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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): October 31, 2023
WORKSPORT
LTD.
(Exact
name of registrant as specified in its charter)
Nevada |
|
000-40681 |
|
35-2696895 |
(State
or other jurisdiction |
|
(Commission |
|
(IRS
Employer |
of
incorporation) |
|
File
Number) |
|
Identification
No.) |
2500
N America Dr.
West
Seneca, NY 14224
(Address
of principal executive offices)
888-554-8789
(Registrant’s
telephone number, including area code)
N/A
(Former
name or former address, if changed since last report.)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction A.2. below):
☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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. ☐
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
Common
Stock, par value $0.0001 |
|
WKSP |
|
The
Nasdaq Stock Market LLC |
Warrants
to purchase common stock |
|
WKSPW |
|
The
Nasdaq Stock Market LLC |
Item
1.01 Entry into a Material Definitive Agreement.
On
October 31, 2023, Worksport Ltd., a Nevada corporation (the “Company”), entered into a securities purchase agreement (the
“Securities Purchase Agreement”) with a certain institutional investor (the “Purchaser”) pursuant to which the
Company sold, in a registered direct offering, an aggregate of (i) 1,925,000 shares (the “Shares”) of common stock, par value
$0.0001 per share, of the Company (“Common Stock”); and (ii) 1,575,000 pre-funded warrants (the “Pre-funded Warrants”)
to purchase up to 1,575,000 shares of Common Stock (the “Pre-funded Warrant Shares”). The offering price per Share was $1.34
and the offering price per Pre-funded Warrant was $1.3399.
Each
Pre-funded Warrant is exercisable for one share of Common Stock for $0.0001 immediately upon issuance until all of the Pre-funded Warrants
are exercised in full. The number of Pre-funded Warrant Shares are subject adjustments for stock splits, recapitalizations and reorganizations.
The
Shares, Pre-funded Warrants and Pre-funded Warrants Shares were offered pursuant to a “shelf” registration statement on Form
S-3 (Registration No. 333-267696), which was declared effective by the Securities and Exchange Commission (the “SEC”)
on October 13 2023, as supplemented by a prospectus supplement and accompanying base prospectus dated October 31, 2023 filed with the
SEC on November 2, 2023 pursuant to Rule 424(b)(5) promulgated under the Securities Act of 1933, as amended (the “Securities Act”).
In
a concurrent private placement, the Company also issued to the Purchaser unregistered warrants (the “Warrants”) to purchase
up to an aggregate of 7,000,000 shares (the “Warrant Shares”) of
the Common Stock at an exercise price of $1.34 per share, subject to adjustment for reverse stock splits, recapitalizations
and reorganizations. The Warrants are exercisable
from May 2, 2024 until the date that is five and a half (5½) years from November 2, 2023.
Pursuant
to the Securities Purchase Agreement, the Company is required to file a registration statement with the SEC within 45 days after
the date of the Securities Purchase Agreement to register the Warrant Shares under the Securities Act and to keep such registration statement
effective at all times until no Purchaser owns any Warrants or Warrant Shares.
The issuance of the Warrants pursuant to the
Securities Purchase Agreement were made pursuant to the exemption from the registration requirements under the Securities Act available
to the Company under Section 4(a)(2) promulgated thereunder due to the fact the offering of the Warrants did not involve a public offering
of securities.
The
Securities Purchase Agreement contained customary representations and warranties. The offering closed on November 2, 2023.
On
October 31, 2023, the Company also entered into a placement agency agreement (the “Placement Agency Agreement”) with
Maxim Group LLC (the “Placement Agent”) as the exclusive placement agent in connection with the offering. Pursuant to
the terms of the Placement Agency Agreement, the Placement Agent agreed to use its reasonable best efforts to arrange for the sale of
the securities in the Offering (the “Placement”). As compensation to the Placement Agent, the Company paid the Placement
Agent a cash fee of 7% of the aggregate gross proceeds raised in the offering and the reimbursement of certain expenses and legal
fees.
The
Company received net proceeds of approximately $4,200,000 from the offering, after deducting the estimated offering expenses payable
by the Company, including the Placement Agent fees. The Company intends to use the net proceeds from the offering for general
corporate purposes, including working capital.
In addition, under the Placement Agency Agreement,
for a period from October 31, 2023 until 90 days after November 2, 2023, subject to certain exceptions, neither the Company nor any of
its subsidiaries shall (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any Common Stock
or Common Stock equivalents or (ii) file any registration statement or amendment or supplement thereto, other than the prospectus or
filing a registration statement on Form S-8 in connection with any employee benefit plan, in each case without prior written consent
of the Placement Agent.
The Placement Agent Agreement also provides
that from October 31, 2023 until 180 days after November 2, 2023, the Company shall be prohibited from effecting or entering into an
agreement to effect any issuance by the Company or any of its subsidiaries of Common Stock or Common Stock equivalents (or a combination
of thereof) involving a variable rate transaction, except that any offer, sale and issuance of shares of Common Stock in connection with
the At the Market Offering Agreement dated as of September 30, 2022, by and between the Company and H.C. Wainwright & Co., LLC, is
permitted from the period ninety (90) days after November 2, 2023 and thereafter.
The Placement Agency Agreement contains customary
representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company
and the Placement Agent, including for liabilities under the Securities Act, other obligations of the parties and termination provisions.
The
Placement Agency Agreement, Securities Purchase
Agreement, form of Pre-funded Warrant and form of Warrant, are filed as Exhibits 1.1, 10.1, 4.1 and 4.2, respectively, to this
Current Report on Form 8-K and are incorporated herein by reference. The above descriptions of the terms of the Placement Agency Agreement,
Securities Purchase Agreement, Pre-funded Warrant and Warrant are qualified in their entirety by reference to such exhibits.
Item
3.02. Unregistered Sales of Equity Securities.
The disclosures set forth in Item 1.01 of this Current Report on Form 8-K (this “Report”) are
hereby incorporated by reference into this Item 3.02.
Item 5.02 Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On October 31, 2023, the Compensation Committee
of the Board of Directors of the Company (“Board”) determined and recommended and the Board approved the grant of incentive
stock options (“CEO Award”) to Steven Rossi, the Chairman, President and Chief Executive Officer of the Company.
The Board believes that Mr. Rossi has played,
and continues to play, a key role in the development of the Company, including, without limitation, his important role in the current
products undergoing development in the Company, including SCX, TC4 and TerraVis products.
The CEO Award was granted outside the Company’s
existing Worksport Ltd. 2022 Equity Incentive Plan (“2022 Plan”) because issuing the stock options outside of the plan will
preserve the shares available under the 2022 Plan for future awards to other directors, officers, employees and consultants. Because
the CEO Award constitutes equity compensation and is not being granted pursuant to the 2022 Plan, the Company is required to obtain stockholder
approval for the grant of the CEO Award under Rule 5635(c) of The Nasdaq Stock Market LLC, which has not been obtained as of the date
of the grant.
The terms of the grant of the CEO Award are
as follows:
|
Shares
Subject to Option: |
1,500,000
Shares |
|
|
|
|
Type
of Option: |
Incentive
Stock Options (ISOs). Any options exceeding the annual $100,000 incentive stock option limit will be treated as non-qualified stock
options. |
|
|
|
|
Exercise
Price Per Share: |
$1.44 |
|
|
|
|
Effective
Date of Grant: |
October
31, 2023 |
|
|
|
|
Vesting
Schedule: |
The
Option will become exercisable (“vest”) per the Company’s achievement of specified revenue metrics. The
vesting schedule for the Option is as follows: (i) 20% of the Option (or 300,000 Shares subject to Option) shall vest upon the Company
achieving annual run rate revenue of $10,000,000, measured by $2,500,000 of quarterly revenue; (ii) an additional 20% of the Option
(or 300,000 Shares subject to Option) shall vest upon the Company achieving annual run rate revenue of $20,000,000, measured by $5,000,000
of quarterly revenue; (iii) an additional 20% of the Option (or 300,000 Shares subject to Option) shall vest upon the Company achieving
annual run rate revenue of $30,000,000, measured by $7,500,000 of quarterly revenue; (iv) an additional 20% of the Option (or 300,000
Shares subject to Option) shall vest upon the Company achieving annual run rate revenue of $40,000,000, measured by $10,000,000 of
quarterly revenue; and (v) an additional 20% of the Option (or 300,000 Shares subject to Option) shall vest upon the Company achieving
annual run rate revenue of $50,000,000, measured by $12,500,000 of quarterly revenue. |
Item
8.01. Other Events.
On
October 31, 2023, the Company issued a press release announcing the pricing of the offering. A copy of the press release announcing this
matter is filed as Exhibit 99.1 to this Report and is incorporated by reference into this Item 8.01.
On
November 2, 2023, the Company issued a press release announcing the closing of the offering. A copy of the press release announcing this
matter is filed as Exhibit 99.2 to this Report and is incorporated by reference into this Item 8.01.
Item
9.01. Exhibits.
+ |
Pursuant
to Item 601(a)(5) of Regulation S-K, schedules have been omitted and will be furnished on a supplemental basis to the Securities
and Exchange Commission upon request. |
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
|
WORKSPORT
LTD. |
|
|
Date:
November 3, 2023 |
By: |
/s/
Steven Rossi |
|
Name:
|
Steven
Rossi |
|
Title: |
Chief
Executive Officer
(Principal
Executive Officer) |
Exhibit 1.1
PLACEMENT AGENCY AGREEMENT
October 31, 2023
Worksport Ltd.
2500 N America Dr
West Seneca, NY 14224 Ladies and Gentlemen:
Subject to the terms
and conditions herein (this “Agreement”), Worksport Ltd., a Nevada corporation (the “Company”),
hereby agrees to sell up to an aggregate of $4,690,000 of registered and unregistered securities of the Company, including, but not limited
to, an aggregate of 1,925,000 shares of the Company’s common stock (the “Shares”) par value $0.0001 per share
(the “Common Stock”), registered pre-funded common stock purchase warrants to purchase 1,575,000 shares of Common Stock
(the “Pre-Funded Warrants”), and unregistered common stock purchase warrants to purchase up to an aggregate of 7,000,000
shares of Common Stock (the “Warrants” and the Common Stock underlying the Pre-Funded Warrants and Warrants, the “Warrant
Shares”, and the Shares, the Pre- Funded Warrants, the Warrants and the Warrant Shares, the “Securities”)
directly to various investors (each, an “Investor” and, collectively, the “Investors”) through Maxim
Group LLC as placement agent (the “Placement Agent”). The documents executed and delivered by the Company and the Investors
in connection with the Offering (as defined below), including, without limitation, a securities purchase agreement (the “Purchase
Agreement”), shall be collectively referred to herein as the “Transaction Documents.” The purchase price
to the Investors for each Share is $1.34, the purchase price to the Investors for each Pre-Funded Warrant is $1.3399, the exercise price
to the Investor for each share of Common Stock issuable upon exercise of the Pre-Funded Warrants is $0.0001, and the exercise price to
the Investors for each share of Common Stock issuable upon exercise of the Warrants is $1.34. The Placement Agent may retain other brokers
or dealers to act as sub-agents or selected-dealers on its behalf in connection with the Offering. Capitalized terms used and not otherwise
defined herein shall have the respective meanings given to them in the Purchase Agreements.
The Company hereby confirms its agreement
with the Placement Agent as follows:
Section 1. Agreement to Act as Placement
Agent.
(a) On the basis
of the representations, warranties, and agreements of the Company herein contained, and subject to all the terms and conditions of this
Agreement, the Placement Agent shall be the exclusive placement agent in connection with the offering and sale by the Company of the Shares
and the Pre-Funded Warrants pursuant to the Company’s registration statement on Form S-3 (File No. 333-267696) (the “Registration
Statement”), with a concurrent private placement of the Warrants, with the terms of such offering (the “Offering”)
to be subject to market conditions and negotiations between the Company, the Placement Agent and the prospective Investors. The Placement
Agent will act on a reasonable best-efforts basis and the Company agrees and acknowledges that there is no guarantee of the successful
placement of the Securities, or any portion thereof, in the prospective Offering. Under no circumstances will the Placement Agent or any
of its “Affiliates” (as defined below) be obligated to underwrite or purchase any of the Shares for its own account or otherwise
provide any financing. The Placement Agent shall act solely as the Company’s agent and not as principal. The Placement Agent shall
have no authority to bind the Company with respect to any offer to purchase Shares and the Company shall have the sole right to accept
offers to purchase Securities and may reject any such offer, in whole or in part. Subject to the terms and conditions hereof, payment
of the purchase price for, and delivery of, the Securities shall be made at one or more closings (each a “Closing”
and the date on which each Closing occurs, a “Closing Date”). The Closing of the issuance of the Securities shall occur
via “Delivery Versus Payment”, i.e., on the Closing Date, the Company shall issue the Securities directly to the account designated
by the Placement Agent and, upon receipt of such Securities, the Placement Agent shall electronically deliver such Securities to the applicable
Investor and payment shall be made by the Placement Agent (or its clearing firm) by wire transfer to the Company. As compensation for
services rendered, on each Closing Date, the Company shall pay to the Placement Agent the fees and expenses set forth below:
(i) Cash Fee.
A cash fee (the “Cash Fee”) equal to seven percent (7%) of the gross proceeds from the sale of Securities at the Closing
by deduction from the proceeds thereof.
(ii) Expenses.
The Company agreed to reimburse the Placement Agent’s expenses up to a maximum of One Hundred Thousand Dollars ($100,000) payable
immediately upon the Closing of the Offering in accordance of that certain financing engagement agreement dated October 9, 2023 (the “Engagement
Agreement”).
(b) The term of the
Placement Agent’s engagement will be until the earlier of (i) the final closing of the Offering and (ii) a party hereto terminating
the engagement with respect to itself upon ten (10) days written notice to the other parties. Notwithstanding anything to the contrary
contained herein, the provisions concerning confidentiality, indemnification, and contribution contained herein and the Company’s
obligations contained in the indemnification provisions will survive any expiration or termination of this Agreement, and the Company’s
obligation to pay fees actually earned and payable and to reimburse expenses actually incurred and reimbursable pursuant to Section
1 hereof and which are permitted to be reimbursed under FINRA Rule 5110(g), will survive any expiration or termination of this Agreement.
Nothing in this Agreement shall be construed to limit the ability of the Placement Agent or its Affiliates to pursue, investigate, analyze,
invest in, or engage in investment banking, financial advisory, or any other business relationship with Persons (as defined below) other
than the Company. As used herein (i) “Persons” means an individual or corporation, partnership, trust, incorporated, or unincorporated
association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof), or other
entity of any kind and (ii) “Affiliate” means any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the
Securities Act of 1933, as amended (the “Securities Act”). The rules and regulations of the United States Securities
and Exchange Commission (the “Commission”) promulgated under the Securities Act are referred to as (the “Rules
and Regulations”).
