Form 8-K
8-K — DNA X, Inc.
Accession: 0001493152-26-031675
Filed: 2026-07-02
Period: 2026-06-29
CIK: 0001178697
SIC: 3661 (TELEPHONE & TELEGRAPH APPARATUS)
Item: Entry into a Material Definitive Agreement
Item: Unregistered Sales of Equity Securities
Item: Material Modifications to Rights of Security Holders
Item: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
Item: Financial Statements and Exhibits
Documents
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EX-10.1 (ex10-1.htm)
EX-10.2 (ex10-2.htm)
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): June 29, 2026
DNA
X, Inc.
(Exact
name of registrant as specified in its charter)
Delaware
001-38907
94-3336783
(State
or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS
Employer
Identification No.)
4445
Eastgate Mall, Suite 200
San
Diego, CA
92121
(Address
of principal executive offices)
(Zip
Code)
Registrant’s
telephone number, including area code: (661) 618-7580
N/A
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☐ Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common
Stock, par value $0.001 per share
SONM
The
Nasdaq Stock Market LLC
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
1.01 Entry
into a Material Definitive Agreement.
Securities
Purchase Agreement
On
June 29, 2026, DNA X, Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”)
with DNA Holdings Venture, Inc. (“DNA Holdings”), a holder of more than 5% of the Company’s outstanding capital stock
and an entity associated with Scott Walker, a member of the Company’s board of directors, pursuant to which the Company agreed
to issue and sell, in a private placement, 1,346,531 shares of non-voting Series B Convertible Preferred Stock, par value $0.001 per
share (the “Series B Preferred Stock”), at a purchase price of $6.00 per share, for an aggregate offering price of $8.1 million
consisting of $5.0 million in cash and the cancellation of $3.1 million of the outstanding balance under a convertible promissory note
issued to DNA Holdings in May 2026 (the “Transaction”).
Concurrently
with the entry into the Purchase Agreement, the Company and DNA Holdings entered into a registration rights agreement (the “Registration
Rights Agreement”) providing DNA Holdings with customary registration rights with respect to the shares of Common Stock, par value
$0.001 per share (the “Common Stock”), issuable upon the conversion of the Series B Preferred Stock.
The
closing of the sale and issuance of the Series B Preferred Stock is subject to the satisfaction of customary closing conditions. The
gross proceeds of the initial issuance of Series B Preferred Stock are estimated to be approximately $5.0 million, before deducting offering
expenses payable by the Company. The Company intends to use the net proceeds from the Transaction for working capital and general corporate
purposes, subject to certain restrictions set forth in the Purchase Agreement.
Pursuant
to the Certificate of Designation of Preferences, Rights and Limitations of the Series B Convertible Preferred Stock to be filed with
the Secretary of State of the State of Delaware in connection with the Transaction (the “Certificate of Designation”), each
share of Series B Preferred Stock will have a stated value of $6.00 per share. The Series B Preferred Stock will be automatically converted
into shares of Common Stock on the first trading day following the approval by the Company’s stockholders of the issuance of the
Common Stock issuable upon such conversion (the “Stockholder Approval”) at an initial conversion price equal to the stated
value, subject to certain adjustments set forth in the Certificate of Designation. Prior to the obtainment of the Stockholder Approval,
the Series B Preferred Stock will not be convertible into shares of Common Stock. Additional information on the Certificate of Designation
and the terms of the Series B Preferred Stock is set forth under Item 5.03 of this Current Report on Form 8-K.
The
shares of Series B Preferred Stock will be issued in a private placement transaction exempt from the registration requirements of under
the Securities Act of 1933, as amended (the “Securities Act”), and have not been registered under the Securities Act, and
until so registered neither the Series B Preferred Stock nor any shares of Common Stock issuable upon conversion thereof may be offered
or sold absent registration or availability of an applicable exemption from registration. There is no established public trading market
for the Series B Preferred Stock, and the Company does not intend to list the Series B Preferred Stock on any national securities exchange
or nationally recognized trading system.
Pursuant
to the Registration Rights Agreement, the Company has agreed to file, within 30 calendar days after the obtainment of the Stockholder
Approval, a resale registration statement on Form S-3 (or Form S-1 if Form S-3 is not available) providing for the resale by DNA Holdings
of the shares of Common Stock issuable upon conversion of the Series B Preferred Stock (the “Registrable Shares”), and to
use commercially reasonable efforts to cause such resale registration statement to be declared effective as soon as practicable but in
any event no later than the earlier of (a) the 30th calendar day following the Filing Date of the registration statement (or the 60th
calendar day following the Filing Date if the U.S. Securities Exchange Commission (the “SEC”) notifies the Company that it
will conduct a “full review” of the registration statement and (b) the fifth business day after the date the Company is notified
(orally or in writing, whichever is earlier) by the SEC that the registration statement will not be “reviewed” or will not
be subject to further review. The Company further agreed to take all steps necessary to keep such registration statement effective at
all times until all Registrable Shares have been resold or until there remain no Registrable Shares. The Company has agreed to pay liquidated
damages upon certain failures to meet the deadlines set forth above or to keep the resale registration statement continuously effective,
as more particularly described in the Registration Rights Agreement.
The
Purchase Agreement contains certain representations and warranties, covenants and indemnities customary for similar transactions. The
representations, warranties and covenants contained in the Purchase Agreement were made solely for the benefit of the parties to the
Purchase Agreement and may be subject to limitations agreed upon by the contracting parties. Pursuant to the Purchase Agreement, the
Company has agreed to certain restrictions on the issuance and sale of shares of the Company’s securities until the obtainment
of the Stockholder Approval, subject to certain exceptions. The Purchase Agreement also grants to DNA Holdings the right to participate
in future equity and debt financings for a period of twelve months, subject to a participation cap equal to 50% of the principal amount
of securities sold in such financings and other exceptions and limitations set forth in the Purchase Agreement.
At
the closing of the Transaction, the Company expects to enter into an advisory and promote agreement (the “Consulting Agreement”)
with DNA Holdings, Scott Walker and Brock Pierce (collectively, the “Consultants”) pursuant to which, among
other things, the Consultants will provide services related to the promotion and development of the Company’s DNA-X platform and
agree not to engage in certain prohibited activities competitive with the Company during the term of the Consulting Agreement
and for a period of one year thereafter in exchange for consideration consisting of an aggregate of 2,494,000 shares of Common Stock,
to be issued to the Consultants following the obtainment of the approval of such issuances by the Company’s stockholders.
The
foregoing summaries of the Certificate of Designation (including the terms of the Series B Preferred Stock), Purchase Agreement and
Registration Rights Agreement are subject to, and qualified in their entirety by, the full text of such documents, which forms are filed
as Exhibits 3.1, 10.1 and 10.2, respectively, and incorporated herein by reference.
No
statement in this report or the attached exhibits is an offer to sell or a solicitation of an offer to purchase the Company’s securities,
and no offer, solicitation or sale will be made in any jurisdiction in which such offer, solicitation or sale is unlawful.
Item
3.02 Unregistered
Sales of Equity Securities.
The
information contained above in Item 1.01 is hereby incorporated by reference into this Item 3.02. The Series B Preferred Stock will
be issued and sold, and the underlying shares of Common Stock will be issued, without registration under the Securities Act
in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and Rule 506 promulgated under the Securities Act and
in reliance on similar exemptions under applicable state laws.
Item
3.03 Material
Modification to Rights of Security Holders.
The
information set forth below in Item 5.03 regarding the Certificate of Designation when it is filed in Delaware is incorporated
into this Item 3.03 by reference.
Item
5.03 Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Certificate
of Designation and Designation of Series B Preferred Stock
The
information contained above in Item 1.01 is hereby incorporated by reference into this Item 5.03.
Pursuant
to the terms of the Purchase Agreement, the Company plans to file the Certificate of Designation with the Delaware Secretary of
State designating 1,350,000 shares of its authorized and unissued preferred stock as Series B Preferred Stock, each with a Stated Value
of $6.00 per share. The Certificate of Designation sets forth the rights, preferences and limitations of the shares of Series B Preferred
Stock. Terms not otherwise defined in this item shall have the meanings given in the Certificate of Designation.
The
following is a summary of the terms of the Series B Preferred Stock:
Dividends.
Subject to the terms and conditions in the Certificate of Designation, dividends will be payable on shares of Series B Preferred
Stock equal, on an as-converted-to-Common-Stock basis, disregarding any conversion limitations under the Certificate of Designations),
to and in the same form as dividends paid on shares of Common Stock when, as and if such dividends are paid on shares of Common Stock.
No other dividends will be paid on shares of Series B Preferred Stock.
Voting
Rights. The Series B Preferred Stock has no voting rights; provided, however, that the Company shall not, without the affirmative
vote of the holders of a majority of the then outstanding shares of Series B Preferred Stock, (a) alter or change adversely the powers,
preferences or rights given to the Series B Preferred Stock or alter or amend the Certificate of Designation, (b) create any equity securities
that are senior in preference or liquidation to the Series B Preferred Stock, (c) amend its certificate of incorporation or other charter
documents in any manner that adversely affects any rights of the holders of Series B Preferred Stock, (d) increase the number of authorized
shares of Series B Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing.
Liquidation.
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company (any such event, a “Liquidation”),
the holders of shares of Series B Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available
for distribution to its stockholders, before any payment shall be made to the holders of any other shares of capital stock of the Company
by reason of their ownership thereof, an amount in cash equal to one times (1x) the Stated Value, together with any dividends declared
but unpaid.
Fundamental
Transactions. In the event of any (i) merger or consolidation of the Company with or into another person or entity, (ii) direct
or indirect sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of the Company’s
assets, (iii) purchase offer, tender offer or exchange offer accepted by the holders of 50% or more of the outstanding Common Stock,
(iv) reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the
Common Stock is effectively converted into or exchange for other securities, cash or property, or (v) stock purchase or other business
combination pursuant to which a person or entity acquires more than 50% of the outstanding shares of Common Stock (the transactions set
forth in clauses (i) – (v), collectively, a “Fundamental Transaction”), then, upon any subsequent conversion of the
Series B Preferred Stock, the holder shall have the right to receive, for each share of Common Stock that would have been issuable upon
such conversion immediately prior to the occurrence of such Fundamental Transaction, the number of shares of common stock of the successor
or acquiring corporation or of the Company (if it is the surviving corporation), and any additional consideration receivable as a result
of such Fundamental Transaction by a holder of the number of shares of Common Stock for which the Series B Preferred Stock is convertible
as of immediately prior to such Fundamental Transaction. The Company is obligated to cause any successor entity in a Fundamental Transaction
in which the Company is not the survivor to assume in writing all of the obligations of the Company under, and to take certain other
steps set forth in, the Certificate of Designation.
Redemption.
Shares of Series B Preferred Stock are not redeemable at the option of the Company or the holder thereof.
The
foregoing summary of the terms of the Series B Preferred Stock is qualified in its entirety by reference to the text of the Form of Certificate
of Designation, which is filed herewith as Exhibit 3.1 and is incorporated herein by reference.
Cautionary
Note Regarding Forward Looking Statements
This
Current Report on Form 8-K and other related materials may contain a number of “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995, as amended, including statements regarding the Company’s expectation about
any or all of the following: anticipated benefits of and activities under the Transaction and the timing and certainty of completion
of the Transaction, and the Company’s use of proceeds from the Transaction. Forward-looking statements can be identified by terms
such as “will,” “intent,” “expect,” “plan,” “potential,” “would”
or similar expressions and the negative of those terms. The Company has based these forward-looking statements largely on its current
expectations and projections about future events and financial trends that it believes may affect its business, financial condition and
results of operations. Although the Company believes that such statements are based on reasonable assumptions, forward-looking statements
are neither promises nor guarantees and they are necessarily subject to a high degree of uncertainty and risk. Because forward-looking
statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond
the Company’s control, you should not rely on these forward-looking statements as predictions of future events. These risks and
uncertainties include, among others, those risk and uncertainties described under the heading “Risk Factors” in the Company’s
Annual Report on Form 10-K filed with the SEC on April 15, 2026, and in any other filings made by the Company with the U.S. Securities
and Exchange Commission, which are available at www.sec.gov. Existing and prospective investors are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date they are made. The Company disclaims any obligation or undertaking
to update or revise any forward-looking statements contained in this Current Report on Form 8-K, other than to the extent required by
law.
