3.1.25.
Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result
of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.
3.1.26.
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their
agents or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company
understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the
Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries,
their respective businesses and the transactions contemplated hereby, is true and correct and does not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The press releases disseminated by the Company during the twelve 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 the 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.
3.1.27.
No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section
3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration
of any such securities under the Securities Act, or (ii) any applicable stockholder approval provisions of any Trading Market on which
any of the securities of the Company are listed or designated.
3.1.28.
Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the
receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s
assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital
to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of
its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has
no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy
or reorganization laws of any jurisdiction within one year after the Closing Date. Schedule 3.1.28 sets forth as of the date hereof all
outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments.
For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts
owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements
and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s
consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due
under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to
any Indebtedness.
3.1.29.
Tax Status. Except as disclosed in Schedule 3.1.29, the Company and its Subsidiaries each (i) has made or filed all material
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 material taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably
adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the
Company or of any Subsidiary know of no basis for any such claim.
3.1.30.
No General Solicitation. Neither the Company nor any Person acting on behalf of the Company has offered or sold any of
the Unregistered Securities by any form of general solicitation or general advertising. The Company has offered the Unregistered Securities
for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities
Act.
3.1.31.
Foreign Corrupt Practices Act. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary,
any agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate
funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf
of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision of FCPA.
3.1.32.
Accountants. The Company’s accounting firm is M&K CPAs, with offices at 24955 Interstate Highway 45 Suite 400,
The Woodlands, TX 77380. To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm
as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s
Annual Report for the fiscal year ended December 31, 2024.
3.1.33.
No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company
and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability
to perform any of its obligations under any of the Transaction Documents.
3.1.34.
Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the
Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given
by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each
Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on
the independent evaluation of the transactions contemplated hereby by the Company and its representatives.
3.1.35.
Acknowledgment Regarding Purchaser’s Trading Activity. Notwithstanding anything in this Agreement or elsewhere herein
to the contrary (except for Sections 3.2.7 and 4.16 hereof), it is understood and acknowledged by the Company
that:
(i) none of the Purchasers has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling,
long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to
hold the Securities for any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including,
without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future transactions,
may negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and counter-parties in
“derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short”
position in the Common Stock and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s
length counter-party in any “derivative” transaction. The Company further understands and acknowledges that (y) one or more
Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding, including, without
limitation, during the periods that the value of the Warrant Shares deliverable with respect to Securities are being determined, and
(z) such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at and
after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities
do not constitute a breach of any of the Transaction Documents.
3.1.36.
Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly
or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases
of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent
in connection with the placement of the Securities.
3.1.37.
Officers’ Certificate. Any certificate signed by any duly authorized officer of the Company and delivered to the
Purchasers shall be deemed a representation and warranty by the Company to the Purchasers as to the matters covered thereby.
3.1.38.
D&O Questionnaires. To the Company’s knowledge, all information contained in the questionnaires most recently
completed by each of the Company’s directors and officers and beneficial owner of 5% or more of the shares of Common Stock or Common
Stock Equivalents is true and correct in all respects and the Company has not become aware of any information which would cause the information
disclosed in such questionnaires become inaccurate and incorrect.
3.1.39.
Stock Option Plans. Each stock option granted by the Company under the Company’s stock option plan, if any, was granted
(i) in accordance with the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair
market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option
granted under the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has
been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options
with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results
or prospects.
3.1.40.
Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director,
officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
3.1.41.
U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation
within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s
request.
3.1.42.
Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding
Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve
System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls,
directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent
(25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or
any entity that is subject to the BHCA and to regulation by the Federal Reserve.
3.1.43.
Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering
Laws”), and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any
Subsidiary, threatened.
3.1.44.
No Disqualification Events. With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under
the Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer
of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting
equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities
Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and,
together, “Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications described
in Rule 506(d)(1)(i) to (viii) under the 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 whether any Issuer Covered Person is
subject to a Disqualification Event. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided
thereunder.
3.1.45.
Other Covered Persons. Other than the Placement Agent, the Company is not aware of any person (other than any Issuer Covered
Person) that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale
of any Securities.
3.1.46.
Notice of Disqualification Events. The Company will notify the Purchasers and the Placement Agent in writing, prior to
the Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage
of time, become a Disqualification Event relating to any Issuer Covered Person.
3.1.47.
Cybersecurity. (i) (a) There has been no security breach or other compromise of or relating to any of the Company’s
or any Subsidiary’s information technology and computer systems, networks, hardware, software, data (including the data of its
respective customers, employees, suppliers, vendors and any third party data maintained by or on behalf of it), equipment or technology
(collectively, “IT Systems and Data”) and (b) the Company and the Subsidiaries have not been notified of, and
has no knowledge of any event or condition that would reasonably be expected to result in, any security breach or other compromise to
its IT Systems and Data; (ii) the Company and the Subsidiaries are presently in compliance with all applicable laws or statutes and all
judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual
obligations relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems and Data from unauthorized
use, access, misappropriation or modification, except, in the case of clauses (i) and (ii) herein, as would not, individually or in the
aggregate, have a Material Adverse Effect; (iii) the Company and the Subsidiaries have implemented and maintained commercially reasonable
safeguards to maintain and protect its material confidential information and the integrity, continuous operation, redundancy and security
of all IT Systems and Data; and (iv) the Company and the Subsidiaries have implemented backup and disaster recovery technology consistent
with industry standards and practices.
3.2.
Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents
and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which
case they shall be accurate as of such date):
3.2.1.
Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing
and in good standing under the law 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 legal, valid and 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.
3.2.2.
Own Account. Such Purchaser understands that the Unregistered Securities are “restricted securities” as defined
in Rule 144 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 Unregistered 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 Unregistered Securities in violation of the Securities Act
or any applicable state securities law (this representation and warranty shall not limit such Purchaser’s right to sell the Securities
pursuant to a 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.
3.2.3.
Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on
each date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1),
(a)(2), (a)(3), (a)(7), (a)(8), (a)(9), (a)(12), or (a)(13) under the Securities Act or (ii) a “qualified institutional buyer”
as defined in Rule 144A(a)(1) under the Securities Act. Such Purchaser hereby represents that neither such Purchaser nor any of its Rule
506(d) Related Parties (as defined below) is a “bad actor” within the meaning of Rule 506(d) promulgated under the Securities
Act. For purposes of this Agreement, “Rule 506(d) Related Party” shall mean a person or entity covered by the “Bad
Actor disqualification” provision of Rule 506(d) of the Securities Act.
3.2.4.
Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of
an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
3.2.5.
General Solicitation. Such Purchaser is not, to such Purchaser’s knowledge, purchasing the Unregistered Securities
as a result of any advertisement, article, notice or other communication regarding the Unregistered Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at any seminar or, to the knowledge of such Purchaser, any
other general solicitation or general advertisement.
3.2.6.