Section 2. Representations,
Warranties and Covenants of the Company. The Company hereby represents, warrants, and covenants to the Placement Agent as of the date
hereof, and as of each Closing Date, as follows:
(a)
Securities Law Filings. The Company has filed with the Commission the Registration Statement under the Securities Act, which was
filed on September 30, 2022 and declared effective on October 13, 2022 for the registration of the Shares and the Pre-Funded Warrants
under the Securities Act. Following the determination of pricing among the Company and the prospective Investors introduced to the Company
by Placement Agent, and subject to the Company’s acceptance of such Investors’ offers to purchase the Securities and their
respective execution and delivery of Purchase Agreements, the Company will file with the Commission pursuant to Rules 430A and 424(b)
under the Securities Act, and the Rules and Regulations, a final prospectus supplement relating to the placement of the Shares and the
Pre-Funded Warrants, their respective pricings and the plan of distribution thereof and will advise the Placement Agent of all further
information (financial and other) with respect to the Company required to be set forth therein. Such registration statement, at any given
time, including the exhibits thereto filed at such time, as amended at such time, is hereinafter called the “Registration Statement”;
such prospectus in the form in which it appears in the Registration Statement at the time of effectiveness, together with any preliminary
prospectus supplement relating to the Offering, is hereinafter called the “Base Prospectus”; and the final prospectus
supplement, in the form in which it is filed with the Commission pursuant to Rule 424(b) (including the Base Prospectus as it may be amended
or supplemented) is hereinafter called the “Final Prospectus.” The Registration Statement at the time it originally
became effective is hereinafter called the “Original Registration Statement.” Any reference in this Agreement to the
Registration Statement, the Original Registration Statement, the Base Prospectus, the Preliminary Prospectus Supplement, or the Final
Prospectus shall be deemed to refer to and include the documents incorporated by reference therein (the “Incorporated Documents”),
if any, which were or are filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), at any
given time, as the case may be; and any reference in this Agreement to the terms “amend,” “amendment,” or “supplement”
with respect to the Registration Statement, the Original Registration Statement, the Base Prospectus, the Preliminary Prospectus Supplement,
or the Final Prospectus shall be deemed to refer to and include the filing of any document under the Exchange Act after the date of this
Agreement, or the issue date of the Base Prospectus, the Preliminary Prospectus Supplement, or the Final Prospectus, as the case may be,
deemed to be incorporated therein by reference. All references in this Agreement to financial statements
and schedules and other information which is “contained,” “included,”
“described,” “referenced,” “set
forth,” or “stated” in
the Registration Statement, the Base Prospectus, the Preliminary Prospectus Supplement, or the Final Prospectus (and all other references
of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement, the Base Prospectus, the Preliminary Prospectus Supplement, or the Final
Prospectus, as the case may be. As used in this paragraph and elsewhere in this Agreement, “Time
of Sale Disclosure Package” means the Base Prospectus and any issuer free writing prospectus
as defined in Rule 433 of the Act (each, an “Issuer Free Writing Prospectus”),
if any, that the parties hereto shall hereafter expressly agree in writing to treat as part of the Time of Sale Disclosure Package. The
term “any Prospectus” shall mean, as the
context requires, the Base Prospectus, the Final Prospectus, and any supplement to either thereof. The Company has not received any notice
that the Commission has issued or intends to issue a stop order suspending the effectiveness of the Registration Statement or the use
of the Base Prospectus or any prospectus supplement thereto or intends to commence a proceeding for any such purpose.
(b) Assurances.
The Original Registration Statement, as amended (and any further documents to be filed with the Commission), contained at the time of
filing and contains all exhibits and schedules as required by the Securities Act. Each of the Registration Statement and any post-effective
amendment thereto, at the time it became effective, complied in all material respects with the Securities Act and the applicable Rules
and Regulations and did not knowingly contain any untrue statement of a material fact or knowingly omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading. The Base Prospectus and the Final Prospectus, each as
of its respective date, comply or will comply in all material respects with the Securities Act and the applicable Rules and Regulations.
Each of the Base Prospectus and the Final Prospectus, as amended or supplemented, did not and will not knowingly contain as of the date
thereof any untrue statement of a material fact or knowingly omit to state a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing
to the Company by the Placement Agent expressly for use therein. The Incorporated Documents, when they were filed with the Commission,
conformed in all material respects to the requirements of the Exchange Act and the applicable rules and regulations promulgated thereunder,
and none of such documents, when they were filed with the Commission, knowingly contained any untrue statement of a material fact or knowingly
omitted to state a material fact necessary to make the statements therein (with respect to Incorporated Documents incorporated by reference
in the Base Prospectus or Final Prospectus), in light of the circumstances under which they were made not misleading. No post- effective
amendment to the Registration Statement reflecting any facts or events arising after the date thereof which represent, individually or
in the aggregate, a fundamental change in the information set forth therein is required to be filed with the Commission. Except for this
Agreement, there are no documents required to be filed with the Commission in connection with the transaction contemplated hereby that
(x) have not been filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time period. Except for
this Agreement, there are no contracts or other documents required to be described in the Base Prospectus or Final Prospectus, or to be
filed as exhibits or schedules to the Registration Statement, which have not been described or filed as required.
(c) Offering Materials.
Neither the Company nor any of its directors and officers has distributed and none of them will distribute, prior to each Closing Date,
any offering material in connection with the Offering other than the Time of Sale Disclosure Package and any other materials permitted
by the Securities Act.
(d) Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and the Time of Sale Disclosure Package and otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby and under the Final Prospectus
have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Company’s
Board of Directors (the “Board of Directors”) or the Company’s shareholders in connection therewith other than
in connection with the Required Approvals. This Agreement has been duly executed by the Company and, when delivered in accordance with
the terms hereof, assuming due authorization, execution, and delivery by the Placement Agent, will constitute the legal, valid, and binding
obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’
rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies,
and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(e) No Conflicts.
The execution, delivery, and performance by the Company of this Agreement and the transactions contemplated pursuant to the Time of Sale
Disclosure Package, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby
to which it is a party do not and will not (i) conflict with or violate any provision of the Company’s amended and restated certificate
of incorporation, amended and restated bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the
properties or assets of the Company, or give to others any rights of termination, amendment, acceleration, or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt, or other instrument (evidencing a Company or Subsidiary debt
or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected,
or (iii) assuming the accuracy of the representations and warranties of the Placement Agent set forth in Section 3 hereof and subject
to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree, or
other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws
and regulations), or by which any property or asset of the Company is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(f) Certificates.
Any certificate signed by an officer of the Company and delivered to the Placement Agent or to counsel for the Placement Agent shall be
deemed to be a representation and warranty by the Company (and not in such officer’s personal capacity) to the Placement Agent as
to the matters set forth therein.
(g) Reliance.
The Company acknowledges that the Placement Agent will rely upon the accuracy and truthfulness of the foregoing representations and warranties
and hereby consents to such reliance.
(h) Forward-Looking
Statements. No forward-looking statements (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) contained in the Time of Sale Disclosure Package has been made or reaffirmed without a reasonable basis or has been disclosed other
than in good faith.
(i) Statistical
or Market-Related Data. Any statistical, industry-related, and market-related data included or incorporated by reference in the Time
of Sale Disclosure Package, are based on or derived from sources that the Company reasonably and in good faith believes to be reliable
and accurate, and such data agree with the sources from which they are derived.
(j)
Certain Fees; FINRA Affiliations. Except as set forth in the Registration Statement and Prospectus Supplement, no brokerage or
finder’s fees or commissions are or will be payable by the Company, any Subsidiary or Affiliate of the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated
by the Transaction Documents. There are no other arrangements, agreements or understandings of the Company or, to the Company’s
knowledge, any of its shareholders that may affect the Placement Agent’s compensation, as determined by FINRA. Other than payments
to the Placement Agent for this Offering or as set forth in the Registration Statement and Prospectus, the Company has not made and has
no agreements, arrangements or understanding to make any direct or indirect payments (in cash, securities or otherwise) to: (i) any person,
as a finder’s fee, consulting fee or otherwise, in consideration of such person raising capital for the Company or introducing to
the Company persons who raised or provided capital to the Company; (ii) any FINRA member participating in the offering as defined in FINRA
Rule 5110 (a “Participating Member”); or (iii) any person or entity that has any direct or indirect affiliation or association
with any Participating Member, within the 180-day period preceding the initial filing of the Registration Statement through the 60-day
period after the Effective Date. None of the net proceeds of the Offering will be paid by the Company to any Participating Member or its
affiliates, except as specifically authorized herein. To the Company’s knowledge, no officer, director or any beneficial owner of
10% or more of the Company’s Common Stock or Common Stock Equivalents (as defined in the Securities Purchase Agreement) has any
direct or indirect affiliation or association with any Participating Member in the Offering. Except for securities purchased on the open
market, no Company Affiliate is an owner of stock or other securities of any Participating Member. No Company Affiliate has made a subordinated
loan to any Participating Member. No proceeds from the sale of the Securities (excluding Placement Agent compensation as disclosed in
the Registration Statement and the Prospectus) will be paid to any Participating Member,
any persons associated with a Participating Member or an affiliate of a Participating Member. Except as disclosed in the Prospectus, the
Company has not issued any warrants or other securities or granted any options, directly or indirectly, to the Placement Agent within
the 180-day period prior to the initial filing date of the Prospectus. Except for securities issued to the Placement Agent as disclosed
in the Prospectus, no person to whom securities of the Company have been privately issued within the 180-day period prior to the initial
filing date of the Prospectus is a Participating Member, is a person associated with a Participating Member or is an affiliate of a Participating
Member. To the Company’s knowledge, no Participating Member in the Offering has a conflict
of interest with the Company. For this purpose, a “conflict of interest” exists
when a Participating Member, the parent or affiliate of a Participating Member or any person associated with a Participating Member in
the aggregate beneficially own 10% or more of the Company’s outstanding subordinated debt or
common equity, or 10% or more of the Company’s preferred equity. “FINRA
member participating in the Offering” includes any associated person of a Participating Member
in the Offering, any member of such associated person’s immediate family and any affiliate
of a Participating Member in the Offering. When used in this Section 2(j) the term “affiliate
of a FINRA member” or “affiliated with a FINRA member”
means an entity that controls, is controlled by or is under common control with a FINRA member. The Company
will advise the Placement Agent and its legal counsel, Lucosky Brookman LLP, if it learns that any officer, director or owner of 10% or
more of the Company’s outstanding Common Stock or Common Stock Equivalents is or becomes an
affiliate or associated person of a Participating Member.
(k) Board of Directors.
The Board of Directors is comprised of the persons set forth under the heading of the Company’s Annual Report on Form 10-K captioned
“Directors, Executive Officers, and Corporate Governance.” The qualifications of the persons serving as board members and
the overall composition of the Board of Directors comply with the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder applicable
to the Company and the rules of The Nasdaq Capital Market (the “Trading Market”). In addition, at least a majority of the
persons serving on the Board of Directors qualify as “independent” as defined under the rules of the Trading Market.
(l) Private Placement;
No General Solicitation. No General Solicitation. Assuming the accuracy of the Investors’ representations and warranties set
forth in Purchase Agreement, no registration under the Securities Act is required for the offer and sale of the Warrants and Common Stock
underlying the Warrants by the Company to the Investors as contemplated hereby. The issuance and sale of the Securities pursuant to the
Transaction Documents does not contravene the rules and regulations of the Trading Market. Neither the Company nor any Person acting on
behalf of the Company has offered or sold any of the Warrants or Common Stock underlying the Warrants by any form of general solicitation
or general advertising. The Company has offered the Securities for sale only to the Investors and certain other “accredited investors”
within the meaning of Rule 501 under the Securities Act.
(m) No Investment
Company Status. The Company is not and, after giving effect to the Offering and the application of the proceeds thereof as described
in the Registration Statement, the Time of Sale Disclosure Package, and the Final Prospectus, will not be, required to register as an
“investment company,” as defined in and pursuant to the Investment Company Act of 1940, as amended.
(n) Representations
and Warranties Incorporated by Reference. Each of the representations and warranties (together with any related disclosure schedules
thereto) made by the Company to the Investors in the Purchase Agreement is hereby incorporated herein by reference (as though fully restated
herein) and is hereby made to, and in favor of, the Placement Agent.
(o) Correspondence
with the Commission. Since June 30, 2023, there has been no correspondence between the Company and the Commission.
Section
3. Representations of the Placement Agent. The Placement Agent represents and warrants that it (i)
is a member in good standing of FINRA, (ii) is a broker/dealer registered under the Exchange Act, (iii) is licensed as a
broker/dealer under the laws of the United States of America, applicable to the offers and sales of the Shares by the Placement
Agent, (iv) is and will be a corporate body validly existing under the law of its place of incorporation, (v) has full power and
authority to enter into and perform its obligations under this Agreement, and (vi) the Placement Agent has not, in connection with
the Offering, disclosed to any Investors information that is different from or inconsistent with the information contained in the
Time of Sale Disclosure Package and the Transaction Documents. The Placement Agent will immediately notify the Company in writing of
any change in its status with respect to
subsections (i) through (vi) above. The Placement Agent covenants that it will use its reasonable best efforts to conduct the
Offering hereunder in compliance with the provisions of this Agreement and the requirements of applicable law.
Section 4. Delivery
and Payment. Each Closing shall occur at such place as shall be agreed upon by the Placement Agent and the Company. Subject to the
terms and conditions hereof, at each Closing payment of the purchase price for the Securities sold on such Closing Date shall be made
by Federal Funds wire transfer, against delivery of such Securities, and such Securities shall be registered in such name or names and
shall be in such denominations, as the Placement Agent may each request at least one business day before the time of purchase.
Deliveries of the
documents with respect to the purchase of the Securities, if any, shall be made at such place as shall be agreed upon by the parties.
All actions taken at a Closing shall be deemed to have occurred simultaneously.
Section 5. Covenants
and Agreements of the Company. The Company further covenants and agrees with the Placement Agent as follows:
(a) Registration
Statement Matters. The Company will advise the Placement Agent promptly after it receives notice thereof of the time when any amendment
to the Registration Statement has been filed or becomes effective or any supplement to the Base Prospectus or the Final Prospectus has
been filed and will furnish the Placement Agent with copies thereof. The Company will file promptly all reports and any definitive proxy
or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 14 or 15(d) of the Exchange
Act subsequent to the date of any Prospectus and for so long as the delivery of a prospectus is required in connection with the Offering.
The Company will advise the Placement Agent, promptly after it receives notice of (i) any request by the Commission to amend the Registration
Statement or to amend or supplement any Prospectus or for additional information, and (ii) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or any order directed at any
Incorporated Document, if any, or any amendment or supplement thereto or any order preventing or suspending the use of the Base Prospectus
or the Final Prospectus or any amendment or supplement thereto or any post-effective amendment to the Registration Statement, of the suspension
of the qualification of the Shares for offering or sale in any jurisdiction, of the institution or threatened institution of any proceeding
for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or any Prospectus
or for additional information. The Company shall use its reasonable best efforts to prevent the issuance of any such stop order or prevention
or suspension of such use. If the Commission shall enter any such stop order or order or notice of prevention or suspension at any time,
the Company will use its commercially reasonable efforts to obtain the lifting of such order at the earliest possible moment, or will
file a new registration statement and use its commercially reasonable efforts to have such new registration statement declared effective
as soon as practicable. Additionally, the Company agrees, in connection with the Offering, that it shall comply with the provisions of
Rules 424(b), 430A, 430B, and 430C, as applicable, under the Securities Act, including with respect to the timely filing of documents
thereunder, and will use its reasonable efforts to confirm that any filings made by the Company under such Rule 424(b) are received in
a timely manner by the Commission.
(b) Blue Sky Compliance.
If applicable, the Company will reasonably cooperate with the Placement Agent and the Investors in endeavoring to qualify the Shares for
sale under the securities laws of such jurisdictions (United States and foreign) as the Placement Agent and the Investors may reasonably
request and will make such applications, file such documents, and furnish such information as may be reasonably required for that purpose,
provided the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process
in any jurisdiction where it is not now so qualified or required to file such a consent, and provided further that the Company
shall not be required to produce any new disclosure document. The Company will, from time to time, prepare and file such statements, reports,
and other documents as are or may be required to continue such qualifications in effect for so long a period as the Placement Agent may
reasonably request for distribution of the Shares. The Company will advise the Placement Agent promptly of the suspension of the qualification
or registration of (or any such exemption relating to) the Shares for offering, sale, or trading in any jurisdiction or any initiation
or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration,
or exemption, the Company shall use its commercially reasonable efforts to obtain the withdrawal thereof at the earliest possible moment.
(c) Amendments
and Supplements to a Prospectus and Other Matters. The Company will comply with the Securities Act and the Exchange Act, and the rules
and regulations of the Commission thereunder, so as to permit the completion of the distribution of the Shares as contemplated in this
Agreement, the Incorporated Documents and any Prospectus. If during the period in which a prospectus is required by law to be delivered
in connection with the distribution of Securities contemplated by the Incorporated Documents, this Agreement, and any Prospectus (the
“Prospectus Delivery Period”), any event shall occur as a result of which, in the judgment of the Company or in the
reasonable opinion of the Placement Agent or counsel for the Placement Agent, it becomes necessary to amend or supplement the Incorporated
Documents or any Prospectus in order to make the statements therein, in light of the circumstances under which they were made, as the
case may be, not misleading, or if it is necessary at any time to amend or supplement the Incorporated Documents or any Prospectus or
to file under the Exchange Act any Incorporated Document to comply with any law, the Company will promptly prepare and file with the Commission,
and furnish at its own expense to the Placement Agent and to dealers, an appropriate amendment to the Registration Statement or supplement
to the Registration Statement, the Incorporated Documents, or any Prospectus that is necessary in order to make the statements in the
Incorporated Documents and any Prospectus as so amended or supplemented, in light of the circumstances under which they were made, as
the case may be, not misleading, or so that the Registration Statement, the Incorporated Documents or any Prospectus, as so amended or
supplemented, will comply with law. Before amending the Registration Statement or supplementing the Incorporated Documents or any Prospectus
in connection with the Offering, the Company will furnish the Placement Agent with a copy of such proposed amendment or supplement and
will not file any such amendment or supplement to which the Placement Agent reasonably objects.