Item
9.01 Financial
Statements and Exhibits.
Exhibit
Number
Description
3.1
Form of Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock
10.1#
Securities Purchase Agreement, dated June 29, 2026, by and between DNA X, Inc. and DNA Holdings Venture, Inc.
10.2#
Form of Registration Rights Agreement by and between DNA X, Inc. and DNA Holdings Venture, Inc.
104
Cover
Page Interactive Data File-the cover page XBRL tags are embedded within the Inline XBRL document.
#
Certain exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2).
The
Company agrees to furnish supplementally a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon
its request.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
DNA X, INC.
Date:
July
2, 2026
By:
/s/
Clayton Crolius
Name:
Clayton Crolius
Title:
Chief Financial Officer
EX-3.1
EX-3.1
Filename: ex3-1.htm · Sequence: 2
Exhibit 3.1
DNA
X, INC.
CERTIFICATE
OF DESIGNATION OF PREFERENCES,
RIGHTS
AND LIMITATIONS
OF
SERIES
B CONVERTIBLE PREFERRED STOCK
PURSUANT
TO SECTION 151 OF THE
Delaware
GENERAL CORPORATION LAW
The
undersigned, Clay Crolius, does hereby certify that:
1.
He is the chief financial officer of DNA X, Inc., a Delaware corporation (the “Corporation”).
2.
The following resolutions were duly adopted by the board of directors of the Corporation (the “Board of Directors”):
WHEREAS,
the certificate of incorporation of the Corporation provides for a class of its authorized capital stock known as preferred stock, consisting
of 5,000,000 shares, par value $0.001 per share, issuable from time to time in one or more series;
WHEREAS,
the Board of Directors is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms of
redemption and liquidation preferences of any wholly unissued series of preferred stock and the number of shares constituting any series
and the designation thereof, of any of them; and
WHEREAS,
it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and
other matters relating to a series of the preferred stock, which shall consist of, up to 1,350,000 shares of the preferred stock which
the Corporation has the authority to issue, as follows:
NOW,
THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of preferred stock for cash or
exchange of other securities, rights or property and does hereby fix and determine the designations, powers, preferences and relative
and other special rights and the qualifications, limitations and restrictions relating to such series of preferred stock as follows:
TERMS
OF PREFERRED STOCK
Section
1. Definitions. For the purposes hereof, the following terms shall have the following meanings:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 of the Securities Act.
“Alternate
Consideration” shall have the meaning set forth in Section 7(b).
“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.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the Corporation’s common stock, par value $0.001 per share, and stock of any other class of securities into
which such securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Corporation or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that
is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Conversion
Date” shall have the meaning set forth in Section 6(a).
“Conversion
Price” shall have the meaning set forth in Section 6(b).
“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in accordance
with the terms hereof.
“Fundamental
Transaction” shall have the meaning set forth in Section 7(b).
“Holder”
shall have the meaning given such term in Section 2.
“Junior
Securities” means the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities which
are explicitly senior or pari passu to the Preferred Stock in dividend rights or liquidation preference.
“Liquidation”
shall have the meaning set forth in Section 5.
2
“New
York Courts” shall have the meaning set forth in Section 8(d).
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Preferred
Stock” shall have the meaning set forth in Section 2.
“Securities”
means the Preferred Stock and the Underlying Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Stated
Value” shall have the meaning set forth in Section 2, as the same may be increased pursuant to Section 3.
“Successor
Entity” shall have the meaning set forth in Section 7(b).
“Trading
Day” means a day on which the principal Trading Market is open for business.
“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 MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange,
OTCQB, OTCQX or OTCPink (or any successors to any of the foregoing).
“Transfer
Agent” means Equiniti Trust Company, LLC, the current transfer agent of the Corporation, and any successor transfer agent of
the Corporation.
“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion or redemption of the Preferred Stock and issued
and issuable in lieu of the cash payment of dividends on the Preferred Stock in accordance with the terms of this Certificate of Designation.
Section
2. Designation, Amount and Par Value. The series of preferred stock shall be designated Series B Convertible Preferred Stock
(the “Preferred Stock”) and the number of shares so designated shall be up to 1,350,000 (which shall not be subject
to increase without the written consent of all of the holders of the Preferred Stock (each, a “Holder” and collectively,
the “Holders”)). Each share of Preferred Stock shall have a par value of $0.001 per share and a stated value equal
to $6.00 (the “Stated Value”).
Section
3. Dividends. Except for stock dividends or distributions for which adjustments are to be made hereunder, Holders shall be
entitled to receive, and the Corporation shall pay, dividends on shares of Preferred Stock equal (on an as-if-converted-to-Common-Stock
basis, disregarding for such purpose any conversion limitations hereunder) to and in the same form as dividends actually paid on shares
of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends shall be paid on shares
of Preferred Stock. The Corporation shall not pay any dividends on the Common Stock unless the Corporation simultaneously complies with
this provision.
3
Section
4. Voting Rights. The Preferred Stock shall have no voting rights; provided, however, as long as any shares
of Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority of the then
outstanding shares of the Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Preferred Stock
or alter or amend this Certificate of Designation, (b) create any equity securities that are senior in preference or liquidation to the
Preferred Stock, (c) amend its articles of incorporation or other charter documents in any manner that adversely affects any rights of
the Holders, (d) increase the number of authorized shares of Preferred Stock, or (e) enter into any agreement with respect to any of
the foregoing.
Section
5. Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”),
the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation, an amount equal to the Stated
Value, plus any accrued and unpaid dividends thereon and any other fees then due and owing thereon under this Certificate of Designation,
for each share of Preferred Stock before any distribution or payment shall be made to the holders of any Junior Securities, and if the
assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders
shall be ratably distributed among the Holders in accordance with the respective amounts that would be payable on such shares if all
amounts payable thereon were paid in full. A Fundamental Transaction shall not be deemed a Liquidation.
Section
6. Conversion.
a)
Automatic Conversion. Each share of Preferred Stock shall automatically, without further action by any Holder, convert into Common
Stock on the first (1st) Trading Day (the “Conversion Date”) immediately following receipt of Shareholder Approval
to issue the Underlying Shares. Each share of Preferred Stock shall be convertible into that number of shares of Common Stock determined
by dividing the Stated Value of such share of Preferred Stock by the Conversion Price, which Conversion Shares shall be validly issued,
fully paid and non-assessable at the time of issuance. Upon the automatic conversion of the Preferred Stock in accordance with this Section,
each Holder shall be deemed to be the beneficial owner of the shares of Common Stock, and the Preferred Stock hereunder held by such
holder shall no longer be outstanding. The Corporation shall take appropriate steps to register the Conversion Shares in the name of
the Holder promptly after the Conversion Date.
b)
Conversion Price. The conversion price for the Preferred Stock shall equal $6.00, subject to adjustment herein (the “Conversion
Price”).
4
c)
Mechanics of Conversion
i.
Obligation Absolute. The Corporation’s obligation to issue and deliver the Conversion Shares upon conversion of Preferred
Stock in accordance with the terms hereof is absolute and unconditional, irrespective of any action or inaction by a Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder
or any other Person of any obligation to the Corporation or any violation or alleged violation of law by such Holder or any other Person,
and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in connection
with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the
Corporation of any such action that the Corporation may have against such Holder.
ii.
Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available
out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Preferred Stock and
payment of dividends on the Preferred Stock, each as herein provided, free from preemptive rights or any other actual contingent purchase
rights of Persons other than the Holder (and the other holders of the Preferred Stock), not less than such aggregate number of shares
of the Common Stock as shall be issuable (taking into account the adjustments and restrictions of Section 7) upon the conversion of the
then outstanding shares of Preferred Stock. The Corporation covenants that all shares of Common Stock that shall be so issuable shall,
upon issue, be duly authorized, validly issued, fully paid and nonassessable.
iii.
Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Preferred
Stock. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Corporation shall
at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the
Conversion Price or round up to the next whole share.
iv.
Transfer Taxes and Expenses. The issuance of Conversion Shares on conversion of the Preferred Stock shall be made without charge
to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion Shares,
provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance
and delivery of any such Conversion Shares upon conversion in a name other than that of the Holders of such shares of Preferred Stock
and the Corporation shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons requesting
the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation
that such tax has been paid. The Corporation shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion
and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for
same-day electronic delivery of the Conversion Shares.
5
Section
7. Certain Adjustments.
a)
Stock Dividends and Stock Splits. If the Corporation, at any time while this Preferred Stock is outstanding: (i) pays a stock
dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other
Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon
conversion of, or payment of a dividend on, this Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a larger number
of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares,
or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Corporation, then
the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding
any treasury shares of the Corporation) outstanding immediately before such event, and of which the denominator shall be the number of
shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section 7(a) shall become effective
immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b)
Fundamental Transaction. If, at any time while this Preferred Stock is outstanding, (i) the Corporation, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Corporation with or into another Person, (ii) the Corporation,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender
or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding
Common Stock, (iv) the Corporation, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, or (v) the Corporation, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of
Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental
Transaction”), then, upon any subsequent conversion of this Preferred Stock, the Holder shall have the right to receive, for
each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction,
the number of shares of Common Stock of the successor or acquiring corporation or of the Corporation, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction
by a holder of the number of shares of Common Stock for which this Preferred Stock is convertible immediately prior to such Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in
such Fundamental Transaction shall file a new Certificate of Designation with the same terms and conditions and issue to the Holders
new preferred stock consistent with the foregoing provisions and evidencing the Holders’ right to convert such preferred stock
into Alternate Consideration. The Corporation shall cause any successor entity in a Fundamental Transaction in which the Corporation
is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Corporation under
this Certificate of Designation in accordance with the provisions of this Section pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and
shall, at the option of the holder of this Preferred Stock, deliver to the Holder in exchange for this Preferred Stock a security of
the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Preferred Stock which is convertible
for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common
Stock acquirable and receivable upon conversion of this Preferred Stock (without regard to any limitations on the conversion of this
Preferred Stock) prior to such Fundamental Transaction. Upon the occurrence of any such Fundamental Transaction, the Successor Entity
shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Certificate
of Designation and the other Transaction Documents referring to the “Corporation” shall refer instead to the Successor Entity),
and may exercise every right and power of the Corporation and shall assume all of the obligations of the Corporation under this Certificate
of Designation with the same effect as if such Successor Entity had been named as the Corporation herein.
c)
Calculations. All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be. For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.
d)
Notice to the Holders. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation
shall promptly deliver to each Holder by facsimile or email a notice setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment.
6
Section
8. Miscellaneous.
a)
Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without
limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized
overnight courier service, addressed to the Corporation, at the address set forth above, or such other facsimile number or address as
the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section. Any and all notices
or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by facsimile
or electronic mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or
address of such Holder appearing on the books of the Corporation, or if no such facsimile number or address appears on the books of the
Corporation, at the principal place of business of such Holder. Any notice or other communication or deliveries hereunder shall be deemed
given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via electronic mail
or facsimile prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice
or communication is delivered via electronic mail or facsimile on a day that is not a Trading Day or later than 5:30 p.m. (New York City
time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.
b)
Absolute Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alter or impair
the obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, accrued dividends and accrued interest,
as applicable, on the shares of Preferred Stock at the time, place, and rate, and in the coin or currency, herein prescribed.
c)
Lost or Mutilated Preferred Stock Certificate. If a Holder’s Preferred Stock certificate shall be mutilated, lost, stolen
or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate,
or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Preferred Stock so
mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of
the ownership hereof reasonably satisfactory to the Corporation.
7
d)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Certificate of Designation
shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the
principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense
of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates,
directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New
York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts 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 such New
York Courts, or such New York Courts are improper or 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
Certificate of Designation 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 applicable law. Each
party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Certificate of Designation or the transactions contemplated hereby. If any party
shall commence an action or proceeding to enforce any provisions of this Certificate of Designation, then the prevailing party in such
action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the
investigation, preparation and prosecution of such action or proceeding.
e)
Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate
as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of
Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to any term
of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder)
of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation on any other
occasion. Any waiver by the Corporation or a Holder must be in writing.
f)
Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate
of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain
applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder
violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the
maximum rate of interest permitted under applicable law.
g)
Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
h)
Headings. The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation
and shall not be deemed to limit or affect any of the provisions hereof.
i)
Status of Converted or Redeemed Preferred Stock. If any shares of Preferred Stock shall be converted, redeemed or reacquired by
the Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated
as Series B Convertible Preferred Stock.
