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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 13, 2023
PARTS
iD, Inc.
(Exact name of Registrant as Specified in Its
Charter)
Delaware |
|
001-38296 |
|
81-3674868 |
(State or Other Jurisdiction
of Incorporation) |
|
(Commission File Number) |
|
(IRS Employer
Identification No.) |
1 Corporate
Drive
Suite C
Cranbury, New Jersey 08512
(Address of Principal Executive Offices, including
Zip Code)
(609)
642-4700
(Registrant’s Telephone Number, Including
Area Code)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2.
below):
| ☐ | Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol |
|
Name of exchange on which registered |
Class A Common Stock |
|
ID |
|
NYSE American |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry Into a Material Definitive Agreement.
Lind Financing
On July 14, 2023 (the “Initial Closing Date”),
PARTS iD, Inc., a Delaware corporation (the “Company”) entered into a Securities Purchase Agreement (the “Lind Purchase
Agreement”).
The Lind Purchase Agreements provides for loans
in an aggregate principal amount of up to $10 million under various tranches (the “Lind Financing”). As of the Initial Closing
Date, Lind funded $3.75 million (less commitment fees) to the Company out of the $4.75 million “First Funding Amount” (as
defined in the Lind Purchase Agreement) and Lind will fund the remaining $1.0 million (less commitment fees) within 5 business days of
the Company (i) having a registration statement (the “Registration Statement”) declared effective by the Securities and Exchange
Commission (the “SEC”) for the registration of the shares of the Company’s Class A common stock (the “Common Stock”)
issuable upon conversion of the Lind Note (as defined below) and the Lind Warrant (as defined below) and (ii) the receipt of Stockholder
Approval (as defined in the Lind Purchase Agreement), if required. In consideration for the First Funding Amount, the Company issued and
sold to Lind, in a private placement, (A) a senior secured convertible promissory note in the aggregate principal amount of $5,367,500
(the “Lind Note”) and (B) 12,837,838 warrants to purchase the Company’s Common Stock at an exercise price of $0.50 per
share (subject to certain adjustments) (the “Lind Warrant”).
At any time while the Lind
Note is outstanding and subject to certain conditions being satisfied as set forth in the Lind Purchase Agreement, the Company may deliver
a written notice to Lind (an “Additional Funding Request”) requesting an increase in the amount of funding provided by Lind
to the Company under the Lind Note, and such Additional Funding Request shall be equal to no less than $1.0 million and shall not exceed
$5.25 million (the “Additional Funding Limit”). Within 7 business days of receiving the Additional Funding Request, Lind shall
give a written response to the Company (an “Investor Response”) that provides that Lind has elected (in its sole and absolute
discretion) to (i) advance the full requested amount, (ii) advance an amount less than the full requested amount or (iii) not advance
any of the requested amount. In addition, Lind may, in its sole discretion and without any action by the Company, deliver written notice
to the Company (an “Investor Funding Notice”) of its election to advance up to an aggregate of $2.0 million of increased funding
to the Company. Any such increased funding amounts directed by Lind shall count toward the Additional Funding Limit.
The Lind Note does not bear any interest and matures
on July 14, 2024. Following the date that is sixty (60) days after the earlier to occur of (A) the date the Registration Statement is
declared effective by the SEC or (B) the date that any shares issued pursuant to the Lind Note may be immediately resold under Rule 144
of the Securities Act of 1933, as amended (the “Securities Act”), the Company may repay all, but not less than all, of the
then outstanding principal amount of the Lind Note, subject to a 5% premium. If the Company elects to prepay the Lind Note, Lind has the
right to convert up to 33 1/3% of the principal amount of the Lind Note at the Conversion Price (as defined below) into shares of the
Company’s Common Stock. The Lind Note is convertible, at the option of Lind, into shares of the Company’s common stock at
price per share equal to the lower of $0.50 or 90% of the average of the 3 lowest daily VWAPs (as defined in the Note) during the 20 Trading
Days (as defined in the Note) prior to conversion.
As collateral for the
obligations under the Lind Purchase Agreement, the Company has granted to Lind a senior security interest in all of Company’s right,
title, and interest in, to and under all of Company’s property (inclusive of intellectual property), subject to certain exceptions,
as set forth in the LLC Guarantor Security Agreement (as defined in the Lind Purchase Agreement) and the Security Agreement (as defined
in the Lind Purchase Agreement).
The Lind Warrant will expire after 5 years from
the date of issuance and may be exercised on a cashless basis. The Lind Warrant provides that Lind will not have the right to exercise
any portion of the Lind Warrant, if, together with its affiliates, and any other party whose holdings would be aggregated with those of
the holder for purposes of Section 13(d) or Section 16 of the Securities Exchange Act of 1934, as amended, would beneficially own in excess
of 4.99%, of the number of shares of the Company’s Common Stock outstanding immediately after giving effect to such exercise (the
“Beneficial Ownership Limitation”); provided, however, that the Beneficial Ownership Limitation by shall automatically increase
to 9.99% if Lind, together with its affiliates, owns in excess of 4.99% of the Company’s outstanding Common Stock.
The Lind Purchase Agreement provides for customary
shelf and piggyback registration rights with respect to the shares of Common Stock underlying the Lind Note and the Lind Warrant.
The Company intends to use the proceeds from the
issuance of the Lind Note and the Lind Warrant for working capital purposes and the repayment of current indebtedness.
Titan Partners Group, a division of American Capital Partners, LLC, acted as sole placement agent for the offering.
The Lind Note and the Lind Warrant were issued
by the Company in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and have not been registered
under the Securities Act.
The foregoing descriptions of the Lind Purchase
Agreement, the Lind Note, the Lind Warrant, Security Agreement, LLC Guarantor Security Agreement, Pledge Agreement, Guaranty and Trademark
Security Agreement are not complete and are subject to, and qualified in their entirety by reference to, the full text of the Lind Purchase
Agreement, the forms of Lind Note and Lind Warrant, and the full text of the Security Agreement, LLC Guarantor Security Agreement, Pledge
Agreement, Guaranty and Trademark Security Agreement, which are included as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7 and 10.8
to this Current Report on Form 8-K, respectively, and are incorporated herein by this reference.
Convertible Notes and Warrants
On July 13, 2023, the Company entered into a Note
and Warrant Purchase Agreement (the “Purchase Agreement”) whereby the Company agreed to issue and sell to certain investors
affiliated with certain directors, officers and beneficial owners of the Company (collectively, the “Purchasers”), in a private
placement (the “Note Offering”), (i) an aggregate principal amount of up to $3.25 million in junior secured convertible promissory
notes (the “Convertible Notes”) and (ii) an aggregate of up to 7,738,094 warrants to purchase the Company’s Common Stock
at an exercise price of $0.42 per share (subject to certain adjustments) (the “Warrants). All of the disinterested directors of
the Company’s Board of Directors, as well as the disinterested directors of the Audit Committee, reviewed and approved the terms
of the Purchase Agreement, Convertible Notes and Warrants.
The Convertible Note issued to the non-insider
Purchaser accrues interest at 7.75% per annum, compounded semi-annually. Effective on the Maturity Date, if the Convertible Notes have
not otherwise been repaid by the Company in accordance with the terms and conditions set forth therein, then at the option of the Purchasers,
the outstanding balance of the Convertible Notes (including any accrued but unpaid interest thereon) (the “Note Amounts”)
shall convert into that number of fully paid and nonassessable shares of the Company’s Common Stock at a conversion price equal
to the respective Note Amount (as defined in the Convertible Note) divided by the Conversion Price (as defined in the Convertible Note).
Upon the Company’s sale and issuance of equity or equity-linked securities pursuant to which the Company receives aggregate gross
proceeds of at least $10 million (an “Equity Financing”), the Company shall repay the Note Amounts in cash. In addition, upon
a Change of Control (as defined in the Convertible Notes) of the Company, the Convertible Notes shall be repaid in full at or before the
closing of such transaction in cash.
The Convertible Notes are strictly subordinated
to the Lind Senior Notes as more fully described in the Convertible Notes and the Convertible Notes are secured by a junior security interest
in all of the Company’s right, title, and interest in and to all of the Company’s assets. The Convertible Notes mature on
July 13, 2025.
The Warrants will expire after 5 years from the
date of issuance and the Warrant issued to the non-insider Purchaser may be exercised on a cashless basis. The Warrants provide that a
holder of Warrants will not have the right to exercise any portion of its Warrants, if such holder, together with its affiliates, and
any other party whose holdings would be aggregated with those of the holder for purposes of Section 13(d) or Section 16 of the Exchange
Act would beneficially own in excess of 4.99%, of the number of shares of the Company’s Common Stock outstanding immediately after
giving effect to such exercise (the “Beneficial Ownership Limitation”); provided, however, that each holder may increase or
decrease the Beneficial Ownership Limitation by giving notice to the Company, with any such increase not taking effect until the sixty-first
day after such notice is delivered to the Company but not to any percentage in excess of 9.99%; provided that any holder of the Warrants
that beneficially owns in excess of 19.99% of the number of shares of the Common Stock outstanding on the issuance date of the Warrants
shall not be subject to the Beneficial Ownership Limitation.
The Purchase Agreement provides for customary shelf
registration rights with respect to the shares of Common Stock underlying the Notes and Warrants.
The Company intends to use the proceeds from the
issuance of the Convertible Notes and the Warrants for working capital purposes and the repayment of current indebtedness.
The Convertible Notes and the Warrants were issued
by the Company in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and have not been registered under the Securities Act.
The foregoing descriptions of the Purchase Agreement,
Convertible Notes and the Warrants thereby are not complete and are subject to, and qualified in their entirety by reference to, the full
text of the Purchase Agreement, the forms of Convertible Note and the forms of Warrant, which are included as Exhibits 10.9, 10.10, 10.11,
10.12 and 10.13 to this Current Report on Form 8-K, respectively, and are incorporated herein by this reference.
Placement Agent Warrant
On July 14, 2023, in
consideration for its services in respect of the Lind Financing described above, the Company also issued to Titan Partners Group
LLC, a division of American Partners, LLC) (the “Placement Agent”) warrants to purchase 536,570 shares of the
Company’s Common Stock at an exercise price per share of $0.625 (the “Placement Agent
Warrant”). The Placement Agent Warrant has a 5-year term. In addition,
the Company paid the Placement Agent a commission of $285,000. The Warrant also provides for customary demand and piggyback
registration rights with respect to the shares of Common Stock underlying the Placement Agent Warrant.
The foregoing description of the Placement Agent
thereby is not complete and are subject to, and qualified in its entirety by reference to, the form of the Placement Agent Warrant, of
which is included as Exhibit 10.14 to this Current Report on Form 8-K and is incorporated herein by this reference.
Item 1.02. Termination of a Material Definitive Agreement.
As previously disclosed, the Company entered into
that certain Loan and Security Agreement, dated as of October 21, 2022, as amended by that Amendment to Loan and Security Agreement, dated
as of February 22, 2023 and as further amended by that Second Amendment to Loan and Security Agreement, dated as of June 16, 2023 (collectively,
the “JGB Loan Agreement”), with JGC Capital, LP (“JGB Capital”), JGB Partners, LP (“JGB Partners”)
and JGB (Cayman) Glenegedale Ltd. (“JGB Cayman” and collectively with JGB Capital and JGB Partners, the “Lenders”)
and JGB Collateral, LLC, in its capacity as collateral agent for the Lenders (the “Agent”).
On July 13, 2023, the Company used proceeds from
the Note Offering and the Lind Financing to repay the Lenders and the Loan Agreement was thereby terminated upon the receipt by the Lenders
of a payoff amount of $4,318,444.46 (the “Payoff Amount”) which included the outstanding principal balance due under the JGB
Loan Agreement, accrued but unpaid interest thereon and Lenders’ and Agent’s legal fees and other expenses. The Payoff Amount
paid by the Company in connection with the termination of the JGB Loan Agreement was made pursuant to a payoff letter. As a result, the
JGB Loan Agreement, together with all documents and agreements executed in connection therewith, have terminated and all liens associated
therewith have been released, subject to the Company continuing to be bound by certain terms under the JGB Loan Agreement that customarily
survive the termination of similar agreements, including, without limitation, certain indemnification obligations and the terms of the
warrants previously issued to the Lenders.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth
in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
Item 8.01 Other Information.
On July 17, 2023, the Company
issued a press release announcing the consummation of the Lind Financing and the Note Offering. The full text of the press release is
attached hereto as Exhibit 99.1 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following
exhibits are filed as part of this report:
Exhibit No. |
|
Description |
10.1 |
|
Securities Purchase Agreement, dated as of July 14, 2023, by and between PARTS iD, Inc. and Lind Global Fund II LP. |
10.2 |
|
Form of Senior Secured Convertible Promissory Note, dated as of July 14, 2023, issued to Lind Global Fund II LP. |
10.3 |
|
Form of Common Stock Purchase Warrant, dated as of July 14, 2023, issued to Lind Global Fund II LP. |
10.4 |
|
Security Agreement, dated as of July 14, 2023, by and between PARTS iD, Inc. and Lind Global Fund II LP. |
10.5 |
|
Guarantor Security Agreement, dated as of July 14, 2023, by and between PARTS iD, LLC and Lind Global Fund II LP. |
10.6 |
|
Pledge Agreement, dated as of July 14, 2023, by and between PARTS iD, Inc. and Lind Global Fund II LP. |
10.7 |
|
Guaranty, dated as of July 14, 2023, by PARTS iD, LLC in favor of Lind Global Fund II LP. |
10.8 |
|
Trademark Security Agreement, dated as of July 14, 2023, by and between PARTS iD, LLC and Lind Global Fund II LP. |
10.9 |
|
Note and Warrant Purchase Agreement, dated as of July 13, 2023, by and between the Company and the Purchasers party thereto. |
10.10 |
|
Form of Junior Secured Convertible Promissory Note, dated as of July 13, 2023. |
10.11 |
|
Form of Junior Secured Convertible Promissory Note, dated as of July 13, 2023. |
10.12 |
|
Form of Common Stock Purchase Warrant, dated as of July 13, 2023. |
10.13 |
|
Form of Common Stock Purchase Warrant, dated as of July 13, 2023. |
10.14 |
|
Placement Agent Common Stock Purchase Warrant, dated as of July 14, 2023, issued to Titan Partners Group LLC. |
99.1 |
|
PARTS iD, Inc. News Release dated July 17, 2023. |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
PARTS ID, INC. |
|
|
|
Date: July 17, 2023 |
By: |
/s/ Lev Peker |
|
|
Name: |
Lev Peker |
|
|
Title: |
Chief Executive Officer |
5
Exhibit 10.1
SECURITIES
PURCHASE AGREEMENT
This
Securities Purchase Agreement (as amended, supplemented, restated and/or modified from time to time, this “Agreement”)
is entered into as of July 14, 2023, by and between PARTS iD, Inc., a Delaware corporation (the “Company”), and Lind
Global Fund II LP, a Delaware limited partnership (the “Investor”).
BACKGROUND
A.
The board of directors (the “Board of Directors”) of the Company has authorized the issuance to Investor of the
Note (as defined below) and the Warrants (as defined below).
B
The Investor desires to purchase the Note and the Warrants on the terms and conditions set forth in this Agreement.
C.
Concurrently with the execution of this Agreement, (i) the Company and the Investor will enter into a security agreement,
substantially in the form attached hereto as Exhibit A (the “Security Agreement”), pursuant to which the
Company will grant a first priority security interest in substantially all of the assets of the Company to secure its obligations
hereunder and under the other Transaction Documents; and (ii) Parts iD, LLC, a wholly-owned subsidiary of the Company (the
“LLC Guarantor”) will enter into a guaranty substantially in the form attached hereto as Exhibit E (the
“Guaranty”) pursuant to which the LLC Guarantor will guarantee to the Investor all of the Company’s
obligations hereunder and under the Transaction Documents and the LLC Guarantor and the Investor will enter into a security
agreement, substantially in the form attached hereto as Exhibit F (the “LLC Guarantor Security Agreement”)
pursuant to which the LLC Guarantor will grant a first priority security interest in substantially all of the assets of the LLC
Guarantor to secure its obligations under the Guaranty and the other Transaction Documents as well as the Company’s
obligations hereunder and under the other Transaction Documents .
NOW
THEREFORE, in consideration of the foregoing recitals and the covenants and agreements set forth herein, and intending hereby to be legally
bound, the Company and the Investor hereby agree as follows:
1.
DEFINITIONS.
As used in this Agreement, the following terms shall have the following meanings specified or indicated below, and such meanings shall
be equally applicable to the singular and plural forms of such defined terms:
“1933
Act” means the Securities Act of 1933, as amended.
“1934
Act” means the Securities Exchange Act of 1934, as amended.
“Acquisition”
means the acquisition by the Company or any direct or indirect Subsidiary of the Company of a majority of the Equity Interests or substantially
all of the assets and business of any Person, whether by direct purchase of Equity Interests, asset purchase, merger, consolidation or
like combination.
“Additional
Funding Request” has the meaning set forth in Section 2.1(b).
“Additional
Funding Limit” has the meaning set forth in Section 2.1(b).
“Affiliate”
means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control
with, the Person specified.
“Agreement”
has the meaning set forth in the preamble.
“Applicable
Closing Date” shall mean the Closing Date or any Subsequent Closing Date, as applicable.
“Blue
Sky Application” has the meaning set forth in Section 9.3(a).
“Board
of Directors” has the meaning set forth in the recitals.
“Business
Day” means any day other than a Saturday, Sunday or any other day on which banks are permitted or required to be closed in
New York City.
“Capital
Stock” means the Common Stock, the Preferred Stock and any other classes of shares in the capital stock of the Company.
“Change
of Control” means, with respect to the Company, on or after the date of this Agreement:
| (a) | a
change in the composition of the Board of Directors of the Company at a single shareholder
meeting where a majority of the individuals that were directors of the Company immediately
prior to the start of such shareholder meeting are no longer directors at the conclusion
of such meeting, without prior written consent of the Investor; |
| (b) | a
change, without prior written consent of the Investor, in the composition of the Board of
Directors of the Company prior to the termination of this Agreement where a majority of the
individuals that were directors as of the date of this Agreement cease to be directors of
the Company prior to the termination of this Agreement; |
| (c) | other
than a shareholder that holds such a position at the date of this Agreement, if a Person
comes to have beneficial ownership, control or direction over more than fifty percent (50%)
of the voting rights attached to any class of voting securities of the Company; or |
| (d) | the
sale or other disposition by the Company or any of its Subsidiaries in a single transaction,
or in a series of transactions, of all or substantially all of their respective assets and
the stockholders of the Company immediately prior to such transaction own less than fifty
percent (50%) of the aggregate voting power of the acquiring entity immediately after the
transaction. |
“Closing”
has the meaning set forth in Section 2.2.
“Closing
Date” has the meaning set forth in Section 2.2.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Commitment
Fee” means an amount equal to One Hundred Twelve Thousand Five Hundred Dollars ($112,500).
“Common
Stock” means the Class A common stock, par value $0.0001 per share, of the Company.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time shares of Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, shares
of Common Stock.
“Company”
has the meaning set forth in the preamble.
“Conversion
Shares” means the shares of Common Stock issuable upon the full or any partial conversion of the Note.
“Disclosure
Letter” has the meaning set forth in Section 3.
“Effectiveness
Period” has the meaning set forth in Section 9.2(a).
“Equity
Interests” means and includes capital stock, membership interests and other similar equity securities, and shall also include
warrants or options to purchase capital stock, membership interests or other equity interests.
“Event”
means any event, change, development, effect, condition, circumstance, matter, occurrence or state of facts.
“Event
of Default” has the meaning set forth in Section 7.1.
“Exempted
Securities” means (a) equity securities issued by reason of a dividend, stock split, split-up or other distribution on shares
of Common Stock, (b) shares of Common Stock or rights, warrants or options to purchase Common Stock issued to employees or directors
of the Company or any of its Subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors (“Equity
Plans”), and (c) shares of Common Stock actually issued upon the exercise of options, warrants or shares of Common Stock actually
issued upon the conversion or exchange of any securities convertible into Common Stock, in each case issued to employees or directors
of, the Company or any of its Subsidiaries pursuant to an Equity Plan and provided that such issuance is pursuant to the terms of the
applicable option, warrant or convertible security.
“FCPA”
has the meaning set forth in Section 3.24.
“First
Funding Amount” means an amount equal to Four Million Seven Hundred Fifty Thousand Dollars ($4,750,000), payable as (a) Three
Million Seven Hundred Fifty Thousand Dollars ($3,750,000), less the Commitment Fee, at the Closing and (b) One Million Dollars ($1,000,000),
less a commitment fee equal to $30,000, within five (5) Business Days following the later of (i) the Company providing written confirmation
to the Investor that the Registration Statement has been declared effective by the SEC and (ii) the receipt of Stockholder Approval,
in each case, the Company shall also confirm to the Investor that there is no Event of Default that has occurred or will occur as a result
of such additional funding.
“First
Warrant” has the meaning set forth in Section 2.1(a).
“Form
8-K” has the meaning set forth in Section 5.10.
“GAAP”
has the meaning set forth in Section 3.5(b).
“Governmental
Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether
state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national
bodies such as the European Union or the European Central Bank).
“Guaranty”
has the meaning set forth in the recitals.
“HSR
Act” has the meaning set forth in Section 5.15.
“Increased
Funding Amount” has the meaning set forth in Section 2.1(b).
“Indebtedness”
has the meaning set forth in the Note.
“Investor”
has the meaning set forth in the preamble.
“Investor
Funding Notice” has the meaning set forth in Section 2.1(b).
“Investor
Group” shall mean the Investor plus any other Person with which the Investor is considered to be part of a group under Section
13 of the 1934 Act or with which the Investor otherwise files reports under Sections 13 and/or 16 of the 1934 Act.
“Investor
Party” has the meaning set forth in Section 5.11(a).
“Investor
Response” has the meaning set forth in Section 2.1(b).
“Investor
Shares” means the Conversion Shares, the Warrant Shares and any other shares issued or issuable to the Investor pursuant to
this Agreement, the Note or the Warrants.
“IP
Rights” has the meaning set forth in Section 3.10.
“Law”
means any law, rule, regulation, order, judgment or decree, including, without limitation, any federal and state securities Laws.
“Legend
Removal Date” shall have the meaning set forth in Section 5.1(d).
“LLC
Guarantor” has the meaning set forth in the recitals.
“LLC
Guarantor Security Agreement” has the meaning set forth in the recitals.
“Losses”
has the meaning set forth in Section 5.11(a).
“Material
Adverse Effect” means any material adverse effect on (i) the businesses, properties, assets, prospects, operations, results
of operations or financial condition of the Company, or the Company and the Subsidiaries, taken as a whole, or (ii) the ability of the
Company to consummate the transactions contemplated by this Agreement or to perform its obligations hereunder or under the Security Agreement,
Note or the Warrants; provided, however, that none of the following shall be deemed either alone or in combination to constitute,
and none of the following shall be taken into account in determining whether there has been or would be, a Material Adverse Effect: (a) any
adverse effect resulting from or arising out of general economic conditions; (b) any adverse effect resulting from or arising out of
general conditions in the industries in which the Company and the Subsidiaries operate; (c) any adverse effect resulting from any changes
to applicable Law; or (d) any adverse effect resulting from or arising out of any natural disaster or any acts of terrorism, sabotage,
military action or war or any escalation or worsening thereof; provided, further, that any event, occurrence, fact, condition
or change referred to in clauses (a) through (d) immediately above shall be taken into account in determining whether a Material Adverse
Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition or change has
a disproportionate effect on the Company and/or the Subsidiaries compared to other participants in the industries in which the Company
and the Subsidiaries operate.
“Maximum
Percentage” means 4.99%; provided, that if at any time after the date hereof the Investor Group beneficially owns in
excess of 4.99% of any class of Equity Interests in the Company that is registered under the 1934 Act, then the Maximum Percentage shall
automatically increase to 9.99% so long as the Investor Group owns in excess of 4.99% of such class of Equity Interests (and shall, for
the avoidance of doubt, automatically decrease to 4.99% upon the Investor Group ceasing to own in excess of 4.99% of such class of Equity
Interests).
“Money
Laundering Laws” has the meaning set forth in Section 3.25.
“New
Securities” means, collectively, equity securities of the Company, whether or not currently authorized, as well as rights,
options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become convertible or
exchangeable into or exercisable for such equity securities.
“Note”
has the meaning set forth in Section 2.1(a).
“Notice
Termination Time” has the meaning set forth in Section 10.2.
“Obligor”
means the Company and each of its Subsidiaries.
“OFAC”
has the meaning set forth in Section 3.23.
“Offer
Notice” has the meaning set forth in Section 10.1.
“Organizational
Documents” has the meaning set forth in Section 3.3.
“Permitted
Lien” shall have the meaning ascribed to such term in the Security Agreement.
“Permitted
Litigation Indebtedness” shall have the meaning ascribed to such term in the Security Agreement.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Preferred
Stock” has the meaning set forth in Section 3.4(a).
“Press
Release” has the meaning set forth in Section 5.10.
“Principal
Amount” has the meaning set forth in Section 2.1(a).
“Proceedings”
has the meaning set forth in Section 3.6.
“Prohibited
Transaction” means a transaction with a third party or third parties in which the Company issues or sells (or arranges or agrees
to issue or sell):
(a) any
debt, equity or equity-linked securities (including options or warrants) that are convertible into, exchangeable or exercisable for,
or include the right to receive shares of the Company’s Capital Stock:
(i) at
a conversion, repayment, exercise or exchange rate or other price that is based on, and/or varies with, a discount to the future trading
prices of, or quotations for, shares of Common Stock; or
(ii)
at a conversion, repayment, exercise or exchange rate or other price that is subject to being reset at some future date after the
initial issuance of such debt, equity or equity-linked security or upon the occurrence of specified or contingent events (other than
warrants that may be repriced by the Company)(b) any securities in a capital or debt raising transaction or series of related
transactions which grant to an investor the right to receive additional securities based upon future transactions of the Company on
terms more favorable than those granted to such investor in such first transaction or series of related transactions;
and
are deemed to include transactions generally referred to as at-the-market transactions (ATMs) or equity lines of credit and stand-by
equity distribution agreements, and convertible securities and loans having a similar effect; provided, the sale of up to an aggregate
value of $5 million of Common Stock in an at-the-market transaction, with a registered broker/dealer with at least $500 million of assets,
shall not be considered a Prohibited Transaction.; provided, further, that the Company shall not sell an aggregate value of more than
$1 million during any calendar month pursuant to such at-the-market transaction.
“Prospectus”
means the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Investor Shares covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus, and
any “free writing prospectus” as defined in Rule 405 under the 1933 Act.
“register,”
“registered” and “registration” refer to a registration made by preparing and filing a Registration
Statement or similar document in compliance with the 1933 Act (as defined below), and the declaration or ordering of effectiveness of
such Registration Statement or document.
“Registration
Statement” means any registration statement of the Company filed under the 1933 Act that covers the resale of any of the Investor
Shares pursuant to the provisions of this Agreement, including the Prospectus and amendments and supplements to such Registration Statement,
and including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.
“Requested
Increase Amount” has the meaning set forth in Section 2.1(b).
“Reverse
Split” has the meaning set forth in Section 5.21.
“Rule
144” means Rule 144 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.
“SEC”
means the United States Securities and Exchange Commission.
“SEC
Documents” has the meaning set forth in Section 3.5(a).
“Securities”
means the Note, the Warrants and the Investor Shares.
“Securities
Termination Event” means either of the following has occurred:
(a) trading
in securities generally in the United States has been suspended or limited for a consecutive period of greater than three (3) Business
Days; or
(b) a
banking moratorium has been declared by the United States or the New York State authorities and is continuing for a consecutive period
of greater than three (3) Business Days.
“Security
Agreement” has the meaning set forth in the recitals.
“Stockholder
Approval” shall mean the approval of the holders of a majority of the outstanding shares of the Company’s voting Common
Stock: (a) if and to the extent legally required, to amend the Company’s Certificate of Incorporation to increase the number of
authorized shares of Common Stock by at least the number of shares of Common Stock equal to the number of shares of Common Stock issuable
hereunder, or (b) to ratify and approve all of the transactions contemplated by the Transaction Documents, including the issuance of
all of the Investor Shares (as such term is defined in each of such documents) issued and potentially issuable to the Investor thereunder,
all as may be required by the applicable rules and regulations of the Trading Market (or any successor entity).
“Subsequent
Closing Date” has the meaning set forth in Section 2.1(c).
“Subsequent
Financing” has the meaning set forth in Section 10.
“Subsequent
Warrant” has the meaning set forth in Section 2.1(c)(ii).
“Subsidiary”
of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of
the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other
than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned,
or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary
or Subsidiaries of the Company.
“Trading
Day” means a day on which the Common Stock is traded on a Trading Market.
“Trading
Market” means whichever of the New York Stock Exchange, NYSE American, or the Nasdaq Stock Market (including the Nasdaq Capital
Market), on which the Common Stock is listed or quoted for trading on the date in question.
“Transaction
Documents” means this Agreement, the Security Agreement, the Guaranty, the LLC Guarantor Security Agreement, the Note, the
Supplemental Loan Documents (as such term is defined in the Security Agreement), the Warrants and any other documents or agreements executed
or delivered in connection with the transactions contemplated hereunder.
“VWAP”
means, as of any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of one share of Common Stock trading in the ordinary course of
business at the applicable Trading Price for such date (or the nearest preceding date) on such Trading Market as reported by Bloomberg
Financial L.P.; (b) if the Common Stock is not then listed on a Trading Market and if the Common Stock is traded in the over-the-counter
market, as reported by the OTCQX or OTCQB Markets, the volume weighted average price of one share of Common Stock for such date (or the
nearest preceding date) on the OTCQX or OTCQB Markets, as reported by Bloomberg Financial L.P.; (c) if the Common Stock is not then listed
or quoted on a Trading Market or on the OTCQX or OTCQB Markets and if prices for the Common Stock are then reported in the “Pink
Sheets” published by the OTC Markets Group (or a similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price of one share of Common Stock so reported, as reported by Bloomberg Financial L.P.; or (d) in all other cases,
the fair market value of one share of Common Stock as determined by an independent appraiser selected in good faith by the Investor and
reasonably acceptable to the Company.
“Warrants”
means the First Warrant and any issued Subsequent Warrants.
“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
2. PURCHASE
AND SALE OF THE NOTE AND THE WARRANTS
2.1
Purchase and Sale of the Note and the Warrants.
(a) Subject
to the terms and conditions set forth herein, at the Closing, the Company shall issue and sell to the Investor, and the Investor shall
purchase from the Company, for the First Funding Amount (a) a convertible promissory note, in the form attached hereto as Exhibit
B (the “Note”), in the principal amount of Five Million Three Hundred Sixty-Seven Thousand Five Hundred Dollars
($5,367,500) (the “Principal Amount”) and (b) a Common Stock purchase warrant, in the form attached hereto as Exhibit
C, registered in the name of the Investor, pursuant to which the Investor shall have the right to acquire 12,837,838 shares of Common
Stock (the “First Warrant”).
(b) At
any time while the Note is outstanding, the Company may deliver written notice to the Investor (an “Additional Funding Request”)
certifying that the conditions set forth in Section 6.1 are satisfied and requesting an increase in the amount of funding provided by
the Investor to the Company under the Note, which notice shall set forth the Company’s requested amount of additional funding (which
shall not be less than One Million Dollars ($1,000,000) (such additional amount, the “Requested Increase Amount”);
provided, that the aggregate amount of Requested Increase Amounts shall not exceed Five Million Two Hundred Fifty Thousand Dollars ($5,250,000)
(the “Additional Funding Limit”). The Investor shall, within seven (7) Business Days of receiving the Additional Funding
Request, give a written response to the Company (an “Investor Response”) that provides that the Investor has elected
(in its sole and absolute discretion) to (i) advance the full Requested Increase Amount, (ii) advance an amount less than the full Requested
Increase Amount or (iii) not advance any of the Requested Increase Amount. In the event the Investor agrees to fund an additional amount
to the Company, the Investor shall set forth such amount in the Investor Response (such amount, the “Increased Funding Amount”).
In addition, the Investor may, in its sole discretion and without any action by the Company, deliver written notice to the Company (an
“Investor Funding Notice”) of its election to advance up to an aggregate of Two Million Dollars ($2,000,000) of Increased
Funding Amount to the Company. Any such Investor-directed Increased Funding Amounts shall count toward the Additional Funding Limit.
(c) Within
ten (10) Business Days of the delivery of an Investor Response or Investor Funding Notice in which the Investor agrees to advance an
Increased Funding Amount (such date, a “Subsequent Closing Date”):
(i) the
Principal Amount of the Note shall be increased by an amount equal to the Increased Funding Amount multiplied by 1.13 and the Company
and Investor shall amend the Note to reflect the new Principal Amount;
(ii) the
Company shall issue to the Investor a Warrant to purchase a number of shares of Common Stock equal to the Increased Funding Amount, divided
by the average of the five (5) daily VWAPs during the five (5) Trading Days prior to the Subsequent Closing Date, with an exercise price
equal to the average of the five (5) daily VWAPs during the five (5) Trading Days prior to the Subsequent Closing Date, multiplied by
1.35 (each, a “Subsequent Warrant”); and
(iii) the
Investor will advance to the Company an amount of money equal to the Increased Funding Amount, less a commitment fee in an amount equal
to 3.0% of the Increased Funding Amount.
2.2 Closing.
The closing hereunder, including payment for and delivery of the Note and the Warrants, shall take place remotely via the exchange of
documents and signatures, no later than ten (10) Business Days following the execution and delivery of this Agreement, subject to satisfaction
or waiver of the conditions set forth in Section 6, or at such other time and place as the Company and the Investor agree upon,
orally or in writing (the “Closing,” and the date of the Closing being the “Closing Date”).
2.3 Commitment
Fee. At the Closing, the Company shall pay to the Investor the Commitment Fee, in United States dollars and in immediately available
funds. The Commitment Fee shall be paid by being offset against the First Funding Amount payable by the Investor at Closing.
2.4 Prepayment
Right. The Company will have the right to pre-pay the entire Outstanding Principal Amount (as such term is defined in the Note) pursuant
to the terms and conditions set forth in the Note.
2.5
Senior Obligation. As an inducement for the Investor to enter into this Agreement and to purchase the Note, all obligations
of the Company pursuant to this Agreement and the Note shall be (a) guaranteed by the LLC Guarantor pursuant to the terms of the Guaranty
(and the LLC Guarantor’s obligations under the Guaranty shall be secured by a first priority security interest in and lien upon
all the “Collateral” (as such term is defined in the LLC Guarantor Security Agreement) of the LLC Guarantor pursuant to the
terms of the LLC Guarantor Security Agreement) and (b) secured by a first priority security interest in and lien upon all the “Collateral”
(as such term is defined in the Security Agreement) of the Company pursuant to the terms of the Security Agreement.
3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Investor and covenants with the Investor that, except as is set forth in the Disclosure Letter
being delivered to the Investor as of the date hereof and as of any Applicable Closing Date (the “Disclosure Letter”),
the following representations and warranties are true and correct:
3.1
Organization and Qualification. The Company is a corporation duly organized and validly existing in good standing under the
Laws of the State of Delaware and has the requisite corporate power and authority to own its properties and to carry on its business
as now being conducted. The Company is duly qualified to do business and is in good standing (if a good standing concept exists in such
jurisdiction) in every jurisdiction in which the ownership of its property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect.
3.2
Authorization; Enforcement; Compliance with Other Instruments. The Company has the requisite corporate power and authority
to execute the Transaction Documents, to issue and sell the Note and the Warrants pursuant hereto, and to perform its obligations under
the Transaction Documents, including issuing the Investor Shares on the terms set forth in this Agreement. The execution and delivery
of the Transaction Documents by the Company and the issuance and sale by the Company of the Securities pursuant hereto, including without
limitation the reservation of the Conversion Shares and the Warrant Shares for future insuance, have been duly and validly authorized
by the Company’s Board of Directors and no further consent or authorization is required by the Company, its Board of Directors,
its stockholders or any other Person in connection therewith. The Transaction Documents have been duly and validly executed and delivered
by the Company and constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar Laws relating to, or affecting generally, the enforcement of creditors’ rights
and remedies.
3.3
No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and its Subsidiaries (as
applicable) and the issuance and sale of the Note and the Warrants hereunder will not (a) conflict with or result in a violation of the
Company’s Second Amended and Restated Certificate of Incorporation, as amended, and Amended and Restated Bylaws, or any Subsidiary’s
organizational and governing documents (collectively, the “Organizational Documents”), (b) conflict with, or
constitute a material default (or an event which, with notice or lapse of time or both, would become a material default) under, or give
to others any right of termination, amendment, acceleration or cancellation of, any material agreement to which the Company or any of
the Subsidiaries is a party, or (c) subject to the making of the filings referred to in Section 5, violate in any material
respect any Law or any rule or regulation of the Trading Market applicable to the Company or any of the Subsidiaries or by which any
of their properties or assets are bound or affected. Assuming the accuracy of the Investor’s representations in Section 4
and subject to the making of the filings referred to in Section 5, (i) no approval or authorization will be required
from any Governmental Authority or agency, regulatory or self-regulatory agency or other third party (including the Trading Market) in
connection with the issuance of the Note and the Warrants and the other transactions contemplated by this Agreement (including the issuance
of the Conversion Shares upon conversion of the Note and the Warrant Shares upon the exercise of the Warrants and the issuance of any
other Investor Shares upon the issuance thereof) and (ii) the issuance of the Note and the Warrants, and the issuance of the Conversion
Shares upon the conversion of the Note and the Warrant Shares upon exercise of the Warrants and the issuance of any other Investor Shares
upon the issuance thereof will be exempt from the registration and qualification requirements under the 1933 Act and all applicable state
securities Laws.
3.4
Capitalization and Subsidiaries.
(a) The
authorized Capital Stock of the Company consists of 100,000,000 shares of Common Stock, 10,000,000 shares of Class F common stock and
1,000,000 shares of preferred stock (the “Preferred Stock”). As of the close of business on June 30, 2023, 34,825,971
shares of Common Stock, no shares of Class F common stock and no shares of Preferred Stock were issued and outstanding; and since June
30, 2023, and through the date of this Agreement, the Company has issued no additional shares of Common Stock and no additional shares
of Preferred Stock. As of June 30, 2023, (i) an aggregate of 4,904,596 shares of Common Stock are reserved and available for issuance
under the Company’s 2020 Equity Incentive Plan, of which 2,580,445 shares were subject to outstanding awards as of June 30, 2023;
(ii) 2,043,582 shares of Common Stock reserved and available for issuance under the Company’s 2020 Employee Stock Purchase Plan;
(iii) 750,000 shares of Common Stock reserved for issuance pursuant to indemnification escrow obligations under that certain Business
Combination Agreement, dated as of September 18, 2020, by and among Legacy Acquisition Corp., Excel Merger Sub I, Inc., Excel Merger
Sub II, LLC, Onyx Enterprises Int’l, Corp., and Shareholder Representative Services LLC and (iv) 3,633,333 shares of Common Stock
are reserved for issuance upon exercise of outstanding warrants with exercise prices ranging from $0.36 to $2.00 per share. The Company
has duly reserved up to 18,000,000 shares of Common Stock for issuance upon conversion of the Note and has duly reserved up to 12,837,838
shares of Common Stock for issuance upon exercise of the Warrants. The Conversion Shares, when issued upon conversion of the Note in
accordance with its terms, and the Warrant Shares, if and when issued upon exercise of the Warrants in accordance with its terms, and
any other Investor Shares, if and when issued in connection wtih the Transaction Documents, will be validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance thereof. No shares of the Company’s Capital Stock are subject
to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company. The Organizational
Documents on file on the SEC’s EDGAR website are true and correct copies of the Organizational Documents, as in effect as of the
Applicable Closing Date. The Company is not in violation of any provision of its Organizational Documents.
(b) Schedule
3.4(b) lists each direct and indirect Subsidiary of the Company existing on the date hereof and indicates for each Subsidiary (i)
the authorized capital stock or other Equity Interests of such Subsidiary as of the date hereof, (ii) the number and kind of shares or
other ownership interests of such Subsidiary that are issued and outstanding as of the date hereof, and (iii) the owner of such shares
or other ownership interests. No Subsidiary has any outstanding stock options, warrants or other instruments pursuant to which such Subsidiary
may at any time or under any circumstances be obligated to issue any shares of its capital stock or other Equity Interests. The Company
owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary. Each Subsidiary is duly organized
and validly existing in good standing under the laws of its jurisdiction of formation (if a good standing concept exists in such jurisdiction)
and has all requisite power and authority to own its properties and to carry on its business as now being conducted.
(c) Neither
the Company nor any Subsidiary is bound by any agreement or arrangement pursuant to which it is obligated to register the sale of any
securities under the 1933 Act. There are no outstanding securities of the Company or any of the Subsidiaries which contain any redemption
or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary
is or may become bound to redeem or purchase any security of the Company or any Subsidiary. There are no outstanding securities or instruments
containing anti-dilution or similar provisions that will be triggered by the issuance of the Note, the Warrants or the Investor Shares.
Neither the Company nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any similar
plan or agreement.
(d) The
issuance and sale of any of the Securities will not obligate the Company to issue shares of Common Stock or other securities, or to satisfy
any related contractual obligations, to any other Person and will not result in the adjustment of the exercise, conversion, exchange,
or reset price of any outstanding securities.
(e) As
of the date of this Agreement, the Company has capacity under the rules and regulations of the Trading Market to issue up to 6,961,712
shares of Common Stock (or securities convertible into or exercisable for Common Stock) at a discount to fair market value without obtaining
Stockholder Approval.
3.5
SEC Documents; Financial Statements.
(a) As
of the Applicable Closing Date, the Company has filed all reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the Applicable Closing
Date and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein
being hereinafter referred to as the “SEC Documents”). As of their respective filing dates, the SEC Documents complied
in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(b) As
of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), and audited
by a firm that is a member of the Public Companies Accounting Oversight Board consistently applied, during the periods involved (except
as may be otherwise indicated in such financial statements or the notes thereto, or, in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the consolidated
financial position of the Company as of the dates thereof and the consolidated results of its operations and consolidated cash flows
for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other written information
provided by or on behalf of the Company to the Investor in connection with the Investor’s purchase of the Note and the Warrants
which is not included in the SEC Documents contains any untrue statement of a material fact or omits to state any material fact necessary
to make the statements therein, in the light of the circumstance under which they are or were made, not misleading.
(c) The
Company and each of the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) reasonable
controls to safeguard assets are in place and (iv) the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
3.6
Litigation and Regulatory Proceedings. There are no material actions, causes of action, suits, claims, proceedings, inquiries
or investigations (collectively, “Proceedings”) before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the executive officers of Company or any of the Subsidiaries, threatened against
or affecting the Company or any of the Subsidiaries, the Common Stock or any other class of issued and outstanding shares of the Company’s
Capital Stock, or any of the Company’s or the Subsidiaries’ officers or directors in their capacities as such and, to the
knowledge of the executive officers of the Company, there is no reason to believe that there is any basis for any such Proceeding.
3.7
No Undisclosed Events, Liabilities or Developments. No event, development or circumstance has occurred or exists, or to the
knowledge of the executive officers of the Company is reasonably anticipated to occur or exist that (a) would reasonably be anticipated
to have a Material Adverse Effect or (b) would be required to be disclosed by the Company under applicable securities Laws on a registration
statement filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced.
3.8
Compliance with Law. The Company and each of the Subsidiaries have conducted and are conducting their respective businesses
in compliance in all material respects with all applicable Laws and are in compliance in all material respects with the rules and regulations
of the Trading Market. The Company is not aware of any facts which could reasonably be anticipated to have the effect of delisting the
Common Stock from the Trading Market, nor has the Company received any notification that the Trading Market is currently contemplating
terminating such listing.
3.9
Employee Relations. Neither the Company nor any Subsidiary is involved in any union labor dispute nor, to the knowledge of
the Company, is any such dispute threatened. Neither the Company nor any Subsidiary is a party to any collective bargaining agreement.
No executive officer (as defined in Rule 501(f) of the 1933 Act) has notified the Company that such officer intends to leave the Company’s
employ or otherwise terminate such officer’s employment with the Company.
3.10
Intellectual Property Rights. The Company and each Subsidiary owns or possesses adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and other intellectual property rights (collectively, “IP Rights”) necessary
to conduct their respective businesses as now conducted. None of the material IP Rights of the Company or any of the Subsidiaries are
expected to expire or terminate within three (3) years from the date of this Agreement. Neither the Company nor any Subsidiary is infringing,
misappropriating or otherwise violating any IP Rights of any other Person. No claim has been asserted, and no Proceeding is pending,
against the Company or any Subsidiary alleging that the Company or any Subsidiary is infringing, misappropriating or otherwise violating
the IP Rights of any other Person, and, to the Company’s knowledge, no such claim or Proceeding is threatened, and the Company
is not aware of any facts or circumstances which might give rise to any such claim or Proceeding. The Company and the Subsidiaries have
taken commercially reasonable security measures to protect the secrecy, confidentiality and value of all of their material IP Rights.
3.11
Environmental Laws. Except, in each case, as would not be reasonably anticipated to have a Material Adverse Effect, the Company
and the Subsidiaries (a) are in compliance with any and all applicable Laws relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or contaminants, (b) have received and hold all permits, licenses
or other approvals required of them under all such Laws to conduct their respective businesses and (c) are in compliance with all terms
and conditions of any such permit, license or approval.
3.12
Title to Assets. The Company and the Subsidiaries have good and marketable title to all personal property owned by them which
is material to their respective businesses, in each case free and clear of all liens, encumbrances and defects other than any Permitted
Liens. Any real property and facilities held under lease by the Company or any Subsidiary are held under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings
by the Company and the Subsidiaries.
3.13
Insurance. The Company and each of the Subsidiaries are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company reasonably believes to be prudent and customary in the businesses
in which the Company and the Subsidiaries are engaged. Neither the Company nor any of the Subsidiaries has been refused any insurance
coverage sought or applied for, and the Company has no reason to believe that it will not be able to renew all existing insurance coverage
as and when such coverage expires or to obtain similar coverage from similar insurers.
3.14
Regulatory Permits. The Company and the Subsidiaries have in full force and effect all certificates, approvals, authorizations
and permits from all regulatory authorities and agencies necessary to own, lease or operate their respective properties and assets and
conduct their respective businesses, and neither the Company nor any Subsidiary has received any notice of Proceedings relating to the
revocation or modification of any such certificate, approval, authorization or permit, except for such certificates, approvals, authorizations
or permits with respect to which the failure to hold would not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
3.15
No Materially Adverse Contracts, Etc. Neither the Company nor any of the Subsidiaries is (a) subject to any charter, corporate
or other legal restriction, or any judgment, decree or order which in the judgment of the Company’s officers has or is expected
in the future to have a Material Adverse Effect or (b) a party to any contract or agreement which in the judgment of the Company’s
management has or would reasonably be anticipated to have a Material Adverse Effect.
3.16
Taxes. The Company and the Subsidiaries each has made or filed, or caused to be made or filed, all United States federal and
other material tax returns, reports and declarations required by any jurisdiction to which it is subject and has paid all taxes and other
governmental assessments and charges that are material in amount, required to be paid by it, regardless of whether such amounts are shown
or determined to be due on such returns, reports and declarations, except those being contested in good faith by appropriate proceedings
and for which it has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction.
3.17 Solvency.
After giving effect to the receipt by the Company of the proceeds from the transactions contemplated by this Agreement (a) the Company’s
fair saleable value of its 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; and (b) 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 debt 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.
3.18 Investment
Company. The Company is not, and is not an Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
3.19
Certain Transactions. There are no contracts, transactions, arrangements or understandings between the Company or any of its
Subsidiaries, on the one hand, and any director, officer or employee thereof on the other hand, that would be required to be disclosed
pursuant to Item 404 of Regulation S-K promulgated by the SEC in the Company’s Annual Report on Form 10-K or proxy statement pertaining
to an annual meeting of stockholders.
3.20
No General Solicitation. Neither the Company, nor any of its Affiliates, nor any person acting on its behalf, has engaged
in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale
of the Note or the Warrants pursuant to this Agreement.
3.21
Acknowledgment Regarding the Investor’s Purchase of the Note and the Warrants. The Company’s Board of Directors
has approved the execution of the Transaction Documents and the issuance and sale of the Note and the Warrants, based on its own independent
evaluation and determination that the terms of the Transaction Documents are reasonable and fair to the Company and in the best interests
of the Company and its stockholders. The Company is entering into this Agreement and the Security Agreement and is issuing and selling
the Note and the Warrants voluntarily and without economic duress. The Company has had independent legal counsel of its own choosing
review the Transaction Documents and advise the Company with respect thereto. The Company acknowledges and agrees that the Investor is
acting solely in the capacity of an arm’s length purchaser with respect to the Note and the Warrants and the transactions contemplated
hereby and that neither the Investor nor any person affiliated with the Investor is acting as a financial advisor to, or a fiduciary
of, the Company (or in any similar capacity) with respect to execution of the Transaction Documents or the issuance of the Note and the
Warrants or any other transaction contemplated hereby.
3.22
No Brokers’, Finders’ or Other Advisory Fees or Commissions. Except as set forth in Schedule 3.22, no brokers,
finders or other similar advisory fees or commissions will be payable by the Company or any Subsidiary or by any of their respective
agents with respect to the issuance of the Note or any of the other transactions contemplated by this Agreement.
3.23 OFAC.
None of the Company nor any of the Subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee, affiliate
or person acting on behalf of the Company and/or any Subsidiary has been or is currently subject to any United States sanctions administered
by the Office of Foreign Assets Control of the United States Department of the Treasury (“OFAC”); and the Company
will not directly or indirectly use any proceeds received from the Investor, or lend, contribute or otherwise make available such proceeds
to its Subsidiaries or to any affiliated entity, joint venture partner or other person or entity, to finance any investments in, or make
any payments to, any country or person currently subject to any of the sanctions of the United States administered by OFAC.
3.24 No
Foreign Corrupt Practices. None of the Company or any of the Subsidiaries has, directly or indirectly: (a) made or authorized any
contribution, payment or gift of funds or property to any official, employee or agent of any Governmental Authority of any jurisdiction
except as otherwise permitted under applicable Law; or (b) made any contribution to any candidate for public office, in either case,
where either the payment or the purpose of such contribution, payment or gift was, is, or would be prohibited under the Foreign Corrupt
Practices Act (“FCPA”) or the rules and regulations promulgated thereunder or under any other legislation of any relevant
jurisdiction covering a similar subject matter applicable to the Company or its Subsidiaries and their respective operations and the
Company has instituted and maintained policies and procedures designed to ensure, and which are reasonably expected to continue to ensure,
continued compliance with such legislation.