(d) Copies of
any Amendments and Supplements to a Prospectus. The Company will furnish the Placement Agent, without charge, during the period beginning
on the date hereof and ending on the later of the last Closing Date of the Offering, as many copies of any Prospectus or prospectus supplement
and any amendments and supplements thereto, as the Placement Agent may reasonably request.
(e) Free Writing
Prospectus. The Company covenants that it will not, unless it obtains the prior written consent of the Placement Agent, make any offer
relating to the Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free
writing prospectus” (as defined in Rule 405 of the Securities Act) required to be filed by the Company with the Commission or
retained by the Company under Rule 433 of the Securities Act. In the event that the Placement Agent expressly consents in writing to any
such free writing prospectus (a “Permitted Free Writing Prospectus”), the Company covenants that it shall (i) treat
each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, and (ii) comply with the requirements of Rule 164 and 433
of the Securities Act applicable to such Permitted Free Writing Prospectus, including in respect
of timely filing with the Commission, legending, and record keeping.
(f) [Reserved]
(g) Transfer Agent.
The Company will maintain, at its expense, a registrar and transfer agent for the Common Stock.
(h) Earnings Statement.
As soon as practicable and in accordance with applicable requirements under the Securities Act, but in any event not later than eighteen
(18) months after the last Closing Date, the Company will make generally available to its security holders and to the Placement Agent
an earnings statement, covering a period of at least twelve (12) consecutive months beginning after the last Closing Date, that satisfies
the provisions of Section 11(a) and Rule 158 under the Securities Act.
(i) Periodic Reporting
Obligations. During the Prospectus Delivery Period, the Company will duly file, on a timely basis, with the Commission and the Trading
Market all reports and documents required to be filed under the Exchange Act within the time periods and in the manner required by the
Exchange Act.
(j) Additional
Documents. The Company will enter into any subscription, purchase or other customary agreements as the Placement Agent or the
Investors deem necessary or appropriate to consummate the Offering, all of which will be in form and substance reasonably acceptable to
the Placement Agent and the Investors. The Company agrees that the Placement Agent may rely upon, and each is a third party beneficiary
of, the representations and warranties, and applicable covenants, set forth in any such purchase, subscription or other agreement with
Investors in the Offering.
(k) No Manipulation
of Price. The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company.
(l) Acknowledgment.
The Company acknowledges that any advice given by the Placement Agent to the Company is solely for the benefit and use of the Board of
Directors of the Company and may not be used, reproduced, disseminated, quoted, or referred to, without the Placement Agent’s prior
written consent.
(m) Announcement
of Offering. The Company acknowledges and agrees that the Placement Agent may, subsequent to the Closing, make public its involvement
with the Offering.
(n) Reliance on
Others. The Company confirms that it will rely on its own counsel and accountants for legal and accounting advice.
(o) Research Matters.
By entering into this Agreement, the Placement Agent does not provide any promise, either explicitly or implicitly, of favorable or continued
research coverage of the Company and the Company hereby acknowledges and agrees that the Placement Agent’s selection as a placement
agent for the Offering was in no way conditioned, explicitly or implicitly, on the Placement Agent providing favorable or any research
coverage of the Company. In accordance with FINRA Rule 2241(b)(2), the parties acknowledge and agree that the Placement Agent has not
directly or indirectly offered favorable research, a specific rating or a specific price target, or threatened to change research, a rating
or a price target, to the Company or inducement for the receipt of business or compensation. The Company hereby waives and releases, to
the fullest extent permitted by law, any claims that the Company may have against the Placement Agent with respect to any conflict of
interest that may arise from the fact that the views expressed by their independent research analysts and research departments may be
different from or inconsistent with the views or advice communicated to the Company by the Placement Agent’s investment banking
divisions. The Company acknowledges that the Placement Agent is a full service securities firm and as such from time to time, subject
to applicable securities laws, may effect transactions for its own account or the account of its customers and hold long or short position
in debt or equity securities of the Company.
(p) Subsequent
Equity Sales.
(i) From the date
hereof until 90 days after the Closing Date (as defined in the Purchase Agreement), neither the Company nor any Subsidiary shall (i) issue,
enter into any agreement to issue or announce the issuance or proposed issuance of any Common Stock or Common Stock Equivalents or (ii)
file any registration statement or amendment or supplement thereto, other than the Prospectus or filing a registration statement on Form
S-8 in connection with any employee benefit plan, in each case without prior written consent of the Placement Agent.
(ii)
From the date hereof until 180 days after the Closing Date (as defined in the Warrants), the Company shall be prohibited from
effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common
Stock Equivalents (or a combination of thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means
a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion price, exercise price
or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common
Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price
that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence
of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock
or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit or an “at-the-market
offering”, whereby the Company may issue
securities at a future determined price. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude
any such issuance, which remedy shall be in addition to any right to collect damages. provided, however, that this Section
5(p)(ii) shall not be applicable to the offer, sale, and issuance of shares of common stock in connection with that certain At
the Market Offering Agreement dated as of September 30, 2022, by and between the Company and H.C. Wainwright & Co., LLC
from the period ninety (90) days after the Closing Date and thereafter
(iii) Notwithstanding
the foregoing, this Section 5(p) shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an
Exempt Issuance. An “Exempt Issuance” means the issuance of (a) Common Stock or equity awards to employees, officers
or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members
of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services
rendered to the Company, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other
securities exercisable or exchangeable for or convertible into Common Stock issued and outstanding on the date of this Agreement, provided
that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the
exercise price, exchange price or conversion price of such securities (other than in connection with automatic price resets, stock splits,
adjustments or combinations as set forth in such securities) or to extend the term of such securities and (c) securities issued pursuant
to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that such securities
are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the
filing of any registration statement in connection therewith during the six month period following the Closing Date, and provided that
any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating
company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional
benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is investing in securities.
(iv) Upon Closing
of the Offering, or if the termination date of the Placement Agent’s engagement is prior to the Closing of the Offering (other than
a termination for “Cause”), then if within nine (9) months following such time, the Company completes any financing of equity,
equity-linked, convertible, or debt financing, or any other capital raising activity with, or receives any proceeds from, any of the investors
contacted or introduced to the Company by the Placement Agent during the engagement term, then the Company will pay the Placement Agent
upon the closing of such financing or receipt of proceeds the compensation equivalent to that set forth in Section 1(a)(i). “Cause,”
for the purpose of this Agreement, shall mean, as determined by a court of competent jurisdiction, Maxim’s gross negligence, willful
misconduct, or a material breach of this Agreement, after being notified in writing of such conduct, and not curing such alleged conduct
within five (5) business days of notification of such alleged wrongful conduct. Notwithstanding anything to the contrary contained herein,
the provisions concerning confidentiality, indemnification, contribution, future rights and the Company’s obligations to pay fees
and reimburse expenses contained herein and the Company’s obligations contained in Section 8 (Indemnification and Contribution)
herein will survive any expiration or termination of this Agreement. Maxim agrees not to use any confidential information concerning the
Company provided to Maxim by the Company for any purposes other than those contemplated under this Agreement.
(q) Lock-Up Agreements.
The Company shall not amend, modify, waive or terminate any provision of any of the Lock-Up Agreements except to extend the term of the
lock-up period and shall enforce the provisions of each Lock-Up Agreement in accordance with its terms. If any party to a Lock-Up Agreement
breaches any provision of a Lock-Up Agreement, the Company shall promptly use its best efforts to seek specific performance of the terms
of such Lock-Up Agreement.
(r) FINRA.
The Company shall advise the Placement Agent (who shall make an appropriate filing with FINRA) if it is aware that any officer, director,
10% or greater shareholder of the Company or Person that received the Company’s unregistered equity securities in the past 180 days
is or becomes an affiliate or associated person of a FINRA member firm prior to the earlier of the termination of this Agreement or the
60-day period after the Effective Date
Section 6. Conditions
of the Obligations of the Placement Agent. The obligations of the Placement Agent hereunder shall be subject to the accuracy of the
representations and warranties on the part of the Company set forth in Section 2 hereof, in each case as of the date hereof and as of
each Closing Date, to the timely performance by each of the Company of its covenants and other obligations hereunder on and as of such
dates, and to each of the following additional conditions:
(a) Compliance
with Registration Requirements; No Stop Order; No Objection from the FINRA. Each Prospectus (in accordance with Rule 424(b)) and “free
writing prospectus” (as defined in Rule 405 of the Securities Act), if any, shall have been duly filed with the Commission,
as appropriate; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or, to the Company’s knowledge, threatened by the Commission; no order
preventing or suspending the use of any Prospectus shall have been issued and no proceeding for that purpose shall have been initiated
or, to the Company’s knowledge, threatened by the Commission; no order having the effect of ceasing or suspending the distribution
of the Securities or any other securities of the Company shall have been issued by any securities commission, securities regulatory authority
or stock exchange and no proceedings for that purpose shall have been instituted or shall be pending or, to the knowledge of the Company,
contemplated by any securities commission, securities regulatory authority or stock exchange; all requests for additional information
on the part of the Commission shall have been complied with; and the FINRA shall have raised no objection to the fairness and reasonableness
of the placement terms and arrangements.
(b) Corporate
Proceedings. All corporate proceedings and other legal matters in connection with this Agreement, the Registration Statement, and
any Prospectus, and the registration, sale, and delivery of the Securities, shall have been completed or resolved in a manner reasonably
satisfactory to the Placement Agent’s counsel, and such counsel shall have been furnished with such papers and information as it
may reasonably have requested to enable such counsel to pass upon the matters referred to in this Section 6.
(c) No Material
Adverse Effect. Subsequent to the execution and delivery of this Agreement and prior to each Closing Date, in the Placement Agent’s
sole judgment after consultation with the Company, there shall not have occurred any Material Adverse Effect.
(d) Opinion of
Counsel for the Company. The Placement Agent shall have received on each Closing Date the favorable opinion and negative assurance
letter of Sichenzia Ross Ference Carmel LLP, counsel to the Company, dated as of such Closing Date, addressed to the Placement Agent and
in form and substance reasonably satisfactory to the Placement Agent.
(e)
Comfort Letter. On the Closing Date, the Placement Agent shall have received a “cold comfort letter” from Lumsden &
McCormick, LLP, the Company’s auditors (the “Auditor”), containing statements and information of the type customarily
included in accountants’ comfort letters with respect to the financial statements and certain financial information contained or
incorporated by reference in the Registration Statement, the Time of Sale Disclosure Package, and the Final Prospectus, addressed to the
Placement Agent and in form and substance reasonably satisfactory in all respects to the Placement Agent The letter shall not disclose
any change in the condition (financial or other), earnings, operations, business or prospects of the Company from that set forth in the
Incorporated Documents or the applicable Prospectus or prospectus supplement, which, in the Placement Agent’s
sole judgment, is material and adverse and that makes it, in the Placement Agent’s sole judgment,
impracticable or inadvisable to proceed with the Offering of the Securities as contemplated by such Prospectus.
(f) Officers’
Certificate. The Placement Agent shall have received on each Closing Date a certificate of the Company, dated as of such Closing Date,
signed by the Chief Executive Officer and the Chief Financial Officer of the Company, to the effect that, and the Placement Agent shall
be satisfied that, the signers of such certificate have reviewed the Registration Statement, the Incorporated Documents, any Prospectus,
and this Agreement and to the further effect that:
(i) The representations
and warranties of the Company in this Agreement are true and correct, as if made on and as of such Closing Date, and the Company has complied
with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to such Closing Date;
(ii) No stop order
suspending the effectiveness of the Registration Statement or the use of any Prospectus has been issued and no proceedings for that purpose
have been instituted or are pending or, to the Company’s knowledge, threatened under the Securities Act; no order having the effect
of ceasing or suspending the distribution of the Securities or any other securities of the Company has been issued by any securities commission,
securities regulatory authority or stock exchange in the United States and no proceedings for that purpose have been instituted or are
pending or, to the knowledge of the Company, contemplated by any securities commission, securities regulatory authority or stock exchange
in the United States;
(iii) When the Registration
Statement became effective, at the time of sale, and at all times subsequent thereto up to the delivery of such certificate, the Registration
Statement and the Incorporated Documents, if any, when such documents became effective or were filed with the Commission, and any Prospectus,
contained all material information required to be included therein by the Securities Act and the Exchange Act and the applicable rules
and regulations of the Commission thereunder, as the case may be, and in all material respects conformed to the requirements of the Securities
Act and the Exchange Act and the applicable rules and regulations of the Commission thereunder, as the case may be, and the Registration
Statement and the Incorporated Documents, if any, and any Prospectus, did not and do not include any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading (provided, however, that the preceding representations and warranties contained in this paragraph
(iii) shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to
the Company by the Placement Agent expressly for use therein) and, since the effective date of the Registration Statement, there has occurred
no event required by the Securities Act and the rules and regulations of the Commission thereunder to be set forth in the Incorporated
Documents which has not been so set forth; and
(iv) Subsequent
to the respective dates as of which information is given in the Registration Statement, the Incorporated Documents and any Prospectus,
there has not been: (a) any Material Adverse Effect; (b) any transaction that is material to the Company and the Subsidiaries taken as
a whole, except transactions entered into in the ordinary course of business; (c) any obligation, direct or contingent, that is material
to the Company and the Subsidiaries taken as a whole, incurred by the Company or any Subsidiary, except obligations incurred in the ordinary
course of business; (d) any material change in the capital stock (except changes thereto resulting from the exercise of outstanding stock
options or warrants) or outstanding indebtedness of the Company or any Subsidiary; (e) any dividend or distribution of any kind declared,
paid or made on the capital stock of the Company; or (f) any loss or damage (whether or not insured) to the property of the Company or
any Subsidiary which has been sustained or will have been sustained which has a Material Adverse Effect.
(g) Secretary’s
Certificate. At each Closing Date, the Placement Agent shall have received a certificate of the Company signed by the Secretary or
another authorized officer of the Company, dated such Closing Date certifying on behalf of the Company and not in an individual capacity:
(i) that the amended and restated certificate of incorporation of the Company is true and complete, has not been modified and is in full
force and effect; (ii) that the resolutions of the Company’s Board of Directors relating to the Offering are in full force and effect
and have not been modified; and (iii) as to the incumbency of the officers of the Company. The documents referred to in such certificate
shall be attached to such certificate.
(h) Lock-Up Agreements.
On the Closing Date (and, if there is more than one Closing Date, then on only the initial Closing Date, the Placement Agent shall have
received the executed lock-up agreements from each of the directors and officers of the Company.
(i) Stock Exchange
Listing. The Common Stock shall be registered under the Exchange Act and shall be listed on the Trading Market, and the Company shall
not have taken any action designed to terminate, or likely to have the effect of terminating, the registration of the Common Stock under
the Exchange Act or delisting or suspending from trading the Common Stock from the Trading Market, nor shall the Company have received
any information suggesting that the Commission or the Trading Market is contemplating terminating such registration or listing.
(j) Additional
Documents. On or before each Closing Date, the Placement Agent and counsel for the Placement Agent shall have received such information
and documents as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the Securities as
contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of
the conditions or agreements, herein contained.
If any condition
specified in this Section 6 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Placement
Agent by notice to the Company at any time on or prior to a Closing Date, which termination shall be without liability on the part of
any party to any other party, except that Section 7 (Payment of Expenses), Section 8 (Indemnification and Contribution),
and Section 9 (Representations and Indemnities to Survive Delivery) shall at all times be effective and shall survive such termination.