*********************
8
RESOLVED,
FURTHER, that the Chief Executive Officer and Chief Financial Officer of the Corporation be and they hereby are authorized and directed
to prepare and file a Certificate of Designation of Preferences, Rights and Limitations in accordance with the foregoing resolution and
the provisions of Delaware law and to take such actions as they deem necessary or appropriate to carry out the purpose and intent of
the foregoing resolution.
IN
WITNESS WHEREOF, the undersigned have executed this Certificate this ___ day of _____ 2026.
Name:
Clay Crolius
Title:
Chief Financial Officer
EX-10.1
EX-10.1
Filename: ex10-1.htm · Sequence: 3
Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”) is dated as of June 29, 2026, between DNA X, Inc., a Delaware corporation
(the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns,
a “Purchaser” and collectively, the “Purchasers”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act (as defined below),
and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully described in this Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt
and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE
I.
DEFINITIONS
1.1
Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined
herein have the meanings given to such terms in the Certificate of Designation (as defined herein), and (b) 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 4.7.
“Action”
shall have the meaning ascribed to such term in Section 3.1(j).
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Bridge
Note” means that certain convertible promissory note, dated May 26, 2026, issued to the Purchaser by the Company in advance
of the transactions contemplated hereunder, in the principal amount of $3,052,787.68.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally
open for use by customers on such day.
“Cash
Subscription Amount” shall have the meaning ascribed to such term in the definition of Subscription Amount.
“Certificate
of Designation” means the Certificate of Designation to be filed prior to the Closing by the Company with the Secretary of
State of Delaware, in the form of Exhibit A attached hereto.
“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.
“Closing
Date” means the Trading Day on which all conditions precedent set forth in Section 2.3 to the Purchaser’s obligations
to pay the Subscription Amount for the Shares 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.
“Company
Counsel” means Goodwin Procter LLP, with offices located at 620 Eighth Avenue, New York, NY 10018.
“Conversion
Price” shall have the meaning ascribed to such term in the Certificate of Designation.
“Conversion
Shares” shall have the meaning ascribed to such term in the Certificate of Designation.
“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.
“Disclosure
Time” means, (i) if this Agreement is signed on a day that is not a Trading Day or after 9:00 a.m. (New York City time) and
before midnight (New York City time) on any Trading Day, 9:01 a.m. (New York City time) on the Trading Day immediately following the
date hereof, and (ii) if this Agreement is signed between midnight (New York City time) and 9:00 a.m. (New York City time) on any Trading
Day, no later than 9:01 a.m. (New York City time) on the date hereof.
“Effective
Date” means the earliest of the date that (a) the Registration Statement has been declared effective by the Commission, (b)
all of the Underlying 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 required under Rule 144 and without volume or manner-of-sale restrictions,
(c) immediately follows the one year anniversary of the Closing Date provided that a holder of Underlying Shares is not an Affiliate
of the Company, or (d) all of the Underlying Shares may be sold pursuant to an exemption from registration under Section 4(a)(1) of the
Securities Act without volume or manner-of-sale restrictions and Company Counsel has delivered to such holders a standing written unqualified
opinion that resales may then be made by such holders of the Underlying Shares pursuant to such exemption which opinion shall be in form
and substance reasonably acceptable to such holders.
“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(s).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange
Agreement” shall have the meaning ascribed to such term in Section 2.3(a)(ii).
“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant
to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority
of the members of a committee of non-employee directors established for such purpose for services rendered to the Company, (b) securities
upon the exercise or exchange of or conversion of securities exercisable or exchangeable for or convertible into shares of Common Stock
issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement
to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other
than in connection with stock splits or combinations) or to extend the term of such securities, (c) shares pursuant to any equity line
of credit or similar arrangement, or (d) securities issued pursuant to acquisitions or strategic transactions approved by a majority
of the disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined
in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith
during the prohibition period in Section 4.13(a) herein, and provided that any such issuance shall only be to a Person (or to the equityholders
of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with
the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not
include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities.
2
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).
“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(bb).
“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(p).
“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).
“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Material
Adverse Effect” means any change, event, circumstance, development, condition, occurrence or effect that, individually or in
the aggregate, (a) was, is, or would reasonably be expected to be, materially adverse to the business, financial condition, properties,
assets, liabilities, stockholders’ equity or results of operations of the Company and its subsidiaries, taken as a whole, or (b)
materially delays or materially impairs the ability of the Company to comply, or prevents the Company from complying, with its obligations
under this Agreement, the other Transaction Documents, or with respect to the Closing, or would reasonably be expected to do so
“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(n).
“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.17.
“Note
Subscription Amount” shall have the meaning ascribed to such term in the definition of Subscription Amount.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Preferred
Stock” means the up to 2,000,000 shares of the Company’s Series B Convertible Preferred Stock issued hereunder having
the rights, preferences and privileges set forth in the Certificate of Designation, in the form of Exhibit A hereto.
“Pro
Rata Portion” shall have the meaning ascribed to such term in Section 4.12(e).
“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.
“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.3(b).
“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b).
“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.10.
3
“Registration
Rights Agreement” means the Registration Rights Agreement, dated on or about the date hereof, among the Company and the Purchasers,
in the form of Exhibit B attached hereto.
“Registration
Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering
the resale of the Underlying Shares by each Purchaser as provided for in the Registration Rights Agreement.
“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“Required
Minimum” means, as of any date, 100% of the maximum aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon conversion in full of all shares of
Preferred Stock, ignoring any conversion limits set forth therein.
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.
“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.
“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means the Preferred Stock and the Underlying Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shares”
means the shares of Preferred Stock issued by the Company to the Purchasers hereunder on the Closing Date.
“Shareholder
Approval” means such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or any
successor entity) from the shareholders of the Company with respect to the transactions contemplated by the Transaction Documents, including
the issuance of all of the Underlying Shares.
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be
deemed to include locating and/or borrowing shares of Common Stock).
“Stated
Value” means $6.00 per share of Preferred Stock.
“Subscription
Amount” shall mean, as to each Purchaser, the aggregate amount to be paid for the Shares purchased hereunder as specified below
such Purchaser’s name on the signature page of this Agreement and next to the heading “Cash Subscription Amount,” in
United States dollars and in immediately available funds, and “Note Subscription Amount,” by means of the surrender of the
Bridge Note and cancellation of $3,079,185.40 of the balance due thereunder, each on a $1 for $1 basis.
“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.12(a).
“Subsequent
Financing Notice” shall have the meaning ascribed to such term in Section 4.12(b).
“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date hereof.
4
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange (or any successors to any of the foregoing).
“Trading
Price” means on any particular date (a) the lowest reported trading price per share of Common Stock on such date on the Trading
Market (as reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), (b) if there is no such price on such date, then the lowest
trading price on the Trading Market on the date nearest preceding such date (as reported by Bloomberg L.P. at 4:15 p.m. (New York City
time)), (c) if the Common Stock is not then listed or quoted on a Trading Market and if prices for the Common Stock are then reported
on OTCQB or the OTXQX (or a similar organization or agency succeeding to its functions of reporting prices), the lowest trading price
per share of the Common Stock so reported, or (d) if the shares of Common Stock are not then publicly traded the fair market value as
of such date of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority
in interest of the shares then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by
the Company.
“Transaction
Documents” means this Agreement, the Certificate of Designation and the Registration Rights Agreement, all exhibits and schedules
thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.
“Transfer
Agent” means Equiniti Trust Company, LLC, the current transfer agent of the Company, and any successor transfer agent of the
Company.
“Underlying
Shares” means the Conversion Shares.
“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.13(a).
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB Venture Market (“OTCQB”) or OTCQX Best Market
(“OTCQX”) is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices
for the Common Stock are then reported on the Pink Open Market (“Pink Market”) operated by OTC Markets Group, Inc. (or a
similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock
so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected
in good faith by the Company and reasonably acceptable to the Purchasers of a majority in interest of the Securities then outstanding,
the fees and expenses of which shall be paid by the Company.
ARTICLE
II.
PURCHASE
AND SALE
2.1
Closings.
(a)
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 Purchasers, severally and not jointly, agree to purchase
(i) 1,346,531 Shares with an aggregate Stated Value of $6.00, for an aggregate Subscription Amount of $8,079,185.40 as set forth on the
signature pages hereto executed by the Purchasers. Each Purchaser shall deliver to the Company, via wire transfer to the bank account
of the Company, immediately available funds equal to such Purchaser’s Cash Subscription Amount and tender for cancellation the
principal amount and accrued interest of the Bridge Note equal to such Purchaser’s Note Subscription Amount and the Company shall
deliver to each Purchaser its shares of Preferred Stock, as determined pursuant to Section 2.2(a), and the Company and each Purchaser
shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions
set forth in Section 2.3, the Closing shall take place remotely by electronic transfer of the Closing documentation or such other location
as the parties shall mutually agree.
5
2.2
Closing Deliveries.
(a)
On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:
(i)
this Agreement duly executed by the Company;
(ii)
a legal opinion of Company Counsel, in customary form and reasonably acceptable to the Purchasers;
(iii)
confirmation of book-entry or a certificate evidencing the applicable number of shares of Preferred Stock registered in the name of the
Purchaser and evidence of the filing and acceptance of the Certificate of Designation from the Secretary of State of Delaware;
(iv)
the Company shall have provided the Purchaser with the Company’s wire instructions, on Company letterhead and executed by the Chief
Executive Officer or Chief Financial Officer;
(v)
the Registration Rights Agreement duly executed by the Company;
(vi)
the Disclosure Schedules; and
(vii)
a certificate, duly executed by the chief executive officer or chief financial officer of the Company, certifying (i) that the conditions
set forth in Section 2.3(b)(i) and Section 2.3(b)(ii) have been satisfied, and (ii) that the Disclosure Schedules delivered pursuant
to Section 2.2(a)(vi) are a true and correct copy thereof.
(b)
On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company, the following:
(i)
this Agreement duly executed by such Purchaser;
(ii)
such Purchaser’s Cash Subscription Amount by wire transfer to the account specified in writing by the Company;
(iii)
such Purchaser’s surrendered Bridge Note, with a principal amount and accrued interest equal to such Purchaser’s Note Subscription
Amount; and
(iv)
the Registration Rights Agreement duly executed by such Purchaser.
2.3
Closing Conditions.
(a)
The obligations of the Company hereunder in connection with the Closing, as may be applicable, are subject to the following conditions
being met:
(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality, in all respects)
on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein in
which case they shall be accurate in all material respects (or, to the extent representations or warranties are qualified by materiality,
in all respects) as of such date);
6
(ii)
all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been
performed; and the delivery by each Purchaser of the items set forth in Section 2.2(b).
(b)
The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse
Effect, in all respects) on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific
date therein in which case they shall be accurate in all material respects or, to the extent representations or warranties are qualified
by materiality or Material Adverse Effect, in all respects) as of such date);
(ii)
all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
(iii)
the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv)
there shall have been no Material Adverse Effect with respect to the Company since the date hereof;
(v)
from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall
not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities
nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of
such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing; and
(vi)
the execution by the Company of a consulting agreement with each of DNA Holdings Venture, Inc., Brock Pierce and Scott Walker, effective
as of the Closing Date.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1
Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules provided with this Agreement (as
potentially updated as contemplated by clause (ii) below, the “Disclosure Schedules”), which Disclosure Schedules
(i) shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained
in the corresponding section of the Disclosure Schedules (but in no event shall qualify any indemnity obligation of the Company hereunder)
and (ii) may be updated by the Company following the execution of this Agreement to the extent that any information contained therein
or any representation or warranty of the Company becomes untrue, incomplete or inaccurate after the date of this Agreement as a result
of events or circumstances after the date of this Agreement or facts of which the Company becomes aware after the date of this Agreement,
with any such update being deemed to have amended the Disclosure Schedules and to have qualified the representations and warranties in
this Article III, the Company (which for purposes of this Section 3.1 means the Company and all of its Subsidiaries) represents
and warrants to the Purchaser that on the Closing Date (unless as of a specific date set forth below):
(a) Subsidiaries.
