Form 8-K
8-K — FingerMotion, Inc.
Accession: 0001493152-26-038662
Filed: 2026-08-17
Period: 2026-08-12
CIK: 0001602409
SIC: 7372 (SERVICES-PREPACKAGED SOFTWARE)
Item: Entry into a Material Definitive Agreement
Item: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
Item: Unregistered Sales of Equity Securities
Item: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers
Item: Other Events
Item: Financial Statements and Exhibits
Documents
8-K — form8-k.htm (Primary)
EX-10.1 (ex10-1.htm)
EX-10.2 (ex10-2.htm)
EX-10.3 (ex10-3.htm)
EX-10.4 (ex10-4.htm)
EX-10.5 (ex10-5.htm)
EX-10.6 (ex10-6.htm)
EX-99.1 (ex99-1.htm)
EX-99.2 (ex99-2.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
August
12, 2026
Date
of Report (Date of earliest event reported)
FINGERMOTION,
INC.
(Exact
name of registrant as specified in its charter)
Delaware
001-41187
46-4600326
(State
or other jurisdiction
of
incorporation)
(Commission
File
Number)
(IRS
Employer
Identification
No.)
111
Somerset Road, Level 3
Singapore
238164
(Address
of principal executive offices)
(Zip
Code)
(347)
349-5339
Registrant’s
telephone number, including area code
Not
applicable.
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K 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
FNGR
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 (Section 230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (Section 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.
On
August 16, 2026 (the “Agreement Date”), FingerMotion, Inc., a Delaware corporation (the “Company”),
entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional investor (the “Investor”),
pursuant to which the Company issued to the Investor a senior secured convertible note (the “Note”) with an original
principal amount of $5,000,000 and an original issue discount of $700,000. The Note bears no interest (except upon an event of default)
and, unless earlier converted or redeemed, will mature on the first anniversary of the closing date under the Agreement (the “Closing
Date”). At closing, the Company will receive $4,300,000, of which $1.3 million will be immediately available to the Company
and the remaining $3.3 million will be held in a DACA account in the name of the Company to be released upon meeting certain release
conditions as set forth in the Purchase Agreement.
The
Note is convertible, at any time at the Investor’s option, into shares of the Company’s common stock, par value $0.0001 per
share (the “Common Stock” and such shares issuable upon conversion, the “Conversion Shares”), at
an initial fixed conversion price of $0.35 per share (the “Fixed Conversion Price”), which is subject to adjustment
for stock splits, stock dividends, stock combinations, recapitalizations, and other customary events. In addition, during each monthly
period specified in the Note (each, a “Monthly Redemption Conversion Period”), the Investor may convert up to the
remaining principal amount of the Note (plus all accrued and unpaid amounts thereon) at a “Redemption Conversion Price” equal
to the lower of (i) the Fixed Conversion Price then in effect and (ii) 90% of the lowest daily volume-weighted average price of the Common
Stock during the seven consecutive trading days ending on and including the applicable date of conversion or the first trading day of
the applicable Monthly Redemption Conversion Period, in each case subject to a floor price (the “Floor Price”) initially
set at 20% of the Nasdaq Minimum Price (as defined in Nasdaq Listing Rule 5635) on the trading day prior to the date of the Purchase
Agreement, which resets automatically every six months. If the Company is unable to issue Conversion Shares due to the exchange cap described
below or if a Floor Price condition exists, the Investor may require the Company to satisfy the applicable monthly conversion amount
in cash at a 7.5% premium.
The
Note includes customary events of default, including, without limitation (and, where applicable, subject to any cure periods set forth
in the Note):
●
suspension
of trading of the Company’s Common Stock on Nasdaq;
●
the
Company’s failure to timely deliver freely tradable Conversion Shares;
●
the
Company’s failure to maintain the required share reserve for the Note;
●
any
payment default under the Note or related transaction documents;
●
acceleration
of $500,000 or more of the Company’s (or any subsidiary’s) other indebtedness;
●
the
Company’s bankruptcy, insolvency, or liquidation (whether voluntary or involuntary);
●
entry
of a final judgment for the payment of money in excess of $500,000 against the Company or any subsidiary;
●
breaches
of representations, warranties, or covenants in the Note or any other transaction documents;
●
any
failure of the resale registration statement to be timely filed, declared effective, or maintained in accordance with the Registration
Rights Agreement (as defined below);
●
any
security document failing or ceasing to create a valid and perfected first-priority lien on the collateral; and
●
failure
by the Company to maintain minimum cash covenant.
If
an event of default occurs and is continuing, the Note shall become due and payable, at the Investor’s election, in cash at an
amount equal to 125% of all the outstanding principal amount of the Note, accrued and unpaid interest, and any other unpaid amounts (collectively,
the “Outstanding Value”). Upon the occurrence and continuation of an event of default, default interest shall accrue
at an annual rate of 12%.
- 2 -
The
Note also contains additional conversion, redemption, and put mechanics, including (i) an optional redemption right in favor of the Company,
exercisable after 40 trading days following the effective date of the initial resale registration statement, at a price equal to 115%
of the Outstanding Value of the Note, (ii) a change of control put right entitling the Investor to require redemption of the Outstanding
Value under the Note at a premium upon the occurrence of a change of control transaction, and (iii) a subsequent placement redemption
right entitling the Investor to require the Company to apply up to 30% of the gross proceeds of such subsequent placement to redeem at
a price equal to 115% of the Outstanding Value being redeemed, in each case subject to the terms and conditions set forth in the Note.
The
Purchase Agreement contains customary representations, warranties, and agreements of the Company and the Investor, and customary indemnification
rights and obligations of the parties. The Company has agreed to seek stockholder approval for the issuance of Conversion Shares in excess
of 19.99% of the outstanding shares of Common Stock as of the date of the Purchase Agreement. Absent such approval (or an opinion of
outside counsel that stockholder approval is not required), the Company may not issue Conversion Shares in excess of 12,256,260 shares
in the aggregate (the “Exchange Cap”). Conversions are also subject to a 9.99% beneficial ownership limitation.
In
addition, the Company is issuing the Investor a Warrant exercisable into 4,092,993 shares of Company common stock (the “Warrant
Shares”). The Warrant carries a five year term and is subject to a price adjustment should the Company issue securities below
the exercise price of the warrant which is the fixed conversion price of the Note. The Warrant and the Warrant Shares will be issued
in transactions exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
In
connection with the Purchase Agreement, the Company entered into a registration rights agreement with the Investor (the “Registration
Rights Agreement”), pursuant to which the Company has agreed to file a resale registration statement to register for resale
a number of shares of Common Stock equal to 150 % of the maximum number of Conversion Shares issuable upon conversion of the Note (subject
to adjustment under the Registration Rights Agreement) and 100% of the number of Warrant Shares issuable upon exercise of the Warrant
(subject to adjustment under the Registration Rights Agreement) no later than 15 calendar days after the date of the Registration Rights
Agreement, and to use best efforts to cause such registration statement to be declared effective within the effectiveness deadlines specified
thereunder.
The
Company also entered into a security agreement with the Investor (the “Security Agreement”), pursuant to which the
Company granted to the Investor, acting as collateral agent, a first-priority security interest in substantially all of the Company’s
personal property assets, subject to customary permitted liens and excluded assets, as set forth in the Security Agreement.
The
foregoing descriptions of the Purchase Agreement, the Note, the Warrant, the Registration Rights Agreement and the Security Agreement
are not complete and are subject to, and qualified in their entirety by reference to the full text of the Purchase Agreement, the Note,
the Registration Rights Agreement and the Security Agreement, copies of which are attached as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5,
respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The
disclosure set forth above under Item 1.01 with respect to the Note is incorporated by reference into this Item 2.03.
Item
3.02 Unregistered Sale of Equity Securities
Reference
is made to the disclosure set forth under Item 1.01 supra and under Item 8.01 infra, which disclosure is incorporated herein by reference.
The
Note and Warrants were, and the Conversion Shares and Warrant Shares will be, issued in a transaction exempt from the registration
requirements under the U.S. Securities Act in reliance on the exemption provided by Section 4(a)(2) thereof and Rule 506(b) of Regulation
D thereunder. The Investor has represented that it is an “accredited investor” as such term is defined in Rule 501(a) of
Regulation D, and is acquiring the securities described herein for investment only and not with a view towards, or for resale in connection
with, the public sale or distribution thereof.
See
Section 8.01 below for the shares of Company common stock issued in the acquisition of Lyken (as defined below).
- 3 -
ITEM
5.02 RESIGNATION OF AN OFFICER; APPOINTMENT OF AN OFFICER
The
Company appointed Chris Polimeni as Chief Financial Officer, effective August 17, 2026. Mr. Polimeni succeeds Lee Yew Hon, whose
resignation as Chief Financial Officer was accepted by the Board of Directors.
About
Chris Polimeni
Chris
Polimeni is an accomplished financial executive with more than 35 years of experience driving financial strategy and operational efficiency
at both public and private companies across publishing, distribution, waste management, and technology. He brings deep expertise in mergers
and acquisitions, capital raising across debt and equity markets, SEC reporting, contract negotiations, revenue recognition, auditing,
financial planning and analysis, treasury management, taxation, and ERP implementation.
A
results-driven leader, Mr. Polimeni combines strong analytical skills with a proven ability to structure complex financial transactions
and advance strategic growth initiatives. Most recently, he served as Chief Financial Officer of Avax One Technology Ltd. Since 2020,
he has also served as President and Chief Executive Officer of Polimeni & Associates, Inc. He holds a Bachelor of Business Administration
in Accounting and Management Information Systems from Hofstra University.
Compensation
of Executive Officers
Both
Jolie Kahn, as Chief Executive Officer, and Chris Polimeni, as Chief Financial Officer, are to be compensated at the rate of $30,000
each per month until such time as the Company’s Compensation Committee is able to meet and determine executive compensation agreements
for both, which is expected to occur imminently.
ITEM
8.01 OTHER INFORMATION
The
Company entered into a share purchase agreement dated August 12, 2026 (the “Agreement”) with Alset AI Ventures Inc. and Lyken
AI Computing Inc., operating as Lyken.AI (“Lyken”), pursuant to which it acquired 99,000 common shares of Lyken from Alset
AI, representing 9.9% of Lyken’s 1,000,000 issued and outstanding common shares immediately prior to closing, for a purchase price
of $500,000 payable solely in common stock of the Company (the “Transaction”) at a price per share of $0.2990 ($0.01 per
share above the closing price on August 12, 2026 of $0.2890 per share), which is 1,674,480 shares of its Common Stock. Final closing
of the transaction was subject to approval of the TSXV on behalf of Alset AI, which occurred on August 14, 2026, on which date the transaction
closed. The shares of common stock of the Company were issued in a transaction exempt from registration under Section 4(a)(2) of the
Securities Act of 1933, as amended.
Item
9.01 Financial Statements and Exhibits
(d)
Exhibits
Exhibit
Description
10.1
Form of Securities Purchase Agreement
10.2
Form of Note
10.3
Form of Warrant
10.4
Form of Registration Rights Agreement
10.5
Form of Security Agreement
10.6
Lyken Purchase Agreement, dated August 12, 2026
99.1
Press Release dated August 17, 2026
99.2
Press Release dated August 17, 2026
104
Cover
Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document)
- 4 -
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.
FINGERMOTION,
INC.
DATE:
August 17, 2026
By:
/s/
Jolie Kahn
Jolie
Kahn
CEO
and Director
- 5 -
EX-10.1
EX-10.1
Filename: ex10-1.htm · Sequence: 2
Exhibit
10.1
Execution
Version
SECURITIES
PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”) is dated as of August 16, 2026, by and between FingerMotion, Inc.,
a Delaware corporation, having an address at c/o FingerMotion, Inc., 111 Somerset Road, Level 3, Singapore (the “Company”),
and each buyer identified on the signature pages hereto (each, including its successors and assigns, a “Buyer” and
collectively, the “Buyers”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended
(the “Securities Act”), and/or Rule 506 of Regulation D promulgated thereunder, the Company desires to issue and sell
to each Buyer, and each Buyer, 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 Buyer, severally and not jointly, hereby 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 Notes (as defined herein), and (b) the following terms have the meanings set forth in this Section 1.1:
“Action”
shall have the meaning assigned to such term in Section 3.1(j).
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Agreement”
shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
“ATM
Program” means a customary “at-the-market” offering program.
“Board
of Directors” means the board of directors of the Company or any duly authorized committee thereof.
“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.
“Buyer”
or “Buyers” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
“Buyer
Party” shall have the meaning assigned to such term in Section 4.8.
1
“Closing”
means the closing of the purchase and sale of the Notes pursuant to Section 2.1(a).
“Closing
Date” means the Business Day mutually selected by the Buyers and the Company and on which all of the Transaction Documents
referred to in Section 2.2(a) have been executed and delivered by the applicable parties thereto, and all conditions precedent
to (i) the Buyers’ obligations to pay the Subscription Amount for the Notes, and (ii) the Company’s obligations to deliver
the Notes have been satisfied or waived, but in any case no later than second (2nd) Business Day after the execution of this
Agreement.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Collateral
Agent” shall have the meaning assigned to such term in Section 4.11.
“Collateral
Agent Indemnitees” shall have the meaning assigned to such term in Section 4.11.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the shares of Common Stock of the Company with par value $0.0001 per share, and any other class of shares into
which such shares may hereafter be reclassified or changed.
“Company”
shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
“Conversion
Notice” shall have the meaning assigned to such term in the Notes.
“Conversion
Price” shall have the meaning assigned to such term in the Notes.
“Conversion
Shares” shall have the meaning assigned to such term in the Notes.
“Convertible
Securities” means any share or other security (other than Options) that is at any time and under any circumstances, directly
or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares
of Common Stock.
“DACA”
means a deposit account control agreement, in form and substance satisfactory to the Buyers, by and among the Company, the depository
bank and the Collateral Agent, governing the Deposit Account.
“Deposit
Account” means a deposit account maintained by the Company at Bank of America, N.A. or another banking institution acceptable
to the Buyers, subject to the DACA, which DACA shall provide that the Company shall have no access to funds in such Deposit Account except
pursuant to the release mechanics set forth in Section 2.4.
“Disqualification
Event” shall have the meaning assigned to such term in Section 3.1(dd).
2
“Equity
Conditions” means, with respect to any Release, that for each Trading Day during the Measurement Period applicable to such
Release and on the applicable Release Eligibility Date: (a) the Company shall have duly and timely issued all shares of Common Stock
required to be issued to any Buyer pursuant to the terms of any Transaction Document, if any; (b) the Company shall have paid all principal,
interest, liquidated damages and other amounts owing to any Buyer in respect of any Note; (c) the Underlying Shares shall be Freely Tradable
(as defined in the Notes) by the applicable Buyer upon issuance; (d) the Common Stock is trading on a Trading Market (as defined in the
Notes) and all Underlying Shares are listed or quoted for trading on such Trading Market, and the Company believes, in good faith, that
trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future; (e) the number of authorized
but unissued and otherwise unreserved shares of Common Stock equals at least the Required Minimum; (f) there is no existing Event of
Default and no existing event which, with the passage of time or the giving of notice, would constitute an Event of Default; (g) the
Company shall not have failed to satisfy the current public information requirement under Rule 144(c) under the Securities Act and shall
not have any pending extension of the deadline for filing a periodic report with the Commission under Rule 12b-25 under the Exchange
Act; (h) the Common Stock is DWAC Eligible (as defined in the Notes); (i) the issuance of the Underlying Shares in question to the applicable
Buyer would not violate the limitations set forth in the Notes or the Warrants, as applicable; (j) there has been no public announcement
of a pending or proposed Fundamental Transaction (as defined in the Notes) or Change of Control Transaction (as defined in the Notes)
that has not been consummated; (k) no Buyer is in possession of any information provided by the Company, any of its Subsidiaries, or
any of their officers, directors, employees, agents or Affiliates, that constitutes, or may constitute, material non-public information;
(l) no bona fide material dispute shall exist by and between any holder of the Notes and the Company, any Trading Market and/or the Financial
Industry Regulatory Authority with respect to any term or provision of any Note or any other Transaction Document; (m) the Company and
its Subsidiaries have complied with their respective obligations under the Transaction Documents in all material respects; (n) the Company
shall not be suspended from trading in or delisted from the Principal Market; (o) the daily dollar trading volume for the Common Stock
during market hours on the principal Trading Market equals or exceeds $500,000 for at least twenty-five (25) out of thirty (30) Trading
Days during the Measurement Period; (p) the daily VWAP for the Common Stock is at least $0.30 (subject to adjustment for share splits,
Stock Dividends (as defined in the Notes) or share combinations) for at least twenty-five (25) out of thirty (30) Trading Days during
the Measurement Period; (q) the Market Value of Listed Securities (as defined under Nasdaq Rules) is at least $25,000,000, calculated
for this purpose assuming the same number of shares of Common Stock outstanding as of the date of this Agreement; (r) the Company has
received the Exchange Cap Stockholder Approval (or such approval is not required under the applicable rules of the Principal Market);
(s) there is no breach of any covenant in any Transaction Document regardless of any applicable cure periods; (t) the Common Stock is
not subject to any DTC “chill” or similar event; and (u) no event or circumstance has had or would reasonably be expected
to have a Material Adverse Effect on the Company or any of its Subsidiaries.