Section 7. Payment
of Expenses. The Company agrees to pay all costs, fees, and expenses incurred by the Company in connection with the performance of
its obligations hereunder and in connection with the transactions contemplated hereby, including, without limitation: (i) any filing fees
relating to the registration of the Securities to be sold in the Offering; (ii) any filing fees associated with the review of an Offering
by FINRA; (iii) all fees and expenses relating to the listing of the Securities on the Trading Market; (iv) all fees, expenses, and disbursements
relating to the registration, qualification, or exemption of the Securities under the securities or “blue sky” laws of such
states of the United States of America as the Company and the Placement Agent shall together determine; (v) the costs of all mailing and
printing of the offering documents, including, without limitation, any underwriting or placement agent agreement, any agreement among
underwriters, any selected dealers’ agreement, any underwriter’s questionnaire, custody agreement, and power of attorney relating
to any selling stockholders, any registration statement, prospectus, prospectus supplement, private placement memorandum, or similar information
document, and all amendments, supplements, and exhibits thereto, all in as many copies as the Placement Agent may reasonably deem necessary;
(vi) the costs of preparing, printing and delivering certificates representing the Securities; (vii) the costs for “tombstones”
and/or other commemorative items; (viii) fees and expenses of accountants, auditors, and the Company’s legal counsel; (ix) fees
and expenses, if any, of the transfer agent for the Securities and of any escrow agent appointed to hold investor’s funds in connection
with the Offering; (x) stock transfer and/or stamp taxes, if any, payable upon the transfer of the Securities from the Company to the
Placement Agent or the purchasers thereof; (xi) all costs and expenses incident to the travel and accommodation of the Company’s
and the Placement Agent’s employees on the “roadshow,” if any,; and (xi) all other fees, costs, and expenses
referred to in Part II of the Registration Statement.
Section 8. Indemnification and Contribution.
(a) The Company agrees
to indemnify and hold harmless the Placement Agent, its affiliates and each person controlling the Placement Agent (within the meaning
of Section 15 of the Securities Act), and the directors, officers, agents assisting with the Offering, and employees of the Placement
Agent, their affiliates and each such controlling person (the Placement Agent, and each such entity or person. an “Indemnified
Person”) from and against any losses, claims, damages, judgments, assessments, costs, and other liabilities (collectively, the
“Liabilities”), and shall reimburse each Indemnified Person for all reasonable and documented out of pocket fees and
expenses (including the reasonable documented and out of pocket fees and expenses of one counsel for all Indemnified Persons, except as
otherwise expressly provided herein) (collectively, the “Expenses”) as they are incurred by an Indemnified Person in
investigating, preparing, pursuing, or defending any Actions, whether or not any Indemnified Person is a party thereto, (i) caused by,
or arising out of or in connection with, any untrue statement or alleged untrue statement of a material fact contained in the Registration
Statement, any Incorporated Document, or any Prospectus or by any omission or alleged omission to state therein a material fact necessary
to make the statements therein, in light of the circumstances under which they were made, not misleading (other than untrue statements
or alleged untrue statements in, or omissions or alleged omissions from, information relating to an Indemnified Person furnished in writing
by or on behalf of such Indemnified Person expressly for use in the Incorporated Documents) or (ii) otherwise arising out of or in connection
with advice or services rendered or to be rendered by any Indemnified Person pursuant to this Agreement, the transactions contemplated
thereby or any Indemnified Person’s actions or inactions in connection with any such advice, services or transactions; provided,
however, that, in the case of clause (ii) only, the Company shall not be responsible for any Liabilities or Expenses of any Indemnified
Person that are finally judicially determined to have resulted primarily from such Indemnified Person’s (x) negligence, gross negligence,
willful misconduct, or bad faith in connection with any of the advice, actions, inactions, or services referred to above or (y) use of
any offering materials or information concerning the Company in connection with the offer or sale of the Securities in the Offering which
were not authorized for such use by the Company and which use constitutes negligence, gross negligence or willful misconduct. The Company
also agrees to reimburse each Indemnified Person for all Expenses as they are incurred in connection with enforcing such Indemnified Person’s
rights under this Agreement.
(b) Upon receipt
by an Indemnified Person of actual notice of an Action against such Indemnified Person with respect to which indemnity may be sought under
this Agreement, such Indemnified Person shall promptly notify the Company in writing; provided that failure by any Indemnified
Person so to notify the Company shall not relieve the Company from any liability which the Company may have on account of this indemnity
or otherwise to such Indemnified Person, except to the extent the Company shall have been prejudiced by such failure. The Company shall,
if requested by the Placement Agent, assume the defense of any such Action including the employment of counsel reasonably satisfactory
to the Placement Agent, which counsel may also be counsel to the Company. Any Indemnified Person shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless: (i) the Company has failed promptly to assume the defense and employ counsel; or (ii) the named parties
to any such Action (including any impeded parties) include such Indemnified Person and the Company, and such Indemnified Person shall
have been advised in the reasonable opinion of counsel that there is an actual conflict of interest that prevents the counsel selected
by the Company from representing both the Company (or another client of such counsel) and any Indemnified Person; provided that
the Company shall not in such event be responsible hereunder for the fees and expenses of more than one firm of separate counsel for all
Indemnified Persons in connection with any Action or related Actions, in addition to any local counsel. The Company shall not be liable
for any settlement of any Action effected without its written consent (which shall not be unreasonably withheld). In addition, the Company
shall not, without the prior written consent of the Placement Agent (which shall not be unreasonably withheld), settle, compromise, or
consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened Action in respect of which indemnification
or contribution may be sought hereunder (whether or not such Indemnified Person is a party thereto) unless such settlement, compromise,
consent, or termination includes an unconditional release of each Indemnified Person from all Liabilities arising out of such Action for
which indemnification or contribution may be sought hereunder. The indemnification required hereby shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as such expense, loss, damage, or liability is incurred and is
due and payable.
(c) In the event
that the foregoing indemnity is unavailable to an Indemnified Person other than in accordance with this Agreement, the Company shall contribute
to the Liabilities and Expenses paid or payable by such Indemnified Person in such proportion as is appropriate to reflect (i) the relative
benefits to the Company, on the one hand, and to the Placement Agent and any other Indemnified Person, on the other hand, of the matters
contemplated by this Agreement or (ii) if the allocation provided by the immediately preceding clause is not permitted by applicable law,
not only such relative benefits but also the relative fault of the Company, on the one hand, and the Placement Agent and any other Indemnified
Person, on the other hand, in connection with the matters as to which such Liabilities or Expenses relate, as well as any other relevant
equitable considerations; provided that in no event shall the Company contribute less than the amount necessary to ensure that
all Indemnified Persons, in the aggregate, are not liable for any Liabilities and Expenses in excess of the amount of fees actually received
by the Placement Agent pursuant to this Agreement. For purposes of this paragraph, the relative benefits to the Company, on the one hand,
and to the Placement Agent on the other hand, of the matters contemplated by this Agreement shall be deemed to be in the same proportion
as (a) the total value paid or contemplated to be paid to or received or contemplated to be received by the Company in the transaction
or transactions that are within the scope of this Agreement, whether or not any such transaction is consummated, bears to (b) the fees
to be received by the Placement Agent under this Agreement. Notwithstanding the above, no person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the Securities Act, as amended, shall be entitled to contribution from a party who was not guilty
of fraudulent misrepresentation.
(d) The Company also
agrees that no Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company
for or in connection with advice or services rendered or to be rendered by any Indemnified Person pursuant to this Agreement, the transactions
contemplated thereby or any Indemnified Person’s actions or inactions in connection with any such advice, services, or transactions
except for Liabilities (and related Expenses) of the Company that are finally judicially determined to have resulted primarily from such
Indemnified Person’s negligence, gross negligence or willful misconduct in connection with any such advice, actions, inactions or
services.
(e) The reimbursement,
indemnity, and contribution obligations of the Company set forth herein shall apply to any modification of this Agreement and shall remain
in full force and effect regardless of any termination of, or the completion of any Indemnified Person’s services under or in connection
with, this Agreement.
Section 9. Representations
and Indemnities to Survive Delivery. The respective indemnities, agreements, representations, warranties, and other statements of
the Company or any person controlling the Company, of its officers, and of the Placement Agent set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or on behalf of the Placement Agent, the Company, or any
of its or their respective partners, officers, or directors or any controlling person, as the case may be, and will survive delivery of
and payment for the Securities sold hereunder and any termination of this Agreement. A successor to the Placement Agent, or to the Company,
its directors or officers or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution, and
reimbursement agreements contained in this Agreement.
Section 10. Notices.
All communications hereunder shall be in writing and shall be mailed, hand delivered or e-mailed and confirmed to the parties hereto as
follows:
Maxim Group LLC 300 Park Ave
16th Floor
New York, NY 10022
e-mail: [***]
Attention: [***]
With a copy to:
Lucosky Brookman LLP,
101 Wood Avenue South, 5th
Floor Woodbridge, New Jersey 08830.
e-mail: [***]
Attention: [***]
If to the Company:
Worksport, Ltd. 2500 N America Dr
West Seneca, NY 14224e-mail: [***]
Attention: Steven Rossi
With a copy (which shall not constitute
notice) to:
Sichenzia Ross Ference Carmel LLP 1185
Avenue of the Americas, 31st floor New York, NY 10036
e-mail: [***]
Attention: [***]
Any
party hereto may change the address for receipt of communications by giving written notice to the others.
Section 11. Successors.
This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 7 hereof, and to their respective successors, and personal representative,
and no other person will have any right or obligation hereunder.
Section 12. Partial
Unenforceability. The invalidity or unenforceability of any section, paragraph, or provision of this Agreement shall not affect the
validity or enforceability of any other section, paragraph, or provision hereof. If any Section, paragraph, or provision of this Agreement
is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
Section 13. Governing
Law Provisions. This Agreement shall be governed by and construed in accordance with the law of the State of New York. Each of the
Placement Agent and the Company: (i) agrees that any legal suit, action, or proceeding arising out of or relating to this Agreement and/or
the transactions contemplated hereby shall be instituted exclusively in Supreme Court, of the State of New York, sitting in the County
of New York, (ii) waives any objection which it may have or hereafter to the venue of any such suit, action, or proceeding, and (iii)
irrevocably consents to the jurisdiction such courts in any such suit, action or proceeding. The Placement Agent and the Company further
agree to accept and acknowledge service of any and all process which may be served in any such suit, action, or proceeding in such courts
and agree that service of process upon the Company mailed by certified mail to the Company’s address set forth in Section 10
hereof (or to such other address as the Company shall have advised the Placement Agent by notice pursuant to Section 10) shall
be deemed in every respect effective service of process upon the Company, in any such suit, action, or proceeding, and service of process
upon the Placement Agent mailed by certified mail to the Placement Agent’s address as set forth in Section 10 hereof (or
to such other address as the Placement Agent shall have advised the Company by notice pursuant to Section 10) shall be deemed in
every respect effective service process upon the Placement Agent, in any such suit, action, or proceeding. Notwithstanding any provision
of this Agreement to the contrary, the Company agrees that neither the Placement Agent nor their affiliates, and the respective officers,
directors, employees, agents, and representatives of the Placement Agent, their affiliates and each other person, if any, controlling
the Placement Agent or any of their affiliates, shall have any liability (whether direct or indirect, in contract or tort or otherwise)
to the Company for or in connection with the engagement and transaction described herein except for any such liability for losses, claims,
damages, or liabilities incurred by the Placement Agent that are finally judicially determined to have resulted from the fraud, willful
misconduct, or gross negligence of such individuals or entities. If either party shall commence an action or proceeding to enforce any
provision of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable
attorney’s fees and other costs and expenses incurred with the investigation, preparation, and prosecution of such action or proceeding.
Section 14. General Provisions.
(a) This Agreement
constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings, and negotiations with respect to the subject matter hereof.
(b) Notwithstanding
anything herein to the contrary, the Engagement Agreement between the Company and Placement Agent shall continue to be effective and the
terms therein shall continue to survive and be enforceable by the Placement Agent and the Company in accordance with its terms, provided
that, in the event of a conflict between the terms of the Engagement Agreement and this Agreement, the terms of this Agreement shall prevail.
(c) This Agreement
may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. Facsimile or other electronically scanned and transmitted signatures (including by email attachment)
and electronic signatures (including by DocuSign) shall be deemed originals for all purposes of this Agreement.
(d) This Agreement
may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit. Section headings herein are for the convenience of the
parties only and shall not affect the construction or interpretation of this Agreement.
(e) The Company acknowledges
that in connection with the Offering: (i) the Placement Agent has acted at arm’s length, is not agent of, and owes no fiduciary
duties to the Company, any officer or director of the Company or any other person affiliated with any of them, (ii) the Placement Agent
owes the Company only those duties and obligations set forth in this Agreement, and (iii) the Placement Agent may have interests that
differ from those of the Company. The Company waives to the full extent permitted by applicable law any claims it may have against the
Placement Agent arising from an alleged breach of fiduciary duty in connection with the offering of the Securities.
[The remainder of this page has been intentionally
left blank.]
If the foregoing
is in accordance with your understanding of our agreement, please sign below whereupon this instrument, along with all counterparts hereof,
shall become a binding agreement in accordance with its terms.
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Very truly yours, |
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Maxim Group, LLC |
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By: |
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Name: |
[*] |
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Title: |
Authorized Representative |
The foregoing Placement
Agency Agreement is hereby confirmed and accepted as of the date first above
written.
WORKSPORT, LTD. |
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By: |
/s/ |
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Name: |
Steven Rossi |
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Title: |
Chief Executive Officer |
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Exhibit 4.1
PRE-FUNDED COMMON STOCK PURCHASE WARRANT
WORKSPORT LTD.
Warrant Shares: 1,575,000 |
Initial Exercise Date: November 2, 2023 |
THIS PRE-FUNDED COMMON STOCK
PURCHASE WARRANT (the “Warrant”) certifies that, for value received, _____________ or its assigns (the “Holder”)
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after
the date hereof (the “Initial Exercise Date”) until this Warrant is exercised in full (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Worksport Ltd., a Nevada corporation (the “Company”), up to
1,575,000 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).
Section 1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement
(the “Purchase Agreement”), dated October 31, 2023, among the Company and the purchasers signatory thereto.
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 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) 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 aggregate exercise price of this Warrant, except for a nominal exercise price of $0.0001 per Warrant Share, was pre-funded to the
Company on or prior to the Initial Exercise Date and, consequently, no additional consideration (other than the nominal exercise price
of $0.0001 per Warrant Share) shall be required to be paid by the Holder to any Person to effect any exercise of this Warrant. The Holder
shall not be entitled to the return or refund of all, or any portion, of such pre-paid aggregate exercise price under any circumstance
or for any reason whatsoever. The remaining unpaid exercise price per share of Common Stock under this Warrant shall be $0.0001, subject
to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise.
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; |
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(B) |
= the Exercise Price of this Warrant, as adjusted hereunder; and |
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(X) |
= the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. |
If Warrant Shares
are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act,
the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position
contrary to this Section 2(c).
“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 (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 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 Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
“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 (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 the OTCQB Venture Market (“OTCQB”) or the OTCQX Best
Market (“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 are then reported on the Pink Open Market (“Pink Market”) operated by the
OTC Markets, Inc. (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 Purchasers of a majority in interest of the Securities then outstanding and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the Company.
d) Mechanics of Exercise.
i. Delivery of Warrant Shares Upon
Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by
crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit
or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there
is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B)
this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s
share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to
such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) 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. Notwithstanding the foregoing, with respect to any Notice(s) of
Exercise delivered on or prior to 12:00 p.m. (New York City time) on the Initial Exercise Date, which may be delivered at any time after
the time of execution of the Purchase Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m.
(New York City time) on the Initial Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes
hereunder, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by such Warrant
Share Delivery Date.
ii. Delivery of New Warrants Upon
Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with
this Warrant.
iii. Rescission Rights. If the
Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share
Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure
to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause
the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to
an exercise on or before the Warrant Share Delivery Date, 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. For the avoidance of doubt,
nothing in this Section 2(d)(vi) shall require the Company to deliver the Warrant Shares on a date earlier than the Warrant Share Delivery
Date.
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) Reserved.
c) 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).
d) Pro Rata Distributions.
During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets
(or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation,
any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant,
then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have
participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the
date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such Distribution (provided, however, that, to the extent
that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation,
then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares
of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the
benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation). To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion
of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.
e) 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, provided, however that the sale by the Company of any Subsidiary, other than a Material Subsidiary,
does not constitute a Fundamental Transaction (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). “Material Subsidiary” shall mean
any subsidiary of the Company that is material to the business and operations of the Company as described in the SEC Reports. 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 and the other Transaction Documents in accordance with the provisions of this Section 3(e) 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 and the other Transaction Documents referring to the “Company” shall refer instead
to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities,
jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor
Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents with
the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company
herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) 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.
