Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement
(this “Agreement”) is dated as of May 1, 2023 (the “Effective Date”), between Ault Alliance, Inc.,
a Delaware corporation (the “Company”), and Ault & Company, Inc., a Delaware corporation (the “Purchaser”).
PREAMBLE
WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities
Act”), the Company desires to issue and sell to the Purchaser, and the Purchaser, severally and not jointly, desires to purchase
from the Company, securities of the Company as more fully described in this Agreement (the “Transaction”).
WHEREAS, subject to
the terms and conditions set forth in this Agreement, the Transaction will be conducted in reliance upon Section 4(a)(2) of the Securities
Act of 1933, as amended (the “Securities Act”).
NOW, THEREFORE, IN CONSIDERATION
of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and the 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 meanings
set forth in this Section 1.1:
“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.21.
“Action”
shall have the meaning ascribed to such term in Section 3.1(m).
“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.
“BHCA”
shall have the meaning ascribed to such term in Section 3.1(oo).
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day
on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Closing”
shall have the meaning ascribed to such term in Section 2.1.
“Closing
Date” shall mean the Trading Day on which the Closing is held, and is 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 Purchaser’s obligations
to pay the Subscription Amount at such Closing and (ii) the Company’s obligations to deliver the Securities to be issued and sold
at such Closing, in each case, have been satisfied or waived.
“Commission” means
the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time 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.
“Contingent
Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect
to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in
whole or in part) against loss with respect thereto.
“Conversion
Price” shall have the meaning ascribed to such term in the Series C Certificate of Designation.
“Copyrights”
shall have the meaning ascribed to such term in Section 3.1(y).
“Conversion
Shares” means the shares of Common Stock issuable upon conversion of the Series C Preferred Stock.
“COVID-19”
means the disease known as coronavirus or COVID-19.
“COVID-19
Measures” means any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing,
shut down, closure, sequester or any other Law, order, or directive by any Governmental Entity.
“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.
“Disqualification
Event” shall have the meaning ascribed to such term in Section 3.1(t).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange
Approval” means approval of the issuance of Common Stock contemplated by this Agreement by the Principal Market, which approval
shall be obtained (i) in the case of the Conversion Shares in an amount of up to 83,107,764 shares of Common Stock and (ii) in the case
of the remaining Conversion Shares, no later than five (5) calendar days after the Company shall have obtained Stockholder Approval to
issue such Conversion Shares.
“Exchange
Cap” shall mean that number of shares of Common Stock or Common Stock Equivalents pursuant to this
Agreement and the other Transaction Documents to the extent that after giving effect thereto, the aggregate number of shares of Common
Stock that would be issued as well as permitted to vote pursuant to this Agreement and such Transaction Documents would not exceed 19.99%
of the Company’s outstanding shares of Common Stock as of the date hereof.
“Exempt
Issuance” means the issuance of (i) shares of Common Stock, restricted stock units or stock options (and Common Stock issued
upon exercise of such securities) to employees, officers, consultants, advisors or directors of the Company in consideration of services
to the Company pursuant to any stock or option plan duly adopted for such purpose by a majority of the members of the Board of Directors
or a majority of the members of a committee of directors established for such purpose, not to exceed fifteen percent (15%) of the shares
of Common Stock issued and outstanding on the Effective Date, (ii) the Securities issued hereunder and any Common Stock or other securities
issued upon the conversion, exercise, or exchange 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, exchange or conversion
price of such securities; (iii) shares of Common Stock issued upon any anti-dilution adjustment to Common Stock and Common Stock Equivalents
held by current unaffiliated security holders as of the date of this Agreement; (iv) securities issued to any underwriter, placement agent
or other registered broker-dealer as reasonable commissions or fees in connection with any financing transactions; (v) securities issued
pursuant to any merger, acquisition, asset purchase or similar transaction approved by the Board of Directors or a duly authorized committee
thereof, provided that any such issuance shall only be to a Person or Persons (or to the equity holders of a Person or Persons)
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, 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; and (vi) securities issued pursuant to any purchase money equipment
loan, capital leasing arrangement or debt financing from a commercial bank or similar financial institution.
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.
“Federal
Reserve” shall have the meaning ascribed to such term in Section 3.1(oo).
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(p).
“Governmental
Entity” means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal,
state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising,
or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any
nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public
international organization or any of the foregoing
“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(q).
“Indemnitee”
shall have the meaning ascribed to such term in Section 3.1(g).
“Indemnified
Liabilities” shall have the meaning ascribed to such term in Section 3.1(g).
“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(y).
“Issuable
Shares” means the Conversion Share and the Warrant Shares.
“Issuer
Covered Person” shall have the meaning ascribed to such term in Section 3.1(t).
“Knowledge”
means, with respect to any Person, (x) such Person is actually aware of such fact or matter or (y) such Person should reasonably have
been expected to discover or otherwise become aware of such fact or matter after reasonable investigation, and for purposes hereof it
shall be assumed that such Person has conducted a reasonable investigation of the accuracy of the representations and warranties set forth
herein.
“Law”
means any federal, state, local, municipal, foreign, multi-national or other law, common law, statute, constitutions, ordinances, rules,
regulations, codes, Orders, or legally enforceable requirements enacted, issued, adopted, promulgated, enforced, ordered, or applied by
any Governmental Entity
“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).
“Liens”
means any security or other property interest or right, claim, lien, pledge, option, charge, security interest, contingent or conditional
sale, or other title claim or retention agreement, interest or other right or claim of third parties, whether perfected or not perfected,
voluntarily incurred or arising by operation of law, and including any agreement (other than this Agreement) to grant or submit to any
of the foregoing in the future.
“Listing
Default” shall have the meaning ascribed to such term in Section 4.13.
“Marks”
shall have the meaning ascribed to such term in Section 3.1(y).
“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(n).
“Material
Agreement” means any material loan agreement, financing agreement, equity investment agreement or securities instrument to which
Company is a party, any agreement or instrument to which Company and Purchaser or any Affiliate of Purchaser is a party, and any other
material agreement listed, or required to be listed, on any of Company’s reports filed or required to be filed with the SEC, including
without limitation Forms 10-K, 10-Q and 8-K.
“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(w).
“Money
Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(bb).
“OFAC”
shall have the meaning ascribed to such term in Section 3.1(aa).
“Officer’s
Certificate” has the meaning set forth in the Section 2.3(b)(i) hereof.
“Order”
means any order, writ, assessment, decision, injunction, decree, ruling, or judgment of a Governmental Entity or arbitrator, whether temporary,
preliminary, or permanent.
“Patents”
shall have the meaning ascribed to such term in Section 3.1(y).
“Per Share
Purchase Price” shall mean $1,000.00.
“Permitted
Liens” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and
by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established
in accordance with GAAP; (b) Liens imposed by law which were incurred in the ordinary course of the Company’s business, such as
carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in
the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate materially detract from the
value of such property or assets or materially impair the use thereof in the operation of the business of the Company and its consolidated
Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for
the foreseeable future the forfeiture or sale of the property or asset subject to such Lien; (c) pledges and deposits made in the ordinary
course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;
and (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature that are not past due, in each case in the ordinary course of business, but excluding any
contract for the payment of money.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company,
joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Preferred
Shares” means the shares of Series C Preferred Stock issuable to the Purchaser pursuant to this Agreement.
“Principal
Market” shall mean the NYSE American, LLC.
“Principal
Market Rules” means the rules and regulations of the Principal Market.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
“Proxy
Failure” shall have the meaning ascribed to such term in Section 4.2(b).
“Proxy
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.2(b).
“Removal
Date” means the date that all of the issued Issuable Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule
144 without the requirement for the Company to be in compliance with the current public information requirements under Rule 144 and without
volume or manner-of-sale restrictions.
“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable in
the future pursuant to the conversion of the Shares or exercise of the Warrants, ignoring any conversion or exercise limits set forth
therein, and assuming that the Conversion Price and Exercise Price is at all times on and after the date of determination 200% of the
then Conversion Price on the Trading Day immediately prior to the date of determination.
“Rights
in Mask Works” shall have the meaning ascribed to such term in Section 3.1(y).
“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.
“SBA”
means the United States Small Business Administration.
“SEC Guidance”
means (i) any publicly available written or oral guidance of the Commission staff, or any comments, requirements or requests of the Commission
staff and (ii) the Securities Act.
“SEC Reports”
shall have the meaning ascribed to such term in Section 3.1(p).
“Securities”
means the Preferred Shares, the Conversion Shares, the Warrant and the Warrant Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Series
C Preferred Stock” means the Series C Convertible Preferred Stock of the Company, par value $0.001 per share, to be issued and
sold by the Company to the Purchaser hereunder.
“Stockholder
Approval” means such approval as may be required by the applicable rules and regulations of the Principal Market Rules (or the
applicable rules and regulations of any successor entity) from the stockholders of the Company with respect to the transactions contemplated
by this Agreement and the other Transaction Documents, including the issuance of all of the Issuable Shares in excess of 19.99% of the
issued and outstanding Common Stock on the Closing Date.
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be
deemed to include the location and/or reservation of borrowable shares of Common Stock).
“Subscription
Amount” means up to $40,000,000.
“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable and with regard to future events,
also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.
“Termination
Date” shall have the meaning ascribed to such term in Section 2.1.
“Trade
Secrets” shall have the meaning ascribed to such term in Section 3.1(y).