“Evaluation
Date” shall have the meaning assigned to such term in Section 3.1(y).
“Event
of Default” shall have the meaning assigned to such term in the Notes.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange
Cap Stockholder Approval” shall have the meaning assigned to such term in Section 4.13.
“Exchange
Cap Stockholder Approval Date” shall have the meaning assigned to such term in Section 4.13.
“Exchange
Cap Stockholder Meeting” shall have the meaning assigned to such term in Section 4.13.
“Exchange
Cap Stockholder Meeting Deadline” shall have the meaning assigned to such term in Section 4.13.
3
“Exchange
Cap Stockholder Resolutions” shall have the meaning assigned to such term in Section 4.13.
“Exchange
Share Cap” shall have the meaning assigned to such term in Section 4.13.
“Exchange
Rate” shall have the meaning assigned to such term in Section 5.14.
“Excluded
Securities” means the issuance of (a) shares of Common Stock, share options, restricted share units and performance share units
to employees, officers or directors of, or consultants to the Company pursuant to any equity incentive plan or employee share purchase
plan duly adopted for such purpose, (b) shares of Common Stock upon the exercise or exchange of or conversion of any of the Securities
and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date
of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number
of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection
with share splits or combinations) or to extend the term of such securities, and (c) securities issued pursuant to acquisitions, mergers,
consolidations, purchases of the assets of a corporation or other entity, 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 provided further that any such issuance shall only be to a Person (or to the equity holders 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, which are issued as restricted securities (within the meaning of Rule 144) and are not afforded registration rights.
“Financial
Statements” has the meaning given such term in Section 3.1(h).
“Governmental
Authority” means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal,
state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising,
or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any
nature or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public
international organization or any of the foregoing.
“Haynes
and Boone” means Haynes and Boone, LLP, with offices located at 30 Rockefeller Plaza, 22nd Floor, New York, NY 10112.
“Holder”
shall have the meaning assigned to such term in the Notes.
“Indebtedness”
shall have the meaning assigned to such term in the Notes.
“Intellectual
Property Rights” shall have the meaning assigned to such term in Section 3.1(n).
“Issuer
Covered Person” shall have the meaning assigned to such term in Section 3.1(dd).
“IT
Systems and Data” shall have the meaning assigned to such term in Section 3.1(aa).
4
“Judgment
Currency” shall have the meaning assigned to such term in Section 5.22(a).
“Judgment
Conversion Date” shall have the meaning assigned to such term in Section 5.22(a).
“Lead
Investor” means Alto Opportunity Master Fund, SPC –Segregated Master Portfolio B and its Affiliates, successors and assigns
regardless of whether the Lead Investor or its Affiliates, successors and assigns holds any Securities at any time of determination.
“Liens”
shall have the meaning assigned to such term in the Notes.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).
“Material
Permit” shall have the meaning assigned to such term in Section 3.1(l).
“Maturity
Date” shall have the meaning assigned to such term in the Notes.
“May
Securities” means the Senior Secured Convertible Notes due May 13, 2027, in the original principal amount of $5,000,000, issued
by the Company to the Buyers pursuant to that certain Securities Purchase Agreement, dated as of May 13, 2026, by and between the Company
and the Buyers (the “May SPA”).
“Measurement
Period” means, with respect to Release B or Release C, the thirty (30) consecutive Trading Day period immediately preceding
the applicable Release Eligibility Date or, if requested by the Company and agreed in writing by the Buyers, such shorter period as so
requested by the Company (and agreed to in writing by the Buyers).
“Maximum
Rate” shall have the meaning assigned to such term in Section 5.15.
“Money
Laundering Laws” shall have the meaning assigned to such term in Section 3.1(x).
“Notes”
means the Senior Secured Convertible Notes due August 16, 2027, issued and sold by the Company to the Buyers pursuant to this Agreement
at the Closing, in the form of Exhibit A attached hereto.
“Notice
Deadline” shall have the meaning assigned to such term in Section 4.9(b)(ii).
“OFAC”
shall have the meaning assigned to such term in Section 3.1(x).
“Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
“Participation
Maximum” shall have the meaning assigned to such term in Section 4.9(a).
“Permits”
means all permits, licenses, registrations, certificates, orders, approvals, authorizations, consents, waivers, franchises, variances
and similar rights issued by or obtained from any Governmental Authority.
“Permitted
Liens” shall have the meaning assigned to such term in the Notes.
“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.
5
“Placement”
shall have the meaning assigned to such term in Section 4.9(a).
“Placement
Notice” shall have the meaning assigned to such term in Section 4.9(b)(i).
“Principal
Amount” means, as to each Buyer, the amounts set forth below such Buyer’s signature block on the signature pages hereto
next to the heading “Principal Amount of Notes,” which shall equal $5,000,000.
“Principal
Market” shall have the meaning assigned to such term in the Notes.
“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.
“Registration
Rights Agreement” means the Registration Rights Agreement, dated on or about the date hereof, among the Company and the Buyers,
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 by the Buyers of the Underlying Shares.
“Release
Conditions” means, with respect to Release B and Release C, that each of the following conditions shall have been satisfied
during the applicable Measurement Period and on the applicable Release Eligibility Date: (i) the Equity Conditions are satisfied; (ii)
the Registration Statement remains effective and Notes may be converted pursuant to such Registration Statement; (iii) the Company is
in compliance with all exchange listing and maintenance requirements and expects to be in compliance for the foreseeable future; (iv)
the Buyers shall be reasonably satisfied, based on publicly available information regarding the Company’s operating and financial
condition (and taking into the funds to be so released from the Deposit Account and its anticipated operating expenses), that the Company
has sufficient cash runway for the immediately succeeding three (3) month period; (v) no Event of Default and no event or circumstance
that, with the passage of time or the giving of notice, would constitute an Event of Default shall have occurred and be continuing. The
Buyers may waive the Release Conditions at their sole discretion; and (vi) with respect to Release Condition B, the execution and delivery
of the Voting Agreements.
“Release”
means each of Release A, Release B and Release C.
“Release
A” shall have the meaning assigned to such term in Section 2.4.
“Release
B” shall have the meaning assigned to such term in Section 2.4.
“Release
C” shall have the meaning assigned to such term in Section 2.4.
“Release
Eligibility Date” means, as applicable, the Release B Eligibility Date or the Release C Eligibility Date.
“Required
Approvals” shall have the meaning assigned to such term in Section 3.1(e).
“Required
Minimum” has the meaning assigned to such term in Section 4.12.
“Required
Holders” means (i) prior to the Closing Date, each Buyer entitled or required to purchase Notes at the Closing and (ii) after
the Closing Date, Lead Investor.
6
“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 effect as such
rule.
“SEC
Reports” as defined in Section 3.1(h).
“Securities”
means the Notes, the Warrants, the Conversion Shares and the Warrant Shares.
“Securities
Act” shall have the meaning assigned to such term in the recital paragraph to this Agreement.
“Security
Documents” means the security agreement, substantially in the form attached hereto as Exhibit C, and any other documents and
filings required thereunder in order to grant the Buyers a first priority security interest in substantially all of the assets and property
of the Company.
“Selling
Stockholders” shall have the meaning assigned to such term in the Registration Rights Agreement.
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be
deemed to include locating and/or borrowing shares of Common Stock).
“Standstill
Period” shall have the meaning set forth in Section 4.15.
“Underlying
Shares” means, collectively, the Conversion Shares and the Warrant Shares.
“Subscription
Amount” means, as to each Buyer, the aggregate amount to be paid for the Notes purchased hereunder as specified below such
Buyer’s name on the signature page of this Agreement and next to the heading “Subscription Amount for the Notes,”
in U.S. Dollars and in immediately available funds. The aggregate “Subscription Amount” for the Notes shall be $4,300,000.
“Subsidiary”
or “Subsidiaries” means, as to any Person, a corporation, partnership, limited liability company or other entity of
which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a “Subsidiary”
or to “Subsidiaries” in the Transaction Documents shall refer to a direct or indirect Subsidiary or Subsidiaries of the Company.
“Trading
Day” shall have the meaning assigned to such term in the Notes.
“Transaction
Documents” means this Agreement, the Notes, the Warrants, the Registration Rights Agreement, the Security Documents, the DACA,
the Voting Agreements and all exhibits and schedules thereto and hereto and any other documents or agreements executed by the Company
or any Subsidiary in connection with the transactions contemplated hereunder.
“U.S.
Dollars” shall have the meaning assigned to such term in Section 5.14.
“U.S.
GAAP” shall have the meaning assigned to such term in Section 3.1(h).
7
“Voting
Agreements” means those certain voting agreements, to be executed and delivered by management, affiliates and insiders of the
Company prior to the date of Release B, pursuant to which such persons agree to vote their shares of Common Stock in favor of the Exchange
Cap Stockholder Approval.
“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
“Warrants”
means the Common Stock purchase warrants issued to the Buyers at the Closing, in the form of Exhibit D attached hereto.
“Variable
Rate Transaction” shall have the meaning assigned to such term in Section 4.10.
Article
II.
PURCHASE AND SALE
2.1 Closings.
(a) Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and each Buyer, severally
and not jointly, agrees to purchase from the Company the Notes and the Warrants as set forth on such Buyer’s signature page hereto.
Each Buyer shall deliver to the Company, via wire transfer, immediately available funds equal to such Buyer’s Subscription Amount
for the Closing as set forth on the signature page hereto executed by such Buyer, which Subscription Amount shall be deposited into the
Deposit Account (or, if applicable, an account of the Collateral Agent), and the Company shall deliver to each Buyer its respective Note
and Warrant, and the Company and each Buyer shall deliver the other items set forth in Section 2.2(a) deliverable at the Closing.
Upon satisfaction of the covenants and conditions set forth in Sections 2.2(a) and 2.3, the Closing shall take place remotely
by electronic transfer of the Closing documentation.
2.2 Deliveries.
(a) Closing.
On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Buyer the following:
1. this
Agreement duly executed by the Company;
2. a
copy of a resolution of the Board of Directors of the Company: (x) approving the terms of, and the transactions contemplated by, the
Transaction Documents to which it is a party and authorizing a specified person or persons to execute those Transaction Documents on
its behalf; and (y) authorizing a specified person or persons, on its behalf, to sign and/or dispatch all documents and notices to be
signed and/or dispatched by it under or in connection with those Transaction Documents;
3. an
ink-original Note registered in the name of such Buyer in accordance with its Principal Amount for the Closing;
4. the
Registration Rights Agreement duly executed by the Company;
5. the
Security Document duly executed by the Company;
8
6. the
Warrants duly executed by the Company;
7. the
DACA duly executed by the Company and the depository bank or, if the DACA is not available on the Closing Date, the Subscription Amount
will be held in an account of the Collateral Agent as cash collateral; and
8. the
Company’s wire instructions.
(b) On
or prior to the Closing Date, each Buyer shall deliver or cause to be delivered to the Company the following:
1. this
Agreement duly executed by such Buyer;
2. the
Security Documents duly executed by such Buyer and the Collateral Agent;
3. the
Registration Rights Agreement duly executed by such Buyer; and
4. such
Buyer’s Subscription Amount for the Closing by wire transfer to the Deposit Account (or, if applicable, an account of the Collateral
Agent).
2.3
Closing Conditions.
(a) The
obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(i) the
representations and warranties made by the Company in this Agreement (i) that are qualified by materiality or Material Adverse Effect
shall be true and correct, and (ii) that are not qualified by materiality, shall be true and correct in all material respects, in each
case, on and as of such date as if made on and as of such date, except to the extent any such representation and warranty expressly relates
to an earlier date, in which case such representation and warranty shall have been true and correct in all material respects (or all
respects, as applicable) as of such earlier date;
(ii) all
obligations, covenants and agreements of each Buyer required to be performed at or prior to the Closing Date shall have been performed;
and
(iii) the
delivery by each Buyer of the items set forth in Section 2.2(b).
(b) The
respective obligations of the Buyers hereunder in connection with the Closing are subject to the following conditions being met or waived,
provided, however that such conditions may be waived, modified or amended by the Buyers who have purchased at least a majority-in-interest
of the Notes based on the Subscription Amounts hereunder:
(i) the
accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein,
except to the extent expressly made as of a specific date, in which case they shall be accurate in all material respects, as of such
date;
9
(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) or Section 2.2(b), as applicable;
(iv) there
shall have been no Material Adverse Effect with respect to the Company since the date of this Agreement;
(v) there
shall be no Event of Default or any event or circumstance that would with the passage of time or giving of notice become an Event of
Default that shall have occurred and be continuing; and
(vi) from
the date of this Agreement to the Closing Date, trading in the Common Stock shall not have been suspended or halted by the Principal
Market or the Commission (nor shall suspension or halt be threatened by the Principal Market or the Commission, including but not limited
to, receipt by the Company of any notice of non-compliance with maintenance requirements by the Principal 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 nor shall a banking moratorium have been
declared either by 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 Buyer, makes it impracticable or inadvisable to purchase the Notes at the Closing.
(vii) all
remaining cash deposits of the Company shall have been repatriated to the United States and held in the Company’s accounts at Bank
of America, N.A.;
(viii) the
DACA shall have been duly executed and delivered by all parties thereto; and
2.4 DACA
Release of Subscription Proceeds. Notwithstanding anything contained herein to the contrary, the Subscription Amount shall be deposited
into the Deposit Account (or, if applicable, the account of the Collateral Agent) on the Closing Date and disbursed to the Company
pursuant to the following release schedule:
(a)
$1,300,000 (“Release A”) shall be released to the Company upon the Closing Date,
with the remaining $3,000,000 to be held in the Deposit Account subject to the DACA (or, if applicable, the account of the Collateral
Agent);
(b)
$2,000,000 (“Release B”) shall be released from the Deposit Account (or, if applicable,
the account of the Collateral Agent) following the date on which the sum of the Outstanding Value of all Notes, inclusive of the May
Securities, falls below $6,500,000 (the “Release B Eligibility Date”), subject to satisfaction of the Release Conditions;
(c)
$1,000,000 (“Release C”) shall be released from the Deposit Account (or, if applicable,
the account of the Collateral Agent) following the date on which the sum of the Outstanding Value of all Notes, inclusive of the May
Securities, falls below $5,000,000 (the “Release C Eligibility Date”), subject to satisfaction of the Release Conditions.
2.5 The
Buyers shall have the right to purchase up to an additional $5,000,000 in Notes in one or more subsequent closings on the terms set forth
herein.
10
Article
III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Company. The Company hereby makes the following representations and warranties as of the date hereof and as
of the Closing Date:
(a) Subsidiaries.
All of the direct and indirect Subsidiaries of the Company as of the date hereof are set forth on Schedule 3.1(a). The Company
owns, directly or indirectly, all of the share capital or other equity interests of each Subsidiary free and clear of any Liens, and
all of the issued and outstanding share capital of each Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase securities.
(b) Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority
to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary
is in violation nor default of any of the provisions of its respective constitution, memorandum and articles of association, certificate
or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s
ability to perform or pay in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii),
or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting
or curtailing or seeking to revoke, limit or curtail such power and authority or qualification. The Company and any of its Subsidiaries
(x) have not used any names (including fictitious names, d/b/as, trade names or similar names) within the past five years and (y) have
not undergone any mergers or similar transactions, in each case other than those listed in Schedule 3.1(b). Schedule 3.1(b) lists
the legal name, jurisdiction of formation and chief executive office (and any other office where books and records are maintained) of
the Company and each direct and indirect subsidiary of the Company.
(c) Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further
authorization, approval or action is required by the Company, the Board of Directors or the Company’s shareholders in connection
herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which
it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms
hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with
its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium,
administration, judicial management 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.
11
(d) No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which
it is a party, the issuance and sale of the Notes and the consummation by it of the transactions contemplated hereby and thereby, including
the issuance of the Conversion Shares, do not and will not: (i) conflict with or violate any provision of the Company’s certificate
of incorporation or bylaws, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would
become a default) under, result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of the
Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary
is bound or affected, or (iii) subject to the receipt of the Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of the Principal Market, or any court or Governmental Authority
to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property
or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as would not
have or reasonably be expected to result in a Material Adverse Effect.