All of the direct and indirect subsidiaries of the Company and the locations thereof 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, and
all of the issued and outstanding shares of capital stock or other interests of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. Schedule 3.1(a) sets forth,
as of the Closing Date, the jurisdiction of organization and the location of the Company’s and its subsidiaries’
executive offices and other places of business.
7
(b) Organization,
Etc. The Company and each of the Subsidiaries is duly organized, validly existing and in good standing under the laws of the
state of their respective organization and are duly qualified and in good standing or has applied for qualification as a foreign
corporation authorized to do business in each jurisdiction where, because of the nature of its activities or properties, such
qualification is required except where the failure to be so qualified would not reasonably be expected to have a Material Adverse
Effect.
(c) Authorization:
No Conflict. The execution, delivery and performance of the Transaction Documents and the transactions contemplated thereby by
the Company, including, but not limited to, the sale and issuance of the Securities for the Subscription Amount, (i) are within the
Company’s corporate powers, (ii) have been duly authorized by all necessary action by or on behalf of the Company (and/or its
stockholders to the extent required by law), (iii) have received all necessary and/or required governmental, regulatory and other
approvals and consents (if any shall be required), (iv) do not and shall not contravene or conflict in any material respect with any
provision of, or require any consents under (1) any law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company or a Subsidiary is subject (including U.S. federal and state securities
laws and regulations) or ordinance, (2) the Company’s organizational documents; and/or (3) 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, and (v) other than
the Liens granted to the Purchaser pursuant to the Transaction Documents, do not result in, or require, the creation or imposition
of any Lien and/or encumbrance on any of the Company’s properties or revenues pursuant to any law, rule, regulation or
ordinance or otherwise.
(d) Validity
and Binding Nature. The Transaction Documents to which the Company is a party are the legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization and other similar laws of general application affecting the rights and remedies of creditors
and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).
(e) Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and
good and marketable title in all personal property owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries, (ii)
Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with
GAAP and the payment of which is not delinquent, and (iii) Permitted Liens. Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the
Subsidiaries are in compliance.
(f) No
Violations of Laws. The Company is not in violation of any law, ordinance, rule, regulation, judgment, decree or order of any
federal, state or local governmental body or court and/or regulatory or self-regulatory body, except as would not reasonably be
expected to have a Material Adverse Effect.
(g) Taxes.
The Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income
and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and
other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and
declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods
subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis
for any such claim.
8
(h) Licenses
and Permits. The Company and its Subsidiaries possesses all certificates, authorizations, consents, approvals, orders, licenses
and permits issued by the appropriate federal, state or foreign regulatory authorities as set forth on Schedule 3.1(h)
(collectively, the “Permits”), necessary to conduct its business as now conducted. All of such Permits are valid
and in full force and effect. There is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or
investigation that individually or in the aggregate would reasonably be expected to lead to the revocation, modification,
termination, suspension or any other impairment of the rights of the holder of any such Permit.
(i) Investment
Company. The Company is not (i) an “investment company” or a company “controlled”, whether directly or
indirectly, by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended; or (ii)
engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System).
(j) Absence
of Defaults and Conflicts. The Company and its Subsidiaries is not (i) in violation of its charter, by-laws or similar
incorporation or organizational documents or (ii) in violation or default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the Company is a party or by which it may be bound, or to which any
of the property or assets of the Company is subject (collectively, “Agreements and Instruments”). The execution,
delivery and performance of this Agreement and the consummation of the transactions contemplated in this Agreement and the other
Transaction Documents, and compliance by the Company with its obligations under this Agreement and the other Transaction Documents,
do not and will not, whether with or without the giving of notice or passage of time or both, (w) conflict with or result in a
breach of any of the terms and provisions of, or constitute a default or Repayment Event (as defined below) under, (x) result in the
creation or imposition of any lien, charge or encumbrance (other than Permitted Liens) upon any property or assets of the Company
pursuant to, the Agreements and Instruments, (y) result in any violation of the provisions of the charter, by-laws or similar
organizational documents of the Company, or (z) result in any applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of
its assets, properties or operations, except in the case of this clause (z) for such conflicts, violations, breaches or defaults
which would not reasonably be expected to result in a Material Adverse Effect on the Company. As used herein, a “Repayment
Event” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness that
is material to the operations or financial results of the Company (or any person acting on such holder’s behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company.
(k) Foreign
Corrupt Practices Act. Neither the Company nor, to the Company’s knowledge, any of its affiliates, directors,
officers, employees, agents or other person acting on behalf of the Company is aware of or has taken any action, directly or
indirectly, that would result in a material violation by such person of the Foreign Corrupt Practices Act of 1977, as amended, and
the rules and regulations thereunder (the “FCPA”), including, without limitation, making use of the mails or any
means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of
the payment of money, or other property, gift, promise to give, or authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any
candidate for foreign political office, in contravention of the FCPA and the Company and, to the Company’s knowledge, its
affiliates have conducted their businesses in material compliance with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith
(l) Rule
506(d) Bad Actor Disqualification Representations and Covenants.
(1) No
Disqualification Events. Neither the Company, nor any of its predecessors, affiliates, any manager, executive officer, other
officer of the Company participating in the offering, any beneficial owner (as that term is defined in Rule 13d-3 under the Exchange
Act) of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any
promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity as of the date of
this Agreement and on the Closing Date (each, a “Company Covered Person” and, together, “Company Covered
Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii)
under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule
506(d)(2) or (d)(3). The Company has exercised reasonable care to determine (A) the identity of each person that is a Company
Covered Person; and (B) whether any Company Covered Person is subject to a Disqualification Event. The Company has complied with its
disclosure obligations under Rule 506(e).
9
(2) Other
Covered Persons. The Company is not aware of any person (other than any Company Covered Person) who has been or will be paid
(directly or indirectly) remuneration in connection with the purchase and sale of the Note who is subject to a Disqualification
Event (each, an “Other Covered Person”).
(3) Reasonable
Notification Procedures. With respect to each Company Covered Person, the Company has established procedures reasonably designed
to ensure that the Company receives notice from each such Company Covered Person of (A) any Disqualification Event relating to that
Company Covered Person, and (B) any event that would, with the passage of time, become a Disqualification Event relating to that
Company Covered Person; in each case occurring up to and including the Closing Date.
(4) Notice
of Disqualification Events. The Company will notify the Purchaser immediately in writing upon becoming aware of (A) any
Disqualification Event relating to any Company Covered Person and (B) any event that would, with the passage of time, become a
Disqualification Event relating to any Company Covered Person and/or Other Covered Person.
(m) Accuracy
of Information, etc. No statement or information contained in this Agreement, any other Transaction Document or any other
document, certificate or statement furnished to the Purchaser by or on behalf of the Company in writing for use in connection with
the transactions contemplated by this Agreement and/or the other Transaction Documents contained, as of the date such statement,
information, document or certificate was made or furnished, as the case may be, any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements contained herein or therein, taken as a whole, not materially misleading.
There is no fact known to the Company that would reasonably be expected to materially affect the Company that has not been expressly
disclosed herein, in the other Transaction Documents, or in any other documents, certificates and written statements furnished to
the Purchaser for use in connection with the transactions contemplated hereby and by the other Transaction Documents.
(n) Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds
the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry
on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital
availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it
to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts
on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its
debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. Schedule
3.1(n) sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or
for which the Company or any Subsidiary has commitments and all liens on any Indebtedness or other personal property of the Company
or any Subsidiary. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.
10
(o) Transactions
With Affiliates and Employees. None of the officers or directors of the Company or any Subsidiary and, to the knowledge of the
Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real or personal property to or from providing for the
borrowing of money from or lending of money to, or otherwise requiring payments to or from any officer, director or such employee
or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee, stockholder, member or partner, in each case in excess of $120,000 other than for: (i) payment of
salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other
employee benefits, including stock option agreements under any stock option plan of the Company.
(p) Intellectual
Property. The Company has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service
marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as
described on Schedule 3.1(p) that are material to the conduct of its business (collectively, the “Intellectual
Property Rights”). The Company has not received a notice (written or otherwise) that any material Intellectual Property
Right has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned. The Company has not
received, since the Balance Sheet Date, a written notice of a claim or otherwise has any knowledge that the Intellectual Property
Rights violate or infringe upon the rights of any Person, except as would not have or reasonably be expected to have a Material
Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights. The Company has taken commercially reasonable security
measures to protect the secrecy, confidentiality and value of all of its intellectual property.
(q) USA
Patriot Act. The Company is in compliance, in all material respects, with (i) the Trading with the Enemy Act, as amended, and
each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as
amended) and any other enabling legislation or executive order relating thereto, and (ii) the USA Patriot Act (Title III of Pub. L.
107-56, signed into law on October 26, 2001) (the “Act”). No part of the proceeds of the Note will be used,
directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party,
candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or
obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
(r) Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director, officer,
agent, joint venture employee or affiliate of the Company or any Subsidiary is currently, or in the past 5 years, has been subject
to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”).
(s) 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 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”).
(t) Authorization;
Enforcement. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of the Transaction Documents and the performance of all obligations of the Company under the
Transaction Documents and have been taken on or prior to the date hereof. Each of the Transaction Documents has been duly executed
by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation
of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by general equitable principles regardless of whether such enforcement is considered in a proceeding in
equity or at law, (iii) as limited by laws relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iv) insofar as indemnification and contribution provisions may be limited by applicable law.
11
(u) Valid
Issuance of Securities. The Shares are duly authorized and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other
than restrictions on transfer provided for in the Transaction Documents. The Underlying Shares, upon receipt of Shareholder
Approval, when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents. The Company has reserved from its duly authorized capital stock a number of shares of Common Stock for
issuance of the Underlying Shares at least equal to the Required Minimum on the date hereof.
(v) Offering.
The offer and sale of the Shares when issued pursuant to this Agreement, as contemplated by this Agreement, and assuming the
accuracy of the representations of the Purchasers, are exempt from the registration requirements of the Securities Act, and the
qualification or registration requirements of state securities laws or other applicable blue sky laws. Neither the Company nor any
authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemptions.
(w) Capitalization
and Voting Rights. The capitalization of the Company is as set forth on Schedule 3.1(w), which Schedule 3.1(w)
shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the
date hereof. The authorized capital stock of the Company and all securities of the Company issued and outstanding are set forth on Schedule
3.1(w) as of the dates reflected therein. All of the outstanding shares of Common Stock and other securities of the Company have
been duly authorized and validly issued, and are fully paid and nonassessable. Except as set forth on Schedule 3.1(w), 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 set forth on Schedule 3.1(w), there are no agreements or
arrangements under which the Company is obligated to register the sale of any of the Company’s securities under the Securities
Act. Except as set forth on Schedule 3.1(w), no shares of Common Stock and/or other securities of the Company are entitled to
preemptive rights and there are no outstanding debt securities and no contracts, commitments, understandings, or arrangements by
which the Company is or may become bound to issue additional shares of the capital stock and/or other securities of the Company or
options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, any shares of capital stock of the Company other than those issued or granted in the
ordinary course of business pursuant to the Company’s equity incentive and/or compensatory plans or arrangements. Except for
customary transfer restrictions contained in agreements entered into by the Company to sell restricted securities and/or as set
forth on Schedule 3.1(w), the Company is not a party to, and it has no knowledge of, any agreement restricting the voting or
transfer of any shares of the capital stock and/or other securities of the Company. Except as set forth on Schedule 3.1(w),
the offer and sale of all capital stock, convertible or exchangeable securities, rights, warrants, options and/or any other
securities of the Company, when any such securities of the Company were issued, complied in all material respects with all
applicable federal and state securities laws, and no current and/or prior holder of any securities of the Company has any right of
rescission or damages or any “put” or similar right with respect thereto. Except as set forth on Schedule 3.1(w),
there are no securities or instruments of the Company containing anti-dilution or similar provisions that will be triggered by the
issuance and/or sale of the Securities and/or the consummation of the transactions described herein or in any of the other
Transaction Documents.