“Trading
Day” means a day on which the Principal Market is open for trading; provided, that in the event that the Common Stock is not
listed or quoted for trading on a Trading Market on the date in question, then Trading Day shall mean a Business Day.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, the New York Stock
Exchange, OTCQB, OTCQX, or the OTC Pink (or any successors to any of the foregoing). Notwithstanding the foregoing, term “Trading
Market” shall only include the OTC Pink for any interim period of time required upon the Company’s delisting from any other
Trading Market provided that the Company shall be required to list its Common Stock for trading or quotation on another Trading Market
(excluding the OTC Pink) promptly upon such delisting and the failure to do so shall constitute a default under the terms of this Agreement
and the other Transaction Documents.
“Transaction”
shall have the meaning ascribed to such term in the Preamble.
“Transaction
Documents” means this Agreement all exhibits and schedules thereto and hereto, the Certificate of Designation of Rights, Preferences
and Limitations of the Series C Convertible Preferred Stock (the “Series C Certificate of Designation”) in the form
attached hereto as Exhibit A, the Warrant in the form attached hereto as Exhibit B, the Transfer Agent Instruction
Letter in the form attached hereto as Exhibit C and any other documents or agreements executed in connection with the transactions
contemplated hereunder.
“Transfer
Agent” means Computershare, N.A., and any successor transfer agent of the Company or, if the Company has not appointed a Transfer
Agent, the Company.
“Transfer
Agent Instruction Letter” means the letter from the Company to the Transfer Agent which instructs the Transfer Agent to reserve
the Issuable Shares pursuant to the Transaction Documents in the form attached hereto as Exhibit C.
“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 Common Stock is not then listed or quoted for trading on
a Trading Market and if prices for the Common Stock are then reported on the OTC Pink Marketplace maintained by OTC Markets Group Inc.
(or a similar organization or agency succeeding to its functions of reporting prices), the most recent closing price per share of the
Common Stock so reported, or (c) 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 Purchaser 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.
“Warrant”
means the Warrant in the form attached hereto as Exhibit B.
“Warrant
Shares” means the shares of Common Stock issued or issuable upon exercise of the Warrant.
ARTICLE II
PURCHASE AND SALE
2.1 Closing.
On the Closing Date, upon the terms and subject to the conditions set
forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to
sell, and the Purchaser agrees to purchase, the Securities for the Subscription Amount (such purchase and sale being the “Closing”).
Contemporaneously with or promptly following the Closing, the Purchaser shall deliver to the Company the Purchaser’s Subscription
Amount as set forth on the signature page hereto executed by the Purchaser by a wire transfer of immediately available funds and the Company
shall, on the Closing Date, deliver to the Purchaser a certificate representing the number of Preferred Shares and the Warrant purchased
by the Purchaser at the Closing as determined pursuant to Section 2.2(a). The Company and the Purchaser shall also 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
and receipt of the Subscription Amount by the Company, the Closing shall occur at the principal offices of the Company or such other location
as the parties shall mutually agree. Notwithstanding anything herein to the contrary, the Closing Date shall occur on or before May 31,
2023, provided, however, that the Purchaser may extend such the Closing Date up to three times, by up to 30 days each extension, by notice
to the Company (such outside date, “Termination Date”). If the Closing is not held on or before the Termination Date,
the Company shall cause the Subscription Amount to be returned, without interest thereon or deduction therefrom to the Purchaser.
2.2 Deliveries.
(a) On
or prior to the Closing Date, the Company shall deliver or cause to be delivered to the Purchaser the following:
(i) this
Agreement duly executed by the Company;
(ii) a
certificate evidencing a number of Preferred Shares equal to the Subscription Amount divided by the Per Share Purchase Price, registered
in the name of the Purchaser;
(iii) the
Series C Certificate of Designation;
(iv) the
Warrant;
(v) the
Transfer Agent Instruction Letter;
(vi) a
Certificate of Good Standing of the Company and its Subsidiaries from each of their jurisdictions of incorporation or formation dated
no later than two Business Days prior to the Closing Date;
(vii) an
Officer’s Certificate (as hereinafter defined), executed by an officer of the Company;
(viii) all
documents, instruments and other writings required to be delivered by the Company to the Purchaser on or before the applicable Closing
Date pursuant to any provision of this Agreement or in order to implement and effect the transactions contemplated hereby.
The purchase of
the Preferred Shares will be completed in a single tranche as provided herein..
(b) On
or prior to the Closing Date, the Purchaser shall deliver or cause to be delivered to the Company the following:
(i) this
Agreement duly executed by the Purchaser; and
(ii) the
Subscription Amount by wire transfer to the account specified by the Company on Schedule 1 hereto (subject to Section 2.1).
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 on the Closing Date of the representations and warranties of the Purchaser contained herein (unless
as of a specific date therein in which case they shall be accurate as of such date);
(ii) all
obligations, covenants and agreements of the Purchaser under this Agreement required to be performed at or prior to the Closing Date shall
have been performed in all material respects;
(iii) the
delivery by the Purchaser of the items set forth in Section 2.2(b) of this Agreement;
(iv) the
special committee appointed by the Company shall have recommended the approval, in writing, of the execution of this Agreement; and
(v) the
Company shall have received the executed signature page to this Agreement from the Purchaser and the Company shall have received payment
of immediately available funds representing the Subscription Amount from the Purchaser in cash.
(b) The
obligations of the Purchaser hereunder in connection with the Closing are subject to the following conditions being met:
(i) each
and every representation and warranty of the Company shall be true and correct in all material respects as of the date when made and as
of the applicable Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such date) and the Company shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to the applicable
Closing Date, including, without limitation the issuance of all Securities on the Closing Date as required by the Transaction Documents
and the Company has a sufficient number of duly authorized shares of preferred stock and Common Stock reserved for issuance as may be
required to fulfill its obligations pursuant to the Transaction Documents and the Purchaser shall have received a certificate, executed
by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may
be reasonably requested by the Purchaser in the form acceptable to Purchaser (the “Officer’s Certificate”);
(ii) the
delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iii) All
necessary actions to be taken by the Company in connection with the Transaction and all documents incident thereto shall be satisfactory
in form and substance to the Purchaser, and the Purchaser shall have received all such counterpart originals or certified or other copies
of such documents as it or they may request;
(iv) there
is no breach of any obligations, covenants and agreements under the Transaction Documents and no existing event which, with the passage
of time or the giving of notice, would constitute a breach under the Transaction Documents;
(v) there
shall have been no Material Adverse Effect with respect to the Company since the date hereof;
(v) All
consents, authorizations, orders and approvals of, and filings and registrations with, any Governmental Authority which are required for
or in connection with the execution and delivery of this Agreement and the consummation by each Party hereto of the Transactions shall
have been obtained or made;
(vii) from
the date hereof 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 the Purchaser, makes it impracticable
or inadvisable to purchase the Securities at the Closing; and
(viii) the
Company shall have received the executed signature page to this Agreement from the Purchaser and the Company shall have received payment
in immediately available funds representing the Subscription Amount from the Purchaser in cash.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part
hereof and shall qualify any representation or warranty made herein only to the extent of the disclosure contained in the corresponding
section of the Disclosure Schedules, the Company hereby represents and warrants to the Purchaser that the following representations and
warranties are true and correct as of the date of this Agreement and the Closing Date:
(a) Organization
and Qualification. The Company and each of the direct and indirect subsidiaries of the Company listed on Schedule 3.1(a) (the
“Subsidiaries”) is an entity duly organized, validly existing and in good standing
under the laws of its state of incorporation or formation. The Company and each of its Subsidiaries is duly qualified to do business,
and is in good standing in the states required due to (i) the ownership or lease of real or personal property for use in the operation
of the Company’s business or (ii) the nature of the business conducted by the Company, except where the failure to so qualify would
not, individually or in the aggregate, have a Material Adverse Effect. The Company and each of its Subsidiaries has all requisite power,
right and authority to own, operate and lease its properties and assets, to carry on its business as now conducted, to execute, deliver
and perform its obligations under this Agreement and the other Transaction Documents to which it is a party, and to carry out the transactions
contemplated hereby and thereby, subject to the Required Approvals. All actions on the part of the Company and its officers and directors
necessary for the authorization, execution, delivery and performance of this Agreement and the other Transaction Documents, the consummation
of the transactions contemplated hereby and thereby, and the performance of all of the Company’s obligations under this Agreement
and the other Transaction Documents have been taken or will be taken prior to the Closing. This Agreement has been, and the other Transaction
Documents to which the Company is a party on the Closing will be, duly executed and delivered by the Company, and this Agreement is, and
each of the other Transaction Documents to which it is a party on the Closing will be, a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as may be limited by bankruptcy, reorganization, insolvency, moratorium
and similar laws of general application relating to or affecting the enforcement of rights of creditors, and except as enforceability
of the obligations hereunder are subject to general principles of equity (regardless of whether such enforceability is considered in a
proceeding in equity or law). All of the Subsidiaries and the Company’s ownership interests therein are set forth on 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 except Permitted Liens, and subject to the Required Approvals, and all of the issued and outstanding shares of capital stock
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) Issuance
of Securities. The issuance of each of the Preferred Shares, Warrant, Conversion Shares and Warrant Shares have been duly authorized
and, upon issuance in accordance with the terms of this Agreement, the Certification of Designations and the Warrant, as applicable, will
be validly issued, fully paid and non-assessable and free and clear of all liens, Encumbrances and rights of refusal of any kind and,
if applicable at the time, subject to the Required Approvals. The issuance of the Warrant is duly authorized by the Company and, when
executed and delivered by the Company, will be a valid and binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors or by general equitable principles.