(e) Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to,
or make any filing or registration with, any court or other foreign, federal, state, local or other Governmental Authority in connection
with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filing, recordation or
registration of the Security Documents with respect to the Company and its Subsidiaries with the appropriate recording, filing or registration
office and any other filings to be made under the Security Documents, (ii) the filing with the Commission of the Registration Statement
pursuant to the Registration Rights Agreement, (iii) the notice and/or application(s) to each applicable Principal Market for the listing
of the Conversion Shares for trading thereon in the time and manner required thereby, and (iv) the filings contemplated by Section
4.5 and Section 4.17 (collectively, the “Required Approvals”).
(f) Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable and free and clear of all Liens imposed by the Company other
than restrictions on transfer provided for in the Transaction Documents. The Underlying Shares, when issued in accordance with the terms
of the Notes or Warrants, as applicable, will be validly issued, fully paid and nonassessable and 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 the maximum number of Underlying Shares issuable pursuant to the terms of the Notes and Warrants.
(g) Capitalization.
As of the date hereof, the Company is authorized to issue up to 200,000,000 shares of Common Stock and up to 1,000,000 shares of preferred
stock. The capitalization of the Company as of the date of this Agreement is set forth on Schedule 3.1(g). No Person has any right of
first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the
Transaction Documents. Except as disclosed in the SEC Reports, there are no outstanding options, warrants, scrip rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock or the share capital of any
subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, Options or Convertible Securities or share capital of any Subsidiary. The issuance and sale
of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Buyers)
and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under
any of such securities. There are no outstanding securities or instruments of the Company or any Subsidiary with any provision that adjusts
the exercise, conversion, exchange or reset price of such security or instrument upon an issuance of securities by the Company or any
Subsidiary. There are no outstanding securities or instruments of the Company or any Subsidiary that contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may
become bound to redeem a security of the Company or any such Subsidiary. The Company does not have any share appreciation rights or “phantom
share” plans or agreements or any similar plan or agreement. All of the outstanding shares of Common Stock of the Company are duly
authorized, validly issued, fully paid and non-assessable, have been issued in compliance with all applicable foreign, federal and state
securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities. No further approval or authorization of any shareholder, the Board of Directors or others is required for
the issuance and sale of the Notes. Except as disclosed in the SEC Reports , there are no shareholders agreements, or other similar agreements
with respect to the Company’s share capital to which the Company is a party or, to the knowledge of the Company, between or among
any of the Company’s shareholders.
12
(h) Financial
Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company
under the Securities Act and the Exchange Act, including pursuant 13(a) or 15(d) thereof, for the two years preceding the date hereof
(or such shorter periods as the Company was required by law or regulation to file such material) (the foregoing materials filed prior
to the date hereof, 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 qualified for a valid extension of such filing. Such SEC Reports compiled
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 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, (the “Financial Statements”) comply in all material respects
with applicable accounting requirements and the rules and regulations of the Commission with respect thereto at the time of the filing.
The Financial Statements were prepared in accordance with U.S. generally accepted accounting principles (“U.S GAAP”)
applied on a consistent basis during the periods involved, except as may be otherwise specified in such Financial Statements or the notes
thereto and except that unaudited financial statements do not contain all footnotes required by U.S. GAAP, and fairly present in all
material respects the financial position of the Company and its Subsidiaries as of and for the dates thereof and the results of operations
and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(i) Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the most recent balance sheet included in the Financial
Statements, except as disclosed in the SEC Reports: (i) there has been no event, occurrence or development that has had or that would
reasonably be expected to result in a Material Adverse Effect, (ii) neither the Company nor any Subsidiary has incurred any liabilities
(contingent or otherwise), (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 shareholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its share capital, and (v) the Company has not issued any equity securities. No event, liability, fact, circumstance, occurrence
or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or
their respective businesses, properties, operations, assets or financial condition, that would reasonably be expected to have a Material
Adverse Effect and that has not been disclosed to the Buyers in the Transaction Documents or the disclosure schedules delivered in connection
herewith.
(j) Litigation.
Except as disclosed in the SEC Reports, there is no action, suit, inquiry, notice of violation, Proceeding or investigation of any nature
pending or, to the knowledge of the Company, threatened against the Company, any Subsidiary or any of their respective properties before
or by any court, arbitrator, governmental or administrative agency, regulatory authority or self-regulatory organization (federal, state,
county, local or foreign) (collectively, an “Action”) which, if there were an unfavorable decision, would individually
or in the aggregate, reasonably be expected to result in a Material Adverse Effect. None of the Actions adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents. Except as disclosed in the SEC Reports, none of the Company,
any Subsidiary, or any current director or officer thereof in their capacity thereof, is or has been for the last three (3) years 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 a Governmental
Authority involving the Company or any current director or officer of the Company. The Commission has not issued any stop order or other
order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the
Securities Act.
(k) Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or
any Subsidiary notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or
any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default
or violation has been waived), (ii) is in violation of any applicable judgment, decree or order of any court, arbitrator, Principal Market,
governmental or administrative agency, regulatory authority, self-regulatory organization (federal, state, county, local or foreign)
or other Governmental Authority, or (iii) is in violation of any applicable statute, rule, ordinance or regulation of any Governmental
Authority, including without limitation all applicable foreign, federal, state and local laws relating to taxes, bribery and corruption,
occupational health and safety, product quality and safety, employment and labor matters, employee benefits and laws related to the protection
of the environment, except, in each case of clauses (i), (ii) and (iii), as would not reasonably be expected, individually or in the
aggregate, to, have a Material Adverse Effect.
13
(l) Regulatory
Permits. The Company and the Subsidiaries possess all Permits necessary to conduct their respective businesses, except where the
failure to possess such Permits would not reasonably be expected to result in a Material Adverse Effect (a “Material Permit”)
and neither the Company nor any Subsidiary has received any notice of Proceedings relating to the revocation or modification of any such
Material Permit.
(m) 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) Permitted Liens, (ii) Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries, and (iii)
Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with U.S
GAAP and, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries
are in compliance, except as would not have or reasonably be expected to result in a Material Adverse Effect. The Company and/or its
direct and indirect subsidiaries own, lease or occupy real property located at the addresses listed in Schedule 3.1(m) and maintain equipment,
inventory or other property at such addresses.
(n) Intellectual
Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights
necessary or useful for the operation of their respective businesses and which the failure to so have would reasonably be expected to
have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Except as disclosed in the SEC
Reports, neither the Company nor any Subsidiary has received a written notice that any of the Intellectual Property Rights has expired,
terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two years from the date of this Agreement.
Neither the Company nor any Subsidiary has received, since the date of the most recent balance sheet included in the Financial Statements,
a written notice of a claim 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, there is no existing infringement
by another Person of any of Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to
protect the secrecy, confidentiality and value of all of their Intellectual Property Rights, except where failure to do so would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(o) Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not
limited to, directors and officers insurance coverage in an amount customary for a publicly-traded company of similar market float. There
are no pending claims against such directors and officers insurance coverage. Neither the Company nor any Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business without a material increase in cost.
(p) 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 Buyers shall have no obligation with respect to any claims made by or on behalf of other Persons for
fees payable by the Company or any Subsidiary of a type contemplated in this Section that may be due in connection with the transactions
contemplated by the Transaction Documents.
14
(q) No
Registration. Assuming the accuracy of the Buyers’ representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Notes by Company to the Buyers as contemplated hereby. To the Company’s
knowledge, the issuance and sale of the Notes hereunder does not contravene the rules and regulations of the Principal Market.
(r) No
Directed Selling Efforts. Neither the Company nor any Person acting on its behalf has conducted any general solicitation, general
advertising or directed selling efforts (within the meaning of the Securities Act) in connection with the offer or sale of any of the
Securities.
(s) Disclosure.
All of the disclosure furnished by or on behalf of the Company to the Buyers regarding the Company and its Subsidiaries, their respective
businesses and the transactions contemplated hereby, is true and correct in all material respects 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 no Buyer makes or has made any representations or
warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2. Any press
releases disseminated by the Company since January 1, 2025 that have been incorporated by reference into the SEC Reports, taken as a
whole with the SEC Reports, do not contain any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made,
not materially misleading.
(t) Solvency;
Seniority. Based on the consolidated financial condition of the Company and its Subsidiaries as of the Closing Date, after giving
effect to the receipt by the Company of the proceeds from the sale of the Notes: (i) the fair saleable value of the Company’s and
its Subsidiaries’ tangible assets exceeds the amount that will be required to be paid on or in respect of the Company’s and
its Subsidiaries’ existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s
and its Subsidiaries’ 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 and its Subsidiaries’, 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 administration, judicial management, reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(t) discloses
all outstanding secured and unsecured Indebtedness of the Company and its Subsidiaries, or for which the Company or any Subsidiary has
commitments. As of the Closing Date, no Indebtedness or other claim against the Company is senior to the Notes in right of payment, whether
with respect to interest or upon liquidation or dissolution, or otherwise.
15
(u) Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all
foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (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 of the Company and
its Subsidiaries in any material amount claimed in writing to be due by the taxing authority of any jurisdiction. The Company is not
and has never been a United States real property holding corporation within the meaning of Section 897 of the Code and the Company shall
so certify upon Buyer’s reasonable request at any time.
(v) Acknowledgment
Regarding Buyers’ Purchase of Securities. The Company acknowledges and agrees that each of the Buyers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The
Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Buyer or any of their
respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely
incidental to the Buyers’ purchase of the Securities. The Company further represents to each Buyer that the Company’s decision
to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions
contemplated hereby by the Company and its representatives.
(w) Acknowledgment
Regarding Buyer’s Trading Activity. It is understood and acknowledged by the Company that (i) none of the Buyers have been
asked by the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the Company or any of its Subsidiaries, to desist
from effecting any transactions in or with respect to any securities of the Company, or “derivative” securities based on
securities issued by the Company or to hold any of the Securities for any specified term; (ii) each Buyer shall not be deemed to have
any affiliation with or control over any arm’s length counterparty in any “derivative” transaction; and (iii) each
Buyer may rely on the Company’s obligation to timely deliver shares of Common Stock upon conversion, exercise or exchange, as applicable,
of the Notes as and when required pursuant to the Transaction Documents for purposes of effecting trading in the shares of Common Stock
of the Company.
(x) Office
of Foreign Assets Control; Money Laundering. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director,
officer, agent, employee or Affiliate of the Company or any Subsidiary, is currently subject to any United States sanctions administered
by the Office of Foreign Assets Control of the United States Treasury Department (“OFAC”) or the equivalent law of
any foreign jurisdiction. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1977, as amended,
applicable money laundering statutes and applicable rules and regulations thereunder or the equivalent law of any foreign jurisdiction
(collectively, the “Money Laundering Laws”), and no action, suit or Proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending
or, to the knowledge of the Company or any Subsidiary, threatened.
16
(y) Sarbanes-Oxley;
Internal Accounting Controls. Except as set forth in the SEC Reports, the Company is in compliance in all material respects with
any applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules
and regulations promulgated by the Commission thereunder that are effective as of the date hereof. Except as set forth in the SEC Reports,
the Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are
executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with U.S. GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure
controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.
The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company as
of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation
Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since
the Evaluation Date, except as set forth in the SEC Reports, there have been no changes in the internal control over financial reporting
(as such term is defined in the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the internal
control over financial reporting of the Company.
(z) Listing
and Maintenance Requirements. The shares of Common Stock are registered pursuant to Section 12(b) of the Exchange Act, and the Company
has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the shares
of Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. Except as disclosed in the SEC Reports, the Company has not, in the twelve (12) months preceding the date hereof,
received notice from the Principal Market to the effect that the Company is not in compliance with the listing or maintenance requirements
of the Principal Market. The Company is, and, to the Company’s knowledge, has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance requirements. The shares of Common Stock are currently eligible
for electronic transfer through the Depository Trust Company and the Company is current in payment of the fees to the Depository Trust
Company in connection with such electronic transfer.
(aa) Cybersecurity.
Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect (i) 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”);
(ii) the Company and the Subsidiaries have not been notified of, and has no knowledge of any event or condition that would reasonably
be expected to result in, any security breach or other compromise to its IT Systems and Data; or (iii) 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. The Company
and the Subsidiaries have implemented and maintained commercially reasonable safeguards to maintain and protect its material confidential
information and the integrity, continuous operation, redundancy and security of all IT Systems and Data and the Company and the Subsidiaries
have implemented commercially reasonable backup and disaster recovery technology consistent with industry standards and practices.
17
(bb) Investment
Company. The Company is not and immediately after receipt of payment for the Notes, will not be an “investment company”
within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will
not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.
(cc) No-Off
Balance Sheet Arrangements. There are no off-balance sheet transactions, arrangements, obligations (including contingent obligations)
or liabilities of the Company or any Subsidiary.
(dd) No
Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company
is current with respect to any material fees owed to its accountants and lawyers which could adversely affect the Company’s ability
to perform any of its obligations under any of the Transaction Documents.
(ee) No
Disqualification Events. With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under the Securities
Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company
participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities,
calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with
the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad
Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”),
except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether
any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure
obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.
(ff) Notice
of Disqualification Events. The Company will notify the Buyers in writing, prior to the Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, reasonably be expected to become
a Disqualification Event relating to any Issuer Covered Person, in each case of which it is aware;
(gg) No
Manipulation of Price. Neither the Company, its Subsidiaries, nor to the Company’s knowledge, any of its or its Subsidiaries’
employees or directors has taken or will take directly or indirectly, any action designed to or that has constituted or that might reasonably
be expected to cause or result in, under the Exchange Act, or otherwise, stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of any security of the Company.
(hh) Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of the State
of Delaware that is or would become applicable to the Buyers as a result of the Buyers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including as a result of the Company’s issuance of the Securities and
the Buyers’ ownership of the Securities.
18
3.2 Representations
and Warranties of the Buyers. Each Buyer, for itself and for no other Buyer, hereby represents and warrants as of the date hereof
and as of the Closing Date to the Company as follows (except to the extent expressly made as of a specific date therein, in which case
they shall be accurate as of such date):
(a) Organization;
Authority. Such Buyer is an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction
of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to
enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of the Transaction Documents and performance by such Buyer of the transactions contemplated
by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar
action, as applicable, on the part of such Buyer. Each Transaction Document to which it is a party has been duly executed by such Buyer,
and when delivered by such Buyer in accordance with the terms hereof, will constitute the valid and legally binding obligation of such
Buyer, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium, administration, judicial management 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) Buyer
Status. At the time such Buyer was offered the Securities, it was, and as of the date hereof it is, and on each date on which it
converts any Notes, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7),
(a)(8), (a)(9), (a)(12), or (a)(13) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule
144A(a) under the Securities Act. Such Buyer is acquiring the Securities, for its own account for investment purposes only and not with
a view toward, or for sale in connection with, any distribution thereof, or with any present intention of distributing or selling the
same; provided, this representation and warranty shall not be deemed to limit such Buyer’s right to sell the Securities in compliance
with applicable federal and state securities laws.
(c) Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Buyer has not, nor has any
Person acting on behalf of or pursuant to any understanding with such Buyer, directly or indirectly executed any purchases or sales,
including Short Sales, of the securities of the Company during the period commencing as the time of the execution of the written term
sheet on August 4, 2026, between such Buyer and the Company and ending immediately prior to the execution hereof. Other than to other
Persons party to this Agreement or to such Buyer’s representatives, including, without limitation, its officers, directors, partners,
legal and other advisors, employees, agents and Affiliates, such Buyer has maintained confidentiality of all disclosures made to it in
connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for the avoidance
of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or
borrowing shares in order to effect Short Sales or similar transactions in the future.
The
Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Buyer’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 transaction contemplated hereby. The Buyers acknowledge and agree that neither the Company nor any Subsidiary
makes or has made any representations or warranties with respect to the transactions contemplated hereby other than such representations
and warranties.
19
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 the Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Buyer 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, the
Notes, the Warrants and the Registration Rights Agreement, as applicable, and shall have the rights and obligations of a Buyer under
this Agreement, the Notes, the Warrants and the Registration Rights Agreement, as applicable.
(b) The
Buyers agree 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 OR EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE
UPON CONVERSION OR EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER
OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES
ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The
Company acknowledges and agrees that a Buyer 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 Buyer 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.
At the appropriate Buyer’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 Underlying Shares
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 under the Registration Rights Agreement.