Access to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents
(including all exhibits and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as
it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering
of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial
condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment;
and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort
or expense that is necessary to make an informed investment decision with respect to the investment. Such Purchaser acknowledges and
agrees that neither the Placement Agent nor any Affiliate of the Placement Agent has provided such Purchaser with any information or
advice with respect to the Securities nor is such information or advice necessary or desired. Neither the Placement Agent nor any Affiliate
has made or makes any representation as to the Company or the quality of the Securities and the Placement Agent and any Affiliate may
have acquired non-public information with respect to the Company which such Purchaser agrees need not be and has not been provided to
it (other than with respect to the transactions contemplated by the Transaction Documents). In connection with the issuance of the Securities
to such Purchaser, neither the Placement Agent nor any of its Affiliates has acted as a financial advisor or fiduciary to such Purchaser.
3.2.7.
Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser
has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed
any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such
Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the
material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing,
in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of
such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion
of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other
than to other Persons party to this Agreement or to such Purchaser’s representatives, including, without limitation, its officers,
directors, partners, legal and other advisors, employees, agents and Affiliates, such Purchaser has maintained the confidentiality of
all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding
the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions,
with respect to locating or borrowing shares in order to effect Short Sales or similar transactions in the future.
The Company
acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s
right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement
or the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, for the avoidance of doubt, nothing contained
herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order
to effect Short Sales or similar transactions in the future.
| 4. | Other
Agreements of the Parties. |
4.1.
Transfer Restrictions.
4.1.1.
The Unregistered Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer
of Unregistered 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 4.1.2, 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
Unregistered 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 the Registration Rights Agreement and shall have the rights and obligations of a Purchaser under this
Agreement and the Registration Rights Agreement.
4.1.2.
The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Unregistered Securities
in substantially the following form:
[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE] 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 EXERCISE
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 a 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 Unregistered Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, such Purchaser
may transfer pledged or secured Unregistered 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 the appropriate Purchaser’s expense, the Company will execute
and deliver such reasonable documentation as a pledgee or secured party of Unregistered Securities may reasonably request in connection
with a pledge or transfer of the Unregistered Securities, including, if the Unregistered Securities are subject to registration pursuant
to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the
Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders (as defined
in the Registration Rights Agreement) thereunder.
4.1.3.
The Registered Securities shall be issued without any legend (including the legend set forth in Section 4.1.2 hereof). Certificates evidencing
the Shares and Warrant Shares shall not contain any legend (including the legend set forth in Section 4.1.2 hereof) (i) while a registration
statement (including the Resale Registration Statement or the Shelf Registration Statement) covering the resale of such security is effective
under the Securities Act, (ii) following any sale of such Shares or Warrant Shares pursuant to Rule 144 (assuming cashless exercise of
the Warrants), (iii) if such Shares or Warrant Shares are eligible for sale or may be sold under Rule 144 (assuming cashless exercise
of the Warrants) without volume or manner-of-sale restrictions, 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 Commission). The Company shall
cause its counsel to issue a legal opinion to the Transfer Agent or the Purchaser if required by the Transfer Agent to effect the removal
of the legend hereunder, or if requested by a Purchaser, respectively. If all or any portion of a Warrant is exercised at a time when
there is an effective registration statement to cover the resale of the Warrant Shares, if the Shares or Warrant Shares may be sold under
Rule 144 and the Company is then in compliance with the current public information required under Rule 144 (assuming cashless exercise
of the Warrants), or if the Shares 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 Shares or Warrant Shares 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
Commission), then such Shares or Warrant Shares shall be issued free of all legends. The Company agrees that following the Resale Effective
Date or at such time as such legend is no longer required under this Section 4.1.3, it will, no later than the earlier of (i) one (1)
Trading Day 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 a certificate representing Shares or Warrant Shares, as the case may be, 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 Unregistered Securities subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting
the account of the 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 Shares or
Warrant Shares, as the case may be, issued with a restrictive legend. In addition to such Purchaser’s other available remedies,
the Company shall pay to the Purchaser, in cash, as partial liquidated damages and not as a penalty, two percent (2%) of the total of
the value of the Shares or Warrant Shares for which the removal of the legend is sought (based on the VWAP of the Common Stock on the
date such Shares or Warrant Shares are submitted to the Transfer Agent) for each full month that said opinion is not delivered after
the Legend Removal Date until such certificate is delivered without a legend.
4.1.4.
In addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, (i) as partial liquidated
damages and not as a penalty, for each $1,000 of Common Warrant Shares (based on the VWAP of the Common Stock on the date such Unregistered
Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1.3, $10 per
Trading Day (increasing to $20 per Trading Day five (5) Trading Days after the Legend Removal Date) for each Trading Day after the Legend
Removal Date until such certificate is delivered without a legend and (ii) if the Company fails to (a) issue and deliver (or cause to
be delivered) to a Purchaser by the Legend Removal Date a certificate representing the Unregistered Securities so delivered to the Company
by such Purchaser that is free from all restrictive and other legends and (b) 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 Common Warrant Shares 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 Common Warrant Shares and ending on the date of such delivery
and payment under this clause (ii).
4.1.5.
Each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any Unregistered
Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements,
or an exemption therefrom, and that if Unregistered Securities are sold pursuant to a Resale Registration Statement, they will be sold
in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates
representing Unregistered Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.
4.2.
Furnishing of Information; Public Information.
4.2.1.
Until no Purchaser owns any Securities and the Common Warrants have terminated, the Company covenants to maintain the effectiveness of
the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to use reasonable best efforts to timely file
(or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company
after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange
Act.
4.2.2.
At any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of the
Securities (assuming cashless exercise for the Warrants) may be sold without the requirement for the Company to be in compliance with
Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if the Company (i) shall fail for any reason to
satisfy the current public information requirement under Rule 144(c) or (ii) has ever been an issuer described in Rule 144(i)(1)(i) or
becomes such an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a “Public
Information Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to a
Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to
sell the Securities, an amount in cash equal to two percent (2.0%) of the aggregate Subscription Amount of such Purchaser’s Securities
on the Calendar Day of a Public Information Failure and on every thirtieth (30th) Calendar Day (prorated for periods totaling less than
thirty Calendar Days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such
public information is no longer required for the Purchasers to transfer the Shares and Warrant Shares pursuant to Rule 144. The payments
to which a Purchaser shall be entitled pursuant to this Section 4.2.2 are referred to herein as “Public Information Failure
Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last Calendar Day of the calendar
month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure
giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments
in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial
months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Public Information
Failure, and such Purchaser 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.
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 stockholder approval
prior to the closing of such other transaction unless stockholder approval is obtained before the closing of such subsequent transaction.
4.4.