(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, subject
to the Required Approvals. 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 stockholders in connection
herewith or therewith other than in connection with the Required Approvals, a Form 8-K and the applicable stockholder approval and notification
regarding the listing of additional shares. This Agreement and each other Transaction Documents 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, except as set forth on Schedule 3.1(d): (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; (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,
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 could
not have or 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 Sections 4.2, 4.8 and 4.20 of this Agreement; (ii) the notice and/or application(s) to the Principal Market, and the receipt of Stockholder
Approval required for the issuance and sale of the Preferred Shares and the listing of the Issuable Shares for trading thereon in the
time and manner required thereby; and (iii) the filing of Form D with the Commission and such filings as are required to be made under
applicable state securities laws (collectively, the “Required Approvals”).
(f) No
Financial Advisor. The Company acknowledges and agrees that the Purchaser is acting solely in the capacity of an arm’s length
purchaser with respect to the Securities and the transactions contemplated hereby. The Company further acknowledges that Purchaser is
not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Purchaser or any of its representatives or agents in connection with this Agreement and
the transactions contemplated hereby is merely incidental to the Purchaser’s purchase of the Securities. The Company further represents
to the Purchaser that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of
the transactions contemplated hereby by the Company and its representatives.
(g) Reserved.
(h) Capitalization
and Additional Issuances. The capitalization of the Company is as set forth in Schedule 3.1(h). Except as disclosed on
Schedule 3.1(h), 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 disclosed on Schedule 3.1(h), 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 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. Except as set forth on Schedule 3.1(h), the issuance and
sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the
Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price
under any of such securities. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully
paid and nonassessable, have been issued in material 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.
(i) Private
Placements. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchaser as contemplated hereby.
(j) Investment
Company. The Company is not, and is not an affiliate of, and immediately after receipt of payment for the Preferred Shares will neither
be nor 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 subject to the Investment Company Act.
(k) Listing
and Maintenance Requirements; Principal Market Regulation.
(i) The
Common Stock is registered pursuant to Section 12(b) 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 disclosed in the SEC Reports,
the Company has not, in the twelve (12) months preceding the date hereof, received notice from any Principal 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 Principal Market. Except as disclosed on Schedule 3.1(k), 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.
(ii) The
Company shall not issue or sell any shares of Common Stock or Common Stock Equivalents pursuant to this Agreement and the other Transaction
Documents to the extent that after giving effect thereto, the aggregate number of shares of Common Stock that would be issued pursuant
to this Agreement and such Transaction Documents would exceed the Exchange Cap, unless and until the Company obtains Stockholder Approval
of the transactions contemplated by this Agreement and such Transaction Documents and the stockholders of the Company as well as, subsequently,
the Principal Market have in fact approved the transactions contemplated by this Agreement and such Transaction Documents in accordance
with the applicable rules and regulations of the applicable Principal Market, and the Certificate of Incorporation and bylaws of the Company.
The Company agrees to submit the application to the Principal Market to obtain Exchange Approval within three (3) days of the Closing
Date. The Company shall file a preliminary proxy statement on Schedule 14A (the “PRE 14A”) with the Commission no later
than fifteen (15) days following the Closing Date for a special meeting of its stockholders (or its annual meeting of its stockholders)
in order to obtain all necessary approvals of the sale and issuance of the remaining Conversion Shares not subject to the Exchange Cap
and the Warrant Shares (it being acknowledged and agreed that the Preferred Shares shall be issued immediately upon receipt of Exchange
Approval therefor) consistent with the rules and regulations of the Principal Market, including but not limited to Section 713(a) and
(b) of the NYSE American LLC Company Guide. In addition, the PRE 14A shall include the unanimous recommendation of the Board of Directors
that such proposal be approved, and the Company shall solicit proxies from its stockholders in connection therewith in the same manner
as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor
of such proposal including, if requested by the Purchaser, the retention and utilization of a nationally known proxy solicitation firm.
The Company shall use its reasonable best efforts to: (i) promptly clear any comments received by the Commission on the PRE 14A and thereafter
file a definitive proxy statement on Schedule 14A related to the meeting of its stockholders, and (ii) obtain such Stockholder Approval.
If the Company does not obtain Stockholder Approval at the first such meeting, and in any event within 75 days of the Closing Date, the
Company shall call a meeting every two (2) months thereafter to seek Stockholder Approval until the earlier of the date on which Stockholder
Approval is obtained or the Securities are no longer outstanding. In the event that the Company has not been able to clear comments with
the Commission on the PRE 14A within 60 days of the Closing Date, unless waived by the Purchaser (a “Proxy Failure”),
the Company will provide prompt written notification to the Purchaser regarding the status of the comments with the Commission and the
parties will, in good faith, attempt to achieve a mutually satisfactory plan to address such comments, and the Company shall make Proxy
Failure Payments until it has cleared such comments. In the event of a Proxy Failure, in addition to the Purchaser’s other available
remedies, the Company shall pay to the Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay,
an amount in cash equal to one percent (1.0%) of the Subscription Amount of the Purchaser’s Securities held by the Purchaser on
the day of a Proxy Failure and on every thirtieth (30th) day (pro-rated for periods totaling less than thirty (30) days) thereafter
until the date such Proxy Failure is cured by the clearing Commission comments. The payments to which the Purchaser shall be entitled
pursuant to this Section 3.1(k)(ii) are referred to herein as “Proxy Failure Payments.” Proxy Failure Payments shall
be paid on the earlier of (i) the last day of the calendar month during which such Proxy Failure Payments are incurred and (ii) the third
(3rd) Business Day after the event or failure giving rise to the Proxy Failure Payments is cured. In the event the Company
fails to make Proxy Failure Payments in a timely manner, such Proxy Failure Payments shall bear interest at the rate of 1.5% per month
(pro-rated for partial months) until paid in full.
(l) Shell
Company Status. The Company is not and has not been a “shell company,” as such term is defined in Rule 144 under the Securities
Act, since January 1, 2021.
(m) Litigation.
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 except as set forth in Schedule 3.1(m),
or against or affecting the Company’s current or former officers or directors in their capacity as such, before or by any court,
arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an
“Action”) which (i) adversely affects or challenges the legality, validity or enforceability
of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected
to result in a Material Adverse Effect, and 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 that is likely to lead to action that can
reasonably be expected to result in a Material Adverse Effect. 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.
(n) Employee
Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member
of a union. The Company believes that its and its Subsidiaries’ relations with their respective employees are good.
The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment
and employment practices and benefits, terms and conditions of employment and wages and hours, except as disclosed in Schedule 3.1(n)
or where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. “Material Adverse Effect” means any material adverse effect on (i)
the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects
of the Company or any Subsidiary, taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents
or (iii) the authority or ability of the Company or any of its Subsidiaries to perform any of their respective obligations under any of
the Transaction Documents.
(o) Tax
Status. The Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other
tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those
being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries know of no basis for
any such claim. The Company is not operated in such a manner as to qualify as a passive foreign investment company, as defined in
Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.
(p) 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 (the foregoing materials, including the exhibits thereto and documents incorporated by reference
therein, being collectively referred to herein as the “SEC Reports”).
Except as disclosed on Schedule 3.1(p), 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 the light of the circumstances under which they were made, not misleading. 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 United States
generally accepted accounting principles applied on a consistent basis during the periods involved (“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.
(q) Indebtedness
and Other Contracts. Except as set forth on Schedule 3.1(q), neither the Company nor any of its Subsidiaries (i) has any outstanding
Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which,
by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect,
(iii) is in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness, except
where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (iv) is a party
to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s
officers, has or is expected to have a Material Adverse Effect. For purposes of this Agreement: (x) “Indebtedness”
of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as
the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with generally
accepted accounting principles) (other than trade payables entered into in the ordinary course of business), (C) all reimbursement or
payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property,
assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred
as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights
and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property),
(F) all monetary obligations under any leasing or similar arrangement which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured
by) any mortgage, claim, lien, tax, right of first refusal, pledge, charge, security interest or other encumbrance upon or in any property
or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has
not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations
of others of the kinds referred to in clauses (A) through (G) above.
(r) No
Undisclosed Events, Liabilities, Developments or Circumstances. Since January 1, 2021, except as set forth in the SEC Reports: (i)
there 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 material 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 the SEC Reports, (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) except as set forth on Schedule 3.1(r), the Company
has not issued any equity securities to any officer, director or Affiliate. 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(r), 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, 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 two Trading Days prior to the date that this representation is made.
(s) No
Additional Agreements. Neither the Company nor any of its Subsidiaries has any agreement or understanding with the Purchaser with
respect to the transactions contemplated by the Transaction Documents other than pursuant to documents substantially identical to the
Transaction Documents.
(t) No
Disqualification Events. None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other
officer of the Company participating in the Transaction contemplated hereby, any beneficial owner of 20% or more of the Company’s
outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under
the 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.
(u) General
Solicitation. None of the Company, any of its Affiliates or any person acting on behalf of the Company or such Affiliate will solicit
any offer to buy or offer or sell the Securities by means of any form of general solicitation or general advertising within the meaning
of Regulation D, including: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or
similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
(v) 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.
(w) 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.
(x) Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property (if any) 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 as set forth on Schedule 3.1(x) and 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 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 is held by them under valid, subsisting and enforceable leases with which the Company and the
Subsidiaries are in compliance, or where the failure of a lease to be enforceable would not result in a Material Adverse Effect.
(y) Intellectual
Property.