20
(c) Delivery
of the Conversion Shares and the Warrant Shares shall be as set forth in the Notes and the Warrants, respectively. If all or any portion
of a Note is converted, or all or any portion of a Warrant is exercised, when there is an effective registration statement (including
a Registration Statement) to cover the resale of the applicable Conversion Shares or Warrant Shares, or if such Conversion Shares or
Warrant Shares may be sold under Rule 144 without volume or manner-of-sale restrictions, or if such legend is not otherwise required
under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the
Commission), then such Conversion Shares or Warrant Shares shall be issued free of all legends. The Company shall cause counsel to the
Company to deliver any standing legal opinion required by the transfer agent for the issuance of the Conversion Shares and Warrant Shares
free of all legends in accordance with this Section 4.1(c).
(d) Each
Buyer, severally and not jointly with the other Buyers, agrees with the Company that the Buyer will transfer the Securities only in compliance
with applicable federal and state securities laws, as the case may be, and: (1) with respect to the Underlying Shares, pursuant to an
effective resale Registration Statement covering the Buyer’s resale of the Underlying Shares, which includes a prospectus that
is current, and in the manner contemplated by such Registration Statement, including the “Plan of Distribution” contained
therein, provided that the Buyer has not received oral or written notice from the Company that use of the prospectus is suspended
or that the prospectus otherwise may not be used for transfers of the Underlying Shares; (2) after the six month anniversary of the date
of acquisition of the applicable Notes or Warrants, as the case may be, in accordance with Rule 144, including the requirement of Rule
144(b)(1); or (3) pursuant to another exemption from the registration requirements of the Securities Act, provided, solely with
respect to this clause (3), that the Buyer provides the Company with advance notice of such transfer and an opinion of counsel that the
proposed transfer is exempt from the registration requirements of the Securities Act.
4.2 Furnishing
of Information. Until the time that no Buyer owns Conversion Shares the Company covenants to maintain the registration of the shares
of Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act
and otherwise cause all public information requirements of Rule 144(c) to be satisfied.
4.3 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 Securities 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 Buyer and regardless of the dilutive effect that such issuance may have
on the ownership of the other shareholders of the Company.
4.4 Redemption,
Conversion and Exercise Procedures. The form of Conversion Notice included in the Notes and the form of Exercise Notice included
in the Warrants set forth the totality of the procedures required of the Buyers in order to convert the Notes or exercise the Warrants,
as applicable. No additional legal opinion, other information or instructions shall be required of the Buyers to convert their Notes
or exercise the Warrants, except as expressly set forth in the Notes or Warrants, as applicable. The Company shall honor conversions
of the Notes and exercises of the Warrants and shall deliver the Conversion Shares or Warrant Shares, as applicable, in accordance with
the terms, conditions and time periods set forth in the Transaction Documents.
21
4.5 Disclosure.
The Company shall file a Current Report on Form 8-K, including copies of the Transaction Documents (or the forms thereof) as exhibits
thereto, with the Commission within the time required by the Exchange Act. Upon the filing of such Form 8-K, the Company represents to
the Buyers that it shall have publicly disclosed all “material, non-public information” delivered to any of the Buyers by
the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. The Company and the Buyers shall consult with each other in issuing any other public announcements
or press releases with respect to the transactions contemplated hereby, and neither the Company nor the Buyers shall issue any such public
announcement or press release nor otherwise make any such public statement or communication without the prior consent of the Company,
with respect to any disclosure of the Buyers, or without the prior consent of the Required Holders, with respect to any disclosure of
the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, then the disclosing
party shall, to the extent lawful and practicable (having regard to time and in the case of the Company, the Company’s continuous
disclosure obligations), promptly provide the other party with prior notice of such public announcement, press release, public statement
or communication.
4.6 Disclosure
of Material Information; No Obligation of Confidentiality.
(a) From
the Closing Date, the Company covenants and agrees that neither it, nor any other Person acting on its behalf including any officer,
director, employee or agent of the Company or its Subsidiaries will provide any Buyer or its agents or counsel with any information that
the Company believes constitutes “material non-public information” unless prior thereto such Buyer shall have entered into
a written agreement with the Company regarding the confidentiality and use of such information. The Company understands and confirms
that each Buyer shall be relying on the foregoing covenant in effecting transactions in securities of the Company. In the event of a
breach of the foregoing covenant by the Company, or any of its Subsidiaries, or any of its or their respective officers, directors, employees
and agents, in addition to any other remedy provided herein or in the Transaction Documents, the Company shall, unless otherwise agreed
by the Required Holders, publicly disclose any “material non-public information” in a Form 8-K, as applicable, filed with
the Commission within two (2) Business Day following the date that it discloses such information to any Buyer or such earlier time as
may be required by applicable law. The Company shall provide any Form 8-K, as applicable, to be filed with the Commission pursuant to
this Section 4.6(a) to the Buyer that received any “material non-public information” at least one (1) Business Day
prior to the filing thereof. From and after the filing of any such Form 8-K, as applicable, pursuant to this Section 4.6(a), no
Buyer shall be deemed to be in possession of any “material non-public information” regarding the Company existing as of the
time of such filing. If the Company fails to file any Form 8-K, as applicable, within the time required in this Section 4.6(a),
each affected Buyer may, in its sole discretion, make a public disclosure of such information that it believes in its discretion upon
the advice of counsel constitutes “material non-public information” of the Company. Such affected Buyer shall provide a copy
of such public disclosure pursuant to this Section 4.6(a) at least one (1) Business Day prior to the public disclosure thereof.
(b) Except
pursuant to any confidentiality agreement entered into by a Buyer as described in Section 4.6(a), no Buyer shall be deemed to
have any obligation of confidentiality with respect to (i) any non-public information of the Company disclosed to such Buyer in breach
of Section 4.6(a) (whether or not the Company files a Form 8-K, as applicable, as provided above), (ii) the fact that any Buyer
has exercised any of its rights and/or remedies under the Transaction Documents, or (iii) any information obtained by any Buyer as a
result of exercising any of its rights and/or remedies under the Transaction Documents. In addition, no Buyer shall be deemed to be in
breach of any duty to the Company and/or to have misappropriated any non-public information of the Company, if such Buyer engages in
transactions of securities of the Company, including, without limitation, any hedging transactions or any “derivative” transactions
while in possession of such non-public information.
22
4.7 Use
of Proceeds. The Company shall use the net proceeds from the sale of the Notes hereunder for general corporate purposes, including,
without limitation, the payment of the Company’s outstanding franchise tax obligations owed to the State of Delaware, and shall
not use such proceeds: (a) for the repayment of any Indebtedness (other than any repayment by the Company of the Notes), or (b) in violation
of the Foreign Corrupt Practices Act of 1970, as amended or the equivalent law of any foreign jurisdiction, as applicable, or OFAC regulations
or the equivalent law of any foreign jurisdiction, as applicable.
4.8 Indemnification.
Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Buyer 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 Buyer (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 “Buyer Party”) harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs, awards, orders, penalties and expenses, including all judgments, amounts paid in settlements, court costs,
interest and reasonable attorneys’ fees and costs of investigation that any such Buyer Party may suffer or incur as a result of
or relating to (i) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement
or in the other Transaction Documents, (ii) any action instituted against the Buyer Parties in any capacity, or any of them or their
respective Affiliates by the Company, any Subsidiary, any shareholder or creditor of the Company or other third party who is not an Affiliate
of such Buyer Party, arising out of or relating to any of the transactions contemplated by the Transaction Documents. For the avoidance
of doubt, the indemnification provided herein is intended to and shall cover direct claims brought by the Company against the Buyer Parties.
If any action shall be brought against any Buyer Party in respect of which indemnity may be sought pursuant to this Agreement, such Buyer
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 Buyer Party. Any Buyer 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 Buyer 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 Buyer Party,
in which case the Company shall reimburse the reasonable fees and expenses of no more than one such separate counsel. The Company will
not be liable to any Buyer Party under this Agreement (y) for any settlement by a Buyer 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 finally judicially determined to be attributable to any Buyer Party’s breach of any of the representations,
warranties, covenants or agreements made by such Buyer Party in this Agreement or in the other Transaction Documents. The indemnification
required by this Section 4.8 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 Buyer Party against the Company or others and any liabilities the Company may be subject to pursuant
to law.
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4.9 Participation
in Future Financing.
(a) From
the date hereof through August 16, 2028, upon any issuance by the Company or any of its Subsidiaries of any shares of Common Stock, Convertible
Securities, Options, preferred shares, Indebtedness or entry into any Variable Rate Transaction, in each case, for cash consideration,
Indebtedness or a combination of units thereof (collectively, a “Placement”), Lead Investor shall have the right to
purchase up to 30% of such Placement (the “Participation Maximum”), on the same terms, conditions and price provided
for in Placement.
(b) In
the case of a Placement:
(i) At
least five (5) Business Days prior to the closing of a Placement, the Company shall deliver to Lead Investor a written notice asking
Lead Investor if it consents to the receipt of material non-public information pursuant to this Section 4.9 (“Pre-Notice”).
If Lead Investor consents to the receipt of material non-public information, it shall so notify the Company within two (2) Trading Days
after receipt of the Pre-Notice. If Lead Investor so consents, the Company shall promptly, but no later than one (1) Trading Day after
such consent, deliver the details of such proposed Placement (the “Placement Notice”) to Lead Investor. The Placement
Notice shall describe in reasonable detail the proposed terms of such Placement, the amount of proceeds intended to be raised thereunder
and the Person or Persons through or with whom such Placement is proposed to be effected and shall include a term sheet or similar document
relating thereto as an attachment.
(ii) If
desiring to participate in such Placement, Lead Investor shall provide written notice (the “Participation Notice”)
to the Company by not later than 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after delivery of the Placement
Notice (the “Notice Deadline”), with such Participation Notice setting forth: (i) that Lead Investor is willing to
participate in the Placement and willing to execute the relevant transaction documents for the Placement on the terms and conditions
set forth in such transaction documents; (ii) the amount of Lead Investor’s participation; and (iii) Lead Investor representing
and warranting that Lead Investor has such funds ready, willing, and available for investment on the terms set forth in the Placement.
If Lead Investor fails to deliver the Participation Notice to the Company by the Notice Deadline, Lead Investor shall forfeit its right
to participate in the Placement.
(iii) If
Lead Investor’s Participation Notice is for less than the Participation Maximum, then the Company may effect the remaining portion
of such Placement, including the difference between the amount to be purchased by Lead Investor and the Participation Maximum, on the
terms and with the Persons set forth in the Placement.
(iv) The
Company and Lead Investor agree that if any Buyer elects to participate in the Placement, the transaction documents related to the Placement
shall not include any term or provision that, directly or indirectly, will, or is intended to, exclude Lead Investor from participating
in a Placement, including, but not limited to, provisions whereby Lead Investor shall be required to agree to any restrictions on trading
as to any of the Securities purchased hereunder 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 Lead Investor; provided,
however, that in the event any such term or provision is included in such transaction documents, and Lead Investor executes such
transaction documents, the execution thereof shall be considered Lead Investor’s prior written consent thereto.
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(v) Notwithstanding
anything to the contrary in this Section 4.9 and unless otherwise agreed to by Lead Investor, the Company will either confirm
in writing to Lead Investor that the transaction with respect to the Placement has been abandoned or will deliver a notice to Buyer of
its intention to issue the securities in the Placement, in either case by the tenth (10th) Business Day following the Notice
Deadline. If by such tenth (10th) Business Day following the Notice Deadline, no public disclosure regarding a transaction
with respect to the Placement has been made, and no notice regarding such transaction has been received by Lead Investor, such transaction
shall be deemed to have been abandoned and Lead Investor shall not be deemed to be in possession of any material, non-public information
with respect to the Company or any of its Subsidiaries.
(vi) Notwithstanding
anything contained herein to the contrary, the Lead Investor may exchange any outstanding Notes for the securities issued in the Placement
at the subscription price for such securities on a dollar-for-dollar basis.
(vii) In
the event that the Company fails to notify Lead Investor of a Placement in accordance with paragraph (b) of this Section 4.9 or otherwise
fails to comply with any of the provisions of this Section 4.9, then the Lead Investor shall have the right, by delivering a written
notice to the Company, during the thirty (30) day calendar period commencing on the date of the first public announcement of the Placement
to, at the Lead Investor’s option, participate in the Placement or subscribe for the securities offered in such Placement in a
separate transaction on substantially equivalent terms as that of the Placement.
(viii) The
provisions of this Section 4.9 shall not apply to: (i) the issuance of any Excluded Securities and/or (ii) any shares of Common Stock
issued and sold pursuant to an ATM Program at prevailing market prices for the shares of Common Stock by a bona fide investment bank.
4.10 Variable
Rate Transactions. From the date hereof and for the later of the Commitment Period (as defined below) or so long as any Notes remain
outstanding, the Company shall be prohibited from, other than with the Lead Investor or one of its Affiliates, effecting or entering
into an agreement to effect any issuance by the Company or any of its Subsidiaries of shares of Common Stock, Options or Convertible
Securities (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction”
means a transaction in which the Company agrees to or enters into an agreement to (i) issue or sell 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
shares of Common Stock or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line
of credit, whereby the Company may issue securities at a future determined price. Notwithstanding the foregoing, the term “Variable
Rate Transaction” shall not include (i) the offer and sale of shares of Common Stock by the Company pursuant to an ATM Program,
and (ii) any Excluded Securities. Lead Investor 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. In addition, the Company and the Lead Investor shall not
be prohibited from executing or entering into a Variable Rate Transaction with each other at any time. Notwithstanding the foregoing,
the Company may enter into an ATM Program. The Company shall not effect sales under an ATM Program within five (5) Trading Days of any
conversion by the Lead Investor. The Company covenants and agrees that it will not enter into any agreement, undertaking or covenant
with a third party that prohibits the Company or its Subsidiaries from entering into, effecting or announcing a Variable Rate Transaction
or similar transaction with the Lead Investor or its Affiliates at any time. “Commitment Period” means the period
from the Closing Date through the date on which all Notes issued hereunder have been repaid or converted in full.
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4.11 Collateral
Agent.
(a) Each
Buyer hereby (i) appoints Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B, as the collateral agent hereunder
and under the other Security Documents (in such capacity, the “Collateral Agent”), and (ii) authorizes the Collateral
Agent (and its officers, directors, employees and agents) to take such action on such Buyer’s behalf in accordance with the terms
hereof and thereof. The Collateral Agent shall not have, by reason hereof or of any of the other Security Documents, a fiduciary relationship
in respect of any Buyer. Neither the Collateral Agent nor any of its officers, directors, employees or agents shall have any liability
to any Buyer for any action taken or omitted to be taken in connection herewith or with any other Security Document except to the extent
caused by its own gross negligence or willful misconduct, and each Buyer agrees to defend, protect, indemnify and hold harmless the Collateral
Agent and all of its officers, directors, employees and agents (collectively, the “Collateral Agent Indemnitees”)
from and against any losses, damages, liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses (including,
without limitation, reasonable attorneys’ fees, costs and expenses) incurred by such Collateral Agent Indemnitee, whether direct,
indirect or consequential, arising from or in connection with the performance by such Collateral Agent Indemnitee of the duties and obligations
of Collateral Agent pursuant hereto or any of the Security Documents. The Collateral Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Holders, and such instructions shall be binding upon all holders of Notes; provided,
however, that the Collateral Agent shall not be required to take any action which, in the reasonable opinion of the Collateral
Agent, exposes the Collateral Agent to liability or which is contrary to this Agreement or any other Transaction Document or applicable
law. The Collateral Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or
any telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person,
and with respect to all matters pertaining to this Agreement or any of the other Transaction Documents and its duties hereunder or thereunder,
upon advice of counsel selected by it.
(b) The
Collateral Agent may resign from the performance of all its functions and duties hereunder and under the other Transaction Documents
at any time by giving at least ten (10) Business Days’ prior written notice to the Company and each holder of Notes. Such resignation
shall take effect upon the acceptance by a successor Collateral Agent of appointment pursuant to clauses (c) and (d) below or as otherwise
provided below. If at any time the Collateral Agent does not (together with its affiliates) beneficially own any Notes, the Required
Holders may, by written consent, remove the Collateral Agent from all its functions and duties hereunder and under the other Transaction
Documents.
(c) Upon
any such notice of resignation or removal, the Required Holders shall appoint a successor collateral agent. Upon the acceptance of any
appointment as Collateral Agent hereunder by a successor agent, such successor collateral agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the collateral agent, and the Collateral Agent shall be discharged from
its duties and obligations under this Agreement and the other Transaction Documents. After the Collateral Agent’s resignation or
removal hereunder as the collateral agent, the provisions of this Section 4.11 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Collateral Agent under this Agreement and the other Transaction Documents.