(x) Shell
Company Status; SEC Reports; Financial Statements. The Company has never been an issuer subject to Rule 144(i) under the
Securities Act. 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 twelve (12)
months preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none
of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in 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.
12
(y) Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest annual financial statements included
within 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 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
reflected in the Company’s financial statement issued subsequent to the latest annual financial statement, or that are not
required to be reflected in the Company’s financial statements pursuant to GAAP, (iii) the Company has not altered its method
of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders
or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. Except
for the issuance of the Securities contemplated by this Agreement, no event, liability, fact, circumstance, occurrence or
development has occurred or exists, or is reasonably expected to occur or exist, with respect to the Company or its Subsidiaries or
their respective businesses, prospects, properties, operations, assets or financial condition, that would be required to be
disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been
publicly disclosed at least one (1) Trading Day prior to the date that this representation is made.
(z) 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 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. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the
subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by
the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any
stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under
the Exchange Act or the Securities Act.
(aa) Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided any Purchaser or its respective agents or counsel
with any information that constitutes material, non-public information. The Company understands that the Purchaser may rely on the
Transaction Documents, the information included therein, including, but not limited to, the foregoing representation in purchasing
the Securities. All of the disclosure furnished by or on behalf of the Company to the Purchaser in the Transaction Documents
regarding, among other matters relating to the Company, its business and the transactions contemplated in the Transaction Documents,
is true and correct in all material respects as of the date made 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 Company acknowledges and agrees that the Purchaser does not make nor has made any
representations or warranties with respect to the transactions contemplated in the Transaction Documents other than those
specifically set forth in Section 3.2 hereof.
(bb) No
Integrated Offering. Assuming the accuracy of the 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 the issuance and/or sale of
the Securities to be integrated with prior offerings of securities by the Company for purposes of (i) the Securities Act that would
require the registration of any such Securities and/or any other securities of the Company under the Securities Act, or that would
invalidate the exemptions from registration relied upon by the Company, or (ii) any stockholder-approval provisions of any Trading
Market on which any of the securities of the Company are listed, eligible for quotation and/or designated.
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(cc) Insurance.
The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are
prudent and customary in the business in which it is engaged; the Company has not been refused any coverage sought or applied for;
and the Company does not have 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.
(dd) Manufacturing
and Marketing Rights. The Company has not granted rights to develop, manufacture, produce, assemble, license, distribute,
market, or sell its products to any other Person and is not bound by any agreement that affects the Company’s exclusive right
to develop, manufacture, produce, assemble, license, distribute, market or sell its products.
(ee) Registration
Rights. No Person has any right to cause the Company to affect the registration under the Securities Act of any securities of
the Company or any Subsidiaries.
(ff) Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the
Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and
its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive
officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or
agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does
not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and
its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and
employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could
not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(gg) Application
of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a
rights agreement) or other similar anti-takeover provisions under the Company’s certificate of incorporation, as amended, or
the laws of the jurisdiction of its formation that are or could become applicable to the Purchaser as a result of the transactions
contemplated by this Agreement and/or the other Transaction Documents, including, without limitation, the Company’s issuance
of the Securities and the Purchaser’s ownership of the Securities. The Company has not adopted a stockholder rights plan or
similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the
Company.
(hh) Affiliate
Transactions. The Company has not purchased, acquired or leased any property from, or sold, transferred or leased any property
to, or entered into any other transaction with (i) any Affiliate, (ii) any officer, director, manager, stockholder or member of the
Company or any Affiliate of any thereof, or (iii) any member of the immediate family of any of the foregoing, except on terms
comparable to the terms that would prevail in an arms-length transaction between unaffiliated third parties.
(ii) No
General Solicitation. Neither the Company, nor any of its affiliates, nor, to the knowledge of the Company, any Person acting on
its behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in
connection with the offer or sale of the Securities.
(jj) Off-Balance
Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or
other off-balance sheet entity.
(kk) Certain
Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiaries to any
broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents. The Purchaser shall have no obligation with respect to any fees or with
respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by the Transaction Documents.
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(ll) Environmental
Laws. The Company and its Subsidiaries, to the best of the Company’s knowledge, (i) are in compliance with all federal,
state, local and foreign laws relating to pollution or protection of human health or the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata), including laws relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous
Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand
letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations, issued, entered,
promulgated or approved thereunder (“Environmental Laws”); (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) are in compliance
with all terms and conditions of any such permit, license or approval where in each clause (i), (ii) and (iii), the failure to so
comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
(mm) Seniority.
As of the Closing Date, except for the indebtedness of the Company identified on Schedule 3.1(mm), no equity securities or other
claim against the Company is senior to or pari passu with the Shares in right of payment, whether with respect to interest or upon
liquidation or dissolution, or otherwise, other than indebtedness secured by purchase money security interests (which is senior only
as to underlying assets covered thereby) and capital lease obligations (which is senior only as to the property covered
thereby).
(nn) Accounts
Receivable. All accounts receivable of the Company and its Subsidiaries that are reflected on the Company’s balance sheet
or interim balance sheet or on the accounting records of the Company and its Subsidiaries as of the Closing Date (collectively, the
“Accounts Receivable”) represent or will represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business. Unless paid prior to the Closing Date, the Accounts Receivable are or will be
as of the Closing Date current and collectible net of the respective reserves shown on the balance sheet or interim balance sheet or
on the accounting records of the Company and its Subsidiaries as of the Closing Date (which reserves are adequate and calculated
consistent with past practice and, in the case of the reserve as of the Closing Date , will not represent a greater percentage of
the Accounts Receivable as of the Closing Date than the reserve reflected in the interim balance sheet represented of the Accounts
Receivable reflected therein and will not represent a material adverse change in the composition of such Accounts Receivable in
terms of aging). Subject to such reserves, each of the Accounts Receivable either has been or will be collected in full without any
set-off, within ninety days after the day on which it must becomes due and payable. There is no contest, claim, or right of set-off,
other than returns in the ordinary course of business, under any agreement and/or contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable. Schedule 3.1(nn) contains a complete and accurate
list of all Accounts Receivable as of the date of the interim balance sheet, which list sets forth the aging of such Accounts
Receivable.
(oo) Inventory.
All inventory of the Company and the Subsidiaries, whether or not reflected in the balance sheet or interim balance sheet, consists
of a quality and quantity usable and salable in the ordinary course of business, except for obsolete items and items of below
standard quality, all of which have been written off or written down to net realizable value in the balance sheet or interim balance
sheet or on the accounting records of the Company and the Subsidiaries as of the Closing Date, as the case may be. All inventories
not written off have been priced at the lower of cost or market on the last in, first out basis. The quantities of each item of
inventory (whether raw materials, work-in-process, or finished goods) are not excessive, but are reasonable in the present
circumstances of the Company and the Subsidiaries.
(pp) Manipulation
of Price. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any
action designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any person
any compensation for soliciting another to purchase any other securities of the Company.
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(qq) DTC
Eligible. The Common Stock is DTC eligible and DTC has not placed a “freeze” or a “chill” on the Common
Stock and the Company has no reason to believe that DTC has any intention to make the Common Stock not DTC eligible, or place a
“freeze” or “chill” on the Common Stock.
(rr) No
Delisting from Trading Market. The Common Stock is eligible for quotation on the principal Trading Market and, except as
disclosed in the SEC Reports, the Company has no reason to believe that the principal Trading Market has any intention of delisting
the Common Stock from the principal Trading Market.
(ss) Listing
and Maintenance Requirements. Except as set forth on Schedule 3.1(ss) and in the SEC Reports, the Company has not, in the 12
months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted
to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Common
Stock is eligible for quotation on the principal Trading Market and the Company has no reason to believe that the principal Trading
Market has any intention of delisting or no longer quoting the Common Stock from the principal Trading Market. The issuance and sale
of the Securities hereunder does not contravene the rules and regulations of the Trading Market.
(tt) Acknowledgment
Regarding the 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 other Transaction Documents and the transactions contemplated
hereby and thereby and that the Purchaser is not (i) an officer or director of the Company, (ii) an Affiliate of the Company or
(iii) to the knowledge of the Company, a “beneficial owner” of more than 10% of the shares of Common Stock (as defined
for purposes of Rule 13d-3 of the Exchange Act). The Company further acknowledges that the Purchaser is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby, and any advice given by the Purchaser or any of its representatives or agents in connection with
the Transaction Documents and the transactions contemplated hereby and thereby 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 the
Transaction Documents has been based solely on the independent evaluation by the Company and its representatives
(uu) Stock
Incentive Plans. Each stock incentive granted by the Company under any of the Company’s stock incentive plans was granted
(i) in accordance with the terms of the applicable stock incentive plan and (ii) with an exercise price at least equal to the fair
market value of the Common Stock on the date such stock incentive would be considered granted under GAAP and applicable law. No
stock option granted under any of the Company’s stock incentive plans 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.
(vv) Cybersecurity.
(i)(x) There has been no security breach or other compromise of or relating to any of the Company’s or any Subsidiary’s
information technology and computer systems, networks, hardware, software, data (including the data of its respective customers,
employees, suppliers, vendors and any third party data maintained by or on behalf of it), equipment or technology (collectively,
“IT Systems and Data”) and (y) the Company and the Subsidiaries have not been notified of, and have no knowledge
of any event or condition that would reasonably be expected to result in, any security breach or other compromise to their IT
Systems and Data; (ii) the Company and the Subsidiaries are presently in compliance with all applicable laws or statutes and all
judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and
contractual obligations relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems and
Data from unauthorized use, access, misappropriation or modification, except as would not, individually or in the aggregate, have a
Material Adverse Effect; (iii) the Company and the Subsidiaries have implemented and maintained commercially reasonable safeguards
to maintain and protect their material confidential information and the integrity, continuous operation, redundancy and security of
all IT Systems and Data; and (iv) the Company and the Subsidiaries have implemented backup and disaster recovery technology
consistent with industry standards and practices.
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(ww) Compliance
with Data Privacy Laws. (i) The Company and the Subsidiaries are, and at all times during the last three (3) years were, in
material compliance with all applicable state, federal and foreign data privacy and security laws and regulations, including,
without limitation, the European Union General Data Protection Regulation (“GDPR”) (EU 2016/679) (collectively,
“Privacy Laws”); (ii) the Company and the Subsidiaries have in place, comply with, and take appropriate steps
reasonably designed to ensure compliance with their policies and procedures relating to data privacy and security and the
collection, storage, use, disclosure, handling and analysis of Personal Data (as defined below) (the “Policies”);
(iii) the Company provides accurate notice of its applicable Policies to its customers, employees, third party vendors and
representatives as required by the Privacy Laws; and (iv) applicable Policies provide accurate and sufficient notice of the
Company’s then-current privacy practices relating to its subject matter, and do not contain any material omissions of the
Company’s then-current privacy practices, as required by Privacy Laws. “Personal Data” means (i) a natural
person’s name, street address, telephone number, email address, photograph, social security 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) “personal data” as defined by GDPR; 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 identifiable data related to an identified person’s health or sexual orientation. (i) None of such disclosures made or
contained in any of the Policies have been inaccurate, misleading, or deceptive in violation of any Privacy Laws and (ii) the
execution, delivery and performance of the Transaction Documents will not result in a breach of any Privacy Laws or Policies.
Neither the Company nor the Subsidiaries (A) to the knowledge of the Company, has received written notice of any actual or potential
liability of the Company or the Subsidiaries under, or actual or potential violation by the Company or the Subsidiaries of, any of
the Privacy Laws; (B) is currently conducting or paying for, in whole or in part, any investigation, remediation or other corrective
action pursuant to any regulatory request or demand pursuant to any Privacy Law; or (C) is a party to any order, decree, or
agreement by or with any court or arbitrator or governmental or regulatory authority that imposed any obligation or liability under
any Privacy Law.
(xx) Bank
Accounts and Safe Deposit Boxes. The Company has such bank accounts at such banks and with such account numbers as set forth on
Schedule 3.1(xx).
3.2
Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and
warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case
they shall be accurate as of such date):
(a) Organization;
Authority. The Purchaser is either an individual or an entity duly incorporated or formed,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right,
corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and
delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated by the Transaction Documents
have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on
the part of the Purchaser. Each Transaction Document to which it is a party has been duly executed by the Purchaser, and when
delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the
Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief
or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable
law.