Securities Laws Disclosure; Publicity. The Company shall (a) by the Disclosure Time, issue a press release disclosing the
material terms of the transactions contemplated hereby, and (b) file, within the time required by the Exchange Act, a Current Report
on Form 8-K, including the Transaction Documents as exhibits thereto, with the Commission. From and after the issuance of such press
release, the Company represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered
to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents
(including, without limitation, the Placement Agent) in connection with the transactions contemplated by the Transaction Documents. In
addition, effective upon the issuance of such press release, the Company acknowledges and agrees that any and all confidentiality or
similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries, or any of their respective
officers, directors, agents (including, without limitation, the Placement Agent), employees or Affiliates on the one hand, and any of
the Purchasers or any of their Affiliates on the other hand, shall terminate and be of no further force or effect. The Company understands
and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. The
Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated
hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without
the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser,
with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure
is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement
or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name
of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except (a) to the extent required by federal securities law in connection with (i) any Resale Registration Statement contemplated
by this Agreement or the Registration Rights Agreement and (ii) the filing of final Transaction Documents with the Commission and (b)
to the extent such disclosure is required by law or Trading Market regulations, in which such cases the Company shall (x) obtain prior
advice of competent counsel that such disclosure is required, (y) provide the Purchasers with prior notice of such disclosure permitted
under this Section 4.4 and (z) reasonably cooperate with such Purchasers regarding such disclosure.
4.5.
Stockholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other
Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter
adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of
receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.
4.6.
Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the
Transaction Documents, which shall be disclosed pursuant to Section 4.4, the Company covenants and agrees that neither it, nor any other
Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company
reasonably believes constitutes, material non-public information, unless prior thereto such Purchaser shall have consented in writing
to the receipt of such information and agreed in writing with the Company to keep such information confidential. The Company understands
and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To
the extent that the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates
delivers any material, non-public information to a Purchaser without such Purchaser’s consent, the Company hereby covenants and
agrees that such Purchaser shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective
officers, directors, agents, employees or Affiliates, or a duty to the Company, any of its Subsidiaries or any of their respective officers,
directors, agents, employees or Affiliates not to trade on the basis of, such material, non-public information, provided that the Purchaser
shall remain subject to applicable law. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains,
material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously with the delivery of such
notice file such notice with the Commission pursuant to a Current Report on Form 8-K. The Company understands and confirms that each
Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
4.7.
Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for general corporate
purposes (which for the avoidance of doubt may include acquisitions, in the Company’s discretion), including working capital. The
Company shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than payment of trade
payables in the ordinary course of the Company’s business and prior practices, or the payment of liabilities disclosed in the Disclosure
Schedules), (b) for the redemption of any shares of Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding
litigation or (d) in violation of FCPA or OFAC regulations.
4.8.
Indemnification of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each
Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such
Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding
a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from
any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid
in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer
or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents, (b) any action instituted against the Purchaser Parties in any capacity
(including a Purchaser Party’s status as an investor), or any of them or their respective Affiliates, by the Company or any stockholder
of the Company who is not an Affiliate of such Purchaser Party, arising out of or relating to any of the transactions contemplated by
the Transaction Documents. For the avoidance of doubt, the indemnification provided herein is intended to, and shall also cover, direct
claims brought by the Company against the Purchaser Parties; provided, however, that such indemnification shall not cover any loss, claim,
damage or liability to the extent it is finally judicially determined to be attributable to such Purchaser Party’s material breach
of any of the representations, warranties or covenants made by such Purchaser Party in any Transaction Document or any conduct by such
Purchaser Party which is finally judicially determined to constitute fraud, gross negligence or willful misconduct) or (c) in connection
with any Resale Registration Statement of the Company providing for the resale by the Purchasers of the Shares or Warrant Shares issued
and issuable upon exercise of the Warrants, the Company will indemnify each Purchaser Party, 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, as incurred, arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained
in such Resale 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 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, except with respect
to direct claims brought by the Company, the Company shall have the right to assume the defense thereof with counsel of its own choosing
reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such 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 (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed
after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion
of counsel to the applicable Purchaser Party (which may be internal counsel), a material conflict on any material issue between the position
of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses
of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement for any settlement
by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed.
In addition, if any Purchaser Party takes actions to collect amounts due under any Transaction Documents or to enforce the provisions
of any Transaction Documents, then the Company shall pay the costs incurred by such Purchaser Party for such collection, enforcement
or action, including, but not limited to, attorneys’ fees and disbursements. The indemnification and other payment obligations
required by this Section 4.8 shall be made by periodic payments of the amount thereof during the course of the investigation, defense,
collection, enforcement or action, as and when bills are received or are incurred; provided, however, that if any Purchaser Party is
finally judicially determined not to be entitled to indemnification or payment under this Section 4.8, such Purchaser Party shall promptly
reimburse the Company for any payments that are advanced under this sentence. The indemnity agreements contained herein shall be in addition
to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject
to pursuant to law.
4.9.
Listing of Common Stock. The Company hereby agrees to use its best efforts to maintain the listing or quotation of the
Common Stock on the Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall apply to list
or quote all of the Shares and Warrant Shares on such Trading Market and promptly secure the listing of all of the Shares and Warrant
Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading
Market, it will then include in such application all of the Shares and Warrant Shares, and will take such other action as is necessary
to cause all of the Shares and Warrant Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company
will then take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply
in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. The
Company agrees to maintain the eligibility of the Common Stock for electronic transfer through the Depository Trust Company or another
established clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or such other
established clearing corporation in connection with such electronic transfer.
4.10.
Subsequent Equity Sales.
4.10.1.
From the date hereof until ninety (90) days after the Release Date, without the prior written consent of the Requisite Purchasers, neither
the Company nor any Subsidiary shall (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any
shares of Common Stock or Common Stock Equivalents or (ii) file any registration statement or any amendment or supplement thereto, in
each case other than as contemplated pursuant to the Registration Rights Agreement or, solely with respect to securities issued pursuant
to any share or option plan duly adopted for such purpose by the Board of Directors or a committee of non-employee directors established
for such purpose for services rendered to the Company, on Form S-8.
4.10.2.
From the date hereof until six (6) months after the Release Date, the Company shall be prohibited from effecting or entering into an
agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination
of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company
(i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to
receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based
upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of
such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date
after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock or (ii) enters into, or effects a transaction under, any agreement,
including, but not limited to, an equity line of credit or an “at-the-market offering”, whereby the Company may issue securities
at a future determined price whereby the Company may issue securities at a future determined price regardless of whether shares pursuant
to such agreement have actually been issued and regardless of whether such agreement is subsequently canceled. Any Purchaser shall be
entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right
to collect damages.
4.10.3.
Notwithstanding the foregoing, this Section 4.10 shall not apply in respect of an Exempt Issuance.
4.11.
Equal Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered
or paid to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration
is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate
right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat
the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or otherwise.
4.12.
Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants
that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales,
including Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and
ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release
as described in Section 4.4. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described
in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction. Notwithstanding the
foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that
(i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities
of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial
press release as described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any
securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by
this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4 and (iii) no Purchaser
shall have any duty of confidentiality or duty not to trade in the securities of the Company to the Company, any of its Subsidiaries,
or any of their respective officers, directors, employees, agents or Affiliates after the issuance of the initial press release as described
in Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth
above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement.
4.13.
Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Unregistered Securities as required
under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Unregistered 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.
4.14.
Capital Changes. Until the date that is ninety (90) days after the date of this Agreement, the Company shall not undertake
a reverse or forward stock split or reclassification of the Common Stock without the prior written consent of the Requisite Purchasers
holding a majority in interest of the Shares and Pre-Funded Warrants, based on the initial Subscription Amounts hereunder.
4.15.
Acknowledgment of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the
outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges
that its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Shares and Warrant Shares
pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or
reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the
dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.
4.16.
Lock-Up Agreements. The Company shall not amend, modify, waive or terminate any provision of any of the Lock-Up Agreements
(and any lock-up agreements contemplated in the Lock-Up Agreements) except to extend the term of the lock-up period and shall enforce
the provisions of each Lock-Up Agreement (and any lock-up agreements contemplated in the Lock-Up Agreements) in accordance with its terms.
If any party to a Lock-Up Agreement (and any lock-up agreements contemplated in the Lock-Up Agreements) breaches any provision of a Lock-Up
Agreement, the Company shall promptly use its best efforts to seek specific performance of the terms of such Lock-Up Agreement (and any
lock-up agreements contemplated in the Lock-Up Agreements).
4.17.
Registration Rights Agreement. On the date hereof, the Company shall enter into the Registration Rights Agreement and shall
not amend, modify, waive or terminate any provision of the Registration Rights Agreement, except pursuant to the terms of the Registration
Rights Agreement.
4.18.
QEF Election. If a Purchaser so requests in writing for any taxable year of the Company, the Company, after consulting
with its outside accounting firm, shall within fifteen (15) Business Days notify such Purchaser in writing that either (A) neither the
Company nor any of its Subsidiaries was a “passive foreign investment company” as defined in Section 1297 of the Code (“PFIC”)
for such year, or (B) the Company and/or one or more of its Subsidiaries was a PFIC for such year, in which event the Company shall provide
to such Purchaser, upon the reasonable written request of such Purchaser, the information reasonably necessary to allow such Purchaser
to elect to treat each of the Company and any applicable Subsidiaries (if any), respectively, as a “qualified electing fund”
(within the meaning of Section 1295 of the Code for such year, including a “PFIC Annual Information Statement” as described
in Treasury Regulation Section 1.1295-1(g)(1) (or any successor Treasury Regulation).
4.19.
Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve
and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling
the Company to issue Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrants.
4.20.
Exercise Procedures. The form of Notice of Exercise included in the Warrants and the payment of the applicable exercise
price set forth the totality of the procedures required of the Purchasers in order to exercise the Warrants. No additional legal opinion,
other information or instructions shall be required of the Purchasers to exercise their Warrants. Without limiting the preceding sentences,
no ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization)
of any Notice of Exercise form be required in order to exercise the Warrants. The Company shall honor exercises of the Warrants and shall
deliver Warrant Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.
5.1.
Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only
and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties,
if the Closing has not been consummated on or before the fifth (5th) Trading Day following the date hereof; provided, however,
that no such termination will affect the right of any party to sue for any breach by any other party (or parties).
5.2.
Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the
fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident
to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees
(including, without limitation, any fees required for same-Calendar Day processing of any instruction letter delivered by the Company
and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any
Securities to the Purchasers.
5.3.
Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, the Prospectus and the Prospectus
Supplement, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.
5.4.
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall
be in writing and shall be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication
is delivered via email at the email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the time of transmission, if such notice or communication is delivered via email
at the email address as set forth on the signature pages attached hereto on a Calendar Day that is not a Trading Day or later than 5:30
p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set forth on the signature pages attached hereto. To the extent that any
notice provided pursuant to any Transaction Document constitutes, or contains material, non-public information regarding the Company
or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form
8-K.
5.5.
Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written
instrument signed, in the case of an amendment, by the Company and Purchasers which purchased at least 50.1% in interest of the Shares
and Pre-Funded Warrants based on the initial Subscription Amounts hereunder (the “Requisite Purchasers”) (or,
prior to Closing, the Company and each Purchaser) or, in the case of a waiver, by the party against whom enforcement of any such waived
provision is sought, provided that if any amendment, modification or waiver disproportionately and adversely impacts a Purchaser (or
multiple Purchasers), the consent of such disproportionately impacted Purchaser (or multiple Purchasers) shall also be required. No waiver
of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay
or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any proposed amendment
or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative to the comparable
rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected Purchaser. Any amendment
effected in accordance with this Section 5.5 shall be binding upon each Purchaser and holder of Securities and the Company.
5.6.
Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed
to limit or affect any of the provisions hereof.
5.7.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent
of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom
such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”
5.8.
No Third-Party Beneficiaries. The Placement Agent shall be the third party beneficiary of the representations and warranties
of the Company in Section 3.1 and the representations and warranties of the Purchasers in Section 3.2. This Agreement is intended for
the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8 and this Section 5.8.
5.9.
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the law of the State of New York without regard to the principles
of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of
the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, stockholders, partners, members, employees or agents) shall be commenced exclusively in the state and
federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City and County of New York 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 or Proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such Action or Proceeding is improper or is an inconvenient venue for such
Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such Action
or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner
permitted by law. If any party shall commence an Action or Proceeding to enforce any provisions of the Transaction Documents, then, in
addition to the obligations of the Company under Section 4.8, the prevailing party in such Action or Proceeding shall be reimbursed by
the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such Action or Proceeding.
5.10.
Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.
5.11.
Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party,
it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by e-mail delivery
of a “.pdf” or DocuSign 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 “.pdf” or DocuSign signature page
were an original thereof.
5.12.
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
5.13.
Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar
provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may
rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election
in whole or in part without prejudice to its future actions and rights; provided, however, that, in the case of a rescission
of an exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock subject to any such rescinded
exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such Shares and
the restoration of such Purchaser’s right to acquire such Shares pursuant to such Purchaser’s Warrant (including, issuance
of a replacement warrant certificate evidencing such restored right).
5.14.
Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to
the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also
pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.15.
Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of
damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in
the Transaction Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the
defense that a remedy at law would be adequate.
5.16.
Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction
Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement
or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent
of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff had not occurred.
5.17.
Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction
Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for
the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein
or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute
the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.
Each Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the rights arising out
of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an
additional party in any Proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review
and negotiation of the Transaction Documents. For reasons of administrative convenience only, each
Purchaser and its respective counsel have chosen to communicate with the Company through the legal counsel to the Placement Agent. The
legal counsel of the Placement Agent does not represent any of the Purchasers and only represents the Placement Agent. The Company has
elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it
was required or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained in this
Agreement and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the
Purchasers collectively and not between and among the Purchasers.