26
(d) If
a successor Collateral Agent shall not have been so appointed within ten (10) Business Days of receipt of a written notice of resignation
or removal, the Collateral Agent shall then appoint a successor collateral agent who shall serve as the Collateral Agent until such time,
if any, as the Required Holders appoint a successor collateral agent as provided above.
(e) In
the event that a successor Collateral Agent is appointed pursuant to the provisions of this Section 4.11 that is not a Buyer or
an affiliate of any Buyer (or the Required Holders or the Collateral Agent (or its successor), as applicable, notify the Company that
they or it wants to appoint such a successor Collateral Agent pursuant to the terms of this Section 4.11), the Company and each
Subsidiary thereof covenants and agrees to promptly take all actions reasonably requested by the Required Holders or the Collateral Agent
(or its successor), as applicable, from time to time, to secure a successor Collateral Agent satisfactory to the requesting part(y)(ies),
in their sole discretion, including, without limitation, by paying all reasonable and customary fees and expenses of such successor Collateral
Agent, by having the Company and each Subsidiary thereof agree to indemnify any successor Collateral Agent pursuant to reasonable and
customary terms and by each of the Company and each Subsidiary thereof executing a collateral agency agreement or similar agreement and/or
any amendment to the Security Documents reasonably requested or required by the successor Collateral Agent.
4.12 Reservation
of Shares. The Company shall reserve from its authorized and unissued shares of Common Stock, shares of Common Stock equal to 150%
of (a) the Conversion Shares issuable upon conversion of the Notes (assuming for purposes hereof that the Notes are convertible at the
Redemption Conversion Price (as defined in the Notes)) as of the date hereof, plus (b) the Warrant Shares issuable upon exercise of the
Warrants (the “Required Minimum”).
4.13 Special
Meeting of Stockholders. The Company shall provide each stockholder entitled to vote at a special meeting of stockholders of the
Company (the “Exchange Cap Stockholder Meeting”), which shall be promptly called and held not later than October 6,
2026 (the “Exchange Cap Stockholder Meeting Deadline”), a proxy statement, in a form reasonably acceptable to the
Buyers and Haynes and Boone, LLP, at the expense of the Company, with the Company obligated to reimburse the expenses of Haynes and Boone
LLP incurred in connection therewith up to a maximum of $5,000, soliciting each such stockholder’s affirmative vote at the Exchange
Cap Stockholder Meeting for approval of resolutions (“Exchange Cap Stockholder Resolutions”) providing for the issuance
of more than 12,256,260 shares of Common Stock (representing 19.99% of the outstanding shares of Common Stock on the date of the May
SPA) (“Exchange Share Cap”) at an issue price below the “minimum price” in payment of interest, amortization,
redemption and settlement of conversions of the Notes, the May Securities and exercise of the Warrants, in each case, in accordance with
Nasdaq Listing Rule 5635 (the “Exchange Cap Stockholder Approval” and the date the Exchange Cap Stockholder Approval
is obtained, the “Exchange Cap Stockholder Approval Date”), and the Company shall use its reasonable best efforts
to solicit its stockholders’ approval of such resolutions and to cause the Board of Directors of the Company to recommend to the
stockholders that they approve such resolutions. The Company shall be obligated to seek to obtain the Exchange Cap Stockholder Approval
by the Exchange Cap Stockholder Meeting Deadline. If, despite the Company’s reasonable best efforts the Exchange Cap Stockholder
Approval is not obtained on or prior to the Exchange Cap Stockholder Meeting Deadline, the Company shall cause an additional Exchange
Cap Stockholder Meeting to be held on or prior to the date that is four months after the Exchange Cap Stockholder Meeting Deadline. If,
despite the Company’s reasonable best efforts the Exchange Cap Stockholder Approval is not obtained after such subsequent stockholder
meetings, the Company shall cause an additional Exchange Cap Stockholder Meeting to be held semi-annually thereafter until such Exchange
Cap Stockholder Approval is obtained.
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4.14 Principal
Market Limitation. Notwithstanding anything in this Agreement or the other Transaction Documents to the contrary, prior to the receipt
of the Exchange Cap Stockholder Approval, the Company shall not issue any shares of Common Stock pursuant to the Notes, the May Securities
or upon exercise of the Warrants if such issuance would cause the aggregate number of shares of Common Stock issued pursuant to the Notes,
the May Securities and upon exercise of the Warrants to exceed the Exchange Share Cap.
4.15 Standstill.
From the date hereof until the date that is 90 Trading Days after the Registration Statement is declared effective by the Commission
(the “Standstill Period”), neither the Company nor any Subsidiary shall (i) issue, enter into any agreement to issue
or announce the issuance or proposed issuance of any shares of Common Stock, Convertible Securities or Options other than Excluded Securities,
or (ii) file any registration statement or any amendment or supplement thereto, other than (a) filing a registration statement on Form
S-8 in connection with any employee benefit plan, (b) filing post-effective amendment on Form S-3 in connection with the existing shelf
registration statement filed by the Company, and (c) the issuance of shares of Common Stock pursuant to an ATM Program established or
maintained by the Company with a registered broker-dealer, provided that (i) such sales are made at prevailing market prices, (ii) such
sales are conducted in the ordinary course of business and not as part of any negotiated transaction, (iii) no Variable Rate Transaction
is effected in connection therewith, (iv) such ATM Program is conducted in compliance with applicable securities laws and the rules of
the Trading Market, and (v) prior to the expiration of the Standstill Period, gross proceeds from sales of shares of Common Stock under
the ATM Program shall be subject to the following limitations:
(A)
gross proceeds from sales of shares of Common Stock under the ATM Program at a price per share at or above $1.50 but less than $2.50
shall not exceed $2,500,000 in the aggregate;
(B)
gross proceeds from sales of shares of Common Stock under the ATM Program at a price per share at or above $2.50 but less than $4.00
shall not exceed an additional $2,500,000 in the aggregate (such that aggregate gross proceeds from all sales under the ATM Program at
prices at or above $1.50 per share shall not exceed $5,000,000 in the aggregate); and
(C)
gross proceeds from sales of shares of Common Stock under the ATM Program at a price per share at or above $4.00 shall not exceed an
additional $5,000,000 in the aggregate (such that aggregate gross proceeds from all sales under the ATM Program shall not exceed $10,000,000
in the aggregate).]
4.16 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 the Principal Market such that it would require stockholder approval prior to the closing
of such other transaction unless stockholder approval is obtained before the closing of such subsequent transaction.
4.17 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 Buyer. 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 Buyers 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 Buyer.
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Article
V.
MISCELLANEOUS
5.1 Fees
and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses
of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement, provided that the Company shall pay all reasonable fees and
expenses of the Buyers incurred in connection with the transactions contemplated by the Transaction Documents. The Company shall pay
all stamp taxes and other similar taxes and duties levied in connection with the delivery of any Securities to the Buyers.
5.2 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.
5.3 Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number or email attachment as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City
time) on a Business Day, (b) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number or email attachment as set forth on the signature pages attached hereto on a day that is not a Business Day or
later than 5:30 p.m. (New York City time) on any Business Day, (c) the second Business Day following the date of mailing, if sent by
a nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set forth on the signature pages attached hereto. To the extent that any
notice provided pursuant to any Transaction Document constitutes, or contains material, non-public information regarding the Company
or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form
8-K.
5.4 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 Required Holders or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement
shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise
of any such right.
5.5 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.
5.6 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Required Holders.
Any Buyer may assign, with written notice to the Company of such assignment, any or all of its rights under this Agreement to any Person
to whom such Buyer assigns or transfers any Securities in compliance with the Transaction Documents, 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
“Buyers.”
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5.7 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 4.8 and this Section 5.7.
5.8 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 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 suit, action or Proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably
waives personal service of process and consents to process being served in any such suit, action or Proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
5.9 Survival.
The representations and warranties contained herein shall survive the Closing and the delivery of the Notes.
5.10
Execution. This Agreement may be executed in
two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign
the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery (including any electronic
signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act
or other applicable law, e.g., www.docusign.com) or other transmission method of a PDF format data file, such signature shall
create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and
effect as if such facsimile or PDF signature page were an original thereof.
5.11 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.
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5.12 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 and receipt of a customary lost security affidavit and indemnity. The applicant for a new certificate
or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity against any claim
that may be made against the Company with respect to the certificate alleged to have been mutilated, lost, stolen, or destroyed) associated
with the issuance of such replacement Securities.
5.13 Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Buyers
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.
The Company acknowledges and agrees that its obligation to pay and perform its obligations under Notes in accordance with the terms thereof
is absolute and unconditional. Accordingly, in no event shall any determination or allegation that a Buyer is (i) an unregistered securities
dealer (within the meaning of the Exchange Act), (ii) acting as an underwriter with respect to the Company’s securities, (iii)
engaged in a distribution (within the meaning of Section 2(a)(11) of the Securities Act) of the Company’s shares of Common Stock
or (iv) the transactions contemplated by the Transaction Documents or a Buyer’s trading activities violate public policy or any
applicable federal or state securities laws, in any case, be a defense to the Company’s obligation to repay any amounts due and
payable to a Buyer under the Notes.
5.14 Payment
Set Aside; Currency. To the extent that the Company makes a payment or payments to any Buyer hereunder or pursuant to any of the
other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or 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, foreign, 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.
Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other Transaction Documents are in United
States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement and all other Transaction Documents shall
be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount
in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount
of currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street
Journal on the relevant date of calculation.
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5.15 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 claim, action or Proceeding that may be brought by any Buyer 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 Buyer with
respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by such Buyer 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 Buyer’s election.
5.16 Independent
Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance or non-performance of
the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and
no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the Buyers are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated by the Transaction Documents. Each Buyer shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction
Documents, and it shall not be necessary for any other Buyer to be joined as an additional party in any Proceeding for such purpose.
The Company has elected to provide all Buyers with the same terms and Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by any of the Buyers.
5.17 Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents
is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts 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.
5.18 Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
5.19 Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to
share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward share splits,
share dividends, share combinations and other similar transactions of the shares of Common Stock that occur after the date of this Agreement.
5.20 WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND
EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
32
5.21 Termination.
This Agreement may be terminated by any Buyer, as to such Buyer’s obligations hereunder only and without any effect whatsoever
on the obligations between the Company and the other Buyers, by written notice to the other parties, if the Closing has not been consummated
on or before the tenth (10th) 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).
5.22 Judgment
Currency.
(a) If
for the purpose of obtaining or enforcing judgment against the Company in connection with this Agreement or any other Transaction Document
in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter in this
Section 5.22 referred to as the “Judgment Currency”) an amount due in U.S. Dollars under this Agreement, the
conversion shall be made at the Exchange Rate prevailing on the Business Day immediately preceding:
(i) the
date actual payment of the amount due, in the case of any Proceeding in the courts of New York or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or
(ii) the
date on which the foreign court determines, in the case of any Proceeding in the courts of any other jurisdiction (the date as of which
such conversion is made pursuant to this Section 5.22 being hereinafter referred to as the “Judgment Conversion Date”).
(b) If
in the case of any Proceeding in the court of any jurisdiction referred to in Section 5.22(a), there is a change in the Exchange
Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay
such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate
prevailing on the date of payment, will produce the amount of U.S. Dollars which could have been purchased with the amount of Judgment
Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(c) Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Agreement or any other Transaction Document.
5.23 Acknowledgment
Regarding Relationship. The parties hereto acknowledge and agree that each party hereto is acting solely in the capacity of an arm’s
length contractual counterparty. Each party hereto further acknowledges and agrees that no Buyer is acting as a financial advisor, underwriter,
broker, dealer or agent of the Company or any of its Subsidiaries in any respect (whether pursuant to the transactions contemplated hereby
or otherwise).
[Signature
Pages Follow]
33
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.
FingerMotion,
Inc.
By:
Name:
Jolie
Kahn
Title:
Chief
Executive Officer
Address
for Notice:
700
S. Rosemary Avenue, Suite 204
West
Palm Beach, Florida 33401
E-mail:
jolie.kahn@fingermotion.com
With
a copy (which shall not constitute notice) to:
Jolie
Kahn, Esq.
700
S. Rosemary Avenue, Suite 204
West
Palm Beach, Florida 33401
Jolie.kahn@fingermotion.com
Signature
Page to 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 Buyer: Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B
Signature
of Authorized Signatory of Buyer:________________________
Name
of Authorized Signatory: Waqas Khatri
Title
of Authorized Signatory: Managing Member
Address of Authorized Signatory: wk@ayrtonllc.com
Facsimile
Number of Authorized Signatory: N/A
Address
for Notice to Buyer:
c/o
Ayrton Capital LLC
55
Post Road West, 2nd Floor
Westport
CT 06880
Address
for Delivery of Securities to Buyer:
c/o
Ayrton Capital LLC
55
Post Road West, 2nd Floor
Westport
CT 06880
Subscription Amount for the Notes: $4,300,000
Principal Amount of Notes: $5,000,000
Signature
Page to Securities Purchase Agreement
EXHIBIT
A
FORM
OF NOTES
[Attached.]
EXHIBIT
B
FORM
OF REGISTRATION RIGHTS AGREEMENT
[Attached.]
EXHIBIT
C
FORM
OF SECURITY DOCUMENT
[Attached.]
EXHIBIT
D
FORM
OF WARRANT
[Attached.]
EX-10.2
EX-10.2
Filename: ex10-2.htm · Sequence: 3
Exhibit
10.2
Execution
Version
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON 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.
Original
Issue Date: August 16, 2026
Original
Principal Amount: $5,000,000
SENIOR
SECURED CONVERTIBLE NOTE
DUE
AUGUST 16, 2027
THIS
SENIOR SECURED CONVERTIBLE NOTE is one of a series of duly authorized and validly issued Senior Secured Notes of FingerMotion, Inc.,
a Delaware corporation (the “Company”), having its principal place of business at c/o FingerMotion, Inc. 111 Somerset
Road, Level 3, Singapore 238164, designated as its Senior Secured Convertible Note due August 16, 2027 (this note, the “Note”
and, collectively with the other notes of such series, the “Notes”).
FOR
VALUE RECEIVED, the Company promises to pay to Alto Opportunity Master Fund, SPC –Segregated Master Portfolio B or its registered
assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the Outstanding Value on August 16, 2027
(the “Maturity Date”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder,
and to pay interest to the Holder on the aggregate unconverted and then Outstanding Principal Amount of this Note in accordance with
the provisions hereof. This Note is subject to the following additional provisions:
Section
1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise
defined herein shall have the meanings set forth in the Purchase Agreement and (b) 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 under the Securities Act.
“Alternate
Conversion Date” shall have the meaning set forth in Section 8(b)(ii).
1
“Alternate
Conversion Price” means the lesser of (but not lower than the prevailing Floor Price): (i) the Fixed Conversion Price then
in effect; (ii) 80% of the lowest daily VWAP during the seven (7) consecutive Trading Days ending on and including the applicable Alternate
Conversion Date; and (iii) 80% of the lowest daily VWAP during the seven (7) consecutive Trading Days ending on and including the first
Trading Day of the applicable Event of Default Redemption Right Period.
“Acquisition”
means the acquisition by the Company or any Subsidiary of another Person or all or substantially all of the assets of another Person
(or any business unit thereof).
“Applicable
Rate” means (a) if no Event of Default has occurred and is continuing, a per annum rate of zero percent (0%) and (b) if an
Event of Default has occurred and is continuing, a per annum rate of twelve percent (12%).
“Available
Cash” means, with respect to any date of determination, an amount equal to the aggregate amount of the cash and Cash Equivalents
of the Company and its Subsidiaries (excluding for this purpose cash held in restricted accounts or otherwise unavailable for unrestricted
use by the Company or any of its Subsidiaries for any reason) as of such date of determination.
“Average
Cash Burn” means, with respect to Company and its Subsidiaries as of any date in question, an amount equal to the negative
change in Available Cash for the trailing three (3) month period immediately preceding such date divided by three (3).
“Bankruptcy
Event” means any of the following events: (a) the Company or any Subsidiary thereof commences a case or other proceeding under
any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency, restructuring or liquidation
or similar law of any jurisdiction relating to the Company or any Subsidiary thereof, (b) there is commenced against the Company or any
Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Subsidiary
thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered,
(d) the Company or any Subsidiary thereof suffers any appointment of any custodian or the like for it or any material part of its property
that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Subsidiary thereof makes a general
assignment for the benefit of creditors, (f) the Company or any Subsidiary thereof calls a meeting of all of its creditors with a view
to arranging a composition, adjustment or restructuring of its debts, (g) the Company or any Subsidiary thereof admits in writing that
it is generally unable to pay its debts as they become due, (h) the Company or any Subsidiary thereof, by any act or failure to act,
expressly indicates its consent to, approval of or acquiescence in any of the foregoing.