(i) The
term “Intellectual Property Rights” includes:
(A) the
name of the Company and each Subsidiary, all fictional business names, trading names, registered and unregistered trademarks, service
marks, and applications of the Company and each Subsidiary (collectively, “Marks”);
(B) all
patents, patent applications, and inventions and discoveries that may be patentable of the Company and each Subsidiary (collectively,
“Patents”);
(C) all
copyrights in both unpublished works and published works of the Company and each Subsidiary (collectively, “Copyrights”);
(D) all
rights in mask works of the Company and each Subsidiary (collectively, “Rights in Mask Works”); and
(E) all
know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings,
and blue prints (collectively, “Trade Secrets”); owned, used, or licensed by the Company and each Subsidiary as licensee
or licensor.
(ii) Agreements.
Except as set forth on Schedule 3.1(y), there are no outstanding and, to the Company’s Knowledge, no threatened disputes
or disagreements with respect to any agreements relating to any Intellectual Property Rights to which the Company is a party or by which
the Company is bound.
(iii) Know-How
Necessary for the Business. The Intellectual Property Rights are all those necessary for the operation of the Company’s businesses
as it is currently conducted. The Company is the owner of all right, title, and interest in and to each of the Intellectual Property Rights,
except as set forth on Schedule 3.1(y), free and clear of all liens, security interests, charges, encumbrances, equities, and other
adverse claims, and has the right to use all of the Intellectual Property Rights. To the Company’s Knowledge, no employee of the
Company has entered into any contract that restricts or limits in any way the scope or type of work in which the employee may be engaged
or requires the employee to transfer, assign, or disclose information concerning his work to anyone other than of the Company.
(iv) Patents.
The Company is the owner of all right, title and interest in and to each of the Patents, free and clear of all Liens and other adverse
claims. All of the issued Patents are currently in compliance with formal legal requirements (including payment of filing, examination,
and maintenance fees and proofs of working or use), are valid and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the Closing Date. No Patent has been or is now involved in any interference, reissue, reexamination,
or opposition proceeding. To the Company’s Knowledge except as set forth in Schedule 3.1(y): (1) there is no potentially
interfering patent or patent application of any third party, and (2) no Patent is infringed or has been challenged or threatened in any
way. To the Company’s Knowledge, none of the products manufactured and sold, nor any process or know-how used, by the Company infringes
or is alleged to infringe any patent or other proprietary right of any other Person.
(v) Trademarks.
The Company is the owner of all right, title, and interest in and to each of the Marks, free and clear of all Liens and other adverse
claims. All Marks that have been registered with the United States Patent and Trademark Office are currently in compliance with all formal
legal requirements (including the timely post-registration filing of affidavits of use and incontestability and renewal applications),
are valid and enforceable, and except as set forth on Schedule 3.1(y) are not subject to any maintenance fees or taxes or actions
falling due within ninety days after the Closing Date. Except as set forth in Schedule 3.1(y), no Mark has been or is now involved
in any opposition, invalidation, or cancellation and, to the Company’s Knowledge, no such action is threatened with respect to any
of the Marks. To the Company’s Knowledge: (1) there is no potentially interfering trademark or trademark application of any third
party, and (2) no Mark is infringed or has been challenged or threatened in any way. To the Company’s Knowledge, none of the Marks
used by the Company infringes or is alleged to infringe any trade name, trademark, or service mark of any third party.
(vi) Copyrights.
The Company is the owner of all right, title, and interest in and to each of the Copyrights, free and clear of all Liens and other adverse
claims. All the Copyrights have been registered and are currently in compliance with formal requirements, are valid and enforceable, and
are not subject to any maintenance fees or taxes or actions falling due within ninety days after the date of the Closing. To the Company’s
Knowledge, no Copyright is infringed or has been challenged or threatened in any way. To the Company’s Knowledge, none of the subject
matter of any of the Copyrights infringes or is alleged to infringe any copyright of any third party or is a derivative work based on
the work of a third party. All works encompassed by the Copyrights have been marked with the proper copyright notice.
(vii) Trade
Secrets. With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate, and sufficient in
detail and content to identify and explain it and to allow its full and proper use without reliance on the Knowledge or memory of any
individual. The Company has taken all reasonable precautions to protect the secrecy, confidentiality, and value of its Trade Secrets.
The Company has good title and an absolute and exclusive right to use the Trade Secrets. The Trade Secrets are not part of the public
knowledge or literature, and, to the Company’s Knowledge, have not been used, divulged, or appropriated either for the benefit of
any Person (other the Company) or to the detriment of the Company, except as disclosed on Schedule 3.1(y). No Trade Secret is subject
to any adverse claim or has been challenged or threatened in any way.
(z) Stock
Option Plans. Each stock option granted by the Company under the stock option plan was granted (i) in accordance with the terms of
such 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 any 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.
(aa) 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 is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of
the U.S. Treasury Department (“OFAC”).
(bb) Money
Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance in all material
respects 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, suit 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.
(cc) RESERVED.
(dd) Acknowledgment
Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees that the Purchaser 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 represents to the 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.
(ee) No
Integrated Transaction. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, neither
the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales
of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of: (i) the Securities Act which would require the registration of any such
securities under the Securities Act, or (ii) any applicable stockholder approval provisions of the Principal Market on which any of the
securities of the Company are listed or designated.
(ff) Application
of Takeover Protections. The Company and the Board of Directors will, no later than five (5) Business Days prior to the Closing Date,
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 Purchaser
as a result of the Purchaser 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 Purchaser’s ownership of the
Securities.
(gg) Registration
Rights. Except as set forth on Schedule 3.1(gg), 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.
(hh) Certain
Fees. Except as disclosed on Schedule 3.1(hh), no brokerage, finder’s fees, commissions or due diligence fees 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 Purchaser shall have no obligation
with respect to any such fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this
Section 3.1(hh) that may be due in connection with the transactions contemplated by the Transaction Documents.
(ii) Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in material compliance with any and all applicable requirements
of the Sarbanes-Oxley Act of 2002 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, except as set forth in the SEC Reports: (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.
(jj) Transactions
With Affiliates and Employees. Except as set forth on Schedule 3.1(jj), 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 $100,000 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 except as disclosed on Schedule 3.1(jj).
(kk) 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 and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited
to, directors and officers insurance coverage at least equal to the Subscription Amount, except as set forth on Schedule 3.1(kk).
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.
(ll) Disclosure.
All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company and its Subsidiaries, their respective
businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, when taken together as a whole,
is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order
to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated
by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that the Purchaser
neither makes nor has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically
set forth herein.
(mm) Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, and the Company’s good faith estimate of the
fair market value of its assets, 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(mm)
sets forth as of the date hereof all outstanding liens and secured and unsecured Indebtedness of the Company or any Subsidiary, or for
which the Company or any Subsidiary has commitments. Except as disclosed on Schedule 3.1(mm), neither the Company nor any Subsidiary
is in default with respect to any Indebtedness.
(nn) 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.
(oo) Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956,
as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent
(5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a
bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries
or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and
to regulation by the Federal Reserve.
(pp) Reserved.
(qq) Accountants
and Lawyers. The Company’s independent registered public accounting firm is set forth on Schedule 3.1(qq). To the Knowledge
and belief of the Company, such accounting firm: (i) is an independent registered public accounting firm and (ii) has expressed its opinion
with respect to the financial statements included in the Company’s Annual Report for the fiscal year ended December 31, 2022. There
are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants
and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants
and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents.
(pp) Material
Agreements. Except for the Transaction Documents (with respect to clause (i) only) or as set forth on Schedule 3.1(pp) hereto,
or as would not be reasonably likely to have a Material Adverse Effect, (i) the Company and each of its Subsidiaries have performed all
obligations required to be performed by them to date under any Material Agreement, (ii) neither the Company nor any of its Subsidiaries
has received any notice of default under any Material Agreement and, (iii) to the best of the Company’s Knowledge, neither the Company
nor any of its Subsidiaries is in default under any Material Agreement now in effect.
(qq) Promotional
Stock Activities. Neither the Company, its officers, its directors, nor any Affiliates or agents of the Company have engaged in any
stock promotional activity that could give rise to a complaint, inquiry, or trading suspension by the Commission alleging (i) a violation
of the anti-fraud provisions of the federal securities laws, (ii) violations of the anti-touting provisions, (iii) improper “gun-jumping;
or (iv) promotion without proper disclosure of compensation.
(rr) No “Off-balance
Sheet Arrangements.” Other than as set forth in Schedule 3.1(rr), neither the Company nor any of its Affiliates is involved
in any “Off-balance Sheet Arrangements”. For purposes hereof an “Off-balance Sheet Arrangement” means any
transaction or contract to which an entity unconsolidated with the Company or any of its Affiliates is a party and under which either
the Company or any such Affiliate has: (i) any obligation under a guarantee contract pursuant to which the Company or any of its Affiliates
could be required to make payments to the guaranteed party, including any standby letter of credit, market value guarantee, performance
guarantee, indemnification agreement, keep-well or other support agreement; (ii) any retained or contingent interest in assets transferred
to such unconsolidated entity that serves as credit, liquidity or market risk support to the entity in respect of such assets; (iii) any
variable interest held in such unconsolidated entity where such entity provides financing, liquidity, market risk or credit risk support
to, or engages in leasing, hedging or research and development services with the Company of any of its Affiliates; and (iv) any liability
or obligation of the same nature as those described in clauses (i) through (iii) of this sentence even if of a different name (whether
absolute, accrued, contingent or otherwise) that would not be required to be reflected in the Company or any of its Affiliates’
financial statements.
(ss) Transfer
Taxes. On each date the Company issues Securities to the Purchaser, all share transfer or other taxes (other than income or similar
taxes) which are required to be paid in connection with the issuance of the Securities hereunder on such date will be, or will have been,
fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
(tt) Cybersecurity.