5.18.
Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under
the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages
and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.
5.19.
Saturdays, Sundays, Holidays, etc. If the last or appointed Calendar Day for the taking of any action or the expiration
of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on
the next succeeding Business Day.
5.20.
Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity
to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition,
each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the
date of this Agreement.
5.21.
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.
[XPON Securities
Purchase Agreement Signature Pages Follows]
[XPON Securities
Purchase Agreement – Company Signature Page]
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.
EXPION360
INC. |
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Address for Notice: |
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By: |
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Email: brian.schaffner@expion360.com |
Name: |
Brian Schaffner |
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Title: |
Chief Executive Officer |
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|
[XPON Securities
Purchase Agreement – Investor Signature Page]
IN
WITNESS WHEREOF, the undersigned has caused this Securities Purchase Agreement to be duly executed by its authorized signatory as of
the date first indicated above.
Name of Purchaser: |
[●] |
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Signature of Authorized Signatory
of Purchaser: |
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Name of Authorized Signatory: |
[●] |
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Title of Authorized Signatory: |
[●] |
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Email Address of Authorized
Signatory: |
[●] |
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Address for Notice to Purchaser: |
[●] |
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Address for Delivery of Securities
to Purchaser (if not same as address for notice): |
[●] |
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Subscription Amount: |
[●] (remaining unpaid
aggregate exercise price $[•] for pre-funded warrants) |
Subscription Amount
– Shelf Takedown |
[●] |
Subscription Amount
– PIPE |
[●] |
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Shares: |
[●] |
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Pre-funded Warrants: |
[●] |
Beneficial Ownership
Blocker: |
[●] |
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Common Warrants: |
[●] |
Beneficial Ownership
Blocker: |
[●] |
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Employer Identification Number: |
[●] |
The
following schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation
S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request:
Exhibit
1.17 Form of Common Warrant
Exhibit
1.38 Form of Lock-Up Agreement
Exhibit
1.49 Form of Pre-Funded Warrant
Exhibit
1.57 Form of Registration Rights Agreement
Exhibit 10.2
REGISTRATION
RIGHTS AGREEMENT
This Registration
Rights Agreement (this “Agreement”) is made and entered into as of January 2, 2025, between Expion360 Inc.,
a Nevada corporation (the “Company”), and each of the several purchasers signatory hereto (each such purchaser,
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 each Purchaser (the “Purchase
Agreement”).
The
Company and each Purchaser 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: |
1.1.
“Advice” shall have the meaning set forth in Section 6.3.
1.2.
“Effectiveness Date” means, with respect to the Initial Registration Statement required to be filed hereunder,
thirty (30) Calendar Days following the Filing Date (or, in the event of a full review by the Commission, sixty (60) Calendar Days following
the Filing Date) and with respect to any additional Registration Statements which may be required pursuant to Section 2.3 or Section
3.3, thirty (30) Calendar Days following the date on which an additional Registration Statement is required to be filed hereunder (or,
in the event of a full review by the Commission, sixty (60) Calendar Days following the date such additional Registration Statement is
required to be filed hereunder); provided, however, that in the event the Company is notified by the Commission that one
or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness
Date as to such Registration Statement shall be the fifth (5th) Trading Day following the date on which the Company is so notified if
such date precedes the dates otherwise required above, provided, further, if such Effectiveness Date falls on a Calendar Day that is
not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.
1.3.
“Effectiveness Period” shall have the meaning set forth in Section 2.1.
1.4.
“Event” shall have the meaning set forth in Section 2.4.
1.5.
“Event Date” shall have the meaning set forth in Section 2.4.
1.6.
“Filing Date” means, with respect to the Initial Registration Statement required hereunder fifteen (15) Calendar
Days after the Closing Date and, with respect to any additional Registration Statements which may be required pursuant to Section 2.3
or Section 3.3, the earliest practical date on which the Company is permitted by SEC Guidance to file such additional Registration Statement
related to the Registrable Securities.
1.7.
“Holder” or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities.
1.8.
“Indemnified Party” shall have the meaning set forth in Section 5.3.
1.9.
“Indemnifying Party” shall have the meaning set forth in Section 5.3.
1.10.
“Initial Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.
1.11.
“Losses” shall have the meaning set forth in Section 5.1.
1.12.
“Plan of Distribution” shall have the meaning set forth in Section 2.1.
1.13.
“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 Commission 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.
1.14.
“Registrable Securities” means, as of any date of determination, (a) all Common Warrant Shares then issued
and issuable upon exercise of the Common Warrants (assuming on such date the Warrants are exercised in full without regard to any exercise
limitations therein), and (b) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization
or similar event with respect to the foregoing; 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 (a) a Registration Statement with respect to the sale of such Registrable Securities is declared
effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance
with such effective Registration Statement, (b) such Registrable Securities have been previously sold in accordance with Rule 144, or
(c) such securities become eligible for resale without the requirement for the Company to be in compliance with the current public information
requirement under Rule 144 (if such requirement is applicable) 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.
1.15.
“Registration Statement” means any registration statement required to be filed hereunder pursuant to Section
2.1 and any additional registration statements contemplated by Section 2.3 or Section 3.3, 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.
1.16.
“Rule 415” means Rule 415 promulgated by the Commission 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 Commission having substantially
the same purpose and effect as such Rule.
1.17.
“Rule 424” means Rule 424 promulgated by the Commission 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 Commission having substantially
the same purpose and effect as such Rule.
1.18.
“Selling Stockholder Questionnaire” shall have the meaning set forth in Section 3.1.
1.19.
“SEC Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments,
requirements or requests of the Commission staff and (ii) the Securities Act.
| 2. | Registration
Statement. |
2.1.
On or prior to each Filing Date, the Company shall prepare and file with the Commission 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. Each Registration Statement filed hereunder shall be on Form S-1 (or Form S-3 to the extent
the Company is eligible to use such registration statement form, subject to the provisions of Section 2.5) 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 2.1.1 and substantially the “Selling Stockholders” section attached hereto as Annex 2.1.2;
provided, however, that no Holder shall be required to be named as an “underwriter” without such Holder’s
express prior written consent. Subject to the terms of this Agreement, the Company shall use its best efforts to cause a Registration
Statement filed under this Agreement (including, without limitation, under Section 3.3) to be declared effective under the Securities
Act as promptly as possible after the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall use
its best 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 (to the extent applicable), 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. (New York
City 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 on the same Trading Day that the Company telephonically confirms effectiveness with the Commission, which shall be the date
requested for effectiveness of such Registration Statement. The Company shall, by 9:30 a.m. (New York City time) on the Trading Day after
the effective date of such Registration Statement, file a final Prospectus with the Commission as required by Rule 424. Failure to so
notify the Holder within one (1) Trading Day of such notification of effectiveness or failure to file a final Prospectus as foresaid
shall be deemed an Event under Section 2.4.