“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 4(d).
“Business
Day” shall have the meaning assigned to such term in the Purchase Agreement.
“Buy-In”
shall have the meaning set forth in Section 4(c)(v).
2
“Cash
Equivalents” means, as at any date of determination, (a) marketable securities (i) issued or directly and unconditionally guaranteed
as to interest and principal by the United States Government, or (ii) issued by any agency of the United States the obligations of which
are backed by the full faith and credit of the United States, in each case maturing within one year after such date, (b) certificates
of deposit or bankers’ acceptances maturing within one year after such date and issued or accepted by any Holder or by any commercial
bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (i) is at least “adequately
capitalized” (as defined in the regulations of its primary Federal banking regulator), and (ii) has Tier 1 capital (as defined
in such regulations) of not less than $100,000,000, and (c) shares of any money market mutual fund that (i) has substantially all of
its assets invested continuously in the types of investments referred to in clause (a)above, (ii) has net assets of not less than $500,000,000,
and (iii) has the highest rating obtainable from either S&P or Moody’s.
“Change
of Control Put Notice” shall have the meaning set forth in Section 6(b).
“Change
of Control Put Right” shall have the meaning set forth in Section 6(b).
“Change
of Control Put Period” shall have the meaning set forth in Section 6(b).
“Change
of Control Transaction” means the occurrence after the Original Issue Date of any of (a) an acquisition by an individual or
legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of shares of the Company, by contract or otherwise) of in excess of 50% of the voting shares of
the Company (other than by means of conversion or exercise of the Note and the Securities issued together with the Note), (b) the Company
merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect
to such transaction, the shareholders of the Company immediately prior to such transaction (directly or indirectly) own less than 50%
of the aggregate voting power of the Company or the successor entity of such transaction, or (c) the Company, directly or indirectly,
sells or transfers all or substantially all of its assets to another Person other than parties to the Security Documents reasonably satisfactory
to the Collateral Agent.
“Closing
Sale Price” means, for any security as of any date, the last closing trade price for such security on the Principal Market,
as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing
trade price then the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal
Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal
securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply,
the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively,
of any market makers for such security as reported in The Pink Open Market (or a similar organization or agency succeeding to its functions
of reporting prices). If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases,
the Closing Sale Price of such security on such date shall be the fair market value as reasonably determined by the Company in good faith.
Subject to Section 4(d), if the Holder shall object to any such fair market value determination by the Company, then such dispute shall
be resolved in accordance with the procedures in Section 25. All such determinations shall be appropriately adjusted for any stock splits,
stock dividends, stock combinations, recapitalizations or other similar transactions during such period.
3
“Code”
means the Internal Revenue Code of 1986, as amended .
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time shares of Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, shares
of Common Stock.
“Conversion
Date” shall have the meaning set forth in Section 4(a).
“Conversion
Failure” has the meaning set in Section 4(c)(iii).
“Conversion
Notice” shall have the meaning set forth in Section 4(a).
“Conversion
Price” means, as applicable, the Fixed Conversion Price, the Redemption Conversion Price or the Alternate Conversion Price.
“Conversion
Shares” means shares of Common Stock issued or issuable upon any conversion of this Note.
“Cure
Period” has the meaning given in Section 8(a)(ii).
“Disqualified
Stock” shall mean, with respect to any Person, any equity interests of such Person that, by their terms (or by the terms of
any security or other equity interests into which such equity interests are convertible or exchangeable) or upon the happening of any
event or condition (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence
of a change of control or asset sale event shall be subject to the prior repayment in full of the Note) (a) matures or is mandatorily
redeemable for cash, pursuant to a sinking fund obligation or otherwise, (b) is redeemable for cash at the option of the holder thereof,
in whole or in part, (c) provides for the scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable
for Indebtedness or any other equity interests that would constitute Disqualified Stock, in each case, prior to the Maturity Date. Notwithstanding
the foregoing: (i) any equity interests issued to any employee or to any plan for the benefit of employees of the Company or the Subsidiaries
or by any such plan to such employees shall not constitute Disqualified Stock solely because they may be required to be repurchased by
the Company in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death
or disability and (ii) any class of equity interests of such Person that by its terms provides that obligations thereunder will be satisfied
by delivery of shares of Common Stock shall not be deemed to be Disqualified Stock.
“DWAC
Eligible” means that (a) the shares of Common Stock are eligible at DTC for full services pursuant to DTC’s Operational
Arrangements, including transfer through DTC’s DWAC system, (b) the Company has been approved (without revocation) by the DTC’s
underwriting department, (c) the Transfer Agent is approved as an agent in the DTC/FAST Program, (d) the Conversion Shares are otherwise
eligible for delivery via DWAC, and (e) the Transfer Agent does not have a policy prohibiting or limiting delivery of the Conversion
Shares via DWAC.
4
“Early
Redemption Premium” means 115%
“Effectiveness
Deadline” has the meaning given such term in the Registration Rights Agreement.
“Event
of Default” shall have the meaning set forth in Section 8(a).
“Event
of Default Redemption Right Period” has the meaning set forth in Section 8(b).
“Exchange
Cap” shall have the meaning set forth in Section 4(e).
“Exchange
Cap Allocation” shall have the meaning set forth in Section 4(e).
“Fixed
Conversion Price” means a price equal to $0.35 per share, subject to adjustment as provided in Section 5 (but not lower than
the prevailing Floor Price).
“Floor
Price” means 20% of the “Minimum Price” (as defined in Nasdaq Listing Rule 5635) on the trading day prior to the
date of the Purchase Agreement, which is initially $0.06 (subject to adjustment for stock splits, Stock Dividends or stock combinations);
provided that the Floor Price shall automatically reset (a “Floor Price Reset”) on each date that is six (6) months
after the date of the Purchase Agreement (and each successive 6 month anniversary thereafter) (each, a “Floor Price Reset Date”)
to equal 20% of the “Minimum Price” (as defined in the rules and regulations of the Nasdaq Stock Market) on the Trading Day
immediately preceding such Floor Price Reset Date. In addition, the Company may voluntarily reduce (and only reduce) the Floor Price
in its sole discretion by providing written notice of such reduction to the Holder.
“Floor
Price Condition” means if, at any time, the Redemption Conversion Price (disregarding, for purposes of this definition, the
proviso to the definition of Redemption Conversion Price) is below the Floor Price for five (5) or more Trading Days out of any seven
(7) consecutive Trading Day Period. The existence of a Floor Price condition shall only be deemed to have been cured and no longer continuing
following the reduction of the Floor Price pursuant to a Floor Price Reset.
“Freely
Tradable” means that the Conversion Shares (i) can be traded by a holder thereof that is not an Affiliate of the Company and
has not been an Affiliate of the Company for the immediately preceding 90 days, or pursuant to an effective Registration Statement and
(ii) are issued upon conversion of this Note free of restrictive legends.
“Fundamental
Transaction” shall have the meaning set forth in Section 5.
“Holder”
or “Holders” means the persons in whose name the Notes are registered on the Note Register.
5
“Indebtedness”
of a Person shall include (a) all obligations for borrowed money or the deferred purchase price of property or services including without
limitation, merchant cash advances (excluding trade accounts payable incurred in the ordinary course of business), (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters
of credit, surety bonds, bankers acceptances, currency swap agreements, interest rate hedging agreements, interest rate swaps or other
financial products, (c) all capital lease obligations (as determined in accordance with U.S. GAAP), (d) all obligations or liabilities
secured by a Lien on any asset of such Person, irrespective of whether such obligation or liability is assumed by such Person, (e) any
obligation arising with respect to any other transaction that is the functional equivalent of borrowing but which does not constitute
a liability on the balance sheets of such Person (excluding trade accounts payable incurred in the ordinary course of business), (f)
Disqualified Stock, and (g) any obligation guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted or sold with recourse) any of the foregoing obligations of any other Person.
“Investments”
means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other
acquisition (including by merger) of equity interests of another Person, (b) a loan, advance or capital contribution to, guarantee or
assumption of debt of, or purchase or other acquisition of any other debt or interest in, another Person, or (c) the purchase or other
acquisition (in one transaction or a series of transactions) of assets of another Person that constitutes a business unit or all or a
substantial part of the business of, such Person.
“Liens”
means any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts
and contract rights) owned by the Company or any of its Subsidiaries.
“Monthly
Redemption Conversion Amount” means, with respect to any Monthly Redemption Conversion Period, the portion of Outstanding Value
designated by the Holder for conversion.
“Monthly
Redemption Conversion Period” means (i) for the initial period, the time commencing on the date that is seven (7) days following
the Effectiveness Deadline and ending following the market close on the last Trading Day of such calendar month, and (ii) thereafter,
each period beginning on the first Trading Day of the following calendar month and ending on the last Trading Day of such calendar month.
“Moody’s”
means Moody’s Investor Services, Inc.
“New
York Courts” shall have the meaning set forth in Section 9(d).
“Note
Register” shall have the meaning set forth in Section 2(b).
“Optional
Redemption” shall have the meaning set forth in Section 6(a).
“Optional
Redemption Date” shall have the meaning set forth in Section 6(a).
“Optional
Redemption Notice” shall have the meaning set forth in Section 6(a).
“Optional
Redemption Notice Date” shall have the meaning set forth in Section 6(a).
6
“Original
Issue Date” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless of the
number of instruments which may be issued to evidence such Notes.
“Outstanding
Principal Amount” means, at the time of determination, the Original Principal Amount outstanding after giving effect to any
conversions, redemptions or payments pursuant to the terms hereof.
“Outstanding
Value”, as of any time of determination, means the Outstanding Principal Amount of this Note, accrued and unpaid interest and
accrued and unpaid on such Outstanding Principal Amount, interest and any other unpaid amounts pursuant to the Transaction Documents,
in each case, as of such time of determination.
“Participant
Register” shall have the meaning set forth in Section 2(b).
“Permitted
Dispositions” means (a) sales of inventory and product in the ordinary course of business and (b) dispositions of worn out,
obsolete, surplus or unneeded equipment or other property in the ordinary course of business.
“Permitted
Indebtedness” means (a) the Indebtedness evidenced by the Note and the other Transaction Documents, (b) the Indebtedness existing
on the Original Issue Date and disclosed in the SEC Reports (as defined in the Purchase Agreement), (c) unsecured Indebtedness incurred
in the ordinary course of business and not exceeding $500,000 in the aggregate at any time outstanding, and (d) Indebtedness incurred
in the ordinary course of business in respect of credit cards in an amount not to exceed $50,000 at any one time in the aggregate.
“Permitted
Lien” means the individual and collective reference to the following: (a) Liens in favor of Holder or the Collateral Agent,
(b) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves
have been established in accordance with U.S. GAAP, (c) any statutory Lien arising in the ordinary course of business by operation of
law with respect to a liability that is not yet due or delinquent, and (d) any Lien created by operation of law, such as materialmen’s
liens, mechanics’ liens and other similar liens, arising in the ordinary course of business with respect to a liability that is
not yet due or delinquent or that are being contested in good faith by appropriate proceedings.
“Principal
Market” means the principal Trading Market for the shares of Common Stock.
“Purchase
Agreement” means the Securities Purchase Agreement, dated as of August 16, 2026, among the Company and the original Holders,
as amended, modified or supplemented from time to time in accordance with its terms.
“Redemption
Conversion” has the meaning set forth in Section 2(d)(i).
“Redemption
Conversion Price” means a price equal to the lesser of: (i) the Fixed Conversion Price then in effect; (ii) 90% of the lowest
daily VWAP during the seven (7) consecutive Trading Days ending on and including the applicable date of the applicable Redemption Conversion;
and (iii) 90% of the lowest daily VWAP during the seven (7) consecutive Trading Days ending on and including the first Trading Day of
the applicable Monthly Redemption Conversion Period; provided, that the Redemption Conversion Price shall not be less than the Floor
Price.
7
“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, among the Company
and the original Holders, in the form of Exhibit B attached to the Purchase Agreement.
“Registration
Statement” means an effective Registration Statement (as defined in the Registration Rights Agreement) covering the resale
of a number of Conversion Shares equal to the Required Reserve Amount under the Securities Act filed by the Company pursuant to the Registration
Rights Agreement.
“Required
Reserve Amount” has the meaning set forth in Section 4(c)(vi).
“S&P”
means Standard & Poor’s Ratings Group, a division of The McGraw Hill Corporation.
“Share
Delivery Date” shall have the meaning set forth in Section 4(c)(ii).
“Stock
Dividend” means the Company’s issuance of solely shares of Common Stock as a dividend or distribution on all or substantially
all shares of Common Stock.
“Successor
Entity” shall have the meaning set forth in Section 5(a).
“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 shares of Common Stock are 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
Market Default” shall have the meaning set forth in Section 8(a)(xi).
“Transfer
Agent” means VStock Transfer, LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette Place,
Woodmere, New York 11590 and an email address of action@vstocktransfer.com, and any successor transfer agent of the Company.
“VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the
Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market
on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time,
as reported by Bloomberg through its “VAP” function (set to 09:30 start time and 16:00 end time) or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board
for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Bloomberg,
or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest
closing bid price and the lowest closing ask price of any of the market makers for such security as reported in The Pink Open Market
(or a similar organization or agency succeeding to its functions of reporting prices). If the VWAP cannot be calculated for such security
on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. All such determinations shall be appropriately adjusted for any share dividend, share split, recapitalization
or other similar transactions during such period.
8
Section
2. Payments.
(a)
Payment of Interest. The Company shall pay interest (if any) to the Holder on the aggregate unconverted and then Outstanding Principal
Amount of this Note (together with any other outstanding amounts owed to the Holder pursuant to the Transaction Documents) at the Applicable
Rate, due and payable monthly, on the first Business Day of each calendar month and on the Maturity Date.
(b)
Note Register. The Company shall establish and maintain a record of ownership (the “Note Register”) in which
it agrees to register by book entry the Holders’ and each subsequent assignee’s name and address and the principal amounts
(and stated interest) of Holder’s and each subsequent assignee’s interest in the Notes. Any of the Holders that sells a participation
shall, acting solely for this purpose as a non-fiduciary agent of the Company, maintain a register on which it enters the name and address
of each participant and the principal amounts (and stated interest) of each participant’s interest in the participated Notes (the
“Participant Register”); provided that the Holders shall have no obligation to disclose all or any portion of the
Participant Register (including the identity of any participant) to the Company except to the extent that such disclosure is necessary
to establish that the applicable Note is in registered form under Treasury Regulations Section 5f.103-1(c). The entries in the Note Register
and the Participant Register shall be conclusive absent manifest error. This Section 2(b) shall be construed so that the Notes are at
all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code, and
any related regulations (or any successor provisions of the Code or such regulations).
(c)
Interest Calculations. Interest shall be calculated on the basis of a 360-day year and the actual number of days elapsed, consisting
of twelve 30 calendar day periods, and shall accrue daily (but without compounding) commencing on the Original Issue Date until payment
in full of the Outstanding Principal Amount of this Note, together with all accrued and unpaid interest and other amounts which may become
due hereunder, has been made. Interest shall cease to accrue with respect to any principal amount converted, provided that, the Company
actually delivers the Conversion Shares within the time period required by Section 4(c)(ii). Interest hereunder will be paid to the Person
in whose name this Note is registered on the Note Register. The rates of interest under this Note are nominal rates, and not effective
rates or yields. The principle of deemed reinvestment of interest does not apply to any interest calculation under this Note.
9
(d)
Monthly Redemption.
(i)
In addition to, and not in limitation of, the Holder’s rights under Section 4 of this Note, the Holder may, during each Monthly
Redemption Conversion Period, convert the applicable Monthly Redemption Conversion Amount into Freely Tradable Conversion Shares (each
a “Redemption Conversion”). During each Monthly Redemption Conversion Period, the Holder may submit one or more Conversion
Notices to convert all or a portion of the Monthly Redemption Conversion Amount at the Redemption Conversion Price as of the Conversion
Date. All conversions under this Section 2(d)(i) shall be effected in accordance with the provisions of Section 4 but using the Redemption
Conversion Price in lieu of the Fixed Conversion Price. Each Conversion Notice shall specify the amount of the Monthly Redemption Conversion
Amount to be converted and the Redemption Conversion Price. Each conversion pursuant to this Section 2(d)(i) shall be applied (a) first,
to pay accrued interest as of the applicable Conversion Date (if any) and (b) second, to reduce other amounts owed pursuant to the Transaction
Documents, and (c) third, to reduce the Outstanding Principal Amount included in such applicable Monthly Redemption Conversion Amount.