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.
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 issuance date of this Warrant and shall be identical
with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register.
The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.
Section 5. Miscellaneous.
a) 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) Jurisdiction.
All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement.
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 or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results
in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder
in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h) Notices.
Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in
accordance with the notice provisions of the Purchase Agreement.
i) Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase
price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the
Company.
j) Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any
action for specific performance that a remedy at law would be adequate.
k) Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable
by the Holder or holder of Warrant Shares.
l) Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
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.
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(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.
WORKSPORT LTD. |
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NOTICE OF EXERCISE
(1) The undersigned hereby elects
to purchase 1,575,000 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):
[ ] lawful money of the United States;
or
[ ] if permitted the cancellation of
such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue said Warrant
Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following
DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of Investing
Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this
form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and
all rights evidenced thereby are hereby assigned to
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Dated: _______________ __, ______ |
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Exhibit 4.2
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
WORKSPORT LTD.
Warrant Shares: 7,000,000 |
Initial Exercise Date: May 2, 2024 |
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Issue Date: November 2, 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
May 2, 2024 (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on May 2, 2029 (the “Termination
Date”) but not thereafter, to subscribe for and purchase from Worksport Ltd., a Nevada corporation (the “Company”),
up to 7,000,000 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).
Section 1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement
(the “Purchase Agreement”), dated October 31, 2023, among the Company and the purchasers signatory thereto.
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 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) 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 $1.34, 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).
“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 (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 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 Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
“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 (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 the OTCQB Venture Market (“OTCQB”) or the OTCQX Best Market
(“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 are then reported on the Pink Open Market (“Pink Market”) operated by the OTC Markets, Inc. (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 Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.
d) Mechanics of Exercise.
i. Delivery of Warrant Shares Upon
Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by
crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit
or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there
is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder
or (B) 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. For the avoidance of doubt,
nothing in this Section 2(d)(vi) shall require the Company to deliver the Warrant Shares on a date earlier than the Warrant Share Delivery
Date.
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) Reserved.
c) 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). To the extent
that this Warrant has not been partially or completely exercised at the time of grant of the Purchase Rights, such portion of the Purchase
Rights shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.
d) Pro Rata Distributions.
During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets
(or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation,
any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant,
then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have
participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the
date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such Distribution (provided, however, that, to the extent
that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation,
then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares
of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the
benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation). To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion
of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.
e) 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, provided, however that the sale by the Company of any Subsidiary, other than a Material Subsidiary,
does not constitute a Fundamental Transaction, (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). “Material Subsidiary” shall mean
any subsidiary of the Company that is material to the business and operations of the Company as described in the SEC Reports. 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, the Holder shall only be entitled to receive from the Company
or any Successor Entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised
portion of this Warrant, that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental
Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock
are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided,
further, that if holders of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction,
such holders of Common Stock will be deemed to have received 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 Termination Date, (B) an expected volatility equal to the greater of (1) the 30 day volatility, (2) the 100 day volatility or
(3) the 365 day volatility, each of clauses (1)-(3) as obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization
factor) as of the Trading Day immediately following the public announcement of the applicable contemplated Fundamental Transaction, (C)
the underlying price per share used in such calculation shall be the highest VWAP during the period beginning on the Trading Day immediately
preceding the public 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 3(e) 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 the later of (i) five Business Days of the Holder’s election and (ii) the date of consummation
of the Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not
the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant
and the other Transaction Documents in accordance with the provisions of this Section 3(e) 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
and the other Transaction Documents referring to the “Company” shall refer instead to each of the Company and the Successor
Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally with the Company,
may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the
obligations of the Company prior thereto under this Warrant and the other Transaction Documents with the same effect as if the Company
and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance of doubt,
the Holder shall be entitled to the benefits of the provisions of this Section 3(e) 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.
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.
Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of
Section 4.1 of the Purchase Agreement, 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 issuance date of this Warrant and shall be identical
with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register.
The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.
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, comply with the provisions of Section 5.7 of the Purchase Agreement.
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. 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 or the Purchase Agreement, 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 Worksport Ltd., 55G East Beaver Creek Rd., Richmond Hill, Ontario, L4B 1E5, Canada, Attention: Steven Rossi, email
address: srossi@worksport.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 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 and the Holder.
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.
WORKSPORT LTD. |
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NOTICE OF EXERCISE
(1) The undersigned hereby elects
to purchase 7,000,000 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):
[ ] 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
5.1
November
2, 2023
Worksport
Ltd.,
2500
N America Dr
West
Seneca, NY 14224
Ladies
and Gentlemen:
We
are counsel to Worksport Ltd., a Nevada corporation (the “Company”), in connection with the offering (“Offering”)
by the Company of an aggregate of (i) 1,925,000 shares (the “Shares”) of common stock, par value $0.0001 per share,
of the Company (the “Common Stock”); (ii) 1,575,000 prefunded warrants (the “Prefunded Warrants”)
to purchase up to an aggregate of 1,575,000 shares of Common Stock of the Company; and (iii) warrants to purchase up to an aggregate
of 7,000,000 shares of Common Stock of the Company (“Warrants” and, together with the Shares and Prefunded Warrants,
the “Securities”). All capitalized terms used herein but not otherwise defined have the meanings ascribed to them
in the Securities Purchase Agreement dated as of October 31, 2023, by and between the Company and the purchaser listed on the signature
page thereto (the “Securities Purchase Agreement”).
The
Shares and Prefunded Warrants are being offered pursuant to a prospectus supplement dated as of October 31, 2023 (the “Final
Prospectus Supplement”) to the registration statement on Form S-3 (File No. 333-267696) under the Securities Act of
1933, as amended (the “Act”), the registration statement of which was filed with the Securities and Exchange Commission
(the “Commission”) on September 30, 2022 (the “Registration Statement”), and declared effective
on October 13, 2022. The Warrants are being offered pursuant to the Securities Purchase Agreement. This opinion is being furnished in
accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of 1933 (the “Securities Act”).
Based
upon the foregoing and subject to the qualifications and assumptions stated herein, we are of the opinion that:
In
connection with this opinion letter, we have examined the following documents: (i) the Registration Statement; (ii) the Final Prospectus
Supplement; (iii) the Placement Agency Agreement dated as of October 31, 2023, by and between the Company and Maxim Group LLC, including
all attachments thereto; (iv) the Securities Purchase Agreement; (v) the form of Prefunded Warrant; (vi) such corporate records, agreements,
documents and other instruments, and such certificates or comparable documents of public officials and of officers and representatives
of the Company and have made such inquiries of such officers and representatives, as we have deemed relevant and necessary as a basis
for the opinions hereinafter set forth. We have also examined such questions of law as we considered necessary.
In
our examination of documents for purposes of this opinion, we have assumed, and express no opinion as to, the genuineness of all signatures,
the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified, conformed or photostatic copies, and the authenticity of the originals of such
latter documents. As to all questions of fact material to this opinion that have not been independently established, we have relied upon
certificates or comparable documents of officers and representatives of the Company.
1185
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T (212) 930-9700 | F (212) 930-9725 | WWW.SRFC.LAW
Based
on the foregoing and subject to the qualifications, assumptions, and limitations stated herein, we are of the opinion that if and when
the Shares and Prefunded Warrants are issued and delivered pursuant to the Securities Purchase Agreement, such Shares will be validly
issued, fully paid and non-assessable.
The
foregoing opinions are limited to matters involving the Nevada Business Corporations Act and the Laws of the State of New York, and we
do not express any opinion as to the laws of any other jurisdiction.
We
consent to the use of this opinion as an Exhibit 5.1 to the Registration Statement and further consent to all references to us, if any,
in the Final Prospectus Supplement. We do not thereby admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act or the rules and regulations of the SEC thereunder. This opinion is rendered on, and speaks only as of,
the date of this letter first written above, and does not address any potential change in facts or law that may occur after the date
of this opinion letter. We assume no obligation to advise you of any fact, circumstance, event or change in the law or the facts that
may hereafter be brought to our attention, whether or not such occurrence would affect or modify any of the opinions expressed herein.
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Very
truly yours, |
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/s/
Sichenzia Ross Ference Carmel LLP |
1185
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Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is entered into and made effective as of October 31, 2023, by and
between WORKSPORT LTD., a Nevada corporation (the “Company”), and each purchaser identified on the signature pages
hereto (each, including its successors and assigns, a “Purchaser” and collectively the “Purchasers”).
RECITALS
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities
Act (as defined below), as to the Shares and Pre-Funded Warrants and (ii) an exemption from the registration requirements of Section
5 of the Securities Act contained in Section 4(a)(2) thereof and/or Regulation D thereunder as to the Warrants, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of
the Company as more fully described in this Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt
and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE
I.
DEFINITIONS
1.1
Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms
have the respective meanings set forth in this Section 1.1:
“Action”
shall have the meaning ascribed to such term in Section 3.1(j).
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Agreement”
shall have the meaning ascribed to such term in the Preamble.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day other than Saturday, Sunday, or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; 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 are generally
open for use by customers on such day.
“Closing”
means the closing of the purchase and sale of the Shares pursuant to Section 2.1.
“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties
thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Securities, in each case, have been satisfied or waived, but in no event later than the second (2nd) Trading
Day following the date hereof.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the 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.
“Common
Warrant” means, collectively, the Common Stock purchase warrants to be delivered to the Purchasers at the Closing in accordance
with Section 2.2(a) hereof, which Common Warrants shall be exercisable on the six month anniversary of the issue date and have a term
equal to five and a half (5.5) years, in the form of Exhibit B attached hereto.
“Common
Warrant Shares” means the shares of Common Stock issuable upon exercise of the Common Warrants.
“Company”
shall have the meaning ascribed to such term in the Preamble.
“Company
Counsel” means Sichenzia Ross Ference Carmel LLP, with offices located at 1185 Avenue of the Americas, 31st floor New York,
NY 10036.
“Disclosure
Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.
“Disclosure
Time” means, (i) if this Agreement is signed on a day that is not a Trading Day or after 9:00 a.m. (New York City time) and
before midnight (New York City time) on any Trading Day, 9:01 a.m. (New York City time) on the Trading Day immediately following the
date hereof, unless otherwise instructed as to an earlier time by the Placement Agent, and (ii) if this Agreement is signed between midnight
(New York City time) and 9:00 a.m. (New York City time) on any Trading Day, no later than 9:01 a.m. (New York City time) on the date
hereof, unless otherwise instructed as to an earlier time by the Placement Agent.
“DWAC”
means the Deposit or Withdrawal at Custodian system of The Depository Trust Company.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company
pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of
Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered
to the Company, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other
securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this
Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such
securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with
stock splits or combinations) or to extend the term of such securities, and (c) securities issued pursuant to acquisitions or
strategic transactions approved by a majority of the disinterested directors of the Company, provided that such securities are
issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the
filing of any registration statement in connection therewith during the prohibition period in Section 4.12(a) herein, and provided
that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries,
an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the
Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in
securities.
“FCPA”
means the United States Foreign Corrupt Practices Act of 1977, as amended.
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(b).
“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right, or other restriction.
“Lock-Up
Agreement” means the Lock-Up Agreement, by and among the Company and the directors and officers and certain shareholders of
the Company, substantially in the form of Exhibit A attached hereto.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).
“OFAC”
means the Office of Foreign Assets Control of the United States Department of the Treasury.
“Per
Share Purchase Price” equals $1.34, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations,
and other similar transactions of the Common Stock that occur after the date of this Agreement, and up to and including the Closing Date.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof), or other entity of any kind.
“Placement
Agent” means Maxim Group LLC.
“Prefunded
Warrant” means, collectively, the Pre-Funded Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance
with Section 2.2(a) hereof, which Prefunded Warrants shall be exercisable immediately and shall expire when exercised in full, in the
form of Exhibit C attached hereto.
“Prefunded
Warrant Purchase Price” equals $1.3399, subject to adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.
“Prefunded
Warrant Shares” means the shares of Common Stock issuable upon exercise of the Prefunded Warrants.
“Proceeding”
means an action, claim, suit, investigation, or proceeding (including, without limitation, an investigation or partial proceeding, such
as a deposition), whether commenced or, to the knowledge of the Company, threatened.
“Prospectus”
means the final base prospectus filed for the Registration Statement, including all information, documents, and exhibits filed with or
incorporated by reference into such base prospectus.
“Prospectus
Supplement” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act, including all information,
documents, and exhibits filed with or incorporated by reference into such Prospectus Supplement, that is filed with the Commission in
connection with the offer and sale of the Shares.
“Purchaser”
shall have the meaning ascribed to such term in the Preamble.
“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.7.
“Registration
Statement” means the effective registration statement with Commission File No. 333- 267696, including all information, documents,
and exhibits filed with or incorporated by reference into such registration statement, which registers the sale of the Shares to the
Purchasers.
“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“Restricted
Period” shall have the meaning ascribed to such term in Section 4.8.
“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.
“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.
“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Securities”
means the Shares, the Warrants, the Warrant Shares, the Pre-Funded Warrants and the Pre-Funded Warrant Shares.
“Shares”
means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be
deemed to include locating and/or borrowing shares of Common Stock).
“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares and Warrants and Pre-Funded Warrants purchased
hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription
Amount,” in United States dollars and in immediately available funds.
“Subsidiary”
means any subsidiary of the Company as set forth in the SEC Reports, where applicable, also including any direct or indirect subsidiary
of the Company formed or acquired after the date hereof.
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the 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).
“Transaction
Documents” means this Agreement, the Warrants, the Pre-Funded Warrants, all exhibits and schedules thereto and hereto, the
Lock-Up Agreements, and any other documents or agreements executed in connection with the transactions contemplated hereunder.
“Transfer
Agent” means Vstock Transfer, LLC., the current transfer agent of the Company, with a mailing address of 18 Lafayette Place,
Woodmere, NY 11598, and any successor transfer agent of the Company.
“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.12(b).
“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 the OTCQB Venture Market (“OTCQB”) or the OTCQX
Best Market (“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 are then reported in the Pink Open Market (“Pink Market”) operated
by OTC Markets, Inc. (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 Purchasers
of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which
shall be paid by the Company.
“Warrants”
means, collectively, the Common Warrants and the Pre-Funded Warrants.
“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE
II.
PURCHASE
AND SALE
2.1 Closing. On
the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchasers,
severally and not jointly, agree to purchase, up to an aggregate of $4,690,000 of Shares and Warrants; provided, however,
that, to the extent that a Purchaser determines, in its sole discretion, that such Purchaser (together with such Purchaser’s
Affiliates, and any Person acting as a group together with such Purchaser or any of such Purchaser’s Affiliates) would
beneficially own in excess of the Beneficial Ownership Limitation, or as such Purchaser may otherwise choose, in lieu of purchasing
Shares such Purchaser may elect to purchase Pre- Funded Warrants in lieu of Shares in such manner to result in the same aggregate
purchase price being paid by such Purchaser to the Company. The “Beneficial Ownership Limitation” shall be 4.99%
(or, at the election of the Purchaser at Closing, 9.99%) of the number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of the Securities on the Closing Date. Each Purchaser’s Subscription Amount as set forth on the
signature page hereto executed by such Purchaser shall be made available for “Delivery Versus Payment” settlement with
the Company or its designee. The Company shall deliver to each Purchaser its respective Shares (and/or Pre-Funded Warrants) and a
Warrant as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in
Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the
Closing shall take place remotely by electronic transfer of the Closing documentation. Notwithstanding anything herein to the
contrary, if at any time on or after the time of execution of this Agreement by the Company and an applicable Purchaser, through,
and including the time immediately prior to the Closing (the “Pre-Settlement Period”), such Purchaser sells to
any Person all, or any portion, of the Shares to be issued hereunder to such Purchaser at the Closing (collectively, the
“Pre-Settlement Shares”), such Purchaser shall, automatically hereunder (without any additional required actions
by such Purchaser or the Company), be deemed to be unconditionally bound to purchase, such Pre-Settlement Shares at the Closing;
provided, that the Company shall not be required to deliver any Pre-Settlement Shares to such Purchaser prior to the Company’s
receipt of the purchase price of such Pre-Settlement Shares hereunder; and provided further that the Company hereby acknowledges and
agrees that the forgoing shall not constitute a representation or covenant by such Purchaser as to whether or not during the
Pre-Settlement Period such Purchaser shall sell any shares of Common Stock to any Person and that any such decision to sell any
shares of Common Stock by such Purchaser shall solely be made at the time such Purchaser elects to effect any such sale, if any.