2.2.
Notwithstanding the registration obligations set forth in Section 2.1, if the Commission informs the Company that all of the Registrable
Securities cannot, as a result of the application of 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 Commission, covering the maximum number of Registrable Securities permitted
to be registered by the Commission, on Form S-3 or such other form available to register for resale the Registrable Securities as a secondary
offering, subject to the provisions of Section 2.5; with respect to filing on Form S-3 or other appropriate form, and subject to the
provisions of Section 2.4 with respect to the payment of liquidated damages; provided, however, that prior to filing such
amendment, the Company shall be obligated to use diligent efforts to advocate with the Commission for the registration of all of the
Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation 612.09.
2.3.
Notwithstanding any other provision of this Agreement and subject to the payment of liquidated damages pursuant to Section 2.4, if the
Commission or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular
Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the Commission
for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its
Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows:
2.3.1.
First, the Company shall reduce or eliminate any securities to be included other than Registrable Securities; and
2.3.2.
Second, the Company shall reduce Registrable Securities (applied to the Holders on a pro rata basis based on the total number of unregistered
Registrable Securities held by such Holders).
In
the event of a cutback hereunder, the Company shall give the Holder at least five (5) 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 best efforts to file with the Commission, 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-3 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.
2.4.
If: (i) the Initial Registration Statement is not filed on or prior to its Filing Date (if the Company files the Initial Registration
Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3.1 herein or the Company
subsequently withdraws the filing of the Registration Statement, the Company shall be deemed to have not satisfied this clause (i)) as
of the Filing Date, or (ii) the Company fails to file with the Commission a request for acceleration of a Registration Statement in accordance
with Rule 461 promulgated by the Commission pursuant to the Securities Act, within five (5) Trading Days of the date that the Company
is notified (orally or in writing, whichever is earlier) by the Commission that such Registration Statement will not be “reviewed”
or will not be subject to further review, or (iii) prior to the effective date of a Registration Statement, the Company fails to file
a pre-effective amendment and otherwise respond in writing to comments made by the Commission in respect of such Registration Statement
within ten (10) Calendar Days after the receipt of comments by or notice from the Commission that such amendment is required in order
for such Registration Statement to be declared effective, or (iv) a Registration Statement registering for resale all of the Registrable
Securities is not declared effective by the Commission by the Effectiveness Date of the Initial Registration Statement (provided if the
Registration Statement does not allow for the resale of Registrable Securities at prevailing market prices (i.e., only allows for fixed
price sales), the Company shall have been deemed to have not satisfied this clause), or (v) after the effective date of a Registration
Statement, such Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities included
in such Registration Statement, or the Holders are otherwise not permitted to utilize the Prospectus therein to resell such Registrable
Securities, for more than ten (10) consecutive Calendar Days or more than an aggregate of fifteen (15) Calendar Days (which need not
be consecutive Calendar Days) during any 12-month period (any such failure or breach being referred to as an “Event”,
and for purposes of clauses (i) and (iv), the date on which such Event occurs, and for purpose of clause (ii) the date on which such
five (5) Trading Day period is exceeded, and for purpose of clause (iii) the date which such ten (10) Calendar Day period is exceeded,
and for purpose of clause (v) the date on which such ten (10) or fifteen (15) Calendar Day period, as applicable, is exceeded being referred
to as “Event Date”), then, in addition to any other rights the Holders may have hereunder or under applicable
law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured
by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as partial liquidated damages
and not as a penalty, equal to the product of 2.0% multiplied by the aggregate Subscription Amount paid by such Holder pursuant to the
Purchase Agreement. If the Company fails to pay any partial liquidated damages pursuant to this Section 2.4 in full within seven (7)
Calendar Days after the date payable, the Company will pay interest thereon at a rate of 15% per annum (or such lesser maximum amount
that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until
such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply
on a daily pro rata basis for any portion of a month prior to the cure of an Event.
2.5.
If Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register
the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable Securities on Form
S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then
in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by
the Commission.
2.6.
Notwithstanding anything to the contrary contained herein, in no event shall the Company be permitted to name any Holder or affiliate
of a Holder as any Underwriter without the prior written consent of such Holder.
| 3. | Registration
Procedures. In connection with the Company’s registration obligations hereunder,
the Company shall: |
3.1.
Not less than five (5) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior to
the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed
to be incorporated therein by reference), the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of such Holders,
and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation within the meaning
of the Securities Act. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto
to which the Holders of a majority of the Registrable Securities shall reasonably object in good faith, provided that, the Company is
notified of such objection in writing no later than five (5) Trading Days after the Holders have been so furnished copies of a Registration
Statement or one (1) Trading Day after the Holders have been so furnished copies of any related Prospectus or amendments or supplements
thereto. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex 3.1
(a “Selling Stockholder Questionnaire”) on a date that is not less than two (2) Trading Days prior to the
Filing Date or by the end of the fourth (4th) Trading Day following the date on which such Holder receives draft materials in accordance
with this Section.
3.2.
(i) Prepare and file with the Commission 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 Commission 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 possible to any comments received from the Commission 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 Commission 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), and (iv) 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.
3.3.
If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common Stock
then registered in a Registration Statement, then the Company shall file as soon as reasonably practicable, but in any case prior to
the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than the number of such
Registrable Securities.
3.4.
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, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person) confirm
such notice in writing no later than one (1) Trading Day following the Trading Day (i)(A) when a Prospectus or any Prospectus supplement
or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether
there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration
Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii)
of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration
Statement or Prospectus or for additional information, (iii) of the issuance by the Commission 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, that 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 and the Company agrees that
the Holders shall not have any duty of confidentiality to the Company or any of its Subsidiaries and shall not have any duty to the Company
not to trade on the basis of such information.
3.5.
Use its best 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.
3.6.
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 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 Commission, provided that any such item which is available on the EDGAR system (or
successor thereto) need not be furnished in physical form.
3.7.
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 3.4.
3.8.
Prior to any resale of Registrable Securities by a 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 qualify generally
to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction
where it is not then so subject or file a general consent to service of process in any such jurisdiction.
3.9.
If requested by a Holder, 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.
3.10.
Upon the occurrence of any event contemplated by Section 3.4, 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 stockholders 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 3.4 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 best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled
to exercise its right under this Section 3.10 to suspend the availability of a Registration Statement and Prospectus, subject to the
payment of partial liquidated damages otherwise required pursuant to Section 2.4, for a period not to exceed 60 Trading Days (which need
not be consecutive Trading Days) in any 12-month period.
3.11.
Otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission 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 Commission 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.
3.12.
The Company shall use its best efforts to maintain eligibility for use of Form S-3 (or any successor form thereto) for the registration
of the resale of Registrable Securities.
3.13.