(ii)
The Holder may, at any time prior to the expiration of a Monthly Redemption Conversion Period, defer all or any portion of the applicable
Monthly Redemption Conversion Amount (“Deferred” and amount Deferred a “Deferral Amount”) to a
later Monthly Redemption Conversion Period at its sole discretion, evidenced in writing (which may be by e-mail) in which case, the Deferral
Amount shall be added to, and become part of, such subsequent Monthly Redemption Conversion Amount. In addition, the Company may, in
its sole discretion, permit the Holder to increase any Monthly Redemption Conversion Amount to a greater amount, but not in excess of
the Outstanding Value.
(iii)
To the extent that (x) the Company would be prohibited from issuing shares of Common Stock pursuant this Section 2(d) due to the Exchange
Cap (a “Redemption Default”) or (y) there is a Floor Price Condition, the Holder may require, at the Holder’s
election by delivery of a written notice to the Company (which may be e-mail), the Company to redeem a portion of the Outstanding Value
per Monthly Redemption Conversion Period in cash payments equal to the sum of (x) the Monthly Redemption Conversion Amount plus
(y) a 7.5% payment premium in respect of each payment of the Monthly Redemption Conversion Amount (collectively, the “Cash Redemption
Price”). The Company shall make each such redemption in cash by not later than the last Trading Day of the applicable Monthly
Redemption Conversion Period for which the Holder has required such redemption.
(iv)
Following the 75th calendar day anniversary of the Closing Date (as defined in the Purchase Agreement), if the Company is unable to issue
Freely Tradable Conversion Shares (whether due to the Exchange Cap, any limitation under the applicable rules or regulations of the Principal
Market, the lack of an effective Registration Statement, or other listing issues), the Company shall make monthly redemptions of the
Outstanding Value of this Note in cash equal to the lesser of (x) $1,000,000 and (y) the entire Outstanding Value plus a redemption premium
equal to 107.5% of the amount being redeemed (each, a “Monthly Cash Redemption”). The Company shall make each Monthly
Cash Redemption in cash by not later than the last Trading Day of the applicable calendar month.
(e)
Prepayment. Except as otherwise set forth herein, including Section 6(a), the Company may not prepay all or any part of this Note.
10
(f)
Application of Payments. All payments made under this Note shall be applied first to the payment of any fees or charges outstanding
pursuant to the Transaction Documents, second to interest to the Holder on the aggregate unconverted and then Outstanding Principal Amount
of this Note in accordance with the provisions hereof, third, to other amounts due and payable hereunder other than the Outstanding Principal
Amount of this Note, and fourth, to the payment of the Outstanding Principal Amount of this Note, or in such other order as determined
by the Holder in its reasonable discretion.
Section
3. Registration of Transfers and Exchanges.
(a)
Different Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations,
as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.
(b)
Investment Representations. This Note has been issued subject to certain investment representations of the original Holder set
forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal
and state securities laws and regulations.
(c)
Reliance on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the
Company may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such agent
shall be affected by notice to the contrary.
Section
4. Conversion.
(a)
Voluntary Conversion. At any time, and from time to time, until this Note is no longer outstanding, the Outstanding Value of this
Note shall, at the option of the Holder (subject to the conversion limitations set forth in Section 4(c)) be convertible, in whole or
in part, into shares of Common Stock at the Fixed Conversion Price. The Holder shall effect conversions by delivering to the Company
a Conversion Notice, the form of which is attached hereto as Annex A (each, a “Conversion Notice”), specifying
therein the Outstanding Value of this Note to be converted, or with respect to a Redemption Conversion, the Monthly Redemption Conversion
Amount to be converted, the applicable Conversion Price, and the date on which such conversion shall be effected (such date, the “Conversion
Date”). If no Conversion Date is specified in a Conversion Notice, the Conversion Date shall be the date that such Conversion
Notice is deemed delivered hereunder. No ink-original Conversion Notice shall be required, nor shall any medallion guarantee (or other
type of guarantee or notarization) of any Conversion Notice form be required. To effect conversions hereunder, the Holder shall not be
required to physically surrender this Note to the Company unless the entire Outstanding Value of this Note has been so converted in which
case the Holder shall surrender this Note as promptly as is reasonably practicable after such conversion without delaying the Company’s
obligation to deliver the shares on the Share Delivery Date. Conversions hereunder shall have the effect of reducing the Outstanding
Value of this Note in an amount equal to the applicable Outstanding Value converted. The Holder and the Company shall maintain records
showing the Outstanding Value converted and the date of such conversion(s). In the event of any dispute or discrepancy, the records of
the Holder shall be controlling and determinative in the absence of manifest error. The Holder, and any assignee by acceptance of
this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note,
the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof.
11
(b)
Intentionally Omitted.
(c)
Mechanics of Conversion and Delivery of Conversion Shares.
(i)
Conversion Shares Issuable Upon Conversion; Adjustment of Conversion Price. The number of Conversion Shares issuable upon a conversion
pursuant to Section 2(d)(i), Section 4 and Section 8 hereunder shall be determined by the quotient obtained by dividing (x) the Outstanding
Value of this Note to be converted by (y) the applicable Conversion Price. On or before the first (1st) Trading Day following the date
of receipt of a Conversion Notice with respect to a Redemption Conversion and with respect to Alternate Conversions pursuant to Section
8, if the applicable Redemption Conversion Price or Alternate Conversion Price is less than the “redemption conversion price”,
or “alternate conversion price”, as applicable, specified on such Conversion Notice, the Holder may deliver an updated Conversion
Notice to the Company correcting the Redemption Conversion Price or Alternate Conversion Price (and aggregate number of Conversion Shares
to be issued) as specified in such Conversion Notice, provided, that if such updated Conversion Notice is not delivered to the Company
on or prior to 9:30am, New York time on the Trading Day immediately following the applicable Conversion Date or Alternate Conversion
Date, as applicable, the applicable Share Delivery Date shall be extended by one (1) Trading Day.
(ii)
Delivery of Conversion Shares Upon Conversion. Not later than the number of Trading Days comprising the Standard Settlement Period
(as defined below) after each Conversion Date or Alternate Conversion Date (the “Share Delivery Date”), the Company
shall deliver, or cause to be delivered, to the Holder the Conversion Shares which shall be Freely Tradable and free of restrictive legends
representing the number of Conversion Shares being acquired upon the conversion of this Note. The Company shall deliver any Conversion
Shares required to be delivered by the Company under this Section 4(c) electronically through the Depository Trust Company or another
established clearing corporation performing similar functions. As used herein, “Standard Settlement Period” means the standard
settlement period, expressed in a number of Trading Days, on the Principal Market as in effect on the date of delivery of the Conversion
Notice. To the extent that the delivery of Conversion Shares in connection with a Conversion Notice would result in the Holder exceeding
the Beneficial Ownership Limitation, and the Holder does not elect in writing to withdraw, in whole, such Conversion Notice, the Company
shall hold such Conversion Shares in abeyance for the benefit of the Holder until such time as such Conversion Notice may be satisfied
without exceeding the Beneficial Ownership Limitation (with such calculations thereunder made as of the date such Conversion Notice was
initially delivered to the Company).
12
(iii)
Failure to Deliver Conversion Shares. If, in the case of any Conversion Notice, such Conversion Shares are not delivered to or
as directed by the applicable Holder by the Share Delivery Date (a “Conversion Failure”), the Holder shall be entitled
to elect by written notice to the Company at any time on or before its receipt of such Conversion Shares, to rescind such Conversion
Notice, in which event the Company shall promptly return to the Holder any original Note delivered to the Company and the Holder shall
promptly return to the Company the Conversion Shares issued to such Holder pursuant to the rescinded Conversion Notice.
(iv)
Obligation Absolute. The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Note in
accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the 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 the Holder or any other
Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective
of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of
such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Company of any such
action the Company may have against the Holder. In connection with the Holder’s conversion of amounts due under this Note in accordance
with the terms of the Note, the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated
with the Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice
to Holder, restraining and or enjoining conversion of all or part of this Note shall have been sought and obtained, and the Company posts
a surety bond for the benefit of the Holder in the amount of 200% of the Outstanding Value of this Note which is subject to the injunction,
which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which
shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion
Shares and, if applicable, cash, upon a properly noticed conversion. Nothing in this Note shall limit a Holder’s right (1) to pursue
actual damages, (2) lost profit resulting from or caused by the Company’s failure to honor any duly submitted conversion notice
or its repudiation of its obligation to honor conversions in accordance with the terms of this Note or (3) declare an Event of Default
pursuant to Section 8 for the Company’s failure to deliver Conversion Shares within the period specified herein. Without limiting
the foregoing, the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder
from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
13
(v)
Compensation for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion. In addition to any other rights available
to the Holder, if the Company fails for any reason to deliver to the Holder such Conversion Shares by the Share Delivery Date pursuant
to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open market
transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction
of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Share
Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in addition to any other remedies
available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase price (including any brokerage
commissions) for the shares of Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock
that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order
giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of the Holder, either
reissue (if surrendered) this Note in a principal amount equal to the principal amount of the attempted conversion (in which case such
conversion shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued if the
Company had timely complied with its delivery requirements under Section 4(c)(ii). For example, if the Holder purchases shares of Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Note with respect to
which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was
a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request
of the Company, evidence of the amount of such loss.
(vi)
Reservation of Shares Issuable Upon Conversion. The Company 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 this Note as herein provided,
free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder, an aggregate number of shares
of Common Stock equal to 150% of the aggregate number of shares issuable upon conversion of this Note in full at the prevailing Redemption
Conversion Price without regard to any limitations on conversion (“Required Reserve Amount”). The Company covenants
that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.
The Company acknowledges and agrees that the purpose of this Section 4(c)(vi) is to ensure that Company may issue shares of Common Stock
from time to time in accordance with the terms hereof and that the reservation of shares of Common Stock pursuant hereto is reasonable
in light of the anticipated economic benefits expected by the Company and Holder from conversions of this Note by the Holder. The Company
further understands that there are no limitations imposed by Holder on the Company’s ability to, any time, increase the number
of its authorized and unissued shares of Common Stock and it is the sole responsibility of the Company to ensure that it has sufficient
authorized and unissued shares of Common Stock to comply with its obligations hereunder and to take advantage of opportunities to raise
capital from the sale of its securities to third parties. Accordingly, there shall be no presumption that Holder’s requirement
that the Company adhere to this Section 4(c)(vi) causes Holder to have any control over the Company’s ability to dispose
of authorized and unissued shares of Common Stock.
(vii)
Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note.
As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its
election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion
Price or round up to the next whole share, however, the Company shall have no obligation to pay the Holder if such fraction multiplied
by the Conversion Price is less than $1.00.
14
(viii)
Transfer Taxes and Expenses. The issuance of Conversion Shares on conversion of this Note shall be made without charge to the
Holder hereof 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 Company 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 Holder of this Note so converted and the
Company 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 Company the amount of such tax or shall have established to the satisfaction of the Company that such
tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of any Conversion Notice 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.
(d)
Holder’s Conversion Limitations. The Company shall not effect any conversion of this Note, and a Holder shall not have the
right to convert any portion of this Note, to the extent that after giving effect to the applicable conversion, the Holder (together
with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates
(such Persons, “Attribution Parties”)) would beneficially own in excess of the Beneficial Ownership Limitation (as
defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its
Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of this Note with respect
to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) conversion
of the remaining, unconverted principal amount of this Note beneficially owned by the Holder or any of its Affiliates or Attribution
Parties and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a
limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other Notes) beneficially
owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this
Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. In addition, a determination as to any group status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4(d), in determining
the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected
in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public
announcement by the Company, or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares
of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and
in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the
Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 9.99% of the number of shares of the shares of Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon conversion of this Note. The Holder, upon notice to the Company, may increase
or decrease the Beneficial Ownership Limitation provisions of this Section 4(d), provided that the Beneficial Ownership Limitation in
no event exceeds 9.99% of the number of shares of the shares of Common Stock outstanding immediately after giving effect to the issuance
of shares of Common Stock upon conversion of this Note held by the Holder and the Beneficial Ownership Limitation provisions of this
Section 4(d) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st
day after such notice is delivered to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed
and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make
changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph
shall apply to a successor holder of this Note.
15
(e)
Exchange Cap. The Company shall not issue any shares of Common Stock upon the conversion of this Note if the issuance of such
shares of Common Stock would exceed the aggregate number of shares of Common Stock which the Company may issue upon exercise or conversion
or otherwise pursuant to the terms of the Notes, the Warrants and the May Securities (each as defined in the Purchase Agreement) without
breaching the Company’s obligations under the rules or regulations of the Principal Market, which number of shares is 12,256,260
shares of Common Stock (representing 19.99% of the total number of shares of Common Stock outstanding on the date of the May SPA (as
defined in the Purchase Agreement)) (the number of shares which may be issued without violating such rules and regulations, the “Exchange
Cap”), except that such limitation shall not apply in the event that the Company (A) obtains the requisite approval of its
stockholders to issue shares of Common Stock in excess of the Exchange Cap or (B) obtains a written opinion from outside counsel to the
Company that such approval is not required, which opinion shall be reasonably satisfactory to the Holder. Until such approval or such
written opinion is obtained, no Buyer shall be issued in the aggregate, upon conversion or exercise (as the case may be) of any Notes,
Warrants or May Securities or otherwise pursuant to the terms thereof, shares of Common Stock in an amount greater than the product of
(i) the Exchange Cap as of the Original Issue Date multiplied by (ii) the quotient of (1) the original principal amount of Notes issued
to such Buyer pursuant to the Purchase Agreement on the Closing Date (as defined in the Purchase Agreement) divided by (2) the aggregate
original principal amount of all Notes issued to the Buyers pursuant to the Purchase Agreement on the Closing Date (with respect to each
Buyer, the “Exchange Cap Allocation”). In the event that any Buyer shall sell or otherwise transfer any of such Buyer’s
Notes, the transferee shall be allocated a pro rata portion of such Buyer’s Exchange Cap Allocation with respect to such portion
of such Notes so transferred, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of
the Exchange Cap Allocation so allocated to such transferee. Upon conversion and exercise in full of a Buyer’s Notes, the difference
(if any) between such Buyer’s Exchange Cap Allocation and the number of shares of Common Stock actually issued to such Buyer upon
such Buyer’s conversion in full of such Notes shall be allocated to the respective Exchange Cap Allocations of the remaining Buyers
on a pro rata basis in proportion to the shares of Common Stock underlying the Notes then held by each such Buyer.
Section
5. Adjustments.
(a)
Fundamental Transaction. If, at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more
related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (and all of its
Subsidiaries, taken as a whole), directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other
disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase
offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of shares 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 shares of Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions
effects any reclassification, reorganization or recapitalization of the shares of Common Stock or any compulsory share exchange pursuant
to which the shares of Common Stock are effectively converted into or exchanged for other securities, cash or property, or (v) the Company,
directly or indirectly, in one or more related transactions consummates a share or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or
group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any
shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons
making or party to, such share or share purchase agreement or other business combination) (each a “Fundamental Transaction”),
then, upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Conversion Share (assuming conversion
at the Alternate Conversion Price for the Trading Day immediately prior to the occurrence of such Fundamental Transaction) that would
have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation
in Section 4(d) , the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 4(d). For purposes of any such conversion, the determination of the Alternate
Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one (1) share of shares of Common Stock in such Fundamental Transaction, and the Company shall apportion the Alternate
Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of shares of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion
of this Note following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which
the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company
under this Note and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this
Section 5(a) 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 Note, deliver to the Holder
in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance
to this Note which is convertible for a corresponding number of shares of share capital of such Successor Entity (or its parent entity)
equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Note (without regard to any limitations on
the conversion of this Note) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder
to such shares of share capital (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of share capital, such number of shares of share capital and such conversion price being for
the purpose of protecting the economic value of this Note immediately prior to the consummation of such Fundamental Transaction), and
which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this
Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may
exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction
Documents with the same effect as if such Successor Entity had been named as the Company herein.
16
(b)
Stock Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (i) pays a share dividend or otherwise
makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which,
for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, or payment of interest
on, the Notes), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of
a reverse share 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 shares of Common Stock, any shares of share capital of the Company, then the Fixed 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 Company) 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 shall become effective immediately after the record date for the determination
of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification.
