded common stock
(or their equivalent) of the Successor Entity (including its Parent Entity) that each Holder would have been entitled to receive upon
the happening of such Fundamental Transaction had all the Preferred Shares held by each Holder been converted immediately prior to such
Fundamental Transaction (without regard to any limitations on the conversion of the Preferred Shares contained in this Certificate of
Designations), as adjusted in accordance with the provisions of this Certificate of Designations. The provisions of this Section 4 shall
apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion
of the Preferred Shares. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 4(b)
regardless of whether (i) the Company has sufficient authorized shares of Common Stock for the issuance of the Conversion Shares and/or
(ii) a Fundamental Transaction occurs prior to the Initial Conversion Date.
(c)
Calculations. All calculations under this Section shall be made to the nearest cent or nearest 1/100th of a share, as the case
may be. For purposes of this Section 4, the nearest number of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of Common Stock (excluding any treasury shares, if any) issued and outstanding.
(d)
Notice to Holder.
(i)
Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 4, the Company
shall promptly give notice to the Holder setting forth the Conversion Price after such adjustment and any resulting adjustment to the
number of Conversion Shares and setting forth a statement of the facts requiring such adjustment (“Dilutive Issuance Notice”).
For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section, upon the occurrence
of any Dilutive Issuance or other reduction of the Conversion Price, the Holder is entitled to receive a number of Conversion
Shares based upon the reduced Conversion Rate regardless of whether the Holder accurately refers to the Conversion Price in the Notice
of Conversion.
(ii)
Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form)
on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock are converted into other securities,
or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company,
then, the Company shall deliver to the Holder at its last address as it shall appear upon the books of the Company, at least 20 calendar
days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified in such notice. The Holder shall remain entitled to convert
these Preferred Shares during the period commencing on the date of such notice to the effective date of the event triggering such notice
except as may otherwise be expressly set forth herein
5.
Authorized Shares; Other Matters.
(a)
Reservation. Beginning on the Initial Conversion Date, the Company shall reserve out of its authorized and unissued Common Stock
a number of shares of Common Stock equal to 100% of the total number of Conversion Shares issuable upon full conversion of all outstanding
Preferred Shares pursuant to this Certificate of Designations, without giving effect to the Beneficial Ownership Limitation, as such
amount may be reduced following conversions or otherwise changed pursuant to this Certificate of Designations. Following the Initial
Conversion Date, so long as any of the Preferred Shares are outstanding, the Company shall take all action necessary to reserve and keep
available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Preferred
Shares, as of any given date, 100% of the number of shares of Common Stock as shall from time-to-time be necessary to effect the full
conversion of all of the Preferred Shares then outstanding, without giving effect to the Beneficial Ownership Limitation, provided that
at no time shall the number of shares of Common Stock so available be less than the number of shares required to be reserved by the previous
sentence (without regard to any limitations on conversions contained in this Certificate of Designations) (the “Required Amount”).
The initial number of shares of Common Stock reserved for conversions of the Preferred Shares and each increase in the number of shares
so reserved shall be allocated pro rata among the Holders based on the number of Preferred Shares held by each Holder on the Initial
Issuance Date or increase in the number of reserved shares (as the case may be) (the “Authorized Share Allocation”).
In the event a Holder shall sell or otherwise transfer any of such Holder’s Preferred Shares, 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 Preferred Shares shall be allocated to the remaining Holders of Preferred Shares, pro rata based on the number
of Preferred Shares then held by such Holders.
(b)
Insufficient Authorized Shares.
(i)
The Company shall use commercially reasonably efforts to (A) cause the Charter Amendment to be made effective as soon as reasonably practicable
and (B) unless the Company has received the Principal Market Notice and to obtain the Shareholder Approval and to cause the Initial Conversion
Date to occur within the minimum period of time practicable in accordance with applicable laws, rules and regulations, including those
enforced or promulgated by the Securities and Exchange Commission (the “SEC”), the Principal Market and the State
of Nevada. Without limiting the generality of the foregoing, the Company shall hold a meeting of its shareholders to obtain Shareholder
Approval within 120 days of the Initial Issuance Date, and every 120 days thereafter, until Shareholder Approval is obtained, and the
Company shall comply with all proxy and information statement and mailing and effective date requirements set forth in rules and regulations
of the SEC (including the time periods provided for therein) and applicable state laws and provisions of its Articles of Incorporation
and Bylaws with respect to the Shareholder Approval. In connection with such meeting, the Company shall provide each shareholder with
a proxy statement and shall use its best efforts to solicit the Shareholder Approval and to cause its Board of Directors to recommend
to the shareholders of the Company that they approve such proposals as are contemplated by the Shareholder Approval. Without limiting
the generality of the foregoing, the Company shall file with the SEC a proxy statement containing the information specified in Schedule
14A with respect to such meeting seeking Shareholder Approval and mail such proxy statement to shareholders of the Company as soon as
practicable thereafter in accordance with the rules and regulations of the SEC. The Company shall promptly provide responses (including
filing an amended Schedule 14A) to the SEC with respect to any comments received from the SEC on any proxy statement filed in accordance
with this Section 5(b), and the Company shall cause the proxy statement to be mailed promptly after the staff of the SEC advises the
Company that it has no further comments thereon or that the Company may commence mailing of the proxy statement, but in no ever later
than two Trading Days thereafter.
(ii)
If, notwithstanding Sections 5(a) and 5(b)(i) and not in limitation thereof, at any time following the Initial Conversion Date and while
any of the Preferred Shares remain outstanding the Company does not have a sufficient number of authorized and unissued shares of Common
Stock to satisfy its obligation to have available for issuance upon conversion of the Preferred Shares at least a number of shares of
Common Stock equal to the Required Amount (an “Authorized Share Failure”), then the Company shall immediately take
all reasonable action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve and have available the Required Amount for all of the Preferred Shares then outstanding within the minimum period
of time practicable in accordance with applicable laws, rules and regulations, including those enforced or promulgated by the SEC, the
Principal Market and the State of Nevada. In the event of any Authorized Share Failure, the Company shall comply with and follow the
terms and procedures set forth in Section 5(b)(i) to obtain the requisite shareholder approval and amendment to its Articles of Incorporation.
(iii)
In the event the Company can comply with this Section 5(b) using the written consent of its shareholders in lieu of a meeting in accordance
with applicable laws, rules and regulations, the Company shall pursue such consent, adhering to the requirements of the SEC and the Principal
Market, to cause the Shareholder Approval or remediation of any subsequent Authorized Share Failure within the minimum amount of time
practicable in compliance with applicable laws, rules and regulations, and in any event within a shorter time period than those contemplated
in Sections 5(b)(i) or (ii) with respect to a meeting of its shareholders.
(c)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 4(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents (as defined below) or rights to purchase stock, warrants, securities or other property pro
rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then each Holder will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired
if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Holder’s Preferred Shares
(without regard to any limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, that, to the extent that such Holder’s right to participate in any such Purchase Right would result in such
Holder exceeding the Beneficial Ownership Limitation, then such Holder shall not be entitled to participate in such Purchase Right to
such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase
Right to such extent shall be held in abeyance for such Holder until such time not to exceed 12 months as its right thereto would not
result in such Holder exceeding the Beneficial Ownership Limitation provided Holder complies with all of the other obligations of a beneficiary
of the Purchase Rights that would not result in Holder exceeding the Beneficial Ownership Limitation.
(d)
Pro Rata Distributions. During such time as the Preferred Shares are outstanding, if the Company declares or makes any dividend
or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
then, in each such case, each Holder shall be entitled to participate in such Distribution to the same extent that such Holder would
have participated therein if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of the Holder’s
Preferred Shares (without regard to any limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation)
immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the
record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however,
to the extent that any Holder’s right to participate in any such Distribution would result in such Holder exceeding the Beneficial
Ownership Limitation, then such Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial
ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be
held in abeyance for the benefit of such Holder until such times, not in excess of 12 months, as its right thereto would not result in
such Holder exceeding the Beneficial Ownership Limitation).
(e)
In the event the Company issues or sells any securities including options, warrants or convertible securities, except for any Exempt
Issuance (as hereinafter defined), at a price of or with an exercise or conversion price of, or an exchange at, less than the Conversion
Price, then upon such issuance or sale, the Conversion Price shall be reduced to the sale price or the exercise or conversion price of
the securities issued or sold. Provided, however, that if the Conversion Price is reduced as the result of the issuance
of convertible or derivative securities, and all of such convertible or derivative securities lapse without the issuance of Common Stock,
then the Conversion Price shall be re-adjusted to what it would be but for the issuance of the convertible or derivative securities.
For purposes of this Section 5(e), “Exempt Issuance” means the issuance of (i) shares of Common Stock, restricted
stock units or options, and the issuance of Common Stock under such restricted stock units and the exercise of such options, to consultants,
employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of
the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established
for such purpose for services rendered to the Company, (ii) securities issued upon the exercise or exchange of or conversion of any outstanding
securities as of the date of this Certificate of Designations, provided that such securities have not been amended since the date
of this Certificate of Designations to increase the number of such securities or to decrease the exercise price, exchange price or conversion
price of such securities (other than in connection with standard price protection or stock dividends, stock splits or combinations) or
to extend the term of such securities, (iii) securities issued pursuant to any merger, acquisition or strategic transaction approved
by a majority of the directors of the Company, provided that any such issuance shall only be to a Person (or to the equity holders
of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with
the business of the Company and which shall reasonably be expected to provide to the Company additional benefits, but shall not include
a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business
is investing in securities, (iv) securities issued pursuant to any purchase money equipment loan or capital leasing arrangement or in
connection with any amendment to any existing real estate lease to which the Company or any subsidiary is a party (v) shares of Common
Stock issued pursuant to any presently outstanding warrants, (vi) Common Stock or Warrants (and the Common Stock issuable upon exercise
of such Warrants) issued to any registered broker-dealer in connection with any capital raising or financing transaction.
6.
Voting Rights. Holders of the Preferred Shares shall be entitled to vote on an as-converted basis with the holders of shares of
Common Stock (except as otherwise required by applicable law, including the NRS) on all matters brought before the shareholders of the
Company; provided, however, that Holders of Preferred Shares will not be entitled to vote on any matters for which shareholder
approval is sought in order to comply with the rules and regulations of the Principal Market and on which the Holders are not entitled
or are precluded from voting pursuant to the rules and regulations of the Principal Market.
Holders
of the Preferred Shares shall be entitled to written notice of all shareholder meetings or written consents (and copies of proxy materials
and other information sent to shareholders), which notice shall be provided pursuant to and in accordance with the Company’s Bylaws
and the NRS.
7.
Liquidation, Dissolution, Winding-Up. In the event of a Liquidation Event, the Holders shall be entitled to receive in cash out
of the assets of the Company, whether from capital or from earnings available for distribution to its shareholders (the “Liquidation
Funds”), before any amount shall be paid to the holders of any of shares of Junior Stock, an amount per Preferred Share equal
to the amount per share such Holder would receive if such Holder converted such Preferred Shares into Common Stock immediately prior
to the date of such payment, provided that if the Liquidation Funds are insufficient to pay the full amount due to the Holders and holders
of shares of parity stock, then each Holder and each holder of parity stock shall receive a percentage of the Liquidation Funds equal
to the full amount of Liquidation Funds payable to such Holder and such holder of parity stock as a liquidation preference, in accordance
with their respective certificate of designations (or equivalent), as a percentage of the full amount of Liquidation Funds payable to
all holders of Preferred Shares and all holders of shares of parity stock. To the extent necessary, the Company shall cause such actions
to be taken by each of its Subsidiaries so as to enable, to the maximum extent permitted by law, the proceeds of a Liquidation Event
to be distributed to the Holders in accordance with this Section 7. All the preferential amounts to be paid to the Holders under this
Section 7 shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution
of any Liquidation Funds of the Company to the holders of shares of Junior Stock in connection with a Liquidation Event as to which this
Section 7 applies. The Company shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated
therein, to each Holder.
8.
Participation. In addition to any adjustments pursuant to Section 4, the Holders shall, as holders of Preferred Shares, be entitled
to receive such dividends paid and distributions made to the holders of shares of Common Stock to the same extent as if such Holders
had converted each Preferred Share held by each of them into shares of Common Stock (without regard to any limitations on conversion
herein or elsewhere) and had held such shares of Common Stock on the record date for such dividends and distributions. Payments under
the preceding sentence shall be made concurrently with the dividend or distribution to the holders of shares of Common Stock (provided,
however, to the extent that a Holder’s right to participate in any such dividend or distribution would result in such Holder exceeding
the Maximum Percentage, then such Holder shall not be entitled to participate in such dividend or distribution to such extent (or the
beneficial ownership of any such shares of Common Stock as a result of such dividend or distribution to such extent) and such dividend
or distribution to such extent shall be held in abeyance for the benefit of such Holder until such time, if ever, as its right thereto
would not result in such Holder exceeding the Maximum Percentage). Except as provided in this Section 8, no dividends shall accrue or
be payable with respect to the Preferred Shares.
9.
Transfer Taxes and Expenses. The issuance of Conversion Shares on conversion of this Preferred Shares shall be made without charge
to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion Shares,
provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance
and delivery of any such Conversion Shares upon conversion in a name other than that of the Holders of such shares of Preferred Shares
and the Company shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that
such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion and
all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day
electronic delivery of the Conversion Shares.
10.
Lost or Stolen Certificates. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any certificates representing Preferred Shares (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 an indemnification undertaking
by the applicable Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation
of the certificate(s), the Company shall execute and deliver new certificate(s) of like tenor and date.
11.