3.25 Anti-Money
Laundering. The operations of each of the Company and the Subsidiaries are and have been conducted at all times in compliance with
all applicable anti-money laundering laws, regulations, rules and guidelines in its jurisdiction of incorporation and in each other jurisdiction
in which such entity, as the case may be, conducts business (collectively, the “Money Laundering Laws”) and no action,
suit or proceeding by or before any court or Governmental Authority involving the Company or its Subsidiaries with respect to any of
the Money Laundering Laws is, to the knowledge of the Company, pending, threatened or contemplated.
3.26 Disclosure.
The Company confirms that neither it, nor to its knowledge, any other Person acting on its behalf has provided the Investor or its agents
or counsel with any information that the Company believes constitutes material, non-public information. The Company understands and confirms
that the Investor will rely on the foregoing representations and covenants in effecting transactions in securities of the Company. All
disclosures provided to the Investor regarding the Company, its business and the transactions contemplated hereby, furnished by or on
behalf of the Company (including the Company’s representations and warranties set forth in this Agreement) are true and correct
in all material respects and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order
to make the statements made therein, in light of the circumstances under which they were made, not misleading.
4.
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
The Investor represents and warrants to the Company as follows:
4.1
Organization and Qualification. The Investor is a limited partnership, duly organized and validly existing in good standing
under the laws of the State of Delaware.
4.2
Authorization; Enforcement; Compliance with Other Instruments. The Investor has the requisite power and authority to enter
into this Agreement and the Security Agreement, to purchase the Note and the Warrants and to perform its obligations under the Transaction
Documents. The execution and delivery of the Transaction Documents to which it is a party have been duly and validly authorized by the
Investor’s governing body and no further consent or authorization is required. The Transaction Documents to which it is a party
have been duly and validly executed and delivered by the Investor and constitute valid and binding obligations of the Investor, enforceable
against the Investor in accordance with their terms, except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors’ rights and remedies.
4.3
No Conflicts. The execution, delivery and performance of the Transaction Documents to which it is a party by the Investor
and the purchase of the Note and the Warrants by the Investor will not (a) conflict with or result in a violation of the Investor’s
organizational documents, (b) conflict with, or constitute a material default (or an event which, with notice or lapse of time or both,
would become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any
material agreement, contract, indenture mortgage, indebtedness or instrument to which the Investor is a party, or (c) violate in any
material respect any Law applicable to the Investor or by which any of the Investor’s properties or assets are bound or affected.
No approval or authorization will be required from any Governmental Authority or agency, regulatory or self-regulatory agency or other
third party in connection with the purchase of the Note and the Warrants and the other transactions contemplated by this Agreement.
4.4
Investment Intent; Accredited Investor. The Investor is purchasing the Note and the Warrants for its own account, for investment
purposes, and not with a view towards distribution. The Investor is an “accredited investor” as such term is defined in Rule
501(a) of Regulation D of the 1933 Act. The Investor has, by reason of its business and financial experience, such knowledge, sophistication
and experience in financial and business matters and in making investment decisions of this type that it is capable of (a) evaluating
the merits and risks of an investment in the Note, the Warrants and the Investor Shares and making an informed investment decision, (b)
protecting its own interests and (c) bearing the economic risk of such investment for an indefinite period of time.
4.5
No Other Representations. Except for the representations and warranties set forth in this Agreement and in other Transaction
Documents, the Investor makes no other representations or warranties to the Company.
5.
OTHER AGREEMENTS OF THE PARTIES.
5.1 Legends,
etc.
(a) Securities
may only be disposed of pursuant to an effective registration statement under the 1933 Act, to the Company or pursuant to an available
exemption from or in a transaction not subject to the registration requirements of the 1933 Act, and in compliance with any applicable
state securities laws.
(b) Certificates
evidencing the Securities will contain the following legend, so long as is required by this Section 5.1:
NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE 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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE
TO THE COMPANY. [THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES] [THESE SECURITIES] MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.
(c) The
Company acknowledges and agrees that the Investor may from time to time pledge, and/or grant a security interest in some or all of the
Securities, in accordance with applicable securities laws, pursuant to a bona fide margin agreement in connection with a bona fide margin
account and, if required under the terms of such agreement or account, the Investor may transfer pledged or secured Securities to the
pledgees or secured parties. Such a pledge or transfer would not be subject to approval or consent of the Company and no legal opinion
of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge, but such legal opinion may
be required in connection with a subsequent transfer following default by the Investor transferee of the pledge. No notice shall be required
of such pledge. At the Company’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured
party of Securities may reasonably request in connection with a pledge or transfer of the Securities including the preparation and filing
of any required prospectus supplement under Rule 424(b)(3) of the 1933 Act or other applicable provision of the 1933 Act to appropriately
amend the list of selling shareholders thereunder.
(d) Certificates
evidencing the Investor Shares shall not contain any legend (including the legend set forth in Section 5.1(b)): (i) while a Registration
Statement is effective under the 1933 Act, (ii) following any sale of such Investor Shares pursuant to Rule 144, (iii) while such Investor
Shares are eligible for sale without restriction under Rule 144(k), or (iv) if such legend is not required under applicable requirements
of the 1933 Act (including judicial interpretations and pronouncements issued by the Staff of the SEC). The Company shall cause its counsel
to issue any legal opinion or instruction required by the Company’s transfer agent to comply with the requirements set forth in
this Section. At such time as a legend is no longer required for the Investor Shares under this Section 5.1(d), the Company will, no
later than two (2) Business Days following the delivery by the Investor to the Company or the Company’s transfer agent of a certificate
representing Investor Shares containing a restrictive legend (such third Business Day, the “Legend Removal Date”),
deliver or cause to be delivered to the Investor a certificate representing such Investor Shares that is free from all restrictive and
other legends. In addition to any other remedies available to the Investor, the Company shall pay to the Investor, in cash, as partial
liquidated damages and not as a penalty, for each $1,000 of Investor Shares (based on the VWAP of the Common Stock on the date such Investor
Shares are submitted to the Company or the Company’s transfer agent) delivered for removal of the restrictive or other legend,
$5 per Trading Day for each Trading Day after the Legend Removal Date until such Investor Shares are delivered without a legend. The
Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section except as it may reasonably determine are necessary or appropriate to comply or to ensure compliance
with those applicable laws that are enacted or modified after the Closing.
5.2 Furnishing
of Information. As long as the Investor owns the Securities, the Company covenants 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 1934 Act. As long as the Investor owns the Securities, if the Company is not required to file reports pursuant to such laws, it will
prepare and furnish to the Investor and make publicly available in accordance with Rule 144(c) such information as is required for the
Investor to sell the Investor Shares under Rule 144. The Company further covenants that it will take such further action as any holder
of the Securities may reasonably request, all to the extent required from time to time to enable such Person to sell such Investor Shares
without registration under the 1933 Act within the limitation of the exemptions provided by Rule 144 or other applicable exemptions.
5.3 Integration.
The Company shall not, and shall use its best efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the 1933 Act) that will be integrated with
the offer or sale of the Securities in a manner that would require the registration under the 1933 Act of the sale of the Securities
to the Investor, or that will be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any
Trading Market that would require, under the rules of the Trading Market, the Stockholder Approval.
5.4 Notification
of Certain Events. The Company shall give prompt written notice to the Investor of (a) the occurrence or non-occurrence of any Event,
the occurrence or non-occurrence of which would render any representation or warranty of the Company contained in this Agreement or any
other Transaction Document, if made on or immediately following the date of such Event, untrue or inaccurate in any material respect,
(b) the occurrence of any Event that, individually or in combination with any other Events, has had or could reasonably be expected to
have a Material Adverse Effect, (c) any failure of the Company to comply with or satisfy any covenant or agreement to be complied with
or satisfied by it hereunder or any Event that would otherwise result in the nonfulfillment of any of the conditions to the Investor’s
obligations hereunder, (d) any notice or other communication from any Person alleging that the consent of such Person is or may be required
in connection with the consummation of the transactions contemplated by this Agreement or any other Transaction Document, or (e) any
Proceeding pending or, to the Company’s knowledge, threatened against a party relating to the transactions contemplated by this
Agreement or any other Transaction Document.
5.5
Available Stock. The Company shall at all times keep authorized and reserved and available for issuance, free of preemptive
rights, such number of shares of Common Stock as are issuable upon repayment or conversion in full of the Note and exercise in full of
the Warrants at any time. If the Company determines at any time that it does not have a sufficient number of authorized shares of Common
Stock to reserve and keep available for issuance as described in this Section 5.5, the Company shall use all commercially reasonable
efforts to increase the number of authorized shares of Common Stock by seeking Stockholder Approval for the authorization of such additional
shares.
5.6
Use of Proceeds. The Company will use the proceeds from the sale of the Note and the Warrants hereunder for the repayment
of the obligations of the Company and the LLC Guarantor under that certain Loan and Security Agreement, dated as of October 21, 2022
and as amended on February 22, 2023 and June 16, 2023, by and among the Company, the LLC Guarantor, the entities party thereto and identified
therein as “Lenders” (the “JGB Lenders”) and JGB Collateral LLC as agent for the JGB Lenders (in such
capacity, the “JGB Agent”) (such facility, the “JGB Facility” and all obligations owing thereunder,
the “JGB Obligations”) and 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 and the repayment
of the JGB Obligations under the JGB Facility), (b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement
of any outstanding litigation or (d) in violation of FCPA or OFAC regulations.
5.7 Repayment
of Note. After the date hereof, if the Company issues any Indebtedness (other than the Note), or issues any Preferred Stock, other
than Exempted Securities, unless otherwise waived in writing by and at the discretion of the Investor, the Company will immediately utilize
the proceeds of such issuance to repay the Note. After the date hereof, if the Company issues any Equity Interests, other than Exempted
Securities, for aggregate cumulative gross proceeds to the Company or any Subsidiary, as applicable, of greater than Five Million Dollars
($5,000,000) while the Note remains outstanding, excluding offering costs or other expenses, unless otherwise waived in writing by and
at the discretion of the Investor, the Company will direct twenty percent (20%) of the proceeds from such issuance to repay the Note.
5.8 Intercreditor
Agreement. In the event that the Company or any Subsidiary incurs debt or issues convertible debt securities to a seller as partial
consideration paid to such seller in connection with an Acquisition, unless otherwise waived in writing by the Investor, as a condition
to consummation of such Acquisition, the holder of such debt or convertible debt securities shall enter into an intercreditor agreement
with the Company and the Investor on terms reasonably satisfactory to the Investor.
5.9 Prohibited
Transactions. The Company hereby covenants and agrees not to enter into any Prohibited Transactions or incur any Indebtedness (other
than Permitted Litigation Indebtedness) without the Investor’s prior written consent, until the later of (a) thirty (30) days after
such time as the Note has been repaid in full, as applicable, and/or has been converted into Conversion Shares and (b) the date on which
the Investor ceases to hold any shares of Common Stock or have the right to acquire any shares of Common Stock.
5.10 Securities
Laws Disclosure; Publicity. The Company shall, by 5:30 p.m. (New York City time) on the Trading Day immediately following the date
hereof, issue a press release disclosing the material terms of the transactions contemplated hereby (the “Press Release”),
and shall, within four (4) days following the date hereof, file a Current Report on Form 8-K (the “Form 8-K”) disclosing
the material terms of the transactions contemplated hereby and including this Agreement as an exhibit thereto; provided, that the Company
may not issue the Press Release without the Investor’s prior written consent. The Company shall provide a copy of the draft Form
8-K to the Investor for review prior to release and the Company shall incorporate the Investor’s reasonable comments. The Company
shall not issue any press release nor otherwise make any such public statement regarding the Investor or the Transaction Documents without
the prior written consent of the Investor, except if such disclosure is made in a manner consistent with the Press Release or Form 8-K,
or is required by law, in which case the Company shall (a) ensure that such disclosure is restricted and limited in content and scope
to the maximum extent permitted by Law to meet the relevant disclosure requirement and (b) provide a copy of the proposed disclosure
to the Investor for review prior to release and the Company shall incorporate the Investor’s reasonable comments. Following the
execution of this Agreement, the Investor and its Affiliates and/or advisors may place announcements on their respective corporate websites
and in financial and other newspapers and publications (including, without limitation, customary “tombstone” advertisements)
describing the Investor’s relationship with the Company under this Agreement in a manner consistent with the Press Release or Form
8-K and including the name and corporate logo of the Company. Notwithstanding anything herein to the contrary, to comply with United
States Treasury Regulations Section 1.6011-4(b)(3)(i), each of the Company and the Investor, and each employee, representative or other
agent of the Company or the Investor, may disclose to any and all persons, without limitation of any kind, the U.S. federal and state
income tax treatment, and the U.S. federal and state income tax structure, of the transactions contemplated hereby and all materials
of any kind (including opinions or other tax analyses) that are provided to such party relating to such tax treatment and tax structure
insofar as such treatment and/or structure relates to a U.S. federal or state income tax strategy provided to such recipient.
5.11 Indemnification
of the Investor.
(a) The
Company will indemnify and hold the Investor, its Affiliates and their respective directors, officers, managers, shareholders, members,
partners, employees and agents and permitted successors and assigns (each, an “Investor Party”) harmless from any
and all damages, 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 and defense (collectively, “Losses”)
that any such Investor Party may suffer or incur as a result of or relating to:
(i) any
breach or inaccuracy of any representation, warranty, covenant or agreement made by the Company in any Transaction Document;
(ii) any
misrepresentation made by the Company in any Transaction Document or in any SEC Document;
(iii) any
omission to state any material fact necessary in order to make the statements made in any SEC Document, in light of the circumstances
under which they were made, not misleading;
(iv) any
Proceeding before or by any court, public board, government agency, self-regulatory organization or body based upon, or resulting from
the execution, delivery, performance or enforcement of any of the Transaction Documents or the consummation of the transactions contemplated
thereby, and whether or not the Investor is party thereto by claim, counterclaim, crossclaim, as a defendant or otherwise, or if such
Proceeding is based upon, or results from, any of the items set forth in clauses (i) through (iii) above.
(b) In
addition to the indemnity contained herein, the Company will reimburse each Investor Party for its reasonable legal and other expenses
(including the cost of any investigation, preparation and travel in connection therewith) incurred in connection therewith, as such expenses
are incurred.
(c) The
provisions of this Section 5.11 shall survive the termination or expiration of this Agreement.
5.12 Non-Public
Information. The Company covenants and agrees that neither it nor any other Person acting on its behalf will provide the Investor
or its agents or counsel with any information that the Company believes constitutes material, non-public information. To the extent the
Company provides the Investor with material, non-public information, the Company shall publicly disclose such information within forty
eight (48) hours of providing the information to the Investor; provided, however, in the event that such material non-public information
is provided to Investor pursuant to Section 9, the Company shall publicly disclose such information within five (5) Business Days
of providing the information to the Investor. The Company understands and confirms that the Investor shall be relying on the foregoing
representation in effecting transactions in securities of the Company.
5.13 Stockholder
Approval. The Company shall hold a special meeting of stockholders (which may also be at the annual meeting of stockholders) on or
before the 90th calendar day following the date hereof for the purpose of obtaining the Stockholder Approval; provided, however, such
ninety (90) calendar days shall be increased to one hundred twenty (120) calendar days in the event the Company receives comments to
its proxy statement from the SEC, with the recommendation of the Board of Directors that such proposal be approved, and the Company shall
solicit proxies from its stockholders in connection therewith in the same manner as all other management proposals in such proxy statement
and all management-appointed proxyholders shall vote their proxies in favor of such proposal. If the Company does not obtain Stockholder
Approval at the first meeting, the Company shall call a meeting every four months thereafter to seek Stockholder Approval until the date
the Stockholder Approval is obtained.
5.14 Listing
of Securities. The Company shall: (a) in the time and manner required by each Trading Market on which the Common Stock is listed,
prepare and file with such Trading Market a Listing of Additional Shares form covering the Investor Shares, (b) take all steps necessary
to cause such shares to be approved for listing on each Trading Market on which the Common Stock is listed as soon as possible thereafter,
(c) provide to the Investor evidence of such Trading Market’s completion of review of the Listing of Additional Shares form, and
(d) maintain the listing of such shares on each such Trading Market.
5.15 Antitrust
Notification. If the Investor determines, in its sole judgment and upon the advice of counsel, that the issuance of the Note, the
Warrants or the Investor Shares pursuant to the terms hereof would be subject to the provisions of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the “HSR Act”), the Company shall file as soon as practicable after the date on which the
Company receives notice from the Investor of the applicability of the HSR Act and a request to so file with the United States Federal
Trade Commission and the United States Department of Justice the notification and report form required to be filed by it pursuant to
the HSR Act in connection with such issuance.
5.16 Share
Transfer Agent. The Company has informed the Investor of the name of its share transfer agent and represents and warrants that the
transfer agent participates in the Depository Trust Company Fast Automated Securities Transfer program. The Company shall notify the
Investor within one (1) Trading Day of any change to its transfer agent.
5.17 Tax
Treatment. The Investor and the Company agree that for U.S. federal income tax purposes, and applicable state, local and non-U.S.
income tax purposes, the Note is not intended to be, and shall not be, treated as indebtedness. Neither the Investor nor the Company
shall take any contrary position on any tax return, or in any audit, claim, investigation, inquiry or proceeding in respect of taxes,
unless otherwise required pursuant to a final determination within the meaning of Section 1313 of the Code, or any analogous provision
of applicable state, local or non-U.S. law.
5.18 Set-Off.
(a) The
Investor may set off any of its obligations to the Company (whether or not due for payment), against any of the Company’s obligations
to the Investor (whether or not due for payment) under this Agreement and/or any other Transaction Document.
(b) The
Investor may do anything necessary to effect any set-off undertaken in accordance with this Section 5.18 (including varying the
date for payment of any amount payable by the Investor to the Company).
5.19 Ongoing
Compliance with Laws. The Company and each of the Subsidiaries shall (a) conduct their respective businesses in compliance in all
material respects with all applicable Laws and (b) take all steps necessary to ensure that their continued performance of the Transaction
Documents and their obligations thereunder do not violate in any material respect any Law or any rule or regulation of the Trading Market
applicable to the Company or any of the Subsidiaries or by which any of their properties or assets are bound or affected.
5.20 Standstill.
The Company hereby covenants and agrees not to issue, sell or register with the SEC (other than on Form S-8 or on any successor form)
any Capital Stock or Indebtedness (other than Permitted Litigation Indebtedness), without the Investor’s prior written consent,
until the earliest to occur of (a) ninety (90) days after the date hereof, (b) the date the Registration Statement is declared effective
by the SEC or (c) the date that any shares issued pursuant to the Note may be immediately resold under Rule 144 without restriction on
the number of shares to be sold or manner of sale.
5.21 Reverse
Stock Split. If at any time the last closing trade price for the Common Stock on the Trading Market as reported by the Trading Market
is less than $0.25, the Company shall promptly call a meeting of the stockholders of the Company for purposes of approving a reverse
stock split of the shares of Common Stock such that the trade price of the Common Stock will be at least $2.00 (a “Reverse Split”)
and, subject to receipt of stockholder approval, shall use its best efforts to promptly effect a Reverse Split.
6. CLOSING
CONDITIONS
6.1 Conditions
Precedent to the Obligations of the Investor. The obligations of the Investor to fund the Note and acquire the Warrants are subject
to the satisfaction or waiver by the Investor, at or before each Applicable Closing Date, of each of the following conditions:
(a) Required
Documentation. The Company must have delivered to the Investor copies of all resolutions duly adopted by the Board of Directors of
the Company, or any such other documentation of the Company approving the Agreement, the Transaction Documents and any of the transactions
contemplated hereby or thereby;
(b) Consents
and Permits. The Company must have obtained and delivered to the Investor copies of all necessary permits, approvals, and registrations
necessary to effect this Agreement, the Transaction Documents and any of the transactions contemplated hereby or thereby, including pursuant
to Section 3.14 of this Agreement;
(c) Trading
Market Approval. The Company shall have either (i) obtained and delivered to the Investor copies of all necessary Trading Market
approvals for the issuance of the Note, the Warrants, and, upon the conversion of the Note, the Conversion Shares, and upon exercise
of the Warrants, the Warrant Shares, or (ii) submitted a Listing of Additional Shares Notification Form with the Trading Market relating
to the issuance of the Note, the Warrants, and, upon conversion of the Note, the Conversion Shares, and upon exercise of the Warrants,
the Warrant Shares;
(d) No
Event(s) of Default. The Investor must be of the reasonable opinion that no Event of Default has occurred and no Event of Default
would result from the execution of this Agreement or any of the Transaction Documents or the transactions contemplated hereby or thereby;
(e) Representations
and Warranties. The representations and warranties of (a) the Company contained herein and (b) the Company and each Subsidiary contained
in any of the Security Documents shall, in each case, be true and correct in all material respects as of the date when made and as of
the Applicable Closing Date as though made on and as of such date;
(f) Performance.
The Company and each Subsidiary shall have performed, satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to such Closing;
(g) No
Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or Governmental Authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents;
(h) No
Suspensions of Trading in Common Stock; Listing. Trading in the Common Stock shall not have been suspended by the SEC or any Trading
Market (except for any suspensions of trading of not more than one day on which the Trading Market is open solely to permit dissemination
of material information regarding the Company) at any time since the date of execution of this Agreement, and the Common Stock shall
have been at all times since such date listed for trading on a Trading Market;
(i) Limitation
on Beneficial Ownership. The issuance of the Note and the Warrants shall not cause the Investor Group to become, directly or indirectly,
a “beneficial owner” (within the meaning of Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder)
of a number of Equity Interests of a class that is registered under the 1934 Act which exceeds the Maximum Percentage of the Equity Interests
of such class that are outstanding at such time;
(j) Perfection
of Security Interest. The Investor shall have, to its satisfaction, perfected the security interest granted in the assets and collateral
of the Company and its Subsidiaries described in the Security Agreement and the LLC Guarantor Security Agreement;
(k) Funds
Flow Request. The Company shall have delivered to the Investor a flow of funds request, substantially in the form set out in Exhibit
D; and
(l) Transfer
Agent Instructions. The Company shall have delivered to the Investor a copy of the irrevocable instructions to the Company’s
transfer agent instructing the Company’s transfer agent to deliver the Investor Shares to the Investor upon conversion of the Note
or exercise of the Warrants, as applicable.
(m) Junior
Notes. The Company shall have provided evidence satisfactory to the Investor that (a) each of 2642186 Ontario Inc., Lev Peker and
Edwin J. Rigaud (the “Junior Creditors”) have executed and delivered to the Company that certain Note and Warrant Purchase
Agreement dated as of July 13, 2023 and the related notes thereunder (the “July Junior Notes”) pursuant to which the Junior
Creditors are providing loans to the Company in an aggregate principal amount of not less than $2,250,000 (the “July 2023 Junior
Loans”); (b) the Junior Creditors have fully funded the July 2023 Junior Loans and the Company has received the $2,250,000 proceeds
thereof; and (c) in connection with the July 2023 Junior Loans, Lev Peker has lent not less than $1,000,000 of the $2,250,000 of such
July 2023 Junior Loans. In addition, the Company hereby shall send to the Investor an amount of not less than $568,444.46 so that when
taken together with the amount to be advanced by the Investor hereunder on the Closing Date, the Investor will hold a sufficient about
to repay in full the JGB Obligations (and the Company hereby authorizes and directs the Investor to send such amount to JGB).
(n) Junior
Notes Subordination Agreement. The Company and each holder of a Junior Note (as such term is defined in the Security Agreement) shall
have delivered to the Investor an executed copy of the Junior Notes Subordination Agreement (as such term is defined in the Security
Agreement).
(o) Payoff
Letter and Payoff of JGB Obligations. The Company shall have delivered to the Investor an executed copy of a payoff letter from the
JGB Agent and the JGB Lenders providing that upon receipt of $4,318,444.46, all the JGB Obligations shall be paid in full and all Liens
in favor of the JGB Agent and the JGB Lenders shall be released.
6.2 Conditions
Precedent to the Obligations of the Company. The obligations of the Company to issue the Note and the Warrants are subject to the
satisfaction or waiver by the Company, at or before each Applicable Closing Date, of each of the following conditions:
(a) Representations
and Warranties. The representations and warranties of the Investor contained herein shall be true and correct in all material respects
as of the date when made and as of the Applicable Closing Date as though made on and as of such date;
(b) Performance.
The Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required
by the Transaction Documents to be performed, satisfied or complied with by the Investor at or prior to the Closing; and
(c) No
Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or Governmental Authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.
7. EVENTS
OF DEFAULT
7.1 Events
of Default. The occurrence of any of the following events shall be an “Event of Default” under this Agreement:
(a) an
Event of Default (as defined in the Note);
(b) any
of the representations or warranties made by the Company, any Subsidiary or any of its agents, officers, directors, employees or representatives
in any Transaction Document or public filing being inaccurate, false or misleading in any material respect, as of the date as of which
it is made or deemed to be made, including as of any Closing Date, or any certificate or financial or other written statements furnished
by or on behalf of the Company or any Subsidiary to the Investor or any of its representatives, is inaccurate, false or misleading, in
any material respect, as of the date as of which it is made or deemed to be made, including as of any Closing Date; or
(c) a
failure by the Company to comply with any of its covenants or agreements set forth in this Agreement.
7.2 Investor
Right to Investigate an Event of Default. If in the Investor’s reasonable opinion, an Event of Default has occurred, or is
or may be continuing:
(a) the
Investor may notify the Company that it wishes to investigate such purported Event of Default;
(b) the
Company shall cooperate with the Investor in such investigation;
(c) the
Company shall comply with all reasonable requests made by the Investor to the Company in connection with any investigation by the Investor
and shall (i) provide all information requested by the Investor in relation to the Event of Default to the Investor; provided that the
Investor agrees that any materially price sensitive information and/or non-public information will be subject to confidentiality, and
(ii) provide all such requested information within three (3) Business Days of such request; and
(d) the
Company shall pay all reasonable costs incurred by the Investor in connection with any such investigation.
7.3 Remedies
Upon an Event of Default
(a) If
an Event of Default occurs pursuant to Section 7.1(a), the Investor shall have such remedies as are set forth in the Note.
(b) If
an Event of Default occurs pursuant to Section 7.1(b) or Section 7.1(c) and is not remedied within (i) two (2) Business
Days for an Event of Default occurring by the Company’s or any Subsidiary’s failure to comply with Section 7.1(c),
or (ii) five (5) Business Days for an Event of Default occurring pursuant to Section 7.1(b), the Investor may declare, by notice
to the Company or the applicable Subsidiary, effective immediately, all outstanding obligations by the Company or the applicable Subsidiary
under the Transaction Documents to be immediately due and payable in immediately available funds and the Investor shall have no obligation
to consummate any Closing under this Agreement or to accept the conversion of any Note into Conversion Shares.
(c) If
any Event of Default occurs and is not remedied within (i) two (2) Business Days for an Event of Default occurring by the Company’s
failure to comply with Section 7.1(c), or (ii) five (5) Business Days for an Event of Default occurring pursuant to Section
7.1(b), the Investor may, by written notice to the Company, terminate this Agreement effective as of the date set forth in the Investor’s
notice.
8. TERMINATION
8.1 Events
of Termination. This Agreement:
(a) may
be terminated:
(i) by
the Investor on the occurrence or existence of a Securities Termination Event or a Change of Control;
(ii) by
the mutual written consent of the Company and the Investor, at any time;
(iii) by
either Party, by written notice to the other Party, effective immediately, if the Closing has not occurred within ten (10) Business Days
of the date specified by this Agreement or such later date as the Company and the Investor agree in writing, provided that the right
to terminate this Agreement under this Section 8.1(a)(iii) is not available to any party that is in material breach of or material
default under this Agreement or whose failure to fulfill any obligation under this Agreement has been the principal cause of, or has
resulted in the failure of the Closing to occur; or
(iv) by
the Investor, in accordance with Section 7.3(c).
8.2 Automatic
Termination. This Agreement will automatically terminate, without further action by the parties, at the time after the Closing Date
that is sixty (60) days after the Outstanding Principal Amount under the Note and any accrued but unpaid interest is reduced to zero
(0), whether as a result of Conversion or repayment by the Company in accordance with the terms of this Agreement and the Note.
8.3 Effect
of Termination.
(a) Subject
to Section 8.3(b), each party’s right of termination under Section 8.1 is in addition to any other rights it may
have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies.
(b) If
the Investor terminates this Agreement under Section 8.1(a)(i):
(i) the
Investor may declare, by notice to the Company, all outstanding obligations by the Company under the Transaction Documents to be due
and payable (including, without limitation, the immediate repayment of any Outstanding Principal Amount under the Note plus accrued but
unpaid interest) without presentment, demand, protest or any other notice of any kind all of which are expressly waived by the Company,
anything to the contrary contained in this Agreement or in any other Transaction Document notwithstanding; and
(ii) the
Company must within five (5) Business Days of such notice being received, pay to the Investor in immediately available funds the Outstanding
Principal Amount for the Note plus all accrued interest thereon (if any), unless the Investor terminates this Agreement as a result of
an Event of Default and provided that (A) subsequent to the termination under Section 8.1(a)(i), the Investor is not prohibited
by Law or otherwise from exercising its conversion rights pursuant to this Agreement or the Note, (B) the Investor actually exercises
its conversion rights under this Agreement or the Note, and (C) the Company otherwise complies in all respects with its obligation to
issue Conversion Shares in accordance with the Note (which obligation will survive termination).
(c) Upon
termination of this Agreement, the Investor will not be required to fund any further amount after the date of termination of the Agreement,
provided that termination will not affect any undischarged obligation under this Agreement, and any obligation of the Company to pay
or repay any amounts owing to the Investor hereunder and which have not been repaid at the time of termination.
(d) Nothing
in this Agreement will be deemed to release any party from any liability for any breach by such party of the terms and provisions of
this Agreement or to impair the right of any party to compel specific performance by any other Party of its obligations under this Agreement.
9. REGISTRATION
RIGHTS
9.1 Registration.
(a) Registration
Statement. Promptly, but in any event no later than fifteen (15) days from the date of this Agreement, the Company shall prepare
and file with the SEC a Registration Statement covering the resale of all of the Investor Shares. The foregoing Registration Statement
shall be filed on Form S-3, or if Form S-3 is not available to the Company, Form S-1 or any successor forms thereto. The Registration
Statement (and each amendment or supplement thereto, and each request for acceleration of effectiveness thereof) shall be provided to
the Investor and its counsel at least three (3) Business Days prior to its filing or other submission and the Company shall incorporate
all reasonable comments provided by the Investor or its counsel.
(b) Expenses.
Except as otherwise expressly provided herein, the Company will pay all fees and expenses incident to the performance of or compliance
with this Section 9, including all fees and expenses associated with effecting the registration of the Investor Shares, including
all filing and printing fees, the Company’s counsel and accounting fees and expenses, costs associated with clearing the Investor
Shares for sale under applicable state securities laws, listing fees, fees and expenses of one counsel to the Investor and the Investor’s
reasonable expenses in connection with the registration, but excluding discounts, commissions, fees of underwriters, selling brokers,
dealer managers or similar securities industry professionals with respect to the Investor Shares being sold.
(c) Effectiveness.
The Company shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable
after filing thereof but in no event later than the date that is ninety (90) days following the Closing Date. The Company shall notify
the Investor by e-mail as promptly as practicable, and in any event, within twenty-four (24) hours, after the Registration Statement
is declared effective and shall simultaneously provide the Investor with copies of any related Prospectus to be used in connection with
the sale or other disposition of the securities covered thereby.
(d) Piggyback
Registration Rights. If the Company at any time determines to file a registration statement under the 1933 Act to register the offer
and sale, by the Company, of shares of Common Stock (other than (y) on Form S-4 or Form S-8 under the 1933 Act or any successor forms
thereto, or (z) a registration of securities solely relating to an offering and sale to employees or directors of the Company pursuant
to any employee stock plan or other employee benefit plan arrangement), the Company shall, as soon as reasonably practicable, give written
notice to the Investor of its intention to so register the offer and sale of shares of Common Stock and, upon the written request, given
within five (5) Business Days after delivery of any such notice by the Company, of the Investor to include in such registration the Investor
Shares (which request shall specify the number of Investor Shares proposed to be included in such registration), the Company shall cause
all such Investor Shares to be included in such registration statement on the same terms and conditions as the shares of Common Stock
otherwise being sold pursuant to such registered offering.
9.2 Company
Obligations. The Company will use its efforts to effect the registration of the Investor Shares in accordance with the terms hereof,
and pursuant thereto the Company will, as expeditiously as possible:
(a) use
its commercially reasonable efforts to cause the Registration Statement to become effective and to remain continuously effective for
a period that will terminate upon the first date on which all Investor Shares are either covered by the Registration Statement or may
be sold without restriction, including volume or manner-of-sale restrictions, pursuant to Rule 144 or have been sold by the Investor
(the “Effectiveness Period”) and advise the Investor in writing when the Effectiveness Period has expired;
(b) prepare
and file with the SEC such amendments and post-effective amendments and supplements to the Registration Statement and the Prospectus
as may be necessary to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions of the
1933 Act and the 1934 Act with respect to the distribution of all of the Investor Shares covered thereby;
(c) provide
copies to and permit counsel designated by the Investor to review all amendments and supplements to the Registration Statement no fewer
than three (3) Business Days prior to its filing with the SEC and not file any document to which such counsel reasonably objects;
(d) furnish
to the Investor and its legal counsel, without charge, (i) promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company (but not later than two (2) Business Days after the filing date, receipt date or sending date, as the
case may be) one copy of the Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and each amendment
or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the staff of the SEC, and each item of correspondence
from the SEC or the staff of the SEC, in each case relating to the Registration Statement (other than any portion of any thereof which
contains information for which the Company has sought confidential treatment), and (ii) such number of copies of a Prospectus, including
a preliminary prospectus, and all amendments and supplements thereto and such other documents as the Investor may reasonably request
in order to facilitate the disposition of the Investor Shares that are covered by the related Registration Statement;
(e) immediately
notify the Investor of any request by the SEC for the amending or supplementing of the Registration Statement or Prospectus or for additional
information;
(f) use
its commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii) if such
order is issued, obtain the withdrawal of any such order at the earliest possible moment and notify the Company of the issuance of any
such order and the resolution thereof, or its receipt of notice of the initiation or threat of any proceeding for such purpose;
(g) prior
to any public offering of Investor Shares, use its commercially reasonable efforts to register or qualify or cooperate with the Investor
and its counsel in connection with the registration or qualification of such Investor Shares for offer and sale under the securities
or blue sky laws of such jurisdictions requested by the Investor and do any and all other commercially reasonable acts or things necessary
or advisable to enable the distribution in such jurisdictions of the Investor covered by the Registration Statement and the Company shall
promptly notify the Investor of any notification with respect to the suspension of the registration or qualification of any of such Investor
Shares for sale under the securities or blue sky laws of such jurisdictions or its receipt of notice of the initiation or threat of any
proceeding for such purpose;
(h) immediately
notify the Investor, at any time prior to the end of the Effectiveness Period, upon discovery that, or upon the happening of any event
as a result of which, the Registration Statement or Prospectus includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of the Prospectus,
in light of the circumstances in which they were made), and promptly prepare, file with the SEC and furnish to such holder a supplement
to or an amendment of such Registration Statement or Prospectus as may be necessary so that such Registration Statement or Prospectus
shall not include 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 not misleading (in the case of such Prospectus, in light of the circumstances in which they were made);
(i) otherwise
use its commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the 1933 Act and the 1934
Act;
(j) hold
in confidence and not make any disclosure of information concerning the Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to complete
the Registration Statement or to avoid or correct a misstatement or omission in the Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction,
or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any
other agreement, and upon learning that disclosure of such information concerning the Investor is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt written notice to the Investor and allow the Investor, at the Investor’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information; and
(k) take
all other reasonable actions necessary to expedite and facilitate disposition by the Investor of all Investor Shares pursuant to the
Registration Statement.
9.3 Indemnification.
(a) Indemnification
by the Company. The Company will indemnify and hold harmless the Investor Parties, from and against any Losses to which they may
become subject under the 1933 Act or otherwise, arising out of, relating to or based upon: (i) any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement, any preliminary Prospectus, final Prospectus or other document,
including any Blue Sky Application (as defined below), or any amendment or supplement thereof or any omission or alleged omission of
a material fact required to be stated therein or, in the case of the Registration Statement, necessary to make the statements therein
not misleading or, in the case of any preliminary Prospectus, final Prospectus or other document, necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading; (ii) any Blue Sky Application or other document executed by the
Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction
in order to qualify any or all of the Investor Shares under the securities laws thereof (any such application, document or information
herein called a “Blue Sky Application”); (iii) any violation or alleged violation by the Company or its agents of
the 1933 Act, the 1934 Act or any similar federal or state law or any rule or regulation promulgated thereunder applicable to the Company
or its agents and relating to any action or inaction required of the Company in connection with the registration or the offer or sale
of the Investor Shares pursuant to any Registration Statement; or (iv) any failure to register or qualify the Investor Shares included
in any such Registration Statement in any state where the Company or its agents has affirmatively undertaken or agreed in writing that
the Company will undertake such registration or qualification on the Investor’s behalf and will reimburse the Investor Parties
for any legal or other expenses reasonably incurred by them in connection with investigating, preparing or defending any such Losses;
provided, however, that the Company will not be liable in any such case if and to the extent, but only to the extent, that any such Losses
arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by the Investor or any such controlling Person in writing specifically for use in such Registration Statement
or Prospectus.
(b) Conduct
of Indemnification Proceedings. Any Person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying
party of any claim, action, suit or proceeding with respect to which it seeks indemnification following such Person’s receipt of,
or such Person otherwise become aware of, the commencement of such claim, action, suit or proceeding and (ii) permit such indemnifying
party to assume the defense of such claim, action, suit or proceeding with counsel reasonably satisfactory to the indemnified party;
provided, however, that any Person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate
in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person unless (A) the indemnifying
party has agreed to pay such fees or expenses, (B) the indemnifying party shall have failed to assume the defense of such claim and employ
counsel reasonably satisfactory to such Person or (C) in the reasonable judgment of any such Person, based upon written advice of its
counsel, a conflict of interest exists between such Person and the indemnifying party with respect to such claims (in which case, if
the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person); and provided, further,
that the failure or delay of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its
obligations hereunder, except to the extent that such failure or delay to give notice shall materially adversely affect the indemnifying
party in the defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any
proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such
indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified
party of a release from all liability in respect of such claim or litigation.
(c) Contribution.
If for any reason the indemnification provided for in the preceding paragraph (a) is unavailable to an indemnified party or insufficient
to hold it harmless, other than as expressly specified therein, the indemnifying party shall contribute to the amount paid or payable
by the indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the indemnified
party and the indemnifying party, as well as any other relevant equitable considerations. No Person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution from any Person not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section are in addition to any other rights or remedies that any indemnified
party may have under applicable law, by separate agreement or otherwise.
10. RIGHTS
TO FUTURE STOCK ISSUANCES. Subject to the terms
and conditions of this Section 10 and applicable securities laws, if at any time prior to the one year anniversary of the Closing,
the Company or any of its Subsidiaries proposes to offer or sell any New Securities (a “Subsequent Financing”), the
Company shall first offer the Investor the opportunity to purchase up to twenty percent (20%) of such New Securities. The Investor shall
be entitled to apportion the right of first offer hereby granted to it in such proportions as it deems appropriate among itself and its
Affiliates.
10.1 The
Company shall give notice (the “Offer Notice”) to the Investor, stating (a) its (or a Subsidiary’s, as applicable)
bona fide intention to offer such New Securities, (b) the number of such New Securities to be offered, and (c) the price and terms, if
any, upon which it proposes to offer such New Securities.
10.2 By
notification to the Company within one (1) day after the date the Offer Notice is given (the “Notice Termination Time”),
the Investor may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to twenty percent
(20%) of such New Securities. If the Company receives no such notice from the Investor as of such Notice Termination Time, the Investor
shall be deemed to have notified the Company that it does not elect to participate in such Subsequent Financing. The closing of any sale
pursuant to this Section 10 shall occur within three (3) days of the earlier of (a) the date that the Offer Notice is given and
(b) the date of initial sale of New Securities pursuant to Section 10.3.
10.3 The
Company or a Subsidiary, as applicable, may, during the three (3) day period following the expiration of the period provided in Section
10.2, offer and sell the remaining portion of such New Securities to any Person or Persons at a price not less than, and upon terms
no more favorable to the offeree than, those specified in the Offer Notice. If the Company or a Subsidiary, as applicable, does not enter
into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days
of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless
first reoffered to the Investor in accordance with this Section 10.
10.4 The
right of first offer in this Section 10 shall not be applicable to Exempted Securities and shall be in accordance with all applicable
federal and state securities Laws.
11. GENERAL
PROVISIONS
11.1
Fees and Expenses. Prior to the date of this Agreement, the Company has paid Morgan, Lewis & Bockius LLP $25,000. At the Closing,
the Company shall reimburse the Investor up to an additional $50,000 in the aggregate of reasonably documented due diligence costs and
fees and disbursements of Morgan, Lewis & Bockius LLP in connection with the preparation of the Transaction Documents, it being understood
that Morgan, Lewis & Bockius LLP has not rendered any legal advice to the Company in connection with the transactions contemplated
hereby and that the Company has relied for such matters on the advice of its own counsel. Except as specified above, 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 the Transaction Documents. The Company shall pay all
stamp and other taxes and duties levied in connection with the sale of the Note and the Warrants.
11.2 Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via email
at the email address specified in this Section prior to 5:00 p.m. (New York time) on a Business Day, (b) the next Business Day after
the date of transmission, if such notice or communication is delivered via email at the email address specified in this Section on a
day that is not a Business Day or later than 5:00 p.m. (New York time) on any date and earlier than 11:59 p.m. (New York time) on such
date, (c) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon
actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as
follows:
If
to the Company:
Parts
iD, Inc.
1
Corporate Drive, Suite C
Cranbury,
NJ 08512
Telephone:
(609) 642-4700
Email:
lev.peker@corp.partsid.com;
john.pendleton@corp.partsid.com
Attention: Lev Peker and John Pendleton
With
a copy (which shall not constitute notice) to:
DLA
Piper LLP (US)
51
John F. Kennedy Parkway
Suite
120
Short
Hills, NJ 07078
Telephone:
(973) 520-2545
Email:
james.fischer@us.dlapiper.com
Attention:
James M. Fischer
If
to the Investor:
Lind
Global Fund II LP
c/o The Lind Partners LLC
444 Madison Avenue, Floor 41
New York, NY 10022
Telephone: (646) 395-3931
Email: jeaston@thelindpartners.com and
notice@thelindpartners.com
Attention: Jeff Easton
With
a copy (which shall not constitute notice) to:
Morgan,
Lewis & Bockius LLP
One Federal Street
Boston, MA 02110
Telephone: (617) 341-7269
Email: bryan.keighery@morganlewis.com
Attention: Bryan S. Keighery
or
such other address as may be designated in writing hereafter, in the same manner, by such Person.
11.3
Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be excessive in scope or
otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the
maximum extent possible, and the validity and enforceability of the remaining provisions of this Agreement will not in any way be affected
or impaired thereby.
11.4
Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without
reference to principles of conflict of laws or choice of laws.
11.5
Jurisdiction and Venue. Any action, proceeding or claim arising out of, or relating in any way to this Agreement shall be
brought and enforced in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District
of New York. The Company and the Investor irrevocably submit to the jurisdiction of such courts, which jurisdiction shall be exclusive,
and hereby waive any objection to such exclusive jurisdiction or that such courts represent an inconvenient forum. The prevailing party
in any such action shall be entitled to recover its reasonable and documented attorneys’ fees and out-of-pocket expenses relating
to such action or proceeding.
11.6
WAIVER OF RIGHT TO JURY TRIAL. THE COMPANY AND THE INVESTOR HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER TRANSACTION
DOCUMENTS.
11.7 Survival.
The representations, warranties, agreements and covenants contained herein shall survive the Closings and the delivery of the Securities.
11.8
Entire Agreement. The Transaction Documents, together with the Exhibits and Schedules thereto, contain the entire understanding
of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
11.9
Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed by the
Company and the Investor. 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 either party to exercise any right hereunder in any manner impair the exercise
of any such right.
11.10 Construction.
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any
of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be construed as if drafted
jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction Documents.
11.11
Successors and Assigns. This Agreement shall be binding upon, and inure to the benefit of and be enforceable by, the Company
and the Investor and their respective successors and assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Investor. The Investor may assign any or all of its rights under this Agreement to
any Person to whom the Investor assigns or transfers any Securities, provided such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions hereof that apply to the “Investor” and such transferee is an accredited
investor.
11.12 No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
11.13
Further Assurances. Each party hereto shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.
11.14
Counterparts. This Agreement may be executed in two identical counterparts, both of which shall be considered one and the
same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. Signature
pages delivered by facsimile or e-mail shall have the same force and effect as an original signature.
11.15 Specific
Performance. The Company acknowledges that monetary damages alone would not be adequate compensation to the Investor for a breach
by the Company of this Agreement and the Investor may seek an injunction or an order for specific performance from a court of competent
jurisdiction if (a) the Company fails to comply or threatens not to comply with this Agreement or (b) the Investor has reason to believe
that the Company will not comply with this Agreement.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the undersigned have executed this Securities Purchase Agreement as of the date first set forth above.
COMPANY: |
|
INVESTOR: |
|
|
|
PARTS ID, INC. |
|
Lind GLOBAL FUND II LP |
|
|
|
By: |
/s/ John Pendleton |
|
By: |
/s/ Jeff Easton |
Name: |
John Pendleton |
|
Name: |
Jeff Easton |
Title: |
Executive Vice President, Legal & Corporate Affairs |
|
Title: |
Managing Member of Lind Global Partners II LLC,
General Partner |
[Signature Page of Securities
Purchase Agreement]
Schedule
3.4(b)
Subsidiaries
of PARTS iD, Inc.
PARTS
iD, LLC, a Delaware limited liability company
PARTS
iD, Inc. is the sole member of, and owns 100% of the equity interests of, PARTS iD, LLC.
Schedule
3.22
Finders’
Fee
Pursuant
to that certain Engagement Agreement, dated as of May 8, 2023, PARTS iD, Inc. (the “Company”) shall pay Titan Partners Group
LLC, a division of American Capital Partners, LLC, (i) a cash fee equal to six percent (6%) of the gross proceeds from the sale of securities
contemplated by this Agreement and (ii) warrants equal to five percent (5%) of the aggregate number of equity securities issuable upon
conversion or exercise of the securities issued by the Company under this Agreement.
EXHIBIT
A
FORM
OF SECURITY AGREEMENT
EXHIBIT
B
FORM
OF NOTE
[See
attached]
EXHIBIT
C
FORM
OF WARRANT
[See
attached]
EXHIBIT
D
FLOW
OF FUNDS REQUEST
Parts
iD, Inc. – Securities Purchase Agreement – Flow of Funds Request
In
connection with the Securities Purchase Agreement, dated July 14, 2023 (the “Agreement”) between PARTS iD, Inc. (the “Company”)
and Lind Global Fund II LP (the “Investor”), the Company irrevocably authorizes the Investor to distribute such funds as
set out below, in the manner set out below, at the Closing.
Capitalized
terms used but not otherwise defined in this letter will have the meaning given to such terms in the Agreement.
Item | |
| Amount | |
Closing | |
$ | [●] | |
Commitment Fee | |
$ | [●] | |
Total | |
$ | [●] | |
Please
transfer the net amount of US $[●] due at the Closing, to the following bank account:
Routing #: |
[●] |
Account # |
[●] |
FBO: |
[●] |
|
[●] |
|
[●] |
Bank: |
[●] |
|
[●] |
[●] |
|
Yours
sincerely,
PARTS
ID, INC.
Exhibit 10.2
THIS NOTE 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 AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS NOTE AND
THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.
PARTS ID, INC.
Form of Senior
Secured
Convertible Promissory
Note due July 14, 2024
Note No. |
$5,367,500 |
Dated: July
14, 2023 (the “Issuance Date”) |
|
For value received, PARTS ID, INC., a Delaware
corporation (the “Maker” or the “Company”), hereby promises to pay to the order of Lind Global Fund
II LP, a Delaware limited partnership (together with its successors and representatives, the “Holder”), in accordance
with the terms hereinafter provided, the principal amount of FIVE MILLION THREE HUNDRED SIXTY-SEVEN THOUSAND FIVE HUNDRED DOLLARS ($5,367,500)
(the “Principal Amount”).
All payments under or pursuant
to this Senior Secured Convertible Promissory Note (this “Note”) shall be made in United States Dollars in immediately
available funds to the Holder at the address of the Holder set forth in the Purchase Agreement (as hereinafter defined) or at such other
place as the Holder may designate from time to time in writing to the Maker or by wire transfer of funds to the Holder’s account,
instructions for which are attached hereto as Exhibit A. The Outstanding Principal Amount of this Note shall be due and payable
on July 14, 2024 (the “Maturity Date”) or at such earlier time as provided herein; provided, that the Holder, in its
sole discretion, may extend the Maturity Date to any date after the original Maturity Date. In the event that the Maturity Date shall
fall on Saturday or Sunday, such Maturity Date shall be the next succeeding Business Day. All calculations made pursuant to this Note
shall be rounded down to three decimal places.
ARTICLE
1
1.1 Purchase
Agreement. This Note has been executed and delivered pursuant to the Securities Purchase Agreement, dated as of July 14, 2023 (as
the same may be amended from time to time, the “Purchase Agreement”), by and between the Maker and the Holder. Capitalized
terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Purchase Agreement.
1.2 Interest.
This Note shall not bear interest.
1.3 [Reserved.]
1.4 Prepayment.
1.4.1 Following
the date that is sixty (60) days after the earlier to occur of (a) the date the Registration Statement is declared effective by the SEC
or (b) the date that any shares issued pursuant to this Note may be immediately resold under Rule 144 without restriction on the number
of shares to be sold or manner of sale, the Maker may repay all, but not less than all, of the then Outstanding Principal Amount upon
delivering a Prepayment Notice on any Business Day (a “Prepayment Date”), for an amount (the “Prepayment Amount”)
equal to the product of the Outstanding Principal Amount multiplied by 1.05.