(b)
Own Account. The Purchaser understands that the Securities are “restricted securities”
and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities
Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute
or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation
and warranty not limiting the Purchaser’s right to sell the Securities pursuant to an effective registration statement or otherwise
in compliance with applicable federal and state securities laws). The Purchaser is acquiring the Securities hereunder in the ordinary
course of its business.
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(c) Purchaser
Status. At the time the Purchaser was offered the Securities, it was, and as of the date
hereof it is an “accredited investor” as defined in Rule 501(a) under the Securities Act.
(d) Experience
of Purchaser. 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 prospective investment in the Securities, and has so evaluated the merits and risks of such investment. 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.
(e) General
Solicitation. The Purchaser is not, to the Purchaser’s knowledge, purchasing the
Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any
newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general
solicitation or general advertisement.
(f) Access
to Information. The Purchaser acknowledges that it has had the opportunity to review the
Transaction Documents (including all exhibits and schedules thereto) and has been afforded (i) the opportunity to ask such questions
as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of
the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company
and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.
(g) Certain
Transactions and Confidentiality. Other than to other Persons party to this Agreement or to the Purchaser’s
representatives, including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and
Affiliates, the Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction
(including the existence and terms of this transaction).
The
Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s
right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement
or the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, for the avoidance of doubt, nothing contained
herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order
to effect Short Sales or similar transactions in the future.
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1
Transfer Restrictions.
(a)
The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection
with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the
Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and
the Registration Rights Agreement and shall have the rights and obligations of a Purchaser under this Agreement and the Registration
Rights Agreement.
18
(b)
The Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following
form:
[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [CONVERSION]
OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY
SUCH SECURITIES.
The
Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor”
as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, such Purchaser may transfer
pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company
and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities,
including, if the Securities are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of
any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act
to appropriately amend the list of Selling Stockholders (as defined in the Registration Rights Agreement) thereunder.
(c)
The Purchaser agrees with the Company that such Purchaser will sell any Securities pursuant to either the registration requirements of
the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are
sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges
that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon
the Company’s reliance upon this understanding.
4.2
Acknowledgment of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding
shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its
obligations under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant to
the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive
effect that such issuance may have on the ownership of the other stockholders of the Company.
4.3
Furnishing of Information. As long as the Purchaser
owns Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period)
all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. As long as the
Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish
to the Purchaser and make publicly available in accordance with Rule 144(c) such information as is required for the Purchaser to sell
the Securities, including without limitation, under Rule 144. The Company further covenants that it will take such further action as
any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities
without registration under the Securities Act, including without limitation, within the requirements of the exemption provided by Rule
144.
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4.4
Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of
the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior
to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.
4.5
Conversion Procedures. The form of Notice of Conversion included in the Certificate of Designation sets forth the totality of
the procedures required of the Purchaser in order to convert the Preferred Stock. Without limiting the preceding sentences, no ink-original
Notice of Exercise or Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization)
of any Notice of Conversion form be required in order to convert the Preferred Stock. No additional legal opinion, other information
or instructions shall be required of the Purchasers to convert their Preferred Stock. The Company shall honor conversions of the Preferred
Stock and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.
4.6
Securities Laws Disclosure; Publicity. The Company shall by the Disclosure Time, issue a press release and file a Current Report
on Form 8-K including the Transaction Documents as exhibits thereto, with the Commission disclosing the material terms of the transactions
contemplated hereby. From and after the filing of each such Current Report on Form 8-K and the issuance of the press release, the Company
represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers
by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees, Affiliates or agents, in connection
with the transactions contemplated by the Transaction Documents. In addition, effective upon the filing of each such Current Report on
Form 8-K and the issuance of the press release, the Company acknowledges and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors,
agents, employees, Affiliates or agents, on the one hand, and any of the Purchasers or any of their Affiliates on the other hand, shall
terminate and be of no further force or effect. The Company understands and confirms that each Purchaser shall be relying on the foregoing
covenant in effecting transactions in securities of the Company. The Company and each Purchaser shall consult with each other in issuing
any press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such
press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release
of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall
not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall, promptly
provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall
not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory
agency or Trading Market, without the prior written consent of such Purchaser, except (a) as required by federal securities law in connection
with (i) any registration statement contemplated by the Registration Rights Agreement and (ii) the filing of final Transaction Documents
with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company
shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b) and reasonably cooperate with such
Purchaser regarding such disclosure.
4.7
Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person,
that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under
the Transaction Documents or under any other agreement between the Company and the Purchasers.
4.8
Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, which shall be disclosed pursuant to Section 4.6, the Company covenants and agrees that neither it, nor any other Person acting
on its behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably believes
constitutes, material non-public information, unless prior thereto such Purchaser shall have consented in writing to the receipt of such
information and agreed in writing with the Company to keep such information confidential. The Company understands and confirms that each
Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company,
any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates delivers any material, non-public
information to a Purchaser without such Purchaser’s consent, the Company hereby covenants and agrees that such Purchaser shall
not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, employees,
Affiliates or agents, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, Affiliates
or agents, not to trade on the basis of, such material, non-public information, provided that the Purchaser shall remain subject to applicable
law. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information
regarding the Company or any Subsidiaries, the Company shall simultaneously with the delivery of such notice file such notice with the
Commission pursuant to a Current Report on Form 8-K filed with the Commission within one (1) Business Day following the date that it
discloses such information to any Purchaser or such earlier time as may be required by applicable. The Company understands and confirms
that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
20
4.9
Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes
and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than payment of trade payables
in the ordinary course of the Company’s business and prior practices), (b) for the redemption of any Common Stock or Common Stock
Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations.
4.10
Indemnification of Purchasers. Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser
and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding
a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any
and all losses, liabilities, obligations, claims, contingencies, damages, costs and reasonable expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer
or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents, (b) any action instituted against the Purchaser Parties in any capacity,
or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with
respect to any of the transactions contemplated by the Transaction Documents (unless such action is solely based upon a material breach
of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings
such Purchaser Party may have with any such stockholder or any violations by such Purchaser Party of state or federal securities laws
or any conduct by such Purchaser Party which is finally judicially determined to constitute fraud, gross negligence or willful misconduct)
or (c) in connection with any registration statement of the Company providing for the resale by the Purchasers of the Conversion Shares
issued and issuable upon conversion of the Shares, the Company will indemnify each Purchaser Party, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’
fees) and expenses, as incurred, arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained
in such registration statement, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any prospectus or supplement thereto, in the light of the circumstances under which they
were made) not misleading, except to the extent, but only to the extent, that such untrue statements or omissions are based solely upon
information regarding such Purchaser Party furnished in writing to the Company by such Purchaser Party expressly for use therein, or
(ii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule
or regulation thereunder in connection therewith. If any action shall be brought against any Purchaser Party in respect of which indemnity
may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and, the Company shall have
the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser
Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of counsel a material conflict on any material issue between the
position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees
and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y)
for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld
or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s
breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other
Transaction Documents. The indemnification required by this Section 4.10 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein
shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities
the Company may be subject to pursuant to law.
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4.11
Reservation and Listing of Securities.
(a)
The Company shall maintain a reserve of the Required Minimum from its duly authorized shares of Common Stock for issuance pursuant to
the Transaction Documents in such amount as may then be required to fulfill its obligations in full under the Transaction Documents.
(b)
If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than (i) the Required
Minimum on such date, minus (ii) the number of shares of Common Stock previously issued pursuant to the Transaction Documents, 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 (minus the number of shares of
Common Stock previously issued pursuant to the Transaction Documents), 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.
(c)
The Company shall, if applicable: (i) in the time and manner required by the Principal Market, prepare and file with such Trading Market
an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum on the date
of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing or quotation on such
Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing or quotation and (iv) maintain
the listing or quotation of such Common Stock on any date at least equal to the Required Minimum on such date on such Trading Market
or another Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic transfer through the Depository
Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to the Depository
Trust Company or such other established clearing corporation in connection with such electronic transfer.
4.12
Participation in Future Financing.
(a)
From the date hereof until the date that is the twelve (12)-month anniversary of the Effective Date, upon any issuance by the Company
or any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash or other consideration, including consideration paid
in digital assets, Indebtedness or a combination of units thereof (a “Subsequent Financing”), each Purchaser shall
have the right to participate in up to an aggregate amount of the Subsequent Financing equal to fifty percent (50%) of the Subsequent
Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing.
(b)
At least five (5) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser
if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”). Upon
the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall promptly,
but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser. The Subsequent Financing
Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised
thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term
sheet or similar document relating thereto as an attachment.
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(c)
Any Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30
p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice that such Purchaser
is willing to participate in the Subsequent Financing, 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 Subsequent Financing Notice.
If the Company receives no such notice from a Purchaser as of such fifth (5th) Trading Day, such Purchaser shall be deemed to have notified
the Company that it does not elect to participate.
(d)
If by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice, notifications
by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees to participate) is, in
the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the remaining portion of such Subsequent
Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.
(e)
If by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice, the Company
receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount of the Participation
Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the Participation Maximum. “Pro
Rata Portion” means the ratio of (x) the Subscription Amount of Securities purchased on the Closing Date by a Purchaser participating
under this Section 4.12 and (y) the sum of the aggregate Subscription Amounts of Securities purchased on the Closing Date by all Purchasers
participating under this Section 4.12.
(f)
The Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of participation
set forth above in this Section 4.12, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated
for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30) Trading Days after the date of the initial
Subsequent Financing Notice.
(g)
The Company and each Purchaser agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision that, directly or indirectly, will, or is intended to, exclude
one or more of the Purchasers from participating in a Subsequent Financing, including, but not limited to, provisions whereby such Purchaser
shall be required to agree to any restrictions on trading as to any securities of the Company or be required to consent to any amendment
to or termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written
consent of such Purchaser.
(h)
Notwithstanding anything to the contrary in this Section 4.12 and unless otherwise agreed to by such Purchaser, the Company shall either
confirm in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser
will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery of the Subsequent
Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction with respect to the Subsequent Financing
has been made, and no notice regarding the abandonment of such transaction has been received by such Purchaser, such transaction shall
be deemed to have been abandoned and such Purchaser shall not be deemed to be in possession of any material, non-public information with
respect to the Company or any of its Subsidiaries.
(i)
Notwithstanding the foregoing, this Section 4.12 shall not apply in respect of an Exempt Issuance.
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4.13 Subsequent
Equity Sales.
(a)
From the date hereof until receipt of Shareholder Approval, the Company shall be prohibited from effecting or entering into an agreement
to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units
thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company
issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive,
additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon,
and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such
debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after
the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock. For purposes of this section, a Variable Rate Transaction
shall not include a transaction or agreement, including, but not limited to, an equity line of credit, whereby the Company may issue
securities at a future determined price, with an investor introduced by a broker-dealer that the Company has engaged pursuant to a written
agreement executed on or prior to the date of this Agreement and set forth on Schedule 4.13(a) of the Disclosure Schedules.
(b)
Unless Shareholder Approval has been obtained and deemed effective, neither the Company nor any Subsidiary shall make any issuance whatsoever
of Common Stock or Common Stock Equivalents which would cause any adjustment of the exercise or conversion price of the Preferred Stock,
as applicable, to the extent the holders of the Preferred Stock would not be permitted to exercise or convert their Preferred Stock in
full, ignoring for such purposes the other exercise limitations therein. Any Purchaser shall be entitled to obtain injunctive relief
against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
4.14
Equal Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration
is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate
right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat
the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or otherwise.
4.15
Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that
neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at
such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as
described in Section 4.6. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described
in Section 4.6, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included
in the Disclosure Schedules (other than as disclosed to its legal and other representatives). Notwithstanding the foregoing, and notwithstanding
anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation,
warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the
transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section
4.6, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance
with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.6 and (iii) no Purchaser shall have any duty of confidentiality or duty
not to trade in the securities of the Company to the Company, any of its Subsidiaries, or any of their respective officers, directors,
employees, Affiliates or agent, including, after the issuance of the initial press release as described in Section 4.6. Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate
portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this
Agreement.
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4.16
Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing under
applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly
upon request of any Purchaser.