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Certificate of Designations
shall be cumulative and in addition to all other remedies available under this Certificate of Designations, at law or in equity (including
a decree of specific performance and/or other injunctive relief), and no remedy contained herein shall be deemed a waiver of compliance
with the provisions giving rise to such remedy. Nothing herein shall limit any Holder’s right to pursue actual and consequential
damages for any failure by the Company to comply with the terms of this Certificate of Designations. The Company covenants to each Holder
that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided
for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by a 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 Holders 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,
each Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such
threatened breach, without the necessity of showing economic loss and without any bond or other security being required, to the extent
permitted by applicable law. The Company shall provide all information and documentation to a Holder that is requested by such Holder
to enable such Holder to confirm the Company’s compliance with the terms and conditions of this Certificate of Designations.
12.
Non-circumvention. The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation,
Bylaws 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 Certificate
of Designations, and will at all times in good faith carry out all the provisions of this Certificate of Designations and take all action
as may be required to protect the rights of the Holders. Without limiting the generality of the foregoing or any other provision of this
Certificate of Designations, the Company (i) 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 conversion of Preferred Shares and (ii) shall,
so long as any Preferred Shares are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued
shares of Common Stock, solely for the purpose of effecting the conversion of the Preferred Shares, the maximum number of shares of Common
Stock as shall from time to time be necessary to effect the conversion of the Preferred Shares then outstanding (without regard to any
limitations on conversion contained herein).
13.
Failure or Indulgence Not Waiver. No failure or delay on the part of a 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. This Certificate of Designations shall be deemed to be jointly drafted by
the Company and all Holders and shall not be construed against any Person as the drafter hereof.
14.
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be
in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) delivered by reputable air courier service with
charges prepaid, next Trading Day delivery, or (iii) transmitted by email, addressed as set forth below or to such other address as such
party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder
shall be deemed effective (a) upon hand delivery or delivery by email, with evidence of confirmation, at the address designated below
(if delivered on a Trading Day during normal business hours where such notice is to be received), or the first Trading Day following
such delivery (if delivered other than on a Trading Day during normal business hours where such notice is to be received) or (b) on the
second Trading Day following the date of transmittal by express courier service, fully prepaid, addressed to such address. The addresses
for such communications shall be: (i) if to the Company, to: 755 Main Street, Building 4, Suite 3, Monroe, Connecticut, Attention: Geoffrey
Gwin, Chief Executive Officer, ggwin@eastsidedistilling.com; and (ii) if to the Holders, to: the addresses and email address on record
with the Company.
15.
Preferred Shares 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 the Holders), a register for the Preferred Shares, in which the Company shall record the name,
address and email address of the Persons in whose name the Preferred Shares have been issued, as well as the name and address of each
transferee. The Company may treat the Person in whose name any Preferred Shares are registered on the register as the owner and holder
thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any properly made transfers.
16.
Shareholder Matters; Amendment.
(a)
Shareholder Matters. Any shareholder action, approval or consent required, desired or otherwise sought by the Company pursuant
to the NRS, the Articles of Incorporation, this Certificate of Designations or otherwise with respect to the issuance of Preferred Shares
may be effected by written consent of the Company’s shareholders or at a duly called meeting of the Company’s shareholders,
all in accordance with the NRS. This provision is intended to comply with the applicable NRS sections permitting shareholder action,
approval and consent affected by written consent in lieu of a meeting.
(b)
Amendment. This Certificate of Designations or any provision hereof may be amended by obtaining the affirmative vote at a meeting
duly called for such purpose, or written consent without a meeting in accordance with the NRS, of the Required Holders, voting separately
as a single class, and with such other shareholder approval, if any, as may then be required pursuant to the NRS and the Articles of
Incorporation.
17.
Certain Defined Terms. For purposes of this Certificate of Designations, the following terms shall have the following meanings:
(a)
“1934 Act” means the Securities Exchange Act of 1934, as amended.
(b)
“Bloomberg” means Bloomberg, L.P.
(c)
“Certificate of Designations” means Certificate of Designations, Preferences and Rights of the Series G Convertible
Preferred Stock of Eastside Distilling, Inc
(d)
“Charter Amendment” means a Certificate of Amendment to the Company’s Articles of Incorporation to increase
the number of authorized shares of Common Stock in an amount sufficient to provide for issuance of all Conversion Shares and for the
Company to reserve a number of authorized and unissued shares of Common Stock equal to the Required Amount.
(e)
“Charter Amendment Effectiveness Date” means the first Trading Day following effectiveness of the Charter Amendment
filed with the Secretary of State of the State of Nevada.
(f)
“Closing Sale Price” means, for any security as of any date, the last closing trade price, respectively, for such
security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis
and does not designate the closing trade price (as the case may be) 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 do not apply, the last trade price of such security in the over-the-counter market
for such security as reported by OTC Markets Group, Inc., or, if no last trade price is reported for such security by OTC Markets Group,
Inc., the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported by OTC Markets
Group, Inc. 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 applicable Holder.
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction
during such period.
(g)
“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.
(h)
“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder
thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock.
(i)
“Conversion Shares” means shares of Common Stock issuable upon conversion of the Preferred Shares.
(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 or The Nasdaq Capital Market.
(l)
“Fundamental Transaction” shall means that (i) the Company or any of its Subsidiaries shall, directly or indirectly,
in one or more related transactions, (A) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is
the surviving corporation) any other Person, or (B) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially
all of its respective properties or assets to any other Person, or (C) make, or allow any other Person to make, a purchase, tender or
exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company (not including
any shares of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated with the Persons
making or party to, such purchase, tender or exchange offer), or (D) consummate a stock or share exchange agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other Person
whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of
Voting Stock of the Company held by the other Person or other Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock or share exchange agreement or other business combination), or (E) reorganize, recapitalize or
reclassify the Common Stock, or (ii) any “person” or “group” (as these terms are used for purposes of Sections
13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner”
(as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued
and outstanding Voting Stock of the Company. Notwithstanding the foregoing, the term Fundamental Transaction shall not include the transactions
contemplated by the Merger Agreement.
(m)
“Initial Issuance Date” means the date on which the Preferred Shares are issued.
(n)
“Liquidation Event” means, whether in a single transaction or series of transactions, the voluntary or involuntary
liquidation, dissolution or winding up of the Company or such Subsidiaries the assets of which constitute all or substantially all of
the assets of the business of the Company and its Subsidiaries, taken as a whole. Notwithstanding the foregoing, the term Fundamental
Transaction shall not include the transactions contemplated by the Merger Agreement.
(o)
“Merger” means the transaction in which the Company acquired control of Beeline Financial Holdings, Inc. on October
7, 2024.
(p)
“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.
(q)
“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.
(r)
“Principal Market” means the market on which the Common Stock is listed or quoted for trading as of the date in question.
As of the Initial Issuance Date, the Principal Market is the Nasdaq Capital Market.
(s)
“Required Holders” means holder of at least a majority of the outstanding Preferred Shares.
(t)
“SEC” means the U.S. Securities and Exchange Commission.
(u)
“Securities” means, collectively, the Preferred Shares and the shares of Common Stock issuable upon conversion of
the Preferred Shares.
(v)
“Shareholder Approval” means (a) such approval as may be required by the applicable rules and regulations of The Nasdaq
Stock Market LLC (or any successor entity) from the shareholders of the Company with respect to issuance of all of the Conversion Shares
upon the conversion of the Preferred Shares, and (b) approval for the Company to file the Charter Amendment.
(w)
“Shareholder Approval Date” means the first trading day following the Company’s notice to the Holders of Shareholder
Approval, which notice shall be provided within two Trading Days of the Company’s receipt of Shareholder Approval. Notwithstanding
anything to the contrary, such notice shall be deemed to be given by a public filing with the SEC disclosing the effectiveness of the
Shareholder Approval.
(x)
“Subsidiary” means any subsidiary of the Company and shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date hereof.
(y)
“Successor Entity” means the Person (or, if so elected by the Required Holders, the Parent Entity) formed by, resulting
from or surviving any Fundamental Transaction or the Person (or, if so elected by the Required Holders, the Parent Entity) with which
such Fundamental Transaction shall have been entered into.
(z)
“Trading Day” means 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 Required Holders.
*
* * * *
EXHIBIT
I
EASTSIDE
DISTILLING, INC.
CONVERSION
NOTICE
Reference
is made to the Certificate of Designations, Preferences and Rights of the Series F-1 Convertible Preferred Stock of Eastside Distilling,
Inc. (the “Certificate of Designations”). In accordance with and pursuant to the Certificate of Designations, the
undersigned hereby elects to convert the number of shares of Series F-1 Convertible Preferred Stock, $0.0001 par value per share (the
“Preferred Shares”), of Eastside Distilling, Inc., a Nevada corporation (the “Company”), indicated
below into shares of common stock, $0.0001 value per share (the “Common Stock”), of the Company, as of the date specified
below.
| |
Number
of Preferred Shares to be converted: |
|
| |
Tax
ID Number (If applicable): |
|
| |
Number
of shares of Common Stock to be issued: |
|
Please
issue the shares of Common Stock into which the Preferred Shares are being converted in the following name and to the following address:
Issue
to: _________________________________________________________
Address:
_________________________________________________________
Telephone
Number: ________________________________
email
address: _________________________________
Holder:
__________________________________________
By:
_____________________________________________
Title:
___________________________________________
Dated:_____________________________
Account
Number (if electronic book entry transfer): _______________________
Transaction
Code Number (if electronic book entry transfer):_________________
Exhibit 3(a)(2)
EXHIBIT
A TO
the
Certificate of Correction to the
Certificate
of Designations, Preferences and Rights of the
Series
G Convertible Preferred Stock of
Eastside
Distilling, Inc.
December
2, 2024
WHEREAS,
pursuant to the authority expressly conferred upon the Board of Directors (the “Board”) of Eastside Distilling, Inc.,
a Nevada corporation (the “Company”) and by the Company’s Articles of Incorporation, as amended (the “Articles
of Incorporation”), the Board previously designated the Series G Convertible Preferred Stock and the number of shares constituting
such series, and fixed the rights, powers, preferences, privileges, limitations and restrictions relating to such series in addition
to any set forth in the Articles of Incorporation, and the Company filed the Certificate of Designations, Preferences and Rights of the
Series G Convertible Preferred Stock (the “Certificate of Designations”) on November 26, 2024. Capitalized words and
phrases used and not defined herein shall have the meanings set forth in in the Certificate of Designations; and
WHEREAS,
Section 3(b) of the Certificate of Designations contained a scrivener’s error with respect to the conversion provisions set forth
therein.
NOW,
THEREFORE, the Certificate of Designations is hereby corrected as follows:
Section
3(b) is hereby corrected by adding the following sentence to the end of that Section:
Notwithstanding
anything herein to the contrary, in no event shall the Conversion Price be reduced to less than 20% of the “Minimum Price”
as such term is defined by the rules and regulations of The Nasdaq Stock Market LLC.
*
* * * *
Exhibit 3(b)
EXHIBIT
A TO
the
Certificate of Correction to the
Certificate
of Designations, Preferences and Rights of the
Series
F Convertible Preferred Stock of
Eastside
Distilling, Inc.
November
26, 2024
WHEREAS,
pursuant to the authority expressly conferred upon the Board of Directors (the “Board”) of Eastside Distilling, Inc.,
a Nevada corporation (the “Company”) and by the Company’s Articles of Incorporation, as amended (the “Articles
of Incorporation”), the Board previously designated the Series F Convertible Preferred Stock and the number of shares constituting
such series, and fixed the rights, powers, preferences, privileges, limitations and restrictions relating to such series in addition
to any set forth in the Articles of Incorporation, and the Company filed the Certificate of Designations, Preferences and Rights of the
Series F Convertible Preferred Stock (the “Certificate of Designations”) on October 7, 2024. Capitalized words and
phrases used and not defined herein shall have the meanings set forth in in the Certificate of Designations; and
WHEREAS,
Section 3 of the Certificate of Designations contained a scrivener’s error with respect to the voting rights of the Holders.
NOW,
THEREFORE, the Certificate of Designations is hereby corrected as follows:
Section
3(e) of the Certificate of Designations is hereby corrected by adding the following to the end of that Section:
Notwithstanding
anything herein to the contrary, in the event a Holder is or becomes subject to Section 16(a) of the 1934 Act by virtue of being an executive
officer or director of the Company, then, beginning 61 days after such Holder became subject to Section 16(a) of the 1934 Act and continuing
for as long as such Holder remains subject to Section 16(a) of the 1934 Act by virtue of being an executive officer or director of the
Company, the Maximum Percentage shall not apply to such Holder for all purposes of this Certificate of Designations and the Preferred
Shares held by such Holder.
*
* * * *
Exhibit 3(c)
EXHIBIT
A TO
the
Certificate of Correction to the
Certificate
of Designations, Preferences and Rights of the
Series
F-1 Convertible Preferred Stock of
Eastside
Distilling, Inc.
November
26, 2024
WHEREAS,
pursuant to the authority expressly conferred upon the Board of Directors (the “Board”) of Eastside Distilling, Inc.,
a Nevada corporation (the “Company”) and by the Company’s Articles of Incorporation, as amended (the “Articles
of Incorporation”), the Board previously designated the Series F-1 Convertible Preferred Stock and the number of shares constituting
such series, and fixed the rights, powers, preferences, privileges, limitations and restrictions relating to such series in addition
to any set forth in the Articles of Incorporation, and the Company filed the Certificate of Designations, Preferences and Rights of the
Series F-1 Convertible Preferred Stock (the “Certificate of Designations”) on October 7, 2024. Capitalized words and
phrases used and not defined herein shall have the meanings set forth in in the Certificate of Designations; and
WHEREAS,
Sections 3 and 6 of the Certificate of Designations contained a scrivener’s error with respect to the voting rights of the Holders.