Unless otherwise directed by the Placement Agent, settlement of the Shares shall occur via “Delivery Versus Payment”
(“DVP”) (i.e., on the Closing Date, the Company shall issue the Shares registered in the Purchasers’ names
and addresses and released by the Transfer Agent directly to the account(s) at the Placement Agent identified by each Purchaser;
upon receipt of such Shares, the Placement Agent shall promptly electronically deliver such Shares to the applicable Purchaser, and
payment therefor shall be made by the Placement Agent (or its clearing firm) by wire transfer to the Company).
Notwithstanding
anything to the contrary herein and a Purchaser’s Subscription Amount set forth on the signature pages attached hereto, the number
of Shares purchased by a Purchaser (and its Affiliates) hereunder shall not, when aggregated with all other shares of Common Stock owned
by such Purchaser (and its Affiliates) at such time, result in such Purchaser beneficially owning (as determined in accordance with Section
13(d) of the Exchange Act) in excess of 9.9% of the then issued and outstanding Common Stock outstanding at the Closing (the “Beneficial
Ownership Maximum”), and such Purchaser’s Subscription Amount, to the extent it would otherwise exceed the Beneficial
Ownership Maximum immediately prior to the Closing, shall be conditioned upon the issuance of Shares at the Closing to the other Purchasers
signatory hereto. To the extent that a Purchaser’s beneficial ownership of the Shares would otherwise be deemed to exceed the Beneficial
Ownership Maximum, such Purchaser’s Subscription Amount shall automatically be reduced as necessary in order to comply with this
paragraph. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise (as defined in the Pre-Funded Warrants) delivered
on or prior to 12:00 p.m. (New York City time) on the Closing Date, which may be delivered at any time after the time of execution of
this Agreement, the Company agrees to deliver the Pre-Funded Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time)
on the Closing Date and the Closing Date shall be the Warrant Share Delivery Date (as defined in the Pre-Funded Warrants) for purposes
hereunder.
2.2
Deliveries.
(a)
On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:
(i)
this Agreement duly executed by the Company;
(ii)
a legal opinion of Company Counsel, addressed to the Placement Agent and the Purchasers, in a form reasonably acceptable to the Placement
Agent and Purchasers;
(iii)
a signed letter from Lumsden McCormick CPA (the “Auditor”) addressed to the Placement Agent and the Purchasers, in form and
substance reasonably satisfactory to the Placement Agent and its counsel, containing statements and information of the type ordinarily
included in accountants’ “comfort letters” to placement agents with respect to the financial statements and certain
financial information contained in the Registration Statement, the Prospectus, and the Prospectus Supplement.
(iii)
subject to Section 2.1, the Company shall have provided each Purchaser with the Company’s wire instructions, on Company
letterhead and executed by the Chief Executive Officer or Chief Financial Officer;
(iv)
subject to Section 2.1, a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver,
on an expedited basis via DWAC, the number of Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase
Price, registered in accordance with the instructions of such Purchaser; and
(v)
a Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 200% of such Purchaser’s
Shares and Pre-Funded Warrants, with an exercise price equal to $1.34, subject to adjustment therein;
(vi)
for each Purchaser of Pre-Funded Warrants pursuant to Section 2.1, a Pre-Funded Warrant registered in the name of such Purchaser to purchase
up to a number of shares of Common Stock equal to the portion of such Purchaser’s Subscription Amount applicable to Pre- Funded
Warrant divided by the Per Share Purchase Price, with an exercise price equal to $0.0001, subject to adjustment therein;
(vii)
the duly executed Lock-Up Agreements; and
(vii)
the Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act).
(b)
On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:
(i)
this Agreement duly executed by such Purchaser; and
(ii)
such Purchaser’s Subscription Amount, which shall be made available for “Delivery Versus Payment” settlement with the
Company or its designee.
2.3
Closing Conditions.
(a)
The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality, in all respects)
when made and on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date
therein in which case they shall be accurate in all material respects (or, to the extent representations or warranties are qualified
by materiality, in all respects) as of such date);
(ii)
all obligations, covenants, and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been
performed in all material respects; and
(iii)
the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b)
The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse
Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein (unless
as of a specific date therein in which case they shall be accurate in all material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all respects) as of such date);
(ii)
all obligations, covenants, and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed
in all material respects;
(iii)
the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv)
there shall have been no Material Adverse Effect with respect to the Company since the date of this Agreement; and
(v)
from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall
not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities
nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of
such Purchaser, makes it impracticable or inadvisable to purchase the Shares at the Closing.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1
Representations and Warranties of the Company. Except as set forth in the SEC Reports (as defined below) and the Disclosure Schedules,
which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent
of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations
and warranties to each Purchaser:
(a)
Subsidiaries. All of the direct and indirect significant subsidiaries (as such term is defined in Rule 1-02 of Regulation S-X
promulgated by the Commission) of the Company are set forth in the Company’s SEC Reports. Except as set forth in Schedule 3.1(a),
the Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any
Liens, and all of the issued and outstanding shares of capital stock or other equity interests of each Subsidiary are validly issued
and are fully paid, non-assessable, and free of preemptive and similar rights to subscribe for or purchase securities.
(b)
Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing, and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any
Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws, or
other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned
by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would
not reasonably be expected to result in a Material Adverse Effect and no Proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit, or curtail such power and authority or qualification. For the purposes of this Agreement,
a “Material Adverse Effect” means (i) a material adverse effect on the legality, validity, or enforceability of any
Transaction Document, (ii) a material adverse effect on the business, financial condition, or results of operations of the Company and
its Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect
on a timely basis its obligations under any Transaction Document, provided, however, that, in the case of clause (i), none
of the following shall be deemed to constitute, alone or in combination, or be taken into account in the determination of whether, there
has been or will be a Material Adverse Effect: (A) any change or proposed change in or change in the interpretation of any law or United
States generally accepted accounting principles (“GAAP”) after the date of this Agreement; (B) events or conditions
generally affecting the industries or geographic areas in which the Company and its subsidiaries operate; (C) any downturn in general
economic conditions, including changes in the credit, debt, securities, financial, or capital markets (including changes in interest
or exchange rates, prices of any security, or market index or commodity or any disruption of such markets); (D) acts of war, sabotage,
civil unrest, or terrorism, or any escalation or worsening of any such acts of war, sabotage, civil unrest, or terrorism, or changes
in global, national, regional, state, or local political or social conditions; (E) any hurricane, tornado, flood, earthquake, natural
disaster, or other acts of God, or (f) any actions taken or not taken by the Company as required by this Agreement.
(c)
Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, the Board of Directors, or the Company’s shareholders in connection herewith or therewith
other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been
(or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will
constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited
by applicable law.
(d)
No Conflicts. The execution, delivery, and performance by the Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Securities, and the consummation by it of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or
articles of incorporation, bylaws, or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties
or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, anti-dilution, or similar adjustments,
acceleration, or cancellation (with or without notice, lapse of time, or both) of, any agreement, credit facility, debt, or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict
with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree, or other restriction of any court or
governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations),
or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as would not reasonably be expected to result in a Material Adverse Effect.
(e)
Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization, or order of, give any
notice to, or make any filing or registration with, any court or other federal, state, local, or other governmental authority or other
Person in connection with the execution, delivery, and performance by the Company of the Transaction Documents, other than: (i) the filings
required pursuant to Section 4.3 of this Agreement, (ii) the filing with the Commission of the Prospectus Supplement, (iii) application(s)
to each applicable Trading Market for the listing of the Shares for trading thereon in the time and manner required thereby, and (iv)
such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).
(f)
Issuance of the Securities; Registration. The Securities are duly authorized and, when issued and paid for in accordance with
the applicable Transaction Documents, will be duly and validly issued, fully paid, and nonassessable, free and clear of all Liens imposed
by the Company. The Warrant Shares and Pre- Funded Warrant Shares, when issued in accordance with the terms of the Warrants and Pre-Funded
Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved
from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement and the Warrants
and Pre-Funded Warrants. The Company has prepared and filed the Registration Statement in conformity with the requirements of the Securities
Act, which became effective on October 13, 2022, including the Prospectus, and such amendments and supplements thereto as may have been
required to the date of this Agreement. The Registration Statement is effective under the Securities Act and no stop order preventing
or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued by
the Commission and no proceedings for that purpose have been instituted or, to the knowledge of the Company, are threatened by the Commission.
The Company, if required by the rules and regulations of the Commission, shall file the Prospectus Supplement with the Commission pursuant
to Rule 424(b). At the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement and
at the Closing Date, the Registration Statement and any amendments thereto conformed and will conform in all material respects to the
requirements of the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments
or supplements thereto, at the time the Prospectus or any amendment or supplement thereto was issued and at the Closing Date, conformed
and will conform in all material respects to the requirements of the Securities Act and did not and will not contain an untrue statement
of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Company was at the time of the filing of the Registration Statement eligible to use Form
S-3. The Company is eligible to use Form S-3 under the Securities Act and it meets the transaction requirements with respect to the aggregate
market value of securities being sold pursuant to this offering and during the twelve (12) months prior to this offering, as set forth
in General Instruction I.B.6 of Form S-3.
(g)
Capitalization. The capitalization of the Company as of the date hereof is as set forth on Schedule 3.1(g), which Schedule
3.1(g) shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as
of the date hereof. Except as set forth on Section 3.1(g), the Company has not issued any capital stock since its most recently
filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options or vesting of restricted
share units under the Company’s stock option and incentive plans, the issuance of shares of Common Stock to employees pursuant
to the Company’s employee stock purchase plans, and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding
as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except
as a result of the purchase and sale of the Securities and as set forth on Schedule 3.1(g), there are no outstanding options, warrants,
scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible
into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock or the
capital stock of any Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is
or may become bound to issue additional shares of Common Stock or Common Stock Equivalents or capital stock of any Subsidiary. The issuance
and sale of the Securities will not obligate the Company or any Subsidiary to issue shares of Common Stock or other securities to any
Person (other than the Purchasers). There are no outstanding securities or instruments of the Company or any Subsidiary with any provision
that adjusts the exercise, conversion, exchange or reset price of such security or instrument upon an issuance of securities by the Company
or any Subsidiary. There are no outstanding securities or instruments of the Company or any Subsidiary that contain any redemption or
similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is
or may become bound to redeem a security of the Company or such Subsidiary. Except for the stock appreciation rights and restricted stock
units issued pursuant to the Company’s equity incentive plan, the Company does not have any stock appreciation rights or “phantom
stock” plans or agreements or any similar plan or agreement. All of the outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws,
and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.
No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the
Securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.
(h)
SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements, and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
two (2) years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, together with the Prospectus
and the Prospectus Supplement, being collectively referred to herein as the “SEC Reports”) and, during the past twelve
(12) calendar months, such SEC Reports have been filed on a timely basis or the Company has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company
has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP, except as may
be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain
all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(i)
Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as set forth on Schedule 3.1(i), (i) here has been no event, occurrence or development that has
had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent
or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice
and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings
made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any
shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant
to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment
of information. Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no
event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with
respect to the Company or its Subsidiaries or their respective businesses, prospects, properties, operations, assets or financial condition
that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.
(j)
Litigation. Except as set forth on Schedule 3.1(j), there is no action, suit, inquiry, notice of violation, proceeding
or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or administrative agency, or regulatory authority (federal, state,
county, local, or foreign) (collectively, an “Action”). None of the Actions set forth on Schedule 3.1(j), (i)
adversely affects or challenges the legality, validity, or enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company
nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of
the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.
(k)
Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or any Subsidiary,
is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary
information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third
party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability
with respect to any of the foregoing matters that would reasonably be expected to have a Material Adverse Effect. The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment
practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(l)
Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor
has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator
or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational
health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be
expected to result in a Material Adverse Effect.
(m)
Environmental Laws. The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign laws relating
to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or subsurface
strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or
toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well
as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice letters, orders,
permits, plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental Laws”); (ii) have
received all permits licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses;
and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where in each clause (i), (ii)
and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
(n)
Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit.
(o)
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment
of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of
which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.
(p) Intellectual
Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and
similar rights necessary or required for use in connection with their respective businesses as described in the SEC Reports and
which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property
Rights”). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of,
the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned,
within two (2) years from the date of this Agreement except where such
expiration, termination or abandonment would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor
any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written
notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any
Person, except as could not have or reasonably be expected to not have a Material Adverse Effect. To the knowledge of the Company,
all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the
Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(q)
Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent in the businesses in which the Company and the Subsidiaries are engaged, including, but
not limited to, directors and officers insurance coverage of $2 million. Neither the Company nor any Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a significant increase in cost.
(r)
Transactions With Affiliates and Employees. Except as set forth on Schedule 3.1(r), none of the officers or directors of
the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently
a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal
property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee
has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case in excess of $120,000 other
than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company
and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.
(s) Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements of the
Sarbanes-Oxley Act of 2002, as amended, that are effective as of the date hereof, and any and all applicable rules and regulations
promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the
Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are
executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is
permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the
period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The
Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the
Exchange Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the
internal control over financial reporting of the Company and its Subsidiaries.
(t)
Certain Fees. Except for fees payable by the Company to the Placement Agent, no brokerage or finder’s fees or commissions
are or will be payable by the Company or any Subsidiary to any broker, financial advisor, or consultant, finder, placement agent, investment
banker, bank, or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.
(u)
Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration
under the Investment Company Act of 1940, as amended.
(v)
Registration Rights. Except as set forth on Schedule 3.1(v), no Person has any right to cause the Company or any Subsidiary
to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.
(w)
Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and
the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. Except as set forth on Schedule 3.1(w), the Company has not, in the 12 months preceding the date hereof, received
notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in
the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. The Common Stock is currently
eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is
current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such
electronic transfer.
(x)
Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order
to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the
laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company
fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of
the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.
(y)
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or
counsel with any information that it believes constitutes or might constitute material, non-public information which is not otherwise
disclosed in the Prospectus Supplement. The Company understands and confirms that the Purchasers will rely on the foregoing representation
in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers
regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement and the SEC Reports, is true and correct and does not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which
they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement
taken as a whole with the SEC reports do not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made
and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties
with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.
(z)
No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties
set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly
or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause
this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would
require the registration of the Warrants or Warrant Shares under the Securities Act, or (ii) any applicable shareholder approval provisions
of any Trading Market on which any of the securities of the Company are listed or designated.
(aa)
Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt
by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds
the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known
contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its
business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements
of the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii)
the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after
taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when
such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any
facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(aa) sets forth as of the date hereof all outstanding
secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For
the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess
of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other
contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s
consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due
under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to
any Indebtedness.
(bb)
Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income
and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, subject
to permanent extensions (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for
the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are
no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company
or of any Subsidiary know of no basis for any such claim.
(cc)
Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any
agent or other person acting on behalf of the Company or any Subsidiary,
has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to
any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by
the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law,
or (iv) violated in any material respect any provision of FCPA.
(dd)
Accountants. The Company’s former and current accounting firms are set forth on Schedule 3.1(dd) of the Disclosure
Schedules. To the knowledge and belief of the Company, the Auditor shall express an opinion with respect to the financial statements
to be included in the Company’s Annual Report for the fiscal year ending December 31, 2024.
(ee)
Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers
is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or
any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby
is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s
decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives.
(ff)
Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Sections 3.2(f) and 4.14 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has been
asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the
Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified
term; (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales
or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded securities; (iii) any Purchaser, and counter-parties in “derivative”
transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the
Common Stock, and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party
in any “derivative” transaction. The Company further understands and acknowledges that (y) one or more Purchasers may engage
in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the
periods that the value of the Warrant Shares deliverable with respect to Securities are being determined, and (z) such hedging activities
(if any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging
activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any
of the Transaction Documents.
(gg)
Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any
of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities
of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Placement Agent in connection with the placement
of the Securities.
(hh)
Stock Option Plans. Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance
with the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value of the
Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the
Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company
policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the
release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or
prospects.