1.4.2 If
the Maker elects to prepay this Note pursuant to this Section 1.4, the Holder shall have the right, upon written notice to the
Maker (a “Prepayment Conversion Notice”) within five (5) Business Days of the Holder’s receipt of a Prepayment
Notice, to convert up to thirty three and one third percent (331/3%) of the Principal Amount (the “Maximum Amount”)
at the Conversion Price (as defined below), in accordance with the provisions of Article 3, specifying the Principal Amount (up to the
Maximum Amount) that the Holder will convert. Upon delivery of a Prepayment Notice, the Maker irrevocably and unconditionally agrees to,
within five (5) Business Days of receiving a Prepayment Conversion Notice, and if no Prepayment Conversion Notice is received, within
ten (10) Business Days of delivery of a Prepayment Notice: (i) repay the amount of the Outstanding Principal Amount minus the Principal
Amount set forth in the Prepayment Conversion Notice and (ii) issue the applicable Conversion Shares to the Holder in accordance with
Article 3, as applicable. The foregoing notwithstanding, the Maker may not deliver a Prepayment Notice with respect to any Outstanding
Principal Amount that is subject to a Conversion Notice delivered by the Holder in accordance with Article 3.
1.5 Delisting
from a Trading Market. If at any time the Common Stock ceases to be listed on a Trading Market, (i) the Holder may deliver a demand
for payment to the Company and, if such a demand is delivered, the Company shall, within ten (10) Business Days following receipt of the
demand for payment from the Holder, pay all of the Outstanding Principal Amount or (ii) the Holder may, at its election, after the six-month
anniversary of the Issuance Date or earlier if a Registration Statement covering the Conversion Shares has been declared effective, upon
notice to the Company in accordance with Section 5.1, convert all or a portion of the Outstanding Principal Amount and the
Conversion Price shall be adjusted to the lower of (A) the then-current Conversion Price and (A) eighty percent (80%) of the average of
the three (3) lowest daily VWAPs during the twenty (20) Trading Days prior to delivery by the Holder of its notice of conversion pursuant
to this Section 1.5.
1.6 Payment
on Non-Business Days. Whenever any payment to be made shall be due on a day which is not a Business Day, such payment may be due on
the next succeeding Business Day.
1.7 Transfer.
This Note may be transferred or sold, subject to the provisions of Section 5.8 of this Note, or pledged, hypothecated or otherwise
granted as security by the Holder.
1.8 Replacement.
Upon receipt of a duly executed and notarized written statement from the Holder with respect to the loss, theft or destruction of this
Note (or any replacement hereof), or, in the case of a mutilation of this Note, upon surrender and cancellation of such Note, the Maker
shall issue a new Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated Note.
1.9 Use
of Proceeds. The Maker shall use the proceeds of this Note as set forth in the Purchase Agreement.
1.10 Status
of Note and Security Interest. The obligations of the Maker under this Note shall be senior to all other existing Indebtedness and
equity of the Company, other than any payment obligations hereunder shall be pari passu with any payment obligations under the Permitted
Litigation Indebtedness. Upon any Liquidation Event (as hereinafter defined), the Holder will be entitled to receive, before any distribution
or payment is made upon, or set apart with respect to, any Indebtedness of the Maker, other than the Permitted Liens, or any class of
capital stock of the Maker, an amount equal to the Outstanding Principal Amount. For purposes of this Note, “Liquidation Event”
means a liquidation pursuant to a filing of a petition for bankruptcy under applicable law or any other insolvency or debtor’s relief,
an assignment for the benefit of creditors, or a voluntary or involuntary liquidation, dissolution or winding up of the affairs of the
Maker.
1.11 Secured
Note; Guarantee. The full amount of this Note is (a) secured by the Collateral (as defined in the Security Agreement) identified and
described as security therefor in the Security Agreement (the “Collateral”); (b) guaranteed by the LLC Guarantor; and (c)
secured by the Collateral (as defined in the LLC Guarantor Security Agreement) identified and described as security therefor in the LLC
Guarantor Security Agreement (the “LLC Guarantor Collateral”).
1.12 Tax
Treatment. The Maker and the Holder agree that for U.S. federal income tax purposes, and applicable state, local and non-U.S. income
tax purposes, this Note is not intended to be, and shall not be, treated as indebtedness. Neither the Maker nor the Holder shall take
any contrary position on any tax return, or in any audit, claim, investigation, inquiry or proceeding in respect of Taxes, unless otherwise
required pursuant to a final determination within the meaning of Section 1313 of the Internal Revenue Code of 1986, as amended (the “Code”),
or any analogous provision of applicable state, local or non-U.S. law.
ARTICLE
2
2.1 Events
of Default. An “Event of Default” under this Note shall mean the occurrence of any of the events defined in the
Purchase Agreement, and any of the additional events described below:
(a) any
default in the payment of (i) the Principal Amount or any accrued and unpaid interest hereunder when due, or any principal or interest
owing under any other Note; or (ii) liquidated damages in respect of this Note or any other Note as and when the same shall become
due and payable (whether on the Maturity Date or by acceleration or otherwise);
(b) the
Maker or any Subsidiary (including, without limitation, the LLC Guarantor) shall fail to observe or perform any other covenant, condition
or agreement contained in this Note or any Transaction Document;
(c) the
Maker’s notice to the Holder, including by way of public announcement, at any time, of its inability to comply (including for any
of the reasons described in Section 3.6(a) hereof) or its intention not to comply with proper requests for conversion of this Note
into shares of Common Stock;
(d) the
Maker shall fail to (i) timely deliver the shares of Common Stock as and when required in Section 3.2; or (ii) make the payment
of any fees and/or liquidated damages under this Note, the Purchase Agreement or the other Transaction Documents;
(e) default
shall be made in the performance or observance of any material covenant, condition or agreement contained in the Purchase Agreement or
any other Transaction Document that is not covered by any other provisions of this Section 2.1;
(f) at
any time the Maker shall fail to have a sufficient number of shares of Common Stock authorized, reserved and available for issuance to
satisfy the potential conversion in full (disregarding for this purpose any and all limitations of any kind on such conversion) of this
Note or upon exercise of the Warrant;
(g) any
representation or warranty made by the Maker or any of its Subsidiaries (including, without limitation, the LLC Guarantor) herein or in
the Purchase Agreement, this Note, the Warrant or any other Transaction Document shall prove to have been false or incorrect or breached
in a material respect on the date as of which made;
(h) unless
otherwise approved in writing in advance by the Holder, the Maker shall, or shall announce an intention to pursue or consummate a Change
of Control, or a Change of Control shall be consummated, or the Maker shall negotiate, propose or enter into any agreement, understanding
or arrangement with respect to any Change of Control;
(i) the
Maker or any of its Subsidiaries (including, without limitation, the LLC Guarantor) shall (A) default in any payment of any amount or
amounts of principal of or interest (if any) on any Indebtedness (other than the Indebtedness hereunder), the aggregate principal amount
of which Indebtedness is in excess of $250,000 or (B) default in the observance or performance of any other agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders or beneficiary
or beneficiaries of such Indebtedness to cause with the giving of notice if required, such Indebtedness to become due prior to its stated
maturity;
(j) the
Maker or any of its Subsidiaries (including, without limitation, the LLC Guarantor) shall: (i) apply for or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property
or assets; (ii) make a general assignment for the benefit of its creditors; (iii) commence a voluntary case under the United States Bankruptcy
Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic); (iv) file a petition seeking
to take advantage of any bankruptcy, insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors’
rights generally; (v) acquiesce in writing to any petition filed against it in an involuntary case under United States Bankruptcy Code
(as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic); (vi) issue a notice of bankruptcy
or winding down of its operations or issue a press release regarding same; or (vii) take any action under the laws of any jurisdiction
(foreign or domestic) analogous to any of the foregoing;
(k) a
proceeding or case shall be commenced in respect of the Maker or any of its Subsidiaries (including, without limitation, the LLC Guarantor),
without its application or consent, in any court of competent jurisdiction, seeking: (i) the liquidation, reorganization, moratorium,
dissolution, winding up, or composition or readjustment of its debts; (ii) the appointment of a trustee, receiver, custodian, liquidator
or the like of it or of all or any substantial part of its assets in connection with the liquidation or dissolution of the Maker or any
of its Subsidiaries; or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or
case described in clause (i), (ii) or (iii) shall continue undismissed, or unstayed and in effect, for a period of forty-five (45) days
or any order for relief shall be entered in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or
under the comparable laws of any jurisdiction (foreign or domestic) against the Maker or any of its Subsidiaries or action under the laws
of any jurisdiction (foreign or domestic) analogous to any of the foregoing shall be taken with respect to the Maker or any of its Subsidiaries
and shall continue undismissed, or unstayed and in effect for a period of forty-five (45) days;
(l) one
or more final judgments or orders for the payment of money aggregating in excess of $250,000 (or its equivalent in the relevant currency
of payment) are rendered against one or more of the Company and its Subsidiaries (including, without limitation, the LLC Guarantor);
(m) the
failure of the Maker to instruct its transfer agent to remove any legends from shares of Common Stock and issue such unlegended certificates
to the Holder within two (2) Trading Days of the Holder’s request so long as the Holder has provided reasonable assurances to the
Maker that such shares of Common Stock can be sold pursuant to Rule 144 or any other applicable exemption;
(n) the
Maker’s shares of Common Stock are no longer publicly traded or cease to be listed on the Trading Market or, after the six month
anniversary of the Issuance Date, any Investor Shares may not be immediately resold under Rule 144 without restriction on the number of
shares to be sold or manner of sale, unless such Investor Shares have been registered for resale under the 1933 Act and may be sold without
restriction;
(o) the
Maker proposes to or does consummate a “going private” transaction as a result of which the Common Stock will no longer be
registered under Sections 12(b) or 12(g) of the 1934 Act;
(p) there
shall be any SEC or judicial stop trade order or trading suspension stop-order or any restriction in place with the transfer agent for
the Common Stock restricting the trading of such Common Stock;
(q) the
Depository Trust Company places any restrictions on transactions in the Common Stock or the Common Stock is no longer tradeable through
the Depository Trust Company Fast Automated Securities Transfer program;
(r) the
Company fails to file any report or filing required to be filed by the Securities and Exchange Commission;
(s) the
Company’s Market Capitalization is below $6.0 million for ten (10) consecutive days;
(t) the
occurrence of a Material Adverse Effect in respect of the Maker, or the Maker and its Subsidiaries taken as a whole; or
(u) the
Maker shall fail, within thirty (30) days of the Closing Date, to provide evidence that all UCC-3 termination statements relating to the
security interest previously granted to the JGB Agent and any JGB Lender have been filed in all appropriate filing offices.
For the avoidance of doubt,
any default pursuant to clause (i) above shall not be subject to any cure periods pursuant to the instrument governing such Indebtedness
or this Note.
2.2 Remedies
Upon an Event of Default.
(a) Upon
the occurrence of any Event of Default, the Maker shall be obligated to pay to the Holder the Mandatory Default Amount, which Mandatory
Default Amount shall be earned by the Holder on the date the Event of Default giving rise thereto occurs and shall be due and payable
on the earlier to occur of the Maturity Date, upon conversion, redemption or prepayment of this Note or the date on which all amounts
owing hereunder have been accelerated in accordance with the terms hereof.
(b) Upon
the occurrence of any Event of Default, the Maker shall, as promptly as possible but in any event within one (1) Business Day of such
Event of Default, notify the Holder of the occurrence of such Event of Default, describing the event or factual situation giving rise
to the Event of Default and specifying the relevant subsection or subsections of Section 2.1 hereof under which such Event of Default
has occurred.
(c) Upon
the occurrence and during the continuance of an Event of Default, the Holder may at any time at its option (1) declare the Mandatory Default
Amount due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest or notice,
all of which are hereby expressly unconditionally and irrevocably waived by the Maker and (2) exercise all other rights and remedies available
to it under the Transaction Documents; provided, however, that (x) upon the occurrence of an Event of Default described above,
the Holder, in its sole and absolute discretion, may: (a) from time-to-time demand that all or a portion of the Outstanding Principal
Amount be converted into shares of Common Stock at the lower of (i) the then-current Conversion Price and (ii) eighty-percent (80%) of
the average of the three (3) lowest daily VWAPs during the twenty (20) Trading Days prior to the delivery by the Holder of the applicable
notice of conversion or (b) exercise or otherwise enforce any one or more of the Holder’s rights, powers, privileges, remedies and
interests under this Note, the Purchase Agreement, the other Transaction Documents or applicable law and (y) upon the occurrence of an
Event of Default described in Section 2.1(j) above, the Mandatory Default Amount shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Maker. No course of delay on the part
of the Holder shall operate as a waiver thereof or otherwise prejudice the rights of the Holder. No remedy conferred hereby shall be exclusive
of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.
(d) Upon
the occurrence and during the continuance of an Event of Default, in addition to any remedy the Holder may have under this Note and the
Purchase Agreement, any Outstanding Principal Amount under this Note shall accrue interest at the rate of ten percent (10%) per annum,
accruing daily and capitalizing on a monthly basis.
ARTICLE
3
3.1 Conversion.
(a) Conversion.
This Note shall be convertible (in whole or in part), at the option of the Holder, into such number of fully paid and non-assessable shares
of Common Stock as is determined by dividing (x) that portion of the Outstanding Principal Amount that the Holder elects to convert (the
“Conversion Amount”) by (y) the Conversion Price then in effect on the date on which the Holder delivers a notice of
conversion, in substantially the form attached hereto as Exhibit B (the “Conversion Notice”), in accordance
with Section 5.1 to the Maker; provided, that during any calendar month, the Holder may not convert an amount of the Outstanding
Principal Amount more than the greater of (a) one-sixth (1/6) of the Principal Amount or (b) twenty percent (20%) of the Company’s
20-day trailing traded volume prior to the delivery by the Holder of the applicable Conversion Notice; provided, further, than the Holder
may not convert more than One Million Five Hundred Thoursand Dollars ($1,500,000) during any calendar month without the Maker’s
consent. The Holder shall deliver this Note to the Maker at the address designated in the Purchase Agreement at such time that this Note
is fully converted. With respect to partial conversions of this Note, the Maker shall keep written records of the amount of this Note
converted as of the date of such conversion (each, a “Conversion Date”).
(b) Conversion
Price. The “Conversion Price” means the lower of (i) the Fixed Conversion Price, or (ii) ninety-percent (90%) of
the average of the three (3) lowest daily VWAPs during the twenty (20) Trading Days prior to the delivery by the Holder of the applicable
Conversion Notice. The “Fixed Conversion Price” means $0.50 and shall be subject to adjustment as provided herein.
3.2 Delivery
of Conversion Shares. As soon as practicable after the occurrence of any event requiring the issuance of shares of Common Stock issuable
upon conversion of this Note (“Conversion Shares”), and in any event within one (1) Business Day thereafter (such date,
the “Share Delivery Date”), the Maker shall, at its expense, cause to be issued in the name of and delivered to the
Holder, or as the Holder may direct, the number of fully paid and nonassessable shares of Common Stock to which the Holder shall be entitled,
in such denominations as may be requested by the Holder, which certificate or certificates shall be free of restrictive and trading legends,
except for any such legends as may be required under the 1933 Act. The Company shall cause its transfer agent to electronically transmit
such shares of Common Stock issuable to the Holder (or its designee), by crediting the account of the Holder’s (or such designee’s)
broker with the Depository Trust Company (“DTC”) through its Deposit and Withdrawal At Custodian (“DWAC”)
system (provided that the same time periods herein as for stock certificates shall apply) as instructed by the Holder (or its designee);
provided, that such issuance shall only be made through DTC’s DWAC system if such Conversion Shares will be issued free of restrictive
legends. If such Conversion Shares will be issued subject to legends required under the 1933 Act, such Conversion Shares will be issued
to the Holder in book entry at the Maker’s transfer agent.
3.3 Ownership
Cap. Notwithstanding anything to the contrary contained herein, the Holder shall not be entitled to receive shares representing Equity
Interests upon conversion of this Note to the extent (but only to the extent) that such exercise or receipt would cause the Holder Group
(as defined below) to become, directly or indirectly, a “beneficial owner” (within the meaning of Section 13(d) of the 1934
Act and the rules and regulations promulgated thereunder) of a number of Equity Interests of a class that is registered under the 1934
Act which exceeds the Maximum Percentage (as defined in the Purchase Agreement) of the Equity Interests of such class that are outstanding
at such time. Any purported delivery of Equity Interests in connection with the conversion of this Note prior to the termination of this
restriction in accordance herewith shall be void and have no effect to the extent (but only to the extent) that such delivery would result
in the Holder Group becoming the beneficial owner of more than the Maximum Percentage of the Equity Interests of a class that is registered
under the 1934 Act that is outstanding at such time. If any delivery of Equity Interests owed to the Holder following conversion of this
Note is not made, in whole or in part, as a result of this limitation, the Company’s obligation to make such delivery shall not
be extinguished and the Company shall deliver such Equity Interests as promptly as practicable after the Holder gives notice to the Company
that such delivery would not result in such limitation being triggered or upon termination of the restriction in accordance with the terms
hereof. To the extent limitations contained in this Section 3.3 apply, the determination of whether this Note is convertible and
of which portion of this Note is convertible shall be the sole responsibility and in the sole determination of the Holder, and the submission
of a notice of conversion shall be deemed to constitute the Holder’s determination that the issuance of the full number of Conversion
Shares requested in the notice of conversion is permitted hereunder, and the Company shall not have any obligation to verify or confirm
the accuracy of such determination. For purposes of this Section 3.3, (i) the term “Maximum Percentage”
shall mean 4.99%; provided, that if at any time after the date hereof the Holder Group beneficially owns in excess of 4.99% of any class
of Equity Interests in the Company that is registered under the 1934 Act, then the Maximum Percentage shall automatically increase to
9.99% so long as the Holder Group owns in excess of 4.99% of such class of Equity Interests (and shall, for the avoidance of doubt, automatically
decrease to 4.99% upon the Holder Group ceasing to own in excess of 4.99% of such class of Equity Interests); and (ii) the term “Holder
Group” shall mean the Holder plus any other Person with which the Holder is considered to be part of a group under Section 13
of the 1934 Act or with which the Holder otherwise files reports under Sections 13 and/or 16 of the 1934 Act. In determining the
number of Equity Interests of a particular class outstanding at any point in time, the Holder may rely on the number of outstanding Equity
Interests of such class as reflected in (x) the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange
Commission, as the case may be, (y) a more recent public announcement by the Company or (z) a more recent notice by the Company or its
transfer agent to the Holder setting forth the number of Equity Interests of such class then outstanding. For any reason at any time,
upon written or oral request of the Holder, the Company shall, within one (1) Business Day of such request, confirm orally and in writing
to the Holder the number of Equity Interests of any class then outstanding. The provisions of this Section 3.3 shall be construed,
corrected and implemented in a manner so as to effectuate the intended beneficial ownership limitation herein contained.
3.4 Adjustment
of Fixed Conversion Price.
(a) Until
the Note has been paid in full or converted in full, the Fixed Conversion Price shall be subject to adjustment from time to time as follows
(but shall not be increased, other than pursuant to Section 3.4(a)(i) hereof):
(i) Adjustments
for Stock Splits and Combinations. If the Maker shall at any time or from time to time after the Closing Date (but whether before
or after the Issuance Date) effect a split or other subdivision of the outstanding Common Stock, the applicable Fixed Conversion Price
in effect immediately prior to the stock or share split shall be proportionately decreased. If the Maker shall at any time or from time
to time after the Closing Date (but whether before or after the Issuance Date), combine the outstanding shares of Common Stock, the applicable
Fixed Conversion Price in effect immediately prior to the combination shall be proportionately increased. Any adjustments under this Section
3.4(a)(i) shall be effective at the close of business on the date the stock split or combination occurs.
(ii) Adjustments
for Certain Dividends and Distributions. If the Maker shall at any time or from time to time after the Closing Date (but whether before
or after the Issuance Date) make or issue or set a record date for the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in shares of Common Stock, then, and in each event, the applicable Fixed Conversion Price in effect
immediately prior to such event shall be decreased as of the time of such issuance or, in the event such record date shall have been fixed,
as of the close of business on such record date, by multiplying the applicable Fixed Conversion Price then in effect by a fraction:
(1) the
numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance
or the close of business on such record date; and
(2) the
denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or
distribution.
(iii) Adjustment
for Other Dividends and Distributions. If the Maker shall at any time or from time to time after the Closing Date (but whether before
or after the Issuance Date) make or issue or set a record date for the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in other than shares of Common Stock, then, and in each event, an appropriate revision to the applicable
Fixed Conversion Price shall be made and provision shall be made (by adjustments of the Fixed Conversion Price or otherwise) so that the
Holder of this Note shall receive upon conversions thereof, in addition to the number of shares of Common Stock receivable thereon, the
number of securities of the Maker or other issuer (as applicable) or cash or other property that it would have received had this Note
been converted into Common Stock in full (without regard to any conversion limitations herein) on the date of such event and had thereafter,
during the period from the date of such event to and including the Conversion Date, retained such securities (together with any distributions
payable thereon during such period) or assets, giving application to all adjustments called for during such period under this Section
3.4(a)(iii) with respect to the rights of the holders of this Note; provided, however, that if such record date shall have
been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Fixed Conversion
Price shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions.
(iv) Adjustments
for Reclassification, Exchange or Substitution. If the Common Stock at any time or from time to time after the Closing Date (but whether
before or after the Issuance Date) shall be changed to the same or different number of shares or other securities of any class or classes
of stock or other property, whether by reclassification, exchange, substitution or otherwise (other than by way of a stock split or combination
of shares or stock dividends provided for in Sections 3.4(a)(i), (ii) and (iii) hereof, or a reorganization, merger, consolidation,
or sale of assets provided for in Section 3.4(a)(vii) hereof), then, and in each event, an appropriate revision to the Fixed Conversion
Price shall be made and provisions shall be made (by adjustments of the Fixed Conversion Price or otherwise) so that the Holder shall
have the right thereafter to convert this Note into the kind and amount of shares of stock or other securities or other property receivable
upon reclassification, exchange, substitution or other change, by holders of the number of shares of Common Stock into which such Note
might have been converted immediately prior to such reclassification, exchange, substitution or other change, all subject to further adjustment
as provided herein.
(v) Adjustments
for Issuance of Additional Shares of Common Stock. Except for Exempted Securities, in the event the Maker shall at any time or from
time to time after the Closing Date issue or sell any additional shares of Common Stock (“Additional Shares of Common Stock”)
at an effective price per share that is less than the Fixed Conversion Price then in effect or without consideration, then
the Fixed Conversion Price upon each such issuance shall be reduced to a price equal to the consideration per share paid for such Additional
Shares of Common Stock. For purposes of clarification, the amount of consideration received for such Additional Shares of Common Stock
shall not include the value of any additional securities or other rights received in connection with such issuance of Additional Shares
of Common Stock (i.e. warrants, rights of first refusal or other similar rights).
(vi) Issuance,
Amendment or Adjustment of Common Stock Equivalents. Except for Exempted Securities, if (x) the Maker, at any time after the Closing
Date (but whether before or after the Issuance Date), shall issue any securities convertible into or exercisable or exchangeable for,
directly or indirectly, Common Stock (“Convertible Securities”), or any rights or warrants or options to purchase any
such Common Stock or Convertible Securities, (collectively with the Convertible Securities, the “Common Stock Equivalents”)
and the price per share for which shares of Common Stock may be issuable pursuant to any such Common Stock Equivalent shall be less
than the applicable Fixed Conversion Price then in effect, or (y) the price per share for which shares of Common Stock may be
issuable under any Common Stock Equivalents is amended or adjusted, pursuant to the terms of such Common Stock Equivalents or otherwise,
and such price as so amended or adjusted shall be less than the Fixed Conversion Price in effect at the time of such amendment or adjustment,
then, in each such case (x) or (y), the Fixed Conversion Price upon each such issuance or amendment or adjustment shall be adjusted as
provided in subsection (v) of this Section 3.4(a) as if the maximum number of shares of Common Stock issuable upon conversion,
exercise or exchange of such Common Stock Equivalents had been issued on the date of such issuance or amendment or adjustment.
(vii) Consideration
for Stock. In case any shares of Common Stock or any Common Stock Equivalents shall be issued or sold:
(1) in
connection with any merger or consolidation in which the Maker is the surviving corporation (other than any consolidation or merger in
which the previously outstanding shares of Common Stock of the Maker shall be changed to or exchanged for the stock or other securities
of another corporation), the amount of consideration therefor shall be deemed to be the fair value, as determined reasonably and in good
faith by the Board of Directors of the Maker and approved by the Holder, of such portion of the assets and business of the nonsurviving
corporation as such Board of Directors may determine to be attributable to such shares of Common Stock, Convertible Securities, rights
or warrants or options, as the case may be; or
(2) in
the event of any consolidation or merger of the Maker in which the Maker is not the surviving corporation or in which the previously outstanding
shares of Common Stock of the Maker shall be changed into or exchanged for the stock or other securities of another corporation or other
property, or in the event of any sale of all or substantially all of the assets of the Maker for stock, shares or other securities or
other property of any corporation, the Maker shall be deemed to have issued shares of its Common Stock, at a price per share equal to
the valuation of the Maker’s Common Stock based on the actual exchange ratio on which the transaction was predicated, as applicable,
and the fair market value on the date of such transaction of all such stock or securities or other property of the other corporation.
If any such calculation results in adjustment of the applicable Fixed Conversion Price, or the number of shares of Common Stock issuable
upon conversion of the Note, the determination of the applicable Fixed Conversion Price or the number of shares of Common Stock issuable
upon conversion of the Note immediately prior to such merger, consolidation or sale, shall be made after giving effect to such adjustment
of the number of shares of Common Stock issuable upon conversion of the Note. In the event Common Stock is issued with other shares or
securities or other assets of the Maker for consideration which covers both, the consideration computed as provided in this Section
3.4(a)(vii) shall be allocated among such securities and assets as determined in good faith by the Board of Directors of the Maker,
and approved by the Holder.
(viii) Record
Date. In case the Maker shall take record of the holders of its Common Stock for the purpose of entitling them to subscribe for or
purchase Common Stock or Convertible Securities, then the date of the issue or sale of the shares of Common Stock shall be deemed to be
such record date.
(b) No
Impairment. The Maker shall not, by amendment of its Organizational Documents or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Maker, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 3.4 and in the taking of all such action as may be necessary or appropriate in order to protect
the conversion rights of the Holder against impairment. In the event the Holder shall elect to convert this Note as provided herein, the
Maker cannot refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged
in any violation of law, violation of an agreement to which the Holder is a party or for any reason whatsoever, unless, an injunction
from a court, or notice, restraining and or adjoining conversion of this Note shall have issued and the Maker posts a surety bond for
the benefit of the Holder in an amount equal to one hundred fifty percent (150%) of the Principal Amount of the Note the Holder has elected
to convert, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which
shall be payable to the Holder (as liquidated damages) in the event it obtains judgment.
(c) Certificates
as to Adjustments. Upon occurrence of each adjustment or readjustment of the Fixed Conversion Price or number of shares of Common
Stock issuable upon conversion of this Note pursuant to this Section 3.4, the Maker at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to the Holder a certificate setting forth such adjustment and
readjustment, showing in detail the facts upon which such adjustment or readjustment is based. The Maker shall, upon written request of
the Holder, at any time, furnish or cause to be furnished to the Holder a like certificate setting forth such adjustments and readjustments,
the applicable Fixed Conversion Price in effect at the time, and the number of shares of Common Stock and the amount, if any, of other
securities or property which at the time would be received upon the conversion of this Note. Notwithstanding the foregoing, the Maker
shall not be obligated to deliver a certificate unless such certificate would reflect an increase or decrease of at least one percent
(1%) of such adjusted amount.
(d) Issue
Taxes. The Maker shall pay any and all issue and other taxes, excluding federal, state or local income taxes, that may be payable
in respect of any issue or delivery of shares of Common Stock on conversion of this Note pursuant thereto; provided, however, that
the Maker shall not be obligated to pay any transfer taxes resulting from any transfer requested by the Holder in connection with any
such conversion.
(e) Fractional
Shares. No fractional shares of Common Stock shall be issued upon conversion of this Note. In lieu of any fractional shares to which
the Holder would otherwise be entitled, the Maker shall pay cash equal such fractional shares multiplied by the Conversion Price then
in effect.
(f) Reservation
of Common Stock. The Maker shall at all times while this Note shall be outstanding, reserve and keep available out of its authorized
but unissued Common Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of
this Note (disregarding for this purpose any and all limitations of any kind on such conversion). The Maker shall, from time to time,
use all commercially reasonable efforts to increase the authorized number of shares of Common Stock or take other effective action if
at any time the unissued number of authorized shares shall not be sufficient to satisfy the Maker’s obligations under this Section 3.4(f).
(g) Regulatory
Compliance. If any shares of Common Stock to be reserved for the purpose of conversion of this Note require registration or listing
with or approval of any governmental authority, stock exchange or other regulatory body under any federal or state law or regulation or
otherwise before such shares may be validly issued or delivered upon conversion, the Maker shall, at its sole cost and expense, in good
faith and as expeditiously as possible, secure such registration, listing or approval, as the case may be.
(h) Effect
of Events Prior to the Issuance Date. If the Issuance Date of this Note is after the Closing Date, then, if the Fixed Conversion Price
or any other right of the Holder of this Note would have been adjusted or modified by operation of any provision of this Note had this
Note been issued on the Closing Date, such adjustment or modification shall be deemed to apply to this Note as of the Issuance Date as
if this Note had been issued on the Closing Date.
3.5 Prepayment
Following a Change of Control.
(a) Mechanics
of Prepayment at Option of Holder in Connection with a Change of Control. No sooner than fifteen (15) days prior to entry into an
agreement for a Change of Control nor later than ten (10) days prior to the consummation of a Change of Control, but not prior to the
public announcement of such Change of Control, the Maker shall deliver written notice (“Notice of Change of Control”)
to the Holder. At any time after receipt of a Notice of Change of Control (or, in the event a Notice of Change of Control is not delivered
at least ten (10) days prior to a Change of Control, at any time within ten (10) days prior to a Change of Control), the Holder may require
the Maker to prepay, effective immediately prior to the consummation of such Change of Control, an amount equal to 105% of the Outstanding
Principal Amount (the “COC Repayment Price”), by delivering written notice thereof (“Notice of Prepayment
at Option of Holder Upon Change of Control”) to the Maker.
(b) Payment
of COC Repayment Price. Upon the Maker’s receipt of a Notice(s) of Prepayment at Option of Holder Upon Change of Control from
the Holder, the Maker shall deliver the COC Repayment Price to the Holder immediately prior to the consummation of the Change of Control;
provided that the Holder’s original Note shall have been so delivered to the Maker.
3.6 Inability
to Fully Convert.
(a) Holder’s
Option if Maker Cannot Fully Convert. If, upon the Maker’s receipt of a Conversion Notice or as otherwise required under this
Note, including with respect to repayment of principal in shares of Common Stock as permitted under this Note, the Maker cannot issue
shares of Common Stock for any reason, including, without limitation, because the Maker (x) does not have a sufficient number of shares
of Common Stock authorized and available or (y) is otherwise prohibited by applicable law or by the rules or regulations of any stock
exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Maker or any of its securities
from issuing all of the Common Stock which is to be issued to the Holder pursuant to this Note, then the Maker shall issue as many shares
of Common Stock as it is able to issue and, with respect to the unconverted portion of this Note or with respect to any shares of Common
Stock not timely issued in accordance with this Note, the Holder, solely at Holder’s option, can elect to:
(i) require
the Maker to prepay that portion of this Note for which the Maker is unable to issue Common Stock or for which shares of Common Stock
were not timely issued (the “Mandatory Prepayment”) at a price equal to the number of shares of Common Stock that the
Maker is unable to issue multiplied by the VWAP on the date of the Conversion Notice (the “Mandatory Prepayment Price”);
(ii) void
its Conversion Notice and retain or have returned, as the case may be, this Note that was to be converted pursuant to the Conversion Notice
(provided that the Holder’s voiding its Conversion Notice shall not affect the Maker’s obligations to make any payments which
have accrued prior to the date of such notice); or
(iii) defer
issuance of the applicable Conversion Shares until such time as the Maker can legally issue such shares; provided, that the Principal
Amount underlying such Conversion Shares shall remain outstanding until the delivery of such Conversion Shares; provided, further, that
if the Holder elects to defer the issuance of the Conversion Shares, it may exercise its rights under either clause (i) or (ii) above
at any time prior to the issuance of the Conversion Shares upon two (2) Business Days’ notice to the Maker.
(b) Mechanics
of Fulfilling Holder’s Election. The Maker shall immediately send to the Holder, upon receipt of a Conversion Notice from the
Holder, which cannot be fully satisfied as described in Section 3.6(a) above, a notice of the Maker’s inability to fully
satisfy the Conversion Notice (the “Inability to Fully Convert Notice”). Such Inability to Fully Convert Notice shall
indicate (i) the reason why the Maker is unable to fully satisfy the Holder’s Conversion Notice; and (ii) the amount of this Note
which cannot be converted. The Holder shall notify the Maker of its election pursuant to Section 3.6(a) above by delivering written
notice to the Maker (“Notice in Response to Inability to Convert”).
(c) Payment
of Mandatory Prepayment Price. If the Holder shall elect to have its Note prepaid pursuant to Section 3.6(a)(i) above, the
Maker shall pay the Mandatory Prepayment Price to the Holder within five (5) Business Days of the Maker’s receipt of the Holder’s
Notice in Response to Inability to Convert; provided that prior to the Maker’s receipt of the Holder’s Notice in Response
to Inability to Convert the Maker has not delivered a notice to the Holder stating, to the satisfaction of the Holder, that the event
or condition resulting in the Mandatory Prepayment has been cured and all Conversion Shares issuable to the Holder can and will be delivered
to the Holder in accordance with the terms of this Note. If the Maker shall fail to pay the applicable Mandatory Prepayment Price to the
Holder on the date that is one (1) Business Day following the Maker’s receipt of the Holder’s Notice in Response to Inability
to Convert, in addition to any remedy the Holder may have under this Note and the Purchase Agreement, such unpaid amount shall bear interest
at the rate of two percent (2%) per month (prorated for partial months) until paid in full. Until the full Mandatory Prepayment Price
is paid in full to the Holder, the Holder may (i) void the Mandatory Prepayment with respect to that portion of the Note for which the
full Mandatory Prepayment Price has not been paid and (ii) receive back such Note.
(d) Dividends
and Distributions. The Holder shall be entitled to receive, on an as-converted basis, any dividends paid or distributions on Common
Stock as if this Note were converted into shares of Common Stock (without regard to limitations on conversion) immediately prior to the
record date for such dividend or distribution, at the Conversion Price.
3.7 Compensation
for Buy-In on Failure to Timely Deliver Conversion Shares. In addition to any other rights available to the Holder, if the Company
fails to cause its transfer agent to transmit to the Holder Conversion Shares or any other shares pursuant to a conversion on or before
the Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise)
or the Holder’s brokerage firm otherwise purchases, Common Stock to deliver in satisfaction of a sale by the Holder of the Conversion
Shares which the Holder anticipated receiving upon such conversion (a “Buy-In”), then the Company shall (a) pay in
cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any)
for the Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Conversion Shares that the Company
was required to deliver to the Holder in connection with the conversion at issue times (2) the price at which the sell order giving rise
to such purchase obligation was executed, and (b) at the option of the Holder, either reinstate the portion of the Note and equivalent
number of Conversion Shares for which such conversion was not honored (in which case such conversion shall be deemed rescinded) or deliver
to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its conversion and
delivery obligations hereunder. For example, if the Holder purchases shares of Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted conversion of shares of Common Stock with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (a) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000.
The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and evidence
of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue a decree of specific performance and/or injunctive
relief with respect to the Company’s failure to timely deliver shares of Common Stock s upon conversion of the Note as required
pursuant to the terms hereof.
ARTICLE
4
4.1 Covenants.
For so long as any Note is outstanding, without the prior written consent of the Holder:
(a) Compliance
with Transaction Documents. The Maker shall, and shall cause its Subsidiaries to, comply with its obligations under this Note and
the other Transaction Documents.
(b) Payment
of Taxes, Etc. The Maker shall, and shall cause each of its Subsidiaries to, promptly pay and discharge, or cause to be paid and discharged,
when due and payable, all lawful taxes, assessments and governmental charges or levies imposed upon the income, profits, property or business
of the Maker and the Subsidiaries, except for such failures to pay that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect; provided, however, that any such tax, assessment, charge or levy need not be
paid if the validity thereof shall currently be contested in good faith by appropriate proceedings and if the Maker or such Subsidiaries
shall have set aside on its books reserves with respect thereto in accordance with generally accepted accounting principles, and provided,
further, that the Maker and such Subsidiaries will pay all such taxes, assessments, charges or levies forthwith upon the commencement
of proceedings to foreclose any lien which may have attached as security therefor.
(c) Corporate
Existence. The Maker shall, and shall cause each of its Subsidiaries to, maintain in full force and effect its corporate existence,
rights and franchises (other than the existence, rights and franchises of the Subsidiaries of the Maker that the board of directors of
the Maker determine are no longer necessary or useful to the operation of the Maker’s business) and all licenses and other rights
to use property owned or possessed by it and reasonably deemed to be necessary to the conduct of its business.
(d) Investment
Company Act. The Maker and each Subsidiary shall conduct its businesses in a manner so that it will not become subject to, or required
to be registered under, the Investment Company Act of 1940, as amended.
(e) Sale
of Collateral; Liens. From the date hereof until the full release of the security interest in the Collateral and the LLC Guarantor
Collateral, (i) the Maker and its Subsidiaries shall not sell, lease, transfer or otherwise dispose of any of the Collateral or LLC Guarantor
Collateral, as the case may be, or attempt or contract to do so, other than sales of inventory in the ordinary course of business consistent
with past practices; and (ii) the Maker and its Subsidiaries shall not, directly or indirectly, create, permit or suffer to exist, and
shall defend the Collateral and the LLC Guarantor Collateral against and take such other action as is necessary to remove, any lien, security
interest or other encumbrance on the Collateral and the LLC Guarantor Collateral (except for the pledge, assignment and security interest
created under the Security Agreement, the LLC Guarantor Security Agreement and Permitted Liens (as defined in the Security Agreement or
the LLC Guarantor Security Agreement, as applicable)).
(f) Prohibited
Transactions. The Company hereby covenants and agrees not to enter into any Prohibited Transactions until thirty (30) days after such
time as this Note has been converted into Conversion Shares or repaid in full.
(g) Repayment
of This Note. If the Company or any Subsidiary issues any Indebtedness (other than this Note), or issues any Preferred Stock, other
than Exempted Securities, unless otherwise waived in writing by and at the discretion of the Holder, the Company will immediately utilize
the proceeds of such issuance to repay this Note. If the Company or any Subsidiary issues any Equity Interests, other than Exempted Securities,
for aggregate cumulative gross proceeds to the Company of greater than Five Million Dollars ($5,000,000) while this Note remains outstanding,
excluding offering costs or other expenses, unless otherwise waived in writing by and at the discretion of the Holder, the Company will
direct twenty percent (20%) of the proceeds from such issuance to repay this Note.
(h) DIP
Financing. Neither the Company nor any Subsidiary shall, to the extent the Company or any Subsidiary, as applicable, seeks to obtain
financing provided under Section 364 of the U.S. Bankruptcy Code or any similar provision of any other law related thereto (such financing,
a “DIP Financing”), enter into, or agree to enter into any DIP Financing, without providing the Holder right of first refusal
to provide all or any portion of such DIP Financing as the Holder may elect in its sole and absolute discretion.
4.2 Set-Off.
This Note shall be subject to the set-off provisions set forth in the Purchase Agreement.
ARTICLE
5
5.1 Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via email
at the email address specified in this Section prior to 5:00 p.m. (New York time) on a Business Day, (b) the next Business Day after the
date of transmission, if such notice or communication is delivered via email at the email address specified in this Section on a day that
is not a Business Day or later than 5:00 p.m. (New York time) on any date and earlier than 11:59 p.m. (New York time) on such date, (c)
the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given. The addresses for such notices and communications shall be as set forth in the
Purchase Agreement.
5.2 Governing
Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without reference to
principles of conflict of laws or choice of laws.
5.3 Headings.
The headings herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of
the provisions hereof. The language used in this Note will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party. This Note shall be construed as if drafted jointly by the
parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions
of this Note.
5.4 Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note, at law or in equity (including, without limitation, a decree of specific performance
and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to
such remedy and nothing herein shall limit the Holder’s right to pursue actual damages for any failure by the Maker to comply with
the terms of this Note. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation
thereof) shall be the amounts to be received by the holder thereof and shall not, except as expressly provided herein, be subject to any
other obligation of the Maker (or the performance thereof). The Maker acknowledges that a breach by it of its obligations hereunder will
cause irreparable and material harm to the Holder and that the remedy at law for any such breach would be inadequate. Therefore, the Maker
agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available rights
and remedies, at law or in equity, to equitable relief, including but not limited to an injunction restraining any such breach or threatened
breach, without the necessity of showing economic loss and without any bond or other security being required.
5.5 Enforcement
Expenses. The Maker agrees to pay all costs and expenses of enforcement of this Note, including, without limitation, reasonable attorneys’
fees and expenses.
5.6 Binding
Effect. The obligations of the Maker and the Holder set forth herein shall be binding upon the successors and assigns of each such
party, whether or not such successors or assigns are permitted by the terms herein.
5.7 Amendments;
Waivers. No provision of this Note may be waived or amended except in a written instrument signed by the Company and the Holder. No
waiver of any default with respect to any provision, condition or requirement of this Note 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 either party to exercise any right hereunder in any manner impair the exercise of any such right.
5.8 Jurisdiction;
Venue. Any action, proceeding or claim arising out of, or relating in any way to this Note shall be brought and enforced in the New
York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York. The Company and
the Holder irrevocably submit to the jurisdiction of such courts, which jurisdiction shall be exclusive, and hereby waive any objection
to such exclusive jurisdiction or that such courts represent an inconvenient forum. The prevailing party in any such action shall be entitled
to recover its reasonable and documented attorneys’ fees and out-of-pocket expenses relating to such action or proceeding.
5.9 Parties
in Interest. This Note shall be binding upon, inure to the benefit of and be enforceable by the Maker, the Holder and their respective
successors and permitted assigns.
5.10 Failure
or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.
5.11 Maker
Waivers. Except as otherwise specifically provided herein, the Maker and all others that may become liable for all or any part of
the obligations evidenced by this Note, hereby waive presentment, demand, notice of nonpayment, protest and all other demands and notices
in connection with the delivery, acceptance, performance and enforcement of this Note, and do hereby consent to any number of renewals
of extensions of the time or payment hereof and agree that any such renewals or extensions may be made without notice to any such persons
and without affecting their liability herein and do further consent to the release of any person liable hereon, all without affecting
the liability of the other persons, firms or Maker liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY JURY.
(a) No
delay or omission on the part of the Holder in exercising its rights under this Note, or course of conduct relating hereto, shall operate
as a waiver of such rights or any other right of the Holder, nor shall any waiver by the Holder of any such right or rights on any one
occasion be deemed a waiver of the same right or rights on any future occasion.
(b) THE
MAKER ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE
LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE HOLDER OR ITS SUCCESSORS OR ASSIGNS
MAY DESIRE TO USE.
5.12 Definitions.
Capitalized terms used herein and not defined shall have the meanings set forth in the Purchase Agreement. For the purposes hereof, the
following terms shall have the following meanings:
(a) “Convertible
Securities” means any securities convertible into or exercisable or exchangeable for, directly or indirectly, shares of Common
Stock.
(b) “Common
Stock Equivalents” means any rights or warrants or options to purchase any shares of Common Stock or Convertible Securities,
other than rights or warrants or options to purchase any shares of Common Stock or Convertible Securities granted or issued under any
Equity Plan.
(c) “Indebtedness”
means, with respect to the Maker or any Subsidiary: (a) all obligations for borrowed money; (b) all obligations evidenced by bonds, debentures,
notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, current
swap agreements, interest rate hedging agreements, interest rate swaps, or other financial products; (c) all capital lease obligations
that exceed $150,000 in the aggregate in any fiscal year; (d) all obligations or liabilities secured by a lien or encumbrance on any asset
of the Maker or any Subsidiary, irrespective of whether such obligation or liability is assumed; (e) all obligations for the deferred
purchase price of assets, together with trade debt and other accounts payable that exceed $150,000 in the aggregate in any fiscal year;
(f) all synthetic leases; (g) any obligation guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted or sold with recourse) any of the foregoing obligations of any other person; (h) trade debt; and (i) endorsements
for collection or deposit.
(d)
“Mandatory Default Amount” means an amount equal to one hundred ten percent (110%) of the Outstanding Principal Amount
of this Note on the date on which the first Event of Default has occurred hereunder.
(e) “Market
Capitalization” means, as of any date of determination, the product of (a) the number of issued and outstanding shares of Common
Stock as of such date (exclusive of any shares of Common Stock issuable upon the exercise of options or warrants or conversion of any
convertible securities), multiplied by (b) the closing price of the Common Stock on the Trading Market on the date of determination.
(f) “Outstanding
Principal Amount” means, at the time of determination, the Principal Amount outstanding after giving effect to any adjustments,
conversions or prepayments pursuant to the terms hereof.
(g) “Trading
Day” means a day on which the Common Stock is traded on a Trading Market.
(h) “VWAP”
means, as of any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of one share of Common Stock trading in the ordinary course of
business on the applicable Trading Price for such date (or the nearest preceding date) on such Trading Market as reported by Bloomberg
Financial L.P.; (b) if the Common Stock is not then listed on a Trading Market and if the Common Stock is traded in the over-the-counter
market, as reported by the OTCQX or OTCQB markets, the volume weighted average price of one share of Common Stock for such date (or the
nearest preceding date) on the OTCQX or OTCQB markets, as reported by Bloomberg Financial L.P.; (c) if the Common Stock is not then listed
or quoted on a Trading Market or on the OTCQX or OTCBQ markets and if prices for the Common Stock are then reported in the “Pink
Sheets” published by the OTC Markets Group (or a similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price of one share of Common Stock so reported, as reported by Bloomberg Financial L.P.; or (d) in all other cases,
the fair market value of one share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and
reasonably acceptable to the Company.
[Signature Pages Follow]
IN WITNESS WHEREOF, the Maker has caused this Note
to be duly executed by its duly authorized officer as of the date first above indicated.
|
PARTS ID, INC. |
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By: |
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Name: |
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Title: |
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EXHIBIT A
WIRE INSTRUCTIONS
EXHIBIT B
FORM OF CONVERSION NOTICE
(To be Executed by the Registered Holder in order
to Convert the Note)
The undersigned hereby irrevocably
elects to convert $ ________________ of the principal amount of the above Note No. ___ into shares of Common Stock of PARTS iD, Inc. (the
“Maker”) according to the conditions hereof, as of the date written below.
Date of Conversion:
Conversion Price:
Number of shares of Common Stock beneficially owned or deemed
beneficially owned by the Holder on the Conversion Date:
| [HOLDER] |
| | |
| By: | |
| Name: | |
| Title: | |
| | |
| Address: |
Exhibit 10.3
THIS WARRANT 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 AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
The number
of shares of common stock issuable upon exercise of this warrant may be MORE OR less than the amounts set forth on the face hereof.
This Warrant is issued pursuant to that certain
Securities Purchase Agreement dated July 14, 2023 by and between the Company and the Holder (as defined below) (the “Purchase
Agreement”). Receipt of this Warrant by the Holder shall constitute acceptance and agreement to all of the terms contained herein.
No.
PARTS
ID, INC.
COMMON STOCK PURCHASE WARRANT
PARTS iD, Inc., a Delaware
corporation (together with any corporation which shall succeed to or assume the obligations of PARTS iD, Inc. hereunder, the “Company”),
hereby certifies that, for value received, Lind Global Fund II LP, a Delaware limited partnership (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company at any time during the Exercise Period (as defined in Section
9) up to Twelve Million Eight Hundred Thirty Seven Thousand Eight Hundred Thirty Eight (12,837,838) fully paid and non-assessable
shares of Common Stock, at a purchase price per share equal to the Exercise Price (as defined in Section 9). The number of shares
of Common Stock for which this Common Stock Purchase Warrant (this “Warrant”) is exercisable and the Exercise Price
are subject to adjustment as provided herein.
1. DEFINITIONS.
Certain terms are used in this Warrant as specifically defined in Section 9. Capitalized terms used and not otherwise defined herein
shall have the meanings set forth for such terms in the Purchase Agreement.
2. EXERCISE
OF WARRANT.
2.1. Exercise.
This Warrant may be exercised prior to its expiration hereof by the Holder at any time or from time to time during the Exercise Period,
by submitting the form of subscription attached hereto (the “Exercise Notice”) duly executed by the Holder, to the
Company at its principal office, indicating whether the Holder is electing to purchase a specified number of shares by paying the Aggregate
Exercise Price as provided in Section 2.2 or is electing to exercise this Warrant as to a specified number of shares pursuant to
the cashless exercise provisions of Section 2.3. On or before the first Trading Day following the date on which the Company has
received the Exercise Notice, the Company shall transmit by electronic mail an acknowledgement of confirmation of receipt of the Exercise
Notice. Subject to Section 2.4, this Warrant shall be deemed exercised for all purposes as of the close of business on the day
on which the Holder has delivered the Exercise Notice to the Company. The Aggregate Exercise Price, if any, shall be paid by wire transfer
to the Company within five (5) Business Days of the date of exercise and prior to the time the Company issues the certificates evidencing
the shares issuable upon such exercise. In the event this Warrant is not exercised in full, the Company may, at its expense, require the
Holder, after such partial exercise, to promptly return this Warrant to the Company and the Company will forthwith issue and deliver to
or upon the order of the Holder a new Warrant or Warrants of like tenor, in the name of the Holder or as the Holder (upon payment by the
Holder of any applicable transfer taxes) may request, calling in the aggregate on the face or faces thereof for the number of shares of
Common Stock equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant
minus the number of such shares (without giving effect to any adjustment therein) for which this Warrant shall have been exercised.