The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive control
over the Common Stock. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration
of the Registrable Securities solely because any Holder fails to furnish such information within three (3) Trading Days after the Company’s
request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise
occur solely because of such delay shall be suspended as to such Holder only, until such information is delivered to the Company.
| 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 Commission, (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) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such
insurance to be purchased at the sole discretion of the Company, and (vi) 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 of any Holder or, except to
the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders. |
5.1.
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, brokers (including brokers who offer and sell Registrable Securities
as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors 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, stockholders, 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 to
the Company by such Holder
for use therein, or to the extent that such information relates to such Holder or such Holder’s information provided in the Selling
Stockholder Questionnaire or proposed method of distribution of Registrable Securities and was reviewed and approved by such Holder for
use in a Registration Statement, such Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved
Annex 2.1.1 hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3.4(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 6.3. 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 6.7.
5.2.
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 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 by such Holder
for use in a Registration Statement (it being understood that the Holder has approved Annex 2.1.1 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.
5.3.
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 one 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 ten (10) Trading Days after written notice thereof to the Indemnifying Party,
provided that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable
to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) not to be entitled to indemnification hereunder.
5.4.
Contribution. If the indemnification under Section 5.1 or 5.2 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 5.4 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.
6.1.
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.
6.2.
No Piggyback on Registrations; Prohibition on Filing Other Registration Statements. Neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration
Statements other than the Registrable Securities. The Company shall not file any other registration statements until all Registrable
Securities are registered pursuant to a Registration Statement that is declared effective by the Commission, provided that this Section
6.2 shall not prohibit the Company from filing amendments to registration statements filed prior to the date of this Agreement.
6.3.
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 3.4(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 best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company agrees and acknowledges
that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder shall be
subject to the provisions of Section 2.4.
6.4.
Piggy-Back Registrations. If, at any time during the Effectiveness Period, there is not an effective Registration Statement
covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other
than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s
stock option or other employee benefit plans, then the Company shall deliver to each Holder a written notice of such determination and,
if within fifteen (15) Calendar Days after the date of the delivery of such notice, any such Holder shall so request in writing, the
Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered;
provided, however, that the Company shall not be required to register any Registrable Securities pursuant to this Section
6.4 that are eligible for resale pursuant to Rule 144 (without volume restrictions and provided the Company is in compliance with the
current public information requirement under Rule 144) promulgated by the Commission pursuant to the Securities Act or that are the subject
of a then effective Registration Statement that is available for resales or other dispositions by such Holder.
6.5.
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 or conversion of any Security); provided that no such
amendment, action or omission that adversely affects, alters or changes the interests of any Holder in a manner disproportionate to the
other Holders shall be effective against such Holder without the prior written consent of such Holder. 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 6.5. 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.
6.6.
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.
6.7.
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 the Purchase Agreement.
6.8.
No Inconsistent Agreements. The Company has not entered, as of the date hereof, nor shall the Company, on or after the
date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted
to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as set forth on Schedule 6.8, the Company
has not previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that
have not been satisfied in full.
6.9.
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 e-mail delivery of a “.pdf” or DocuSign 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 “.pdf” or DocuSign
signature page were an original thereof.
6.10.
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.
6.11.
Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.
6.12.
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
6.13.
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.
6.14.
Independent Nature of Holders’ Obligations and Rights. The obligations of each Holder hereunder are several and not
joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations
of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action
taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture
or any other kind of group or entity, or create a presumption that the Holders are in any way acting in concert or as a group or entity
with respect to such obligations or the transactions contemplated by this Agreement or any other matters, and the Company acknowledges
that the Holders are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations
or transactions. Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out
of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such
purpose. The use of a single agreement with respect to the obligations of the Company contained was solely in the control of the Company,
not the action or decision of any Holder, and was done solely for the convenience of the Company and not because it was required or requested
to do so by any Holder. It is expressly understood and agreed that each provision contained in this Agreement is between the Company
and a Holder, solely, and not between the Company and the Holders collectively and not between and among Holders.
[XPON Registration
Rights Agreement Signature Pages Follow]
[XPON Registration
Rights Agreement – Company Signature Page]
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.
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Chief Executive Officer |
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[XPON Registration
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The
following schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation
S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request:
Annex 2.1.1
Plan of Distribution
Annex 2.1.2
Selling Stockholders
Annex 3.1
Selling Stockholder Notice and Questionnaire
Exhibit
99.1
Expion360
Inc. Announces $2.6 Million Registered Direct and Private Placements Priced at the Market Under Nasdaq Rules
REDMOND,
OR, JANUARY 2, 2025 (GLOBE NEWSWIRE) -- Expion360 Inc. (Nasdaq: XPON) (the “Company”), a lithium-ion battery power storage
solutions company, today announced that it has entered into definitive agreements with institutional investors for the purchase and sale
of shares of its common stock, par value $0.001 per share (“Common Stock”) and pre-funded warrants to purchase Common Stock
(each, a “Pre-Funded Warrant”) in a registered direct offering. In a concurrent private placement, the Company also agreed
to sell to the same investors warrants to purchase Common Stock (the “Warrants”). Aggregate gross proceeds to the Company
from both transactions are expected to be approximately $2.6 million. The entire transaction has been priced at the market under Nasdaq
rules.
The transactions
consisted of the sale of 1,048,386 shares (each, a “Share”) of Common Stock (or Pre-Funded Warrants to purchase Common Stock),
each of which will be sold together with one Warrant to purchase one share of Common Stock per Warrant at an exercise price of $2.36.
The offering price per Share is $2.48 (or $2.479 for each Pre-Funded Warrant, which is equal to the offering price per Share minus an
exercise price of $0.001 per Pre-Funded Warrant). The Pre-Funded Warrants will be immediately exercisable and may be exercised at any
time until exercised in full. For each Pre-Funded Warrant sold in the offering, the number of Shares in the offering will be decreased
on a one-for-one basis.
Aggregate
gross proceeds to the Company are expected to be approximately $2.6 million. The transactions are expected to close on or about January
3, 2025, subject to the satisfaction of customary closing conditions. The Company expects to use the net proceeds from the offerings,
together with its existing cash, for general corporate purposes and working capital.
Aegis Capital
Corp. is acting as exclusive placement agent for the offerings. Stradling Yocca Carlson & Rauth LLP is acting as counsel to the Company.
Kaufman & Canoles, P.C. is acting as counsel to Aegis Capital Corp.
The registered
direct offering is being made pursuant to an effective shelf registration statement on Form S-3 (No. 333-272956) previously filed with
the U.S. Securities and Exchange Commission (the “SEC”) and declared effective by the SEC on July 10, 2023. A final prospectus
supplement and accompanying prospectus describing the terms of the proposed offering will be filed with the SEC and will be available
on the SEC’s website located at www.sec.gov. Electronic copies of the final prospectus supplement and the accompanying prospectus
may be obtained, when available, by contacting Aegis Capital Corp., Attention: Syndicate Department, 1345 Avenue of the Americas, 27th
floor, New York, NY 10105, by email at syndicate@aegiscap.com, or by telephone at +1 (212) 813-1010.