NOW,
THEREFORE, the Certificate of Designations is hereby corrected as follows:
Section
3(e) of the Certificate of Designations is hereby corrected by adding the following to the end of that Section:
Notwithstanding
anything herein to the contrary, in the event a Holder is or becomes subject to Section 16(a) of the 1934 Act by virtue of being an executive
officer or director of the Company, then, beginning 61 days after such Holder became subject to Section 16(a) of the 1934 Act and continuing
for as long as such Holder remains subject to Section 16(a) of the 1934 Act by virtue of being an executive officer or director of the
Company, the Maximum Percentage shall not apply to such Holder for all purposes of this Certificate of Designations and the Preferred
Shares held by such Holder.
Section
6 of the Certificate of Designations is hereby replaced with the following:
6.
Voting Rights. Whenever any Preferred Shares are outstanding, Holders of the Preferred Shares shall be entitled to vote on an
as-converted basis, as if the Initial Conversion Date has occurred even if as of an applicable date of determination the Initial Conversion
Date has not occurred, and, subject to the Maximum Percentage as to any Holder, as applicable, with the holders of shares of Common Stock
(except as otherwise required by applicable law, including the NRS) on all matters brought before the shareholders of the Company; provided,
however, that Holders of Preferred Shares will not be entitled to vote on any matters for which shareholder approval is sought
in order to comply with the rules and regulations of the Principal Market and on which the Holders are not entitled or are precluded
from voting pursuant to the rules and regulations of the Principal Market. For the avoidance of doubt, the phrase “subject to the
Maximum Percentage as to any Holder” does not apply to any Holder to whom the Maximum Percentage is made inapplicable by Section
3(e) hereof.
Holders
of the Preferred Shares shall be entitled to written notice of all shareholder meetings or written consents (and copies of proxy materials
and other information sent to shareholders), which notice shall be provided pursuant to and in accordance with the Company’s Bylaws
and the NRS.
*
* * * *
Exhibit
4(a)
Execution
Copy
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.
Warrant
To Purchase Common Stock
Date
of Issuance: ___________, 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 the date of this Warrant (the “Subscription Date”), by and among the Company and the Purchaser
referred to therein, as amended from time-to-time (the “Purchase Agreement”). Capitalized words and phrases used
and not defined herein and which are not descriptive shall have the meaning given them in the Purchase Agreement.
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 $0.65, 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. If there is no effective Registration Statement covering the sale of the Warrant Share, the Holder may exercise
this Warrant by surrendering such number of shares of Common Stock received upon exercise of the Warrant with an aggregate Fair Market
Value (as defined below) equal to the number of Warrants to be exercised times the exercise price, as described in the following paragraph
(a “Cashless Exercise”).
If
the Holder elects to conduct a Cashless Exercise, the Company shall cause to be delivered to the Holder a certificate or certificates
representing the number of shares of Common Stock computed using the following formula:
X
= Y (A-B)
A
Where:
X
= the number of shares of Common Stock to be issued to the Holder;
Y
= the portion of this Warrant (in number of shares of Common Stock) being exercised by the Holder (at the date of such calculation);
A
= the Fair Market Value (as defined below) of one share of Common Stock; and
B
= the exercise price (as adjusted to the date of such calculation).
For
purposes of this Warrant, Fair Market Value shall mean: (i) if the principal trading market for such securities is a national securities
exchange, OTCQX or the OTCQB (or a similar system then in use), the average of the last five reported sales prices on the principal market
the last five trading days immediately prior to such expiration date; or (ii) if (i) is not applicable, and if bid and ask prices for
shares of Common Stock are reported by the principal trading market, the average of the high bid and low asked prices so reported for
the trading day immediately prior to such expiration date. Notwithstanding the foregoing, if there is no last reported sales price or
bid and ask prices, as the case may be, for the day in question, then Fair Market Value shall be determined as of the latest day prior
to such day for which such last reported sales price or bid and asked prices, as the case may be, are available, unless such securities
have not been traded on an exchange or in the over-the-counter market for 30 or more days immediately prior to the day in question, in
which case the Fair Market Value shall be determined in good faith by and reflected in a formal resolution of the board of directors
of the Company.
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
Securities Act, the Warrant Shares take on the registered characteristics of the Warrants being exercised. For purposes of Rule 144(d)
promulgated under the Securities 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 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 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.
In
the event the Company issues or sells any securities including options, warrants or convertible securities, except for any Exempt Issuance
(as hereinafter defined), at a price of or with an exercise or conversion price of, or an exchange at, less than the Exercise Price,
then upon such issuance or sale, the Exercise Price shall be reduced to the sale price or the exercise or conversion price of the securities
issued or sold. Provided, however, that if the Exercise Price is reduced as the result of the issuance of convertible or derivative securities,
and all of such convertible or derivative securities lapse without the issuance of Common Stock, then the Exercise Price shall be re-adjusted
to what it would be but for the issuance of the convertible or derivative securities. For purposes of this Section 5(b), “Exempt
Issuance” means the issuance of (i) shares of Common Stock, restricted stock units or options, and the issuance of Common Stock
under such restricted stock units and the exercise of such options, to consultants, employees, officers or directors of the Company pursuant
to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority
of the members of a committee of non-employee directors established for such purpose for services rendered to the Company, (ii) securities
issued upon the exercise or exchange of or conversion of any outstanding securities as of the date of this Warrant, provided
that such securities have not been amended since the date of this Warrant to increase the number of such securities or to
decrease the exercise price, exchange price or conversion price of such securities (other than in connection with standard price protection
or stock dividends, stock splits or combinations) or to extend the term of such securities, (iii) securities issued pursuant to any merger,
acquisition or strategic transaction approved by a majority of the directors of the Company, provided that any such issuance shall
only be to a Person (or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an owner
of an asset in a business synergistic with the business of the Company and which shall reasonably be expected to provide to the Company
additional benefits, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities, (iv) securities issued pursuant to any purchase money equipment
loan or capital leasing arrangement or in connection with any amendment to any existing real estate lease to which the Company or any
Subsidiary is a party, (v) shares of Common Stock issued pursuant to any presently outstanding warrants, (vi) Securities issued
or issuable to other Purchasers pursuant to the Purchase Agreement, and (vi) Common Stock or Warrants (and the Common Stock issuable
upon exercise of such Warrants) issued to any registered broker-dealer in connection with any capital raising or financing transaction.
(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 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 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 Purchase Agreement), Bylaws (as defined in the 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 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 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 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: EXCLUSIVE JURISDICTION. 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 as provided in, the and the
jurisdiction of all disputes arising under this Warrant shall be as provided in, the Purchase Agreement.
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 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 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 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 (a) and (B) written documentation supporting its position with respect to such dispute,
in each case, no later than 5:00 p.m. (New York, N.Y. time) by the fifth 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 Nevada law (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 Providence, Rhode
Island 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
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 New York, N.Y.
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 New York, N.Y. 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, N.Y. 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)
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities.
(p)
“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.
(q)
“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.
(r)
“Principal Market” means the Nasdaq Capital Market.
(s)
“Registration Rights Agreement” means that certain registration rights agreement, 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 Warrants, as may be amended from time-to-time.
(t)
“SEC” means the United States Securities and Exchange Commission or the successor thereto.
(u)
“Shareholder Approval” has the meaning set forth in the Purchase Agreement.
(v)
“Shareholder Approval Date” has the meaning set forth in the Purchase Agreement.
(w)
“Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(x)
“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.
(y)
“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, N.Y. 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 Nasdaq Capital Market(or any successor thereto) is open for trading of securities.
(z)
“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, N.Y. 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, N.Y. time, and ending at 4:00 p.m., New
York, N.Y. 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. |
| |
|
|
| |
By: |
|
| |
Name: |
Geoffrey
Gwin |
| |
Title: |
Chief
Executive Officer |
Signature
Page to Warrant
EXHIBIT
A
EXERCISE
NOTICE
TO
BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT
TO PURCHASE COMMON STOCK
EASTSIDE
DISTILLING, INC.
The
undersigned holder hereby elects to exercise the Warrant to Purchase Common Stock No. _______ (the “Warrant”) of Eastside
Distilling, Inc., a Nevada corporation (the “Company”) as specified below. Capitalized terms used herein and not otherwise
defined shall have the respective meanings set forth in the Warrant.
1.
Form of Exercise Price. The Holder intends that payment of the Aggregate Exercise Price shall be made as:
| ☐ | a
“Cash Exercise” with respect to _________________ Warrant Shares; and/or |
| ☐ | a
“Cashless Exercise” with respect to _______________ Warrant Shares. |
In
the event that the Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto,
the Holder hereby represents and warrants that (i) this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.] on the
date set forth below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice was $________.
2.
Payment of Exercise Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant
Shares to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company
in accordance with the terms of the Warrant.
3.
Delivery of Warrant Shares. The Company shall deliver to Holder, or its designee or agent as specified below, __________ shares
of Common Stock in accordance with the terms of the Warrant. Delivery shall be made to Holder, or for its benefit, as follows:
☐
Check here if requesting delivery as a certificate to the following name and to the following address:
☐
Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
| |
DTC
Participant: |
|
| |
DTC
Number: |
|
| |
Account
Number: |
|
| Date:
_____________ __, |
|
| |
|
|
|
| Name
of Registered Holder |
|
Tax
ID:____________________________
E-mail
Address:_____________________
EXHIBIT
B
ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs ______________ to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated _________, 202_, from the Company and acknowledged and agreed to by _______________.
| |
Eastside
Distilling, Inc. |
| |
|
| |
By: |
|
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Name:
|
|
| |
Title: |
|
Exhibit
10(a)
Execution
Copy
SECURITIES
PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of __________, 2024, by and among Eastside Distilling, Inc., a
Nevada corporation (the “Company”) and the purchasers from time-to-time party hereto as “Purchasers” (together
with their respective successors and assigns, each, a “Purchaser” and collectively, the “Purchasers”).
RECITALS
A.
The Company and the Purchasers are executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by Section 4(a)(2) of the Securities Act (as defined below), and/or Rule 506(b) of Regulation D (“Regulation D”)
as promulgated by the United States Securities and Exchange Commission under the Securities Act.
B.
Each of the Purchasers, wishes to purchase, and the Company wishes to sell at closing, upon the terms and conditions stated in this Agreement,
the Securities (as defined herein), all in the amounts and for the price set forth on Schedule 1 hereto.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Company and the Purchasers hereby agree as follows:
ARTICLE
1
DEFINITIONS
1.1
Defined Terms. In addition to terms defined elsewhere in this Agreement or in any supplement, amendment or exhibit hereto, when
used herein, the following terms shall have the following meanings:
(a)
“Action” has the meaning specified for such term in Section 3.1(t).
(b)
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by
or is under common control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act, including, among
others, executive officers, directors, large stockholders, subsidiaries, parent entities and sister companies.
(c)
“Certificate of Designations” means the Certificate of Designations of Rights, Preferences and Limitations of Series G Convertible
Preferred Stock, substantially in the form attached as Exhibit A.
(d)
“Closing Date” means a Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to the parties’ obligations hereunder have been satisfied or waived, including (i)
each Purchaser’s obligation to pay the Purchase Price as described in Section 2.5, and (ii) the Company’s obligations to
deliver the Securities. For avoidance of doubt, the Company and Purchasers may have multiple Closing Dates.
(e)
“Common Stock” means (i) the Company’s common stock, par value $0.0001 per share, and (ii) any capital stock into which
such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(f)
“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof
to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
(g)
“Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person
with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability
will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will
be protected (in whole or in part) against loss with respect thereto.
(h)
“Conversion Shares” means the shares of Common Stock issuable upon conversion of the Preferred Shares.
(i)
“Dollar(s)” and “$” means lawful money of the United States.
(j)
“Effective Date” means the date that the initial Registration Statement filed by the Company pursuant to the Registration
Rights Agreement is first declared effective by the SEC.
(k)
“Exchange Act” means the Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder.
(l)
“Exempt Issuance” means the issuance of (i) shares of Common Stock, restricted stock units or options, and the issuance of
Common Stock under such restricted stock units and the exercise of such options, to consultants, employees, officers or directors of
the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board
of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered
to the Company, (ii) securities issued upon the exercise or exchange of or conversion of any outstanding securities as of the date of
this Certificate of Designations, provided that such securities have not been amended since the date of this Certificate of Designations
to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other
than in connection with standard price protection or stock dividends, stock splits or combinations) or to extend the term of such securities,
(iii) securities issued pursuant to any merger, acquisition or strategic transaction approved by a majority of the directors of the Company,
provided that any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself or through its
subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and which shall
reasonably be expected to provide to the Company additional benefits, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, (iv) securities
issued pursuant to any purchase money equipment loan or capital leasing arrangement or in connection with any amendment to any existing
real estate lease to which the Company or any Subsidiary is a party (v) shares of Common Stock issued pursuant to any presently outstanding
warrants, (vi) Common Stock or Warrants (and the Common Stock issuable upon exercise of such Warrants) issued to any registered broker-dealer
in connection with any capital raising or financing transaction.
(m)
“FINRA” means the Financial Industry Regulatory Authority, Inc.
(n)
“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time.
(o)
“Indebtedness” means, with respect to any Person at any date, without duplication, (a) all indebtedness of such Person for
borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (but excluding trade payables
incurred in the ordinary course of business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar
instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or the purchaser under such agreement in the event of default
are limited to repossession or sale of such property), (e) all capital lease obligations of such Person, (f) all obligations of such
Person, contingent or otherwise, as an account party or applicant under acceptance, letter of credit, surety bond or similar facilities,
(g) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any capital stock
of such Person, (h) all obligations for any earn-out consideration, (i) the liquidation value of preferred capital stock of such Person,
(j) all guarantee obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (i) above, (k)
all obligations of the kind referred to in clauses (a) through (i) above secured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract
rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation and all obligations
of such Person in respect of hedge agreements; and (1) all Contingent Obligations in respect to indebtedness or obligations of any Person
of the kind referred to in clauses (a)-(k) above. The Indebtedness of any Person shall include, without duplication, the Indebtedness
of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor
as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such
Indebtedness expressly provide that such Person is not liable therefor.