(ii)
Cybersecurity. (i)(x) There has been no security breach or other compromise of or relating to any of the Company’s or any
Subsidiary’s information technology and computer systems, networks, hardware, software, data (including the data of its respective
customers, employees, suppliers, vendors and any third party data maintained by or on behalf of it), equipment or technology (collectively,
“IT Systems and Data”) and (y) the Company and the Subsidiaries have not been notified of, and has no knowledge of
any event or condition that would reasonably be expected to result in, any security breach or other compromise to its IT Systems and
Data; (ii) the Company and the Subsidiaries are presently in compliance with all applicable laws or statutes and all judgments, orders,
rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations
relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems and Data from unauthorized use,
access, misappropriation or modification, except as would not, individually or in the aggregate, have a Material Adverse Effect; (iii)
the Company and the Subsidiaries have implemented and maintained commercially reasonable safeguards to maintain and protect its material
confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and Data; and (iv) the Company
and the Subsidiaries have implemented backup and disaster recovery technology consistent with industry standards and practices.
(jj)
Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director,
officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(kk)
U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within
the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s
request.
(ll)
Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company
Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the
“Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly,
five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity
of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries
or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and
to regulation by the Federal Reserve.
(mm)
Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended,
applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”),
and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company
or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.
(nn)
Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the Warrants or the Warrant Shares by the Company to the
Purchasers as contemplated hereby.
(oo)
No General Solicitation. Neither the Company nor any Person acting on behalf of the Company has offered or sold any of the Warrant
or Warrant Shares by any form of general solicitation or general advertising. The Company has offered the Warrants and Warrant Shares
for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities
Act.
(pp)
No Disqualification Events. With respect to the Warrant and Warrant Shares to be offered and sold hereunder in reliance on Rule
506 under the Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other
officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities
Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject
to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification
Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care
to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable,
with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.
(qq)
Other Covered Persons. Other than the Placement Agent, the Company is not aware of any person (other than any Issuer Covered Person)
that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of any
Securities.
(rr)
Notice of Disqualification Events. The Company will notify the Purchasers in writing, prior to the Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, reasonably be expected to become
a Disqualification Event relating to any Issuer Covered Person, in each case of which it is aware.
3.2
Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and
warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case
they shall be accurate as of such date):
(a)
Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing, and
in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited
liability company, or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance
by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate,
partnership, limited liability company, or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to
which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof,
will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except:
(i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(b)
Understandings or Arrangements. Such Purchaser is acquiring the Securities as principal for its own account and has no direct
or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this
representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or
otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. Such Purchaser understands that the Warrants and the Warrant Shares are “restricted securities”
and have not been registered under the Securities Act or any applicable state securities law and is acquiring such Securities as principal
for his, her or its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation
of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation
of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other
persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such Purchaser’s right to sell such Securities pursuant to a registration statement
or otherwise in compliance with applicable federal and state securities laws).
(c)
Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional
buyer” as defined in Rule 144A(a) under the Securities Act.
(d)
Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication,
and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of
an investment in the Shares and, at the present time, is able to afford a complete loss of such investment.
(e)
Access to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including
all exhibits and schedules thereto) and the SEC Reports and has been afforded, (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the
Shares and the merits and risks of investing in the Securities, (ii) access to information about the Company and its financial condition,
results of operations, business, properties, management, and prospects sufficient to enable it to evaluate its investment, and (iii)
the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense
that is necessary to make an informed investment decision with respect to the investment. Such Purchaser acknowledges and agrees that
neither the Placement Agent nor any Affiliate of the Placement Agent has provided such Purchaser with any information or advice with
respect to the Securities nor is such information or advice necessary or desired. Neither the Placement Agent nor any Affiliate has made
or makes any representation as to the Company or the quality of the Securities and the Placement Agent and any Affiliate may have acquired
non-public information with respect to the Company which such Purchaser agrees need not be provided to it. In connection with the issuance
of the Securities to such Purchaser, neither the Placement Agent nor any of its Affiliates has acted as a financial advisor or fiduciary
to such Purchaser.
(f)
Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has
not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any
purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser
first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing,
in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of
such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion
of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other
than to other Persons party to this Agreement or to such Purchaser’s representatives, including, without limitation, its officers,
directors, partners, legal, and other advisors, employees, agents, and Affiliates, such Purchaser has maintained the confidentiality
of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding
the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions,
with respect to locating or borrowing shares in order to effect Short Sales or similar transactions in the future.
(g)
General Solicitation. Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or, to the knowledge of such Purchaser, any other general solicitation or general advertisement.
(h)
Information Regarding Purchaser. The Purchaser has provided the Company with true, complete, and correct information regarding
all applicable items set forth on the Purchaser’s signature page to this Agreement.
The
Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend, or affect such
Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations
and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection
with this Agreement or the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, for the avoidance of
doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing
shares in order to effect Short Sales or similar transactions in the future.
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1
Removal of Legends.
(a)
The Warrants and Warrant Shares may only be disposed of in compliance with state and federal securities laws. In connection with any
transfer of Warrants or Warrant Shares other than pursuant to an effective registration statement or Rule 144, to the Company or to an
Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such
transferred Warrant under the Securities Act.
(b)
The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Warrants or Warrant Shares
in the following form:
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAS 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.
The
Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Warrants or Warrant Shares to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, such Purchaser
may transfer pledged or secured Warrants or Warrant Shares to the pledgees or secured parties. Such a pledge or transfer would not be
subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in
connection therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company
will execute and deliver such reasonable documentation as a pledgee or secured party of Warrants and Warrant Shares may reasonably request
in connection with a pledge or transfer of the Warrants or Warrant Shares.
(c)
Certificates evidencing the Warrant Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i)
while a registration statement covering the resale of such security is effective under the Securities Act, or (ii) following any sale
of such Warrant Shares pursuant to Rule 144 (assuming cashless exercise of the Warrants), or (iii) if such Warrant Shares are eligible
for sale under Rule 144 (assuming cashless exercise of the Warrants), or (iv) if such legend is not required under applicable requirements
of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall
cause its counsel to issue a legal opinion to the Transfer Agent or the Purchaser promptly if required by the Transfer Agent to effect
the removal of the legend hereunder, or if requested by a Purchaser, respectively. If all or any portion of a Warrant is exercised at
a time when there is an effective registration statement to cover the resale of the Warrant Shares, or if such Warrant Shares may be
sold under Rule 144 (assuming cashless exercise of the Warrants) or if such legend is not otherwise required under applicable requirements
of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Warrant
Shares shall be issued free of all legends. The Company agrees that following such time as such legend is no longer required under this
Section 4.1(c), the Company will, no later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising
the Standard Settlement Period (as defined below) following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate
representing Warrant Shares, as applicable, issued with a restrictive legend (such date, the “Legend Removal Date”),
deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other
legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions
on transfer set forth in this Section 4. Warrant Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent
to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed
by such Purchaser. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in
a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of
delivery of a certificate representing Warrant Shares issued with a restrictive legend.
(d)
In addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser,
in cash, (i) as partial liquidated damages and not as a penalty, for each $1,000 of Warrant Shares (based on the VWAP of the Common Stock
on the date such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section
4.1(c), $10 per Trading Day (increasing to $20 per Trading Day three (3) Trading Days after such damages have begun to accrue) for each
Trading Day after the Legend Removal Date until such certificate is delivered without a legend and (ii) if the Company fails to (a) issue
and deliver (or cause to be delivered) to a Purchaser by the Legend Removal Date a certificate representing the Securities so delivered
to the Company by such Purchaser that is free from all restrictive and other legends and (b) if after the Legend Removal Date such Purchaser
purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Purchaser
of all or any portion of the number of shares of Common Stock, or a sale of a number of shares of Common Stock equal to all or any portion
of the number of shares of Common Stock, that such Purchaser anticipated receiving from the Company without any restrictive legend, then
an amount equal to the excess of such Purchaser’s total purchase price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased (including brokerage commissions and other out-of-pocket expenses, if any)
(the “Buy-In Price”) over the product of (A) such number of Warrant Shares that the Company was required to deliver
to such Purchaser by the Legend Removal Date multiplied by (B) the lowest closing sale price of the Common Stock on any Trading Day during
the period commencing on the date of the delivery by such Purchaser to the Company of the applicable Warrant Shares (as the case may
be) and ending on the date of such delivery and payment under this Section 4.1(d).
(e)
The Shares, Pre-Funded Warrants, and Pre-Funded Warrant Shares shall be issued free of legends. If all or any portion of a
Pre-Funded Warrant is exercised at a time when there is an effective registration statement to cover the issuance or resale of the
Pre-Funded Warrant Shares or if the Pre-Funded Warrant is exercised via cashless exercise, the Pre-Funded Warrant Shares issued
pursuant to any such exercise shall be issued free of all legends. If at any time following the date hereof the Registration
Statement (or any subsequent registration statement registering the sale or resale of the Pre-Funded Warrant Shares) is not
effective or is not otherwise available for the sale or resale of the Pre-Funded Warrant Shares, the Company shall immediately
notify the holders of the Pre-Funded Warrants in writing that such registration statement is not then effective and thereafter shall
promptly notify such holders when the registration statement is effective again and available for the sale or resale of the
Pre-Funded Warrant Shares (it being understood and agreed that the foregoing shall not limit the ability of the Company to issue, or
any Purchaser to sell, any of the Pre-Funded Warrant Shares in compliance with applicable federal and state securities laws). The
Company shall use best efforts to keep a registration statement (including the Registration Statement) registering the issuance or
resale of the Pre-Funded Warrant Shares effective during the term of the Pre-Funded Warrants.
4.2
Furnishing of Information.
(a)
Until the earlier of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, 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 Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange
Act.
(b)
At any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of the
Warrant Shares (assuming cashless exercise) may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1)
and otherwise without restriction or limitation pursuant to Rule 144, if the Company (i) shall fail for any reason to satisfy the current
public information requirement under Rule 144(c) or (ii) has ever been an issuer described in Rule 144(i)(1)(i) or becomes an issuer
in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a “Public Information Failure”)
then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Warrant Shares, an amount in cash
equal to two percent (2.0%) of the aggregate Exercise Price of such Purchaser’s Warrants on the day of a Public Information Failure
and on every thirtieth (30th) day (pro-rated for periods totaling less than thirty days) thereafter until the earlier of (a) the date
such Public Information Failure is cured and (b) such time that such public information is no longer required for the Purchasers to transfer
the Warrant Shares pursuant to Rule 144. The payments to which a Purchaser shall be entitled pursuant to this Section 4.2(b) are referred
to herein as “Public Information Failure Payments.” Public Information Failure Payments shall be paid on the earlier
of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd)
Business Day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails
to make Public Information Failure Payments in a timely manner, such
Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full.
Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Public Information Failure, and such Purchaser
shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief.
4.3
Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Warrants or Warrant Shares or that would be integrated with the
offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent
transaction.
4.4
Securities Laws Disclosure; Publicity. The Company shall (a) by the Disclosure Time, issue a press release disclosing the material
terms of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including the Transaction Documents as exhibits
thereto, with the Commission within the time required by the Exchange Act. From and after the issuance of such press release, the Company
represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers
by the Company or any of its officers, directors, employees, or agents in connection with the transactions contemplated by the Transaction
Documents. In addition, effective upon the issuance of such press release, the Company acknowledges and agrees that any and all confidentiality
or similar obligations with respect to the transactions completed by the Transaction Documents under any agreement, whether written or
oral, between the Company or any of its officers, directors, agents, employees, or Affiliates on the one hand, and any of the Purchasers
or any of their Affiliates on the other hand, shall terminate. The Company shall not publicly disclose the name of any Purchaser, or
include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except (i) as required by federal securities law in connection with the filing of final Transaction Documents
with the Commission and (ii) to the extent such disclosure is required by law or Trading Market or Financial Industry Regulatory Authority,
Inc. regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause
(ii).
4.5
Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, which shall be disclosed pursuant to Section 4.4, the Company covenants and agrees that neither it, nor any other Person acting
on its behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably believes
constitutes, material non-public information, unless prior thereto such Purchaser shall have consented in writing to the receipt of such
information and agreed in writing with the Company to keep such information confidential. The Company understands and confirms that each
Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company,
any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates delivers any material, non-public
information to a Purchaser without such Purchaser’s consent, the Company hereby covenants and agrees that such Purchaser shall
not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, employees,
Affiliates or agents, including, without limitation, the Placement Agent, or a duty to the Company, any of its Subsidiaries or any of
their respective officers, directors, employees, Affiliates or agents, including, without limitation, the Placement Agent, not to trade
on the basis of, such material, non-public information, provided that the Purchaser shall remain subject to applicable law. To the extent
that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the
Company or any Subsidiaries, the Company shall simultaneously with the delivery of such notice file such notice with the Commission pursuant
to a Current Report on Form 8-K. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant
in effecting transactions in securities of the Company.
4.6
Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep
available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company
to issue Shares pursuant to this Agreement and Warrant Shares and Pre-Funded Warrant Shares pursuant to any exercise of the Warrants
and Pre-Funded Warrants.
4.7
Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that
neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at
such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as
described in Section 4.3. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time
as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described
in Section 4.3, such Purchaser will maintain the confidentiality of the existence and terms of this transaction (other than as
disclosed to its legal and other representatives).
4.8
Use of Proceeds. Except as set forth in the Prospectus Supplement, the Company shall use the net proceeds from the sale of the
Securities hereunder for working capital purposes 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), or the debt of
any officer, director, or executive management of the Company, or any sponsor, general partner, manager, or advisor or any of the Company’s
affiliates, (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 regulation.
4.9
Indemnification of Purchasers. Subject to the provisions of this Section 4.7, the Company will indemnify and hold each
Purchaser and its directors, officers, shareholders, members, partners, employees, and agents (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such
Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners, or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding
a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any
and all losses, liabilities, obligations, claims, contingencies, damages, costs, and expenses, including all judgments, amounts paid
in settlements, court costs, and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer
or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants, or agreements made by the
Company in this Agreement or in the other Transaction Documents, or (b) any action instituted against the Purchaser Parties in any capacity,
or any of them or their respective Affiliates, by any shareholder of the Company who is not an Affiliate of such Purchaser Party, with
respect to any of the transactions contemplated by the Transaction Documents (unless such action is solely based upon a material breach
of such Purchaser Party’s representations, warranties, or covenants under the Transaction Documents or any agreements or understandings
such Purchaser Party may have with any such shareholder or any violations by such Purchaser Party of state or federal securities laws
or any conduct by such Purchaser Party which is finally judicially determined to constitute fraud, gross negligence, willful misconduct,
or malfeasance), the Company will indemnify each Purchaser Party, to the fullest extent permitted by applicable law, from and against
any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses,
as incurred, arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained in such registration
statement, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising
out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements
therein (in the case of any prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading,
except to the extent, but only to the extent, that such untrue statements or omissions are based solely upon information regarding such
Purchaser Party furnished in writing to the Company by such Purchaser Party expressly for use therein, or (ii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, or any state securities law, or any rule or regulation thereunder in
connection therewith. If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant
to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume
the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the
right to employ one separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Purchaser Party except to the extent that (x) the employment thereof has been specifically authorized
by the Company in writing, (y) the Company has failed after a reasonable period of time to assume such defense and to employ counsel,
or (z) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position
of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses
of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (1) for any settlement
by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed;
or (2) to the extent, but only to the extent that a loss, claim, damage, or liability is attributable to any Purchaser Party’s
breach of any of the representations, warranties, covenants, or agreements made by such Purchaser Party in this Agreement or in the other
Transaction Documents. The indemnification required by this Section 4.7 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained
herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities
the Company may be subject to pursuant to law.
4.10
Listing of Common Stock. The Company hereby agrees to use reasonable best efforts to maintain the listing or quotation of the
Common Stock on the Trading Market on which it is currently listed, and prior to the Closing, the Company shall have applied to list
or quote all of the Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded
on any other Trading Market, it will then include in such application all of the Shares, and will take such other action as is necessary
to cause all of the Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all
action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects
with the Company’s reporting, filing, and other obligations under the bylaws or rules of the Trading Market. The Company agrees
to maintain the eligibility of the Common Stock for electronic transfer through the Depository Trust Company or another established clearing
corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or such other established clearing
corporation in connection with such electronic transfer.
4.11
Equal Treatment of Purchasers. No consideration (including any modification of this Agreement) shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration is also offered
to all of the parties to this Agreement. For clarification purposes, this provision constitutes a separate right granted to each Purchaser
by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall
not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition, or voting of
Securities or otherwise.