4.17
Capital Changes. Until the one-year anniversary of the later of (a) the Effective Date and (b) the date that Shareholder Approval
is obtained and deemed effective, the Company shall not undertake a reverse or forward stock split or reclassification of the Common
Stock without the prior written consent of the Purchaser, other than a reverse stock split that is required, in the good faith determination
of the Board of Directors, to maintain the listing of the Common Stock on the Trading Market.
4.18
No Broker-Dealer. The Company acknowledges and agrees that the Purchasers are not acting as a broker, dealer, underwriter or agent
of the Company or any of its Subsidiaries. The Company and its Subsidiaries shall not, and the Company shall direct its agents, affiliates
and representatives not to, take the position that the Purchasers are acting in any manner as a broker, dealer or agent of the Company
or any of its Subsidiaries in any respect (whether pursuant to the transactions contemplated hereby or otherwise).
4.19
Shareholder Approval. The Company shall hold an annual or special meeting of stockholders on or prior to the date that is seventy-five
(75) days following the Closing Date for the purpose of obtaining Shareholder Approval, with the recommendation of the Company’s
Board of Directors that such proposals are 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 proposals. If the Company does not obtain Shareholder Approval at the first meeting, the Company shall call
a meeting every ninety (90) days thereafter to seek Shareholder Approval until the earlier of the Shareholder Approval Date or until
no Purchaser holds any of the Preferred Stock. The Company shall set the record date for Shareholder Approval as soon as practicable
following the Closing Date.
ARTICLE
V.
MISCELLANEOUS
5.1
Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without
any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the
Closing has not been consummated on or before the fifth (5th) Trading Day following the date hereof; provided, however,
that no such termination will affect the right of any party to sue for any breach by any other party (or parties).
5.2
Fees and Expenses. At the Closing, the Company has agreed to reimburse the Purchasers for its legal fees and expenses in the aggregate
of $50,000. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without
limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any conversion or exercise
notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to
the Purchasers.
5.3
Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding
of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.4
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication is
delivered via email attachment at the e-mail address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New
York City time) on a Trading Day, (b) the next Trading Day after the time of transmission, if such notice or communication is delivered
via email attachment at the e-mail address as set forth on the signature pages attached hereto on a day that is not a Trading Day or
later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required
to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.
25
5.5
Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by the Company and the Purchaser or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately and adversely impacts
a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers) shall also be
required. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any
proposed amendment or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative
to the comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected Purchaser.
Any amendment effected in accordance with this Section shall be binding upon each Purchaser and holder of Securities and the Company.
5.6
Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof.
5.7
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and
permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent
of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom
such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”
5.8
No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise
set forth in Section 4.10 and this Section 5.8.
5.9
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the 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, shareholders, partners, members, employees or agents) shall be commenced exclusively
in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of
any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or Proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding is improper or is an inconvenient
venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such Action or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law. If any party shall commence an Action or Proceeding to enforce any provisions of the Transaction
Documents, then, in addition to the obligations of the Company under Section 4.10, the prevailing party in such Action or Proceeding
shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Action or Proceeding.
26
5.10
Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.
5.11
Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party,
it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by e-mail delivery
of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such “.pdf” signature page were an original thereof.
5.12
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
5.13
Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions
of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may
rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election
in whole or in part without prejudice to its future actions and rights; provided, however, that, in the case of a rescission
of a conversion of the Preferred Stock, the applicable 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 such Purchaser of the aggregate exercise price paid to the
Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s
Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).
5.14
Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to
the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also
pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.15
Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages,
each of the Purchasers and the Company will be entitled to seek specific performance under the Transaction Documents. The parties agree
that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense
that a remedy at law would be adequate.
5.16
Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including,
without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not occurred.
27
5.17
Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever
claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at
any time hereafter in force, in connection with any Action or Proceeding that may be brought by any Purchaser in order to enforce any
right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction Document,
it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature
of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without
limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums
in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate. It is agreed
that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by
statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will
be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward, unless such application is precluded
by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Purchaser
with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by such Purchaser to the unpaid principal
balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Purchaser’s election.
5.18
Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts
have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts
are due and payable shall have been canceled.
5.19
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business
Day.
5.20
Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise
the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each
and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the
date of this Agreement.
5.21
WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY,
THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature
Pages Follow)
28
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
DNA
X, Inc.
Address
for Notice:
DNA
X, Inc.
4445
Eastgate Mall
Suite
200
San
Diego, California 92121
E-Mail:
By:
/s/
Mike Mulica
Name:
Mike Mulica
Title:
Chief Executive Officer
With
a copy to (which shall not constitute notice):
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
[PURCHASER
SIGNATURE PAGES TO SONM SECURITIES PURCHASE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.
Name
of Purchaser: DNA Holdings Venture Inc.
Signature
of Authorized Signatory of Purchaser: /s/ Scott Walker
Name
of Authorized Signatory: Scott Walker
Title
of Authorized Signatory: Chairman
Address of Authorized Signatory: ______________________________________
Address
for Notice to Purchaser: 174 De Diego Ave, Suan Juan, PR 00927
Address
for Delivery of Securities to Purchaser (if not same as address for notice):
Cash
Subscription Amount: $5,000,000.00
Note
Subscription Amount: $3,079,185.40
Shares:
1,346,531
Beneficial
Ownership Blocker ☐ 4.99% or ☐ 9.99%
EIN
Number: ____________________________
[SIGNATURE
PAGES CONTINUE]
EX-10.2
EX-10.2
Filename: ex10-2.htm · Sequence: 4
Exhibit
10.2
REGISTRATION
RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”) is made and entered into as of June 29, 2026, between DNA X, Inc., a Delaware corporation (the “Company”), and each of the several purchasers signatory hereto (each
such purchaser, a “Purchaser” and, collectively, the “Purchasers”).
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and each Purchaser
(the “Purchase Agreement”).
The
Company and each Purchaser hereby agree as follows:
1.
Definitions.
Capitalized
terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the
Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Advice”
shall have the meaning set forth in Section 6(c).
“Conversion Shares” shall have the meaning ascribed to such
term in the Certificate of Designation of the Preferred Stock.
“Effectiveness
Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 30th calendar
day following the Filing Date (or, in the event of a “full review” by the Commission, the 60th calendar day following
the Filing Date) and with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section
3(c), the 45th calendar day following the date on which an additional Registration Statement is required to be filed hereunder
(or, in the event of a “full review” by the Commission, the 75th calendar day following the date such additional
Registration Statement is required to be filed hereunder); provided, however, that in the event the Company is notified
by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review
and comments, the Effectiveness Date as to such Registration Statement shall be the fifth Trading Day following the date on which the
Company is so notified if such date precedes the dates otherwise required above, provided, further, if such Effectiveness Date falls
on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.
“Effectiveness
Period” shall have the meaning set forth in Section 2(a).
“Event”
shall have the meaning set forth in Section 2(d).
“Event
Date” shall have the meaning set forth in Section 2(d).
“Filing
Date” means, with respect to the Initial Registration Statement required hereunder, the 30th calendar day following the date Shareholder Approval is obtained,
and, with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c), the earliest practical date on which the Company is permitted by SEC Guidance to file such additional Registration Statement related
to the Registrable Securities.
“Holder”
or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.
“Indemnified
Party” shall have the meaning set forth in Section 5(c).
“Indemnifying
Party” shall have the meaning set forth in Section 5(c).
“Initial
Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.
“Losses”
shall have the meaning set forth in Section 5(a).
“Plan
of Distribution” shall have the meaning set forth in Section 2(a).
“Preferred Stock” means the Company’s Series B Convertible Preferred Stock, par value $0.001 per
share.
“Prospectus”
means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the
Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to
the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference
in such Prospectus.
“Registrable
Securities” means, as of any date of determination, (a) the Underlying Shares, (b) any shares of Common Stock issued to the Purchaser upon conversion of any indebtedness of the Company on or prior to the date of this Agreement,
(c) any additional shares of Common Stock issued and issuable in connection with any anti-dilution provisions in the Preferred Stock (in each
case, without giving effect to any limitations on exercise set forth in the Preferred Stock) and (d) any securities issued or then issuable
upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however,
that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the
effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long as (a) a Registration Statement
with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable
Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (b) such Registrable Securities
have been previously sold in accordance with Rule 144, or (c) such securities become eligible for resale without volume or manner-of-sale
restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter to such effect, addressed,
delivered and acceptable to the Transfer Agent and the affected Holders (assuming that such securities and any securities issuable upon
exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were at no time
held by any Affiliate of the Company), as reasonably determined by the Company, upon the advice of counsel to the Company.
“Registration
Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration
statements contemplated by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and supplements to any such
registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in any such registration statement.
“Rule
415” means Rule 415 promulgated by the 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.
“Selling
Stockholder Questionnaire” shall have the meaning set forth in Section 3(a).
“SEC
Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements
or requests of the Commission staff and (ii) the Securities Act.
“Underlying Shares” means the Conversion Shares.
2
2.
Shelf Registration.
(a)
On or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale
of all of the Registrable Securities that are not then registered on an effective Registration Statement for an offering to be made
on a continuous basis pursuant to Rule 415. Each Registration Statement filed hereunder shall be on Form S-3 (except if the Company
is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance herewith, subject to the provisions of Section 2(e)) and shall contain (unless otherwise
directed by at least 85% in interest of the Holders) substantially the “Plan of Distribution” attached hereto as Annex
A and substantially the “Selling Stockholder” section attached hereto as Annex B; provided, however,
that no Holder shall be required to be named as an “underwriter” without such Holder’s express prior written
consent. Subject to the terms of this Agreement, the Company shall use its reasonable best efforts to cause a Registration Statement
filed under this Agreement (including, without limitation, under Section 3(c)) to be declared effective under the Securities Act as
promptly as possible after the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall use its
reasonable best efforts to keep such Registration Statement continuously effective under the Securities Act until the date that all
Registrable Securities covered by such Registration Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be
sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in
compliance with the current public information requirement under Rule 144, as determined by the counsel to the Company pursuant to a
written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders (the
“Effectiveness Period”). The Company shall telephonically request effectiveness of a Registration Statement as of
5:00 p.m. (New York City time) on a Trading Day. The Company shall promptly notify the Holders via e-mail of the effectiveness of a
Registration Statement on the same Trading Day that the Company telephonically confirms effectiveness with the Commission, which
shall be the date requested for effectiveness of such Registration Statement. The Company shall, by 9:30 a.m. (New York City time)
on the 2nd Trading Day after the effective date of such Registration Statement, file a final Prospectus with the Commission as
required by Rule 424. Failure to so notify the Holder within one (1) Trading Day of such notification of effectiveness or failure to
file a final Prospectus as foresaid shall be deemed an Event under Section 2(d).
(b) Notwithstanding
the registration obligations set forth in Section 2(a), if the Commission informs the Company that all of the Registrable Securities
cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration
statement, the Company agrees to promptly inform each of the Holders thereof and use its commercially reasonable efforts to file
amendments to the Initial Registration Statement as required by the Commission, covering the maximum number of Registrable
Securities permitted to be registered by the Commission, on Form S-3 or such other form available to register for resale the
Registrable Securities as a secondary offering, subject to the provisions of Section 2(e); with respect to filing on Form S-3 or
other appropriate form, and subject to the provisions of Section 2(d) with respect to the payment of liquidated damages; provided, however,
that prior to filing such amendment, the Company shall be obligated to use diligent efforts to advocate with the Commission for the
registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance and
Disclosure Interpretation 612.09.
(c)
Notwithstanding any other provision of this Agreement and subject to the payment of liquidated damages pursuant to Section 2(d), if the
Commission or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular
Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the Commission
for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its
Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows:
a. First,
the Company shall reduce or eliminate any securities to be included other than Registrable
Securities; and
3
b. Second,
the Company shall reduce Registrable Securities represented by Conversion Shares (applied, in
the case that some Shares may be registered, to the Holders on a pro rata basis based
on the total number of unregistered Shares held by such Holders).
In
the event of a cutback hereunder, the Company shall give the Holder at least three (3) Trading Days prior written notice along with
the calculations as to such Holder’s allotment. In the event the Company amends the Initial Registration Statement in
accordance with the foregoing, the Company will use its reasonable best efforts to file with the Commission, as promptly as allowed
by Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration
statements on Form S-3 or such other form available to register for resale those Registrable Securities that were not registered for
resale on the Initial Registration Statement, as amended.