(p)
“Investment” means any investment (including, without limitation, any loan or advance) in or to any Person, whether payment
therefor is made in cash or capital stock or other equity interests or otherwise, and whether such Investment is by acquisition of capital
stock or other equity interests or Indebtedness, or by loan, advance, transfer of property out of the ordinary course of business, capital
contribution, equity or profit sharing interest, extension of credit on terms other than those normal in the ordinary course of business
or otherwise.
(q)
“Liens” means a lien, mortgage, charge pledge, security interest, encumbrance, right of first refusal, preemptive right or
other restriction, or other clouds on title.
(r)
“Liabilities” means all direct or indirect liabilities, Indebtedness and obligations of any kind of Company to the Purchasers,
howsoever created, arising or evidenced, whether now existing or hereafter arising (including those acquired by assignment), absolute
or contingent, due or to become due, primary or secondary, joint or several, whether existing or arising through discount, overdraft,
purchase, direct loan, participation, operation of law, or otherwise, including, but not limited to, pursuant to the Transaction Documents,
any letter of credit, any standby letter of credit, and/or outside attorneys’ and paralegals’ fees or charges relating to
the preparation of the Transaction Documents and the enforcement of the Purchasers’ rights, remedies and powers under the Transaction
Documents.
(s)
“Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or would be expected to become,
individually or in the aggregate, materially adverse to the (a) the business, prospects, assets, property, results of operations, or
condition (financial or otherwise) of the Company, (b) the validity or enforceability of this Agreement or any of the other Transaction
Documents, (c) the rights or remedies of any Purchaser hereunder or thereunder, or (d) the ability of the Company to perform its obligations
under any Transaction Document.
(t)
“Permitted Indebtedness” means (i) any Indebtedness of the Company outstanding as of the date of this Agreement and/or that
is listed on Schedule 1.1(u), (ii) purchase money indebtedness incurred in connection with the acquisition of capital assets in
the ordinary course of business, (iii) capital leases, and (iv) related party indebtedness or intercompany advances which are approved
or ratified by the Board of Directors of the Company.
(u)
“Permitted Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other
governmental charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in
good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have
been established in accordance with GAAP; (b) Liens imposed by law which were incurred in the ordinary course of the Company’s
business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar
Liens arising in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate materially
detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Company
and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect
of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien; (c) Liens incurred in
connection with Permitted Indebtedness; (d) pledges and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or regulations; and (e) deposits to secure the performance of bids,
trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature that
are not past due, in each case in the ordinary course of business, but excluding any contract for the payment of money.
(v)
“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party or government (whether national, federal, state, county, city, municipal or otherwise including,
without limitation, any instrumentality, division, agency, body or department thereof).
(w)
“Preferred Shares” means all shares of Series G sold to the Purchasers under this Agreement.
(x)
“Principal Market” means the principal Trading Market on which the Common Stock is listed or quoted for trading on the date
in question.
(y)
“Proceeding” means an Action, claim, preliminary inquiry investigation or proceeding (including, without limitation, an informal
investigation or partial proceeding, such as a deposition), whether commenced or threatened.
(z)
“Purchase Price” shall have the meaning as set forth on Schedule 1 next to the heading “Purchase Price,”
in United States dollars.
(aa)
“Registration Rights Agreement” means the Registration Rights Agreement, dated as of a Closing Date, by and between the Company
and the Purchasers, as may hereinafter be amended and/or supplemented, together with all exhibits, schedules and annexes to such Registration
Rights Agreement, substantially in the form attached as Exhibit B.
(bb)
“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement
and covering the resale of the Conversion Shares and the Warrant Shares, each as provided for in the Registration Rights Agreement.
(cc)
“Required Minimum” means 100% of the Underlying Shares.
(dd)
“SEC” means the United States Securities and Exchange Commission.
(ee)
“Securities” means the Preferred Shares and the Warrants purchased pursuant to this Agreement, all Conversion Shares and
Warrant Shares and any securities of the Company issued to the Purchasers in replacement, substitution and/or in connection with any
exchange, conversion and/or any other transaction involving all or any of such securities of the Company.
(ff)
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(gg)
“Series G” means the Series G Convertible Preferred Stock of the Company.
(hh)
“Shareholder Approval” means (i) an increase in authorized Common Stock of the Company as necessary to permit full issuance
of the Underlying Shares together with other Common Stock Equivalents outstanding as of the date of this Agreement and (ii) the approval
of the issuance of all of the Securities as may be required by the rules and regulations of the Principal Market (without regard to any
limitations on conversion or exercise set forth in the Securities, respectively, unless the staff of the Principal Market has advised
the Company that the Conversion Shares and the Warrant Shares are not subject to any 19.99% limitation.
(ii)
“Shareholder Approval Date” means the date on which the Shareholder Approval occurs.
(jj)
“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock).
(kk)
“Subsidiary” means, with respect to any Person, a corporation, partnership, limited liability company or other entity of
which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person. MagicBlocks, LLC is not a Subsidiary.
(ll)
“Term Sheet” means the Confidential Term Sheet, dated as of November 26, 2024 as hereinafter amended and/or supplemented
altogether with all exhibits, schedules and annexes attached thereto.
(mm)
“Trading Day” means a day on which the principal Trading Market is open for trading.
(nn)
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading
on the date in question: the New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, any market or quotation service of the OTC Markets Group (including the OTCQX, the OTCQB, the OTC Pink Open Market
or any successors to any of the foregoing).
(oo)
“Transaction Documents” means, collectively, this Agreement, the Term Sheet, the Certificate of Designations, the Warrants,
the Registration Rights Agreement and such other documents, instruments, certificates, supplements, amendments, exhibits and schedules
required and/or attached pursuant to this Agreement and/or any of the above documents, and/or any other document and/or instrument related
to the above agreements, documents and/or instruments, and the transactions hereunder and/or thereunder and/or any other agreement, documents
or instruments required or contemplated hereunder or thereunder, whether now existing or at any time hereafter arising.
(pp)
“Transfer Agent” means Transfer Online, Inc., the Company’s transfer agent, and any successor transfer agent of the
Company.
(qq)
“Underlying Shares” means all Conversion Shares and all Warrant Shares.
(rr)
“Warrants” means those certain Common Stock Purchase Warrants, issued by the Company to the Purchasers on the Closing Date
and any and all Warrant(s) issued in exchange, transfer or replacement of the Warrant(s), substantially in the form attached as Exhibit
C.
(ss)
“Warrant Shares” has the meaning assigned to such term in the Warrants.
1.2
Other Definitional Provisions.
(a)
Use of Defined Words and Terms. Unless otherwise specified therein, all words and terms defined in this Agreement shall have the
defined meanings when used in the other Transaction Documents or any certificate or other document made or delivered pursuant hereto
or thereto.
(b)
Construction. The words “hereof”, “herein” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and section, schedule
and exhibit references are to this Agreement unless otherwise specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
ARTICLE
2
PURCHASE
AND SALE
2.1
Closing.
(a)
The Securities will be offered for sale until the earlier of (i) the date upon which subscriptions for up to $3,060,000 (the “Maximum
Offering”) offered hereunder have been accepted, or (ii) January 31, 2025, unless extended by the Company for two additional 30
day periods without prior notice to the Purchasers, unless terminated at an earlier time by the Company (the “Termination Date”).
Closings with respect to Securities may take place at any time prior to the Termination Date as determined by the Company with respect
to subscriptions accepted prior to the Termination Date (each such closing referred to as a “Closing”). The last Closing
of the Offering, occurring on or prior to the Termination Date, shall be referred to as the “Final Closing”. Any subscription
documents or funds received after the Final Closing will be returned, without interest or deduction. In the event that the any Closing
does not occur prior to the Termination Date, all amounts paid by the Purchaser shall be returned to the Purchaser, without interest
or deduction. The Purchaser may not revoke this subscription or obtain a return of the subscription amount except as may be provided
by applicable state law. Any subscription received prior to the Termination Date shall be irrevocable. The minimum purchase that may
be made by any prospective Purchaser shall be $49,800. The Company reserves the right to reject any subscription made hereby, in whole
or in part, in its sole discretion. The Company’s agreement with each Purchaser is a separate agreement and the sale of the Securities
to each Purchaser is a separate sale.
(b)
On a Closing Date, time being of the essence, subject to the occurrence of the conditions set forth in Section 2.3, upon the terms and
subject to the conditions set forth herein, the Company agrees to sell, and each Purchaser severally, but not jointly or jointly and
severally, agrees to purchase, the Securities in such amounts as indicated next to its name on Schedule 1 hereto. Each Purchaser
shall deliver, via wire transfer, immediately available funds equal to the Purchase Price for its Securities as set forth in Section
2.5 hereof, and the Company shall deliver to each Purchaser the number of Preferred Shares and the Warrants specified opposite its name
on Schedule 1 on the Closing Date, and the Company and the Purchasers shall deliver the other items set forth in Section 2.2 deliverable
on the Closing Date. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at
the offices of the Company or such other location as the parties shall mutually agree.
2.2
Deliveries.
(a)
On or prior to a Closing Date, the Company shall deliver or cause to be delivered to the Purchasers the following:
(i)
this Agreement duly executed by the Company;
(ii)
a copy of the Certificate of Designations as filed with the Secretary of State of the State of Nevada;
(iii)
delivery in book entry form of the Preferred Shares purchased by such Purchaser as set forth on Schedule 1;
(iv)
a Warrant, registered in the name of each Purchaser as set forth on Schedule 1, duly executed by the Company; and
(v)
the Registration Rights Agreement duly executed by the Company.
(b)
On or prior to the Closing, each Purchaser shall deliver or cause to be delivered to the Company the following:
(i)
this Agreement duly executed by such Purchaser;
(ii)
the portion of the Purchase Price specified opposite its name on Schedule 1 hereto, by wire transfer; provided, that it is understood
and agreed that the Purchase Price shall be delivered as set forth in Section 2.4 hereof; and
(iii)
the Registration Rights Agreement duly executed by such Purchaser.
2.3
Conditions to Purchase the Securities. Subject to the terms and conditions of this Agreement, on the Closing Date, each Purchaser,
severally, but not jointly or jointly and severally, will purchase from the Company the Securities in the amounts and for the Purchase
Price as set forth opposite its name on Schedule 1, provided the following:
(a)
The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse
Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Purchasers contained herein (unless
as of a specific date therein in which case they shall be accurate as of such date);
(ii)
all obligations, covenants and agreements of the Purchasers required to be performed at or prior to the Closing Date shall have been
performed;
(iii)
the delivery by the Purchasers of the items set forth in Section 2.2(b) of this Agreement;
(iv)
there shall have been no Material Adverse Effect with respect to the Company and its Subsidiaries, taken as a whole;
(v)
the Certificate of Designation shall have been filed with the Secretary of State of the State of Nevada; and
(vi)
no statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or other federal, state, local or other governmental authority of competent jurisdiction that prohibits the consummation
of any of the transactions contemplated by the Transaction Documents.
(b)
The obligations of each Purchaser hereunder in connection with the Closing are subject to the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse
Effect, in all respects) when made and on the date of the Closing of the representations and warranties of the Company contained herein
(unless as of a specific date therein in which case they shall be accurate as of such date);
(ii)
all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing shall have been performed
in all material respects;
(iii)
the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv)
there shall have been no Material Adverse Effect with respect to the Company and its Subsidiaries, taken as a whole;
(v)
except for the Shareholder Approval, the Company shall have obtained all governmental, regulatory and third party consents and approvals,
if any, necessary for the entry into the Transaction Documents and the sale of the Securities;
(vi)
the Certificate of Designation shall have been filed with the Secretary of State of the State of Nevada; and
(vii)
no statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or other federal, state, local or other governmental authority of competent jurisdiction that prohibits the consummation
of any of the transactions contemplated by the Transaction Documents.
2.4 Purchase
Price and Payment of the Purchase Price for the Securities. The Purchase Price for the Securities to be purchased by each
Purchaser at the Closing shall be as set forth opposite its name on Schedule 1 and shall be paid at a Closing by the
Purchaser by wire transfer or check payment against delivery of the Securities.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES
3.1
Representation and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall
be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the
corresponding section of the Disclosure Schedules, and subject to the qualifications set forth herein, the Company represents and warrants
to the Purchasers on the Closing Date and on each date on which the representations and warranties are required to be made or remade
(unless as of a specific date set forth below) as follows:
(a)
Subsidiaries. Except for Permitted Liens, the Company owns, directly or indirectly, all of the capital stock or other equity interests
of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock or other interests of each
Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase
securities.
(b)
Organization, Etc. The Company and each of the Subsidiaries is duly organized, validly existing and in good standing under the
laws of the state of their respective organization and are duly qualified and in good standing or has applied for qualification as a
foreign corporation authorized to do business in each jurisdiction where, because of the nature of its activities or properties, such
qualification is required except where the failure to be so qualified would not result in a Material Adverse Effect.
(c)
Authorization: No Conflict. Subject to the Shareholder Approval, the execution, delivery and performance of the Transaction Documents
and the transactions contemplated thereby by the Company and its Subsidiaries (including, but not limited to, (x) the sale and issuance
of the Securities for the Purchase Price, and (y) the issuance of the Warrant Shares and the Conversion Shares (i) are within the corporate
powers of the Company, (ii) have been duly authorized by all necessary action by or on behalf of the Company, (iii) have received all
necessary and/or required governmental, regulatory and other approvals and consents (if any shall be required), (iv) do not and shall
not contravene or conflict in any material respect with any provision of, or require any consents under (1) any law, rule, regulation
or ordinance, (2) the Company’s organizational documents; and/or (3) any agreement, credit facility, debt or other instrument (evidencing
a Company indebtedness) or other understanding to which the Company is a party or by which any property or asset of the Company is bound
or affected, and (v) do not result in, or require, the creation or imposition of any Lien and/or encumbrance on any of the Company’s
properties pursuant to any law, rule, regulation or ordinance or otherwise.