4.12
Subsequent Equity Sales.
(a)
From the date hereof until 90 days after the Closing Date, neither the Company nor any Subsidiary shall (i) issue, enter into any agreement
to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents or (ii) file any registration
statement or any amendment or supplement thereto, other than the Prospectus Supplement or as contemplated pursuant to Section 4.17 herein
or filing a registration statement on Form S-8 in connection with any employee benefit plan.
(b)
From the date hereof until 180 days after the Closing Date, the Company shall be prohibited from effecting or entering into an agreement
to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units
thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company (i)
issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive
additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon
and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such
debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after
the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock or (ii) enters into, or effects a transaction under, any agreement,
including, but not limited to, an equity line of credit or an “at-the-market offering”, whereby the Company may issue securities
at a future determined price regardless of whether shares pursuant to such agreement have actually been issued and regardless of whether
such agreement is subsequently canceled. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude
any such issuance, which remedy shall be in addition to any right to collect damages; provided, however, that this Section
4.12(b) shall not be applicable to the offer, sale, and issuance of shares of common stock in connection with that certain At the
Market Offering Agreement dated as of September 30, 2022, by and between the Company and H.C. Wainwright & Co., LLC from the period
ninety (90) days after the Closing Date and thereafter
(c)
Notwithstanding the foregoing, this Section 4.12 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction
shall be an Exempt Issuance.
4.13
Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that
neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at
such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as
described in Section 4.3. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time
as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described
in Section 4.3, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information
included in the Disclosure Schedules. Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary,
the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty, or covenant hereby that it will
not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement
are first publicly announced pursuant to the initial press release as described in Section 4.3, (ii) no Purchaser shall be restricted
or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and
after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release
as described in Section 4.3, and (iii) no Purchaser shall have any duty of confidentiality or duty not to trade in the securities
of the Company to the Company after the issuance of the initial press release as described in Section 4.3. Notwithstanding the
foregoing, in the case of a Purchaser that is a multi- managed investment vehicle whereby separate portfolio managers manage separate
portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this
Agreement.
4.14
Capital Changes. Until the one year anniversary of the Closing Date, the Company shall not undertake a reverse or forward stock
split or reclassification of the Common Stock without the prior written consent of the Purchasers holding a majority in interest of the
Shares and Pre-Funded Warrants other than a reverse stock split that is required, in the good faith determination of the Board of Directors,
to maintain the listing of the Common Stock on the Trading Market.
4.15
Exercise Procedures. The form of Notice of Exercise included in the Warrants and Pre-Funded Warrants
set forth the totality of the procedures required of the Purchasers in order to exercise the Warrants and Pre- Funded Warrants. No additional
legal opinion, other information or instructions shall be required of the Purchasers to exercise their Warrants and Pre-Funded Warrants.
Without limiting the preceding sentences, no ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or
other type of guarantee or notarization) of any Notice of Exercise form be required in order to exercise the Warrants and Pre-Funded
Warrants. The Company shall honor exercises of the Warrants and Pre-Funded Warrants and shall deliver Warrant Shares and Pre- Funded
Warrant Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.
4.16
Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Warrant and Warrant Shares as required
under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Warrant and Warrant Shares for, sale to
the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall
provide evidence of such actions promptly upon request of any Purchaser.
4.17
Registration Statement. As soon as practicable (and in any event within 45 calendar days of the date of this Agreement), the Company
shall file registration statement on Form S-3 (or other appropriate form if the Company
is not then S-3 eligible) providing for the resale by the Purchasers of the Warrant Shares issued and issuable upon exercise of the Warrants.
The Company shall use commercially reasonable efforts to file the registration statement on Form S-3 within 180 days following the Closing
Date and to keep such registration statement effective at all times until no Purchaser owns any Warrants or Warrant Shares issuable upon
exercise thereof.
4.18
Lock-Up. The Company shall not amend, modify, waive, or terminate any provision of any of the Lock- Up Agreements except to extend
the term of the lock-up period and shall enforce the provisions of each Lock-Up Agreement in accordance with its terms. If any officer
or director of the Company that is a party to a Lock-Up Agreement breaches any provision of a Lock-Up Agreement, the Company shall promptly
use its commercially reasonable best efforts to seek specific performance of the terms of such Lock-Up Agreement.
ARTICLE
V.
MISCELLANEOUS
5.1
Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without
any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the
Closing has not been consummated on or before the fifth (5th) Trading Day following the date hereof; provided, however,
that no such termination will affect the right of any party to sue for any breach by any other party (or parties).
5.2
Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants, and other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery, and performance of this Agreement. The Company shall pay all Transfer Agent fees (including,
without limitation, any fees required for same- day processing of any instruction letter delivered by the Company), stamp taxes, and
other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.
5.3
Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, the Prospectus and the Prospectus
Supplement, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such
documents, exhibits, and schedules.
5.4
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication is
delivered via email attachment at the email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New
York City time) on a Trading Day, (b) the next Trading Day after the time of transmission, if such notice or communication is delivered
via email attachment at the email address as set forth on the signature pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set forth on the signature pages attached hereto.
5.5
Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented, or amended except in a written instrument
signed, in the case of an amendment, by the Company and Purchasers which purchased at least 50.1% in interest of the Shares based on
the initial Subscription Amounts hereunder (or, prior to the Closing, the Company and each Purchaser) or, in the case of a waiver, by
the party against whom enforcement of any such waived provision is sought, provided that if any amendment, modification, or waiver
disproportionately and adversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser
(or group of Purchasers) shall also be required. No waiver of any default with respect to any provision, condition, or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other
provision, condition, or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right. Any proposed amendment or waiver that disproportionately, materially and adversely affects the
rights and obligations of any Purchaser relative to the comparable rights and obligations of the other Purchasers shall require the prior
written consent of such adversely affected Purchaser. Any amendment effected in accordance with this Section 5.5 shall be binding
upon each Purchaser and holder of Securities and the Company.
5.6
Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof.
5.7
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and
permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent
of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom
such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”
5.8
No Third-Party Beneficiaries. The Placement Agent shall be the third party beneficiary of the representations and warranties of
the Company in Section 3.1 and the representations and warranties of the Purchasers in Section 3.2. This Agreement is intended
for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set forth in this Section 5.8.
5.9
Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the law of the State of New York,
without regard to the principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations,
enforcement, and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against
a party hereto or its respective affiliates, directors, officers, 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 courts of the State of New York and of the United States of America sitting in the City and County of New York, for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of this Agreement or any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in
any Action or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding
is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents
to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by law. If any party shall commence an Action or Proceeding to enforce any
provisions of the Transaction Documents, then the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing
party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation, and prosecution
of such Action or Proceeding.
5.10
Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.
5.11
Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party,
it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by e-mail delivery
of a “.pdf” format data file, or by electronic signature (including DocuSign), such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such “.pdf”
or electronic signature page were an original thereof.
5.12
Severability. If any term, provision, covenant, or restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, illegal, void, or unenforceable, the remainder of the terms, provisions, covenants, and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired, or invalidated, and the parties hereto shall use their
commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant, or restriction. It is hereby stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions, covenants, and restrictions without including any of such that may be
hereafter declared invalid, illegal, void, or unenforceable.
5.13
Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions
of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand, or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may
rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand, or election
in whole or in part without prejudice to its future actions and rights.
5.14
Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to
the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also
pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.15
Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages,
each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction
Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that
a remedy at law would be adequate.
5.16
Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by,
or are required to be refunded, repaid, or otherwise restored to the Company, a trustee, receiver, or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common law, or equitable cause of action), then to the extent
of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff had not occurred.
5.17
Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document
are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other
Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as
a partnership, an association, a joint venture, or any other kind of entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional
party in any Proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation
of the Transaction Documents. For reasons of administrative convenience only, each Purchaser and its respective counsel have chosen to
communicate with the Company through the legal counsel of the Placement Agent. The legal counsel of the Placement Agent does not represent
any of the Purchasers and only represents the Placement Agent. The Company has elected to provide all Purchasers with the same terms
and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers.
It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between
the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.
5.18
Liquidated Damages. The Company’s obligations to pay any amounts owing under the Transaction Documents is a continuing obligation
of the Company and shall not terminate until all unpaid amounts due and owing have been paid notwithstanding the fact that the instrument
or security pursuant to which such amounts are due and payable shall have been canceled.
5.19
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business
Day.
5.20
Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise
the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each
and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations, and other similar transactions of the Common Stock that occur after the
date of this Agreement.
5.20
WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY,
THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature
Pages Follow)
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
Worksport,
Ltd. |
|
Address
for Notice: |
|
|
|
55G
East Beaver Creek Rd. |
By: |
|
|
Richmond
Hill, Ontario, Canada |
Name: |
Steven
Rossi |
|
|
Title: |
Chief
Executive Officer |
|
|
E-Mail: |
[***] |
|
|
With
a copy to (which shall not constitute notice):
Sichenzia
Ross Ference Carmel LLP
1185
Avenue of the Americas, 31st floor
New
York, NY 10036
Attn:
Ross D. Carmel
Email:
[***]
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
[PURCHASER
SIGNATURE PAGES TO WORKSPORT SECURITIES PURCHASE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.
Name
of Purchaser:[***]
Signature
of Authorized Signatory of Purchaser:
Name
of Authorized Signatory: [***]
Title
of Authorized Signatory: [***]
Email
Address of Authorized Signatory: [***])
Address
for Notice to Purchaser:
[***]
Address
for Delivery of Securities to Purchaser (if not same as address for notice): [***]
Subscription
Amount: [***]
Shares[***]
Pre-Funded Warrant
Shares: [***] |
Beneficial Ownership
Blocker ☐ 4.99% or ☐ 9.99% |
Warrant Shares: [***] |
Beneficial Ownership Blocker ☐ 4.99%
or ☐ 9.99% |
EIN Number: [***] |
|
☐
Notwithstanding anything contained in this Agreement to the contrary, by checking this box (i) the obligations of the above-signed to
purchase the securities set forth in this Agreement to be purchased from the Company by the above-signed, and the obligations of the
Company to sell such securities to the above-signed, shall be unconditional and all conditions to Closing shall be disregarded, (ii)
the Closing shall occur on the second (2nd) Trading Day following the date of this Agreement and (iii) any condition to Closing contemplated
by this Agreement (but prior to being disregarded by clause (i) above) that required delivery by the Company or the above-signed of any
agreement, instrument, certificate or the like or purchase price (as applicable) shall no longer be a condition and shall instead be
an unconditional obligation of the Company or the above-signed (as applicable) to deliver such agreement, instrument, certificate or
the like or purchase price (as applicable) to such other party on the Closing Date.
Pursuant
to Item 601(a)(5) of Regulation S-K, disclosure schedules to this Securities Purchase Agreement have been omitted and will be furnished
on a supplemental basis to the Securities and Exchange Commission upon request. |
Exhibit
99.1
Worksport
Announces Pricing of Approximately $4.7 Million Registered Direct Offering & Concurrent Private Placement
West
Seneca, New York, Oct. 31, 2023 (GLOBE NEWSWIRE) -- Worksport Ltd. (Nasdaq: WKSP; WKSPW) (“Worksport” or the
“Company”) is pleased to announce today that it has entered into a securities purchase agreement with a single
institutional investor to purchase 3,500,000 shares of common stock (or pre-funded warrants to purchase shares of common stock in
lieu thereof) in a registered direct offering. In a concurrent private placement, the Company also agreed to issue and sell to the
investor warrants to purchase up to 7,000,000 shares of common stock. The combined effective offering price for each share of common
stock (or pre-funded warrant in lieu thereof) and accompanying warrant is $1.34. The warrants will become exercisable six months
from issuance, expire five and a half years from the issuance date and have an exercise price of $1.34 per share.
The
gross proceeds to the Company from the registered direct offering and concurrent private placement are estimated to be approximately
$4.7 million before deducting the placement agent’s fees and other estimated offering expenses payable by the Company. The offering
is expected to close on or about November 2, 2023, subject to the satisfaction of customary closing conditions. The Company intends to
use the net proceeds from the offering for working capital and general corporate purposes.
Maxim
Group LLC is acting as the sole placement agent in connection with the Offering.
The
shares of common stock (or pre-funded warrants in lieu thereof) are being offered by the Company pursuant to an effective shelf registration
statement on Form S-3 (File No. 333-267696) that was filed with the SEC on September 30, 2022, and subsequently declared effective on
October 13, 2022. The offering of shares of common stock (or pre-funded warrants in lieu thereof) will be made only by means of a prospectus
supplement that forms part of the registration statement. The warrants to be issued in the concurrent private placement and the shares
issuable upon exercise of such warrants were offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended
(the “Act”), and Regulation D promulgated thereunder and have not been registered under the Act or applicable state securities
laws. A prospectus supplement relating to the shares of common stock and pre-funded warrants will be filed by Worksport with the SEC.
When available, copies of the prospectus supplement relating to the registered direct offering, together with the accompanying prospectus,
can be obtained at the SEC’s website at www.sec.gov or from Maxim Group LLC, 300 Park Avenue, New York, NY 10022, Attention:
Syndicate Department, or via email at syndicate@maximgrp.com or telephone at (212) 895-3745.
This
press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities
in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under
the securities laws of any such state or jurisdiction.
About
Worksport
Worksport
Ltd. (Nasdaq: WKSP; WKSPW), through its subsidiaries, designs, develops, manufactures, and owns the intellectual property on a variety
of tonneau covers, solar integrations, and NP (Non-Parasitic), Hydrogen-based true green energy solutions for the sustainable, clean
energy, and automotive industries. Worksport seeks to capitalize on the growing shift of consumer mindsets towards clean energy integrations
with its proprietary solar solutions, mobile energy storage systems (ESS), and NP (Non-Parasitic), Hydrogen-based technology. Terravis
Energy’s website is terravisenergy.com. For more information, please visit investors.worksport.com.
Connect
with Worksport
Please
follow the Company’s social media accounts on X (previously Twitter), Facebook, LinkedIn, YouTube,
and Instagram (collectively, the “Accounts”), the links of which are links to external third party websites, as well
as sign up for the Company’s newsletters at investors.worksport.com. The Company does not endorse, ensure the accuracy of,
or accept any responsibility for any content on these third party websites other than content published by the Company.
Worksport
strives to provide frequent updates of its operations to its community of investors, clients, and customers to maintain the highest level
of visibility.
LinkedIn
Facebook
X
(previously Twitter)
Instagram
YouTube
Investors
and others should note that the Company announces material financial information to our investors using our investor relations website,
press releases, Securities and Exchange Commission (“SEC”) filings, and public conference calls and webcasts. The Company
also uses the Accounts to announce Company news and other information. The information shared on the Accounts could be deemed to be material
information. As a result, the Company encourages investors, the media, and others to review the information the Company publishes on
the Accounts.
In
order to comply with Regulation FD, the Company does not selectively disclose material non-public information on any Account. If there
is any significant financial information, it is the policy of the Company to release it broadly to the public through a press release
or SEC filing prior to publishing it on one of the Accounts.
For
additional information, please contact:
Steven
Obadiah
Investor
Relations
Worksport
Ltd.
T:
1 (888) 554 8789 E: investors@worksport.com W: www.worksport.com
Forward-Looking
Statements
The
information contained herein may contain “forward-looking statements.” Forward-looking statements reflect the current view
about future events. When used in this press release, the words “anticipate,” “believe,” “estimate,”
“expect,” “future,” “intend,” “plan,” “project,” or the negative of these
terms and similar expressions, as they relate to us or our management, identify forward-looking statements. Forward-looking statements
are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations
and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy
and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks
and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial
condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these
forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those
indicated in the forward-looking statements include, among others, the following: (i) supply chain delays; (ii) acceptance of our products
by consumers; (iii) delays in or nonacceptance by third parties to sell our products; and (iv) competition from other producers of similar
products. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements
is set forth in the Company’s filings with the SEC, including, without limitation, our Annual Report on Form 10-K and our Quarterly
Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC’s web site at
www.sec.gov. As a result of these matters, changes in facts, assumptions not being realized or other circumstances, the Company’s
actual results may differ materially from the expected results discussed in the forward-looking statements contained in this press release.
The forward-looking statements made in this press release are made only as of the date of this press release, and the Company undertakes
no obligation to update them to reflect subsequent events or circumstances.
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