The Company and its Subsidiaries’ information technology assets and equipment, computers, systems, networks, hardware, software,
websites, applications, and databases (collectively, “IT Systems”) are adequate for, and operate and perform in all
material respects as required in connection with the operation of the business of the Company and its Subsidiaries as currently conducted,
free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants. The Company and its Subsidiaries
have implemented and maintained commercially reasonable physical, technical and administrative controls, policies, procedures, and safeguards
to maintain and protect their material confidential information and the integrity, continuous operation, redundancy and security of all
IT Systems and data, including “Personal Data,” used in connection with their businesses. “Personal Data”
means (i) a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax identification
number, driver’s license number, passport number, credit card number, bank information, or customer or account number; (ii) any
information which would qualify as “personally identifying information” under the Federal Trade Commission Act, as amended;
(iii) any information which would qualify as “protected health information” under HIPAA; and (iv) any other piece of information
that allows the identification of such natural person, or his or her family, or permits the collection or analysis of any data related
to an identified person’s health or sexual orientation. There have been no breaches, violations, outages or unauthorized uses of
or accesses to same, except for those that have been remedied without material cost or liability or the duty to notify any other person,
nor any incidents under internal review or investigations relating to the same. The Company and its Subsidiaries are presently in material
compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental
or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Personal
Data and to the protection of such IT Systems and Personal Data from unauthorized use, access, misappropriation or modification.
(uu) Compliance
with Data Privacy Laws. To the Knowledge of the Company, the Company and its Subsidiaries are, and at all prior times were, in material
compliance with all applicable state and federal data privacy and security laws and regulations (collectively, the “Privacy Laws”).
To ensure compliance with the Privacy Laws, the Company and its Subsidiaries have in place, comply with, and take appropriate steps reasonably
designed to ensure compliance in all material respects with their policies and procedures relating to data privacy and security and the
collection, storage, use, disclosure, handling, and analysis of Personal Data (the “Policies”), if applicable. To the
Company’s Knowledge, the Company and its Subsidiaries have at all times made all disclosures to users or customers required by applicable
laws and regulatory rules or requirements in all material respects, and none of such disclosures made or contained in any Policy have,
to the Knowledge of the Company, been inaccurate or in violation of any applicable laws and regulatory rules or requirements in any material
respect. The Company further certifies that neither it nor any Subsidiary: (i) has received notice of any actual or potential liability
under or relating to, or actual or potential violation of, any of the Privacy Laws, and has no Knowledge of any event or condition that
would reasonably be expected to result in any such notice to the extent that it would result in a Material Adverse Effect; (ii) is currently
conducting or paying for, in whole or in part, any investigation, remediation, or other corrective action pursuant to any Privacy Law;
or (iii) is a party to any order, decree, or agreement that imposes any obligation or liability under any Privacy Law.
(vv) COVID-19; COVID-19 Measures.
(i) the
Company is not subject to (or has received an exclusion from the applicable Governmental Entity) COVID-19 Measures, such that the Company
may not continue to operate in the ordinary course of business as of the Effective Date and the reasonably foreseeable future.
(ii) Schedule
3.1(vv) sets forth a list of each loan or other financial grant for which the Company has applied or which it has received pursuant
to any COVID-19 Measure, including any “Paycheck Protection Program” loan, “Economic Stabilization Fund” loan,
or other SBA loan.
(iii) the
Company has in place and maintains in effect business continuity, risk management, emergency and disaster plans, procedures, protocols
and facilities appropriate for the nature of the risks associated with the business of the Company.
(iv) the
Company has taken reasonable actions to (i) reduce the potentially adverse effects of COVID-19 and COVID-19 Measures on the Company, and
(ii) assess and monitor risks which may arise from the continuation of the COVID-19 pandemic.
(v) Except
as set forth on Schedule 3.1(vv), as of the date hereof, the Company has not had, nor to the Knowledge of the Company are there
any facts that would give rise to, any workforce changes resulting from disruptions due to COVID-19 or COVID-19 Measures, whether directly
or indirectly, including any actual or expected terminations, layoffs, furlough, shutdowns (whether voluntary or by Order), or any changes
to benefit or compensation programs, nor are any such changes currently contemplated.
(vi) The
Company has no Knowledge that any of the Company’s personnel has any plans to terminate his, her or its status as an employee or
independent contractor of the Company or any of its Subsidiaries, including upon or in connection with the consummation of the transactions
contemplated by this Agreement or as a result of COVID-19 or COVID-19 Measures.
(xx) Reporting
Requirements. The Company is subject to and in compliance in all material respects with the reporting requirements of Section 13 or
Section 15(d), as applicable, of the Exchange Act.
(yy) Full
Disclosure. No representation or warranty by the Company in this Agreement and no statement contained in the Disclosure Schedules
to this Agreement or any certificate or other document furnished or to be furnished to the Purchaser pursuant to this Agreement contains
any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light
of the circumstances in which they are made, not misleading.
(zz) Survival. The foregoing
representations and warranties shall not survive the Closing Date.
3.2 Representations
and Warranties of the Purchaser. The Purchaser hereby represents and warrants to the Company that the following representations and
warranties are true and correct as of the date of this Agreement and the Closing Date:
(a) The
Purchaser has full power and authority to enter into this Agreement, the execution and delivery of which has been duly authorized, if
applicable, and this Agreement constitutes a valid and legally binding obligation of the Purchaser, except as may be limited by bankruptcy,
reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement of rights of creditors,
and except as enforceability of the obligations hereunder are subject to general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or law).
(b) The
Purchaser acknowledges its understanding that the Transaction and sale of the Securities is intended to be exempt from registration under
the Securities Act, by virtue of Section 4(a)(2) of the Securities Act. In furtherance thereof, the Purchaser represents and warrants
to the Company as follows:
(i) The
Purchaser realizes that the basis for the exemption from registration may not be available if, notwithstanding the Purchaser’s representations
contained herein, the Purchaser is merely acquiring the Securities for a fixed or determinable period in the future, or for a market rise,
or for sale if the market does not rise. The Purchaser does not have any such intention.
(ii) The
Purchaser realizes that the basis for exemption would not be available if the Transaction is part of a plan or scheme to evade registration
provisions of the Securities Act or any applicable state or federal securities laws, except sales pursuant to a registration statement
or sales that are exempted under the Securities Act.
(iii) The
Purchaser is acquiring the Securities solely for the Purchaser’s own beneficial account, for investment purposes, and not with a
view towards, or resale in connection with, any distribution of the Securities.
(iv) The
Purchaser has the financial ability to bear the economic risk of the Purchaser’s investment, has adequate means for providing for
its current needs and contingencies, and has no need for liquidity with respect to an investment in the Company.
(v) The
Purchaser and the Purchaser’s attorney, accountant, purchaser representative and/or tax advisor, if any (collectively, the “Advisors”)
has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of a prospective
investment in the Securities. The Purchaser has not been organized solely for the purpose of acquiring the Securities.
(vi) The
Purchaser (together with its Advisors, if any) has received all documents requested by the Purchaser, if any, and has carefully reviewed
them and understands the information contained therein, prior to the execution of this Agreement.
(c) The
Purchaser is not relying on the Company or any of its employees, agents, sub-agents or advisors with respect to the legal, tax, economic
and related considerations involved in this investment. The Purchaser has relied on the advice of, or has consulted with, only its Advisors.
(d) The
Purchaser has carefully considered the potential risks relating to the Company and a purchase of the Securities, and fully understands
that the Securities are a speculative investment that involves a high degree of risk of loss of the Purchaser’s entire investment.
(e) The
Purchaser will not sell or otherwise transfer any Securities without registration under the Securities Act or an exemption therefrom,
and fully understands and agrees that the Purchaser must bear the economic risk of its purchase because, among other reasons, the Securities
have not been registered under the Securities Act or under the securities laws of any state and, therefore, cannot be resold, pledged,
assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and under the applicable securities
laws of such states, or an exemption from such registration is available. In particular, the Purchaser is aware that the Securities are
“restricted securities,” as such term is defined in Rule 144, and may not be sold pursuant to Rule 144 unless all of the conditions
of Rule 144 are met. The Purchaser understands that any sales or transfers of the Securities are further restricted by state securities
laws and the provisions of this Agreement.
(f) No
oral or written representations or warranties have been made, or information furnished, to the Purchaser or its Advisors, if any, by the
Company or any of its officers, employees, agents, sub-agents, affiliates, advisors or subsidiaries in connection with the Transaction,
other than any representations of the Company contained herein, and in subscribing for the Securities, the Purchaser is not relying upon
any representations other than those contained herein.
(g) The
Purchaser’s overall commitment to investments that are not readily marketable is not disproportionate to the Purchaser’s net
worth, and an investment in the Securities will not cause such overall commitment to become excessive.
(h) The
Purchaser understands and agrees that the certificates for the Securities shall bear substantially the following legend:
“NEITHER THE ISSUANCE
AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE OR EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO
THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
(i) Certificates
evidencing Securities shall not be required to contain the legend set forth in Section 3.2 (h) above or any other legend (i) while
a registration statement covering the resale of such Securities is effective under the Securities Act, (ii) following any sale of such
Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), (iii) if such Securities are eligible to
be sold, assigned or transferred under Rule 144 (provided that the Purchaser provides the Company with reasonable assurances that such
Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion of the Purchaser’s counsel),
(iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that the Purchaser provides the Company
with an opinion of counsel, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may
be made without registration under the applicable requirements of the Securities Act or (v) if such legend is not required under applicable
requirements of the Securities Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the
Commission). If a legend is not required pursuant to the foregoing, the Company shall no later than three (3) business days following
the delivery by the Purchaser to the Company or the transfer agent (with notice to the Company) of a legended certificate representing
such Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance
and/or transfer, if applicable), together with any other deliveries from the Purchaser as may be required above in this Section 3.2
(i), as directed by the Purchaser, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated
Securities Transfer Program and the Securities are Conversion Shares or Warrant Shares, credit the aggregate number of Conversion Shares
or Warrant Shares to which the Purchaser shall be entitled to the Purchaser’s or its designee’s balance account with DTC through
its Deposit and Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and deliver (via reputable overnight courier) to the Purchaser, a certificate representing such Securities
that is free from all restrictive and other legends, registered in the name of the Purchaser or its designee. The Company shall be responsible
for any transfer agent fees, fees of legal counsel to the Company or DTC fees with respect to any issuance of Securities or the removal
of any legends with respect to any Securities in accordance herewith.