(d)
If: (i) the Initial Registration Statement is not filed on or prior to its Filing Date (if the Company files the Initial
Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3(a)
herein or the Company subsequently withdraws the filing of the Registration Statement, the Company shall be deemed to have not
satisfied this clause (i) as of the Filing Date), or (ii) the Company fails to file with the Commission a request for acceleration
of a Registration Statement in accordance with Rule 461 promulgated by the Commission pursuant to the Securities Act, within five
Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that such
Registration Statement will not be “reviewed” or will not be subject to further review, or (iii) prior to the effective
date of a Registration Statement, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments
made by the Commission in respect of such Registration Statement within fifteen (15) calendar days after the receipt of comments by
or notice from the Commission that such amendment is required in order for such Registration Statement to be declared effective, or
(iv) a Registration Statement registering for resale all of the Registrable Securities is not declared effective by the Commission
by the Effectiveness Date of the Initial Registration Statement (provided that, if the Registration Statement does not allow for the
resale of Registrable Securities at prevailing market prices (i.e., only allows for fixed price sales), the Company shall have been
deemed to have not satisfied this clause) or (v) after the effective date of a Registration Statement, such Registration Statement
ceases for any reason to remain continuously effective as to all Registrable Securities included in such Registration Statement, or
the Holders are otherwise not permitted to utilize the Prospectus therein to resell such Registrable Securities, for more than
forty-five (45) consecutive calendar days or more than an aggregate of sixty (60) calendar days (which need not be consecutive
calendar days) during any 12-month period (any such failure or breach being referred to as an “Event”, and for
purposes of clauses (i) and (iv), the date on which such Event occurs, and for purpose of clause (ii) the date on which such five
(5) Trading Day period is exceeded, and for purpose of clause (iii) the date which such twenty one (21) calendar day period is
exceeded, and for purpose of clause (v) the date on which such forty-five (45) or sixty (60) calendar day period, as applicable, is
exceeded being referred to as “Event Date”), then, in addition to any other rights the Holders may have hereunder
or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event
shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash,
as partial liquidated damages and not as a penalty, equal to the product of 1.0% multiplied by the aggregate Subscription Amount
paid by such Holder pursuant to the Purchase Agreement. If the Company fails to pay any partial liquidated damages pursuant to this
Section in full within seven days after the date payable, the Company will pay interest thereon at a rate of 12% per annum (or such
lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such partial
liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages
pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of an
Event.
(e)
If Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the
resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable Securities on Form S-3
as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect
until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the Commission.
4
(f)
Notwithstanding anything to the contrary contained herein, in no event shall the Company be permitted to name any Holder or affiliate
of a Holder as any “underwriter” without the prior written consent of such Holder.
3.
Registration Procedures.
In
connection with the Company’s registration obligations hereunder, the Company shall:
(a)
Not less than five (5) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior to
the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed
to be incorporated therein by reference), the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of such Holders,
and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation within the meaning
of the Securities Act; provided that the Company shall redact any sections of such documents that may contain material non-public information
unless the Holder consents in writing to receive such information and agrees to hold it in confidence. The Company shall not file a Registration
Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities
shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than five (5) Trading
Days after the Holders have been so furnished copies of a Registration Statement or one (1) Trading Day after the Holders have been so
furnished copies of any related Prospectus or amendments or supplements thereto. Each Holder agrees to furnish to the Company a completed
questionnaire in the form attached to this Agreement as Annex C (a “Selling Stockholder Questionnaire”) on
a date that is not less than two (2) Trading Days prior to the Filing Date or by the end of the fourth (4th) Trading Day following
the date on which such Holder receives draft materials in accordance with this Section.
(b)
(i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be amended or supplemented
by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant
to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration
Statement or any amendment thereto and provide as promptly as reasonably possible to the Holders true and complete copies of all correspondence
from and to the Commission relating to a Registration Statement (provided that, the Company shall excise any information contained therein
which would constitute material non-public information regarding the Company or any of its Subsidiaries), and (iv) comply in all material
respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable
Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with
the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus
as so supplemented.
(c)
If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common Stock
then registered in a Registration Statement, then the Company shall file as soon as reasonably practicable, but in any case prior to
the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than the number of such
Registrable Securities.
5
(d)
Notify the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied
by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible
(and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person) confirm
such notice in writing no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether there will be a “review”
of such Registration Statement and whenever the Commission comments in writing on such Registration Statement, and (C) with respect to
a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or
any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional
information, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending
the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings
for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding
for such purpose, (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration
Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement,
Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain
any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading, and (vi) of the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company,
makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus; provided,
however, that in no event shall any such notice contain any information which would constitute material, non-public information
regarding the Company or any of its Subsidiaries.
(e)
Use its reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or
suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.
(f)
Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested
by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission, provided that any such item which is available on the EDGAR system (or
successor thereto) need not be furnished in physical form.
(g)
Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).
(h)
Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate
with the selling Holders in connection with the registration or qualification (or exemption from the registration or qualification) of
such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United
States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during
the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions
of the Registrable Securities covered by each Registration Statement, provided that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction
where it is not then so subject or file a general consent to service of process in any such jurisdiction.
6
(i)
If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates or book entry
statements representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which
certificates or statements, as applicable, shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends,
and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may
request.
(j)
Upon the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible under the circumstances taking
into account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the
premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration
Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference,
and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will
contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were made, not misleading. If
the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any
Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus. The
Company will use its reasonable best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable.
The Company shall be entitled to exercise its right under this Section 3(j) to suspend the availability of a Registration Statement
and Prospectus, subject to the payment of partial liquidated damages otherwise required pursuant to Section 2(d), for a period not
to exceed 60 calendar days (which need not be consecutive days) in any 12-month period.
(k)
Otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission under the Securities
Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file any final Prospectus, including any
supplement or amendment thereof, with the Commission pursuant to Rule 424 under the Securities Act, promptly inform the Holders in writing
if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof,
the Holders are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions
as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder.
(l)
The Company shall use its reasonable best efforts to maintain eligibility for use of Form S-3 (or any successor form thereto) for
the registration of the resale of Registrable Securities.
(m)
The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common
Stock beneficially owned by such Holder and , if required by the Commission, the natural persons thereof that have voting and
dispositive control over the shares. During any periods that the Company is unable to meet its obligations hereunder with respect to
the registration of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days
of the Company’s request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any
Event that may otherwise occur solely because of such delay shall be suspended as to such Holder only, until such information is
delivered to the Company.
4.
Registration Expenses. All fees and expenses incident to the performance of or compliance with, this Agreement by the Company
shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made with
the Commission, (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for
trading, and (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including,
without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the
Registrable Securities), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection
with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required
hereunder. In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to the extent
provided for in the Transaction Documents, any legal fees or other costs of the Holders.
7
5.
Indemnification.
(a)
Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, members, partners, agents, brokers (including brokers who offer and sell Registrable Securities
as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees
(and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any
other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other Persons with
a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each such
controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities,
costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as
incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement,
any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of
or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading
or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any
rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but
only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in
writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto (it being understood that the
Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section
3(d)(iii)-(vi), the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such
Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt
by such Holder of the Advice contemplated in Section 6(c). The Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is
aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified
person and shall survive the transfer of any Registrable Securities by any of the Holders in accordance with Section 6(f).
(b)
Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: any untrue or alleged
untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances
under which they were made) not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained
in any information so furnished in writing by such Holder to the Company expressly for inclusion in such Registration Statement or such
Prospectus or (ii) to the extent, but only to the extent, that such information relates to such Holder’s information provided in
the Selling Stockholder Questionnaire or the proposed method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved Annex
A hereto for this purpose), such Prospectus or in any amendment or supplement thereto. In no event shall the liability of a selling Holder
be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating
to this Section 5 and the amount of any damages such Holder has otherwise been required to pay by reason of such untrue statement or
omission) received by such Holder upon the sale of the Registrable Securities included in the Registration Statement giving rise to such
indemnification obligation.
8
(c)
Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof, provided that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent
that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have materially and adversely prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party
has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such
Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict
of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses
of no more than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for
any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed.
No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding
in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party
from all liability on claims that are the subject matter of such Proceeding.
Subject
to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section)
shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party, provided
that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such
actions for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not subject
to appeal or further review) not to be entitled to indemnification hereunder.
9
(d)
Contribution. If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold
an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified
Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has
been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any
reasonable attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party
would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party
in accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately
preceding paragraph. In no event shall the contribution obligation of a Holder of Registrable Securities be greater in amount than the
dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 5 and the
amount of any damages such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.
The
indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
6.
Miscellaneous.
(a)
Remedies. In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement,
each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company and
each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it
of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect
of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.
(b) No
Piggyback on Registrations; Prohibition on Filing Other Registration Statements. Neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration
Statements other than the Registrable Securities. The Company shall not file any other registration statements other than the
Registration Statement during the prohibition period set forth in Section 4.12(a) of the Purchase Agreement.
(c) Discontinued
Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of
the occurrence of any event of the kind described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue
disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the
“Advice”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended)
may be resumed. The Company will use its reasonable best efforts to ensure that the use of the Prospectus may be resumed as promptly
as is practicable. The Company agrees and acknowledges that any periods during which the Holder is required to discontinue the
disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 2(d).
10
(d) Amendments
and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing
and signed by the Company and the Holders of 50.1% or more of the then outstanding Registrable Securities (for purposes of
clarification, this includes any Registrable Securities issuable upon exercise or conversion of any Security), provided that, if any
amendment, modification or waiver disproportionately and adversely impacts a Holder (or group of Holders), the consent of such
disproportionately impacted Holder (or group of Holders) shall be required. If a Registration Statement does not register all of the
Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then the number of
Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each Holder shall have the
right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights
of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given only by such
Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however,
that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the
first sentence of this Section 6(d). No consideration shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of this Agreement unless the same consideration also is offered to all of the parties to this
Agreement who continue to hold any of the Registrable Securities.
(e)
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered
as set forth in the Purchase Agreement.
(f)
Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns
of each of the parties and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations
hereunder without the prior written consent of all of the Holders of the then outstanding Registrable Securities. Each Holder may assign
their respective rights hereunder in the manner and to the Persons as permitted under Section 5.7 of the Purchase Agreement.
(g)
No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the
Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its
securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Except as set forth on Schedule 6(g), neither the Company nor any of its Subsidiaries has previously entered into
any agreement granting any registration rights with respect to any of its securities to any Person that have not been
satisfied in full.
(h)
Execution and Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall
be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to
the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered
by e-mail delivery of a “.pdf” format data file or any electronic signature complying with the U.S. federal ESIGN Act of
2000 (e.g., www.docusign.com), such signature shall create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such “.pdf” signature page were an original thereof.
(i)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be
determined in accordance with the provisions of the Purchase Agreement.
(j)
Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.
(k)
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.
(l)
Headings. The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be
deemed to limit or affect any of the provisions hereof.
11
(m) Independent
Nature of Holders’ Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of
any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action
taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of group or entity, or create a presumption that the Holders are in any way acting in concert or as a
group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other matters, and the
Company acknowledges that the Holders are not acting in concert or as a group, and the Company shall not assert any such claim, with
respect to such obligations or transactions. Each Holder shall be entitled to protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an
additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company
contained in this Agreement was solely in the control of the Company, not the action or decision of any Holder, and was done solely
for the convenience of the Company and not because it was required or requested to do so by any Holder. It is expressly understood
and agreed that each provision contained in this Agreement is between the Company and a Holder, solely, and not between the Company
and the Holders collectively and not between and among Holders.
********************
(Signature
Pages Follow)
12
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.
DNA X, INC.
By:
Name:
Mike Mulica
Title:
Chief
Executive Officer
[SIGNATURE
PAGE OF HOLDERS FOLLOWS]
SIGNATURE
PAGE OF HOLDERS TO SONM RRA
Name
of Holder: __________________________
Signature
of Authorized Signatory of Holder: __________________________
Name
of Authorized Signatory: _________________________
Title
of Authorized Signatory: __________________________
[SIGNATURE
PAGES CONTINUE]
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