2.2. Payment
of Exercise Price by Wire Transfer. If the Holder elects to purchase a specified number of shares by paying the Aggregate Exercise
Price, the Holder shall pay such amount by wire transfer of immediately available funds to the account designated by the Company in its
acknowledgement of receipt of such Exercise Notice pursuant to Section 2.1.
2.3. Cashless
Exercise. If a registration statement covering the shares of Common Stock that are the subject of the Notice of Exercise (the “Unavailable
Warrant Shares”) is not available for the resale of such Unavailable Warrant Shares to the public or upon exercise of this Warrant
in connection with a Fundamental Transaction, the Holder may elect to exercise this Warrant by receiving shares of Common Stock equal
to the number of shares determined pursuant to the following formula:
X = Y (A - B)
A
where,
| X = | the number of shares of Common Stock to be issued to Holder; |
| Y = | the number of shares of Common Stock as to which this Warrant is to be exercised (as indicated on the Exercise Notice); |
| A = | VWAP for the Trading Day immediately preceding the date of exercise; and |
This Warrant will be
exercised pursuant to this Section 2.3 automatically and without further action by any Person immediately prior to the time
at which it expires in accordance with Section 2.5.
2.4. Antitrust
Notification. If the Holder determines, in its sole judgment upon the advice of counsel, that the issuance of any Warrant Shares pursuant
to the terms hereof would be subject to the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR
Act”), the Company shall file as soon as practicable after the date on which the Company receives notice from the Holder of
the applicability of the HSR Act and a request to so file with the United States Federal Trade Commission and the United States Department
of Justice the notification and report form required to be filed by it pursuant to the HSR Act in connection with such issuance.
2.5. Termination.
This Warrant shall terminate upon the earlier to occur of (i) exercise in full or (ii) the expiration of the Exercise Period.
3. REGISTRATION
RIGHTS. The Holder of this Warrant has certain rights to require the Company to register its resale of the Warrant Shares under the
1933 Act and any blue sky or securities laws of any jurisdictions within the United States at the time and in the manner specified in
the Purchase Agreement.
4. DELIVERY
OF STOCK CERTIFICATES ON EXERCISE.
4.1. Delivery
of Exercise Shares. As soon as practicable after any exercise of this Warrant and in any event within one (1) Trading Day thereafter
(such date, the “Exercise Share Delivery Date”), the Company shall, at its expense (including the payment by it of
any applicable issue or stamp taxes), cause to be issued in the name of and delivered to the Holder, or as the Holder may direct, a certificate
or certificates evidencing the number of fully paid and non-assessable shares of Common Stock (which number shall be rounded down to the
nearest whole share in the event any fractional share may otherwise be issuable upon such exercise and the Company shall pay a cash adjustment
to the Holder in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price) to which the Holder
shall be entitled on such exercise, in such denominations as may be requested by the Holder, which certificate or certificates shall be
free of restrictive and trading legends (except for any such legends as may be required under the 1933 Act). In lieu of delivering physical
certificates for the shares of Common Stock issuable upon any exercise of this Warrant, provided the Warrant Shares are not restricted
securities and the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated
Securities Transfer program or a similar program, upon request of the Holder, the Company shall cause its transfer agent to electronically
transmit such shares of Common Stock issuable upon exercise of this Warrant to the Holder (or its designee), by crediting the account
of the Holder’s (or such designee’s) broker with DTC through its Deposit Withdrawal Agent Commission system (provided that
the same time periods herein as for stock certificates shall apply) as instructed by the Holder (or its designee).
4.2. Compensation
for Buy-In on Failure to Timely Deliver Exercise Shares. In addition to any other rights available to the Holder, if the Company fails
to cause its transfer agent to transmit to the Holder Exercise Shares pursuant to an exercise on or before the Exercise Share Delivery
Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s
brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Exercise Shares which
the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (a) pay in cash to the Holder
the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common
Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Exercise Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation
was executed, and (b) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Exercise Shares
for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.
For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (a) of
the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In and evidence of the amount of such loss. Nothing herein shall
limit a Holder’s right to pursue a decree of specific performance and/or injunctive relief with respect to the Company’s failure
to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
4.3. Charges,
Taxes and Expenses. Issuance of Exercise Shares shall be made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such Exercise Shares, all of which taxes and expenses shall be paid by the Company, and
such Exercise Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however,
that in the event Exercise Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto (the “Assignment Form”) duly executed by the Holder and
the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.
5. CERTAIN
ADJUSTMENT.
5.1. Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (a) pays a stock dividend or otherwise makes
a distribution or distributions on shares of Common Stock or any other equity or equity equivalent securities payable in shares of Common
Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant),
(b) subdivides (including by way of share split) outstanding shares of Common Stock into a larger number of shares, (c) combines (including
by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issues by reclassification of
shares of Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the
number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this
Warrant shall remain unchanged. Any adjustment made pursuant to this Section 5.1 shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination or re-classification.
5.2 Pro
Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution
of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification,
corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent
that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation)
immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the
record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that, to
the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the beneficial ownership
limitation provided for in Section 10, then the Holder shall not be entitled to participate in such Distribution to such extent
(or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such
Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in
the Holder exceeding the beneficial ownership limitation).
5.3 Fundamental
Transaction. If, at any time while this Warrant is outstanding, (a) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person, (b) the Company or any Subsidiary, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one
or a series of related transactions, (c) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock or 50% or more of the
voting power of the common equity of the Company, (d) the Company, directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or property, or (e) the Company, directly or indirectly, in
one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other
Person or group acquires 50% or more of the outstanding shares of Common Stock or 50% or more of the voting power of the common equity
of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall
have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence
of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 10 on the exercise of
this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 10 on the exercise of this Warrant). For purposes of any such exercise,
the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion
the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components
of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise
of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction,
the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with,
or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable
Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value
(as defined below) of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction;
provided, however, that, if the Fundamental Transaction is not within the Company’s control, including not approved by the Company’s Board
of Directors, Holder shall only be entitled to receive from the Company or any Successor Entity the same type or form of consideration
(and in the same proportion), at the Black Scholes Value of the unexercised portion of this Warrant, that is being offered and paid to
the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of
cash, stock or any combination thereof, or whether the holders of Common Stock are given the choice to receive from among alternative
forms of consideration in connection with the Fundamental Transaction; provided, further, that if holders of Common Stock of the Company
are not offered or paid any consideration in such Fundamental Transaction, such holders of Common Stock will be deemed to have received
common stock of the Successor Entity (which Entity may be the Company following such Fundamental Transaction) in such Fundamental Transaction.
“Black Scholes Value” means the value of this Warrant based on the Black Scholes Option Pricing Model obtained from
the “OV” function on Bloomberg determined as of the day of consummation of the applicable Fundamental Transaction for pricing
purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the
date of the public announcement of the applicable contemplated Fundamental Transaction and the last day of the Exercise Period (the “Termination
Date”), (B) an expected volatility equal to the 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing
a 365-day annualization factor) as of the Trading Day immediately following the public announcement of the applicable contemplated Fundamental
Transaction, (C) the underlying price per share used in such calculation shall be the highest VWAP during the period beginning on the
Trading Day immediately preceding the announcement of the applicable contemplated Fundamental Transaction (or the consummation of the
applicable Fundamental Transaction, if earlier) and ending on the Trading Day of the Holder’s request pursuant to this Section
5.3 and (D) a remaining option time equal to the time between the date of the public announcement of the applicable contemplated Fundamental
Transaction and the Termination Date and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer
of immediately available funds (or such other consideration) within five (5) Trading Days of the Holder’s election (or, if later,
on the effective date of the Fundamental Transaction). The Company shall cause any successor entity in a Fundamental Transaction in which
the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company
under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 5.3 pursuant to written
agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to
such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of
the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable
for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common
Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior
to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock
(but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in
form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and
be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction
Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the
same effect as if such Successor Entity had been named as the Company herein.
5.4 Adjustments
to Exercise Price Upon Issuance of Common Stock. In the event the Company shall at any time or from time to time after the First Closing
Date (but whether before or after the Issue Date) issue or sell any additional shares of Common Stock or Common Stock Equivalents (“Additional
Shares of Common Stock”), other than Exempted Securities, at an effective price per share (or issuable, convertible or exercisable
at a price per share) that is less than the Exercise Price then in effect or without consideration (a “Dilutive Issuance”),
then automatically and without further action by any Person the Exercise Price upon each such issuance shall be reduced to a price equal
to the consideration per share paid for such Additional Shares of Common Stock (the “Base Share Price”). For purposes
of clarification, the amount of consideration received for such Additional Shares of Common Stock shall not include the value of any additional
securities or other rights received in connection with such issuance of Additional Shares of Common Stock (i.e., warrants, rights of first
refusal or other similar rights). The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance
or deemed issuance of any Additional Shares of Common Stock subject to this Section 5.4, indicating therein the applicable issuance
price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance
Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section
5.4, upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant Shares based upon the Base
Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. If the Company enters
into a Variable Rate Transaction, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible
price, conversion price or exercise price at which such securities may be issued, converted or exercised.
5.5 Calculations.
All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding at the close of the Trading
Day on or, if not applicable, most recently preceding, such given date.
5.6 Notice
to Holder.
(a) Adjustment
to Exercise Price or number of Warrant Shares. Whenever the Exercise Price or number of Warrant Shares is adjusted pursuant to any
provision of this Section 5, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price or number
of Warrant Shares, as applicable, after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
(b) Notice
to Allow Exercise by Holder. If (i) the Company shall declare a dividend (or any other distribution in whatever form) on the Common
Stock; (ii) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (iii) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock
of any class or of any rights; (iv) the approval of any stockholders of the Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of
the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property;
or (v) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company;
then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register
of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a
record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer
or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of
record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the
mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. Subject to applicable law,
the Holder is entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event
triggering such notice. Notwithstanding the foregoing, the delivery of the notice described in this Section 5.6 is not intended
to and shall not bestow upon the Holder any voting rights whatsoever with respect to outstanding unexercised Warrants.
6. NO
IMPAIRMENT. The Company will not, by amendment of the Organizational Documents or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and
in taking all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. Without
limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of Common Stock receivable on
the exercise of this Warrant above the amount payable therefor on such exercise and (b) will take all such action as may be necessary
or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of stock on the exercise of
this Warrant from time to time outstanding.
7. NOTICES
OF RECORD DATE. In the event of:
(a) any
taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock
of any class or any other securities or property, or to receive any other right;
(b) any
capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of
all or substantially all the assets of the Company to or any consolidation or merger of the Company with or into any other Person or any
other Change of Control; or
(c) any
voluntary or involuntary dissolution, liquidation or winding-up of the Company;
then, and in each such event, the Company will
mail or cause to be mailed to the Holder a notice specifying (i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the date on which
any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is
anticipated to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock shall be entitled to
exchange their shares of Common Stock for securities or other property deliverable on such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up. Such notice shall be mailed at least fifteen (15) days prior
to the date specified in such notice on which any such action is to be taken.
8. RESERVATION
OF STOCK ISSUABLE ON EXERCISE OF WARRANT; REGULATORY COMPLIANCE; PROHIBITED TRANSACTIONS.
8.1. Reservation
of Stock Issuable on Exercise of Warrant. The Company shall at all times while this Warrant shall be outstanding, reserve and keep
available out of its authorized but unissued Common Stock, such number of shares of Common Stock as shall from time to time be sufficient
to effect the exercise of all or any portion of the Warrant Shares (disregarding for this purpose any and all limitations of any kind
on such exercise). The Company shall, from time to time in accordance with the General Corporation Law of the State of Delaware, increase
the authorized number of shares of Common Stock or take other effective action if at any time the unissued number of authorized shares
shall not be sufficient to satisfy the Company’s obligations under this Section 8.
8.2. Regulatory
Compliance. If any shares of Common Stock to be reserved for the purpose of exercise of the Warrant Shares require registration or
listing with or approval of any Governmental Authority, stock exchange or other regulatory body under any federal or state law or regulation
or otherwise before such shares may be validly issued or delivered upon exercise, the Company shall, at its sole cost and expense, in
good faith and as expeditiously as possible, secure such registration, listing or approval, as the case may be.
8.3 Prohibited
Transactions. The Company hereby covenants and agrees not to enter into any Prohibited Transactions while this Warrant is outstanding.
9. DEFINITIONS.
As used herein the following terms, unless the context otherwise requires, have the following respective meanings:
“Aggregate
Exercise Price” means, in connection with the exercise of this Warrant at any time, an
amount equal to the product obtained by multiplying (i) the Exercise Price times (ii) the number of shares of Common Stock for
which this Warrant is being exercised at such time.
“Change of Control”
has the meaning set forth in the Purchase Agreement.
“Convertible Securities”
means any debt, equity or other securities that are, directly or indirectly, convertible into or exchangeable for Common Stock.
“Exercise Period”
means the period commencing on the Issue Date and ending 11:59 P.M. (New York City time) on the date that is sixty (60) months from the
Issue Date or earlier closing of a Fundamental Transaction (other than a Fundamental Transaction of the type described in clause (d) of
the definition thereof resulting in the conversion into or exchange for another security of the Company).
“Exercise Price”
means $0.50 per share, as may be adjusted pursuant to the terms hereof.
“Exercise Shares”
means the shares of Common Stock for which this Warrant is then being exercised.
“Fair Market Value”
means, with respect to any security or other property, the fair market value of such security or other property as determined by the Company’s
Board of Directors, acting in good faith.
“Governmental Authority”
means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the
European Union or the European Central Bank).
“Issue Date”
means July 14, 2023.
“Note”
means the senior secured convertible promissory note issued by the Company to the Holder pursuant to the
Purchase Agreement.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint
venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Subsidiary”
means, as of any time of determination and with respect to any Person, any United States corporation, partnership, limited liability company
or limited liability partnership, all of the stock (or other equity interest) of every class of which, except directors’ qualifying
shares (or any equivalent), shall, at such time, be owned by such Person either directly or through Subsidiaries and of which such Person
or a Subsidiary shall have 100% control thereof, except directors’ qualifying shares. Unless the context otherwise clearly requires,
any reference to a “Subsidiary” is a reference to a Subsidiary of the Company.
“Trading Day”
means a day on which the Common Stock is traded on a Trading Market.
“Trading Market”
means whichever of the New York Stock Exchange, NYSE: Amex Exchange, or the Nasdaq Stock Market (including the Nasdaq Capital Market),
on which the Common Stock is listed or quoted for trading on the date in question.
“Variable Rate Transaction”
means a transaction in which the Company (A) 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 (x) at a conversion price, exercise price or
exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the Common Stock at any time
after the initial issuance of such debt or equity securities or (y) 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 (B) enters into, or effects
a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities
at a future determined price.
“VWAP”
means, as of any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of one share of Common Stock trading in the ordinary course of
business on the applicable Trading Price for such date (or the nearest preceding date) on such Trading Market as reported by Bloomberg
Financial L.P.; (b) if the Common Stock is not then listed on a Trading Market and if the Common Stock is traded in the over-the-counter
market, as reported by the OTC Bulletin Board, the volume weighted average price of one share of Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board, as reported by Bloomberg Financial L.P.; (c) if the Common Stock is not then listed or quoted
on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by the Pink
OTC Markets Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price of one
share of Common Stock so reported, as reported by Bloomberg Financial L.P.; or (d) in all other cases, the fair market value of one share
of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company
(in each case rounded to four decimal places).
“Warrant
Shares” means collectively the shares of Common Stock of the Company issuable upon exercise
of the Warrant in accordance with its terms, as such number may be adjusted pursuant to the provisions thereof.
10. LIMITATION
ON BENEFICIAL OWNERSHIP. Notwithstanding anything to the contrary contained herein, the Holder shall not be entitled to receive shares
of Common Stock or other securities (together with Common Stock, “Equity Interests”) upon exercise of this Warrant
to the extent (but only to the extent) that such exercise or receipt would cause the Holder Group to become, directly or indirectly, a
“beneficial owner” (within the meaning of Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder)
of a number of Equity Interests of a class that is registered under the 1934 Act which exceeds the Maximum Percentage (as defined in the
Purchase Agreement) of the Equity Interests of such class that are outstanding at such time. Any purported delivery of Equity Interests
in connection with the exercise of the Warrant prior to the termination of this restriction in accordance herewith shall be void and have
no effect to the extent (but only to the extent) that such delivery would result in the Holder Group becoming the beneficial owner of
more than the Maximum Percentage of the Equity Interests of a class that is registered under the 1934 Act that is outstanding at such
time. If any delivery of Equity Interests owed to the Holder following exercise of this Warrant is not made, in whole or in part, as a
result of this limitation, the Company’s obligation to make such delivery shall not be extinguished and the Company shall deliver
such Equity Interests as promptly as practicable after the Holder gives notice to the Company that such delivery would not result in such
limitation being triggered or upon termination of the restriction in accordance with the terms hereof. To the extent limitations contained
in this Section 10 apply, the determination of whether this Warrant is exercisable and of which portion of this Warrant is exercisable
shall be the sole responsibility and in the sole determination of the Holder, and the submission of an Exercise Notice shall be deemed
to constitute the Holder’s determination that the issuance of the full number of Warrant Shares requested in the Exercise Notice
is permitted hereunder, and neither the Company nor any Warrant agent shall have any obligation to verify or confirm the accuracy of such
determination. For purposes of this Section 10, (i) the term “Maximum Percentage” shall have the definition
set forth in the Purchase Agreement; and (ii) the term “Holder Group” shall mean the Holder plus any other Person with
which the Holder is considered to be part of a group under Section 13 of the 1934 Act or with which the Holder otherwise files reports
under Sections 13 and/or 16 of the 1934 Act. In determining the number of Equity Interests of a particular class outstanding at any point
in time, the Holder may rely on the number of outstanding Equity Interests of such class as reflected in (x) the Company’s most
recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as the case may be, (y) a more recent public announcement
by the Company or (z) a more recent notice by the Company or its transfer agent to the Holder setting forth the number of Equity Interests
of such class then outstanding. For any reason at any time, upon written or oral request of the Holder, the Company shall, within one
(1) Trading Day of such request, confirm orally and in writing to the Holder the number of Equity Interests of any class then outstanding.
The provisions of this Section 10 shall be construed, corrected and implemented in a manner so as to effectuate the intended beneficial
ownership limitation herein contained.
11. REGISTRATION
AND TRANSFER OF WARRANT.
11.1. Registration
of Warrant. The Company shall register and record transfers, exchanges, reissuances and cancellations of this Warrant, upon the records
to be maintained by the Company for that purpose, in the name of the record holder hereof from time to time. The Company may deem and
treat the registered holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to
the Holder, and for all other purposes, absent actual notice to the contrary. The Company shall be entitled to rely, and held harmless
in acting or refraining from acting in reliance upon, any notices, instructions or documents it believes in good faith to be from an authorized
representative of the Holder.
11.2 Transferability.
This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part,
upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this
Warrant substantially in the form of assignment (the “Assignment Notice”) attached hereto duly executed by the Holder
or its agent or attorney. The Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the
transferor, 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 the transferred Warrant under the 1933 Act. Upon such surrender, the Company shall execute and deliver
a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified
in such Assignment Notice, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled. This Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the
purchase of Exercise Shares without having a new Warrant issued.
11.3. New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or
its agent or attorney. Subject to compliance with Section 11.2, as to any transfer which may be involved in such division or combination,
the Company shall execute and deliver a new Warrant or Warrants in exchange for this Warrant or Warrants to be divided or combined in
accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original Issue Date and shall be identical
with this Warrant except as to the number of Exercise Shares issuable pursuant thereto.
12. LOSS,
THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Exercise Shares, and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of this Warrant, shall not include
the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make
and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or share certificate.
13. REMEDIES.
The Company stipulates that the remedies at law of the Holder in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that such terms may be specifically
enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of
the terms hereof or otherwise.
14. DIVIDENDS
AND DISTRIBUTIONS. With respect to the Exercise Shares, the Holder shall be entitled to receive, on the same basis as holders of Common
Stock, any dividends paid or distributions on Common Stock as if this Warrant were exercised for shares of Common Stock (without regard
to limitations on exercise) immediately prior to the record date for such dividend or distribution.
15. NOTICES.
All notices, requests, demands and other communications that are required or may be given pursuant to the terms of this Warrant shall
be in writing and shall be deemed delivered (i) on the date of delivery when delivered by hand on a Business Day during normal business
hours or, if delivered on a day that is not a Business Day or after normal business hours, then on the next Business Day, (ii) on the
date of transmission when sent by facsimile transmission or email during normal business hours on a Business Day with telephone confirmation
of receipt or, if transmitted on a day that is not a Business Day or after normal business hours, then on the next Business Day, or (iii)
on the second Business Day after the date of dispatch when sent by a reputable courier service that maintains records of receipt. The
addresses for notice shall be as set forth in the Purchase Agreement.
16. CONSENT
TO AMENDMENTS. Any term of this Warrant may be amended, and the Company may take any action herein prohibited, or compliance therewith
may be waived, only if the Company shall have obtained the written consent (and not without such written consent) to such amendment, action
or waiver from the Holder. No course of dealing between the Company and the Holder nor any delay in exercising any rights hereunder shall
operate as a waiver of any rights of the Holder.
17. MISCELLANEOUS.
In case any provision of this Warrant shall be invalid, illegal or unenforceable, or partially invalid, illegal or unenforceable, the
provision shall be enforced to the extent, if any, that it may legally be enforced and the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby. If any provision of this Warrant is found to conflict with
the Purchase Agreement, the provisions of this Warrant shall prevail. If any provision of this Warrant is found to conflict with the Note,
the provisions of the Note shall prevail. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES
SHALL BE GOVERNED BY, THE INTERNAL LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD
PERMIT THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. The prevailing party in any such action shall be entitled
to recover its reasonable and documented attorneys’ fees and out-of-pocket expenses relating to such action or proceeding. The headings
in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Company has caused this
Warrant to be executed by its duly authorized officer.
Dated as of July 14, 2023
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PARTS ID, INC. |
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By: |
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Name: |
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Title: |
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FORM OF SUBSCRIPTION
(To be signed only on exercise
of Common Stock
Purchase Warrant)
TO: PARTS iD, Inc.
1. The
undersigned Holder of the attached Warrant hereby elects to exercise its purchase right under such Warrant to purchase shares of Common
Stock of PARTS iD, Inc., a Delaware corporation (the “Company”), as follows (check one or more, as applicable):
| ☐ | to exercise the Warrant to purchase __________ shares of Common Stock and to pay the Aggregate Exercise
Price therefor by wire transfer of United States funds to the account of the Company, which transfer has been made prior to or as of the
date of delivery of this Form of Subscription pursuant to the instructions of the Company; |
and/or
| ☐ | to exercise the Warrant with respect to ____________ shares of Common Stock pursuant to the cashless exercise
provisions specified in Section 2.3 of the Warrant. |
2. In
exercising this Warrant, the undersigned Holder hereby confirms and acknowledges that the shares of Common Stock are being acquired solely
for the account of the undersigned and not as a nominee for any other party, and for investment, and that the undersigned shall not offer,
sell or otherwise dispose of any such shares of Common Stock except under circumstances that will not result in a violation of the 1933
Act or any state securities laws. The undersigned hereby further confirms and acknowledges that it is an “accredited investor”,
as that term is defined under the 1933 Act.
3. Please
issue a stock certificate or certificates representing the appropriate number of shares of Common Stock in the name of the undersigned
or in such other name(s) as is specified below:
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Name: |
____________________________ |
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Address: |
____________________________ |
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____________________________ |
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____________________________ |
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TIN: |
____________________________ |
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______________________________________________ |
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Dated: ____________________ |
(Signature must conform exactly to name of
Holder as specified
on the face of the Warrant) |
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FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned
hereby sells, assigns, and transfers unto ________________ the right represented by the within Warrant to purchase
shares of Common Stock of PARTS iD, Inc., a Delaware corporation, to which the within Warrant relates, and appoints _________________
attorney to transfer such right on the books of PARTS iD, Inc., with full power of substitution in the premises.
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[insert name of Holder] |
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Dated:____________________________ |
By:____________________________ |
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Title:____________________________ |
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[insert address of Holder] |
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Signed in the presence of: |
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________________________________________ |
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Exhibit 10.4
SECURITY AGREEMENT
SECURITY AGREEMENT
(this “Agreement”), dated as of July 14, 2023, by and between PARTS iD,
INC., a Delaware corporation (the “Company”) and LIND GLOBAL FUND II LP (the “Secured Party”).
WHEREAS, the Company
(a) and the Secured Party have entered into that certain Securities Purchase Agreement dated as of the date hereof (as amended and in
effect from time to time, the “SPA”) and (b) issued to the Secured Party that certain Senior Secured Convertible Promissory
Note dated as of the date hereof (as amended and in effect from time to time, the “Note”); and
WHEREAS, it is a condition
precedent to the obligations of the Secured Party to fund the Note under the SPA that the Company execute and deliver to the Secured Party
a security agreement in substantially the form hereof; and
WHEREAS, the Company
wishes to grant security interests in favor of the Secured Party as herein provided;
NOW, THEREFORE, in
consideration of the promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions.
All capitalized terms used herein without definitions shall have the respective meanings provided therefor in the SPA. All terms defined
in the Uniform Commercial Code of the State (as hereinafter defined) and used herein shall have the same definitions herein as specified
therein, however, if a term is defined in Article 9 of the Uniform Commercial Code of the State differently than in another Article of
the Uniform Commercial Code of the State, the term has the meaning specified in Article 9, and the following terms shall have the following
meanings:
“Event of Default”
means the occurrence of any “Event of Default” under and as defined in each of the SPA, the Note or any Supplemental Loan Document,
or the failure of the Company or any Guarantor to comply with any term or covenant of any Transaction Document (including this Agreement)
to which it is a party.
“Existing Commercial
Tort Claim” means the Company’s and the LLC Guarantor’s claims for trademark infringement against Volkswagen Group
of America, Inc. pursuant to the lawsuit currently pending in the (i) United States District Court for the District of New Jersey and
captioned as Onyx Enterprises Int’l, Corp v. Volkswagen Group of America, Inc., Civil Action Number 3:20-cv-09976-BRM-ZNQ and (ii)
United States District Court for the District of Massachusetts and captioned as Onyx Enterprises International Corp. v. ID Parts LLC,
Case No. 1:20cv-11253
“Guarantors”
means, collectively, each Person which provides a guarantee of all or any portion of the Obligations of the Borrower to the Secured Party,
including, without limitation, Parts iD, LLC, a Delaware limited liability company.
“Junior Notes”
means, collectively, that (a) Junior Secured Convertible Promissory Note dated March 6, 2023 from the Company in favor of Limestone Edwin
J. Rigaud in the original principal amount of $400,000; (b) Junior Secured Convertible Promissory Note dated March 6, 2023 from the Company
in favor of Lev M. Peker in the original principal amount of $250,000; (c) Junior Secured Convertible Promissory Note dated March 6, 2023
from the Company in favor of Limestone Development Corporation in the original principal amount of $250,000; (d) Junior Secured Convertible
Promissory Note dated March 6, 2023 from the Company in favor of 2642186 Ontario Inc. in the original principal amount of $2,000,000;
(e) Unsecured Convertible Promissory Note dated May 22, 2023 from the Company in favor of Lev M. Peker in the original principal amount
of $750,000; (f) Unsecured Convertible Promissory Note dated May 22, 2023 from the Company in favor of 2642185 Ontario Inc. in the original
principal amount of $250,000; (g) Unsecured Convertible Promissory Note dated June 20, 2023 from the Company in favor of 2642185 Ontario
Inc. in the original principal amount of $250,000; (h) Junior Secured Convertible Promissory Note dated July 10, 2023 from the Company
in favor of Lev M. Peker in the original principal amount of $1,000,000; (i) Junior Secured Convertible Promissory Note dated July 10,
2023 from the Company in favor of 2642186 Ontario Inc. in the original principal amount of $1,000,000; and (j) Junior Secured Convertible
Promissory Note dated July 10, 2023 from the Company in favor of Edwin J. Rigaud in the original principal amount of $250,000.
“Junior Notes Subordination
Agreement” means that certain subordination agreement dated as of the date hereof among the Secured Party and each holder of
a Junior Note, such agreement to be on terms and conditions satisfactory to the Secured Party.
“LLC Guarantor”
means Parts iD, LLC, a Delaware limited liability company.
“Lien” means
any mortgage, charge, pledge, hypothecation, security interest, assignment by way of security, lien (statutory or otherwise), encumbrance,
conditional sale agreement, capital lease, financing lease, deposit arrangement, title retention agreement, and any other agreement, trust
or arrangement that in substance secures payment or performance of an obligation.
“Obligations”
means, collectively, all (a) debts, liabilities and obligations, present or future, direct or indirect, absolute or contingent, matured
or unmatured, at any time due or accruing due and owing by or otherwise payable by the Company or any Guarantor to the Secured Party in
any currency, under, in connection with or pursuant to the any Transaction Document (including, without limitation, the SPA, the Note,
any Supplemental Loan Document or this Agreement), and whether incurred by the Company or any Guarantor alone or jointly with another
or others and whether as principal, guarantor or surety and in whatever name or style and (b) expenses, costs and charges incurred by
or on behalf of the Secured Party in connection with, and as contemplated by, any Transaction Document (including, without limitation,
the SPA, the Note, any Supplemental Loan Document and this Agreement) or the Collateral, including all legal fees, court costs, receiver’s
or agent’s remuneration and other expenses of taking possession of, repairing, protecting, insuring, preparing for disposition,
realizing, collecting, selling, transferring, delivering or obtaining payment for the Collateral, and of taking, defending or participating
in any action or proceeding in connection with any of the foregoing matters or otherwise in connection with the Secured Party’s interest
in any Collateral, directly relating to the Secured Party’s rights under this Agreement or any other Transaction Document (including,
without limitation, any enforcement of this Agreement or any other Transaction Document).
“Permitted Lien”
means any of the following: (a) mechanics and materialman Liens and other statutory Liens (including Liens for taxes, fees, assessments
and other governmental charges or levies) in respect of any amount (i) which is not at the time overdue or (ii) which may be overdue but
the validity of which is being contested at the time in good faith by appropriate proceedings, in each case so long as the holder of such
Lien has not taken any action to foreclose or otherwise exercise any remedies with respect to such Lien; (b) Liens securing the obligations
of the Company under the Junior Notes described in clauses (a) – (d) and (h) – (j) of such definition, provided, only to the
extent such Liens remain fully subordinated to the Liens in favor of the Secured Party pursuant to the Junior Notes Subordination Agreement;
and (d) Liens which are permitted in writing by the Secured Party in its sole and absolute discretion.
“Permitted Litigation
Indebtedness” means Indebtedness which is solely collateralized by and solely recourse to the Existing Commercial Tort Claim
and which is substantially on the terms set forth in that certain term sheet which was dated June 27, 2023 by the Borrower and dated July
10, 2023 by the proposed lender, a copy of which has been provided to the Secured Party prior to the date hereof.
“Person”
means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental
authority or other entity.
“State” means
the State of New York.
“Supplemental Loan
Documents” means any other document, agreement or instrument evidencing any debt or similar obligation owing from the Borrower
or any of its Subsidiaries (including, without limitation, any Guarantor) to the Secured Party.
“Transaction Documents”
means, collectively, the SPA, the Note, any guaranty from any Guarantor, any Supplemental Loan Document, this Agreement or any other “Transaction
Documents” as defined in the SPA, in each case as amended, supplemented, novated and/or replaced from time to time in accordance
with the applicable terms thereof.
2. Grant
of Security Interest.
2.1. Grant;
Collateral Description. The Company hereby grants
to the Secured Party, to secure the payment and performance in full of all of the Obligations, a security interest in and pledges and
assigns to the Secured Party the following properties, assets and rights of the Company, wherever located, whether now owned or hereafter
acquired or arising, and all proceeds and products thereof (all of the same being hereinafter called the “Collateral”):
all personal and fixture property of every kind and nature including all goods (including inventory, equipment and any accessions thereto),
instruments (including promissory notes), documents (whether tangible or electronic), accounts (including health-care-insurance receivables),
chattel paper (whether tangible or electronic), deposit accounts, letter-of-credit rights (whether or not the letter of credit is evidenced
by a writing), commercial tort claims (excluding, subject to the second sentence of Section 2.2, the Existing Commercial Tort Claim),
securities and all other investment property, supporting obligations, any other contract rights or rights to the payment of money, insurance
claims and proceeds, and all general intangibles (including all payment intangibles). Notwithstanding the foregoing, no security interest
is granted in (a) any leasehold interest in real property and any fee-owned real property, and (b) any “intent to use” trademark
applications, in each case, only until such time as the Company begins to use such trademarks or files a “Statement of Use”
or “Amendment to Allege Use” (in which case, the security interest in such trademark shall be deemed granted by the Company
at such time and will attach immediately).
2.2. Commercial
Tort Claims. The Secured Party acknowledges that
the attachment of its security interest in any commercial tort claim as original collateral is subject to the Company’s compliance with
§4.7. In addition, the Company and the Secured Party agree that to the extent the Company has not obtained the funding of Permitted
Litigation Indebtedness by not later than September 14, 2023 (or the holder of such Permitted Litigation Indebtedness has elected not
to take a Lien on the Existing Commercial Tort Claim), then on September 14, 2023 (or, if applicable, if the holder the Permitted Litigation
Indebtedness has elected not to take a Lien on the Existing Commercial Tort Claim, then on such earlier date on which the closing on the
Permitted Litigation Indebtedness has occurred), Collateral shall include the Existing Commercial Tort Claim.
2.3. Non-Transferable
Collateral.
(a) The
grant of the security interest contained in § 2.1 shall not extend to, and the term “Collateral” shall not include,
any directly held investment property, or any general intangibles, now or hereafter held or owned by the Company, to the extent, in each
case, that (i) a security interest may not be granted by the Company in such directly held investment property or general intangibles
as a matter of law, or under the terms of the governing document applicable thereto, without the consent of one or more applicable parties
thereto and (ii) such consent has not been obtained.
(b) The
grant of the security interest contained in § 2.1 shall extend to, and the term “Collateral” shall include, (i)
any and all proceeds of such directly held investment property or general intangibles to the extent that the proceeds are not themselves
directly held investment property or general intangibles subject to § 2.3(a) and (ii) upon any such applicable party or parties’
consent with respect to any otherwise excluded directly held investment property or general intangibles being obtained, thereafter such
directly held investment property or general intangibles.
(c) The
provisions of § 2.3(a) shall not apply to (i) directly held investment property or general intangibles to the extent that the
restriction on the Company granting a security interest therein is not effective under applicable law or (ii) payment intangibles.
3. Authorization
to File Financing Statements. The Company hereby
irrevocably authorizes the Secured Party at any time and from time to time until payment in full, in cash, of all of the Obligations (other
than contingent indemnification obligations for which no claims have been made) to file in any filing office in any Uniform Commercial
Code jurisdiction which the Secured Party considers necessary to perfect the Secured Party’s interest in the Collateral any initial financing
statements and amendments thereto that (a) indicate the Collateral (i) as all assets of the Company or words of similar effect, regardless
of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the
State or such other jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail, and (b) provide any other information
required by part 5 of Article 9 of the Uniform Commercial Code of the State or such other jurisdiction for the sufficiency or filing office
acceptance of any financing statement or amendment, including whether the Company is an organization, the type of organization and any
organizational identification number issued to the Company. The Company agrees to furnish any such information to the Secured Party promptly
upon the Secured Party’s reasonable request.
4. Other
Actions. Further to insure the attachment, perfection
and first priority of, and the ability of the Secured Party to enforce, the Secured Party’s security interest in the Collateral, the Company
agrees, in each case at the Company’s expense, to take the following actions with respect to the following Collateral and without limitation
on the Company’s other obligations contained in this Agreement:
4.1. Promissory
Notes and Tangible Chattel Paper. If the
Company shall, now or at any time hereafter, hold or acquire any promissory notes or tangible chattel paper with an aggregate value for
all such promissory notes or tangible chattel paper in excess of $50,000, the Company shall forthwith endorse, assign and deliver the
same to the Secured Party, accompanied by such instruments of transfer or assignment duly executed in blank as the Secured Party may from
time to time specify.
4.2. Deposit
Accounts. For each deposit account that the Company,
now or at any time hereafter, opens or maintains the Company shall promptly, at the Secured Party’s written request and option, (and in
no event more than forty five (45) days after such request or such later date as the Secured Party may agree in its sole and absolute
discretion) pursuant to an agreement in form and substance reasonably satisfactory to the Secured Party, either (a) cause the depositary
bank to agree to comply without further consent of the Company, at any time with instructions from the Secured Party to such depositary
bank directing the disposition of funds from time to time credited to such deposit account, or (b) arrange for the Secured Party to become
the customer of the depositary bank with respect to the deposit account, with the Company being permitted, only with the consent of the
Secured Party, to exercise rights to withdraw funds from such deposit account. The Secured Party agrees with the Company that the Secured
Party shall not give any such instructions or withhold any withdrawal rights from the Company, unless an Event of Default has occurred
and is continuing, or, if effect were given to any withdrawal not otherwise permitted by the Transaction Documents, would occur. The provisions
of this paragraph shall not apply to (i) any deposit account for which the Company, the depositary bank and the Secured Party have entered
into a cash collateral agreement specially negotiated among the Company, the depositary bank and the Secured Party for the specific purpose
set forth therein, (ii) any deposit accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of the Company’s salaried employees, and (iii) any deposit account with a stated balance in the amount
of less than $100,000 and, when taken together with all other deposit accounts not subject to an agreement of the type set forth in the
first sentence hereof, have aggregate balances in an amount of less than $150,000.
4.3. Investment
Property. If the Company shall, now or
at any time hereafter, hold or acquire any certificated securities, the Company shall forthwith endorse, assign and deliver the same to
the Secured Party, accompanied by such instruments of transfer or assignment duly executed in blank as the Secured Party may from time
to time reasonably specify. If any securities now or hereafter acquired by the Company are uncertificated and are issued to the Company
or its nominee directly by the issuer thereof, the Company shall promptly (but in any event within two (2) Business Days) notify the Secured
Party thereof and, at the Secured Party’s request and option, pursuant to an agreement in form and substance satisfactory to the Secured
Party, either (a) cause the issuer to agree to comply without further consent of the Company or such nominee, at any time with instructions
from the Secured Party as to such securities, or (b) arrange for the Secured Party to become the registered owner of the securities. If
any securities, whether certificated or uncertificated, or other investment property now or hereafter acquired by the Company are held
by the Company or its nominee through a securities intermediary or commodity intermediary, the Company shall promptly (but in any event
within two (2) Business Days) notify the Secured Party thereof and, at the Secured Party’s request and option, pursuant to an agreement
in form and substance satisfactory to the Secured Party, either (i) cause such securities intermediary or (as the case may be) commodity
intermediary to agree to comply, in each case without further consent of the Company or such nominee, at any time with entitlement orders
or other instructions from the Secured Party to such securities intermediary as to such securities or other investment property, or (as
the case may be) to apply any value distributed on account of any commodity contract as directed by the Secured Party to such commodity
intermediary, or (ii) in the case of financial assets or other investment property held through a securities intermediary, arrange for
the Secured Party to become the entitlement holder with respect to such investment property, with the Company being permitted, only with
the consent of the Secured Party, to exercise rights to withdraw or otherwise deal with such investment property. The Secured Party agrees
with the Company that the Secured Party shall not give any such entitlement orders or instructions or directions to any such issuer, securities
intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by the
Company, unless an Event of Default has occurred and is continuing, or, after giving effect to any such investment and withdrawal rights
not otherwise permitted by the Transaction Documents, would occur. The provisions of this paragraph shall not apply to any financial assets
credited to a securities account for which the Secured Party is the securities intermediary.
4.4. Collateral
in the Possession of a Bailee. If any
Collateral with an aggregate value in excess of $50,000 is, now or at any time hereafter, in the possession of a bailee, the Company shall
promptly notify the Secured Party thereof and, at the Secured Party’s reasonable request and option, shall promptly use commercially reasonable
efforts to obtain an acknowledgement from the bailee, in form and substance satisfactory to the Secured Party, that the bailee holds such
Collateral for the benefit of the Secured Party and such bailee’s agreement to comply, without further consent of the Company, at any
time with instructions of the Secured Party as to such Collateral. The Secured Party agrees with the Company that the Secured Party shall
not give any such instructions unless an Event of Default has occurred and is continuing.
4.5. Electronic
Chattel Paper, Electronic Documents and Transferable Records.
If the Company, now or at any time hereafter, holds or acquires an interest in any Collateral that is electronic chattel paper, any electronic
document or any “transferable record,” as that term is defined in Section 201 of the federal Electronic Signatures in Global
and National Commerce Act, or in §16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, the Company
shall promptly notify the Secured Party thereof and, at the request and option of the Secured Party, shall take such action as the Secured
Party may reasonably request to vest in the Secured Party control, under §9-105 of the Uniform Commercial Code of the State or any
other relevant jurisdiction, of such electronic chattel paper, control, under §7-106 of the Uniform Commercial Code of the State
or any other relevant jurisdiction, of such electronic document or control, under Section 201 of the federal Electronic Signatures in
Global and National Commerce Act or, as the case may be, §16 of the Uniform Electronic Transactions Act, as so in effect in such
jurisdiction, of such transferable record. The Secured Party agrees with the Company that the Secured Party will arrange, pursuant to
procedures satisfactory to the Secured Party and so long as such procedures will not result in the Secured Party’s loss of control, for
the Company to make alterations to the electronic chattel paper, electronic document or transferable record permitted under UCC §9-105,
UCC §7-106, or, as the case may be, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or §16
of the Uniform Electronic Transactions Act for a party in control to make without loss of control, unless an Event of Default has occurred
and is continuing or would occur after taking into account any action by the Company with respect to such electronic chattel paper, electronic
document or transferable record. The provisions of this §4.5 relating to electronic documents and “control” under UCC §7-106
apply in the event that the 2003 revisions to Article 7, with amendments to Article 9, of the Uniform Commercial Code, in substantially
the form approved by the American Law Institute and the National Conference of Commissioners on Uniform State Laws, are now or hereafter
adopted and become effective in the State or in any other relevant jurisdiction.
4.6. Letter-of-Credit
Rights. If the Company is, now or at any time
hereafter, a beneficiary under a letter of credit with a stated amount in excess of $25,000, or if the Company is a beneficiary under
letters of credit not assigned to the Secured Party with an aggregate stated amount in excess of $50,000, the Company shall promptly notify
the Secured Party thereof and, at the request and option of the Secured Party, the Company shall, pursuant to an agreement in form and
substance satisfactory to the Secured Party, either (a) arrange for the issuer and any confirmer of such letter of credit to consent to
an assignment to the Secured Party of the proceeds of the letter of credit or (b) arrange for the Secured Party to become the transferee
beneficiary of the letter of credit. The Secured Party agrees with the Company that the Secured Party shall not give any such instructions
unless an Event of Default has occurred and is continuing.
4.7. Commercial
Tort Claims. If the Company shall, now
or at any time hereafter, hold or acquire a commercial tort claim (other than the Existing Commercial Tort Claim), the Company shall promptly
notify the Secured Party in a writing signed by the Company of the particulars thereof and grant to the Secured Party in such writing
a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance
satisfactory to the Secured Party.
4.8. Other
Actions as to any and all Collateral. The Company
further agrees, upon the request of the Secured Party and at the Secured Party’s option, to take any and all other actions as the Secured
Party may reasonably determine to be necessary or useful for the attachment, perfection and first priority of (subject to Permitted Liens),
and the ability of the Secured Party to enforce, the Secured Party’s security interest in any and all of the Collateral, including (a)
executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the Uniform Commercial
Code of any relevant jurisdiction, to the extent, if any, that the Company’s signature thereon is required therefor, (b) causing the Secured
Party’s name to be noted as secured party on any certificate of title for a titled good with a stated amount in excess of $50,000 if such
notation is a condition to attachment, perfection or priority of, or ability of the Secured Party to enforce, the Secured Party’s security
interest in such Collateral, (c) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral
if compliance with such provision is a condition to attachment, perfection or priority of, or ability of the Secured Party to enforce,
the Secured Party’s security interest in such Collateral, (d) obtaining governmental and other third party waivers, consents and approvals,
in form and substance satisfactory to the Secured Party, including any consent of any licensor, lessor or other Person obligated on Collateral,
(e) obtaining waivers from mortgagees and landlords where Collateral in excess of $50,000 is located (so long as the value of all Collateral
where waivers from mortgagees and landlords have not been obtained does not exceed $100,000) in form and substance reasonably satisfactory
to the Secured Party and (f) taking all actions under any other law, as reasonably determined by the Secured Party to be applicable in
any relevant Uniform Commercial Code or other jurisdiction, including any foreign jurisdiction.
4.9. Relation
to other Security Documents. Concurrently herewith
the Company is also executing and delivering to the Secured Party the Pledge Agreement dated as of the date hereof between the Company
and the Secured Party (as amended and in effect from time to time, the “Pledge Agreement”) pursuant to which the Company
is pledging to the Secured Party all of its limited liability company membership interests legally or beneficially owned by the Company
in the LLC Guarantor. The provisions of Pledge Agreement are supplemental to the provisions of this Agreement and nothing contained in
Pledge Agreement shall derogate from any of the rights or remedies of the Secured Party hereunder. Nor will anything contained in Pledge
Agreement be deemed to prevent or extend the time of attachment or perfection of any security interest in such Collateral created hereby.
5. Representations
and Warranties Concerning the Company’s Legal Status.
The Company has, on the date hereof, delivered to the Secured Party a certificate signed by the Company and entitled “Perfection
Certificate” (the “Perfection Certificate”). The Company represents and warrants to the Secured Party as follows:
as of the date hereof (a) the Company’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof,
(b) the Company is an organization of the type, and is organized in the jurisdiction, set forth in the Perfection Certificate, (c) the
Perfection Certificate accurately sets forth the Company’s organizational identification number or accurately states that the Company
has none, (d) the Perfection Certificate accurately sets forth the Company’s place of business or, if more than one, its chief executive
office, as well as the Company’s mailing address, if different, (e) all other information set forth on the Perfection Certificate pertaining
to the Company is accurate and complete in all material respects, and (f) there has been no change in any of such information since the
date on which the Perfection Certificate was signed by the Company.
6. Covenants
Concerning Company’s Legal Status. The Company
covenants with the Secured Party as follows: (a) without providing at least ten (10) days prior written notice to the Secured Party, the
Company will not change its name, its place of business or, if more than one, chief executive office, or its mailing address or organizational
identification number if it has one, (b) if the Company does not have an organizational identification number and later obtains one, the
Company will forthwith notify the Secured Party of such organizational identification number, and (c) the Company will not change its
type of organization, jurisdiction of organization or other legal structure without the Secured Party’s prior written consent (which consent
will not, in the case of a change in its type of organization, be unreasonably withheld).
7. Representations
and Warranties Concerning Collateral, Etc. The
Company further represents and warrants to the Secured Party as follows: (a) the Company is the owner of or has other rights in or power
to transfer the Collateral, free from any right or claim of any Person or any adverse lien, except for the security interest created by
this Agreement and the Permitted Liens, (b) none of the account debtors or other Persons obligated on any of the Collateral is a governmental
authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral,
(c) the Company holds no commercial tort claim except as indicated on the Company’s Perfection Certificate dated as of the date hereof
or as otherwise updated by written notice to the Secured Party, (d) all other information set forth on the Company’s Perfection Certificate
pertaining to the Collateral is accurate and complete in all material respects as of the date of such Perfection Certificate, and (e)
there has been no change in any of such information since the date on which the Company’s Perfection Certificate was signed by the Company
except as any such changes have been disclosed to the Secured Party in writing.
8. Covenants
Concerning Collateral, Etc. The Company further
covenants with the Secured Party as follows: (a) other than inventory sold in the ordinary course of business consistent with past practices,
the Collateral, to the extent not delivered to the Secured Party pursuant to §4, will be kept at those locations listed on the Perfection
Certificate and the Company will not remove the Collateral from such locations, without providing at least ten (10) Business Days prior
written notice to the Secured Party, (b) except for the security interest herein granted, the Company shall be the owner of or have other
rights in the Collateral free from any right or claim of any other Person or any Lien (other than Permitted Liens), and the Company shall
defend the same against all claims and demands of all Persons at any time claiming the same or any interests therein adverse to the Secured
Party, (c) other than in favor of the Secured Party or with respect to any Permitted Lien, the Company shall not pledge, mortgage or create,
or suffer to exist any right of any Person in or claim by any Person to the Collateral, or any Lien in the Collateral in favor of any
Person, or become bound (as provided in Section 9-203(d) of the Uniform Commercial Code of the State or any other relevant jurisdiction
or otherwise) by a security agreement in favor of any Person as secured party, (d) the Company will permit the Secured Party, or its designee,
to inspect the Collateral during normal business hours, wherever located, provided if any Event of Default has occurred and is continuing,
any such inspection shall be permitted at any reasonable time, (e) the Company will pay promptly when due all taxes, assessments, governmental
charges and levies upon the Collateral or incurred in connection with the use or operation of the Collateral or incurred in connection
with this Agreement, and (f) the Company will not sell or otherwise dispose, or offer to sell or otherwise dispose, of the Collateral,
or any interest therein except for, (i) dispositions otherwise permitted under the SPA and the Note and (ii) so long as no Event of Default
has occurred and is continuing, dispositions of obsolete or worn-out property, the granting of non-exclusive licenses in the ordinary
course of business, and the sale of inventory in the ordinary course of business consistent with past practices.
9. Collateral
Protection Expenses; Preservation of Collateral.
9.1. Expenses
Incurred by Secured Party. In the Secured Party’s
discretion, the Secured Party may discharge taxes and other encumbrances at any time levied or placed on any of the Collateral, and pay
any necessary filing fees or insurance premiums, in each case if the Company fails to do so. The Company agrees to reimburse the Secured
Party on demand for all expenditures so made. The Secured Party shall have no obligation to the Company to make any such expenditures,
nor shall the making thereof be construed as a waiver or cure of any Event of Default.
9.2. Secured
Party’s Obligations and Duties. Anything herein
to the contrary notwithstanding, the Company shall remain obligated and liable under each contract or agreement comprised in the Collateral
to be observed or performed by the Company thereunder. The Secured Party shall not have any obligation or liability under any such contract
or agreement by reason of or arising out of this Agreement or the receipt by the Secured Party of any payment relating to any of the Collateral,
nor shall the Secured Party be obligated in any manner to perform any of the obligations of the Company under or pursuant to any such
contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Secured Party in respect of the
Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim,
to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the Secured Party
or to which the Secured Party may be entitled at any time or times. The Secured Party’s sole duty with respect to the custody, safe keeping
and physical preservation of the Collateral in its possession, under §9-207 of the Uniform Commercial Code of the State or otherwise,
shall be to deal with such Collateral in the same manner as the Secured Party deals with similar property for its own account.