(j) Neither
the Commission nor any state securities commission has approved the Securities or passed upon or endorsed the merits of the Transaction.
There is no government or other insurance covering any of the Securities.
(k) The
Purchaser has taken no action that would give rise to any claim by any person for brokerage commissions, finders’ fees or the like
relating to this Agreement or the transactions contemplated hereby.
(l) The
Purchaser is not relying on the Company or any of its employees, agents, or advisors with respect to the legal, tax, economic and related
considerations of an investment in the Securities, and the Purchaser has relied on the advice of, or has consulted with, only its own
Advisors.
(m) No
oral or written representations have been made, or oral or written information furnished, to the Purchaser or its Advisors, if any, in
connection with the Transaction that are in any way inconsistent with the information contained herein.
(n) The
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 Transaction, and has so evaluated the merits and risks of such investment.
The Purchaser has not authorized any person or entity to act as its Purchaser Representative (as that term is defined in Regulation D
of the General Rules and Regulations under the Securities Act) in connection with the Transaction. The Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
ARTICLE IV
OTHER AGREEMENTS
OF THE PARTIES
4.1 Transfer
Restrictions.
(a) The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of the Purchaser or in connection
with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities
Act. As a condition of such transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and
the other applicable Transaction Documents and shall have the rights and obligations of the Purchaser under this Agreement.
(b) The
Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on the Securities in the following form:
“NEITHER THE ISSUANCE AND SALE
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE OR EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A
UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
The Company acknowledges and agrees
that, the Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security
interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a)
under the Securities Act and who agrees to be bound by the provisions of this Agreement and the other applicable Transaction Documents
and, if required under the terms of such arrangement, the Purchaser may transfer pledged or secured Securities into the name of the pledgees
or secured parties, in their respective capacities as such. 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 Securities may reasonably request in connection with a pledge or transfer of
the Securities.
(c) Certificates
evidencing the Conversion Shares and 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 any such securities are effective under the Securities Act; (ii) following any
sale of such Conversion Shares or Warrant Shares pursuant to Rule 144; 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 upon
request of the Purchaser and at the Company’s sole expense cause its counsel (or at the Purchaser’s option, counsel selected
by the Purchaser) to issue a legal opinion reasonably satisfactory to the Company to the Transfer Agent promptly after any of the events
described in (i)-(ii) in the preceding sentence if required by the Transfer Agent to effect the removal of the legend hereunder (with
a copy to the applicable Purchaser and its broker). If all or any portion of any Preferred Shares or Warrant is converted or exercised,
respectively, at a time when there is an effective registration statement to cover the resale of the Conversion Shares or Warrant Shares,
or if such Conversion Shares or Warrant Shares may be sold under Rule 144 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 Conversion Shares or 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), it will, no later than 9:00 AM the next Trading Day following the delivery by a Purchaser
to the Company or the Transfer Agent of a certificate representing Conversion Shares or Warrant Shares issued with a restrictive legend
(such Trading Day, the “Legend Removal Date”), instruct the Transfer Agent to deliver or cause to be delivered to the
Purchaser a certificate representing such shares of Common Stock that is free from all restrictive and other legends. The Company may
not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in
this Section 4. Certificates for the Conversion Shares and Warrant Shares that are 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 the Purchaser.
(d) In
lieu of delivering physical certificates representing the unlegended shares, upon request of the Purchaser, so long as the certificates
therefor do not bear a legend and the Purchaser is not obligated to return such certificate for the placement of a legend thereon and
provided it is commercially reasonable for the Company to do so, the Company shall cause its transfer agent to electronically transmit
the unlegended shares by crediting the account of Purchaser’s prime broker with the Depository Trust Company through its DWAC system,
provided that the Company’s Common Stock is DTC eligible and the Company’s transfer agent participates in the Deposit Withdrawal
at Custodian system and such Securities are Conversion Shares or Warrant Shares. Such delivery must be made on or before the Legend Removal
Date.
(e) In
the event the Purchaser shall request delivery of unlegended shares as described in this Section 4.1 and the Company is required to deliver
such unlegended shares, the Company may not refuse to deliver unlegended shares based on any claim that the Purchaser or anyone associated
or affiliated with the Purchaser has not complied with Purchaser’s obligations under the Transaction Documents, or for any other
reason, unless, an injunction or temporary restraining order from a court, on notice, restraining and or enjoining delivery of such unlegended
shares shall have been sought and obtained by the Company and the Company has posted a surety bond for the benefit of the Purchaser in
the amount of the greater of (i) 120% of the amount of the aggregate stated value of the Conversion Shares or the Warrant Shares which
is subject to the injunction or temporary restraining order, or (ii) the VWAP of the Common Stock on the trading day before the issue
date of the injunction multiplied by the number of unlegended shares to be subject to the injunction, which bond shall remain in effect
until the completion of arbitration/litigation of the dispute and the proceeds of which shall be payable to the Purchaser to the extent
Purchaser obtains judgment in Purchaser’s favor.
4.2 Furnishing
of Information; Public Information.
(a) From
the Closing Date until no Purchaser holds any Securities, the Company covenants to maintain the registration of the Common Stock under
Section 12(b) or 12(g) of the Exchange Act and 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 commencing on the Closing Date and ending at such time that all of the Securities 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 shall
fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public Information Failure”)
then, in addition to the Purchaser’s other available remedies, the Company shall pay to the Purchaser, in cash, as partial liquidated
damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Securities, an amount in cash equal
to one percent (1.0%) of the Subscription Amount of the Purchaser’s Securities held by the Purchaser 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
Purchaser to transfer the Conversion Shares or Warrant Shares pursuant to Rule 144. The payments to which the 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 (pro-rated for partial months) until paid in full. Nothing herein shall limit
the Purchaser’s right to pursue actual damages for the Public Information Failure, and the 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 by the Company in a manner that would require
the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the Securities
for purposes of the rules and regulations of any Trading Market such that it would require stockholder approval prior to the closing of
such other transaction unless stockholder approval is obtained before the closing of such subsequent transaction.
4.4 Publicity.
The Company and the Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated
hereby, and neither the Company nor the Purchaser shall issue any such press release nor otherwise make any such public statement without
the prior consent of the Company, with respect to any press release of the Purchaser, or without the prior consent of the Purchaser, with
respect to any press release of the Company, which consent shall not unreasonably be withheld, delayed, denied or conditioned, except
if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of
such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Purchaser,
or include the name of the Purchaser in any filing with the Commission or any regulatory agency or Trading Market unless the name of the
Purchaser is already included in the body of the Transaction Documents, without the prior written consent of the Purchaser, except: (a)
as required by federal or state securities law in connection with the filing of final Transaction Documents with the Commission, or (b)
to the extent such disclosure is required by law or Principal Market regulations, in which case the Company shall provide the Purchaser
with prior notice of such disclosure permitted under this clause (b).
4.5 RESERVED.
4.6 Use
of Proceeds. The Company will use the net proceeds to the Company from the sale of the Preferred Shares hereunder as set forth
on Schedule 4.6. Absent consent of the Purchaser, the Company shall not use such proceeds: (a) for the satisfaction of any
portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior
practices), (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 the law, including FCPA or OFAC.
4.7 Right
of Participation. The Company acknowledges and agrees that the right set forth in this Section 4.7 is a right granted by the
Company, separately, to the Purchaser, provided that the Purchaser owns no fewer than Ten Thousand (10,000) Preferred Shares.
(a) If
the Company has delivered to the Purchaser or its assigns a notice (an “MNPI Pre-Notice”) and offer to deliver Material non-Public
Information (“MNPI”), and the Purchaser or its assigns has delivered written notice that it will accept such MNPI and
only in that event, at least ten (10) trading days prior to any proposed or intended sale by the Company of its Common Stock or other
securities or equity linked debt obligations other than an Exempt Issuance other than (v) thereof (each, a “Subsequent Placement”),
the Company shall deliver to the Purchaser a written notice of its proposal or intention to effect a Subsequent Placement (each such notice,
a “Pre-Notice”), which Pre-Notice shall not contain any information (including, without limitation, material, non-public
information) other than: (A) a statement that the Company proposes or intends to effect a Subsequent Placement, (B) a statement that the
statement in clause (A) above does not constitute material, non-public information and (C) a statement informing the Purchaser that it
is entitled to receive an Offer Notice (as defined below) with respect to such Subsequent Placement upon its written request. Upon the
written request of the Purchaser within five (5) Business Days after the Company’s delivery to the Purchaser of such Pre-Notice,
and only upon a written request by the Purchaser, the Company shall promptly, but no later than one (1) Business Day after such request,
deliver to the Purchaser an irrevocable written notice (the “Offer Notice”) of any proposed or intended issuance or
sale or exchange (the “Offer”) of the securities being offered (the “Offered Securities”) in a Subsequent
Placement, which Offer Notice shall (I) identify and describe the Offered Securities, (II) describe the price and other terms upon which
they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged, (III) identify
the persons (if known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (IV) offer to issue
and sell to or exchange with the Purchaser in accordance with the terms of the Offer such number of Offered Securities entitling the Purchaser
to maintain its percentage beneficial ownership of the Company held prior to the Subsequent Placement (the “Participation Amount”).