(d)
Validity and Binding Nature. The Transaction Documents to which the Company is a party are the legal, valid and binding obligations
of the Company , enforceable against the Company in accordance with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization and other similar laws of general application affecting the rights and remedies of creditors and
by general equitable principles (whether enforcement is sought by proceedings in equity or at law), or insofar as indemnification and
contribution provisions may be limited by applicable law.
(e)
Title to Assets. The Company has good and marketable title in fee simple to all real property owned by them and good and marketable
title in all personal property owned by it that is material to the business of the Company, in each case free and clear of all Liens,
except for Permitted Liens. Any real property and facilities held under lease by the Company is held by it under valid, subsisting and
enforceable leases with which the Company is in material compliance.
(f)
Compliance. The Company (i) is not in default under or in violation of (and no event has occurred that has not been waived that,
with notice or lapse of time or both, would result in a default by the Company under), nor has the Company received notice of a claim
that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument
to which it is a party or by which it or any of its properties is bound, (ii) is in not violation of any judgment, decree or order of
any court, arbitrator or other governmental authority or (iii) is not or has not been in violation of any statute, rule, ordinance or
regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to securities,
corporate law, taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters,
except in each case as could not have or would result in a Material Adverse Effect or as set forth on Schedule 3.1(f).
(g)
Taxes. Except for matters that would not, individually or in the aggregate, have or would result in a Material Adverse Effect,
the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income
and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and
other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations
and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.
(h)
Licenses and Permits. The Company and each of its Subsidiaries possesses all material certificates, authorizations, consents,
approvals, orders, licenses and permits issued by the appropriate federal, state or foreign regulatory authorities (collectively, the
“Permits”), necessary to conduct its business as now conducted. All of such Permits are valid and in full force and effect.
There is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or investigation that individually or in
the aggregate would reasonably be expected to lead to the revocation, modification, termination, suspension or any other impairment of
the rights of the holder of any such Permit.
(i)
Investment Company. The Company is not (i) an “investment company” or a company “controlled”, whether
directly or indirectly, by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.
(j)
No Conflicts. Subject to the Shareholder Approval and the matters disclosed on Schedule 3.1(j), the execution, delivery
and performance of this Agreement and the consummation of the transactions contemplated in this Agreement and the other Transaction Documents,
and compliance by the Company with its obligations under this Agreement and the other Transaction Documents, do not and will not, whether
with or without the giving of notice or passage of time or both, (w) conflict with or result in a breach of any of the terms and provisions
of, or constitute a default under, (x) result in the creation or imposition of any Lien (other than Permitted Liens) upon any property
or assets of the Company pursuant to any agreement, (y) result in any violation of the provisions of the charter, by-laws or similar
organizational documents of the Company, or (z) result in the violation of any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any
of its respective assets, properties or operations, except in the case of this clause (z) for such conflicts, violations, breaches or
defaults which would not result in a Material Adverse Effect.
(k)
Foreign Corrupt Practices Act. The Company, nor, to the Company’s knowledge, any of its directors, officers, employees,
agents or other person acting on behalf of the Company is aware of or has taken any action, directly or indirectly, that would result
in a material violation by such person of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder
(the “FCPA”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce
corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of money, or other property, gift, promise
to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA)
or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA and the
Company.
(l)
Rule 506(d) Bad Actor Disqualification Representations and Covenants.
(i)
No Disqualification Events. Neither the Company, nor any of its predecessors, affiliates, any manager, executive officer, other
officer of the Company participating in the offering, any beneficial owner (as that term is defined in Rule 13d-3 under the Exchange
Act) 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 Securities Act) connected with the Company in any capacity as of the date of this Agreement
and on the Closing Date (each, a “Company Covered Person” and, together, “Company Covered Persons”) is subject
to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification
Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to
determine (A) the identity of each person that is a Company Covered Person; and (B) whether any Company Covered Person is subject to
a Disqualification Event. The Company has complied with its disclosure obligations under Rule 506(e).
(ii)
Other Covered Persons. The Company is not aware of any person (other than any Company Covered Person) who has been or will be
paid (directly or indirectly) remuneration in connection with the purchase and sale of the Securities who is subject to a Disqualification
Event (each, an “Other Covered Person”).
(iii)
Reasonable Notification Procedures. With respect to each Company Covered Person, the Company has established procedures reasonably
designed to ensure that the Company receives notice from each such Company Covered Person of (A) any Disqualification Event relating
to that Company Covered Person, and (B) any event that would, with the passage of time, become a Disqualification Event relating to that
Company Covered Person; in each case occurring up to and including the Closing Date.
(iv)
Notice of Disqualification Events. The Company will notify each Purchaser immediately in writing upon becoming aware of (A) any
Disqualification Event relating to any Company Covered Person and (B) any event that would, with the passage of time, become a Disqualification
Event relating to any Company Covered Person and/or Other Covered Person.
(m)
Transactions With Affiliates and Employees. Except as set forth in SEC Reports, none of the officers or directors of the Company
or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement
or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from
providing for the borrowing of money from or lending of money to, or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee, stockholder, member or partner, in each case in excess of $120,000 per year, other than
for: (i) payment of salary and bonuses or consulting fees for services rendered (so long as such salaries and bonuses or consulting fees
are on customary terms for companies of a similar size and stage of development), (ii) reimbursement for expenses incurred on behalf
of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.
(n)
Intellectual Property. The Company has, or has rights to use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights
that are material to the conduct of its business (collectively, the “Intellectual Property Rights”). Neither the Company
nor any of its Subsidiaries has received a notice (written or otherwise) that any material Intellectual Property Right has expired, terminated
or been abandoned, or is expected to expire or terminate or be abandoned. The Company has not received, since September 30, 2024, a written
notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person,
except as would not have or reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The
Company and each of its Subsidiaries has taken commercially reasonable security measures to protect the secrecy, confidentiality and
value of all of its intellectual property.
(o)
Filings, Consents and Approvals. Other than the Shareholder Approval, the Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents,
other than: (i) the filings required pursuant to the Registration Rights Agreement and the declaration of effectiveness by the SEC of
the Registration Statement and (ii) the filing of Form D with the SEC and such filings as are required to be made under applicable state
securities laws.
(p)
Authorization; Enforcement. Other than the Shareholder Approval, all corporate action on the part of the Company and its officers
and x directors necessary for the authorization, execution and delivery of the Transaction Documents and the performance of all obligations
of the Company under the Transaction Documents and have been taken on or prior to the date hereof. Each of the Transaction Documents
has been duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid
and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by general equitable principles regardless of whether such enforcement is considered in a proceeding in equity
or at law, (iii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies
and (iv) insofar as indemnification and contribution provisions may be limited by applicable law.
(q)
Valid Issuance of Securities. The Preferred Shares and Warrants have been duly authorized and, when issued and paid for in accordance
with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens and all restrictions
on transfer other than those expressly imposed by the federal securities laws. Subject to the Shareholder Approval, the Conversion Shares
and Warrant Shares have been duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens and all restrictions on transfer other than those expressly imposed
by the federal securities laws. Within three Trading Days after the Shareholder Approval, Date, the Company will reserve from its duly
authorized unissued Common Stock, the Required Minimum.
(r)
SEC Reports. As of the date hereof, the Company files reports with the SEC under the Exchange Act. Except as disclosed in Schedule
3.1(r), all documents required to be filed, including periodic and current reports and exhibits thereto, filed under the Exchange
Act (the “SEC Reports”) have been so filed, and all material contracts so filed as exhibits are, in full force and effect,
except those which have expired in accordance with their terms, and the Company is not in material default with respect to such contracts.
As of its respective filing date, each SEC Report complied in all material respects with the requirements of the Exchange Act and the
rules and regulations of the SEC promulgated thereunder and the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated
thereunder.
(s)
Material Changes; Undisclosed Events, Liabilities or Developments. Since September 30, 2024, except as disclosed in SEC Reports:
(i) there has been no event, occurrence or development that has had or that could reasonably be expected to be materially adverse to
the Company, (ii) neither the Company nor any of its Subsidiaries has incurred any liabilities (contingent or otherwise) other than (A)
Permitted Indebtedness, trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice,
and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings
made with the SEC, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any
shares of its capital stock, and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except as
set forth on Schedule 3.1(s) or pursuant to existing Company stock option plans.
(t)
Litigation. Except as set forth on Schedule 3.1(t), there is no action, suit, inquiry, notice of violation, proceeding
or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its properties before
or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign)
(collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of
the Transaction Documents or the Securities or (ii) would, if there were an unfavorable decision, have or reasonably be expected to result
in a Material Adverse Effect.
(u)
Insurance. The Company and each of its Subsidiaries is insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the business in which it is engaged; neither the Company nor any
of its Subsidiaries has been refused any coverage sought or applied for; and the Company does not have any reason to believe that it
or any of its Subsidiaries will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business.
(v)
Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s employees is a
member of a union that relates to such employee’s relationship with the Company, and the Company is not a party to a collective
bargaining agreement, and the Company and believes that its relationships with its employees are good. To the knowledge of the Company,
no executive officer of the Company or any s, is, or is now expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or
any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the
Company to any liability with respect to any of the foregoing matters. The Company is in compliance with all U.S. federal, state, local
and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours,
except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(w)
DTC Eligible. The Common Stock is DTC eligible and DTC has not placed a “freeze” or a “chill” on the Common
Stock and the Company has no reason to believe that DTC has any intention to make the Common Stock not DTC eligible, or place a “freeze”
or “chill” on the Common Stock.
(x)
Listing and Maintenance Requirements. Except as disclosed on SEC Reports, the Company has not, in the 12 months preceding the
date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Common Stock is eligible for listing
on the Principal Market and the Company has no reason to believe that the Principal Market has any intention of delisting or no longer
quoting the Common Stock from the Principal Market, except as disclosed on SEC Reports. Subject to Shareholder Approval, the issuance
and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market. Subject to the Shareholder
Approval and notice of issuance, all Conversion Shares and Warrant Shares will be listed for trading on the Trading Market.
(y)
Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company or any of its Subsidiaries
to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents. No Purchaser shall have any obligation with respect to any fees or with respect
to any claims made by or on behalf of other Persons for fees of a type contemplated in this Agreement that may be due in connection with
the transactions contemplated by the Transaction Documents. If the Company engages a placement agent and that party sells any units,
the Company shall issue a supplement to the Term Sheet given to the Purchaser and deliver that Supplement (or an amended Term Sheet)
to the Purchaser prior to the Purchaser executing this Agreement.
(z)
Environmental Laws. Except as disclosed in SEC Reports, the Company and its Subsidiaries, to the best of the Company’s
knowledge, (i) are in material compliance with all federal, state, local and foreign laws relating to pollution or protection of human
health or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata), including laws relating
to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or
wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all material authorizations,
codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations,
issued, entered, promulgated or approved thereunder (“Environmental Laws”); (ii) have received all material permits, licenses
or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) are in material
compliance with all terms and conditions of any such permit, license or approval except where in each clause (i), (ii) and (iii), the
failure to so comply would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
(aa)
Sarbanes-Oxley; Internal Accounting Controls. Except as disclosed in the SEC Reports, the Company is in material compliance with
all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date. As of September 30, 2024, the Company
and the Subsidiaries did not maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions
are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company’s
certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period
covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation
Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the Exchange
Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial
reporting.
(bb)
Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.
(cc)
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or
counsel with any information that it believes constitutes or might constitute material, nonpublic information. The Company understands
and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company. All
disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, its business and the transactions contemplated
hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which
they were made, not misleading. To the Company’s knowledge, the press releases disseminated by the Company during the 12 months
preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they
were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.
(dd)
No Other Representations and Warranties. Except for the representations and warranties of any Purchaser expressly set forth in
this Agreement or in a certificate delivered pursuant to this Agreement, no Purchaser nor any other Person on behalf of such Purchaser
has made or makes any other express or implied representation or warranty, either written or oral, with respect to such Purchaser.
(ee)
Non-Reliance. The Company acknowledges that the representations and warranties of the Purchasers in this Agreement constitute
the sole and exclusive representations and warranties of the Purchasers in connection with the transactions contemplated hereby, and
the Company further acknowledges and agrees that neither no Purchaser or any of its respective representatives, are making any representation
or warranty whatsoever, express or implied, beyond those expressly given in this Agreement. The Company is not relying on any representation
or warranty of any Purchaser or any of its respective representatives except for those expressly set forth in this Agreement or in a
certificate delivered pursuant to this Agreement.
3.2
Representation and Warranties of the Purchasers. Each Purchaser, severally and not jointly, hereby represents and warrants as
of the date hereof and as of the Closing Date to the Company as follows:
(a)
Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited
liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance
by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate,
partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to
which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof,
will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except:
(i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited
by applicable law.
(b)
Own Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and
not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable
state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable
state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the
distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty
not limiting such Purchaser’s right to sell the Securities pursuant to an effective registration statement or otherwise in compliance
with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its
business.
(c)
Purchaser Status. At the time such Purchaser was offered the Securities, it was, as of the date hereof it is and as of the Closing
Date it will be an “accredited investor” as defined in Rule 501(a) under the Securities Act.