10. Securities
and Deposits. The Secured Party may at any time
following and during the continuance of an Event of Default, at its option, transfer to itself or any nominee any securities constituting
Collateral, receive any income thereon and hold such income as additional Collateral or apply it to the Obligations. Whether or not any
Obligations are due, the Secured Party may, following and during the continuance of an Event of Default demand, sue for, collect, or make
any settlement or compromise which it deems desirable with respect to the Collateral. Regardless of the adequacy of Collateral or any
other security for the Obligations, any deposits or other sums at any time credited by or due from the Secured Party to the Company may
at any time following and during the continuation of an Event of Default be applied to or set off against any of the Obligations then
due and owing.
11. Notification
to Account Debtors and Other Persons Obligated on Collateral.
If an Event of Default shall have occurred and be continuing:
(a)
the Company shall, at the request and option of the Secured Party, notify account debtors and other Persons obligated on any of the Collateral
of the security interest of the Secured Party in any account, chattel paper, general intangible, instrument or other Collateral and that
payment thereof is to be made directly to the Secured Party or to any financial institution designated by the Secured Party as the Secured
Party’s agent therefor;
(b)
the Secured Party may itself, without notice to or demand upon the Company, so notify account debtors and other Persons obligated on Collateral;
(c)
after the making of such a request or the giving of any such notification, the Company shall hold any proceeds of collection of accounts,
chattel paper, general intangibles, instruments and other Collateral received by the Company as trustee for the Secured Party, for the
benefit of the Secured Party, without commingling the same with other funds of the Company and shall turn the same over to the Secured
Party in the identical form received, together with any necessary endorsements or assignments; and
(d) the
Secured Party shall apply the proceeds of collection of accounts, chattel paper, general intangibles, instruments and other Collateral
and received by the Secured Party to the payment of the Obligations, such proceeds to be immediately credited after final payment in cash
or other immediately available funds of the items giving rise to them.
12. Power
of Attorney.
12.1. Appointment
and Powers of Secured Party. The Company hereby
irrevocably constitutes and appoints the Secured Party and any officer or agent thereof, with full power of substitution, as its true
and lawful attorneys-in-fact with full irrevocable power and authority in the place and stead of the Company or in the Secured Party’s
own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all
documents and instruments that may be necessary or useful to accomplish the purposes of this Agreement and, without limiting the generality
of the foregoing, hereby gives said attorneys the power and right, on behalf of the Company, without notice to or assent by the Company,
to do the following:
(a) upon
the occurrence and during the continuance of an Event of Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise dispose of or deal with any of the Collateral in such manner as is consistent with the Uniform Commercial Code of the
State or any other relevant jurisdiction and as fully and completely as though the Secured Party were the absolute owner thereof for all
purposes, and to do, at the Company’s expense, at any time, or from time to time, all acts and things which the Secured Party deems necessary
or useful to protect, preserve or realize upon the Collateral and the Secured Party’s security interest therein, in order to effect the
intent of this Agreement, all no less fully and effectively as the Company might do, including (i) upon written notice to the Company,
the exercise of voting rights with respect to voting securities, which rights may be exercised, if the Secured Party so elects, with a
view to causing the liquidation of assets of the issuer of any such securities and (ii) the execution, delivery and recording, in connection
with any sale or other disposition of any Collateral, of the endorsements, assignments or other instruments of conveyance or transfer
with respect to such Collateral; and
(b) to
the extent that the Company’s authorization given in §3 is not sufficient, to file such financing statements with respect hereto,
with or without the Company’s signature, or a photocopy of this Agreement in substitution for a financing statement, as the Secured Party
may deem appropriate and to execute in the Company’s name such financing statements and amendments thereto and continuation statements
which may require the Company’s signature.
12.2. Ratification
by Company. To the extent permitted by law, the
Company hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and is irrevocable until such time as all of the Obligations have been repaid in full in cash (other than contingent
indemnification obligations for which no claims have been made).
12.3. No
Duty on Secured Party. The powers conferred on
the Secured Party hereunder are solely to protect the interests of the Secured Party in the Collateral and shall not impose any duty upon
the Secured Party to exercise any such powers. The Secured Party shall be accountable only for the amounts that it actually receives as
a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to
the Company for any act or failure to act, except for the Secured Party’s own gross negligence or willful misconduct.
13. Rights
and Remedies.
13.1. General.
If an Event of Default shall have occurred and be continuing, the Secured Party, without any other notice to or demand upon the Company,
shall have in any jurisdiction in which enforcement hereof is sought, in addition to all other rights and remedies, the rights and remedies
of a secured party under the Uniform Commercial Code of the State or any other relevant jurisdiction and any additional rights and remedies
as may be provided to a secured party in any jurisdiction in which Collateral is located, including the right to take possession of the
Collateral, and for that purpose the Secured Party may, so far as the Company can give authority therefor, enter upon any premises on
which the Collateral may be situated and remove the same therefrom. The Secured Party may in its discretion require the Company to assemble
all or any part of the Collateral at such location or locations within the jurisdiction(s) of the Company’s principal office(s) or at
such other locations as the Secured Party may reasonably designate. Unless the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, the Secured Party shall give to the Company at least ten (10) Business
Days prior written notice of the time and place of any public sale of Collateral or of the time after which any private sale or any other
intended disposition is to be made. The Company hereby acknowledges that ten (10) Business Days prior written notice of such sale or sales
shall be reasonable notice. In addition, the Company waives any and all rights that it may have to a judicial hearing in advance of the
enforcement of any of the Secured Party’s rights and remedies hereunder, including its right following an Event of Default to take immediate
possession of the Collateral and to exercise its rights and remedies with respect thereto.
14. Standards
for Exercising Rights and Remedies. To the extent
that applicable law imposes duties on the Secured Party to exercise remedies in a commercially reasonable manner, the Company acknowledges
and agrees that it is not commercially unreasonable for the Secured Party (a) to fail to incur expenses reasonably deemed significant
by the Secured Party to prepare Collateral for disposition or otherwise to fail to complete raw material or work in process into finished
goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition
of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against account debtors or other Persons obligated
on Collateral or to fail to remove Liens on or any adverse claims against Collateral, (d) to exercise collection remedies against account
debtors and other Persons obligated on the Collateral directly or through the use of collection agencies and other collection specialists,
(e) to advertise dispositions of the Collateral through publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (f) to contact other Persons, whether or not in the same business as the Company, for expressions of interest
in acquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of the
Collateral, whether or not the collateral is of a specialized nature, (h) to dispose of the Collateral by utilizing Internet sites that
provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that
match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties,
(k) to purchase insurance or credit enhancements to insure the Secured Party against risks of loss, collection or disposition of the Collateral
or to provide to the Secured Party a guaranteed return from the collection or disposition of such Collateral, or (l) to the extent deemed
appropriate by the Secured Party, to obtain the services of brokers, investment bankers, consultants and other professionals to assist
the Secured Party in the collection or disposition of any of the Collateral. The Company acknowledges that the purpose of this §14
is to provide non-exhaustive indications of what actions or omissions by the Secured Party would fulfill the Secured Party’s duties under
the Uniform Commercial Code of the State or any other relevant jurisdiction in the Secured Party’s exercise of remedies against the Collateral
and that other actions or omissions by the Secured Party shall not be deemed to fail to fulfill such duties solely on account of not being
indicated in this §14. Without limitation upon the foregoing, nothing contained in this §14 shall be construed to grant any
rights to the Company or to impose any duties on the Secured Party that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this §14.
15. No
Waiver by Secured Party, etc. The Secured Party
shall not be deemed to have waived any of its rights and remedies in respect of the Obligations or the Collateral unless such waiver shall
be in writing and signed by the Secured Party. No delay or omission on the part of the Secured Party in exercising any right or remedy
shall operate as a waiver of such right or remedy or any other right or remedy. A waiver on any one occasion shall not be construed as
a bar to or waiver of any right or remedy on any future occasion. All rights and remedies of the Secured Party with respect to the Obligations
or the Collateral, whether evidenced hereby or by any other instrument or papers, shall be cumulative and may be exercised singularly,
alternatively, successively or concurrently at such time or at such times as the Secured Party deems expedient.
16. Suretyship
Waivers by Company. The Company waives demand,
notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, Collateral received or delivered or other
action taken in reliance hereon and all other demands and notices of any description. With respect to both the Obligations and the Collateral,
the Company assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or
release of or failure to perfect any security interest in any such Collateral, to the addition or release of any party or Person primarily
or secondarily liable, to the acceptance of partial payment thereon and the settlement, compromising or adjusting of any thereof, all
in such manner and at such time or times as the Secured Party may deem advisable. The Secured Party shall have no duty as to the collection
or protection of the Collateral or any income therefrom, the preservation of rights against prior parties, or the preservation of any
rights pertaining thereto beyond the safe custody thereof as set forth in §9.2. The Company further waives any and all other suretyship
defenses.
17. Marshaling.
The Secured Party shall not be required to marshal any present or future collateral security (including but not limited to the Collateral)
for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of
payment in any particular order, and all of the rights and remedies of the Secured Party hereunder and of the Secured Party in respect
of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however
existing or arising. To the extent that it lawfully may, the Company hereby agrees that it will not invoke any law relating to the marshaling
of collateral which might cause delay in or impede the enforcement of the Secured Party’s rights and remedies under this Agreement or
under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which
any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, the Company hereby
irrevocably waives the benefits of all such laws.
18. Proceeds
of Dispositions; Expenses. The Company shall
pay to the Secured Party promptly on demand (but in any event within two (2) Business Days of such demand) any and all expenses, including
attorneys’ fees and disbursements, incurred or paid by the Secured Party in protecting or preserving the Secured Party’s rights and remedies
under or in respect of any of the Obligations or any of the Collateral and any such expenses incurred in releasing any security interest
granted hereunder and, in addition, the Company shall pay to the Secured Party on demand any and all expenses, including attorneys’ fees
and disbursements, incurred or paid by the Secured Party in enforcing the Secured Party’s rights and remedies under or in respect of any
of the Obligations or any of the Collateral. After deducting all of said expenses, the residue of any proceeds of collection or sale or
other disposition of Collateral shall, to the extent actually received in cash, be applied to the payment of the Obligations in such order
or preference as is provided in the SPA, proper allowance and provision being made for any Obligations not then due. Upon the final payment
and satisfaction in full of all of the Obligations (other than contingent indemnification obligations for which no claims have been made)
and after making any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial Code of the State, any excess
shall be returned to the Company. In the absence of final payment and satisfaction in full of all of the Obligations, the Company shall
remain liable for any deficiency.
19. Overdue
Amounts. Until paid, all amounts due and payable
by the Company hereunder shall be a debt secured by the Collateral and shall bear, whether before or after judgment, interest at the rate
of interest for overdue principal set forth in the SPA or applicable Transaction Document.
20. Governing
Law; Consent to Jurisdiction. This
Agreement IS A contract UNDER the laws of the state of NEW YORK and shall for all purposes be construed in accordance with and governed
by the laws of SAID state of NEW YORK. The Company and THE SECURED PARTY EACH agree that any suit for the enforcement of this agreement
or any other action brought by SUCH PERSON arising hereunder or in any way related to this agreement SHALL BE BROUGHT IN
THE COURTS OF THE STATE OF NEW YORK IN THE BOROUGH OF MANHATTAN OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON SUCH PERSON BY MAIL AT THE ADDRESS SPECIFIED ON THE
SIGNATURE PAGE OF EACH PARTY HERETO. the Company AND THE SECURED PARTY EACH hereby waives any
objection that it may now or hereafter have to the venue of any suit BROUGHT IN the state of new york or any court SITTING THEREIN or
that A suit BROUGHT THEREIN is brought in an inconvenient court.
21. Waiver
of Jury Trial. THE COMPANY AND THE SECURED PARTY
WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the
Company waives any right which it may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to, actual damages. The Company (a) certifies that neither
the Secured Party nor any representative, agent or attorney of the Secured Party has represented, expressly or otherwise, that the Secured
Party would not, in the event of litigation, seek to enforce the foregoing waivers or other waivers contained in this Agreement and (b)
acknowledges that, in entering into this Agreement and any other Transaction Document to which the Secured Party is a party, the Secured
Party is relying upon, among other things, the waivers and certifications contained in this §21.
22. Notices.
All notices, requests and other communications hereunder shall be made in the manner set forth in the SPA.
23. Miscellaneous.
The headings of each section of this Agreement are for convenience only and shall not define or limit the provisions thereof. This Agreement
and all rights and obligations hereunder shall be binding upon the Company and its successors and assigns, and shall inure to the benefit
of the Secured Party and its successors and assigns. If any term of this Agreement shall be held to be invalid, illegal or unenforceable,
the validity of all other terms hereof shall in no way be affected thereby, and this Agreement shall be construed and be enforceable as
if such invalid, illegal or unenforceable term had not been included herein. The Company acknowledges receipt of a copy of this Agreement.
[Signature pages to follow]
IN WITNESS WHEREOF,
intending to be legally bound, the Company has caused this Agreement to be duly executed as of the date first above written.
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PARTS iD, INC. |
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By: |
/s/ John Pendleton |
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Name: John Pendleton |
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Title: Executive Vice President, Legal & Corporate Affairs |
Accepted: |
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LIND GLOBAL FUND II LP |
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By: Lind Global Partners II LLC, its general partner |
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By: |
/s/ Jeff Easton |
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Title: Jeff Easton, Managing Member |
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Exhibit 10.5
GUARANTOR SECURITY
AGREEMENT
GUARANTOR SECURITY AGREEMENT
(this “Agreement”), dated as of July 14, 2023, by and among PARTS iD, LLC, a Delaware limited liability company
(the “Company) and LIND GLOBAL FUND II LP (the “Secured Party”).
WHEREAS, Parts iD,
Inc., a Delaware corporation (the “Borrower”) is the holder of 100% of the membership interests of the Company; and
WHEREAS, (a) the Borrower
and the Secured Party have entered into that certain Securities Purchase Agreement dated as of the date hereof (as amended and in effect
from time to time, the “SPA”) and (b) the Borrower has issued to the Secured Party that certain Senior Secured Convertible
Promissory Note dated as of the date hereof (as amended and in effect from time to time, the “Note”);
WHEREAS, in connection
with the SPA and the Note, the Company has entered into that certain Guaranty dated as of the date hereof in favor of the Secured Party
(as amended and in effect from time to time, the “Guaranty”) pursuant to which the Company has guaranteed all of the
obligations of the Borrower owing to the Secured Party under the SPA, the Note, the Supplemental Loan Documents (as such term is defined
in the Guaranty), the other Transaction Documents (as such term is defined in the Guaranty) and certain other related agreements; and
WHEREAS, it is a condition
precedent to the obligations of the Secured Party to fund the Note that the Company execute and deliver to the Secured Party a security
agreement in substantially the form hereof; and
WHEREAS, the Company
wishes to grant security interests in favor of the Secured Party as herein provided;
NOW, THEREFORE, in
consideration of the promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions.
All capitalized terms used herein without definitions shall have the respective meanings provided therefor in the SPA. All terms defined
in the Uniform Commercial Code of the State (as hereinafter defined) and used herein shall have the same definitions herein as specified
therein, however, if a term is defined in Article 9 of the Uniform Commercial Code of the State differently than in another Article of
the Uniform Commercial Code of the State, the term has the meaning specified in Article 9, and the following terms shall have the following
meanings:
“Event of Default”
means the occurrence of any “Event of Default” under and as defined in each of the SPA, the Note or any Supplemental Loan Document,
or the failure of the Borrower or the Company to comply with any term or covenant of any Transaction Document (including this Agreement)
to which it is a party.
“Guarantors”
means, collectively, each Person which provides a guarantee of all or any portion of the Obligations of the Borrower to the Secured Party,
including, without limitation, the Company.
“Lien” means
any mortgage, charge, pledge, hypothecation, security interest, assignment by way of security, lien (statutory or otherwise), encumbrance,
conditional sale agreement, capital lease, financing lease, deposit arrangement, title retention agreement, and any other agreement, trust
or arrangement that in substance secures payment or performance of an obligation.
“Obligations”
means, collectively, all (a) debts, liabilities and obligations, present or future, direct or indirect, absolute or contingent, matured
or unmatured, at any time due or accruing due and owing by or otherwise payable by the Borrower or any Guarantor (including, without limitation,
the Company) to the Secured Party in any currency, under, in connection with or pursuant to any Transaction Document (including, without
limitation, the SPA, the Note, the Guaranty, any Supplemental Loan Document or this Agreement), and whether incurred by the Borrower or
any Guarantor (including, without limitation, the Company) alone or jointly with another or others and whether as principal, guarantor
or surety and in whatever name or style and (b) expenses, costs and charges incurred by or on behalf of the Secured Party in connection
with, and as contemplated by, any Transaction Document (including, without limitation, the SPA, the Note, any Supplemental Loan Document,
the Guaranty and this Agreement) or the Collateral, including all legal fees, court costs, receiver’s or agent’s remuneration
and other expenses of taking possession of, repairing, protecting, insuring, preparing for disposition, realizing, collecting, selling,
transferring, delivering or obtaining payment for the Collateral, and of taking, defending or participating in any action or proceeding
in connection with any of the foregoing matters or otherwise in connection with the Secured Party’s interest in any Collateral, directly
relating to the Secured Party’s right under this Agreement or any other Transaction Document (including, without limitation, any enforcement
of this Agreement or any other Transaction Document).
“Permitted Lien”
means any of the following: (a) mechanics and materialman Liens and other statutory Liens (including Liens for taxes, fees, assessments
and other governmental charges or levies) in respect of any amount (i) which is not at the time overdue or (ii) which may be overdue but
the validity of which is being contested at the time in good faith by appropriate proceedings, in each case so long as the holder of such
Lien has not taken any action to foreclose or otherwise exercise any remedies with respect to such Lien; and (b) Liens which are permitted
in writing by the Secured Party in its sole and absolute discretion.
“Person”
means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental
authority or other entity.
“State” means
the State of New York.
“Supplemental Loan
Documents” means any other document, agreement or instrument evidencing any debt or similar obligation owing from the Borrower
or any of its Subsidiaries (including, without limitation, the Company) to the Secured Party.
“Transaction Documents”
means, collectively, the SPA, the Note, the Guaranty, any Supplemental Loan Document, this Agreement or any other “Transaction Documents”
as defined in the SPA, , in each case as amended, supplemented, novated and/or replaced from time to time in accordance with the applicable
terms thereof.
2. Grant
of Security Interest.
2.1. Grant;
Collateral Description. The Company hereby grants
to the Secured Party, to secure the payment and performance in full of all of the Obligations, a security interest in and pledges and
assigns to the Secured Party the following properties, assets and rights of the Company, wherever located, whether now owned or hereafter
acquired or arising, and all proceeds and products thereof (all of the same being hereinafter called the “Collateral”):
all personal and fixture property of every kind and nature including all goods (including inventory, equipment and any accessions thereto),
instruments (including promissory notes), documents (whether tangible or electronic), accounts (including health-care-insurance receivables),
chattel paper (whether tangible or electronic), deposit accounts, letter-of-credit rights (whether or not the letter of credit is evidenced
by a writing), commercial tort claims, securities and all other investment property, supporting obligations, any other contract rights
or rights to the payment of money, insurance claims and proceeds, and all general intangibles (including all payment intangibles). Notwithstanding
the foregoing, no security interest is granted in (a) any leasehold interest in real property and any fee-owned real property, and (b)
any “intent to use” trademark applications, in each case, only until such time as the Company begins to use such trademarks
or files a “Statement of Use” or “Amendment to Allege Use” (in which case, the security interest in such trademark
shall be deemed granted by the Company at such time and will attach immediately).
2.2. Commercial
Tort Claims. The Secured Party acknowledges that
the attachment of its security interest in any commercial tort claim as original collateral is subject to the Company’s compliance with
§4.7.
2.3. Non-Transferable
Collateral.
(a) The
grant of the security interest contained in § 2.1 shall not extend to, and the term “Collateral” shall not include,
any directly held investment property, or any general intangibles, now or hereafter held or owned by the Company, to the extent, in each
case, that (i) a security interest may not be granted by the Company in such directly held investment property or general intangibles
as a matter of law, or under the terms of the governing document applicable thereto, without the consent of one or more applicable parties
thereto and (ii) such consent has not been obtained.
(b) The
grant of the security interest contained in § 2.1 shall extend to, and the term “Collateral” shall include, (i)
any and all proceeds of such directly held investment property or general intangibles to the extent that the proceeds are not themselves
directly held investment property or general intangibles subject to § 2.3(a) and (ii) upon any such applicable party or parties’
consent with respect to any otherwise excluded directly held investment property or general intangibles being obtained, thereafter such
directly held investment property or general intangibles.
(c) The
provisions of § 2.3(a) shall not apply to (i) directly held investment property or general intangibles to the extent that the
restriction on the Company granting a security interest therein is not effective under applicable law or (ii) payment intangibles.
3. Authorization
to File Financing Statements. The Company hereby
irrevocably authorizes the Secured Party at any time and from time to time until payment in full, in cash, of all of the Obligations (other
than contingent indemnification obligations for which no claims have been made) to file in any filing office in any Uniform Commercial
Code jurisdiction which the Secured Party considers necessary to perfect the Secured Party’s interest in the Collateral any initial financing
statements and amendments thereto that (a) indicate the Collateral (i) as all assets of the Company or words of similar effect, regardless
of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the
State or such other jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail, and (b) provide any other information
required by part 5 of Article 9 of the Uniform Commercial Code of the State or such other jurisdiction for the sufficiency or filing office
acceptance of any financing statement or amendment, including whether the Company is an organization, the type of organization and any
organizational identification number issued to the Company. The Company agrees to furnish any such information to the Secured Party promptly
upon the Secured Party’s reasonable request.
4. Other
Actions. Further to insure the attachment, perfection
and first priority of, and the ability of the Secured Party to enforce, the Secured Party’s security interest in the Collateral, the Company
agrees, in each case at the Company’s expense, to take the following actions with respect to the following Collateral and without limitation
on the Company’s other obligations contained in this Agreement:
4.1. Promissory
Notes and Tangible Chattel Paper. If the
Company shall, now or at any time hereafter, hold or acquire any promissory notes or tangible chattel paper with an aggregate value for
all such promissory notes or tangible chattel paper in excess of $50,000, the Company shall forthwith endorse, assign and deliver the
same to the Secured Party, accompanied by such instruments of transfer or assignment duly executed in blank as the Secured Party may from
time to time specify.
4.2. Deposit
Accounts. For each deposit account that the Company,
now or at any time hereafter, opens or maintains the Company shall promptly, at the Secured Party’s written request and option (and in
no event more than forty five (45) days after such request or such later date as the Secured Party may agree in its sole and absolute
discretion), pursuant to an agreement in form and substance reasonably satisfactory to the Secured Party, either (a) cause the depositary
bank to agree to comply without further consent of the Company, at any time with instructions from the Secured Party to such depositary
bank directing the disposition of funds from time to time credited to such deposit account, or (b) arrange for the Secured Party to become
the customer of the depositary bank with respect to the deposit account, with the Company being permitted, only with the consent of the
Secured Party, to exercise rights to withdraw funds from such deposit account. The Secured Party agrees with the Company that the Secured
Party shall not give any such instructions or withhold any withdrawal rights from the Company, unless an Event of Default has occurred
and is continuing, or, if effect were given to any withdrawal not otherwise permitted by the Transaction Documents, would occur. The provisions
of this paragraph shall not apply to (i) any deposit account for which the Company, the depositary bank and the Secured Party have entered
into a cash collateral agreement specially negotiated among the Company, the depositary bank and the Secured Party for the specific purpose
set forth therein, (ii) any deposit accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of the Company’s salaried employees, and (iii) any deposit account with a stated balance in the amount
of less than $100,000 and, when taken together with all other deposit accounts not subject to an agreement of the type set forth in the
first sentence hereof, have aggregate balances in an amount of less than $150,000.
4.3. Investment
Property. If the Company shall, now or
at any time hereafter, hold or acquire any certificated securities, the Company shall forthwith endorse, assign and deliver the same to
the Secured Party, accompanied by such instruments of transfer or assignment duly executed in blank as the Secured Party may from time
to time reasonably specify. If any securities now or hereafter acquired by the Company are uncertificated and are issued to the Company
or its nominee directly by the issuer thereof, the Company shall promptly (but in any event within two (2) Business Days) notify the Secured
Party thereof and, at the Secured Party’s request and option, pursuant to an agreement in form and substance satisfactory to the Secured
Party, either (a) cause the issuer to agree to comply without further consent of the Company or such nominee, at any time with instructions
from the Secured Party as to such securities, or (b) arrange for the Secured Party to become the registered owner of the securities. If
any securities, whether certificated or uncertificated, or other investment property now or hereafter acquired by the Company are held
by the Company or its nominee through a securities intermediary or commodity intermediary, the Company shall promptly (but in any event
within two (2) Business Days) notify the Secured Party thereof and, at the Secured Party’s request and option, pursuant to an agreement
in form and substance satisfactory to the Secured Party, either (i) cause such securities intermediary or (as the case may be) commodity
intermediary to agree to comply, in each case without further consent of the Company or such nominee, at any time with entitlement orders
or other instructions from the Secured Party to such securities intermediary as to such securities or other investment property, or (as
the case may be) to apply any value distributed on account of any commodity contract as directed by the Secured Party to such commodity
intermediary, or (ii) in the case of financial assets or other investment property held through a securities intermediary, arrange for
the Secured Party to become the entitlement holder with respect to such investment property, with the Company being permitted, only with
the consent of the Secured Party, to exercise rights to withdraw or otherwise deal with such investment property. The Secured Party agrees
with the Company that the Secured Party shall not give any such entitlement orders or instructions or directions to any such issuer, securities
intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by the
Company, unless an Event of Default has occurred and is continuing, or, after giving effect to any such investment and withdrawal rights
not otherwise permitted by the Transaction Documents, would occur. The provisions of this paragraph shall not apply to any financial assets
credited to a securities account for which the Secured Party is the securities intermediary.
4.4. Collateral
in the Possession of a Bailee. If any
Collateral with an aggregate value in excess of $50,000 is, now or at any time hereafter, in the possession of a bailee, the Company shall
promptly notify the Secured Party thereof and, at the Secured Party’s reasonable request and option, shall promptly use commercially reasonable
efforts to obtain an acknowledgement from the bailee, in form and substance satisfactory to the Secured Party, that the bailee holds such
Collateral for the benefit of the Secured Party and such bailee’s agreement to comply, without further consent of the Company, at any
time with instructions of the Secured Party as to such Collateral. The Secured Party agrees with the Company that the Secured Party shall
not give any such instructions unless an Event of Default has occurred and is continuing.
4.5. Electronic
Chattel Paper, Electronic Documents and Transferable Records.
If the Company, now or at any time hereafter, holds or acquires an interest in any Collateral that is electronic chattel paper, any electronic
document or any “transferable record,” as that term is defined in Section 201 of the federal Electronic Signatures in Global
and National Commerce Act, or in §16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, the Company
shall promptly notify the Secured Party thereof and, at the request and option of the Secured Party, shall take such action as the Secured
Party may reasonably request to vest in the Secured Party control, under §9-105 of the Uniform Commercial Code of the State or any
other relevant jurisdiction, of such electronic chattel paper, control, under §7-106 of the Uniform Commercial Code of the State
or any other relevant jurisdiction, of such electronic document or control, under Section 201 of the federal Electronic Signatures in
Global and National Commerce Act or, as the case may be, §16 of the Uniform Electronic Transactions Act, as so in effect in such
jurisdiction, of such transferable record. The Secured Party agrees with the Company that the Secured Party will arrange, pursuant to
procedures satisfactory to the Secured Party and so long as such procedures will not result in the Secured Party’s loss of control, for
the Company to make alterations to the electronic chattel paper, electronic document or transferable record permitted under UCC §9-105,
UCC §7-106, or, as the case may be, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or §16
of the Uniform Electronic Transactions Act for a party in control to make without loss of control, unless an Event of Default has occurred
and is continuing or would occur after taking into account any action by the Company with respect to such electronic chattel paper, electronic
document or transferable record. The provisions of this §4.5 relating to electronic documents and “control” under UCC §7-106
apply in the event that the 2003 revisions to Article 7, with amendments to Article 9, of the Uniform Commercial Code, in substantially
the form approved by the American Law Institute and the National Conference of Commissioners on Uniform State Laws, are now or hereafter
adopted and become effective in the State or in any other relevant jurisdiction.
4.6. Letter-of-Credit
Rights. If the Company is, now or at any time
hereafter, a beneficiary under a letter of credit with a stated amount in excess of $25,000, or if the Company is a beneficiary under
letters of credit not assigned to the Secured Party with an aggregate stated amount in excess of $50,000, the Company shall promptly notify
the Secured Party thereof and, at the request and option of the Secured Party, the Company shall, pursuant to an agreement in form and
substance satisfactory to the Secured Party, either (a) arrange for the issuer and any confirmer of such letter of credit to consent to
an assignment to the Secured Party of the proceeds of the letter of credit or (b) arrange for the Secured Party to become the transferee
beneficiary of the letter of credit. The Secured Party agrees with the Company that the Secured Party shall not give any such instructions
unless an Event of Default has occurred and is continuing
4.7. Commercial
Tort Claims. If the Company shall, now
or at any time hereafter, hold or acquire a commercial tort claim, the Company shall promptly notify the Secured Party in a writing signed
by the Company of the particulars thereof and grant to the Secured Party in such writing a security interest therein and in the proceeds
thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Secured Party.
4.8. Other
Actions as to any and all Collateral. The Company
further agrees, upon the request of the Secured Party and at the Secured Party’s option, to take any and all other actions as the Secured
Party may reasonably determine to be necessary or useful for the attachment, perfection and first priority of (subject to Permitted Liens),
and the ability of the Secured Party to enforce, the Secured Party’s security interest in any and all of the Collateral, including (a)
executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the Uniform Commercial
Code of any relevant jurisdiction, to the extent, if any, that the Company’s signature thereon is required therefor, (b) causing the Secured
Party’s name to be noted as secured party on any certificate of title for a titled good with a stated amount in excess of $50,000 if such
notation is a condition to attachment, perfection or priority of, or ability of the Secured Party to enforce, the Secured Party’s security
interest in such Collateral, (c) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral
if compliance with such provision is a condition to attachment, perfection or priority of, or ability of the Secured Party to enforce,
the Secured Party’s security interest in such Collateral, (d) obtaining governmental and other third party waivers, consents and approvals,
in form and substance satisfactory to the Secured Party, including any consent of any licensor, lessor or other Person obligated on Collateral,
(e) obtaining waivers from mortgagees and landlords where Collateral in excess of $50,000 is located (so long as the value of all Collateral
where waivers from mortgagees and landlords have not been obtained does not exceed $100,000) in form and substance reasonably satisfactory
to the Secured Party and (f) taking all actions under any other law, as reasonably determined by the Secured Party to be applicable in
any relevant Uniform Commercial Code or other jurisdiction, including any foreign jurisdiction.
4.9. Relation
to other Security Documents. Concurrently herewith
the Company is also executing and delivering to the Secured Party the Trademark Security Agreement pursuant to which the Company is assigning
to the Secured Party certain Collateral consisting of trademarks, service marks and trademark and service mark rights, together with the
goodwill appurtenant thereto. The provisions of the Trademark Security Agreement are supplemental to the provisions of this Agreement
and nothing contained in the Trademark Security Agreement shall derogate from any of the rights or remedies of the Secured Party hereunder.
Nor will anything contained in the Trademark Security Agreement be deemed to prevent or extend the time of attachment or perfection of
any security interest in such Collateral created hereby.
5. Representations
and Warranties Concerning the Company’s Legal Status.
The Company has, on the date hereof, delivered to the Secured Party a certificate signed by the Company and entitled “Perfection
Certificate” (the “Perfection Certificate”). The Company represents and warrants to the Secured Party as follows:
as of the date hereof (a) the Company’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof,
(b) the Company is an organization of the type, and is organized in the jurisdiction, set forth in the Perfection Certificate, (c) the
Perfection Certificate accurately sets forth the Company’s organizational identification number or accurately states that the Company
has none, (d) the Perfection Certificate accurately sets forth the Company’s place of business or, if more than one, its chief executive
office, as well as the Company’s mailing address, if different, (e) all other information pertaining to the Company set forth on the Perfection
Certificate is accurate and complete in all material respects, and (f) there has been no change in any of such information since the date
on which the Perfection Certificate was signed by the Company.
6. Covenants
Concerning Company’s Legal Status. The Company
covenants with the Secured Party as follows: (a) without providing at least ten (10) days prior written notice to the Secured Party, the
Company will not change its name, its place of business or, if more than one, chief executive office, or its mailing address or organizational
identification number if it has one, (b) if the Company does not have an organizational identification number and later obtains one, the
Company will forthwith notify the Secured Party of such organizational identification number, and (c) the Company will not change its
type of organization, jurisdiction of organization or other legal structure without the Secured Party’s prior written consent (which consent
will not, in the case of a change in the type of organization, be unreasonably withheld).
7. Representations
and Warranties Concerning Collateral, Etc. The
Company further represents and warrants to the Secured Party as follows: (a) the Company is the owner of or has other rights in or power
to transfer the Collateral, free from any right or claim of any Person or any adverse lien, except for the security interest created by
this Agreement and the Permitted Liens, (b) none of the account debtors or other Persons obligated on any of the Collateral is a governmental
authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral,
(c) the Company holds no commercial tort claim except as indicated on the Company’s Perfection Certificate dated as of the date hereof
or as otherwise updated by written notice to the Secured Party, (d) all other information set forth on the Company’s Perfection Certificate
pertaining to the Collateral is accurate and complete in all material respects as of the date of such Perfection Certificate, and (e)
there has been no change in any of such information since the date on which the Company’s Perfection Certificate was signed by the Company
except as any such changes have been disclosed to the Secured Party in writing.
8. Covenants
Concerning Collateral, Etc. The Company further
covenants with the Secured Party as follows: (a) other than inventory sold in the ordinary course of business consistent with past practices,
the Collateral, to the extent not delivered to the Secured Party pursuant to §4, will be kept at those locations listed on the Perfection
Certificate and the Company will not remove the Collateral from such locations, without providing at least ten (10) Business Days prior
written notice to the Secured Party, (b) except for the security interest herein granted, the Company shall be the owner of or have other
rights in the Collateral free from any right or claim of any other Person or any Lien (other than Permitted Liens), and the Company shall
defend the same against all claims and demands of all Persons at any time claiming the same or any interests therein adverse to the Secured
Party, (c) other than in favor of the Secured Party or with respect to any Permitted Lien, the Company shall not pledge, mortgage or create,
or suffer to exist any right of any Person in or claim by any Person to the Collateral, or any Lien in the Collateral in favor of any
Person, or become bound (as provided in Section 9-203(d) of the Uniform Commercial Code of the State or any other relevant jurisdiction
or otherwise) by a security agreement in favor of any Person as secured party, (d) the Company will permit the Secured Party, or its designee,
to inspect the Collateral during normal business hours, wherever located, provided if any Event of Default has occurred and is continuing,
any such inspection shall be permitted at any reasonable time, (e) the Company will pay promptly when due all taxes, assessments, governmental
charges and levies upon the Collateral or incurred in connection with the use or operation of the Collateral or incurred in connection
with this Agreement, and (f) the Company will not sell or otherwise dispose, or offer to sell or otherwise dispose, of the Collateral,
or any interest therein except for (i) dispositions otherwise permitted under the SPA and the Note and (ii) so long as no Event of Default
has occurred and is continuing, dispositions of obsolete or worn-out property, the granting of non-exclusive licenses in the ordinary
course of business, and the sale of inventory in the ordinary course of business consistent with past practices.
9. Collateral
Protection Expenses; Preservation of Collateral.
9.1. Expenses
Incurred by Secured Party. In the Secured Party’s
discretion, the Secured Party may discharge taxes and other encumbrances at any time levied or placed on any of the Collateral, and pay
any necessary filing fees or insurance premiums, in each case if the Company fails to do so. The Company agrees to reimburse the Secured
Party on demand for all expenditures so made. The Secured Party shall have no obligation to the Company to make any such expenditures,
nor shall the making thereof be construed as a waiver or cure of any Event of Default.
9.2. Secured
Party’s Obligations and Duties. Anything herein
to the contrary notwithstanding, the Company shall remain obligated and liable under each contract or agreement comprised in the Collateral
to be observed or performed by the Company thereunder. The Secured Party shall not have any obligation or liability under any such contract
or agreement by reason of or arising out of this Agreement or the receipt by the Secured Party of any payment relating to any of the Collateral,
nor shall the Secured Party be obligated in any manner to perform any of the obligations of the Company under or pursuant to any such
contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Secured Party in respect of the
Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim,
to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the Secured Party
or to which the Secured Party may be entitled at any time or times. The Secured Party’s sole duty with respect to the custody, safe keeping
and physical preservation of the Collateral in its possession, under §9-207 of the Uniform Commercial Code of the State or otherwise,
shall be to deal with such Collateral in the same manner as the Secured Party deals with similar property for its own account.
10. Securities
and Deposits. The Secured Party may at any time
following and during the continuance of an Event of Default, at its option, transfer to itself or any nominee any securities constituting
Collateral, receive any income thereon and hold such income as additional Collateral or apply it to the Obligations. Whether or not any
Obligations are due, the Secured Party may, following and during the continuance of an Event of Default demand, sue for, collect, or make
any settlement or compromise which it deems desirable with respect to the Collateral. Regardless of the adequacy of Collateral or any
other security for the Obligations, any deposits or other sums at any time credited by or due from the Secured Party to the Company may
at any time following and during the continuation of an Event of Default be applied to or set off against any of the Obligations then
due and owing.
11. Notification
to Account Debtors and Other Persons Obligated on Collateral.
If an Event of Default shall have occurred and be continuing:
(a)
the Company shall, at the request and option of the Secured Party, notify account debtors and other Persons obligated on any of the Collateral
of the security interest of the Secured Party in any account, chattel paper, general intangible, instrument or other Collateral and that
payment thereof is to be made directly to the Secured Party or to any financial institution designated by the Secured Party as the Secured
Party’s agent therefor;
(b)
the Secured Party may itself, without notice to or demand upon the Company, so notify account debtors and other Persons obligated on Collateral;
(c)
after the making of such a request or the giving of any such notification, the Company shall hold any proceeds of collection of accounts,
chattel paper, general intangibles, instruments and other Collateral received by the Company as trustee for the Secured Party, for the
benefit of the Secured Party, without commingling the same with other funds of the Company and shall turn the same over to the Secured
Party in the identical form received, together with any necessary endorsements or assignments; and
(d) the
Secured Party shall apply the proceeds of collection of accounts, chattel paper, general intangibles, instruments and other Collateral
and received by the Secured Party to the payment of the Obligations, such proceeds to be immediately credited after final payment in cash
or other immediately available funds of the items giving rise to them.
12. Power
of Attorney.
12.1. Appointment
and Powers of Secured Party. The Company hereby
irrevocably constitutes and appoints the Secured Party and any officer or agent thereof, with full power of substitution, as its true
and lawful attorneys-in-fact with full irrevocable power and authority in the place and stead of the Company or in the Secured Party’s
own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all
documents and instruments that may be necessary or useful to accomplish the purposes of this Agreement and, without limiting the generality
of the foregoing, hereby gives said attorneys the power and right, on behalf of the Company, without notice to or assent by the Company,
to do the following:
(a) upon
the occurrence and during the continuance of an Event of Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise dispose of or deal with any of the Collateral in such manner as is consistent with the Uniform Commercial Code of the
State or any other relevant jurisdiction and as fully and completely as though the Secured Party were the absolute owner thereof for all
purposes, and to do, at the Company’s expense, at any time, or from time to time, all acts and things which the Secured Party deems necessary
or useful to protect, preserve or realize upon the Collateral and the Secured Party’s security interest therein, in order to effect the
intent of this Agreement, all no less fully and effectively as the Company might do, including (i) upon written notice to the Company,
the exercise of voting rights with respect to voting securities, which rights may be exercised, if the Secured Party so elects, with a
view to causing the liquidation of assets of the issuer of any such securities and (ii) the execution, delivery and recording, in connection
with any sale or other disposition of any Collateral, of the endorsements, assignments or other instruments of conveyance or transfer
with respect to such Collateral; and
(b) to
the extent that the Company’s authorization given in §3 is not sufficient, to file such financing statements with respect hereto,
with or without the Company’s signature, or a photocopy of this Agreement in substitution for a financing statement, as the Secured Party
may deem appropriate and to execute in the Company’s name such financing statements and amendments thereto and continuation statements
which may require the Company’s signature.
12.2. Ratification
by Company. To the extent permitted by law, the
Company hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and is irrevocable until such time as all of the Obligations have been repaid in full in cash (other than contingent
indemnification obligations for which no claims have been made).
12.3. No
Duty on Secured Party. The powers conferred on
the Secured Party hereunder are solely to protect the interests of the Secured Party in the Collateral and shall not impose any duty upon
the Secured Party to exercise any such powers. The Secured Party shall be accountable only for the amounts that it actually receives as
a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to
the Company for any act or failure to act, except for the Secured Party’s own gross negligence or willful misconduct.
13. Rights
and Remedies.
13.1. General.
If an Event of Default shall have occurred and be continuing, the Secured Party, without any other notice to or demand upon the Company,
shall have in any jurisdiction in which enforcement hereof is sought, in addition to all other rights and remedies, the rights and remedies
of a secured party under the Uniform Commercial Code of the State or any other relevant jurisdiction and any additional rights and remedies
as may be provided to a secured party in any jurisdiction in which Collateral is located, including the right to take possession of the
Collateral, and for that purpose the Secured Party may, so far as the Company can give authority therefor, enter upon any premises on
which the Collateral may be situated and remove the same therefrom. The Secured Party may in its discretion require the Company to assemble
all or any part of the Collateral at such location or locations within the jurisdiction(s) of the Company’s principal office(s) or at
such other locations as the Secured Party may reasonably designate. Unless the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, the Secured Party shall give to the Company at least ten (10) Business
Days prior written notice of the time and place of any public sale of Collateral or of the time after which any private sale or any other
intended disposition is to be made. The Company hereby acknowledges that ten (10) Business Days prior written notice of such sale or sales
shall be reasonable notice. In addition, the Company waives any and all rights that it may have to a judicial hearing in advance of the
enforcement of any of the Secured Party’s rights and remedies hereunder, including its right following an Event of Default to take immediate
possession of the Collateral and to exercise its rights and remedies with respect thereto.
14. Standards
for Exercising Rights and Remedies. To the extent
that applicable law imposes duties on the Secured Party to exercise remedies in a commercially reasonable manner, the Company acknowledges
and agrees that it is not commercially unreasonable for the Secured Party (a) to fail to incur expenses reasonably deemed significant
by the Secured Party to prepare Collateral for disposition or otherwise to fail to complete raw material or work in process into finished
goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition
of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against account debtors or other Persons obligated
on Collateral or to fail to remove Liens on or any adverse claims against Collateral, (d) to exercise collection remedies against account
debtors and other Persons obligated on the Collateral directly or through the use of collection agencies and other collection specialists,
(e) to advertise dispositions of the Collateral through publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (f) to contact other Persons, whether or not in the same business as the Company, for expressions of interest
in acquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of the
Collateral, whether or not the collateral is of a specialized nature, (h) to dispose of the Collateral by utilizing Internet sites that
provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that
match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties,
(k) to purchase insurance or credit enhancements to insure the Secured Party against risks of loss, collection or disposition of the Collateral
or to provide to the Secured Party a guaranteed return from the collection or disposition of such Collateral, or (l) to the extent deemed
appropriate by the Secured Party, to obtain the services of brokers, investment bankers, consultants and other professionals to assist
the Secured Party in the collection or disposition of any of the Collateral. The Company acknowledges that the purpose of this §14
is to provide non-exhaustive indications of what actions or omissions by the Secured Party would fulfill the Secured Party’s duties under
the Uniform Commercial Code of the State or any other relevant jurisdiction in the Secured Party’s exercise of remedies against the Collateral
and that other actions or omissions by the Secured Party shall not be deemed to fail to fulfill such duties solely on account of not being
indicated in this §14. Without limitation upon the foregoing, nothing contained in this §14 shall be construed to grant any
rights to the Company or to impose any duties on the Secured Party that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this §14.
15. No
Waiver by Secured Party, etc. The Secured Party
shall not be deemed to have waived any of its rights and remedies in respect of the Obligations or the Collateral unless such waiver shall
be in writing and signed by the Secured Party. No delay or omission on the part of the Secured Party in exercising any right or remedy
shall operate as a waiver of such right or remedy or any other right or remedy. A waiver on any one occasion shall not be construed as
a bar to or waiver of any right or remedy on any future occasion. All rights and remedies of the Secured Party with respect to the Obligations
or the Collateral, whether evidenced hereby or by any other instrument or papers, shall be cumulative and may be exercised singularly,
alternatively, successively or concurrently at such time or at such times as the Secured Party deems expedient.
16. Suretyship
Waivers by Company. The Company waives demand,
notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, Collateral received or delivered or other
action taken in reliance hereon and all other demands and notices of any description. With respect to both the Obligations and the Collateral,
the Company assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or
release of or failure to perfect any security interest in any such Collateral, to the addition or release of any party or Person primarily
or secondarily liable, to the acceptance of partial payment thereon and the settlement, compromising or adjusting of any thereof, all
in such manner and at such time or times as the Secured Party may deem advisable. The Secured Party shall have no duty as to the collection
or protection of the Collateral or any income therefrom, the preservation of rights against prior parties, or the preservation of any
rights pertaining thereto beyond the safe custody thereof as set forth in §9.2. The Company further waives any and all other suretyship
defenses.
17. Marshaling.
The Secured Party shall not be required to marshal any present or future collateral security (including but not limited to the Collateral)
for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of
payment in any particular order, and all of the rights and remedies of the Secured Party hereunder and of the Secured Party in respect
of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however
existing or arising. To the extent that it lawfully may, the Company hereby agrees that it will not invoke any law relating to the marshaling
of collateral which might cause delay in or impede the enforcement of the Secured Party’s rights and remedies under this Agreement or
under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which
any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, the Company hereby
irrevocably waives the benefits of all such laws.
18. Proceeds
of Dispositions; Expenses. The Company shall
pay to the Secured Party promptly on demand (but in any event within two (2) Business Days of such demand) any and all expenses, including
attorneys’ fees and disbursements, incurred or paid by the Secured Party in protecting or preserving the Secured Party’s rights and remedies
under or in respect of any of the Obligations or any of the Collateral and any such expenses incurred in releasing any security interest
granted hereunder and, in addition, the Company shall pay to the Secured Party on demand any and all expenses, including attorneys’ fees
and disbursements, incurred or paid by the Secured Party in enforcing the Secured Party’s rights and remedies under or in respect of any
of the Obligations or any of the Collateral. After deducting all of said expenses, the residue of any proceeds of collection or sale or
other disposition of Collateral shall, to the extent actually received in cash, be applied to the payment of the Obligations in such order
or preference as is provided in the SPA, proper allowance and provision being made for any Obligations not then due. Upon the final payment
and satisfaction in full of all of the Obligations (other than contingent indemnification obligations for which no claims have been made)
and after making any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial Code of the State, any excess
shall be returned to the Company. In the absence of final payment and satisfaction in full of all of the Obligations, the Company shall
remain liable for any deficiency.
19. Overdue
Amounts. Until paid, all amounts due and payable
by the Company hereunder shall be a debt secured by the Collateral and shall bear, whether before or after judgment, interest at the rate
of interest for overdue principal set forth in the SPA or applicable Transaction Document.
20. Governing
Law; Consent to Jurisdiction. This
Agreement IS A contract UNDER the laws of the state of NEW YORK and shall for all purposes be construed in accordance with and governed
by the laws of SAID state of NEW YORK. the Company and THE SECURED PARTY EACH agree that any suit for the enforcement of this agreement
or any other action brought by SUCH PERSON arising hereunder or in any way related to this agreement SHALL BE BROUGHT IN
THE COURTS OF THE STATE OF NEW YORK IN THE BOROUGH OF MANHATTAN OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON SUCH PERSON BY MAIL AT THE ADDRESS SPECIFIED ON THE
SIGNATURE PAGE OF EACH PARTY HERETO. the Company AND THE SECURED PARTY EACH hereby waiveS any
objection that it may now or hereafter have to the venue of any suit BROUGHT IN the state of new york or any court SITTING THEREIN or
that A suit BROUGHT THEREIN is brought in an inconvenient court.
21. Waiver
of Jury Trial. THE COMPANY AND THE SECURED PARTY
WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the
Company waives any right which it may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to, actual damages. The Company (a) certifies that neither
the Secured Party nor any representative, agent or attorney of the Secured Party has represented, expressly or otherwise, that the Secured
Party would not, in the event of litigation, seek to enforce the foregoing waivers or other waivers contained in this Agreement and (b)
acknowledges that, in entering into this Agreement and any other Transaction Document to which the Secured Party is a party, the Secured
Party is relying upon, among other things, the waivers and certifications contained in this §21.
22. Notices.
All notices, requests and other communications hereunder shall be made in the manner set forth in the Guaranty.
23. Miscellaneous.
The headings of each section of this Agreement are for convenience only and shall not define or limit the provisions thereof. This Agreement
and all rights and obligations hereunder shall be binding upon the Company and its successors and assigns, and shall inure to the benefit
of the Secured Party and its successors and assigns. If any term of this Agreement shall be held to be invalid, illegal or unenforceable,
the validity of all other terms hereof shall in no way be affected thereby, and this Agreement shall be construed and be enforceable as
if such invalid, illegal or unenforceable term had not been included herein. The Company acknowledges receipt of a copy of this Agreement.
[Signature pages to follow]
IN WITNESS WHEREOF,
intending to be legally bound, the Company has caused this Agreement to be duly executed as of the date first above written.