As used in this Section 4.7, the word “Purchaser” includes its assigns.
(b) To
accept an Offer, in whole or in part, the Purchaser must deliver a written notice to the Company prior to the end of the fifth (5th)
Business Day after the Purchaser’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion
of the Purchaser’s Participation Amount that the Purchaser elects to purchase. Notwithstanding the foregoing, if the Company desires
to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Company may deliver to the Purchaser
a new Offer Notice and the Offer Period shall expire on the fifth (5th) Business Day after the Purchaser’s receipt of
such new Offer Notice. Notwithstanding anything herein to the contrary, in the event that the Subsequent Placement is an “overnight”
registered offering (“RDO”), there shall be no Pre-Notice required to be delivered to the Purchaser; provided
that the Subsequent Placement is delivered between the time period of 4:00 pm (New York City time) and 6:00 pm (New York City time) on
the Trading Day immediately prior to the Trading Day of the expected announcement of the Subsequent Placement (or, if the Trading Day
of the expected announcement of the Subsequent Placement is the first Trading Day following a holiday or a weekend (including a holiday
weekend), between the time period of 4:00 pm (New York City time) on the Trading Day immediately prior to such holiday or weekend and
2:00 pm (New York City time) on the day immediately prior to the Trading Day of the expected announcement of the Subsequent Placement).
The Offer Notice shall describe in reasonable detail the proposed terms of such Subsequent Placement, the amount of proceeds intended
to be raised thereunder and the Person or Persons through or with whom such Subsequent Placement is proposed to be effected and shall
include a term sheet or similar document relating thereto as an attachment. In addition, in the event of an RDO, any Purchaser desiring
to participate in such Subsequent Placement must provide written notice to the Company by 6:30 am (New York City time) on the Trading
Day following the date on which the Offer Notice is delivered to such Purchaser (the “Notice Termination Time”) that
such Purchaser is willing to participate in the Subsequent Placement, the amount of such Purchaser’s participation, and representing
and warranting that such Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Offer Notice.
If the Company receives no such notice from a Purchaser as of such Notice Termination Time, such Purchaser shall be deemed to have notified
the Company that it does not elect to participate in such Subsequent Placement.
4.8 Establishment
of Reserve Account. The Company shall establish a reserve account to be funded with no less than 12.5% of the Subscription Amount,
which account shall be maintained for a period of at least nine (9) months from the Closing Date. Thereafter, any reduction of the Reserve
Account shall require the approval of the Board of Directors.
4.9 Dividend
Participation. In the event the Company declares or pays any cash dividend or distribution on, the shares of outstanding Common Stock
of the Company, the Purchaser shall have the right to participate in such dividend or distribution with respect to the Preferred Shares
then held by the Purchaser on an as-converted basis.
4.10 Certain
Limitations. Notwithstanding anything contained in any Transaction Document to the contrary, the parties covenant and agree that the
Purchaser shall not convert any Preferred Shares or exercise any of the Warrant into shares of Common Stock, or to sell any Conversion
Shares or Warrant Shares, unless and until the Company obtains Exchange Approval and, if applicable, Stockholder Approval of the Transaction
in accordance with the Principal Market Rules. The Purchaser further covenants and agrees not to vote any of its Securities at the meeting
of the stockholders held for the purpose of obtaining such Stockholder Approval.
4.11 Primary
Market Compliance. Notwithstanding anything in this Agreement or any other Transaction Document to the contrary, the parties shall
use commercially reasonable efforts to comply with the Principal Market Rules, including the listing requirements, and as long as the
Common Stock remains listed on the Principal Market the parties shall not enforce any provision of any Transaction Document which does
not comply with the Principal Market Rules.
4.12 Reservation
of Common Stock. The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in amount equal to the Required Minimum. If, on any date including the Effective Date, the number of authorized
but unissued (and otherwise unreserved) shares of Common Stock is less than the Required Minimum on such date, then the Board of Directors
shall use commercially reasonable efforts to amend the Company’s Certificate of Incorporation to increase the number of authorized
but unissued shares of Common Stock to at least the Required Minimum at such time, as soon as possible and in any event not later than
the 75th day after such date; provided that the Company will not be required at any time to authorize a number of shares of
Common Stock greater than the maximum remaining number of shares of Common Stock that could possibly be issued after such time pursuant
to the Transaction Documents.
4.13 Listing
of Common Stock. At all times subsequent to the Closing Date, the Company hereby agrees to maintain the listing of the Common Stock
on the Trading Market on which it is listed, and following the Closing, Stockholder and final Exchange Approval, the Company, shall apply
to list all of the Conversion Shares and the Warrant Shares on such Trading Market and promptly secure the listing of all of the Conversion
Shares and the Warrant Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded
on any other Trading Market, it will then include in such application all of the Conversion Shares and the Warrant Shares, and will take
such other action as is necessary to cause all of the Conversion Shares and Warrant Shares to be listed or quoted on such other Trading
Market as promptly as possible. The Company will then take all action necessary to continue the listing or quotation and trading of its
Common Stock on a Trading Market until five years after the Closing Date and will comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Trading Market until at least five years after the Closing Date. In the
event the afore-described listing is not continuously maintained for five years after the date of such listing (a “Listing Default”),
then in addition to any other rights the Purchaser may have hereunder or under applicable law, on the first day of a Listing Default and
on each monthly anniversary of each such Listing Default date (if the applicable Listing Default shall not have been cured by such date)
until the applicable Listing Default is cured, the Company shall pay to the Purchaser an amount in cash, as partial liquidated damages
and not as a penalty, equal to 2% of the Subscription Amount of the Securities then held by the Purchaser on the day of a Listing Default
and on every thirtieth (30th) day (pro-rated for periods less than thirty days) thereafter until the date such Listing Default
is cured. If the Company fails to pay any liquidated damages pursuant to this Section in a timely manner, the Company will pay interest
thereon at a rate of 1.5% per month (pro-rated for partial months) to the Purchaser.
4.14 Reserved.
4.15 Notice
of Disqualification Events. The Company will notify the Purchaser in writing, prior to the Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating
to any Issuer Covered Person not otherwise disclosed herein.
4.16 Acknowledgment
of Dilution. The Company acknowledges that the issuance of the Conversion Shares upon conversion of the Preferred Shares and
of the Warrant Shares upon exercise of the Warrant may result in dilution of the outstanding shares of Common Stock, which dilution may
be substantial. The Company further acknowledges that its obligations under the Transaction Documents, including, without limitation,
its obligation to issue the Conversion Shares and the Warrant Shares pursuant to the Transaction Documents, are unconditional and absolute,
but subject to the terms and conditions of the Transaction Documents, and not subject to any right of set off, counterclaim, delay or
reduction, regardless of the effect of any such dilution or any claim the Company may have against the Purchaser and regardless of the
dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.
4.17 Certain
Equity Limitations.
(a) Limitations
on Issuances and Financings. For a period ending on the earlier of (i) of four (4) years from the final Closing Date, and (ii) the
date that Purchaser no longer holds a minimum of Ten Thousand (10,000) Preferred Shares (the “Prohibition Period”),
the Company shall not, without the consent of the Purchaser (“Required Consent”) issue any Common Stock or securities
convertible into or exercisable for shares of Common Stock to any person or entity solely for capital raising purposes or incur any financing
debt other than conventional loans obtained through a commercial bank or enter into other incremental financing arrangements at a price
per share that is less than the Conversion Price.
(b) Subsequent
Equity Sales; Variable Rate Transactions; Other. During the Prohibition Period:
(i) the
Company shall not, directly or indirectly, amend, modify, waive or alter any terms of conditions of any Common Stock Equivalents outstanding
as of the date hereof to decrease the exercise, conversion and/or exchange price, as applicable, thereunder or otherwise increase the
aggregate number of shares of Common Stock issuable in connection therewith (other than pursuant to anti-dilution terms and conditions
applicable to such Common Stock Equivalents in effect as of the date hereof and disclosed in filings of the Company with the Commission
prior to the date hereof).
(ii) the
Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company 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 issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable
for, or include the right to receive, additional 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 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 (other than pursuant to terms and conditions applicable to such
Common Stock Equivalents in effect as of the date hereof and disclosed in filings of the Company with the Commission prior to the date
hereof). For purpose of this Section 4.17(b)(ii), an At-the-Market offering shall not be deemed a variable rate transaction.
(iii) the
Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company of Common Stock or Common
Stock Equivalents (or a combination of units thereof) involving an equity line of credit, at-the-market offering (as defined in SEC Rule
415) or similarly structured transaction, whereby the Company may issue securities at a future determined price.
(iv) The
Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance in this Section 4.17(b) (without
the need for the posting of any bond or similar item, which the Company hereby expressly and irrevocably waives the requirement for),
which remedy shall be in addition to any right to collect damages.
(c) Exempt
Issuances. Notwithstanding anything herein to the contrary, the provisions of this Section 4.17 shall not apply to any Exempt Issuance
other than (iv) thereof.