(d)
No General Solicitation; No Advertising. The Purchaser is unaware of, is in no way relying on, and did not become aware of the
offering of the Securities directly or indirectly through or as a result of, any form of general solicitation or general advertising
including, without limitation, any press release, article, notice, advertisement or other communication published in any newspaper, magazine
or similar media or broadcast over television, radio or the Internet (including without limitation, Internet “blogs,” bulletin
boards, discussion groups or social networking sites in connection with the offering and sale of the Securities and is not subscribing
for the Securities and did not become aware of the offering of the Securities through or as a result of any seminar or meeting to which
the undersigned was invited by, or any solicitation of a subscription by, a person not previously known to the Purchaser in connection
with investments in securities generally. The Purchaser further confirms that it has a substantive and pre-existing relationship with
the Company or their respective officers, directors or agents and such Purchaser was not solicited to purchase the Securities through
the use of general solicitation or had established a substantive relationship with the Company prior to the commencement of any Rule
506(b) private placement conducted by the Company.
(e)
Experience of the Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of
an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(f)
Access to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents and all
exhibits and schedules thereto (including without limitation the Term Sheet and the Risk Factors referenced therein) and has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access
to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient
to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.
The Purchaser acknowledges receipt of a Term Sheet summarizing the offering and acknowledges that such Purchaser as had the opportunity
to review all SEC Reports.
(g)
Certain Transactions and Confidentiality. Such Purchaser has not directly or indirectly, nor has any Person acting on behalf of
or pursuant to any understanding with such Purchaser, executed any purchases or sales, including Short Sales, of the securities of the
Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company
or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately
prior to the execution hereof. Notwithstanding the foregoing, if such Purchaser is a multi-managed investment vehicle, whereby separate
portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set
forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision
to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement or to such Purchaser’s
representatives, including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates,
such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence
and terms of this transaction).
(h)
Registration Limitations. Each Purchaser understands and acknowledges that the Company’s ability to register the Purchaser’s
sale of Underling Shares as contemplated by the Registration Rights Agreement may be limited by (i) the outstanding registration rights
set forth in Schedule 3.1(cc) and/or (ii) the SEC Staff’s policy that the registration of the resale of securities in certain
transactions constituting “private investments in public equity” are limited to one-third of the registrant’s public
float (defined as securities held by non-Affiliates).
(i)
No Other Representations and Warranties. Except for the representations and warranties of the Company expressly set forth in this
Agreement or in a certificate delivered pursuant to this Agreement, neither the Company nor any other Person on behalf of the Company
has made or makes to the Purchaser any other express or implied representation or warranty, either written or oral, with respect to the
Company.
(j)
Non-Reliance. Each Purchaser acknowledges that the representations and warranties of the Company in this Agreement constitute
the sole and exclusive representations and warranties of such Purchaser in connection with the transactions contemplated hereby, and
each Purchaser further acknowledges and agrees that no Purchaser or any of its respective representatives, are making any representation
or warranty whatsoever, express or implied, beyond those expressly given in this Agreement. Each Purchaser is not relying on any representation
or warranty of the Company or any of its respective representatives except for those expressly set forth in this Agreement or in a certificate
delivered pursuant to this Agreement.
ARTICLE
4
OTHER
AGREEMENTS OF THE PARTIES
4.1
Transfer Restrictions.
(a)
The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection
with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the
Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and
shall have the rights and obligations of a Purchaser under this Agreement.
(b)
Each Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following
form:
[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [CONVERTIBLE] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [CONVERSION]
OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY
SUCH SECURITIES.
The
Company acknowledges and agrees that each Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor”
as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and, if required under
the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge
or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor
shall be required in connection therewith. Further, no notice shall be required of such pledge. At such Purchaser’s expense, the
Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in
connection with a pledge or transfer of the Securities, including, if the Securities are then registered for resale on a registration
statement, the preparation and filing of any required prospectus supplement under Rule 424(b) under the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling stockholders thereunder.
(c)
Certificates evidencing the Conversion Shares and/or the Warrant Shares shall not contain any legend (including the legend set forth
in Section 4.1(b) hereof): (i) when they have been sold while a registration statement (including the Registration Statement) covering
the resale of such security is effective under the Securities Act, (ii) following any sale of such the Conversion Shares and/or Warrant
Shares pursuant to Rule 144, (iii) if such Conversion Shares and/or Warrant Shares are eligible for sale under Rule 144 and a sale or
transfer will be taking place prior to the Company’s next periodic report becomes due under the Exchange Act (not including any
extension period) or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations
and pronouncements issued by the staff of the SEC). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent
promptly after the Effective Date or at such time as such legend is no longer required under this Section 4.1(c) if required by the Transfer
Agent to effect the removal of the legend hereunder, or if requested by any Purchaser. If any portion of any Preferred Shares or Warrants
is exercised at a time when there is an effective registration statement to cover any sale of the Underlying Shares, or if such Conversion
Shares and/or Warrant Shares have been sold under Rule 144 and the Company is then in compliance with the current public information
required under Rule 144, or if the Conversion Shares and/or Warrant Shares may be sold under Rule 144 without the requirement for the
Company to be in compliance with the current public information required under Rule 144 as to such Conversion Shares and/or Warrant Shares
and without volume or manner-of-sale restrictions provided the conditions of Rule 144(i)(2) have been satisfied and a sale of such shares
will be taking place prior to the Company’s next annual or quarterly report becoming due under its reporting obligations under
the Exchange Act (not including any extension period) or if such legend is not otherwise required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by the staff of the SEC) then such Conversion Shares and/or
Warrant Shares shall be issued free of all legends. The Company agrees that following the Effective Date or at such time as such legend
is no longer required under this Section 4.1(c), it will, no later than the earlier of (i) three Trading Days and (ii) the number of
Trading Days comprising the Standard Settlement Period (as defined below) following the delivery by a Purchaser to the Company or the
Transfer Agent of certificate(s) representing the Conversion Shares and/or Warrant Shares, as applicable, issued with a restrictive legend
(such date, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing such
shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions
to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4. Certificates for Conversion Shares and/or
Warrant Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the applicable Purchaser by crediting
the account of such Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser. As used herein,
“Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in effect on the date of delivery of a certificate representing the Conversion
Shares and/or Warrant Shares, as applicable, issued with a restrictive legend.
(d)
In addition to each Purchaser’s other available remedies, the Company shall pay to each Purchaser, in cash, the greater of (i)
as partial liquidated damages and not as a penalty, for each $1,000 of Conversion Shares and/or Warrant Shares (based on the Exercise
Price) delivered for removal of the restrictive legend and subject to Section 4.1(c), $5 per Trading Day (increasing to $10 per Trading
Day five Trading Days after such damages have begun to accrue) for each Trading Day after the Legend Removal Date until such certificate
is delivered without a legend and (ii) if the Company fails to (x) issue and deliver (or cause to be delivered) to a Purchaser by the
Legend Removal Date a certificate representing the Securities so delivered to the Company by such Purchaser that is free from all restrictive
and other legends or (y) if after the Legend Removal Date such Purchaser purchases (in an open market transaction or otherwise) shares
of Common Stock to deliver in satisfaction of a sale by such Purchaser of all or any portion of the number of shares of Common Stock,
or a sale of a number of shares of Common Stock equal to all or any portion of the number of shares of Common Stock that such Purchaser
anticipated receiving from the Company without any restrictive legend, then, an amount equal to the excess of such Purchaser’s
total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased
(including brokerage commissions and other out-of-pocket expenses, if any) (the “Buy-In Price”) over the product of (A) such
number of Conversion Shares or Warrant Shares, as applicable, that the Company was required to deliver to such Purchaser by the Legend
Removal Date 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 delivery by such Purchaser to the Company of the applicable, Conversion Shares or Warrant Shares (as the case may be) and
ending on the date of such delivery and payment under this clause (ii).
4.2
Furnishing of Information. As long as any Purchaser owns Securities, the Company covenants to use commercially reasonably efforts
to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed
by the Company after the date hereof pursuant to the Exchange Act.
4.3
Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of
the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior
to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.
4.4
Indemnification of Purchasers. Subject to the provisions of this Section 4.7, the Company will indemnify and hold each Purchaser
and their respective directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls any
Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding
a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, as incurred, arising out of or relating to (i)
any untrue or alleged untrue statement of a material fact contained in any registration statement filed by the Company, any prospectus
or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to
any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the
case of any prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to
the extent, but only to the extent, that such untrue statements or omissions are based solely upon information regarding such Purchaser
Party furnished in writing to the Company by such Purchaser Party expressly for use therein, or (ii) any violation or alleged violation
by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder in connection
therewith. If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement,
such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof
with counsel of its own choosing reasonably acceptable to such Purchaser Party. Any Purchaser Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense
of such Purchaser Party except to the extent that (x) the employment thereof has been specifically authorized by the Company in writing,
(y) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (z) in such action there
is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position
of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such
separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (1) for any settlement by a Purchaser Party
effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (2) to the extent,
but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations,
warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification
required by this Section 4.8 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 are incurred. The indemnity agreements contained herein shall be in addition to any cause of action
or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.
4.5
Reservation of Common Stock. Within three Trading Days of the Shareholder Approval Date, the Company shall reserve and keep available
at all times, free of preemptive rights, a sufficient number of shares of Common Stock equal to the Required Minimum for the purpose
of enabling the Company to issue the Underlying Shares and any other shares that may be issuable pursuant to the Warrants. If, on any
date after the Shareholder Approval Date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is
less than the Required Minimum on such date, then the Company’s board of directors shall use commercially reasonable efforts to
amend the Company’s certificate or articles of incorporation to increase the number of authorized but unissued shares of Common
Stock to at least the Required Minimum at such time, as soon as possible and in any event not later than the 75th day after such date.
4.6
Certain Transactions and Confidentiality. Each Purchaser covenants, severally, but not jointly or jointly and severally, that
neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at
such time that the transactions contemplated by this Agreement are first publicly disclosed. Until that time, each Purchaser covenants,
severally, but not jointly or jointly and severally, such Purchaser will maintain the confidentiality of the existence and terms of this
transaction and the information included in the Disclosure Schedules. Notwithstanding the foregoing and notwithstanding anything contained
in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty
or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions
contemplated by this Agreement are first publicly disclosed, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions
in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated
by this Agreement are first publicly disclosed, (iii) no Purchaser has been asked by the Company to agree, nor has any Purchaser agreed,
to desist from purchasing or selling Securities which have been issued under the terms of this Agreement, the Certificate of Designations,
the Warrants or any other Transaction Document, or “derivative” securities based on securities issued by the Company or to
hold the Securities for any specified term, (iv) no Purchaser shall be deemed to have any affiliation with or control over any arm’s
length counter-party in any “derivative” transaction, (v) any Purchaser may engage in hedging activities, other than Short
Sales at various times during the period that the Securities are outstanding, and (vi) no Purchaser shall have any duty of confidentiality
or duty not to trade in the securities of the Company to the Company or its Subsidiaries after the first public disclosure relating to
that Purchaser’s purchase of Securities. Except as contemplated above, Company acknowledges that such aforementioned hedging activities
do not constitute a breach of any of the Transaction Documents.
4.7
Conversion and Exercise Procedures. The form of Notice of Conversion in the Certificate of Designations sets forth the totality
of the procedures required of the Purchasers in order to convert the Preferred Shares, and the form of Notice of Exercise in the Warrants
sets forth the totality of the procedures required of the Purchasers in order to exercise the Warrants. No additional legal opinion,
other information or instructions shall be required of any Purchaser to convert the Preferred Shares or the exercise the Warrants. Without
limiting the preceding sentences, no ink-original Notice of Conversion, Notice of Exercise or Delivery Notice shall be required, nor
shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form, Notice of Exercise form
or Delivery Notice form be required in order to convert the Preferred Shares or exercise the Warrants. The Company shall honor conversions
of the Preferred Shares and exercises of the Warrants, and shall deliver the Conversion Shares, and the Warrant Shares, as applicable,
in accordance with the terms, conditions and time periods set forth in the Transaction Documents. Nothing contained in this Section 4.12
shall be construed to mean that no legal opinion is required to remove any restrictive legends on the Securities.
4.8
Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities with the SEC as required under
Regulation D, and with the applicable securities regulators in the states in which the Securities were sold, and to provide copies thereof,
promptly upon request of any Purchaser. The Company shall take such further 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 Purchasers at the Closing under applicable securities
or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of
any Purchaser.
4.9
Preservation of Corporate Existence. So long as any Warrants issued hereunder remain outstanding, the Company shall, and shall
use its commercially reasonable efforts to cause each of its Subsidiaries to, preserve and maintain their respective corporate existences,
rights, privileges and franchises in their respective jurisdictions of incorporation, and qualify and remain qualified, as a foreign
corporation in each jurisdiction in which such qualification is necessary in view of their respective businesses and operations and where
the failure to qualify or remain qualified would result in a Material Adverse Effect.
4.10
DTC Program. At all times that the Securities are outstanding, the Company will employ as the Transfer Agent for the Common Stock,
the Conversion Shares and the Warrant Shares a participant in the Depository Trust Company Automated Securities Transfer Program and
cause the Common Stock (including the Conversion Shares and the Warrant Shares) to be transferable pursuant to such program.
4.11
Transfer Agent Instructions. On the Shareholder Approval Date, the Company shall issue irrevocable instructions to the Transfer
Agent in a form acceptable to the Purchasers (the “Irrevocable Transfer Agent Instructions”) to issue certificates or credit
shares via DWAC or otherwise to the applicable balance accounts at The Depository Trust Company (“DTC”), registered in the
name of the Purchasers and/or their respective nominee(s), for the Underlying Shares in such amounts as specified from time to time by
the Purchasers to the Company upon conversion of the Preferred Shares or exercise of the Warrants. The Company represents and warrants
that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 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. In the event that such sale,
assignment or transfer involves Conversion Shares or Warrant Shares sold, assigned or transferred pursuant to an effective registration
statement or in compliance with Rule 144 or Section 4(a)(1) of the Securities Act, 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 4.1. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to the Purchasers. Accordingly, the Company acknowledges
that the remedy at law for a breach of its obligations under this Section will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section, that each Purchaser 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 from and after the Applicable Date.