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PARTS iD, LLC |
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By: |
/s/ John Pendleton |
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Name: |
John Pendleton |
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Title: |
Executive Vice President, Legal & Corporate Affairs |
Accepted: |
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LIND GLOBAL FUND II LP |
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By: Lind Global Partners II LLC, its
general partner |
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By: |
/s/ Jeff Easton |
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Title: |
Jeff Easton,
Managing Member |
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Exhibit 10.6
PLEDGE AGREEMENT
This PLEDGE AGREEMENT
(this “Agreement”) is made as of July 14, 2023, by and between PARTS iD, INC., a Delaware corporation (the “Company”)
and LIND GLOBAL FUND II, LP (the “Secured Party”).
WHEREAS, the Company
(a) and the Secured Party have entered into that certain Securities Purchase Agreement dated as of the date hereof (as amended and in
effect from time to time, the “SPA”) and (b) has issued to the Secured Party that certain Senior Secured Convertible
Promissory Note dated as of the date hereof (as amended and in effect from time to time, the “Note”); and
WHEREAS, the Company
is the direct legal and beneficial owner of the percentage or number of units, as the case may be, of the issued and outstanding shares
of each class of the outstanding membership interests, or other equity interests (the “Initial Equity Interests”) of
each of the entities set forth on Annex A hereto (collectively, the “Subsidiaries” and each, a “Subsidiary”);
and
WHEREAS, it is a condition
precedent to the obligations of the Secured Party to fund the Note under the SPA that the Company execute and deliver to the Secured Party
all Transaction Documents (as such term is defined in the SPA) to which it is a party; and
WHEREAS, the Company
wishes to the grant a security interest to the Secured Party in all of the Company’s right, title and interest in all of the Equity
Interests in each Subsidiary to secure all Secured Obligations owing to the Secured Party; and
NOW, THEREFORE, in
consideration of the premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Pledge.
1.1. Pledge
of Equity Interests. (i) The Company
hereby ratifies and affirms the grant of security interests made pursuant to the Security Agreement, and (ii) in addition, the Company
hereby pledges, assigns, grants a security interest in, and delivers to the Secured Party, all of the shares of capital stock, limited
liability company membership units or other units of equity ownership of every class of each of the Subsidiaries, as more fully described
on Annex A hereto, including without limitation, (a) all payments or distributions, whether in cash, property or otherwise,
at any time owing or payable to the Company on account of its interest as a member or shareholder in any of the Subsidiaries, (b) all
of the Company’s rights and interest under each of the Operating Agreements or other organizational documents of the applicable
Subsidiary, including all voting and management rights and rights to grant or withhold consents or approvals; (c) all rights of access
and inspection to and use of all books and records, including computer software and computer software programs, of each of the Subsidiaries,
(d) all other rights, interests, property or claims to which the Company may be entitled in its capacity as the member or shareholder
of any Subsidiary, and (e) all proceeds, income from, increases in and products of any of the foregoing. The certificates for such shares,
membership units or other units of equity ownership of every class, to the extent that such interests are represented by certificates,
accompanied by stock powers or other appropriate instruments of assignment thereof duly executed in blank by the Company, have been (or
within two (2) Business Days following the date hereof, or with regard to any Subsidiaries formed or acquired following the date hereof,
such date of formation or acquisition, in each case, as may be extended by the Secured Party, will be) delivered to the Secured Party.
1.2. Additional
Equity Interests. In case the Company
shall acquire any additional shares of the capital stock, membership interests of other Equity Interests of any Subsidiary or corporation,
limited liability company or other entity which is the successor of any Subsidiary, or any securities exchangeable for or convertible
into shares of such capital stock, membership interests or other Equity Interests of any class of any Subsidiary, whether by purchase,
stock dividend, stock split or otherwise, then such shares or other securities shall be subject to the pledge, assignment and security
interest granted to the Secured Party under this Agreement and the Company shall deliver to the Secured Party forthwith any certificates
therefor, accompanied by stock powers, unit powers or other appropriate instruments of assignment duly executed by the Company in blank.
The Company agrees that the Secured Party may from time to time attach as Annex A hereto an updated list of the shares
of capital stock, membership interests, other Equity Interests or securities at the time pledged to the Secured Party hereunder.
1.3. Pledge
of any account into which cash collateral is held. The
Company also hereby pledges, assigns, grants a security interest in, and delivers to the Secured Party, any account into which any Cash
Collateral is deposited and all of the Cash Collateral as such terms are hereinafter defined.
1.4. Waiver
of Operating Agreement Restrictions. The
Company irrevocably waives any and all provisions of any Operating Agreement or other organizational document of any Subsidiary that
(a) prohibit, restrict, condition or otherwise affect the grant hereunder of any Lien on any of the Securities Collateral or any enforcement
action which may be taken in respect of any such Lien; or (b) otherwise conflict with the terms of this Agreement.
2. Definitions. All
capitalized terms used herein without definition shall have the respective meanings provided therefor in the SPA. Terms used herein and
not defined in the SPA or otherwise defined herein that are defined in the Uniform Commercial Code of the State of New York (the “NY
UCC”) have such defined meanings herein (with terms used in Article 9 controlling over terms used in another Article), unless
the context otherwise indicated or requires, and the following terms shall have the following meanings:
“Cash Collateral”
has the meaning provided for such term in §4 hereof.
“Equity Interests”
means the Initial Equity Interests and any additional shares of stock, membership interests or other Equity Interests at the time pledged
to the Secured Party hereunder and the interests described in clauses (a) through (e) of clause (ii) of §1.1 of this Agreement
“Event of Default”
means the occurrence of any “Event of Default” under and as defined in each of the SPA or the Note, or the failure of the
Company to comply with any of its covenants or agreements set forth in any of the Transaction Document (including this Agreement) to which
it is a party and such failure continues beyond any applicable cure period expressly provided for therein (if any).
“Guarantors”
means, collectively, each person or entity which provides a guarantee of all or any portion of the Obligations of the Parent to the Secured
Party, including, without limitation, any Subsidiary.
“Obligations”
has the meaning set forth in the Security Agreement.
“Operating Agreement(s)”
means, as to any Subsidiary which is a limited liability company, the operating agreement of such Subsidiary.
“Person”
has the meaning set forth in the Security Agreement.
“Securities Act”
has the meaning provided for such term in §7.3 hereof.
“Securities Collateral”
means the property at any time pledged to the Secured Party hereunder, including, without limitation, the Equity Interests, and all income
therefrom, increases therein and proceeds thereof, including without limitation that included in Cash Collateral. The term does not include
any income, increases or proceeds received by the Company to the extent expressly permitted by §6.
“Security Agreement”
means that certain Security Agreement dated as of the date hereof by and between the Company and the Secured Party, as the same may be
amended, restated, modified or otherwise supplemented from time to time.
“Supplemental Loan
Documents” has the meaning set forth in the Security Agreement.
“Transaction Documents”
means, collectively, the SPA, the Note, the Security Agreement, any Supplemental Loan Document, this Agreement or any other “Transaction
Documents” as defined in the SPA, in each case as amended, supplemented, novated and/or replaced from time to time in accordance
with the applicable terms thereof.
3. Security for
Obligations. This Agreement and the
security interest in and pledge of the Securities Collateral hereunder are made with and granted to the Secured Party as security for
the payment and performance in full of all the Obligations.
4. Liquidation,
Recapitalization, etc. Any sums or
other property paid or distributed upon or with respect to any of the Equity Interests, whether by dividend or redemption or upon the
liquidation or dissolution of the issuer thereof or otherwise, shall, except to the limited extent provided in §6, be paid over
and delivered to the Secured Party to be held by the Secured Party as security for the payment and performance in full of all of the
Obligations. To the extent any such property paid or distributed pursuant to the immediately preceding sentence is in the form of money,
the Secured Party shall have the right (but not the obligation) to deposit such money in a deposit account with a depository satisfactory
to the Secured Party and any such funds may be invested in such items as the Secured Party may elect, and the Secured Party shall have
a perfected security interest in all such sums or other property so paid or distributed and all proceeds thereof (and any interest earned
shall continue to be held by the Secured Party as security for the payment and performance in full of all of the Obligations). Any money
so received by the Secured Party pursuant to this §4, any account into which it shall be deposited and all proceeds thereof shall
be referred to herein as the “Cash Collateral”. In case, pursuant to the recapitalization or reclassification of the
capital of the issuer thereof or pursuant to the reorganization thereof, any distribution of capital shall be made on or in respect of
any of the Equity Interests or any property shall be distributed upon or with respect to any of the Equity Interests, the property so
distributed shall be delivered to the Secured Party, to be held by it as security for the Obligations. Except to the limited extent provided
in §6, all sums of money and property paid or distributed in respect of the Equity Interests, whether as a dividend or upon such
a liquidation, dissolution, recapitalization or reclassification or otherwise, that are received by the Company shall, until paid or
delivered to the Secured Party, be held in trust for the Secured Party as security for the payment and performance in full of all of
the Obligations.
5. Warranty of
Title; Authority. The Company hereby
represents and warrants that: (a) the Company has good and marketable title to, and is the sole record and beneficial owner of, the Equity
Interests described in §1, subject to no pledges, liens, security interests, charges, options, restrictions or other encumbrances
except the pledge and security interest created by the Security Agreement and this Agreement and Permitted Liens (as defined in the Security
Agreement), (b) each of the Equity Interests described in §1 is validly issued, fully paid and non-assessable, (c) the Company has
full power, authority and legal right to execute, deliver and perform its obligations under this Agreement and to pledge and grant a
security interest in all of the Securities Collateral pursuant to this Agreement, and the execution, delivery and performance hereof
and the pledge of and granting of a security interest in the Securities Collateral hereunder have been duly authorized by all necessary
corporate or other action and do not contravene in any material respect any law, rule or regulation or any provision of the Company’s
or any Subsidiary’s charter documents or by-laws or of any judgment, decree or order of any tribunal or of any agreement or instrument
to which the Company or any Subsidiary is a party or by which it or any of its property is bound or affected or constitute a default
thereunder, and (d) the information set forth in Annex A hereto relating to the Equity Interests is true, correct
and complete in all respects. The Company covenants that it will defend the rights of the Secured Party and security interest of the
Secured Party in such Equity Interests against the claims and demands of all other Persons whomsoever.
6. Dividends,
Voting, etc., Prior to Maturity. So
long as no Event of Default shall have occurred and be continuing, the Company shall be entitled to receive and retain all cash dividends
paid in respect of the Equity Interests (and to retain such amounts, to distribute such amounts to the members of the issuer thereof,
or to otherwise retain or utilize such amounts in any manner with does not violate this Agreement, in each case, free of any claim or
security interest granted pursuant to this Agreement), to vote the Equity Interests and to give consents, waivers and ratifications in
respect of the Equity Interests; provided, however, that no vote shall be cast or consent, waiver or ratification given
by the Company if the effect thereof would in the judgment of the Secured Party impair any of the Securities Collateral or be inconsistent
with or result in any violation of any of the provisions of the SPA, the Note or the other Transaction Documents. All such rights of
the Company to receive cash dividends shall cease in case an Event of Default shall have occurred and be continuing. All such rights
of the Company to vote and give consents, waivers and ratifications with respect to the Equity Interests shall, at the Secured Party’s
option, as evidenced by the Secured Party’s notifying the Company of such election, cease in case an Event of Default shall have
occurred and be continuing.
7. Remedies.
7.1. In
General.
If an Event of Default
shall have occurred and be continuing, the Secured Party shall have the following rights and remedies (to the extent permitted by applicable
law) in addition to the rights and remedies of a secured party under the NY UCC, all such rights and remedies being cumulative, not exclusive,
and enforceable alternatively, successively or concurrently, at such time or times as the Secured Party deems expedient:
(a) if
the Secured Party so elects and gives written notice of such election to the Company, the Secured Party may vote any or all shares of
the Equity Interests (whether or not the same shall have been transferred into its name or the name of its nominee or nominees) for any
lawful purpose, including, without limitation, if the Secured Party so elects, for the liquidation of the assets of the issuer thereof,
and give all consents, waivers and ratifications in respect of the Equity Interests and otherwise act with respect thereto as though it
were the outright owner thereof (the Company hereby irrevocably (until payment of the Obligations in full (other than contingent indemnity
obligations for which no claims have been made)) constituting and appointing the Secured Party the proxy and attorney-in-fact of the Company,
with full power of substitution, to do so);
(b) the
Secured Party may demand, sue for, collect or make any compromise or settlement the Secured Party deems suitable in respect of any Securities
Collateral;
(c) the
Secured Party may sell, resell, assign and deliver, or otherwise dispose of any or all of the Securities Collateral, for cash or credit
or both and upon such terms at such place or places, at such time or times and to such Persons as the Secured Party thinks expedient,
all without demand for performance by the Company or any notice or advertisement whatsoever except as expressly provided herein or as
may otherwise be required by law;
(d) the
Secured Party may cause all or any part of the Equity Interests held by it to be transferred into its name or the name of its nominee
or nominees; and
(e) the
Secured Party may set off or otherwise apply or credit against the Obligations any and all sums deposited with it or held by it.
7.2. Sale
of Securities Collateral. In the
event of any sale or other disposition of the Securities Collateral as provided in clause (c) of §7.1 and to the extent that any
notice thereof is required to be given by law, the Secured Party shall give to the Company at least ten (10) Business Days’ prior
notice of the time and place of any public sale or other disposition of the Securities Collateral or of the time after which any private
sale or any other intended disposition is to be made. The Company hereby acknowledges that ten (10) Business Days’ prior notice
of such sale or other disposition or sales or other dispositions shall be reasonable notice. The Secured Party may enforce its rights
hereunder without any other notice and without compliance with any other condition precedent now or hereunder imposed by statute, rule
of law or otherwise (all of which are hereby expressly waived by the Company, to the fullest extent permitted by law). The Secured Party
may buy or otherwise acquire any part or all of the Securities Collateral at any public sale or other disposition and if any part or
all of the Securities Collateral is of a type customarily sold or otherwise disposed of in a recognized market or is of the type which
is the subject of widely-distributed standard price quotations, the Secured Party may buy or otherwise acquire at private sale or other
disposition and may make payments thereof by any means. The Secured Party may apply the cash proceeds actually received from any sale
or other disposition to the reasonable expenses of retaking, holding, preparing for sale, selling and the like, to reasonable attorneys’
fees, travel and all other expenses which may be incurred by the Secured Party in attempting to collect the Obligations or to enforce
this Agreement or in the prosecution or defense of any action or proceeding related to the subject matter of this Agreement, and then
to the Obligations pursuant to the terms of the Transaction Documents. Only after such applications, and after payment by the Secured
Party of any amount required by §9-608(a)(1)(C) or §9-615(a)(3) of the NY UCC, need the Secured Party account to the Company
for any surplus.
7.3. Private
Sales. The Company recognizes that
the Secured Party may be unable to effect a public sale or other disposition of the Equity Interests by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the “Securities Act”), federal banking laws, and other applicable
laws, but may be compelled to resort to one or more private sales thereof to a restricted group of purchasers. The Company agrees that
any such private sales may be at prices and other terms less favorable to the seller than if sold at public sales and that such private
sales shall not by reason thereof be deemed not to have been made in a commercially reasonable manner. The Secured Party shall be under
no obligation to delay a sale of any of the Equity Interests for the period of time necessary to permit the issuer of such Equity Interests
to register such Equity Interests for public sale under the Securities Act, or such other federal banking or other applicable laws, even
if the issuer would agree to do so. Subject to the foregoing, the Secured Party agrees that any sale of the Equity Interests shall be
made in a commercially reasonable manner, and the Company agrees to use its commercially reasonable efforts to cause the issuer or issuers
of the Equity Interests contemplated to be sold, to execute and deliver, and cause the directors and officers of such issuer to execute
and deliver, all at the Company’s expense, all such instruments and documents, and to do or cause to be done all such other acts
and things as may be necessary or, in the reasonable opinion of the Secured Party, advisable to exempt such Equity Interests from registration
under the provisions of the Securities Act, and to make all amendments to such instruments and documents which, in the opinion of the
Secured Party, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations
of the Securities and Exchange Commission applicable thereto. The Company further agrees to use its commercially reasonable efforts to
cause such issuer or issuers to comply with the provisions of the securities or “Blue Sky” laws of any jurisdiction which
the Secured Party shall designate and, if required, to cause such issuer or issuers to make available to its security holders, as soon
as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities
Act.
7.4. Company’s
Agreements, etc. The Company further
agrees to do or cause to be done all such other acts and things as may be reasonably necessary to make any sales of any portion or all
of the Equity Interests pursuant to this §7 valid and binding and in compliance with any and all applicable laws (including, without
limitation, the Securities Act, the Securities Exchange Act of 1934, as amended, the rules and regulations of the Securities and Exchange
Commission applicable thereto and all applicable state securities or “Blue Sky” laws), regulations, orders, writs, injunctions,
decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at the Company’s expense. The Company further agrees that a breach of any of the covenants contained
in this §7 will cause irreparable injury to the Secured Party, that the Secured Party has no adequate remedy at law in respect of
such breach and, as a consequence, agrees that the Secured Party may seek specific performance of each and every covenant contained in
this §7 against the Company and the Company hereby waives and agrees not to assert any defenses against an action for specific performance
of such covenants.
8. Marshalling. The
Secured Party shall not be required to marshal any present or future collateral security (including but not limited to the Securities
Collateral) for, or other assurance of payment of, the Obligations or any of them, or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights and remedies of the Secured Party hereunder and in respect of such
collateral security and other assurances of payment shall be cumulative and in addition to all other rights, however existing or arising.
To the extent that it lawfully may, the Company hereby agrees that it will not invoke any law relating to the marshaling of collateral
which might cause delay in or impede the enforcement of the Secured Party’s rights and remedies under this Agreement or under any
other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of
the Obligations is secured or payment thereof is otherwise assured, and to the extent that it lawfully may the Company hereby irrevocably
waives the benefits of all such laws.
9. Company’s
Obligations Not Affected. The obligations
of the Company hereunder shall remain in full force and effect without regard to, and shall not be impaired by (a) any exercise or nonexercise,
or any waiver, by the Secured Party of any right, remedy, power or privilege under or in respect of any of the Obligations or any security
thereof (including this Agreement); (b) any amendment to or modification of the Transactions Documents or any of the Obligations; (c)
any amendment to or modification of any instrument (other than this Agreement) securing any of the Obligations, including, without limitation,
the Security Agreement and the other Transaction Documents; or (d) the taking of additional security for, or any other assurances of
payment of, any of the Obligations or the release or discharge or termination of any security or other assurances of payment or performance
for any of the Obligations; whether or not the Company shall have notice or knowledge of any of the foregoing, the Company hereby generally
waiving all suretyship defenses to the extent applicable.
10. Transfer,
etc., by Company. Without the prior
written consent of the Secured Party, the Company will not sell, assign, transfer or otherwise dispose of, grant any option with respect
to, or pledge or grant any security interest in or otherwise encumber or restrict any of the Securities Collateral or any interest therein,
except for the pledge thereof and security interest therein provided for in this Agreement and any Permitted Liens so long as the holder
of such lien has not taken any action to foreclose or otherwise realize on the Securities Collateral.
11. Further Assurances. The
Company will do all such acts, and will furnish to the Secured Party all such financing statements, certificates and other documents
and will obtain all such governmental consents and corporate approvals and will do or cause to be done all such other things as the Secured
Party may reasonably request from time to time in order to give full effect to this Agreement and to secure the rights of the Secured
Party hereunder, all without any cost or expense to the Secured Party. The Company hereby irrevocably authorizes the Secured Party at
any time and from time to time to file in any filing office which the Secured Party deems necessary in any Uniform Commercial Code jurisdiction
any initial financing statements and amendments thereto that (a) indicate the Collateral as the Securities Collateral or words of similar
effect, or as being of equal or lesser scope or in greater detail, and (b) contain any other information required by part 5 of Article
9 of the Uniform Commercial Code of the jurisdiction of the filing office for the sufficiency or filing office acceptance of any financing
statement or amendment, including whether the Company is an organization, the type of organization and any organization identification
number issued to the Company. The Company agrees to furnish any such information to the Secured Party promptly upon request. The Company
also ratifies its authorization for the Secured Party to have filed in any Uniform Commercial Code jurisdiction any like initial financing
statements or amendments thereto if filed prior to the date hereof.
12. Secured Party’s
Exoneration. Under no circumstances
shall the Secured Party be deemed to assume any responsibility for or obligation or duty with respect to any part or all of the Securities
Collateral of any nature or kind or any matter or proceedings arising out of or relating thereto, other than (a) to exercise reasonable
care in the physical custody of the Securities Collateral and (b) after an Event of Default shall have occurred and be continuing to
act in a commercially reasonable manner. The Secured Party shall not be required to take any action of any kind to collect, preserve
or protect its or the Company’s rights in the Securities Collateral or against other parties thereto. The Secured Party’s
prior recourse to any part or all of the Securities Collateral shall not constitute a condition of any demand, suit or proceeding for
payment or collection of any of the Obligations.
13. No Waiver,
etc. The Secured Party shall not
be deemed to have waived any of its rights and remedies in respect of the Obligations or the Securities Collateral unless such waiver
shall be in writing and signed by the Secured Party. No delay or omission on the part of the Secured Party in exercising any right or
remedy shall operate as a waiver of such right or remedy or any other right or remedy. A waiver on any one occasion shall not be construed
as a bar to or waiver of any right or remedy on any future occasion. All rights and remedies of the Secured Party with respect to the
Obligations or the Securities Collateral, whether evidenced hereby or by any other instrument or papers, shall be cumulative and may
be exercised singularly, alternatively, successively or concurrently at such time or at such times as the Secured Party deems expedient.
14. Notice, etc. All
notices, requests and other communications hereunder shall be made in the manner set forth in the SPA.
15. Overdue Amounts. Until
paid, all amounts due and payable by the Company hereunder shall be a debt secured by the Securities Collateral and shall bear, whether
before or after judgment, interest at the rate of interest for overdue principal set forth in the SPA.
16. Governing
Law; Consent to Jurisdiction. This
Agreement IS A contract UNDER the laws of the state of NEW YORK and shall for all purposes be construed in accordance with and governed
by the laws of SAID state of NEW YORK. The Company and THE SECURED PARTY EACH agree that any suit for the enforcement of this agreement
or any other action brought by SUCH PERSON arising hereunder or in any way related to this agreement SHALL
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE BOROUGH OF MANHATTAN OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON SUCH PERSON BY MAIL AT THE ADDRESS SPECIFIED
ON THE SIGNATURE PAGE OF EACH PARTY HERETO. the Company and the secured party each hereby waives
any objection that it may now or hereafter have to the venue of any suit BROUGHT IN the state of new york or any court SITTING THEREIN
or that A suit BROUGHT THEREIN is brought in an inconvenient court
17. Waiver of
Jury Trial. THE COMPANY
AND THE SECURED PARTY EACH WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OR ENFORCEMENT OF ANY SUCH RIGHTS OR OBLIGATIONS. Except
as prohibited by law, the Company waives any right which it may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages. The
Company (a) certifies that neither the Secured Party nor any representative, agent or attorney of the Secured Party has represented,
expressly or otherwise, that the Secured Party would not, in the event of litigation, seek to enforce the foregoing waivers or other
waivers contained in this Agreement and (b) acknowledges that, in entering into this Agreement and any other Transaction Document to
which the Secured Party is a party, the Secured Party is relying upon, among other things, the waivers and certifications contained in
this §17.
18. Miscellaneous. The
headings of each section of this Agreement are for convenience only and shall not define or limit the provisions thereof. This Agreement
and all rights and obligations hereunder shall be binding upon the Company and its successors and assigns, and shall inure to the benefit
of the Secured Party and its successors and assigns. If any term of this Agreement shall be held to be invalid, illegal or unenforceable,
the validity of all other terms hereof shall in no way be affected thereby, and this Agreement shall be construed and be enforceable
as if such invalid, illegal or unenforceable term had not been included herein. The Company acknowledges receipt of a copy of this Agreement.
IN WITNESS WHEREOF,
intending to be legally bound, the Company and the Secured Party have caused this Agreement to be executed as of the date first above
written.
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PARTS iD, INC. |
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By: |
/s/ John Pendleton |
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Name: |
John Pendleton |
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Title: |
Executive Vice President, Legal & Corporate Affairs |
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LIND GLOBAL FUND II, LP By: Lind Global Partners II, LLC, its general partner |
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By: |
/s/ Jeff Easton |
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Title: |
Jeff Easton, Managing Member |
Each undersigned Subsidiary
hereby joins in the above Agreement for the sole purpose of consenting to and being bound by the provisions of §§1.2, 1.4, 6
and 7 thereof, the undersigned hereby agreeing to cooperate fully and in good faith with the Secured Party and the Company in carrying
out such provisions.
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PARTS iD, LLC |
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|
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By: |
/s/ John Pendleton |
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Name: |
John Pendleton |
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Title: |
Executive Vice President, Legal & Corporate Affairs |
ANNEX A TO PLEDGE AGREEMENT
None of the issuers has any
authorized, issued or outstanding shares of its equity interests of any class or any commitments to issue any shares of its equity interests
of any class or any securities convertible into or exchangeable for any shares of its equity interests of any class except as otherwise
stated in this Annex A.
Issuer | |
Record
Owner | |
Class
of
Shares | |
Percentage Ownership |
Parts iD, LLC | |
Parts iD, Inc. | |
N/A | |
| 100% |
Exhibit 10.7
GUARANTY
GUARANTY (the “Guaranty”),
dated as of July 14, 2023, by PARTS iD, LLC, a Delaware limited liability company (the “Guarantor”) in favor of
LIND GLOBAL FUND II, LP (the “Lender”).
WHEREAS, Parts iD,
Inc., a Delaware corporation (the “Borrower”) is the holder of 100% of the membership interests of the Guarantor; and
WHEREAS, (a) the Borrower
and the Lender have entered into that certain Securities Purchase Agreement dated as of the date hereof (as amended and in effect from
time to time, the “SPA”); (b) the Borrower has issued to the Lender that certain Senior Secured Convertible Promissory
Note dated as of the date hereof (as amended and in effect from time to time, the “Note”); and (c) the Borrower has issued
to the Lender those certain Warrants pursuant to the terms of the SPA (as amended and in effect from time to time, the “Warrants”);
WHEREAS, the Borrower
and the Guarantor are members of a group of related entities, the success of any one of which is dependent in part on the success of the
other members of such group;
WHEREAS, the Guarantor
expects to receive substantial direct and indirect benefits from the transactions contemplated by the SPA and the Note (including, without
limitation, the advances made to the Borrower by the Lender pursuant to the SPA and the Note) (which benefits are hereby acknowledged);
WHEREAS, it is a condition
precedent to the Lender’s willingness to enter into the SPA and the Note and make the advances to the Borrower contemplated thereunder
that the Guarantor execute and deliver to the Lender a guaranty substantially in the form hereof; and
WHEREAS, the Guarantor
wishes to guaranty the Borrower’s and any other Person’s obligations to the Lender under or in respect of the SPA, the Note and the other
Transaction Documents (as such term is defined in the SPA) and the other Obligations (as hereinafter defined) as provided herein;
NOW, THEREFORE, the
Guarantor hereby agrees with the Lender as follows:
1. Definitions.
The term (a) “Obligations” means, collectively, all debts, liabilities and obligations (including, without limitation, any expenses,
costs and charges incurred by or on behalf of the Lender in connection with any Transaction Document), present or future, direct or indirect,
absolute or contingent, matured or unmatured, at any time or from time to time due or accruing due and owing by or otherwise payable by
the Borrower or the Guarantor to the Lender in any currency, under, in connection with or pursuant to the any Transaction Document (including,
without limitation, this Guaranty), and whether incurred by the Borrower or the Guarantor alone or jointly with another or others and
whether as principal, guarantor or surety and in whatever name or style; (b) “Transaction Documents” means, collectively, the
SPA, the Note, the Warrants, this Guaranty, the other “Transaction Documents” as defined in the SPA and any other document,
agreement or instrument evidencing any debt or similar obligation owing from the Borrower or the Guarantor to the Lender (any such other
document, agreement or instrument being hereinafter referred to as a “Supplemental Loan Document”) and (c) “Event
of Default” means any “Event of Default” as such term is defined in the SPA, the Note, the Warrants or any Supplemental
Loan Document (or the analogous term used in any such Supplemental Loan Document). All other capitalized terms used herein without definition
shall have the respective meanings provided therefor in the SPA.
2. Guaranty
of Payment and Performance. The Guarantor hereby
guarantees to the Lender the full and punctual payment when due (whether at stated maturity, by required pre-payment, by acceleration
or otherwise), as well as the performance, of all of the Obligations including all such which would become due but for the operation of
the automatic stay pursuant to §362(a) of the Federal Bankruptcy Code and the operation of §§502(b) and 506(b) of the Federal
Bankruptcy Code in a bankruptcy or other insolvency proceeding of the Borrower. This Guaranty is an absolute, unconditional and continuing
guaranty of the full and punctual payment and performance of all of the Obligations and not of their collectibility only and is in no
way conditioned upon any requirement that the Lender first attempt to collect any of the Obligations from the Borrower or any other Person
or resort to any collateral security or other means of obtaining payment. Should the Borrower default in the payment or performance of
any of the Obligations, the obligations of the Guarantor hereunder with respect to such Obligations in default shall, upon demand by the
Lender, become immediately due and payable to the Lender, without demand or notice of any nature, all of which are expressly waived by
the Guarantor. Payments by the Guarantor hereunder may be required by the Lender on any number of occasions. All payments by the Guarantor
hereunder shall be made to the Lender, in the manner and at the place of payment specified therefor in the Note or Supplemental Loan Document,
as applicable, for the account of the Lender. The Guarantor shall make all payments hereunder without setoff or counterclaim and free
and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans,
restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or
taxing or other authority therein unless the Guarantor is compelled by law to make such deduction or withholding. If any such obligation
is imposed upon the Guarantor with respect to any amount payable by it hereunder, the Guarantor will pay to the Lender on the date on
which such amount is due and payable hereunder, such additional amount in U.S. dollars as shall be necessary to enable the Lender to receive
the same net amount which the Lender would have received on such due date had no such obligation been imposed upon the Guarantor. The
Guarantor will deliver promptly to the Lender certificates or other valid vouchers for all taxes or other charges deducted from or paid
with respect to payments made by the Guarantor hereunder. The obligations of the Guarantor under this paragraph shall survive the payment
in full of the Obligations and termination of this Guaranty.
3. Guarantor’s
Agreement to Pay Enforcement Costs, etc. The
Guarantor further agrees, as the principal obligor and not as a guarantor only, to pay to the Lender, on demand, all out-of-pocket costs
and expenses (including court costs and legal expenses) incurred or expended by the Lender in connection with the Obligations, this Guaranty
and the enforcement thereof, together with interest on amounts recoverable under this §3 from the time when such amounts become due
until payment, whether before or after judgment, at the rate of interest for overdue principal set forth in the Note, provided that if
such interest exceeds the maximum amount permitted to be paid under applicable law, then such interest shall be reduced to such maximum
permitted amount.
4. Waivers
by Guarantor; Lender’s Freedom to Act. The Guarantor
agrees that the Obligations will be paid and performed strictly in accordance with their respective terms to the maximum extent permitted
by applicable law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the
Lender with respect thereto. The Guarantor waives promptness, diligence, presentment, demand, protest, notice of acceptance, notice of
any Obligations incurred and all other notices of any kind, all defenses which may be available by virtue of any valuation, stay, moratorium
law or other similar law now or hereafter in effect, any right to require the marshalling of assets the Borrower or any other entity or
other person primarily or secondarily liable with respect to any of the Obligations, and all suretyship defenses generally. Without limiting
the generality of the foregoing, the Guarantor agrees to the provisions of any instrument evidencing, securing or otherwise executed in
connection with any Obligation and agrees that the obligations of the Guarantor hereunder shall not be released or discharged, in whole
or in part, or otherwise affected by (a) the failure of the Lender to assert any claim or demand or to enforce any right or remedy against
the Borrower or any other entity or other person primarily or secondarily liable with respect to any of the Obligations; (b) any extensions,
compromise, refinancing, consolidation or renewals of any Obligation; (c) any change in the time, place or manner of payment of any of
the Obligations or any rescissions, waivers, compromise, refinancing, consolidation or other amendments or modifications of any of the
terms or provisions of the SPA, the Note, the other Transaction Documents or any other agreement evidencing, securing or otherwise executed
in connection with any of the Obligations, (d) the addition, substitution or release of any entity or other person primarily or secondarily
liable for any Obligation; (e) the adequacy of any rights which the Lender may have against any collateral security or other means of
obtaining repayment of any of the Obligations; (f) the impairment of any collateral securing any of the Obligations, including without
limitation the failure to perfect or preserve any rights which the Lender might have in such collateral security or the substitution,
exchange, surrender, release, loss or destruction of any such collateral security; or (g) any other act or omission which might in any
manner or to any extent vary the risk of the Guarantor or otherwise operate as a release or discharge of the Guarantor, all of which may
be done without notice to the Guarantor. To the fullest extent permitted by law, the Guarantor hereby expressly waives any and all rights
or defenses arising by reason of (i) any “one action” or “anti-deficiency” law which would otherwise prevent the Lender
from bringing any action, including any claim for a deficiency, or exercising any other right or remedy (including any right of set-off),
against the Guarantor before or after the Lender’s commencement or completion of any foreclosure action, whether judicially, by exercise
of power of sale or otherwise, or (ii) any other law which in any other way would otherwise require any election of remedies by the Lender.
5. Unenforceability
of Obligations Against Borrower. If for any reason
the Borrower has no legal existence or is under no legal obligation to discharge any of the Obligations, or if any of the Obligations
have become irrecoverable from the Borrower by reason of the Borrower’s insolvency, bankruptcy or reorganization or by other operation
of law or for any other reason, this Guaranty shall nevertheless be binding on the Guarantor to the same extent as if the Guarantor at
all times had been the principal obligor on all such Obligations. In the event that acceleration of the time for payment of any of the
Obligations is stayed upon the insolvency, bankruptcy or reorganization of the Borrower or any other Person, or for any other reason,
all such amounts otherwise subject to acceleration under the terms of the SPA, the Note, any Supplemental Loan Document, the other Transaction
Documents or any other agreement evidencing, securing or otherwise executed in connection with any Obligation shall be immediately due
and payable by the Guarantor.
6. Subrogation;
Subordination.
6.1. Waiver
of Rights Against Borrower. Until the final payment
and performance in full of all of the Obligations, the Guarantor shall not exercise and hereby waives any rights against the Borrower
arising as a result of payment by the Guarantor hereunder, by way of subrogation, reimbursement, restitution, contribution or otherwise,
and will not prove any claim in competition with the Lender in respect of any payment hereunder in any bankruptcy, insolvency or reorganization
case or proceedings of any nature; the Guarantor will not claim any setoff, recoupment or counterclaim against the Borrower in respect
of any liability of the Guarantor to the Borrower; and the Guarantor waives any benefit of and any right to participate in any collateral
security which may be held by the Lender.
6.2. Subordination.
The payment of any amounts due with respect to any indebtedness of the Borrower for money borrowed or credit received now or hereafter
owed to the Guarantor is hereby subordinated to the prior payment in full of all of the Obligations. The Guarantor agrees that, after
the occurrence and during the continuance of any default in the payment of any of the Obligations or upon the occurrence and continuation
of any other Event of Default, the Guarantor will not demand, sue for or otherwise attempt to collect any such indebtedness of the Borrower
to the Guarantor until all of the Obligations shall have been paid in full. If, notwithstanding the foregoing sentence, the Guarantor
shall collect, enforce or receive any amounts in respect of such indebtedness while any Obligations are still outstanding, such amounts
shall be collected, enforced and received by the Guarantor as trustee for the Lender and be paid over to the Lender on account of the
Obligations without affecting in any manner the liability of the Guarantor under the other provisions of this Guaranty.
6.3. Provisions
Supplemental. The provisions of this §6
shall be supplemental to and not in derogation of any rights and remedies of the Lender under any separate subordination agreement which
the Lender may at any time and from time to time enter into with the Guarantor.
7. Security;
Setoff. The Guarantor grants to the Lender, as
security for the full and punctual payment and performance of all of the Guarantor’s obligations hereunder, a continuing lien on
and security interest in all securities or other property belonging to the Guarantor now or hereafter held by the Lender and in all deposits
(general or special, time or demand, provisional or final) and other sums credited by or due from the Lender to the Guarantor or subject
to withdrawal by the Guarantor. Regardless of the adequacy of any collateral security or other means of obtaining payment of any of the
Obligations, the Lender is hereby authorized at any time and from time to time, without notice to the Guarantor (any such notice being
expressly waived by the Guarantor) and to the fullest extent permitted by law, to set off and apply such deposits and other sums against
the obligations of the Guarantor under this Guaranty, whether or not the Lender shall have made any demand under this Guaranty and although
such obligations may be contingent or unmatured.
8. Further
Assurances. The Guarantor agrees that it will
from time to time, at the request of the Lender, do all such things and execute all such documents as the Lender may reasonably request
and consider necessary or desirable to give full effect to this Guaranty and to perfect and preserve the rights and powers of the Lender
hereunder. The Guarantor acknowledges and confirms that the Guarantor itself has established its own adequate means of obtaining from
the Borrower on a continuing basis all information desired by the Guarantor concerning the financial condition of the Borrower and that
the Guarantor will look to the Borrower and not to the Lender in order for the Guarantor to keep adequately informed of changes in the
Borrower’s financial condition.
9. Termination;
Reinstatement. This Guaranty shall remain in
full force and effect as to the Guarantor until the Lender is given written notice of the Guarantor’s intention to discontinue this Guaranty,
notwithstanding any intermediate or temporary payment or settlement of the whole or any part of the Obligations. No such notice shall
be effective unless received and acknowledged by an officer of the Lender at the address of Lender for notices set forth in the SPA. No
such notice shall affect any rights of the Lender hereunder, including without limitation the rights set forth in §§4 and 6,
with respect to any Obligations incurred or accrued prior to the receipt of such notice or any Obligations incurred or accrued pursuant
to any contract or commitment in existence prior to such receipt. This Guaranty shall continue to be effective or be reinstated, notwithstanding
any such notice, if at any time any payment made or value received with respect to any Obligation is rescinded or must otherwise be returned
by the Lender upon the insolvency, bankruptcy or reorganization of the Borrower, or otherwise, all as though such payment had not been
made or value received.
10. Successors
and Assigns. This Guaranty shall be binding upon
the Guarantor, its successors and assigns, and shall inure to the benefit of the Lender and its successors, transferees and assigns. Without
limiting the generality of the foregoing sentence, the Lender may assign or otherwise transfer any Transaction Document or any other agreement
or note held by it evidencing, securing or otherwise executed in connection with the Obligations, or sell participations in any interest
therein, to any other entity or other person, and such other entity or other person shall thereupon become vested, to the extent set forth
in the agreement evidencing such assignment, transfer or participation, with all the rights in respect thereof granted to the Lender herein,
all in accordance with, and subject to, the SPA (in the case of a transfer of rights under the SPA), the Note (in the case of a transfer
of rights under the Note) or Supplemental Loan Document (in the case of a transfer of rights under any such Supplemental Loan Document).
The Guarantor may not assign any of its obligations hereunder.
11. Amendments
and Waivers. No amendment or waiver of any provision
of this Guaranty nor consent to any departure by the Guarantor therefrom shall be effective unless the same shall be in writing and signed
by the Lender. No failure on the part of the Lender to exercise, and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise
of any other right.
12. Notices.
All notices and other communications called for hereunder shall be made in writing and, unless otherwise specifically provided herein,
shall be deemed to have been duly made or given when made or given in accordance with the procedures set forth in the SPA and addressed
as follows: if to the Guarantor, at the address set forth beneath its signature hereto, and if to the Lender, at the address for notices
to the Lender set forth in the SPA, or at such address as either party may designate in writing to the other.
13. Governing
Law; Consent to Jurisdiction. THIS GUARANTY SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. The Guarantor agrees that any suit for the enforcement
of this Guaranty may be brought in the courts of the STATE OF NEW YORK sitting in the Borough of Manhattan or, to the extent permitted
by applicable law, any federal court for the Southern District of New York (and appellate courts thereof) and consents to the nonexclusive
jurisdiction of such court and to service of process in any such suit being made upon the Guarantor by mail at the address specified by
reference in §12. The Guarantor hereby waives any objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit was brought in an inconvenient court.
14. Waiver
of Jury Trial. THE GUARANTOR HEREBY WAIVES ITS
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THE PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Guarantor hereby waives any right
which it may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary, punitive or consequential
damages or any damages other than, or in addition to, actual damages. The Guarantor (i) certifies that neither the Lender nor any representative,
agent or attorney of the Lender has represented, expressly or otherwise, that the Lender would not, in the event of litigation, seek to
enforce the foregoing waivers and (ii) acknowledges that, in entering into the SPA, the Note and the other Transaction Documents to which
the Lender is a party, the Lender is relying upon, among other things, the waivers and certifications contained in this §14.
15. Miscellaneous.
This Guaranty constitutes the entire agreement of the Guarantor with respect to the matters set forth herein. The rights and remedies
herein provided are cumulative and not exclusive of any remedies provided by law or any other agreement, and this Guaranty shall be in
addition to any other guaranty of or collateral security for any of the Obligations. The invalidity or unenforceability of any one or
more sections of this Guaranty shall not affect the validity or enforceability of its remaining provisions. Captions are for the ease
of reference only and shall not affect the meaning of the relevant provisions. The meanings of all defined terms used in this Guaranty
shall be equally applicable to the singular and plural forms of the terms defined.
16. Effectiveness.
Delivery of an executed signature page of this Guaranty by facsimile transmission or by email with a PDF attachment shall be effective
as delivery of a manually executed counterpart hereof. This Guaranty and the other Transaction Documents constitute the entire contract
among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof.
IN WITNESS WHEREOF,
the Guarantor has caused this Guaranty to be executed and delivered as of the date first above written.
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PARTS iD, LLC |
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By: |
/s/ John Pendleton |
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Name: |
John Pendleton |
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Title: |
Executive Vice President, Legal & Corporate Affairs |
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Address: 1 Corporate Drive, Suite C, Cranbury,
NJ 08512 |
Exhibit 10.8
TRADEMARK SECURITY AGREEMENT
This TRADEMARK SECURITY AGREEMENT (this “Trademark
Security Agreement”) is entered into as of July 14, 2023 by and between PARTS iD, LLC, a Delaware limited liability company
(the “Grantor”) and LIND GLOBAL FUND II LP (the “Secured Party”).
WHEREAS, Parts iD,
Inc. (the “Borrower”) is the holder of 100% of the equity interests of the Grantor; and
WHEREAS, (a) the Borrower
and the Secured Party have entered into that certain Securities Purchase Agreement dated as of the date hereof (as amended and in effect
from time to time, the “SPA”) and (b) the Borrower has issued to the Secured Party that certain Senior Secured Convertible
Promissory Note dated as of the date hereof (as amended and in effect from time to time, the “Note”);
WHEREAS, in connection
with the SPA and the Note, the Grantor has entered into that certain Guaranty dated as of the date hereof in favor of the Secured Party
(as amended and in effect from time to time, the “Guaranty”) pursuant to which the Grantor has guaranteed all of the
obligations of the Borrower owing to the Secured Party under the SPA, the Note and certain other related agreements and also entered into
a Security Agreement dated as of the date hereof (as amended and in effect from time to time, the “Security Agreement”)
with the Secured Party pursuant to which the Grantor has granted a lien in favor of the Secured Party in all of the Grantor’s assets (including
the Trademark Collateral) to secure its obligations under the Guaranty; and
WHEREAS, in connection
with the Security Agreement, the Grantor has agreed to execute and deliver this Trademark Security Agreement in order to record the security
interest granted to the Secured Party with the United States Patent and Trademark Office;
NOW, THEREFORE, in
consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Grantor hereby agrees as follows:
SECTION 1. Defined Terms.
Unless otherwise defined herein, capitalized terms defined in the Security Agreement and used herein have the meaning given to them in
the Security Agreement. The term “Trademarks” means, collectively, (a) all of the trademarks, service marks, designs,
logos, indicia, trade names, corporate names, company names, business names, fictitious business names, trade styles, elements of package
or trade dress, and other source and product or service identifiers, used or associated with or appurtenant to the products, services
and businesses of the Grantor, that (i) are set forth on Schedule I hereto, or (ii) have been adopted, acquired, owned,
held or used by the Grantor or are now owned, held or used by the Grantor, in the Grantor’s business, or with the Grantor’s products and
services, or in which the Grantor has any right, title or interest, or (iii) are in the future adopted, acquired, owned, held and used
by the Grantor in the Grantor’s business or with the Grantor’s products and services, or in which the Grantor in the future acquires any
right, title or interest, (b) all past, present or future rights in, to and associated with the foregoing throughout the world, whether
arising under federal law, state law, common law, foreign law or otherwise, including the following: all such rights arising out of or
associated with the registrations of the foregoing items set forth in clause (a), the right (but not the obligation) to register claims
under any state, federal or foreign trademark law or regulation; the right (but not the obligation) to sue or bring opposition or cancellation
proceedings in the name of the Grantor or the Secured Party for any and all past, present and future infringements or dilution of or any
other damages or injury to the foregoing or any associated goodwill, and the rights to damages or profits due or accrued arising out of
or in connection with any such past, present or future infringement, dilution, damage or injury; and (c) any license rights related to
the foregoing.
SECTION 2. Grant of Security
Interest in Trademark Collateral. The Grantor hereby pledges, collaterally assigns and grants to the Secured Party to secure the prompt
and complete payment and performance of the Obligations, a security interest (referred to in this Trademark Security Agreement as the
“Security Interest”) in all of the Grantor’s right, title and interest in, to and under the following, whether now owned
or hereafter acquired or arising (collectively, the “Trademark Collateral”):
(a) all
of its Trademarks and licenses with respect to Trademarks to which it is a party including those referred to on Schedule I;
(b) all
goodwill of the business connected with the use of, and symbolized by, each Trademark and each license with respect to Trademarks; and
(c) all
products and proceeds (as that term is defined in the UCC) of the foregoing, including any claim by the Grantor against third parties
for past, present or future (i) infringement or dilution of any Trademark or any Trademarks exclusively licensed under any license, including
right to receive any damages, (ii) injury to the goodwill associated with any Trademark, or (iii) right to receive license fees, royalties,
and other compensation under any license with respect to Trademarks.
SECTION 3. Security
for Obligations. This Trademark Security Agreement and the Security Interest created hereby secures the payment and performance of
the Obligations, whether now existing or arising hereafter. Without limiting the generality of the foregoing, this Trademark Security
Agreement secures the payment of all amounts which constitute part of the Obligations and would be owed by the Grantor to the Secured
Party, whether or not they are unenforceable or not allowable due to the existence of an insolvency proceeding involving the Grantor.
SECTION 4. Security
Agreement. The Security Interest granted pursuant to this Trademark Security Agreement is granted in conjunction with the security
interests granted to the Secured Party pursuant to the Security Agreement. The Grantor hereby acknowledges and affirms that the rights
and remedies of the Secured Party with respect to the Security Interest in the Trademark Collateral made and granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.
To the extent there is any inconsistency between this Trademark Security Agreement and the Security Agreement, the Security Agreement
shall control.
SECTION 5. Authorization
to Supplement. If the Grantor shall obtain rights to any new Trademarks, the provisions of this Trademark Security Agreement shall
automatically apply thereto. The Grantor hereby authorizes the Secured Party unilaterally to modify this Trademark Security Agreement
by amending Schedule I to include any such new trademark rights of the Grantor. Notwithstanding the foregoing, no failure to so
modify this Trademark Security Agreement or amend Schedule I shall in any way affect, invalidate or detract from the Secured Party’s
continuing security interest in all Collateral (including the Trademark Collateral), whether or not listed on Schedule I.
SECTION 6. Counterparts.
This Trademark Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument,
and any party here to may execute this Trademark Security Agreement by signing and delivering one or more counterparts.
SECTION 7. Governing Law.
This Trademark Security Agreement and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based
upon, arising out of or relating to this Trademark Security Agreement and the transactions contemplated hereby shall be governed by, and
construed in accordance with, the law of the State of New York.
[signature pages follow]
IN WITNESS WHEREOF, each Grantor
has caused this Trademark Security Agreement to be executed and delivered by its duly authorized offer as of the date first set forth
above.
GRANTOR: |
PARTS iD, LLC |
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By: |
/s/ John Pendleton |
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Name: |
John Pendleton |
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Title: |
Executive Vice President, Legal & Corporate Affairs |
Accepted and Agreed:
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LIND GLOBAL FUND II LP, as Secured Party | |
By: Lind Global Partners II LLC, its general partner | |
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By: |
/s/ Jeff Easton |
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Name: |
Jeff Easton |
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Title: |
Managing Member |
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SCHEDULE I TO
TRADEMARK SECURITY AGREEMENT
TRADEMARK REGISTRATIONS AND TRADEMARK APPLICATIONS
Exhibit
10.9
Note
and Warrant Purchase Agreement
This
NOTE AND WARRANT PURCHASE AGREEMENT (this “Agreement”) is made as of the 13th day of July, 2023 (the “Effective
Date”) by and among PARTS iD, Inc., a Delaware corporation (the “Company”), and each of the purchasers listed
on Exhibit A attached hereto (collectively, the “Purchasers”, and individually, a “Purchaser”).
As used herein, the term “Requisite Purchasers” shall mean Purchasers holding more than fifty percent (50%) of the
aggregate outstanding principal amount of the Notes issued pursuant to this Agreement. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings given to them in the Notes (as defined below).
RECITALS
A. Subject
to the terms of this Agreement, the Purchasers desire to advance loans (the “Loans”) to the Company and the Company
desires to borrow from the Purchasers up to an aggregate principal amount of Three Million Two Hundred Fifty Thousand Dollars ($3,250,000.00),
evidenced by one or more junior secured convertible promissory notes, the form of which is attached hereto as Exhibit B (the “Notes”).
The Notes may be converted into shares of the Company’s capital stock as provided for in the Notes.
B. In
consideration for the Loans, the Company believes it is in the best interest to issue warrants to the Purchasers in the form attached
hereto as Exhibit C (the “Warrants”) to purchase up to an aggregate amount of 7,738,094 shares of the Company’s
Class A common stock, par value $0.0001 per share (the “Common Stock”), subject to the terms and conditions set forth
in the Warrants.
The
parties hereby agree as follows:
1. Amount
and Terms of the Notes and Warrants.