The offer
and sale of the securities in the private placement are being made in a transaction not involving a public offering and have not been
registered under the Securities Act of 1933, as amended (the “Securities Act”), or applicable state securities laws. Accordingly,
the securities may not be reoffered or resold in the United States except pursuant to an effective registration statement or an applicable
exemption from the registration requirements of the Securities Act and such applicable state securities laws. The securities were offered
only to accredited investors. Pursuant to a registration rights agreement with the investors, the Company has agreed to file one or more
registration statements with the SEC covering the resale of the shares of Common Stock issuable upon exercise of the Warrants.
Before investing
in this offering, interested parties should read in their entirety the prospectus supplement and the accompanying prospectus and the
other documents that the Company has filed with the SEC that are incorporated by reference in such prospectus supplement and the accompanying
prospectus, which provide more information about the Company and such offering.
This press
release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities
in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under
the securities laws of any such state or jurisdiction.
About Expion360
Inc.
Expion360
designs, assembles, manufactures, and sells lithium iron phosphate (LiFePO4) batteries and supporting accessories for recreational vehicles,
marine applications and home energy storage products with plans to expand into industrial applications.
Forward-Looking
Statements
The foregoing
material may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934, each as amended. Forward-looking statements include all statements that do not relate solely
to historical or current facts, including without limitation statements regarding the Company’s product development and business
prospects, and can be identified by the use of words such as “may,” “will,” “expect,” “project,”
“estimate,” “anticipate,” “plan,” “believe,” “potential,” “should,”
“continue” or the negative versions of those words or other comparable words. Forward-looking statements are not guarantees
of future actions or performance. These forward-looking statements are based on information currently available to the Company and its
current plans or expectations and are subject to a number of risks and uncertainties that could significantly affect current plans. Should
one or more of these risks or uncertainties materialize, or the underlying assumptions prove incorrect, actual results may differ significantly
from those anticipated, believed, estimated, expected, intended, or planned. Although the Company believes that the expectations reflected
in the forward-looking statements are reasonable, the Company cannot guarantee future results, performance, or achievements. Except as
required by applicable law, including the security laws of the United States, the Company does not intend to update any of the forward-looking
statements to conform these statements to actual results.
Brian Schaffner, CEO
541-797-6714
Exhibit
99.2
Expion360
Inc. Announces Closing of $2.6 Million Registered Direct Offering and Private Placement Priced at the Market Under Nasdaq Rules
REDMOND,
OR, JANUARY 3, 2025 (GLOBE NEWSWIRE) -- Expion360 Inc. (Nasdaq: XPON) (the “Company”), a lithium-ion battery power storage
solutions company, today announced the closing of its previously announced registered direct offering and concurrent private placement
with institutional investors. The Company issued shares of Common Stock and pre-funded warrants (“Pre-Funded Warrants”) in
a registered direct offering. In a concurrent private placement, the Company also issued to the same investors warrants to purchase Common
Stock (the “Warrants”). Aggregate gross proceeds to the Company from both transactions were approximately $2.6 million. The
transactions closed on January 3, 2025. The transactions were priced at the market under Nasdaq rules.
The transactions
consisted of the sale of 1,048,386 shares (each a “Share”) of Common Stock or Pre-Funded Warrants to purchase one share of
Common Stock, each of which was sold together with one Warrant to purchase one share of Common Stock per Warrant at an exercise price
of $2.36. The offering price per Share was $2.48 (or $2.479 for each Pre-Funded Warrant, which is equal to the offering price per Share
minus an exercise price of $0.001 per Pre-Funded Warrant). The Pre-Funded Warrants are immediately exercisable and may be exercised at
any time until exercised in full. For each Pre-Funded Warrant sold in the offering, the number of Shares in the offering will be decreased
on a one-for-one basis.
The Company
expects to use the net proceeds from the offerings, together with its existing cash, for general corporate purposes and working capital.
The Company also intends to use $500,000 of the net proceeds from the offering to satisfy a portion of certain
amounts owed to the Company’s Series A warrant holders pursuant to the terms of such warrants.
Aegis Capital
Corp. acted as exclusive placement agent for the offerings. Stradling Yocca Carlson & Rauth LLP acted as counsel to the Company.
Kaufman & Canoles, P.C. acted as counsel to Aegis Capital Corp.
The registered
direct offering was being made pursuant to an effective shelf registration statement on Form S-3 (No. 333-272956) previously filed with
the U.S. Securities and Exchange Commission (the “SEC”) and declared effective by the SEC on July 10, 2023. A final prospectus
supplement and accompanying prospectus describing the terms of the proposed offering will be filed with the SEC and will be available
on the SEC’s website located at www.sec.gov. Electronic copies of the final prospectus supplement and the accompanying prospectus
may be obtained, when available, by contacting Aegis Capital Corp., Attention: Syndicate Department, 1345 Avenue of the Americas, 27th
floor, New York, NY 10105, by email at syndicate@aegiscap.com, or by telephone at +1 (212) 813-1010.
The offer
and sale of the securities in the private placement were made in a transaction not involving a public offering and have not been registered
under the Securities Act of 1933, as amended (the “Securities Act”), or applicable state securities laws. Accordingly, the
securities may not be reoffered or resold in the United States except pursuant to an effective registration statement or an applicable
exemption from the registration requirements of the Securities Act and such applicable state securities laws. The securities were offered
only to accredited investors. Pursuant to a registration rights agreement with the investors, the Company has agreed to file one or more
registration statements with the SEC covering the resale of the Common Stock issuable upon exercise of the Warrants.
This press
release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities
in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under
the securities laws of any such state or jurisdiction.
About Expion360
Inc.
Expion360
designs, assembles, manufactures, and sells lithium iron phosphate (LiFePO4) batteries and supporting accessories for recreational vehicles,
marine applications and home energy storage products with plans to expand into industrial applications.
Forward-Looking
Statements
The foregoing
material may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934, each as amended. Forward-looking statements include all statements that do not relate solely
to historical or current facts, including without limitation statements regarding the Company’s business prospects, and can be
identified by the use of words such as “may,” “will,” “expect,” “project,” “estimate,”
“anticipate,” “plan,” “believe,” “potential,” “should,” “continue”
or the negative versions of those words or other comparable words. Forward-looking statements are not guarantees of future actions or
performance. These forward-looking statements are based on information currently available to the Company and its current plans or expectations
and are subject to a number of risks and uncertainties that could significantly affect current plans. Should one or more of these risks
or uncertainties materialize, or the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated,
believed, estimated, expected, intended, or planned. Although the Company believes that the expectations reflected in the forward-looking
statements are reasonable, the Company cannot guarantee future results, performance, or achievements. Except as required by applicable
law, including the security laws of the United States, the Company does not intend to update any of the forward-looking statements to
conform these statements to actual results.
Brian Schaffner, CEO
541-797-6714
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