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. “Applicable Date” means the first date on
which the Underlying Shares are eligible to be resold by the Purchasers pursuant to Rule 144 or an effective registration statement is
in effect.
4.12
Trading Market. The Company shall use commercially reasonable efforts to ensure that its shares of Common Stock remain listed
on the Trading Market.
ARTICLE
5
MISCELLANEOUS
5.1
Fees and Expenses. Except as expressly set forth below and in the Transaction Documents to the contrary, each party shall pay
the reasonable, documented fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall
pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered
by the Company and any exercise notice delivered by any Purchaser), stamp taxes and other taxes and duties levied in connection with
the delivery of any Securities to any Purchaser.
5.2
Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding
of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.3
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
delivered via facsimile or email attachment at the facsimile number or email address as set forth on the signature pages attached hereto
at or prior to 5:30 p.m. (New York, NY time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice
or communication is delivered via facsimile or email attachment at the facsimile number or email address as set forth on the signature
pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York, NY time) on any Trading Day, (c) the second
Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the
signature pages attached hereto.
5.4
Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by the Company and the Purchasers of a majority of the then outstanding Securities or, in the case
of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right. Any amendment effected in accordance with accordance with this
Section 5.4 shall be binding upon the Purchasers and holders of Securities and the Company and its Subsidiaries.
5.5
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and
permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent
of the Purchasers. Each Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns
or transfers any Securities in compliance with the Transaction Documents, provided that such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers,”
and provided further that (i) such transferee is an “accredited investor” within the meaning of Rule 501 under the Securities
Act and (ii) such transferee is not a direct competitor of the Company or any Subsidiary.
5.6
No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
5.7
Governing Law; Exclusive Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of
the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada,
without regard to the principles of conflicts of law thereof. Each party agrees that all Actions concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto
or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively
in the state and federal courts sitting in Providence, Rhode Island. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in Providence, Rhode Island for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any Action, any claim that it is not personally subject to the
jurisdiction of any such court, that such Action is improper or is an inconvenient venue for such Action. Each party hereby irrevocably
waives personal service of process and consents to process being served in any such Action by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. In any Action, the Parties
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 the Purchase Agreement, the Warrant or any transaction contemplated hereby.
If
any party shall commence an Action to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the
Company elsewhere in this Agreement, the prevailing party in such Action shall be reimbursed by the non-prevailing party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action.
5.8
Survival. The representations and warranties contained herein shall survive a Closing and the delivery of the Securities at a
Closing.
5.9
Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party,
it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf’ format data file, such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature
page were an original thereof.
5.10
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired, or invalidated, as long as the essential terms and conditions
of the Warrant for each party remain valid, binding, and enforceable. The parties shall use their commercially reasonable efforts to
find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision,
covenant or restriction.
5.11
Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions
of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then the Purchasers may
rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election
in whole or in part without prejudice to its future actions and rights; provided, however, that, in the case of a rescission of
a conversion of any Preferred Shares or exercise of any Warrants, the applicable Purchasers shall be required to return any shares of
Common Stock subject to any such rescinded conversion or exercise notice concurrently with the return to such Purchasers of the aggregate
exercise price paid to the Company for such shares.
5.12
Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to
the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also
pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.13
Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages,
each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction
Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that
a remedy at law would be adequate.
5.14
Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or any Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the Company, any of its Subsidiaries, a trustee, receiver or any other
Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
5.15
Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts
have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts
are due and payable shall have been canceled.
5.16
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Trading Day, then such action may be taken or such right may be exercised on the next succeeding Trading
Day.
5.17
Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise
the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto.
5.18
WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE
PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature
Pages Follow)
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
| |
EASTSIDE
DISTILLING, INC. |
| |
|
|
| |
By: |
|
| |
Name: |
Geoffrey
Gwin |
| |
Title: |
CEO |
| |
Address
for Notice: |
| |
|
| |
55
Main Street Monroe, CT 06468
Telephone:
(971) 888-4264 Attention: Chief Executive Officer E-Mail: ggwin@eastsidedistilling.com |
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASERS FOLLOWS]
Signature
Page to Securities Purchase Agreement
PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.
| |
Address
for Notice to Purchasers: |
| |
|
| |
Address
for Delivery of Securities to Purchaser (if not same as address for notice): |
Purchaser
Signature Page to Securities Purchase Agreement
Exhibit
10(b)
Execution
Copy
REGISTRATION
RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”) is made and entered into as of ____________, 2024, between Eastside
Distilling, Inc., a Nevada corporation (the “Company”), and the purchasers from time to time party hereto (each, a
“Purchaser” and collectively, the “Purchasers”).
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and the Purchasers
(the “Purchase Agreement”).
The
Company and the Purchasers hereby agrees as follows:
1.
Definitions. Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the
meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Advice”
shall have the meaning set forth in Section 6(b).
“Effectiveness
Date” means the 2nd Trading 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 Trading 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.
“Effectiveness
Period” shall have the meaning set forth in Section 2(a).
“Filing
Date” means, (a) with respect to the Initial Registration Statement required hereunder, the 30th Trading Day following the
later of (i) the date on which the final closing has occurred or the Offering has terminated or (ii) termination of the Offering, and
(b) with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c), the earliest
practical date on which the Company is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable
Securities.
“Holder”
or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.
“Indemnified
Party” shall have the meaning set forth in Section 5(c).
“Indemnifying
Party” shall have the meaning set forth in Section 5(c).
“Initial
Registration Statement” means the first Registration Statement filed pursuant to this Agreement.
“Losses”
shall have the meaning set forth in Section 5(a).
“Offering”
means the offering of Preferred Shares and Warrants pursuant to the Purchase Agreement.
“Plan
of Distribution” shall have the meaning set forth in Section 2(a).
“Prior
Investors” means the holder or holders of the Prior Securities, and any designees, successors or assigns with respect to the
Prior Securities.
“Prior
Securities” means the Company’s Common Stock subject to registration obligations as of November 26, 2024.
“Prospectus”
means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the
SEC pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering
of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
“Registrable
Securities” means, as of any date of determination, (a) all Conversion Shares issuable upon conversion of the Preferred Shares,
and (b) all Warrant Shares issuable upon exercise of the Warrants; provided, however, that any such Registrable Securities
shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another,
Registration Statement hereunder with respect thereto) for so long as (i) a Registration Statement with respect to the sale of such Registrable
Securities is declared effective by the SEC under the Securities Act and such Registrable Securities have been disposed of by the Holder
in accordance with such effective Registration Statement, (ii) such Registrable Securities have been previously sold in accordance with
Rule 144, or (iii) such securities become eligible for resale without volume or manner-of-sale restrictions and without current public
information pursuant to Rule 144, and the conditions of Rule 144(i)(2) have been met, as set forth in a written opinion letter to such
effect, addressed, delivered and acceptable to the Transfer Agent and the affected Holders (assuming that such securities and any securities
issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were
at no time held by any Affiliate of the Company, as reasonably determined by the Company, upon the advice of counsel to the Company).
“Registration
Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration
statements contemplated by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and supplements to any such
registration statement or Prospectus, including pre- and post- effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in any such registration statement.
“Rule
415” means Rule 415 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended or interpreted from
time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such
Rule.
“Rule
424” means Rule 424 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended or interpreted from
time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such
Rule.
“Selling
Stockholder Questionnaire” shall have the meaning set forth in Section 3(a).
“SEC
Guidance” means (i) any publicly-available written or oral guidance of the SEC staff, or any comments, requirements or requests
of the SEC staff and (ii) the Securities Act.
2.
Shelf Registration.
(a)
Subject to SEC Guidance and Sections 2(c) and 6(m), on or prior to each Filing Date, the Company shall prepare and file with the SEC
a Registration Statement covering the resale of all of the Registrable Securities that are not then registered on an effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be filed with the SEC
by the Filing Date. Any time requirements required by this Agreement shall be extended to the next business day if the time falls on
a weekend or federal holiday. Each Registration Statement filed hereunder shall be on Form S-1 or such other form available to register
for resale the Registrable Securities as a secondary offering and shall contain (unless otherwise directed by at least 50.1% in interest
of the Holders) substantially the “Plan of Distribution” attached hereto as Annex A and substantially the “Selling
Stockholder” section attached hereto as Annex B; provided, however, that unless required by SEC Guidance,
no Holder shall be required to be named as an “underwriter” without such Holder’s express prior written consent in
which event the Company shall be under no obligations to such Holder under this Agreement. Subject to the terms of this Agreement, the
Company shall use its commercially reasonable efforts to cause a Registration Statement filed under this Agreement (including, without
limitation, under Section 3(c)) to be declared effective under the Securities Act as promptly as possible after the filing thereof and
by the applicable Effectiveness Date, and shall use its commercially reasonable efforts to keep such Registration Statement continuously
effective under the Securities Act until the date that all Registrable Securities covered by such Registration Statement (i) have been
sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and
without the requirement for the Company to be in compliance with the current public information requirement under Rule 144, and the conditions
of Rule 144(i)(2) have been met, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed
and acceptable to the Transfer Agent and the affected Holders (the “Effectiveness Period”). The Company shall telephonically
request effectiveness of a Registration Statement as of 5:00 p.m. Eastern Time on a Trading Day. The Company shall immediately notify
the Holders via facsimile or by e-mail of the effectiveness of a Registration Statement by the next Trading Day that the Company telephonically
confirms effectiveness with the SEC, which shall be the date requested for effectiveness of such Registration Statement. The Company
shall, by 9:30 a.m. Eastern Time on the Trading Day five days after the effective date of such Registration Statement, file a final Prospectus
with the SEC as required by Rule 424.
(b)
Notwithstanding the registration obligations set forth in Section 2(a), if the SEC staff informs the Company that all of the Registrable
Securities cannot, as a result of the application of any SEC Guidance including Rule 415, be registered for resale as a secondary offering
on a single registration statement, the Company agrees to promptly inform each of the Holders thereof and use its commercially reasonable
efforts to file amendments to the Initial Registration Statement as required by the SEC, covering the maximum number of Registrable Securities
permitted to be registered by the SEC, on Form S-1 or such other form available to register for resale the Registrable Securities as
a secondary offering; provided, however, that prior to filing such amendment, the Company shall be obligated to use diligent
efforts to advocate with the SEC for the registration of all of the Registrable Securities in accordance with SEC Guidance, including
without limitation, Compliance and Disclosure Interpretation 612.09.
(c)
Notwithstanding any other provision of this Agreement, if the SEC or any SEC Guidance sets forth a limitation on the number of Registrable
Securities permitted to be registered on a particular Registration Statement (and notwithstanding that the Company used diligent efforts
to advocate with the SEC for the registration of all or a greater portion of Registrable Securities), the number of Registrable Securities
and other securities to be registered on such Registration Statement will be reduced or eliminated as necessary to comply with such SEC
Guidance or other communications or requirements, as follows:
| (1) | First,
the Company shall reduce or eliminate the Warrant Shares; |
| (2) | Second,
the Company shall reduce or eliminate the Conversion Shares; and |
| (3) | Third,
the Company shall reduce or eliminate the Prior Securities. |
In
the event of a cutback hereunder, the Company shall give the Holder at least five Trading Days prior written notice along with the calculations
as to such Holder’s allotment. In the event the Company amends the Initial Registration Statement in accordance with the foregoing,
the Company will use its commercially reasonable efforts to file with the SEC, as promptly as allowed by Commission or SEC Guidance provided
to the Company or to registrants of securities in general, one or more registration statements on Form S-1 or such other form available
to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended.
(d)
Notwithstanding anything in this Agreement to the contrary, the Company’s obligations shall cease on the date which is two years
after the final sale of the units sold by the Purchase Agreement.
3.
Registration Procedures. In connection with the Company’s registration obligations hereunder:
(a)
Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex C (a “Selling
Stockholder Questionnaire”) on a date that is not less than two Trading Days prior to the Filing Date or by the end of the fourth
Trading Day following the date on which such Holder receives draft materials in accordance with this Section.
(b)
The Company shall prepare and file with the SEC such amendments, including post-effective amendments, to a Registration Statement and
the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period and prepare and file with the SEC such additional Registration Statements in order
to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be
filed pursuant to Rule 424, (iii) respond as promptly as reasonably practicable to any comments received from the SEC with respect to
a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holders true and complete copies
of all correspondence from and to the SEC relating to a Registration Statement (provided that, the Company shall excise any information
contained therein which would constitute material non-public information regarding the Company or any of its Subsidiaries), and (iv)
undertake reasonable efforts to comply in all material respects with the applicable provisions of the Securities Act and the Exchange
Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in
accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in such
Registration Statement as so amended or in such Prospectus as so supplemented.
(c)
If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares constituting
Registrable Securities then registered in a Registration Statement, file, as soon as reasonably practicable, an additional Registration
Statement covering the resale by the Holders of not less than the number of such Registrable Securities, subject to SEC Guidance and
the provisions of this Agreement.
(d)
The Company shall notify the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi)
hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly
as reasonably possible and (if requested by any such Person) confirm such notice in writing no later than three Trading Days following
the day (i) with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any
request by the SEC or any other federal or state governmental authority for amendments or supplements to a Registration Statement or
Prospectus or for additional information related to the applicable Holder, (iii) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that makes
the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration
Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect
or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement
or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading, and (vi) of the occurrence or existence of any pending corporate development with respect to the Company that the Company
believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued
availability of a Registration Statement or Prospectus, provided, however, in no event shall any such notice contain any
information which would constitute material, non-public information regarding the Company or any of its Subsidiaries.