1.1 The
Notes. At the Closing (as defined below), with respect to each Purchaser, (i) the Purchaser will deliver to the Company wire transfer
funds in the amount of the sum of such Purchaser’s applicable Loan Amount; and (ii) the Company shall issue and deliver to the
Purchaser a Note in favor of the Purchaser in the principal amount of such Purchaser’s applicable Loan Amount and a Warrant to
purchase up to the Purchaser’s applicable shares of Common Stock as set forth on Exhibit A attached hereto.
1.2 The
Warrants. In consideration for the purchase by the Purchasers of the Notes, the Company will issue to each Purchaser a Warrant to
purchase up to such Purchaser’s applicable shares of Common Stock, subject to the terms and conditions set forth in the Warrants.
2. Closing.
2.1 The
closing of the purchase and sale of the Notes and the Warrants (the “Closing”) shall be held on the Effective Date
or at such other time as the Company and the Purchaser have mutually agreed upon (the “Closing Date”).
3. Representations,
Warranties and Covenants of the Company.
The
Company hereby represents and warrants to each Purchaser that the following representations and warranties are true and complete as of
the Effective Date and the Closing Date, except as otherwise indicated:
3.1 Organization;
Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to carry on its business as presently conducted and as proposed
to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure
to so qualify would have a material adverse effect on the business, assets (including intangible assets), liabilities, financial condition,
property or results of operations of the Company.
3.2 Capitalization.
(a) As
of June 30, 2023, the authorized capital of the Company consists of:
(i) 110,000,000
shares of common stock, $0.0001 par value per share, including 100,000,000 shares of Class A common stock and 10,000,000 shares of Class
F common stock, with 34,825,971 shares of Class A common stock and no shares of Class F common stock issued and outstanding immediately
prior to the Effective Date. All of the outstanding shares of common stock have been duly authorized, are fully paid and nonassessable
and were issued in compliance with all applicable federal and state securities laws. The Company holds no common stock in its treasury;
and
(ii) 1,000,000
shares of preferred stock, $0.0001 par value per share, none of which are outstanding immediately prior to the Effective Date.
(b) As
of immediately prior to the Effective Date, the Company has reserved:
(i) 3,212,078
shares of Common Stock for future issuance to officers, directors, employees, consultants and advisors of the Company pursuant to its
2020 Equity Incentive Plan duly adopted by the board of directors (the “Board of Directors”) and approved by the Company’s
stockholders, of which 2,580,445 shares of Common Stock are subject to outstanding equity awards; and
(ii) 2,043,582
shares of Common Stock for future issuance to officers and employees of the Company pursuant to its 2020 Employee Stock Purchase Plan
duly adopted by the Board of Directors and approved by the Company’s stockholders.
3.3 Subsidiaries.
Except as set forth on Schedule 3.3 attached hereto, the Company does not currently own or control, directly or indirectly, any
interest in any other corporation, partnership, trust, joint venture, limited liability company, association, or other business entity.
The Company is not a participant in any joint venture, partnership or similar arrangement.
3.4 Corporate
Power. The Company has all requisite corporate power to execute and deliver this Agreement, the Note, the Warrant and any other document
provided for herein or by any of the foregoing (collectively, as the same may from to time be amended, modified, supplemented or restated,
the “Loan Documents”) and to carry out and perform its obligations under the terms of the Loan Documents.
3.5 Authorization.
All corporate action on the part of the Company, its directors and its stockholders necessary for the authorization, execution, delivery
and performance of the Loan Documents by the Company and the performance of the Company’s obligations thereunder, including the
authorization for the issuance and delivery of the Notes, the reservation of the equity securities issuable upon conversion of the Notes
(the “Conversion Shares”) and the reservation of the equity securities issuable upon exercise of the Warrants, if
any, (the “Shares”), has been taken or will be taken prior to the issuance of such equity securities. The Loan Documents,
when executed and delivered by the Company, shall constitute valid and binding obligations of the Company enforceable in accordance with
their terms, subject to laws of general application relating to equitable principles, bankruptcy, insolvency, the relief of debtors and,
with respect to rights to indemnity, subject to federal and state securities laws. The Shares, when issued in compliance with the provisions
of this Agreement and the Warrants, will be validly issued, fully paid and nonassessable and free of any liens or encumbrances. The issuance
of the Notes (and the underlying securities) pursuant to the provisions of this Agreement will not give rise to any preemptive rights
or rights of first refusal granted by the Company, and the Notes (and the underlying securities) will be issued in compliance with all
applicable federal and state securities laws, and will be free of any liens or encumbrances, other than any liens or encumbrances created
by or imposed upon the holders through no action of the Company; provided, however, that the Notes may be subject to restrictions on
transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time the transfer
is proposed.
3.6 Offering.
Assuming the accuracy of the representations and warranties of the Purchasers contained in Section 4 hereof, the offer, issue,
and sale of the Notes is and will be exempt from the registration and prospectus delivery requirements of the Securities Act of 1933,
as amended (the “Securities Act”), and have been registered or qualified (or are exempt from registration and qualification)
under the registration, permit, or qualification requirements of all applicable state securities laws.
3.7 Compliance
with Other Instruments. Neither the authorization, execution and delivery of this Agreement, nor the issuance and delivery of the
Note will constitute or result in a default or violation of (a) any law or regulation applicable to the Company, (b) any term or provision
of the Company’s certificate of incorporation or bylaws, as each may be amended and/or restated from time to time, or (c) any provision
of any mortgage, indenture or contract to which it is a party and by which it is bound or of any judgment, decree, order or writ, other
than, with respect to clauses (a) and (c), such violations that would not individually or in the aggregate have a material adverse effect
on the Company. The execution, delivery and performance of the Loan Documents, and the consummation of the transactions contemplated
by the Loan Documents, will not result in any such violation or be in conflict with, or constitute, with or without the passage of time
and giving of notice, either a default under any such provision, instrument, judgment, decree, order or writ or an event that results
in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture,
or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations or any
of its assets or properties.
3.8 Governmental
Consents. All consents, approvals, orders, or authorizations of, or registrations, qualifications, designations, declarations, or
filings with, any governmental authority, required on the part of the Company in connection with the valid execution and delivery of
this Agreement, the offer, sale or issuance of the Notes, the Shares and the Conversion Shares or the consummation of any other transaction
contemplated hereby shall have been obtained and will be effective at such time as required by such governmental authority, except for
filings pursuant to applicable state and federal securities laws, which have been made or will be made in a timely manner.
3.9 Compliance
with Laws. The operations of the Company have been conducted in material compliance with all applicable laws, including, without
limitation, all applicable laws promulgated by any governmental authority of competent jurisdiction. The Company has not received written
notice of any violation (or of any investigation, inspection, audit, or other proceeding by any governmental authority involving allegations
of any material violation) of any applicable law, and to the knowledge of the Company, no investigation, inspection, audit, or other
proceeding by any governmental authority involving allegations of any violation of any applicable law has been threatened.
3.10 Litigation.
Except as set forth on Schedule 3.10, (A) there is no claim, action, suit, proceeding, arbitration, complaint, charge or investigation
pending or to the Company’s knowledge, currently threatened (i) against the Company or any officer or director of the Company,
or (ii) to the Company’s knowledge, that questions the validity of this Agreement, the Notes, the Warrants or the Loan Documents
or the right of the Company to enter into them, or to consummate the transactions contemplated by this Agreement, the Notes, the Warrants
or the Loan Documents, or (iii) to the Company’s knowledge, that would reasonably be expected to have, either individually or in
the aggregate, a material adverse effect on the Company; (B) neither the Company nor, to the Company’s knowledge, any of its officers
or directors is a party or is named as subject to the provisions of any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality (in the case of officers or directors, such as would affect the Company); and (C) there is no action, suit,
proceeding or investigation by the Company pending or which the Company intends to initiate. The foregoing includes, without limitation,
actions, suits, proceedings or investigations pending or threatened in writing (or any basis therefor known to the Company) involving
the prior employment of any of the Company’s employees, their services provided in connection with the Company’s business,
any information or techniques allegedly proprietary to any of their former employers or their obligations under any agreements with prior
employers.
3.11 Intellectual
Property. Except as set forth on Schedule 3.11, (i) the Company (A) solely and exclusively owns, free and clear of all liens
or encumbrances, all right, title and interest in and to any and all trademarks, service marks, domain names, inventions, know how, patents,
copyrights, works of authorship, trade secrets, confidential information, software, and other intellectual property (collectively, “Intellectual
Property”) that the Company purports to own (collectively, “Owned IP”) and (A) owns or has a valid license
to use, sell, or license, as the case may be, all other Intellectual Property and information technology rights, systems, and assets
(collectively, “IT Systems”) used in or necessary to conduct its business as currently conducted and proposed to be
conducted and none of the foregoing will be adversely impacted by the execution or delivery of this Agreement or the consummation of
the transactions contemplated hereby; (ii) the Company and the conduct of the Company’s business (including its products and services)
did not and do not infringe, misappropriate, or otherwise violate the Intellectual Property rights of any third party nor constitute
unfair competition or trade practices and the Company has not received any written notices (including offers to license) and there are
no claims, actions or proceedings pending (or to the knowledge of the Company, threatened), in each case, alleging any of the foregoing
or contesting the ownership, use, validity, or enforceability of any Owned IP; (iv) to the knowledge of the Company, no third party has
infringed, misappropriated or otherwise violated any Owned IP; (v) the Company takes reasonable steps to maintain, police and protect
all Owned IP and the confidentiality of all of its IT Systems and its confidential information and trade secrets, all of which have been
maintained in confidence and have not been disclosed other than pursuant to written non-disclosure and confidentiality agreements; and
(iv) all source code for any proprietary Company software is in the Company’s sole possession and maintained as strictly confidential.
3.12 Compliance
with Rules of Trading Market.
(a) Exchange
Cap. Subject to Section 3.12(b) below and the applicable rules of the NYSE American (the “Principal Trading Market”),
the Company shall not issue any Shares or Conversion Shares to the Purchaser if, to the extent that after giving effect thereto, the
aggregate number of shares of Common Stock that would be issued pursuant to this Agreement and the transactions contemplated hereby would
exceed 6,961,711 (such number of shares equal to 19.99% of the number of shares of Common Stock issued and outstanding immediately prior
to the date of this Agreement), which number of shares shall be reduced, on a share-for-share basis, by the number of shares of Common
Stock issued or issuable pursuant to any transaction or series of transactions that may be aggregated with the transactions contemplated
by this Agreement under applicable rules of the Principal Trading Market (such maximum number of shares, the “Exchange Cap”
and such limitation on the Company’s issuance of shares to the Purchaser, the “Exchange Cap Limitation”).
(b) Shareholder
Approval. In the event the Company is prohibited from issuing any shares of Common Stock pursuant to Section 3.12(a) above (an “Exchange
Cap Share Failure”), then the Company shall, as soon as practicable after the date of occurrence of such Exchange Cap Share
Failure, but in no event later than ninety (90) days thereafter, the Company shall hold a meeting of its stockholders to seek the Shareholder
Approval. In connection with such meeting and any subsequent stockholder meetings, the Company shall provide each stockholder with a
proxy statement in compliance with applicable Securities and Exchange Commission (the “SEC”) rules and regulations and shall
use commercially reasonable efforts to solicit the approval of its stockholders of the Shareholder Approval and to cause its Board of
Directors to recommend to the stockholders that they approve such proposal. If, despite the Company’s efforts, the Shareholder
Approval is not obtained at the first stockholder meeting, the Company shall cause an additional stockholder meeting to be held semi-annually
thereafter to seek Shareholder Approval until the earlier of (i) the date such Shareholder Approval is obtained and (ii) the date on
which none of the Notes are outstanding. For the avoidance of doubt, if the Company is required to and fails to obtain Shareholder Approval,
the Exchange Cap shall be applicable for all purposes of this Agreement and the transactions contemplated hereby at all times during
the term of this Agreement. For purposes of this Agreement, “Shareholder Approval” means such approval as may be required
by the applicable rules and regulations of the Principal Trading Market (or any successor entity) from the shareholders of the Company
with respect to the transactions contemplated by the Loan Documents, including (a) the issuance of all of the Conversion Shares or Shares
in excess of 19.99% of the issued and outstanding Common Stock on the Closing Date and (b) any subsequent issuance(s) of the Shares of
Conversion Shares in excess of 19.99% of the issued and outstanding Common Stock as a consequence of any corporate action including the
implementation of a reverse stock split.
(c) The
Company shall not issue any Conversion Shares pursuant to this Agreement and the transactions contemplated hereby if such issuance would
reasonably be expected to result in (A) violation of the Securities Act or (B) breach of the rules of the Principal Trading Market. The
provisions of this Section 3.12 shall be implemented in a manner otherwise than in strict conformity with the terms of this Section 3.12
only if necessary to ensure compliance with the Securities Act and the applicable rules of the Trading Market. The limitations contained
in this Section 3.12 may not be waived by the Company or the Purchaser.
4. Representations
and Warranties of the Purchasers.
Each
Purchaser hereby represents and warrants to, and agrees with, the Company, severally and not jointly, that the following is true and
complete as of the Effective Date and the Closing Date:
4.1 Purchase
for Own Account. Each Purchaser understands that the Notes, the Warrants, the Conversion Shares and the Shares (collectively, the
“Securities”), have not been registered under the Securities Act on the basis that no distribution or public offering
of the stock of the Company is to be effected. Each Purchaser realizes that the basis for the exemption may not be present if, notwithstanding
its representations, each Purchaser has a present intention of acquiring the Securities for a fixed or determinable period in the future,
selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the Securities. Each
Purchaser represents that it is acquiring the Securities solely for its own account and beneficial interest for investment and not for
sale or with a view to distribution of the Securities or any part thereof, has no present intention of selling (in connection with a
distribution or otherwise), granting any participation in, or otherwise distributing the same, and does not presently have reason to
anticipate a change in such intention.
4.2 Information
and Sophistication. Without lessening or obviating the representations and warranties of the Company set forth in Section 3,
each Purchaser hereby: (i) acknowledges that it has received all the information it has requested from the Company and it considers necessary
or appropriate for deciding whether to acquire the Securities, (ii) represents that it has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the offering of the Securities and to obtain any additional information
necessary to verify the accuracy of the information given to each Purchaser and (iii) further represents that it has such knowledge and
experience in financial and business matters that it is capable of evaluating the merits and risk of this investment.
4.3 Ability
to Bear Economic Risk. Each Purchaser acknowledges that investment in the Securities involves a high degree of risk, and represents
that it is able, without materially impairing its financial condition, to hold the Securities for an indefinite period of time and to
suffer a complete loss of its investment.
4.4 Rule
144. Each Purchaser is aware that none of the Securities may be sold pursuant to Rule 144 adopted under the Securities Act unless
certain conditions are met, including, among other things, the existence of a public market for the shares, the availability of certain
current public information about the Company, the resale following the required holding period under Rule 144 and the number of shares
being sold during any three month period not exceeding specified limitations. The Purchaser is aware that the conditions for resale set
forth in Rule 144 have not been satisfied as of the Effective Date.
4.5 Accredited
Investor Status. Each Purchaser is an “Accredited Investor” as such term is defined in Rule 501 under the Securities
Act.
4.6 Further
Limitations on Disposition. Without in any way limiting the representations set forth above, each Purchaser further agrees not to
make any disposition of all or any portion of the Securities unless and until:
(a) There
is then in effect a Registration Statement under the Securities Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(b) Such
Purchaser shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement
of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, such Purchaser shall have furnished
the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration under
the Securities Act or any applicable state securities laws.
(c) Notwithstanding
the provisions of paragraphs (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a
transfer by a Purchaser to (i) any shareholder, partner, retired partner, member or former member of such Purchaser for no additional
consideration, (ii) any affiliate, including affiliated funds, for no additional consideration or (iii) transfers by gift, will or intestate
succession to any spouse or lineal descendants or ancestors, if all transferees agree in writing to be subject to the terms hereof to
the same extent as if they were the Purchaser hereunder.
5. Events
of Default; Remedies.
5.1 Events
of Default. Each of the following shall constitute an event of default (each, an “Event of Default”) under this
Agreement and the other Loan Documents:
(a) The
Company shall fail to pay (i) when due any principal or interest payment on the due date hereunder or (ii) any other payment
required under the terms of the Notes or any other Loan Documents on the date due and such payment shall not have been made within five
(5) days of the Company’s receipt of a Purchaser’s written notice to the Company of such failure to pay;
(b) Any
representation or warranty made by the Company in any of the Loan Documents shall prove, when given, to be false or misleading in any
material respect;
(c) The
Company shall fail to observe or perform any other covenant, obligation, condition or agreement contained in the Loan Documents (other
than those specified in Section 5.1(a)) and (i) such failure shall continue for 15 days, or (ii) if such failure
is not curable within such 15-day period, but is reasonably capable of cure within 30 days, either (A) such failure shall continue
for 30 days or (B) the Company shall not have commenced a cure in a manner reasonably satisfactory to the applicable Purchaser within
the initial 15-day period;
(d) The
Company files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for
the relief of, or relating to, debtors, now or hereafter in effect, or makes any general assignment for the benefit of creditors or takes
any corporate action in furtherance of any of the foregoing;
(e) An
involuntary petition is filed against the Company (unless such petition is dismissed or discharged within thirty (30) days) under any
bankruptcy statute now or hereafter in effect, or a custodian, receiver, trustee, assignee for the benefit of creditors (or other similar
official) is appointed to take possession, custody or control of any property of the Company; or
(f) The
Company’s stockholders or Board of Directors affirmatively vote to liquidate, dissolve, or wind up the Company or the Company otherwise
ceases to carry on its ongoing business operations.
5.2 Remedies.
Upon the occurrence of any Event of Default and while it is continuing, all unpaid principal on the Notes, accrued and unpaid interest
thereon and all other amounts owing under any of the Loan Documents shall, at the option of the applicable Purchaser, and, upon the occurrence
of any Event of Default pursuant to Section 5.1(d), (e) or (f) above, automatically, be immediately due, payable and collectible
by the applicable Purchaser pursuant to applicable law. In the event of any Event of Default, the Company shall pay all reasonable attorneys’
fees and costs incurred by such Purchaser in enforcing its rights under the Notes and the other Loan Documents and collecting any amounts
due and payable under the Notes. No right or remedy conferred upon or reserved to the Purchasers under this Agreement is intended to
be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to every other right and remedy
given hereunder or now and hereafter existing under applicable law.
6. Conditions
to Closing.
6.1 Conditions
to Purchasers’ Obligations at the Closing. The obligations of each Purchaser under the Loan Documents are subject to the fulfillment
on or before each Closing of each of the following conditions, which may be waived in writing by the Requisite Purchasers:
(a) Representations
and Warranties. The representations and warranties of the Company contained in Section 3 shall be true in all material respects
on and as of each Closing with the same effect as though such representations and warranties had been made on and as of the date of such
Closing.
(b) Performance.
The Company shall have performed and complied in all material respects with all agreements, obligations, and conditions contained in
the Loan Documents that are required to be performed or complied with by it on or before each Closing.
(c) Qualifications.
All authorizations, approvals, or permits, if any, of any governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the Note, the Warrant, the Conversion Shares and the Shares shall
be duly obtained and effective as of each Closing.
(d) Proceedings
and Documents. All corporate and other proceedings in connection with the transactions contemplated at each Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the Purchaser’s counsel, which shall have received all
such counterpart original and certified copies of such documents as it may reasonably request.
(e) Loan
Documents. The Company shall have duly executed and delivered to the Purchasers the following documents:
(i) This
Agreement; and
(ii) Each
Note and Warrant issued hereunder.
6.2 Conditions
to Obligations of the Company. The obligations of the Company under the Loan Documents are subject to the fulfillment on or before
each Closing of each of the following conditions, which may be waived in writing by the Company:
(a) Representations
and Warranties. The representations and warranties made by the Purchasers in Section 4 shall be true on and as of each
Closing with the same effect as though such representations and warranties had been made on and as of the date of such Closing.
(b) Qualifications.
All authorizations, approvals, or permits, if any, of any governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the Notes, the Warrants, the Conversion Shares and the Shares shall
be duly obtained and effective as of each Closing.
(c) Purchase
Price. Each Purchaser shall have delivered to the Company their respective Loan Amount (as set forth on Exhibit A attached
hereto) in respect of the Notes and the Warrants.
7. Registration
Rights.
7.1 Registration
Statement. Promptly, but in any event no later than fifteen (15) days from the date of this Agreement, the Company shall prepare
and file with the SEC a Registration Statement covering the resale of all the shares of Common Stock issuable upon (i) the full or any
partial conversion of the Notes and (ii) the exercise of the Warrants ((i) and (ii) collectively, the “Registrable Shares”).
The foregoing Registration Statement shall be filed on Form S-3, or if Form S-3 is not available to the Company, Form S-1 or any successor
forms thereto. The Registration Statement (and each amendment or supplement thereto, and each request for acceleration of effectiveness
thereof) shall be provided to the Purchasers and their counsel at least three (3) Business Days prior to its filing or other submission
and the Company shall incorporate all reasonable comments provided by the Purchasers or their counsel.
7.2 Expenses.
Except as otherwise expressly provided herein, the Company will pay all fees and expenses incident to the performance of or compliance
with this Section 7, including all fees and expenses associated with effecting the registration of the Registrable Shares, including
all filing and printing fees, the Company’s counsel and accounting fees and expenses, costs associated with clearing the Registrable
Shares for sale under applicable state securities laws, listing fees, fees and expenses of one counsel to the Purchasers and the Purchasers’
reasonable expenses in connection with the registration, but excluding discounts, commissions, fees of underwriters, selling brokers,
dealer managers or similar securities industry professionals with respect to the Registrable Shares being sold.
7.3 Effectiveness.
The Company shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable
after filing thereof but in no event later than the date that is ninety (90) days following the Closing Date. The Company shall notify
the Purchasers by e-mail as promptly as practicable, and in any event, within twenty-four (24) hours, after the Registration Statement
is declared effective and shall simultaneously provide the Purchasers with copies of any related prospectus to be used in connection
with the sale or other disposition of the securities covered thereby.
7.4 Company
Obligations. The Company will use its efforts to effect the registration of the Registrable Shares in accordance with the terms hereof,
and pursuant thereto the Company will, as expeditiously as possible:
(a) use
its commercially reasonable efforts to cause the Registration Statement to become effective and to remain continuously effective for
a period that will terminate upon the first date on which all Registrable Shares are either covered by the Registration Statement or
may be sold without restriction, including volume or manner-of-sale restrictions, pursuant to Rule 144 or have been sold by the Purchasers
(the “Effectiveness Period”) and advise the Purchasers in writing when the Effectiveness Period has expired;
(b) prepare
and file with the SEC such amendments and post-effective amendments and supplements to the Registration Statement and any prospectus
as may be necessary to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions of the
Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with respect to the distribution
of all of the Registrable Shares covered thereby;
(c) provide
copies to and permit counsel designated by the Purchasers to review all amendments and supplements to the Registration Statement no fewer
than three (3) Business Days prior to its filing with the SEC and not file any document to which such counsel reasonably objects;
(d) furnish
to the Purchasers and their legal counsel, without charge, (i) promptly after the same is prepared and publicly distributed, filed with
the SEC, or received by the Company (but not later than two (2) Business Days after the filing date, receipt date or sending date, as
the case may be) one copy of the Registration Statement and any amendment thereto, each preliminary prospectus and prospectus and each
amendment or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the staff of the SEC, and each
item of correspondence from the SEC or the staff of the SEC, in each case relating to the Registration Statement (other than any portion
of any thereof which contains information for which the Company has sought confidential treatment), and (ii) such number of copies of
a prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as the Purchasers
may reasonably request in order to facilitate the disposition of the Registrable Shares that are covered by the related Registration
Statement;
(e) immediately
notify the Purchasers of any request by the SEC for the amending or supplementing of the Registration Statement or Prospectus or for
additional information;
(f) use
its commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii) if such
order is issued, obtain the withdrawal of any such order at the earliest possible moment and notify the Company of the issuance of any
such order and the resolution thereof, or its receipt of notice of the initiation or threat of any proceeding for such purpose;
(g) prior
to any public offering of Registrable Shares, use its commercially reasonable efforts to register or qualify or cooperate with the Purchasers
and its counsel in connection with the registration or qualification of such Registrable Shares for offer and sale under the securities
or blue sky laws of such jurisdictions requested by the Purchasers and do any and all other commercially reasonable acts or things necessary
or advisable to enable the distribution in such jurisdictions of the Purchasers covered by the Registration Statement and the Company
shall promptly notify the Purchasers of any notification with respect to the suspension of the registration or qualification of any of
such Registrable Shares for sale under the securities or blue sky laws of such jurisdictions or its receipt of notice of the initiation
or threat of any proceeding for such purpose;
(h) immediately
notify the Purchasers, at any time prior to the end of the Effectiveness Period, upon discovery that, or upon the happening of any event
as a result of which, the Registration Statement or Prospectus includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of the prospectus,
in light of the circumstances in which they were made), and promptly prepare, file with the SEC and furnish to such holder a supplement
to or an amendment of such Registration Statement or prospectus as may be necessary so that such Registration Statement or prospectus
shall not include 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 not misleading (in the case of such prospectus, in light of the circumstances in which they were made);
(i) otherwise
use its commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the Securities Act and the
Exchange Act;
(j) hold
in confidence and not make any disclosure of information concerning the Purchasers provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to complete
the Registration Statement or to avoid or correct a misstatement or omission in the Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction,
or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any
other agreement, and upon learning that disclosure of such information concerning the Purchasers is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt written notice to the Purchaser and allow the Purchasers, at the Purchasers’
expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information; and
(k) take
all other reasonable actions necessary to expedite and facilitate disposition by the Purchasers of all Registrable Shares pursuant to
the Registration Statement.
8. Miscellaneous.
8.1 Binding
Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors
and assigns of the parties. Nothing in this Agreement, expressed or implied, is intended to confer upon any third party any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
8.2 Governing
Law. The terms of this Agreement shall be construed in accordance with the laws of the State of Delaware, as applied to contracts
entered into by Delaware residents within the State of Delaware, and to be performed entirely within the State of Delaware.
8.3 Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
8.4 Titles
and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing
or interpreting this Agreement.
8.5 Notices.
All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) five (5) days after having been sent by registered or certified mail, return receipt requested, postage
prepaid, (c) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification
of receipt or (d) when transmitted by facsimile or electronic mail and receipt is acknowledged during normal business hours, and if not,
the next business day after transmission.
8.6 Amendment;
Modification; Waiver. No amendment, modification or waiver of any provision of this Agreement or consent to departure therefrom shall
be effective unless in writing and approved by the Company and the Requisite Purchasers. Any amendment or waiver effected in accordance
with this Section 8.6 shall be binding upon each Purchaser and/or holder of any Notes at the time outstanding, each future holder of
such securities, and the Company.
8.7 Severability.
If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
8.8 Entire
Agreement. This Agreement, the Exhibits hereto, and the Loan Documents constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and no party shall be liable or bound to any other party in any manner by any
representations, warranties, covenants and agreements except as specifically set forth herein and therein.
8.9 Finder’s
Fee. The Purchasers shall not be obligated for any finder’s fee in connection with this transaction.
8.10 Expenses.
The Company and the Purchasers shall pay their own costs and expenses incurred with respect to the negotiation, execution, delivery and
performance of this Agreement.
[SIGNATURE
PAGE TO FOLLOW]
IN
WITNESS WHEREOF, the parties hereto have executed this Note and Warrant Purchase Agreement as of the day and year first written above.
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COMPANY: |
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PARTS ID, INC. |
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By: |
/s/ John Pendleton |
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Name: |
John Pendleton |
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Title: |
Executive Vice President,
Legal & Corporate Affairs |
PURCHASERS: |
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2642186 ONTARIO INC. |
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By: |
/s/ Matthew Kurtin |
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Name: |
Matthew Kurtin |
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Title: |
Authorized Signatory |
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LEV PEKER |
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By: |
/s/ Lev Peker |
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Name: |
Lev Peker |
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EDWIN J. RIGAUD |
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By: |
/s/ Edwin J. Rigaud |
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Name: |
Edwin J. Rigaud |
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SCHEDULE
3.3
PARTS
iD, LLC, a Delaware limited liability company
SCHEDULE
3.10
The
information described under the heading “Legal Matters” in Note 7 to the Company’s Consolidated Financial Statements
included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on April 17
2023, is incorporated herein by reference.
SCHEDULE
3.11
Pursuant
to the terms of that certain (i) the Security Agreement, by and among the Company and Lind Global Fund II LP (“Secured Party”),
(ii) the Security Agreement, by and between PARTS iD, LLC and the Secured Party, (iii) the Pledge Agreement, by and between the Company
and the Secured Party and (iv) the Trademark Security Agreement, by and between PARTS iD, LLC and the Secured Party, the Company has
granted a senior security interest in all of Company’s right, title, and interest in, to and under all of Company’s property
(inclusive of intellectual property), subject to certain exceptions as set forth in such agreements.
The
junior secured convertible promissory notes (the “March 2023 Notes”) issued by the Company to certain investors on March
6, 2023 are secured by a junior security interest in all of the Company’s right, title, and interest in and to all of the Company’s
assets, subject to the subordination provisions contained in the March 2023 Notes.
EXHIBIT
A
SCHEDULE
OF PURCHASERS
NAME | |
LOAN AMOUNT | | |
NUMBER OF WARRANTS TO PURCHASE SHARES OF COMMON STOCK | |
2642186 Ontario Inc. | |
$ | 1,000,000 | | |
| 2,380,952 | |
Lev Peker | |
$ | 2,000,000 | | |
| 4,761,904 | |
Edwin J. Rigaud | |
$ | 250,000 | | |
| 595,238 | |
Total | |
$ | 3,250,000 | | |
| 7,738,094 | |
EXHIBIT
B
FORM
OF JUNIOR SECURED
CONVERTIBLE
PROMISSORY NOTE
EXHIBIT
C
FORM
OF WARRANT
Exhibit 10.10
NEITHER THIS CONVERTIBLE PROMISSORY NOTE, NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE. NO SALE OR
DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER THE ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
AN APPLICABLE EXEMPTION THEREFROM.
JUNIOR SECURED CONVERTIBLE PROMISSORY NOTE
For value received, PARTS
iD, Inc., a Delaware corporation (“Company”), hereby promises to pay to the order of [__] (“Purchaser”),
the principal sum of [__] Dollars ($[__]). This junior secured convertible promissory note (this “Note”) shall not
bear interest. All payments on this Note shall be made by wire transfer of immediately available funds or as otherwise determined by the
Company to such account as the Purchaser may from time to time designate by written notice in accordance with the provisions of this Note.
1.
Payment; Maturity.
1.1 This Note is one in a
series of similar junior secured convertible promissory notes (collectively, the “Notes”) issued pursuant to the terms
of that certain Note and Warrant Purchase Agreement, dated as of July 13, 2023, by and among the Company and the persons and entities
listed on the Schedule of Purchasers attached thereto as Exhibit A, as the same may be amended from time to time (the “Purchase
Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them
in the Purchase Agreement or other Loan Documents (as defined in the Purchase Agreement).
1.2 All payments of interest
and principal in cash shall be in lawful money of the United States of America. If any payments on this Note become due on a Saturday,
Sunday or a public holiday under the laws of the State of Delaware, such payment shall be made on the next succeeding business day and
such extension of time shall be included in computing interest in connection with such payment. Upon an Event of Default, the outstanding
principal of this Note shall be payable in accordance with Section 10 below. If not otherwise converted or redeemed earlier in
accordance with the terms of Section 2 or 3 below or repaid in full, the outstanding principal of this Note (the “Note
Amount”) shall become fully due and payable upon July 13, 2024 (such date, the “Maturity Date”).
2.
Optional Conversion Upon Maturity Date. Effective on the Maturity Date, if the Note Amount has not otherwise been repaid
by the Company in accordance with the terms and conditions set forth herein, then at the option of the Purchaser, the Note Amount shall
convert into that number of fully paid and nonassessable shares of the Company’s Class A common stock, par value $0.0001 per share
(the “Common Stock”), at a conversion price equal to the Note Amount divided by the Conversion Price (as defined herein).
For purposes of this Section 2, “Conversion Price” shall mean, for a share of the Company’s Common Stock on the
Maturity Date, the closing bid price on the NYSE American or applicable trading market as reported by a reliable reporting service (“Reporting
Service”) designated by the Company (i.e. Bloomberg) or, if the NYSE American is not the principal trading market for the Company’s
Common Stock, the closing bid price of such Common Stock on the principal securities exchange or trading market where such Common Stock
is listed or traded or, if no closing bid price of such Common Stock is available in any of the foregoing manners, the average of the
closing bid prices of any market makers for such Common Stock that are listed in the “pink sheets”. If the Conversion Price
cannot be calculated for the Company’s Common Stock on the Maturity Date in the manner provided above, the Conversion Price shall
be the fair market value of a share of the Company’s Common Stock as determined by the Company’s board of directors.
3.
Repayment Upon Equity Financing. If, within 180 days of the date of this Note, the Company consummates an Equity Financing
(as defined below), then the Company shall pay to the Purchaser an amount, payable in cash, equal to the Note Amount at the first closing
of the Equity Financing. For purposes of this Note, an “Equity Financing” shall mean the issuance and sale of equity
securities or equity-linked securities (including, for the avoidance of doubt, any shares of the Company’s common stock, preferred
stock or any securities convertible into common stock or preferred stock, in a registered underwritten offering or private placement)
to investors (whether in one transaction or series of related transactions) after the date hereof resulting in aggregate gross proceeds
to the Company of at least Ten Million Dollars ($10,000,000), paid in cash and excluding conversion of (A) the Notes, including accrued
but unpaid interest thereon, and (B) any other indebtedness of the Company, convertible promissory notes or similar instruments.
4.
Repayment Upon Change of Control. In the event the Company enters into a transaction that results in a Change of Control
(as defined below) of the Company (a “Company Sale”), prior to the repayment or conversion of this Note, then, notwithstanding
any provision in this Note to the contrary, in lieu of the then outstanding principal that would otherwise be payable at such time pursuant
to Section 1, the Company shall, prior to or otherwise in connection with the closing of such Company Sale, pay to the Purchaser
an amount, payable in cash, equal to the Note Amount at the closing of the Company Sale. “Change of Control” as used
above, means (i) a transaction or series of related transactions in which any person or group becomes the beneficial owner of more than
fifty percent (50%) of the outstanding voting securities entitled to elect the Company’s board of directors, (ii) any reorganization,
merger or consolidation of the Company, in which the outstanding voting security holders of the Company fail to retain at least a majority
of such voting securities following such transaction or (iii) a sale, lease or other disposition of all or substantially all of the assets
of the Company.
5.
Fraction Shares. No fractional shares of Company’s capital stock will be issued upon conversion or redemption of this
Note. In lieu of any fractional share to which Purchaser would otherwise be entitled, Company will pay to Purchaser in cash the amount
of the unconverted or unredeemed principal and interest balance of this Note that would otherwise be converted into such fractional share.
6.
Effect of Conversion. Upon conversion of this Note pursuant to Section 2, Purchaser shall surrender this Note, duly
endorsed, at the principal offices of Company. Before this Note shall be entitled to be converted pursuant to Section 2 above,
Purchaser shall execute and deliver to the Company a purchase agreement reasonably acceptable to the Company containing customary representations
and warranties and transfer restrictions reasonably acceptable to the Company. At its expense, Company will, as soon as practicable thereafter,
issue and deliver to Purchaser, at Purchaser’s address set forth in the Purchase Agreement or such other address requested by Purchaser,
a certificate or certificates for the number of shares to which Purchaser is entitled upon such conversion (bearing such legends as are
required by the Purchase Agreement, any other agreement entered into in connection with the any such conversion or applicable state and
federal securities laws), together with a replacement Note (if any principal amount is not converted) and any other securities and property
to which Purchaser is entitled upon such conversion under the terms of this Note, including a check payable to Purchaser for any cash
amounts payable as a result of any fractional shares as described herein.
7.
Compliance with Rules of Trading Market.
7.1 Exchange Cap. Notwithstanding
anything herein to the contrary, if the Company has not obtained Shareholder Approval, then the Company may not issue, upon conversion
of this Note, the payment of any Interest Shares, or the payment of any redemption in shares of common stock or otherwise, a number of
shares of common stock, which, when aggregated with any shares of common stock issued in connection with any other related transactions
that may be considered part of the same series of transactions, would exceed the Exchange Cap (as defined in the Purchase Agreement).
7.2 Shareholder Approval.
In the event the Company is prohibited from issuing any shares of common stock pursuant to Section 6.1 above (an “Exchange
Cap Share Failure” and such number of shares of common stock that is determined to be unavailable for issuance upon the conversion
or redemption of this Note, the “Exchange Cap Excess Shares”), then the Company shall, as soon as practicable after
the date of occurrence of such Exchange Cap Share Failure, but in no event later than one hundred and twenty (120) days thereafter, hold
a meeting of its stockholders to seek the Shareholder Approval. In connection with such meeting and any subsequent stockholder meetings,
the Company shall provide each stockholder with a proxy statement in compliance with applicable Securities and Exchange Commission (the
“SEC”) rules and regulations and shall use its best efforts to solicit the approval of its stockholders of the Shareholder
Approval and to cause its board of directors to recommend to the stockholders that they approve such proposal. If, despite the Company’s
best efforts, the Shareholder Approval is not obtained at the first stockholder meeting, the Company shall cause an additional stockholder
meeting to be held semi-annually thereafter to seek Shareholder Approval until the earlier of (i) the date such Shareholder Approval is
obtained and (ii) the date on which the Note is no longer outstanding. In the event the Company is prohibited from issuing shares of common
stock pursuant to the conversion this Note, the payment of any Interest Shares, the payment of any redemption in shares of common stock
or otherwise, due to the Exchange Cap, and the Company fails to obtain Shareholder Approval as required by this Section 6.2, then,
in exchange for the cancellation of such portion of this Note, interest or other amounts convertible into such Exchange Cap Excess Shares,
the Company shall pay cash to the Purchaser at a price equal to the product of (A) such number of Exchange Cap Excess Shares and (B) the
closing sale price of the Company’s common stock on such date. For the avoidance of doubt, if the Company is required to and fails
to obtain Shareholder Approval, the Exchange Cap shall be applicable for all purposes of this Note.
8.
Reservation of Authorized Shares.
8.1 Reservation. So
long as this Note remains outstanding, the Company shall at all times reserve a number of shares equal to at least the Exchange Cap (the
“Required Reserve Amount”).
8.2 Insufficient Authorized
Shares. If, notwithstanding Section 7.1 above, and not in limitation thereof, at any time while this Note remains outstanding
the Company does not have a sufficient number of authorized and unreserved shares of common stock to satisfy its obligation to reserve
for issuance upon conversion or redemption of this Note at least a number of shares of common stock equal to the Required Reserve Amount
(an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s
authorized shares of common stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Notes then
outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an
Authorized Share Failure, but in no event later than one hundred and twenty (120) days after the occurrence of such Authorized Share Failure,
the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock.
In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit
its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend
to the stockholders that they approve such proposal. In the event that the Company is prohibited from issuing shares of common stock pursuant
to the terms of this Note due to the failure by the Company to have sufficient shares of common stock available out of the authorized
but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the “Authorized Failure Shares”),
in lieu of delivering such Authorized Failure Shares to the Purchaser, the Company shall pay cash in exchange for the redemption of such
portion of the Note Amount convertible into such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such
number of Authorized Failure Shares and (y) the 10-day trailing VWAP of the closing sale price of the Company’s common stock immediately
prior to the date of such issuance and payment under this Section 7; and (ii) to the extent the Purchaser purchases (in an open
market transaction or otherwise) shares of common stock to deliver in satisfaction of a sale by the Purchaser of Authorized Failure Shares,
any brokerage commissions and other out-of-pocket expenses, if any, of the Purchaser incurred in connection therewith. Nothing contained
in this Section 7 shall limit any obligations of the Company under any provision of the Purchase Agreement.
9.
Security Interest. As security for the payment and performance of the obligations representing the indebtedness evidenced
by this Note, the Company hereby grants to Purchaser a continuing security interest in all of the Company’s right, title and interest
in and to all of the assets of the Company, excluding the proceeds from the Existing Commercial Tort Claim (as defined in that certain
Security Agreement, dated on or about the date hereof, by and between the Company and Lind Global Fund II LP). The security interest granted
to Purchaser hereunder (i) shall be junior and subordinate in accordance with the provisions of that certain Subordination Agreement,
dated on or about the date hereof, among Lind Global Fund II LP and the Purchasers; and (ii) secures payment and performance of all obligations
of the Company to the Purchaser under this Note, including all unpaid principal and all other amounts payable by the Company to the Purchaser
under this Note whether due or to become due, absolute or contingent, liquidated or unliquidated, determined or undetermined, including
any interest that accrues after the commencement of an Insolvency Proceeding. As used herein, “Insolvency Proceeding”
means any proceeding commenced, by the filing of a petition for relief, by or against any person under the United States Bankruptcy Code,
as amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors.
10.
Incorporation of Terms. The representations and warranties and rights and obligations of transfer and assignment of Purchaser
that are set forth in Section 4 of the Purchase Agreement are hereby made a part of this Note and incorporated herein by this reference.
11.
Default; Remedies. The occurrence of any Event of Default described in Section 5 of the Purchase Agreement shall
be an Event of Default hereunder and the remedies described in Section 5 of the Purchase Agreement shall be the remedies available
hereunder.
12.
No Impairment. Subject to the terms and conditions hereof, the obligation of the Company to pay to the Purchaser the principal
hereof and interest hereon as and when the same become due and payable shall remain unimpaired, and, subject to the terms and conditions
hereof, nothing shall prevent the holder of this Note, upon default hereunder, from exercising all rights, powers and remedies otherwise
provided herein or by applicable law.
13.
Waiver; Payment of Fees and Expenses. Company waives presentment and demand for payment, notice of dishonor, protest and
notice of protest of this Note, and shall pay all costs of collection when incurred, including, without limitation, reasonable attorneys’
fees, costs and other expenses. The right to plead any and all statutes of limitations as a defense to any demands hereunder is hereby
waived to the full extent permitted by law. No delay by Purchaser shall constitute a waiver, election or acquiescence by it.
14.
Cumulative Remedies. Purchaser’s rights and remedies under this Note and the other Loan Documents shall be cumulative.
Purchaser shall have all other rights and remedies not inconsistent herewith as provided under the Uniform Commercial Code, by law or
in equity. No exercise by Purchaser of one right or remedy shall be deemed an election, and no waiver by Purchaser of any Event of Default
shall be deemed a continuing waiver of such Event of Default or the waiver of any other Event of Default.
15.
Miscellaneous
15.1 Governing Law.
The terms of this Note shall be construed in accordance with the laws of the State of Delaware, as applied to contracts entered into by
Delaware residents within the State of Delaware, and to be performed entirely within the State of Delaware.
15.2 Successors and Assigns;
Assignment. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. The Company may not assign this Note or delegate any of its obligations hereunder without the written consent
of the Requisite Purchasers. Purchaser may not assign this Note and its rights hereunder without the prior written consent of Company.
15.3 Titles and Subtitles.
The titles and subtitles used in this Note are used for convenience only and are not to be considered in construing or interpreting the
Note.
15.4 Notices. All notices
required or permitted hereunder shall be in writing and shall be given in the manner and to the addresses set forth in the Purchase Agreement.
15.5 Amendment; Modification;
Waiver. No term of this Note may be amended, modified or waived without the written consent of the Company and Requisite Purchasers;
provided, however, that no such amendment, waiver or consent shall: (i) reduce the principal amount of this Note without
Purchaser’s written consent, or (ii) reduce the rate of interest of this Note without Purchaser’s written consent. Any amendment
or waiver effected in accordance with this Section 15.5 shall be binding upon the Company, all holders of the Notes, and each transferee
of the Notes. By acceptance hereof, Purchaser acknowledges that in the event the required consent is obtained, any term of this Note may
be amended or waived with or without the consent of Purchaser.
15.6 Usury. In the
event any interest is paid on this Note which is deemed to be in excess of the then legal maximum rate, then that portion of the interest
payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the
principal of this Note.
15.7 Counterparts; Electronic
Signature. This Note may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. This Note may be executed and delivered via facsimile, electronic mail (including pdf or
any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any
signature page so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
15.8 Lost Documents.
Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Note or any
note exchanged for it, and an indemnity agreement reasonably satisfactory to the Company (in case of loss, theft or destruction) or surrender
and cancellation of such note (in the case of mutilation), the Company, at its own expense, will make and deliver in lieu of such note
a new note of like tenor and unpaid principal amount and dated as of the date to which interest has been paid on the unpaid principal
amount of the note in lieu of which such new note is made and delivered.
15.9 Invalidity. If
any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision
is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. In such
an event, the parties will in good faith attempt to effect the business agreement represented by such invalidated term to the fullest
extent permitted by law.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties
hereto have executed this Junior Secured Convertible Promissory Note as of the day and year first written above.
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PARTS ID, INC. |
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AGREED TO AND ACCEPTED: |
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[PURCHASER] |
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Parts iD, Inc.
Junior Secured Convertible Promissory Note
- Signature Page -
Exhibit 10.11
NEITHER THIS CONVERTIBLE PROMISSORY NOTE, NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE. NO SALE OR
DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER THE ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
AN APPLICABLE EXEMPTION THEREFROM.
JUNIOR SECURED CONVERTIBLE PROMISSORY NOTE
For value received, PARTS
iD, Inc., a Delaware corporation (“Company”), hereby promises to pay to the order of 2642186 Ontario Inc. (“Purchaser”),
the principal sum of One Million Dollars ($1,000,000) with interest accruing on the outstanding principal amount of this junior secured
convertible promissory note (this “Note”) at the rate of seven and three-fourths percent (7.75%) per annum, compounded
semi-annually, computed on the actual number of days elapsed based on a 365-day year. Interest shall commence with the date hereof and
shall continue accruing on the outstanding principal until paid in full or otherwise converted pursuant to the terms herein. All payments
on this Note shall be made by wire transfer of immediately available funds or as otherwise determined by the Company to such account as
the Purchaser may from time to time designate by written notice in accordance with the provisions of this Note.
1. Payment;
Maturity.
1.1 This
Note is one in a series of similar junior secured convertible promissory notes (collectively, the “Notes”) issued pursuant
to the terms of that certain Note and Warrant Purchase Agreement, dated as of July 13, 2023, by and among the Company and the persons
and entities listed on the Schedule of Purchasers attached thereto as Exhibit A, as the same may be amended from time to time (the
“Purchase Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings
given to them in the Purchase Agreement or other Loan Documents (as defined in the Purchase Agreement).
1.2 All
payments of interest and principal in cash shall be in lawful money of the United States of America. All payments shall be applied first
to unpaid accrued interest, and thereafter to principal of this Note. If any payments on this Note become due on a Saturday, Sunday or
a public holiday under the laws of the State of Delaware, such payment shall be made on the next succeeding business day and such extension
of time shall be included in computing interest in connection with such payment. Upon an Event of Default, all amounts of outstanding
principal and accrued but unpaid interest of this Note shall be payable in accordance with Section 10 below. If not otherwise converted
or redeemed earlier in accordance with the terms of Section 2 or 3 below or repaid in full, the outstanding principal and
the accrued but unpaid interest of this Note (the “Note Amount”) shall become fully due and payable upon July 13, 2024
(such date, the “Maturity Date”).
2. Optional
Conversion Upon Maturity Date. Effective on the Maturity Date, if the Note Amount has not otherwise been repaid by the Company in
accordance with the terms and conditions set forth herein, then at the option of the Purchaser, the Note Amount shall convert into that
number of fully paid and nonassessable shares of the Company’s Class A common stock, par value $0.0001 per share (the “Common
Stock”), at a conversion price equal to the Note Amount divided by the Conversion Price (as defined herein). For purposes of
this Section 2, “Conversion Price” shall mean, for a share of the Company’s Common Stock on the Maturity Date,
the closing bid price on the NYSE American or applicable trading market as reported by a reliable reporting service (“Reporting
Service”) designated by the Company (i.e. Bloomberg) or, if the NYSE American is not the principal trading market for the Company’s
Common Stock, the closing bid price of such Common Stock on the principal securities exchange or trading market where such Common Stock
is listed or traded or, if no closing bid price of such Common Stock is available in any of the foregoing manners, the average of the
closing bid prices of any market makers for such Common Stock that are listed in the “pink sheets”. If the Conversion Price
cannot be calculated for the Company’s Common Stock on the Maturity Date in the manner provided above, the Conversion Price shall
be the fair market value of a share of the Company’s Common Stock as determined by the Company’s board of directors.
3. Repayment
Upon Equity Financing. If, within 180 days of the date of this Note, the Company consummates an Equity Financing (as defined below),
then the Company shall pay to the Purchaser an amount, payable in cash, equal to the Note Amount at the first closing of the Equity Financing.
For purposes of this Note, an “Equity Financing” shall mean the issuance and sale of equity securities or equity-linked
securities (including, for the avoidance of doubt, any shares of the Company’s common stock, preferred stock or any securities convertible
into common stock or preferred stock, in a registered underwritten offering or private placement) to investors (whether in one transaction
or series of related transactions) after the date hereof resulting in aggregate gross proceeds to the Company of at least Ten Million
Dollars ($10,000,000), paid in cash and excluding conversion of (A) the Notes, including accrued but unpaid interest thereon, and (B)
any other indebtedness of the Company, convertible promissory notes or similar instruments.
4. Repayment
Upon Change of Control. In the event the Company enters into a transaction that results in a Change of Control (as defined below)
of the Company (a “Company Sale”), prior to the repayment or conversion of this Note, then, notwithstanding any provision
in this Note to the contrary, in lieu of the then outstanding principal that would otherwise be payable at such time pursuant to Section
1, the Company shall, prior to or otherwise in connection with the closing of such Company Sale, pay to the Purchaser an amount, payable
in cash, equal to the Note Amount at the closing of the Company Sale. “Change of Control” as used above, means (i)
a transaction or series of related transactions in which any person or group becomes the beneficial owner of more than fifty percent (50%)
of the outstanding voting securities entitled to elect the Company’s board of directors, (ii) any reorganization, merger or consolidation
of the Company, in which the outstanding voting security holders of the Company fail to retain at least a majority of such voting securities
following such transaction or (iii) a sale, lease or other disposition of all or substantially all of the assets of the Company.