4.18 Indemnification
of Purchaser. Subject to the provisions of this Section 4.18, the Company will indemnify and hold the Purchaser and its officers,
managers, 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 the Purchaser (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, managers, stockholders, 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 the 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 stockholder of the Company who is not an Affiliate of the Purchaser Party, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is based upon a breach of the Purchaser Party’s representations, warranties
or covenants under the Transaction Documents or any agreements or understandings the Purchaser Party may have with any such stockholder
or any violations by such Purchaser Party of state or federal securities laws or any conduct by the Purchaser Party which constitutes
fraud, gross negligence or willful misconduct). If any action shall be brought against any Purchaser Party in respect of which indemnity
may be sought pursuant to this Agreement, the 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 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 the Purchaser Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of counsel retained to represent such Purchaser Party, a material
conflict on any material issue between the position of the Company and the position of the 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 (x) for any settlement by the Purchaser Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; or (y) 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 the Purchaser Party in this Agreement or in the other Transaction Documents or such Purchaser Party’s fraud, gross negligence
or willful misconduct. The indemnification required by this Section 4.16 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 indemnification 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 applicable law.
4.19 DTC
Program. For a period of two (2) years from the Closing Date, the Company will employ as the transfer agent for the Common Stock a
participant in the Depository Trust Company Automated Securities Transfer Program and cause the Common Stock to be transferable pursuant
to such program.
4.20 Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the sale of the Securities by the Company under
this Agreement as required under Regulation D. 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 Securities for, sale to the Purchaser 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
the Purchaser.
4.21 Stockholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that the Purchaser
is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that the Purchaser
could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents
or under any other agreement between the Company and the Purchaser.
4.22 Maintenance
of Property. The Company shall keep all of its property, which is necessary or useful to the conduct of its business, in good working
order and condition, ordinary wear and tear excepted.
4.23 Preservation
of Corporate Existence. The Company shall preserve and maintain its corporate existence, rights, privileges and franchises in the
jurisdiction of its then-incorporation, and qualify and remain qualified, as a foreign corporation in each jurisdiction in which such
qualification is necessary in view of its business or operations and where the failure to qualify or remain qualified might reasonably
have a Material Adverse Effect upon the financial condition, business or operations of the Company taken as a whole.
4.24 Restriction
on Redemption and Cash Dividends. For as long as the Purchaser holds any Preferred Shares (the “Obligation Period”),
the Company shall not, directly or indirectly, redeem, or declare or pay any cash dividend or distribution on, any securities of the Company
without the written consent of the Purchaser. This Section 4.24 shall not apply to any spin-off by the Company of any securities of any
Subsidiary.
4.25 Corporate
Existence. During the Obligation Period, the Company shall not be party to any Fundamental Transaction (as defined in the Series C
Certificate of Designation) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set
forth in the Series C Certificate of Designation.
4.26 Conversion
Procedures. The form of Notice of Conversion included in the Series C Certificate of Designation sets forth the totality of the procedures
required of the Purchaser in order to convert the Preferred Shares. No legal opinion, other information or instructions shall be required
of the Purchaser to convert its Preferred Shares. The Company shall promptly honor conversions of the Preferred Shares and shall deliver
the Conversion Shares in accordance with the terms, conditions and time periods set forth in the Series C Certificate of Designation.
4.27 Inspection
Rights. A representative of each of the Purchaser shall have the right upon reasonable notice and at its expense, to visit and inspect
any of the properties, books and records of the Company and to discuss the Company’s affairs, finances and accounts with its directors,
officers and employees. All inspection rights and information rights are subject to the confidentiality restrictions contained in any
agreement entered into between the Company and the Purchaser.
4.28 Conduct
of Business. The business of the Company shall not be conducted in violation of any law, ordinance or regulation of any governmental
entity, except where such violations would not result, either individually or in the aggregate, in a Material Adverse Effect.
4.29 Passive
Foreign Investment Company. The Company shall conduct its business in such a manner as will ensure that the Company will not be deemed
to constitute a passive foreign investment company within the meaning of Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.
ARTICLE V
TERMINATION
5.1 Termination.
(a) The
Purchaser may elect to terminate this Agreement upon the occurrence of any of the following:
(i) if
at any time the Company has filed for and/or is subject to any bankruptcy, insolvency, reorganization or liquidation proceedings or other
proceedings for relief under any bankruptcy law or any law for the relief of debtors instituted by or against the Company or any Subsidiary
of the Company;
(ii) the
Company is in breach or default of any Material Agreement, which breach or default could reasonably be expected to have a Material Adverse
Effect;
(iii) the
Company is in breach or default of this Agreement, any Transaction Document, or any agreement with any Purchaser or any Affiliate of the
Purchaser; or
(iv) upon
the occurrence of a Fundamental Transaction.
(b) This Agreement will automatically terminate if the Closing has not
occurred prior to May 31, 2023, provided, however, that the Purchaser may extend such the Closing Date up to three times, by up to 30
days each extension, by notice to the Company, or unless extended by the mutual consent of the parties.
5.2 Effect
of Termination. Notwithstanding anything to the contrary above, nothing contained in this Section 5 shall be deemed to release any
party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents
or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other
Transaction Documents.
ARTICLE VI
MISCELLANEOUS
6.1 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 the Purchaser exercises a right, election, demand or option under a Transaction Document and
the Company does not timely perform its related obligations within the periods therein provided, then the Purchaser may rescind or withdraw,
in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part
without prejudice to its future actions and rights; provided, however, that in the case of a rescission of a conversion or exercise of
any Share or Warrant, respectively, the Purchaser shall be required to return any shares of Common Stock subject to any such rescinded
conversion or exercise notice concurrently with the return to the Purchaser of the aggregate exercise price paid to the Company for such
shares.
6.2 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 Advisors, 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,
DTC fees, stamp taxes and other similar taxes and duties levied in connection with the delivery of any Securities to the Purchaser in
addition to paying the cost of any counsel or other expenses incurred in rendering Rule 144 opinions of any the Purchaser upon request.
6.3 Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
6.4 Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, , (ii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by email, addressed as set forth below or to such other address as such party shall have specified most
recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a)
upon hand delivery or delivery by email, at the address or number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business
day during normal business hours where such notice is to be received) or (b) on the second business day following the date of express
courier service, fully prepaid, addressed to such address, or upon actual receipt of such delivery, whichever shall first occur. The
addresses for such communications shall be: (i) if to the Company, to: Ault Alliance, Inc., 11411 Southern Highlands Pkwy Suite 240,
Las Vegas, NV 89141, Attn. William B. Horne, CEO, email: Will@ault.com with a copy by e-mail only (which shall not constitute
notice) to: Ault Alliance, 100 Park Avenue, Suite 1658 New York, NY 10017, Attn: Henry Nisser, Esq., email: Henry@ault.com, and
(ii) if to the Purchaser, to: the addresses and email address indicated on the signature pages hereto.
6.5 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 the Purchaser, or, in the case of a waiver, by the party against whom enforcement of any
such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise
of any such right.
6.6 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.
6.7 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 the
Purchaser. The Purchaser may assign any or all of its rights under this Agreement to any Person to whom the 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.”
6.8 No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise
set forth herein.
6.9 Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the 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 Agreement and any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, stockholders, partners, members, employees or agents) shall be commenced exclusively in the
state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in the City 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 (including with respect to the enforcement of any of the Transaction
Documents), 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 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 either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents,
then the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
6.10 Survival.
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities at the Closing for the
applicable statute of limitations.
6.11 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 facsimile transmission or by e-mail
delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were
an original thereof.
6.12 Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force
and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts
to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
6.13 RESERVED.
6.14 Replacement
of Securities. If any certificate or instrument evidencing any of the Securities is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and upon surrender and 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, destruction, or mutilation, and of the ownership of such Security. The applicant for a new certificate
or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity and bonds) associated
with the issuance of such replacement Securities.
6.15 Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchaser
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.
6.16 Payment
Set Aside. To the extent that the Company makes a payment or payments to the Purchaser pursuant to any Transaction Document
or the 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.
6.17 Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts
due thereunder have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.
6.18 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.
6.19 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.
6.20 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.
6.21 Equitable
Adjustment. Trading volume amounts, price/volume amounts and similar figures in the Transaction Documents shall be equitably adjusted
(but without duplication) to offset the effect of stock splits, similar events and as otherwise described in this Agreement, if such events
shall occur between the date of this Agreement and Closing.
(Signature Pages Follow)
IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated
above.
| AULT ALLIANCE, INC. |
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| By: |
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Name: William B. Horne |
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Title: Chief Executive Officer |
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
PURCHASER
SIGNATURE PAGE TO AULT ALLIANCE, INC.
SECURITIES
PURCHASE AGREEMENT
IN WITNESS WHEREOF, the undersigned
has caused this Securities Purchase Agreement to be duly executed by its duly authorized signatory as of the date first indicated above.
Name of Purchaser: Ault & Company, Inc.
Signature of Authorized Signatory of Purchaser:
___________________________________________________________
Name of Authorized Signatory: Milton C. Ault,
III
Title of Authorized Signatory: Chief Executive
Officer
Email Address of Authorized Signatory: Todd@aultandcompany.com
Address for Notice to Purchaser:
11411 Southern Highlands Pkwy, Suite 240
Las Vegas, NV 89141,
Address for Delivery of Securities to Purchaser
(if not same as address for notice):
________________________________________________________________________________________________
________________________________________________________________________________________________
________________________________________________________________________________________________
Subscription Amount: US$40,000,000
Series C Convertible Preferred Stock: 40,000 Shares
EIN Number, if applicable, will be provided under
separate cover: ______________________________________________
EXHIBIT A
Certificate of Designation of Rights, Preferences
and Limitations of Series C Convertible Preferred Stock
EXHIBIT B
Warrant
EXHIBIT C
Transfer Agent Instruction Letter