(e)
The Company shall use its commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order
stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.
(f)
The Company shall furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment
thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to
the extent reasonably requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished
or incorporated by reference) promptly after the filing of such documents with the SEC; provided, that any such item which
is available on the EDGAR system (or successor thereto) need not be furnished in physical form.
(g)
Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3 (d).
(h)
Prior to any resale of Registrable Securities by a Holder, or from time to time as reasonably requested by the Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification
(or exemption from the registration or qualification) of such Registrable Securities for the resale by the Holder under the securities
or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration
or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement, provided
that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified,
(ii) become subject to any material tax in any such jurisdiction where it is not then so subject, or (iii) file a general consent to
service of process in any such jurisdiction.
(i)
If requested by a Holder, the Company shall cooperate with such Holder to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be
free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be
in such denominations and registered in such names as any such Holder may request.
(j)
The Company shall use commercially reasonable efforts, upon the occurrence of any event contemplated by Section 3(d), as promptly as
reasonably possible under the circumstances taking into account the Company’s good faith assessment of any adverse consequences
to the Company and its shareholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective
amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the
Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus until the requisite
changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus. The Company will use its commercially
reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is reasonably practicable.
(k)
The Company shall otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under
the Securities Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file any final Prospectus,
including any supplement or amendment thereof, with the SEC pursuant to Rule 424 under the Securities Act, promptly inform the Holders
in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as
a result thereof, the Holders are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take
such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder.
(l)
The Company may require each selling Holder to furnish to the Company a certified written statement as to the number of shares of Common
Stock beneficially owned by such Holder and, if required by the SEC, the natural persons thereof that have voting and dispositive control
over the shares.
(m)
The Company shall not be obligated to register or qualify the Conversion Shares and Warrant Shares in any state which applies merit review.
(n)
Notwithstanding anything to the contrary contained in this Agreement (but subject to the last sentence of this Section 3(n)), at any
time after the Effective Date of a particular Registration Statement, the Company may, upon written notice to the Holders, suspend the
Holders’ use of any prospectus that is a part of any Registration Statement (in which event the Holders shall discontinue sales
of the Registrable Securities pursuant to such Registration Statement contemplated by this Agreement, but shall settle any previously
made sales of Registrable Securities) if the Company (x) is pursuing an acquisition, merger, tender offer, reorganization, disposition
or other similar transaction and the Company determines in good faith that (A) the Company’s ability to pursue or consummate such
a transaction would be materially adversely affected by any required disclosure of such transaction in such Registration Statement or
other registration statement or (B) such transaction renders the Company unable to comply with SEC requirements, in each case under circumstances
that would make it impractical or inadvisable to cause any Registration Statement (or such filings) to be used by the Holders or to promptly
amend or supplement any Registration Statement contemplated by this Agreement on a post effective basis, as applicable, or (y) has experienced
some other material non-public event the disclosure of which at such time, in the good faith judgment of the Company, would materially
adversely affect the Company (each, an “Allowable Grace Period”); provided, however, that in no event
shall the Holders be suspended from selling Registrable Securities pursuant to any Registration Statement for a period that exceeds 45
calendar days in any 365-day period. . Upon disclosure of such information or the termination of the condition described above, the Company
shall provide prompt notice, but in any event within one Trading Day of such disclosure or termination, to the Holders and shall promptly
terminate any suspension of sales it has put into effect and shall take such other reasonable actions to permit registered sales of Registrable
Securities as contemplated in this Agreement (including as set forth in the first sentence of Section 3(d) 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(p), the Company shall cause its transfer agent to deliver shares of Common Stock to a transferee of a Holder in accordance
with the terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which (i) the Company
has made a sale to the Holders and (ii) the Holders 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, in each case prior to the Holder’s receipt of the notice
of an Allowable Grace Period and for which the Holder has not yet settled.
(o)
For all purposes of this Agreement, any time requirements imposed upon the Company including with respect to filing, amending, supplementing
and causing the effectiveness of Registration Statements shall be deemed modified to the extent that the Company’s inability to
comply with the financial statement requirements under SEC Guidance after 45 days of a new fiscal year (the “Staleness Date”)
until audited financial statements are filed for the prior fiscal year but in no event later than the time permitted by Rule 12b-25 under
the Exchange Act (the “Form 10-K Deadline”). Any time between the Staleness Date and the Form 10-K Deadline (or such earlier
date as the Company’s applicable Annual Report on Form 10-K has been filed with the SEC) shall be disregarded and not calculated
in determining if the Company has complied with its obligations under this Agreement. Provided, further, that if the Staleness
Date causes a delay in filing a Registration Statement or updating a Prospectus an additional five Trading Days after a Form 10-K has
been filed shall be added to any time period.
4.
Registration Expenses. All fees and expenses incident to the performance of or compliance with, this Agreement by the Company
shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made with
the SEC, (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading,
and (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without
limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable
Securities), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities), (iii)
fees and disbursements of counsel for the Company, and (iv) fees and expenses of all other Persons retained by the Company in connection
with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required
hereunder. In no event shall the Company be responsible for any broker or similar commissions, markdowns or discounts of any Holder or
any legal fees or other costs of the Holders.
5.
Indemnification.
(a)
Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, members, partners, agents, and employees (and any other Persons with a functionally equivalent
role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each Person who controls
any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors,
members, shareholders, partners, agents and employees (and any other Persons with a functionally equivalent role of a Person holding
such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted
by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable
attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue
or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in
any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement
thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance
of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions are
based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or
to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities
and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or in
any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii)
in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated,
defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated,
defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section
6(b). The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in
connection with the transactions contemplated by this Agreement of which the Company is aware. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of any Registrable
Securities by any of the Holders in accordance with Section 6(f).
(b)
Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: any untrue or alleged
untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances
under which they were made) not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained
in any information so furnished in writing by such Holder to the Company for inclusion in such Registration Statement or such Prospectus
or (ii) to the extent, but only to the extent, that such information relates to such Holder’s information provided in the Selling
Stockholder Questionnaire or the proposed method of distribution of Registrable Securities and was reviewed and approved in writing by
such Holder for use in a Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose),
such Prospectus or in any amendment or supplement thereto. In no event shall the liability of a selling Holder be greater in amount than
the dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 5 and
the amount of any damages such Holder has otherwise been required to pay by reason of such untrue statement or omission) received by
such Holder upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.
(c)
Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses
incurred in connection with defense thereof, provided that the failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure
shall have materially and adversely prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party
has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such
Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named parties to
any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to
the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to
assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying
Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes
an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
Subject
to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section)
shall be paid to the Indemnified Party, as incurred, within 10 Trading Days of written notice thereof.
(d)
Contribution. If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold
an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified
Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has
been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any
reasonable attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party
would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party
in accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately
preceding paragraph. In no event shall the contribution obligation of a Holder of Registrable Securities be greater in amount than the
dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 5 and the
amount of any damages such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.
The
indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
6.
Miscellaneous.
(a)
Remedies. In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement,
each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company and
each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it
of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect
of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.
(b)
Discontinued Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from
the Company of the occurrence of any event of the kind described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue
disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”)
by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company will
use its commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable.
(c)
Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified
or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing
and signed by the Company and the Holders of 50.1% or more of the then outstanding Registrable Securities (for purposes of clarification,
this includes any Registrable Securities issuable upon exercise of any Security), provided that, if any amendment, modification or waiver
disproportionately and adversely impacts a Holder (or group of Holders), the consent of such disproportionately impacted Holder (or group
of Holders) shall be required. If a Registration Statement does not register all of the Registrable Securities pursuant to a waiver or
amendment done in compliance with the previous sentence, then the number of Registrable Securities to be registered for each Holder shall
be reduced pro rata among all Holders and each Holder shall have the right to designate which of its Registrable Securities shall be
omitted from such Registration Statement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of a Holder or some Holders and that does not directly or indirectly affect
the rights of other Holders may be given only by such Holder or Holders of all of the Registrable Securities to which such waiver or
consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the first sentence of this Section 6(c). 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 also is offered
to all of the parties to this Agreement.
(d)
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered
as set forth in the Purchase Agreement.
(e)
Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns
of each of the parties and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations
hereunder without the prior written consent of all of the Holders of the then outstanding Registrable Securities. Each Holder may assign
their respective rights hereunder in the manner and to the Persons as permitted under Section 5.5 of the Purchase Agreement.
(f)
No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered into, as of the date hereof, any agreement
with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof.
(g)
Execution and Counterparts. 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 by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile
or “.pdf’ signature page were an original thereof.
(h)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be
determined in accordance with the provisions of the Purchase Agreement.
(i)
Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.
(j)
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(k)
Headings. The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be
deemed to limit or affect any of the provisions hereof.
(l)
Subordination. Notwithstanding anything herein to the contrary, and for the avoidance of doubt, the parties acknowledge and agree
that the registration rights granted to the Holders hereunder are subordinated to the registration rights and the Company’s obligations
and commitments with respect to each of: (A) the resale of the Prior Securities by the Prior Investors, and (B) the registration of the
transactions set forth on Schedule 6(l), and any limitation or delay on the Company’s ability to perform its obligations
under this Agreement as a result of either of the foregoing, including as a result of SEC Guidance, shall not constitute of breach of
this Agreement as long as the Company undertakes good faith and commercially reasonable efforts to adhere its obligations under this
Agreement.
********************
(Signature
Pages Follow)
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.
| |
EASTSIDE
DISTILLING, INC. |
| |
|
|
| |
By: |
|
| |
Name: |
Geoffrey
Gwin |
| |
Title: |
Chief
Executive Officer |
[SIGNATURE
PAGE OF HOLDERS FOLLOWS]
Signature
Page to Registration Rights Agreement
[SIGNATURE
PAGE OF HOLDERS]
Purchaser
Signature Page to Registration Rights Agreement
v3.24.3
Cover
|
Nov. 26, 2024 |
| Cover [Abstract] |
|
| Document Type |
8-K
|
| Amendment Flag |
false
|
| Document Period End Date |
Nov. 26, 2024
|
| Current Fiscal Year End Date |
--12-31
|
| Entity File Number |
001-38182
|
| Entity Registrant Name |
EASTSIDE
DISTILLING, INC.
|
| Entity Central Index Key |
0001534708
|
| Entity Tax Identification Number |
20-3937596
|
| Entity Incorporation, State or Country Code |
NV
|
| Entity Address, Address Line One |
755
Main Street
|
| Entity Address, Address Line Two |
Building 4
|
| Entity Address, Address Line Three |
Suite 3
|
| Entity Address, City or Town |
Monroe
|
| Entity Address, State or Province |
CT
|
| Entity Address, Postal Zip Code |
06468
|
| City Area Code |
(484)
|
| Local Phone Number |
800-9154
|
| Written Communications |
false
|
| Soliciting Material |
false
|
| Pre-commencement Tender Offer |
false
|
| Pre-commencement Issuer Tender Offer |
false
|
| Trading Symbol |
EAST
|
| Security Exchange Name |
NASDAQ
|
| Title of 12(g) Security |
Common
Stock, $0.0001 par value
|
| Entity Emerging Growth Company |
false
|
| X |
- DefinitionBoolean flag that is true when the XBRL content amends previously-filed or accepted submission.
| Name: |
dei_AmendmentFlag |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionEnd date of current fiscal year in the format --MM-DD.
| Name: |
dei_CurrentFiscalYearEndDate |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:gMonthDayItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionFor the EDGAR submission types of Form 8-K: the date of the report, the date of the earliest event reported; for the EDGAR submission types of Form N-1A: the filing date; for all other submission types: the end of the reporting or transition period. The format of the date is YYYY-MM-DD.
| Name: |
dei_DocumentPeriodEndDate |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:dateItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
| Name: |
dei_DocumentType |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:submissionTypeItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionAddress Line 1 such as Attn, Building Name, Street Name
| Name: |
dei_EntityAddressAddressLine1 |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionAddress Line 2 such as Street or Suite number
| Name: |
dei_EntityAddressAddressLine2 |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionAddress Line 3 such as an Office Park
| Name: |
dei_EntityAddressAddressLine3 |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- Definition
+ References
+ Details
| Name: |
dei_EntityAddressCityOrTown |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionCode for the postal or zip code
| Name: |
dei_EntityAddressPostalZipCode |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionName of the state or province.
| Name: |
dei_EntityAddressStateOrProvince |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:stateOrProvinceItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionA unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityCentralIndexKey |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:centralIndexKeyItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionIndicate if registrant meets the emerging growth company criteria. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityEmergingGrowthCompany |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionCommission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
| Name: |
dei_EntityFileNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:fileNumberItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTwo-character EDGAR code representing the state or country of incorporation.
| Name: |
dei_EntityIncorporationStateCountryCode |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:edgarStateCountryItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityRegistrantName |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityTaxIdentificationNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:employerIdItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionLocal phone number for entity.
| Name: |
dei_LocalPhoneNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 13e
-Subsection 4c
| Name: |
dei_PreCommencementIssuerTenderOffer |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14d
-Subsection 2b
| Name: |
dei_PreCommencementTenderOffer |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTitle of a 12(g) registered security. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection g
| Name: |
dei_Security12gTitle |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:securityTitleItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionName of the Exchange on which a security is registered. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection d1-1
| Name: |
dei_SecurityExchangeName |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:edgarExchangeCodeItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14a
-Subsection 12
| Name: |
dei_SolicitingMaterial |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTrading symbol of an instrument as listed on an exchange.
| Name: |
dei_TradingSymbol |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:tradingSymbolItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Securities Act
-Number 230
-Section 425
| Name: |
dei_WrittenCommunications |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
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