5. Fraction
Shares. No fractional shares of Company’s capital stock will be issued upon conversion of this Note. In lieu of any fractional
share to which Purchaser would otherwise be entitled, Company will pay to Purchaser in cash the amount of the unconverted or unredeemed
principal and interest balance of this Note that would otherwise be converted into such fractional share.
6. Effect
of Conversion. Upon conversion of this Note pursuant to Section 2, Purchaser shall surrender this Note, duly endorsed, at the
principal offices of Company. Before this Note shall be entitled to be converted pursuant to Section 2 above, Purchaser shall execute
and deliver to the Company a purchase agreement reasonably acceptable to the Company containing customary representations and warranties
and transfer restrictions reasonably acceptable to the Company. At its expense, Company will, as soon as practicable thereafter, issue
and deliver to Purchaser, at Purchaser’s address set forth in the Purchase Agreement or such other address requested by Purchaser,
a certificate or certificates for the number of shares to which Purchaser is entitled upon such conversion (bearing such legends as are
required by the Purchase Agreement, any other agreement entered into in connection with the any such conversion or applicable state and
federal securities laws), together with a replacement Note (if any principal amount is not converted) and any other securities and property
to which Purchaser is entitled upon such conversion under the terms of this Note, including a check payable to Purchaser for any cash
amounts payable as a result of any fractional shares as described herein.
7. Compliance
with Rules of Trading Market.
7.1 Exchange
Cap. Notwithstanding anything herein to the contrary, if the Company has not obtained Shareholder Approval, then the Company may not
issue, upon conversion of this Note, the payment of any interest shares, or the payment of any redemption in shares of common stock or
otherwise, a number of shares of common stock, which, when aggregated with any shares of common stock issued in connection with any other
related transactions that may be considered part of the same series of transactions, would exceed the Exchange Cap (as defined in the
Purchase Agreement).
7.2 Shareholder
Approval. In the event the Company is prohibited from issuing any shares of common stock pursuant to Section 6.1 above (an
“Exchange Cap Share Failure” and such number of shares of common stock that is determined to be unavailable for issuance
upon the conversion or redemption of this Note, the “Exchange Cap Excess Shares”), then the Company shall, as soon
as practicable after the date of occurrence of such Exchange Cap Share Failure, but in no event later than one hundred and twenty (120)
days thereafter, hold a meeting of its stockholders to seek the Shareholder Approval. In connection with such meeting and any subsequent
stockholder meetings, the Company shall provide each stockholder with a proxy statement in compliance with applicable Securities and Exchange
Commission (the “SEC”) rules and regulations and shall use its best efforts to solicit the approval of its stockholders
of the Shareholder Approval and to cause its board of directors to recommend to the stockholders that they approve such proposal. If,
despite the Company’s best efforts, the Shareholder Approval is not obtained at the first stockholder meeting, the Company shall
cause an additional stockholder meeting to be held semi-annually thereafter to seek Shareholder Approval until the earlier of (i) the
date such Shareholder Approval is obtained and (ii) the date on which the Note is no longer outstanding. In the event the Company is prohibited
from issuing shares of common stock pursuant to the conversion this Note, the payment of any interest shares, the payment of any redemption
in shares of common stock or otherwise, due to the Exchange Cap, and the Company fails to obtain Shareholder Approval as required by this
Section 6.2, then, in exchange for the cancellation of such portion of this Note, interest or other amounts convertible into such
Exchange Cap Excess Shares, the Company shall pay cash to the Purchaser at a price equal to the product of (A) such number of Exchange
Cap Excess Shares and (B) the closing sale price of the Company’s common stock on such date. For the avoidance of doubt, if the
Company is required to and fails to obtain Shareholder Approval, the Exchange Cap shall be applicable for all purposes of this Note.
8. Reservation
of Authorized Shares.
8.1 Reservation.
So long as this Note remains outstanding, the Company shall at all times reserve a number of shares equal to at least the Exchange Cap
(the “Required Reserve Amount”).
8.2 Insufficient
Authorized Shares. If, notwithstanding Section 7.1 above, and not in limitation thereof, at any time while this Note remains
outstanding the Company does not have a sufficient number of authorized and unreserved shares of common stock to satisfy its obligation
to reserve for issuance upon conversion or redemption of this Note at least a number of shares of common stock equal to the Required Reserve
Amount (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase the
Company’s authorized shares of common stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount
for the Notes then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the
occurrence of an Authorized Share Failure, but in no event later than one hundred and twenty (120) days after the occurrence of such Authorized
Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares
of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its
best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board
of directors to recommend to the stockholders that they approve such proposal. In the event that the Company is prohibited from issuing
shares of common stock pursuant to the terms of this Note due to the failure by the Company to have sufficient shares of common stock
available out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the “Authorized
Failure Shares”), in lieu of delivering such Authorized Failure Shares to the Purchaser, the Company shall pay cash in exchange
for the redemption of such portion of the Note Amount convertible into such Authorized Failure Shares at a price equal to the sum of (i)
the product of (x) such number of Authorized Failure Shares and (y) the 10-day trailing VWAP of the closing sale price of the Company’s
common stock immediately prior to the date of such issuance and payment under this Section 7; and (ii) to the extent the Purchaser
purchases (in an open market transaction or otherwise) shares of common stock to deliver in satisfaction of a sale by the Purchaser of
Authorized Failure Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Purchaser incurred in connection
therewith. Nothing contained in this Section 7 shall limit any obligations of the Company under any provision of the Purchase Agreement.
9. Security
Interest. As security for the payment and performance of the obligations representing the indebtedness evidenced by this Note, the
Company hereby grants to Purchaser a continuing security interest in all of the Company’s right, title and interest in and to all
of the assets of the Company, excluding the proceeds from the Existing Commercial Tort Claim (as defined in that certain Security Agreement,
dated on or about the date hereof, by and between the Company and Lind Global Fund II LP). The security interest granted to Purchaser
hereunder (i) shall be junior and subordinate in accordance with the provisions of that certain Subordination Agreement, dated on or about
the date hereof, among Lind Global Fund II LP and the Purchasers; and (ii) secures payment and performance of all obligations of the Company
to the Purchaser under this Note, including all unpaid principal and all other amounts payable by the Company to the Purchaser under this
Note whether due or to become due, absolute or contingent, liquidated or unliquidated, determined or undetermined, including any interest
that accrues after the commencement of an Insolvency Proceeding. As used herein, “Insolvency Proceeding” means any
proceeding commenced, by the filing of a petition for relief, by or against any person under the United States Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors.
10. Incorporation
of Terms. The representations and warranties and rights and obligations of transfer and assignment of Purchaser that are set forth
in Section 4 of the Purchase Agreement are hereby made a part of this Note and incorporated herein by this reference.
11. Default;
Remedies. The occurrence of any Event of Default described in Section 5 of the Purchase Agreement shall be an Event of Default
hereunder and the remedies described in Section 5 of the Purchase Agreement shall be the remedies available hereunder.
12. No
Impairment. Subject to the terms and conditions hereof, the obligation of the Company to pay to the Purchaser the principal hereof
and interest hereon as and when the same become due and payable shall remain unimpaired, and, subject to the terms and conditions hereof,
nothing shall prevent the holder of this Note, upon default hereunder, from exercising all rights, powers and remedies otherwise provided
herein or by applicable law.
13. Waiver;
Payment of Fees and Expenses. Company waives presentment and demand for payment, notice of dishonor, protest and notice of protest
of this Note, and shall pay all costs of collection when incurred, including, without limitation, reasonable attorneys’ fees, costs
and other expenses. The right to plead any and all statutes of limitations as a defense to any demands hereunder is hereby waived to the
full extent permitted by law. No delay by Purchaser shall constitute a waiver, election or acquiescence by it.
14. Cumulative
Remedies. Purchaser’s rights and remedies under this Note and the other Loan Documents shall be cumulative. Purchaser shall
have all other rights and remedies not inconsistent herewith as provided under the Uniform Commercial Code, by law or in equity. No exercise
by Purchaser of one right or remedy shall be deemed an election, and no waiver by Purchaser of any Event of Default shall be deemed a
continuing waiver of such Event of Default or the waiver of any other Event of Default.
15. Miscellaneous
15.1 Governing
Law. The terms of this Note shall be construed in accordance with the laws of the State of Delaware, as applied to contracts entered
into by Delaware residents within the State of Delaware, and to be performed entirely within the State of Delaware.
15.2 Successors
and Assigns; Assignment. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors
and assigns of the parties. The Company may not assign this Note or delegate any of its obligations hereunder without the written consent
of the Requisite Purchasers. Purchaser may not assign this Note and its rights hereunder without the prior written consent of Company.
15.3 Titles
and Subtitles. The titles and subtitles used in this Note are used for convenience only and are not to be considered in construing
or interpreting the Note.
15.4 Notices.
All notices required or permitted hereunder shall be in writing and shall be given in the manner and to the addresses set forth in the
Purchase Agreement.
15.5 Amendment;
Modification; Waiver. No term of this Note may be amended, modified or waived without the written consent of the Company and Requisite
Purchasers; provided, however, that no such amendment, waiver or consent shall: (i) reduce the principal amount of this
Note without Purchaser’s written consent, or (ii) reduce the rate of interest of this Note without Purchaser’s written consent.
Any amendment or waiver effected in accordance with this Section 15.5 shall be binding upon the Company, all holders of the Notes,
and each transferee of the Notes. By acceptance hereof, Purchaser acknowledges that in the event the required consent is obtained, any
term of this Note may be amended or waived with or without the consent of Purchaser.
15.6 Usury.
In the event any interest is paid on this Note which is deemed to be in excess of the then legal maximum rate, then that portion of the
interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against
the principal of this Note.
15.7 Counterparts;
Electronic Signature. This Note may be executed in two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Note may be executed and delivered via facsimile, electronic mail (including
pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method
and any signature page so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
15.8 Lost
Documents. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Note or any note exchanged for it, and an indemnity agreement reasonably satisfactory to the Company (in case of loss, theft or destruction)
or surrender and cancellation of such note (in the case of mutilation), the Company, at its own expense, will make and deliver in lieu
of such note a new note of like tenor and unpaid principal amount and dated as of the date to which interest has been paid on the unpaid
principal amount of the note in lieu of which such new note is made and delivered.
15.9 Invalidity.
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision
is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. In such
an event, the parties will in good faith attempt to effect the business agreement represented by such invalidated term to the fullest
extent permitted by law.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties
hereto have executed this Junior Secured Convertible Promissory Note as of the day and year first written above.
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PARTS ID, INC. |
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By: |
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Name: |
John Pendleton |
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Title: |
Executive Vice President, Legal & Corporate Affairs |
AGREED TO AND ACCEPTED: |
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2642186 ONTARIO INC. |
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By: |
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Name: |
Matthew Kurtin |
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Title: |
Authorized Signatory |
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Parts iD, Inc.
Junior Secured Convertible Promissory Note
- Signature Page -
Exhibit 10.12
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE 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 OR OTHER LOAN SECURED
BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
PARTS
iD, INC.
Warrant Shares: |
Issue Date: July 13, 2023 |
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Initial Exercise Date: July 13, 2023 |
THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”)
certifies that, for value received, [__] or its assigns (the “Holder”) is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on or after the date set forth above (the “Initial
Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on July 13, 2028 (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Parts iD, Inc., a Delaware corporation (the “Company”), up to
[__] shares (as subject to adjustment hereunder, the “Warrant Shares”) of the Company’s Common Stock. The purchase
price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. In addition to the terms defined elsewhere
in this Warrant, the following terms have the meanings indicated in this Section 1:
“Affiliate” means any Person that,
directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 405 under the Securities Act.
“Board of Directors” means the
board of directors of the Company.
“Business Day” means any day other
than a Saturday or a Sunday on which commercial banking institutions are not required or authorized to be closed in New York, New York.
“Commission” means the United
States Securities and Exchange Commission.
“Common Stock” means the Class
A common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter
be reclassified or changed.
“Common Stock Equivalents” means
any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time shares of Common Stock,
including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into
or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Exchange Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Person” means an individual or
corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.
“Securities Act” means the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary” means any direct
or indirect subsidiary of the Company formed or acquired after the date hereof.
“Trading Day” means a day on which
the Common Stock is traded on a Trading Market and, if the Common Stock is not traded on a Trading Market, a Business Day.
“Trading Market” means any of
the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American,
the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors
to any of the foregoing).
“Transfer Agent” means Continental
Stock Transfer & Trust Company, and any successor transfer agent of the Company.
“Warrants” means this Warrant
collectively with the other Warrants issued on the date hereof.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (“Bloomberg”)
(based on a Trading Day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time)), (b) if the Common Stock is not then listed
for trading on a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on
OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the
Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common
Stock as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding
and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
Section 2. Exercise.
a) Exercise of Warrant. Exercise
of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise
Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by e-mail
(or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the
earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section
2(c)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares
specified in the applicable Notice of Exercise by wire transfer. No ink-original Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary,
the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant
Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company
for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial
exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the
effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant
Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such
purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The
Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following
the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given
time may be less than the amount stated on the face hereof.
b) Exercise Price. The exercise
price per share of Common Stock under this Warrant shall be $0.42, subject to adjustment hereunder (the “Exercise Price”).
c) Mechanics of Exercise.
i. Delivery of Warrant Shares Upon
Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by
crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit
or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there
is an effective registration statement permitting the resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible
for resale by the Holder without volume or manner of sale limitations pursuant to the Rule 144, and otherwise by physical delivery of
a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares
to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date
that is the earlier of (A) the earlier of (i) two (2) Trading Days and (ii) the number of days comprising the Standard Settlement Period,
in each case after the delivery to the Company of the Notice of Exercise and (B) one (1) Trading Day after delivery of the aggregate Exercise
Price to the Company (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder
shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant
has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price
is received by the Warrant Share Delivery Date. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject
to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not
as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable
Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the third Trading Day after the Warrant Share Delivery
Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise.
The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding
and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a
number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery
of the Notice of Exercise.
ii. Delivery of New Warrants Upon
Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with
this Warrant.
iii. Rescission Rights. If the
Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share
Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure
to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause
the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(c)(i) above pursuant to
an exercise on or before the Warrant Share Delivery Date (subject to receipt of the aggregate exercise price for the applicable exercise),
and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s
brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which
the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder
the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common
Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation
was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares
for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.
For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of
the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount
of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to
timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v. No Fractional Shares or Scrip.
No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a
cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to
the next whole share.
vi. Charges, Taxes and Expenses.
Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect
of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be
issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the
event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall
be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto,
the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees
required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii. Closing of Books. The Company
will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms
hereof.
d) Holder’s Exercise Limitations.
The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable
Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the
Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess
of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder
or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.
Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that
the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder
is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this
Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together
with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this
Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify
or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section
2(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common
Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B)
a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one (1) Trading
Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this
Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common
Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder,
upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(d), provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section
2(d) shall continue to apply. In the event that the Holder on the Issue Date beneficially owns greater than 19.99% of the number of shares
of Common Stock outstanding, then the Holder shall not be subject to the Beneficial Ownership Limitation with respect to this Warrant.
Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered
to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such
limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
Section 3. Certain Adjustments.
a) Stock Dividends and Splits.
If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions
on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance
of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding
shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock
of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the
number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant
shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant
to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination
or re-classification.
b) Subsequent Rights Offerings.
In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents
or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock
(the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights (provided, however, that to the extent that the Holder’s right to participate
in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled
to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase
Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its
right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
c) Pro Rata Distributions. During
such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights
to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation,
any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant,
then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have
participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the
date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that
the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation,
then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares
of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the
benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation).
d) Fundamental Transaction. If,
at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any
merger or consolidation of the Company with or into another Person, (ii) the Company (and all of its Subsidiaries, taken as a whole),
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender
or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding
Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into
or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates
a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than
50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making
or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business
combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall
have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence
of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(d) on the exercise of this
Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction
by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(d) on the exercise of this Warrant). For purposes of any such exercise, the determination
of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among
the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor
(the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance
with the provisions of this Section 3(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and
approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver
to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar
in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity
(or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard
to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the
exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant
to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise
price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction,
the Successor Entity shall succeed to, and be substituted for the Company (so that from and after the date of such Fundamental Transaction,
the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and the Successor
Entity may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with
the same effect as if such Successor Entity had been named as the Company herein.
e) Calculations. All calculations
under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section
3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares
of Common Stock (excluding treasury shares, if any) issued and outstanding.
f) Notice to Holder.
i. Adjustment to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder
by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant
Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder.
If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare
a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders
of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation
or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory
share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be
delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register
of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record
is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share
exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record
shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in
the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that
any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain
entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.
g) No Other Adjustments. Except
for the adjustments set forth in this Section 3, there shall be no other adjustments to the Exercise Price or number of Warrant Shares
hereunder.
Section 4. Transfer of Warrant.
a) Transferability. Subject to
compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof, this Warrant and all rights hereunder
(including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form
attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making
of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants
in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment
and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly
be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to
the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company
within three (3) Trading Days of the date on which the Holder delivers a duly executed Assignment Form to the Company assigning this Warrant
in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued. The Company reserves the right to refuse to transfer any Warrant if such transfer would be in violation
of any securities laws, including but not limited to the Securities Act.
b) New Warrants. This Warrant
may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written
notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject
to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and
deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All
Warrants issued on transfers or exchanges shall be dated the Issue Date of this Warrant and shall be identical with this Warrant except
as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company
shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.
d) Transfer Restrictions. If,
at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be
either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or
blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant
to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the
case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions
of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and
under applicable state securities or blue sky laws, (ii) that the Holder or transferee execute and deliver to the Company an investment
letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined
in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a qualified institutional buyer as defined
in Rule 144A(a) under the Securities Act. The first Holder of this Warrant, by taking and holding the same, represents to the Company
that such Holder is an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act and is acquiring
this Warrant for investment purposes and not with a view to the distribution thereof.
e) Representation by the Holder.
The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire
the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant
Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered
or exempted under the Securities Act.
Section 5. Miscellaneous.
a) No Rights as Stockholder Until
Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder
of the Company prior to the exercise hereof as set forth in Section 2(c)(i), except as expressly set forth in Section 3.
b) Loss, Theft, Destruction or Mutilation
of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender
and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate
of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc.
If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading
Day, then, such action may be taken or such right may be exercised on the next succeeding Trading Day.
d) Authorized Shares.
The Company covenants that, during the period
the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for
the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary
to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements
of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon
the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant
and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free
from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except and to the extent as waived or consented
to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder
as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the
par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value,
(ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions
or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations
under this Warrant.
Before taking any action which would result
in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain
all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
e) Governing Law; Jurisdiction.
This Warrant and all rights, obligations and liabilities hereunder shall be governed by the laws of the State of Delaware. Notwithstanding
the foregoing, the provisions of this paragraph are not binding on the holders of this Warrant and will not apply to suits brought to
enforce any liability or duty created by the Securities Act or the Exchange Act or any other claim for which the federal district courts
of the United States of America are the sole and exclusive forum.
f) Restrictions. The Holder acknowledges
that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.
g) Nonwaiver and Expenses. No
course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right
or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that the right to exercise this Warrant
terminates on the Termination Date. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails
to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder
such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including
those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of
its rights, powers or remedies hereunder.
h) Notices. Any and all notices
or other communications or deliveries to be provided by the holders hereunder including, without limitation, any Notice of Exercise. To
the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any
subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
i) Limitation of Liability. No
provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration
herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common
Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition
to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its
rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason
of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific
performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject
to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding
upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant
are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of
Warrant Shares.
l) Amendment. This Warrant may
be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder of this
Warrant, on the other hand.
m) Severability. Wherever possible,
each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used
in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the Company has caused this
Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
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PARTS iD, INC. |
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Name: |
John Pendleton |
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Title: |
Executive Vice President, Legal & |
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Corporate Affairs |
EXHIBIT A
NOTICE OF EXERCISE
To: PARTS iD, INC.
(1) The undersigned hereby elects to purchase ________
Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment
of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (insert Exercise
Price Below):
[ ] in lawful money of the United States.
(3) Please issue said Warrant Shares in the name
of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following DWAC Account
Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name of Investing Entity: _______________________________________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this
form and supply required information. Do not use this form to exercise the Warrant to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and
all rights evidenced thereby are hereby assigned to
Name: |
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(Please Print) |
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Address: |
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(Please Print) |
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Phone Number: |
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Email Address: |
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Dated: _______________ __, ______ |
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Holder’s Signature: |
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Holder’s Address: |
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Exhibit 10.13
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE 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 OR OTHER LOAN SECURED
BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
PARTS
iD, INC.
Warrant Shares: 2,380,952 |
Issue Date: July 13, 2023 |
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Initial Exercise Date: July 13, 2023 |
THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”)
certifies that, for value received, 2642186 Ontario Inc. or its assigns (the “Holder”) is entitled, upon the terms
and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date set forth above
(the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on July 13, 2028 (the “Termination
Date”) but not thereafter, to subscribe for and purchase from Parts iD, Inc., a Delaware corporation (the “Company”),
up to 2,380,952 shares (as subject to adjustment hereunder, the “Warrant Shares”) of the Company’s Common Stock.
The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. In addition to the terms defined elsewhere
in this Warrant, the following terms have the meanings indicated in this Section 1:
“Affiliate” means any Person that,
directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 405 under the Securities Act.
“Board of Directors” means the
board of directors of the Company.
“Business Day” means any day other
than a Saturday or a Sunday on which commercial banking institutions are not required or authorized to be closed in New York, New York.
“Commission” means the United
States Securities and Exchange Commission.
“Common Stock” means the Class
A common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter
be reclassified or changed.
“Common Stock Equivalents” means
any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time shares of Common Stock,
including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into
or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Exchange Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Person” means an individual or
corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.
“Securities Act” means the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary” means any direct
or indirect subsidiary of the Company formed or acquired after the date hereof.
“Trading Day” means a day on which
the Common Stock is traded on a Trading Market and, if the Common Stock is not traded on a Trading Market, a Business Day.
“Trading Market” means any of
the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American,
the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors
to any of the foregoing).
“Transfer Agent” means Continental
Stock Transfer & Trust Company, and any successor transfer agent of the Company.
“Warrants” means this Warrant
collectively with the other Warrants issued on the date hereof.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (“Bloomberg”)
(based on a Trading Day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time)), (b) if the Common Stock is not then listed
for trading on a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on
OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the
Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common
Stock as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding
and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
Section 2. Exercise.
a) Exercise of Warrant. Exercise
of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise
Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by e-mail
(or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the
earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section
2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares
specified in the applicable Notice of Exercise by wire transfer. No ink-original Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary,
the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant
Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company
for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial
exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the
effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant
Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such
purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The
Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following
the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given
time may be less than the amount stated on the face hereof.
b) Exercise Price. The exercise
price per share of Common Stock under this Warrant shall be $0.42, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. If at the
time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available
for the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means
of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
| (A) | = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice
of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed
and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined
in Rule 600 of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either
(y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common
Stock on the principal Trading Market as reported by Bloomberg as of the time of the Holder’s execution of the applicable Notice
of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within
two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant
to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a
Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular
trading hours” on such Trading Day; |
| (B) | = the Exercise Price of this Warrant, as adjusted hereunder; and |
(X) = the number of Warrant Shares that
would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash
exercise rather than a cashless exercise.
If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant
Shares being issued may be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this
Section 2(c).
d) Mechanics of Exercise.
i. Delivery of Warrant Shares Upon
Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by
crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit
or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there
is an effective registration statement permitting the resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible
for resale by the Holder without volume or manner of sale limitations pursuant to the Rule 144, and otherwise by physical delivery of
a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares
to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date
that is the earlier of (A) the earlier of (i) two (2) Trading Days and (ii) the number of days comprising the Standard Settlement Period,
in each case after the delivery to the Company of the Notice of Exercise and (B) one (1) Trading Day after delivery of the aggregate Exercise
Price to the Company (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder
shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant
has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price
is received by the Warrant Share Delivery Date. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject
to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not
as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable
Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the third Trading Day after the Warrant Share Delivery
Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise.
The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding
and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a
number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery
of the Notice of Exercise.
ii. Delivery of New Warrants Upon
Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with
this Warrant.
iii. Rescission Rights. If the
Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share
Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure
to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause
the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to
an exercise on or before the Warrant Share Delivery Date (subject to receipt of the aggregate exercise price for the applicable exercise),
and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s
brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which
the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder
the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common
Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation
was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares
for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.
For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of
the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount
of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to
timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v. No Fractional Shares or Scrip.
No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a
cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to
the next whole share.
vi. Charges, Taxes and Expenses.
Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect
of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be
issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the
event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall
be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto,
the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees
required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii. Closing of Books. The Company
will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms
hereof.
e) Holder’s Exercise Limitations.
The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable
Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the
Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess
of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder
or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.
Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that
the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder
is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this
Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together
with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this
Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify
or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section
2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common
Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B)
a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one (1) Trading
Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this
Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common
Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder,
upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section
2(e) shall continue to apply. In the event that the Holder on the Issue Date beneficially owns greater than 19.99% of the number of shares
of Common Stock outstanding, then the Holder shall not be subject to the Beneficial Ownership Limitation with respect to this Warrant.
Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered
to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such
limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
Section 3. Certain Adjustments.
a) Stock Dividends and Splits.
If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions
on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance
of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding
shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock
of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the
number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant
shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant
to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination
or re-classification.
b) Subsequent Rights Offerings.
In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents
or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock
(the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights (provided, however, that to the extent that the Holder’s right to participate
in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled
to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase
Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its
right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
c) Pro Rata Distributions. During
such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights
to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation,
any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant,
then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have
participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the
date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that
the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation,
then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares
of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the
benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation).
d) Fundamental Transaction. If,
at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any
merger or consolidation of the Company with or into another Person, (ii) the Company (and all of its Subsidiaries, taken as a whole),
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender
or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding
Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into
or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates
a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than
50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making
or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business
combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall
have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence
of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this
Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction
by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination
of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among
the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor
(the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance
with the provisions of this Section 3(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and
approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver
to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar
in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity
(or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard
to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the
exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant
to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise
price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction,
the Successor Entity shall succeed to, and be substituted for the Company (so that from and after the date of such Fundamental Transaction,
the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and the Successor
Entity may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with
the same effect as if such Successor Entity had been named as the Company herein.
e) Calculations. All calculations
under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section
3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares
of Common Stock (excluding treasury shares, if any) issued and outstanding.
f) Notice to Holder.
i. Adjustment to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder
by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant
Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder.
If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare
a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders
of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation
or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory
share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be
delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register
of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record
is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share
exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record
shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in
the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that
any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain
entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.
g) No Other Adjustments. Except
for the adjustments set forth in this Section 3, there shall be no other adjustments to the Exercise Price or number of Warrant Shares
hereunder.
Section 4. Transfer of Warrant.
a) Transferability. Subject to
compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof, this Warrant and all rights hereunder
(including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form
attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making
of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants
in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment
and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly
be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to
the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company
within three (3) Trading Days of the date on which the Holder delivers a duly executed Assignment Form to the Company assigning this Warrant
in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued. The Company reserves the right to refuse to transfer any Warrant if such transfer would be in violation
of any securities laws, including but not limited to the Securities Act.
b) New Warrants. This Warrant
may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written
notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject
to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and
deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All
Warrants issued on transfers or exchanges shall be dated the Issue Date of this Warrant and shall be identical with this Warrant except
as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company
shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.
d) Transfer Restrictions. If,
at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be
either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or
blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant
to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the
case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions
of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and
under applicable state securities or blue sky laws, (ii) that the Holder or transferee execute and deliver to the Company an investment
letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined
in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a qualified institutional buyer as defined
in Rule 144A(a) under the Securities Act. The first Holder of this Warrant, by taking and holding the same, represents to the Company
that such Holder is an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act and is acquiring
this Warrant for investment purposes and not with a view to the distribution thereof.
e) Representation by the Holder.
The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire
the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant
Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered
or exempted under the Securities Act.
Section 5. Miscellaneous.
a) No Rights as Stockholder Until
Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder
of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
b) Loss, Theft, Destruction or Mutilation
of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender
and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate
of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc.
If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading
Day, then, such action may be taken or such right may be exercised on the next succeeding Trading Day.
d) Authorized Shares.
The Company covenants that, during the period
the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for
the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary
to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements
of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon
the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant
and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free
from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except and to the extent as waived or consented
to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder
as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the
par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value,
(ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions
or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations
under this Warrant.
Before taking any action which would result
in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain
all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
e) Governing Law; Jurisdiction.
This Warrant and all rights, obligations and liabilities hereunder shall be governed by the laws of the State of Delaware. Notwithstanding
the foregoing, the provisions of this paragraph are not binding on the holders of this Warrant and will not apply to suits brought to
enforce any liability or duty created by the Securities Act or the Exchange Act or any other claim for which the federal district courts
of the United States of America are the sole and exclusive forum.
f) Restrictions. The Holder acknowledges
that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.
g) Nonwaiver and Expenses. No
course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right
or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that the right to exercise this Warrant
terminates on the Termination Date. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails
to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder
such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including
those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of
its rights, powers or remedies hereunder.
h) Notices. Any and all notices
or other communications or deliveries to be provided by the holders hereunder including, without limitation, any Notice of Exercise. To
the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any
subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
i) Limitation of Liability. No
provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration
herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common
Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition
to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its
rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason
of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific
performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject
to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding
upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant
are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of
Warrant Shares.
l) Amendment. This Warrant may
be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder of this
Warrant, on the other hand.
m) Severability. Wherever possible,
each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used
in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the Company has caused this
Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
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John Pendleton |
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Executive Vice President, Legal & |
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Corporate Affairs |
EXHIBIT A
NOTICE OF EXERCISE
To: PARTS iD, INC.
(1) The undersigned hereby elects to purchase ________
Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment
of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (insert Exercise
Price Below):
☐ in lawful money of the United States.
(3) Please issue said Warrant Shares in the name
of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following DWAC Account
Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name of Investing Entity: _______________________________________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this
form and supply required information. Do not use this form to exercise the Warrant to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and
all rights evidenced thereby are hereby assigned to
Name: |
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Address: |
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Dated: _______________ __, ______ |
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Holder’s Signature: |
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Holder’s Address: |
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Exhibit 10.14
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE 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 OR OTHER LOAN SECURED
BY SUCH SECURITIES.
PLACEMENT AGENT CLASS A COMMON STOCK PURCHASE
WARRANT
PARTS
iD, Inc.
Warrant Shares: 536,750 |
Issue Date: July 14, 2023 |
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Initial Exercise Date: July 14, 2023 |
THIS COMMON STOCK PURCHASE WARRANT
(the “Warrant”) certifies that, for value received, Titan Partners Group LLC, a division of American Capital Partners,
LLC, or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after Issue Date (the “Initial Exercise Date”) and on or prior to 5:00 p.m.
(New York City time) on July 14, 2028 (the “Termination Date”) but not thereafter, to subscribe for and purchase from
PARTS iD, Inc., a Delaware corporation (the “Company”), up to 536,750 shares (as subject to adjustment hereunder, the
“Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal
to the Exercise Price, as defined in Section 2(b). This Warrant is issued pursuant to that certain Engagement Agreement, dated as of May
8, 2023 (the “Engagement Agreement”), by and between the Company and Titan Partners Group LLC, a division of American
Capital Partners, LLC.
Section 1. Definitions.
In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Bid Price”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading
Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price
of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then
listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock is then reported on the Pink Open Market (or a similar
organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock so reported,
or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in
good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally
are open for use by customers on such day.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the Class A common stock of the Company, par value $0.0001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exempted
Securities” means (a) equity securities issued by reason of a dividend, stock split, split-up or other distribution on shares
of Common Stock, (b) shares of Common Stock or rights, warrants or options to purchase Common Stock issued to employees or directors of
the Company or any of its Subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors (“Equity
Plans”), and (c) shares of Common Stock actually issued upon the exercise of options, warrants or shares of Common Stock actually
issued upon the conversion or exchange of any securities convertible into Common Stock, in each case issued to employees or directors
of, the Company or any of its Subsidiaries pursuant to an Equity Plan and provided that such issuance is pursuant to the terms of the
applicable option, warrant or convertible security.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company,
joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
“Trading
Day” means a day on which the Common Stock is traded on a Trading Market.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock
Exchange (or any successors to any of the foregoing).
“Transfer
Agent” means Continental Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing address
of 1 State Street, 30th Floor, New York, NY 10004, and any successor transfer agent of the Company.
“Variable
Rate Transaction” means a transaction in which the Company (A) 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 (x) at a conversion price,
exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the Common
Stock at any time after the initial issuance of such debt or equity securities or (y) 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 (B) enters into,
or effects a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue
securities at a future determined price.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock is then reported on the Pink Open Market
(or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock
so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
“Warrants”
means this Warrant and other Placement Agent Common Stock purchase warrants issued by the Company pursuant to the Engagement Agreement.
Section 2. Exercise.
a) Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on
or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF copy submitted
by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within
the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section
2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified
in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise
procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall
be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation as soon as reasonably practicable of the date on which the final Notice of Exercise
is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares
available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal
to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant
Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business
Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of
the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available
for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b) Exercise
Price. The exercise price per share of Common Stock under this Warrant shall be $0.625, subject to adjustment hereunder (the “Exercise
Price”).
c) Cashless
Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained
therein is not available for the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part,
at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares
equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
| (A) | = |
as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of
Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and
delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in
Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either
(y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common
Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) as of the time of the Holder’s
execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a
Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading
hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if
the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a)
hereof after the close of “regular trading hours” on such Trading Day; |
| (B) | = |
the Exercise Price of this Warrant, as adjusted hereunder; and |
| (X) | = |
the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such
exercise were by means of a cash exercise rather than a cashless exercise. |
If Warrant Shares
are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act,
the holding period of the Warrant Shares being issued
may be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this Section 2(c).
Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant
to this Section 2(c).
i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the third Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.
ii. Delivery
of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and
upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing
the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant.
iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i)
by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if
the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section
2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its
broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise
(a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained
by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise
at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the
Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in
which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with
an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the
Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit
a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock
upon exercise of the Warrant as required pursuant to the terms hereof.
v. No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall,
at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the
Exercise Price or round up to the next whole share.
vi. Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant
Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however,
that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent
fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii. Closing
of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
e) Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise
as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting
as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject
to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its
Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder,
it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation
to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is
exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s
determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates
and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation,
and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any
group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may
rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report
filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice
by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request
of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date
as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall
be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock
issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation
provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held
by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will
not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph
(or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to
make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph
shall apply to a successor holder of this Warrant.
Section 3. Certain
Adjustments.
a) Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes
a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of
Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of
shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or re-classification.
b) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells
any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any
class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number
of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are
to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the Holder’s
right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder
shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as
a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until
such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
c) Pro
Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution
of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise, other
than cash (including, without limitation, any distribution of stock or other securities, property or options by way of a dividend, spin
off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided,
however, that, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the
beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation). To the extent that this Warrant has not been partially or completely exercised at the
time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has
exercised this Warrant.
d) Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person, (ii) the Company or any Subsidiary, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one
or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock or 50% or more of the
voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in
one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other
Person or group acquires 50% or more of the outstanding shares of Common Stock or 50% or more of the voting power of the common equity
of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall
have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence
of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this
Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction
by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination
of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among
the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor
(the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance
with the provisions of this Section 3(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and
approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver
to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar
in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity
(or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard
to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the
exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant
to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise
price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction,
the Successor Entity shall be added to the term “Company” under this Warrant (so that from and after the occurrence or consummation
of such Fundamental Transaction, each and every provision of this Warrant referring to the “Company” shall refer instead to
each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities,
jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor
Entities shall assume all of the obligations of the Company prior thereto under this Warrant with the same effect as if the Company and
such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance of doubt,
the Holder shall be entitled to the benefits of the provisions of this Section 3(d) regardless of (i) whether the Company has sufficient
authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs prior to the
Initial Exercise Date.
e) Adjustments
to Exercise Price Upon Issuance of Common Stock. In the event the Company shall at any time or from time to time after the Issue Date
issue or sell any additional shares of Common Stock or Common Stock Equivalents (“Additional Shares of Common Stock”), other
than Exempted Securities (as hereinafter defined), at an effective price per share (or issuable, convertible or exercisable at a price
per share) that is less than the Exercise Price then in effect or without consideration (a “Dilutive Issuance”), then
automatically and without further action by any Person the Exercise Price upon each such issuance shall be reduced to a price equal to
the consideration per share paid for such Additional Shares of Common Stock (the “Base Share Price”). For purposes
of clarification, the amount of consideration received for such Additional Shares of Common Stock shall not include the value of any additional
securities or other rights received in connection with such issuance of Additional Shares of Common Stock (i.e., warrants, rights of first
refusal or other similar rights). The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance
or deemed issuance of any Additional Shares of Common Stock subject to this Section 3(e), indicating therein the applicable issuance
price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance
Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section
3(e), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant Shares based upon the Base
Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. If the Company enters
into a Variable Rate Transaction, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible
price, conversion price or exercise price at which such securities may be issued, converted or exercised.
f) Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice
to Holder.
i. Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly
deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number
of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common
Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock
of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer of
all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into other securities,
cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall
appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders
of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice
or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such
notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the
Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the
effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 4. Transfer
of Warrant.
a) Transferability.
Pursuant to FINRA Rule 5110(e)(1), neither this Warrant nor any Warrant Shares issued upon exercise of this Warrant shall be sold, transferred,
assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result
in the effective economic disposition of the securities by any person for a period of 180 days immediately following the commencement
of sales of the offering pursuant to which this Warrant is being issued, except as permitted under FINRA Rule 5110(e)(2). Subject to the
foregoing restriction, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable,
in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written
assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient
to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so
assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required
to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the
Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for
the purchase of Warrant Shares without having a new Warrant issued.
b) New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or
its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination,
the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Issue Date and shall be identical with this
Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant
Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder
of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.
d) Representation
by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise
hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or
reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant
to sales registered or exempted under the Securities Act.
Section 5. Registration
Rights.
a) Demand
Registration. The Company, upon written demand (a “Demand Notice”) of the Holder(s) of at least 51% of the Warrants
and/or the underlying Warrant Shares agrees to register, on one occasion, all or any portion of the Warrant Shares underlying the Warrants
(collectively, the “Registrable Securities”). On such occasion, the Company will file a registration statement with
the Commission covering the Registrable Securities within thirty (30) days after receipt of a Demand Notice and use its commercially reasonable
efforts to have the registration statement declared effective promptly thereafter, subject to compliance with review by the Commission;
provided, however, that the Company shall not be required to comply with a Demand Notice if the Company has filed a registration statement
with respect to which the Holder is entitled to piggyback registration rights pursuant to Section 5(b) hereof and either: (i) the Holder
has elected to participate in the offering covered by such registration statement or (ii) if such registration statement relates to an
underwritten primary offering of securities of the Company, until the offering covered by such registration statement has been withdrawn
or until thirty (30) days after such offering is consummated. The sole demand for registration may be made at any time beginning on the
Initial Exercise Date and expiring on the Termination Date. The Company covenants and agrees to give written notice of its receipt of
any Demand Notice by any Holder(s) to all other registered Holders of the Warrants and/or the Registrable Securities within ten (10) days
after the date of the receipt of any such Demand Notice. The Company shall bear all fees and expenses attendant to the registration of
the Registrable Securities pursuant to Section 5(a), but the Holders shall pay any and all underwriting commissions and the expenses of
any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities. The Company agrees
to use its commercially reasonable efforts to cause the filing required herein to become effective promptly and to qualify or register
the Registrable Securities in such States as are reasonably requested by the Holder(s); provided, however, that in no event shall the
Company be required to register the Registrable Securities in a State in which such registration would cause: (i) the Company to be obligated
to register or license to do business in such State or submit to general service of process in such State, or (ii) the principal stockholders
of the Company to be obligated to escrow their shares of capital stock of the Company. The Company shall cause any registration statement
filed pursuant to the demand right granted under Section 5(a) to remain effective for a period of at least twelve (12) consecutive months
after the date that the Holders of the Registrable Securities covered by such registration statement are first given the opportunity to
sell all of such securities. The Holders shall only use the prospectuses provided by the Company to sell the Warrant Shares covered by
such registration statement, and will immediately cease to use any prospectus furnished by the Company if the Company advises the Holder
that such prospectus may no longer be used due to a material misstatement or omission.
b) “Piggy-Back”
Registration. In addition to the demand right of registration described in Section 5(a) hereof, the Holder shall have the right, for
a period of no more than five (5) years from the commencement of the offering in accordance with FINRA Rule 5110(g)(8)(D), unlimited piggyback
rights to include the Registrable Securities as part of any other registration of securities filed by the Company (other than in connection
with a transaction contemplated by Rule 145(a) promulgated under the Securities Act or pursuant to Form S-8 or any equivalent form); provided,
however, that if, solely in connection with any primary underwritten public offering for the account of the Company, the managing underwriter(s)
thereof shall, in its reasonable discretion, impose a limitation on the number of Registrable Securities that may be included in the Registration
Statement because, in such underwriter(s)’ judgment, marketing or other factors dictate such limitation is necessary to facilitate
public distribution, then the Company shall be obligated to include in such Registration Statement only such limited portion of the Registrable
Securities with respect to which the Holder requested inclusion hereunder as the underwriter shall reasonably permit. Any exclusion of
Registrable Securities shall be made pro rata among the Holders seeking to include Registrable Securities in proportion to the number
of Registrable Securities sought to be included by such Holders; provided, however, that the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding securities, the holders of which are not entitled to inclusion of such
securities in such Registration Statement or are not entitled to pro rata inclusion with the Registrable Securities. The Company shall
bear all fees and expenses attendant to registering the Registrable Securities pursuant to Section 5(b) hereof, but the Holders shall
pay any and all underwriting commissions and the expenses of any legal counsel selected by the Holders to represent them in connection
with the sale of the Registrable Securities. In the event of such a proposed registration, the Company shall furnish the then Holders
of outstanding Registrable Securities with not less than thirty (30) days written notice prior to the proposed date of filing of such
registration statement. Such notice to the Holders shall continue to be given for each registration statement filed by the Company during
the five (5) year period following the commencement of sales in the offering until such time as all of the Registrable Securities have
been sold by the Holder. The holders of the Registrable Securities shall exercise the “piggy-back” rights provided for herein
by giving written notice within ten (10) days of the receipt of the Company’s notice of its intention to file a registration statement.
Section 6. Miscellaneous.
a) No
Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends
or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set
forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to
Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be required
to net cash settle an exercise of this Warrant.
b) Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include
the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make
and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized
Shares.
The Company covenants
that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the
necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action
as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation,
or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented
by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
Except and to the
extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate
of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate
to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the
Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior
to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts
to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary
to enable the Company to perform its obligations under this Warrant.
Before taking any
action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price,
the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
e) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of
law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough
of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is 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 suit, 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 Warrant 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 either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in
such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not
utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as
a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this
Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages
to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but
not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts
due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h) Notices.
Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice
of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed
to the Company, at 1 Corporate Drive, Suite C, Cranbury, NJ 08512, Attention: Lev Peker, Chief Executive Officer, email address: lev.peker@corp.partsid.com,
or such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent
by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing
on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest
of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section
prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication
is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any
notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company
shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 6-K.
i) Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase
price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the
Company.
j) Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any
action for specific performance that a remedy at law would be adequate.
k) Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable
by the Holder or holder of Warrant Shares.
l) Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and
the Holder, on the other hand.
m) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the Company
has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
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NOTICE OF EXERCISE
To: PARTS
iD, Inc.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised
in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment
shall take the form of (check applicable box):
☐ in lawful money
of the United States; or
☐ if permitted the
cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise
this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in
subsection 2(c).
(3) Please
issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following
DWAC Account Number:
_______________________________
_______________________________
_______________________________
(4) Accredited Investor.
The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of Investing
Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this
form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and
all rights evidenced thereby are hereby assigned to
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Exhibit 99.1
PARTS iD Announces New Financing with The Lind
Partners
And Co-Investment by Certain Company Insiders
CRANBURY, N.J., July 17, 2023 -- PARTS iD, Inc. (NYSE American: ID)
(“PARTS iD” or “the Company”) the owner and operator of, among other verticals, “CARiD.com,” a leading
digital commerce platform for the automotive aftermarket, today announced two new funding agreements that deliver $7.0 million in immediate
proceeds to the Company.
The first is a $3.75 million investment by Lind Global Partners II,
LP, an investment fund managed by The Lind Partners, a New York based institutional fund manager (together “Lind”). Two Company
insiders, including CEO, Lev Peker and one external investor (together “Investors”) co-invested an additional $3.25 million
alongside Lind. The Company intends to use the capital to repay and retire outstanding debt owed to JGB Capital as well as for general
working capital needs.
Titan Partners Group, a division of American Capital Partners, LLC,
is acting as sole placement agent for the offering.
“This new financing will provide additional flexibility as we
continue our focus on enhancing profitability and growing our share of the automotive parts industry,” said Lev Peker. “We
are pleased to have The Lind Partners as an investor and appreciate their support of our technology-driven business model.”
Lind Founder, Jeff Easton said, “The large and fragmented automotive
aftermarket industry is ripe for increased online penetration, and PARTS iD has made great headway with their proprietary technology.
We are excited to be a part of the PARTS iD turnaround story and to support their growth and profitability objectives.”
The new capital obtained from Lind is in the form of a senior-secured
promissory note with a 12-month maturity, 0% annual interest rate and is convertible into shares of the Company’s Class A common
stock (the “Common Stock”) at the option of Lind. Lind will also receive warrants to purchase 12,837,838 shares of Common
Stock exercisable at $0.50 per share. The Company also has the ability to obtain up to a total of $10.0 million of incremental
senior-secured debt pursuant to the funding agreement, and expects to draw an additional $1.0 million within 30 days of the closing. The
transaction is subject to the satisfaction of customary closing conditions.
The new investment by the Investors is in the form of junior secured
promissory notes in the aggregate principal amount of $3.25 million, which are convertible into shares of the Company’s Common Stock
pursuant to the terms described therein.
The Company has filed a Current Report on Form 8-K with the Securities
and Exchange Commission (the “SEC”) that includes additional details about the funding agreements.
About The Lind Partners.
The Lind Partners manages institutional funds that are leaders in providing
growth capital to small- and mid-cap companies publicly traded in the US, Canada, Australia and the UK. Lind’s funds make direct
investments ranging from US$1 to US$30 million, invest in syndicated equity offerings and selectively buy on market. Having completed
more than 150 direct investments totaling over US$1.5 Billion in transaction value, Lind’s funds have been flexible and supportive
capital partners to investee companies since 2011.
About PARTS iD, Inc.
PARTS iD is a technology-driven, digital commerce company focused on
creating custom infrastructure and unique user experiences within niche markets. Founded in 2008 with a vision of creating a one-stop
eCommerce destination for the automotive parts and accessories market, we believe that PARTS iD has since become a market leader and proven
brand-builder, fueled by its commitment to delivering a revolutionary shopping experience; comprehensive, accurate and varied product
offerings; and continued digital commerce innovation.
Cautionary Note Regarding Forward-Looking Statements
All statements made in this press release relating to future financial
or business performance, conditions, plans, prospects, trends, or strategies and other such matters, including without limitation, expected
future performance, consumer adoption, anticipated success of our business model or the potential for long term profitable growth, are
forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. In addition, when or if used
in this press release, the words “may,” “could,” “should,” “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “plan,” “predict,” “potential,”
“confident,” “look forward,” “optimistic” and similar expressions and their variants, as they relate
to us may identify forward-looking statements. We operate in a changing environment where new risks emerge from time to time and it is
not possible for us to predict all risks that may affect us, particularly those associated with the COVID-19 pandemic and the conflict
in Ukraine, which have had wide-ranging and continually evolving effects. We caution that these forward-looking statements are subject
to numerous assumptions, risks, and uncertainties, which change over time, often quickly and in unanticipated ways.
Important factors that may cause actual results to differ materially
from the results discussed in the forward-looking statements include risks and uncertainties, including without limitation: the ongoing
conflict between Ukraine and Russia has affected and may continue to affect our business; competition and our ability to counter competition,
including changes to the algorithms of Google and other search engines and related impacts on our revenue and advertisement expenses;
the impact of health epidemics, including the COVID-19 pandemic, on our business and the actions we may take in response thereto; disruptions
in the supply chain and associated impacts on demand, product availability, order cancellations and cost of goods sold including inflation;
difficulties in managing our international business operations, particularly in the Ukraine, including with respect to enforcing the terms
of our agreements with our contractors and managing increasing costs of operations; changes in our strategy, future operations, financial
position, estimated revenues and losses, product pricing, projected costs, prospects and plans; the outcome of actual or potential litigation,
complaints, product liability claims, or regulatory proceedings, and the potential adverse publicity related thereto; the implementation,
market acceptance and success of our business model, expansion plans, opportunities and initiatives, including the market acceptance of
our planned products and services; developments and projections relating to our competitors and industry; our expectations regarding our
ability to obtain and maintain intellectual property protection and not infringe on the rights of others; our ability to maintain and
enforce intellectual property rights and ability to maintain technology leadership; our future capital requirements; our ability to raise
capital and utilize sources of cash; our ability to obtain funding for our operations; changes in applicable laws or regulations; the
effects of current and future U.S. and foreign trade policy and tariff actions; disruptions in the marketplace for online purchases of
aftermarket auto parts; costs related to operating as a public company; and the possibility that we may be adversely affected by other
economic, business, and/or competitive factors.
Further information on the factors and risks that could cause actual
results to differ from any forward-looking statements are contained in our filings with the SEC, which are available at https://www.sec.gov
(or at https://www.partsidinc.com). The forward-looking statements represent our estimates as of the date hereof only, and we specifically
disclaim any duty or obligation to update forward-looking statements.
Investors:
Brendon Frey
ICR
ir@partsidinc.com
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PARTS iD (AMEX:ID)
Graphique Historique de l'Action
De Avr 2024 à Mai 2024
PARTS iD (AMEX:ID)
Graphique Historique de l'Action
De Mai 2023 à Mai 2024