(c)
Subsequent Equity Sales. If, at any time while this Note is outstanding, the Company or any Subsidiary, as applicable, sells or
grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant
or any option to purchase or other disposition), any shares of Common Stock or Common Stock Equivalents entitling any Person to acquire
shares of Common Stock at an effective price per share that is lower than the then the Fixed Conversion Price (such issuances, collectively,
a “Dilutive Issuance”) (if the holder of the shares of Common Stock or Common Stock Equivalents so issued shall at
any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise,
or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common
Stock at an effective price per share that is lower than the Fixed Conversion Price, such issuance shall be deemed to have occurred for
less than the Fixed Conversion Price on such date of the Dilutive Issuance), then simultaneously with the consummation (or, if earlier,
the announcement) of each Dilutive Issuance the Fixed Conversion Price shall be reduced (but never increased) to equal the lower of (a)
the effective price per share of such Dilutive Issuance and (b) the lowest VWAP for the shares of Common Stock during the five (5) Trading
Days following the consummation or announcement (if earlier) of such Dilutive Issuance (the lowest of (a) and (b), the “Base
Fixed Conversion Price”). If the Company enters into a Variable Rate Transaction, despite the prohibition set forth in the
Purchase Agreement, the Company shall be deemed to have issued shares of Common Stock or Common Stock Equivalents at the lowest possible
conversion price at which such securities may be converted or exercised. The Company shall notify the Holder in writing, no later than
the Trading Day following the issuance of any shares of Common Stock or Common Stock Equivalents subject to this Section 5(c), indicating
therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice,
the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance
Notice pursuant to this Section 5(c), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Conversion
Shares for a conversion under Section 4(a) based upon the Base Fixed Conversion Price on or after the date of such Dilutive Issuance,
regardless of whether the Holder accurately refers to the Base Fixed Conversion Price in the applicable Conversion Notice.
17
(d)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase shares, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had
held the number of shares of Common Stock acquirable upon complete conversion of this Note at the Alternate Conversion Price (without
regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided,
however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent
(or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to
such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding
the Beneficial Ownership Limitation).
(e)
Pro Rata Distributions. During such time as this Note is outstanding, if the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, shares or other securities, property or options by way of a dividend, spin
off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable
upon complete conversion of this Note at the Alternate Conversion Price (without regard to any limitations on conversion hereof, including
without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution,
or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation
in such Distribution (provided, however, that, to the extent that the Holder’s right to participate in any such Distribution
would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent)
and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto
would not result in the Holder exceeding the Beneficial Ownership Limitation).
18
(f)
Voluntary Adjustment by Company. The Company may at any time during the term of this Note, with the prior written consent of the
Holder reduce the then current Fixed Conversion Price or Redemption Conversion Price of each of the Notes to any amount and for any period
of time deemed appropriate by the board of directors of the Company.
(g)
Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.
(h)
Notice to the Holder.
(i)
Adjustment to Fixed Conversion Price. Whenever the Fixed Conversion Price is adjusted pursuant to any provision of this Section
5, the Company shall promptly deliver to each Holder a notice setting forth the Fixed Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment.
(ii)
Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form)
on the shares of Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the shares of
Common Stock, (C) the Company shall authorize the granting to all holders of the shares of Common Stock of rights or warrants to subscribe
for or purchase any shares of share capital of any class or of any rights, (D) the approval of any shareholders of the Company shall
be required in connection with any reclassification of the shares of Common Stock, any consolidation or merger to which the Company(and
all of its Subsidiaries, taken as a whole) is a party, any sale or transfer of all or substantially all of the assets of the Company,
or any compulsory share exchange whereby the shares of Common Stock are converted into other securities, cash or property or (E) the
Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each
case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause
to be delivered to the Holder at its last address as it shall appear upon the Note Register, at least twenty (20) calendar days prior
to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the
holders of the shares of Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to
become effective or close, and the date as of which it is expected that holders of the shares of Common Stock of record shall be entitled
to exchange their shares of the shares of Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in
the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that
any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report Form 8-K. For the avoidance of doubt,
the Holder shall remain entitled to convert this Note during the 20-day period commencing on the date of such notice through the effective
date of the event triggering such notice except as may otherwise be expressly set forth herein.
19
Section
6. Redemption.
(a)
Optional Redemption at Election of Company. At any time after the date that is 40 Trading Days after the initial Registration
Statement filed pursuant to the Registration Rights Agreement has been declared effective, and prior to the Maturity Date, provided that
(i) no Event of Default then exists, (ii) on the Trading Day immediately preceding the Optional Redemption Notice Date the Closing Sale
Price was not greater than the Fixed Conversion Price, and (iii) the Company is not in possession of any material, non-public information
expected to positively impact the trading price of the Common Stock, the Company may deliver a written notice to the Holder (an “Optional
Redemption Notice” and the date such notice is deemed delivered hereunder, the “Optional Redemption Notice Date”)
of its irrevocable election to redeem this Note for cash in an amount equal to the Outstanding Value multiplied by the Early Redemption
Premium (the “Optional Redemption Amount”) on the 15th Trading Day following the Optional Redemption Notice Date (such
date, the “Optional Redemption Date”, such 15 Trading Day period, the “Optional Redemption Period”
and such redemption, the “Optional Redemption”). The Optional Redemption Amount is payable in full on the Optional
Redemption Date. Notwithstanding the foregoing, if the Closing Sale Price of the Common Stock exceeds the Fixed Conversion Price on any
Trading Day during the Optional Redemption Period, the Optional Redemption Notice shall be deemed automatically revoked and of no further
force or effect, and the Company shall not be permitted to consummate the Optional Redemption.
(b)
Notice of a Change of Control Put Right. The Holder may require the Company to redeem (the “Change of Control Put Right”)
all of the Outstanding Value of this Note at any time following the earlier of (a) the Company’s consummation of a Change of Control
Transaction or (b) public announcement of such Change of Control Transaction until the 20th Trading Day following the latest of (x) the
consummation of such Change of Control Transaction and (y) the public announcement of such Change of Control Transaction (the “Change
of Control Put Period”) at a price payable in cash equal to the greater of (the “Change of Control Redemption Price”):
(i)
The applicable Outstanding Value to be redeemed multiplied by the Early Redemption Premium; and
(ii)
the product of (A) the applicable Outstanding Value to be redeemed and (B) the quotient obtained by dividing (1) the aggregate per-share
consideration payable to holders of Common Stock in such Change of Control Transaction (with any non-cash consideration valued, in the
case of publicly traded securities, at the highest Closing Sale Price thereof during the period from the Trading Day immediately prior
to the public announcement of such Change of Control Transaction through the Trading Day immediately following consummation thereof),
by (2) the Alternate Conversion Price then in effect.
20
The
Holder may exercise the Change of Control Put Right by delivering a written notice to the Company, at any time during the Change of Control
Put Period , specifying that the Note is to be redeemed, and then the applicable Change of Control Redemption Price be due and payable
in cash on the 3rd Trading Day following the Company’s receipt of such notice (“Change of Control Put Notice”).
The Company shall, to the extent legally permissible and within the Company’s control, publicly announce any Change of Control
Transaction at least 45 Trading Days prior to the consummation thereof, but, in any case, the Company shall make such announcement no
later than 30 Trading Days prior to the consummation of the applicable Change of Control Transaction. Notwithstanding the foregoing until
the Change of Control Redemption Price has been paid in full, the Outstanding Value subject to such redemption may be converted, in whole
or in part, at the option of the Holder in accordance with this Note.
(c)
Subsequent Placement Redemption Right. At any time from and after the earlier of (x) the date of the public announcement of a
Placement (the “Holder Notice Date”) and (y) the time of consummation of a Placement (in each case, other than with
respect to Excluded Securities and subject to exceptions under the Purchase Agreement) (each, an “Eligible Subsequent Placement”),
the Holder shall have the right, in its sole discretion, to require that the Company redeem (each an “Subsequent Placement Optional
Redemption”) all, or any portion, of the Outstanding Value under this Note at a price equal to the product of (a) the Early
Redemption Premium multiplied by (b) the Outstanding Value being redeemed, not to exceed thirty percent (30%) of the gross proceeds from
all Eligible Subsequent Placements (the “Eligible Subsequent Placement Optional Redemption Amount”) by delivering
written notice thereof (an “Subsequent Placement Optional Redemption Notice”) to the Company. Notwithstanding the
foregoing, if the Holder is participating in an Eligible Subsequent Placement, upon the written request of the Holder, the Company shall
apply all, or any part, as set forth in such written request, of any amounts that would otherwise be payable to the Holder in such Subsequent
Placement Optional Redemption, on a dollar-for-dollar basis, against the purchase price of the securities to be purchased by the Holder
in such Eligible Subsequent Placement. Each Subsequent Placement Optional Redemption Notice shall indicate that all, or such applicable
portion, as set forth in the applicable Subsequent Placement Optional Redemption Notice, of the Eligible Subsequent Placement Optional
Redemption Amount the Holder is electing to have redeemed (the “Subsequent Placement Optional Redemption Amount”)
and the date of such Subsequent Placement Optional Redemption (the “Subsequent Placement Optional Redemption Date”),
which shall be the date of the consummation of such Eligible Subsequent Placement. The portion of the Outstanding Value of this Note
subject to redemption pursuant to this Section 6(c) shall be redeemed by the Company in cash at a price equal to the Subsequent Placement
Optional Redemption Amount (or applicable portion thereof) (the “Subsequent Placement Optional Redemption Price”).
For purposes of this Section 6(c), “Placement” shall have the meaning set forth in the Purchase Agreement and shall include,
without limitation, any sales of shares of Common Stock pursuant to an ATM Program (as defined in the Purchase Agreement), and the gross
proceeds from any such ATM Program sales shall be included in calculating the Eligible Subsequent Placement Optional Redemption Amount.
21
Section
7. Covenants.
(a)
Affirmative Covenants. As long as any portion of this Note remains outstanding, the Company shall, and shall cause its Subsidiaries
to:
(i)
The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve (except where otherwise permitted
hereunder), all of its properties which are necessary or useful in the proper conduct of its business in good working order and condition,
ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases
to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder except
where such failure would not individually or in the aggregate, have a Material Adverse Effect on the Company or any of its Subsidiaries;
(ii)
The Company will, and will cause each of its Subsidiaries to, take all action necessary or advisable to maintain all of the Intellectual
Property Rights of the Company and/or any of its Subsidiaries that are necessary or material to the conduct of its business in full force
and effect. Without limiting the foregoing, the Company shall at all times maintain directors’ and officers’ liability insurance
coverage in an aggregate amount of not less than $5,000,000, with insurers of recognized financial responsibility;
(iii)
The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies
or associations (including, without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with
respect to its properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks
as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound
business practice by companies in similar businesses similarly situated (including, without limitation, and for the avoidance of doubt,
director’s and officer’s insurance of ($5,000,000);
(iv)
The Company and its Subsidiaries shall pay when due all taxes, fees or other charges of any nature whatsoever (together with any related
interest or penalties) now or hereafter imposed or assessed against the Company and its Subsidiaries or their respective assets or upon
their ownership, possession, use, operation or disposition thereof or upon their rents, receipts or earnings arising therefrom (except
where the failure to pay would not, individually or in the aggregate, have a Material Adverse Effect on the Company or any of its Subsidiaries);
(v)
The Company shall and shall cause each of its Subsidiaries to (a) comply with all laws applicable to it and its business and its obligations
under its contracts and agreements, in each case, in all material respects and (b) maintain in effect and enforce policies and procedures
reasonably designed to achieve compliance in all material respects by the Company and its directors, officers, employees and agents with
anti-corruption laws, anti-terrorism laws, and applicable sanctions;
22
(b)
Negative Covenants. As long as any portion of this Note remains outstanding, the Company shall not, and shall not permit its Subsidiaries
to, directly or indirectly:
(i)
Other than Permitted Indebtedness, except with the prior written consent of the Collateral Agent the Company shall not and shall cause
each of its Subsidiaries to not enter into, create, incur, assume, guarantee or suffer to exist any Indebtedness of any kind.
(ii)
Other than Permitted Liens, prior to all outstanding amounts under the Notes being repaid, converted or otherwise satisfied in full,
the Company shall not and shall cause each of its Subsidiaries to not enter into, create, incur, assume or suffer to exist any Liens
of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income
or profits therefrom without the prior written consent of the Holder.
(iii)
The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem, defease, repurchase,
repay or make any payments in respect of, by the payment of cash or Cash Equivalents (in whole or in part, whether by way of open market
purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness (other than the Note and Permitted
Indebtedness) whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness.
(iv)
The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem or repurchase any
shares of Common Stock or other equity securities or declare or pay any cash dividend or distribution out of its capital;
(v)
The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, sell, lease, license, assign,
transfer, spin-off, split-off, close, convey or otherwise dispose of any assets or rights of the Company or any Subsidiary, owned or
hereafter acquired whether in a single transaction or a series of related transactions, other than Permitted Dispositions.
(vi)
The Company shall not, and the Company shall cause each of its Subsidiaries to not make or hold any Investments other than: (a) Investments
existing on the date of the Purchase Agreement and that are disclosed in the Company’s financial statements included in its most
recent periodic report filed with the Commission, (b) Investments in cash and Cash Equivalents, (c) Investments in Subsidiaries that
have executed and delivered the Security Documents reasonably satisfactory to the Collateral Agent to the Collateral Agent; (d) Investments
(including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement
of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of the Company’s business;
(e) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers in the
ordinary course of business and consistent with past practice, provided that this clause (e) shall not apply to Investments of the Company
in any Subsidiary thereof; (f) Investments consisting of (i) loans not involving the net transfer on a substantially contemporaneous
basis of cash proceeds to employees, officers or directors relating to the purchase of share capital of the Company pursuant to employee
share purchase plans or other similar agreements approved by the Company’s Board of Directors and (ii) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of business; provided that the aggregate of all such loans
outstanding may not exceed $50,000 at any time; (g) extensions of credit to customers or advances, deposits or payment to or with suppliers,
lessors or utilities or for workers’ compensation, in each case, that are incurred in the ordinary course of business; (h) other
Investments that do not exceed $1,000,000 in the aggregate per calendar year; and (i) other Investments in which the Collateral Agent
is given a perfected, first priority security interest.
23
(vii)
The Company shall not and shall cause each of its Subsidiaries to not enter into any transaction with any Affiliate of the Company which
would be required to be disclosed in any public filing with the Commission, unless such transaction is made on an arm’s-length
basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required
for board approval);
(viii)
The Company shall not and shall cause each of its Subsidiaries to not form, establish or acquire any new Subsidiary unless such new Subsidiary
executes and delivers the Security Documents to the Collateral Agent in a form reasonably satisfactory to the Collateral Agent, promptly
thereupon;
(ix)
The Company shall not enter into any business, directly or indirectly, except for those businesses in which the Company is engaged on
the date of this Note or that are reasonably related or ancillary thereto or that provide strategic opportunity for the Company at the
Company’s discretion;
(x)
The Company shall not maintain any deposit account or securities account that is not subject to a perfected, first priority security
interest in such account;
(xi)
The Company will remain registered under Section 12(b) of Exchange Act and timely file with the Commission all reports required under
the Exchange Act, the Securities Act or other applicable securities law.
(c)
Minimum Cash Covenant. The Company’s Available Cash on the last day of each calendar quarter shall be greater than or equal
to the product (expressed as a positive number) of (x) 1.0 and (y) the Average Cash Burn. In any case, Available Cash shall never be
less than $500,000 at any time. The Company will file a Report on Form 8-K with the Commission disclosing such breach no later than four
(4) Trading Day after the occurrence of such breach and provide simultaneous written notice thereof to the Holder.
Section
8. Events of Default.
(a)
“Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and
whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of
any court, or any order, rule or regulation of any administrative or governmental body):
(i)
any default in the payment of all or any portion of the Outstanding Value or any other amounts owed pursuant to this Note or any other
Transaction Document when the same becomes due and payable in accordance with the terms of this Note or such Transaction Document, including,
without limitation, any payment pursuant to Section 2(d)(iii);
(ii)
the Company or any Subsidiary shall fail to observe or perform any covenant or agreement contained in this Note or in any Transaction
Document, which failure is not cured, if possible to cure, within the specified cure period and if not specified, the earlier to occur
of ten (10) Trading Days after (A) notice of such failure sent by a Holder to the Company and (B) the Company has become or should have
become aware of such failure (the “Cure Period”);
24
(iii)
any representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto or
any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or incorrect
in any material respect as of the date when made or deemed made;
(iv)
the Company or any Subsidiary shall be subject to a Bankruptcy Event;
(v)
the Company or any Subsidiary shall default on any of its obligations under any Indebtedness, that (a) involves an obligation greater
than $500,000, whether such Indebtedness now exists or shall hereafter be created, and (b) results in such Indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise become due and payable;
(vi)
following the earlier of (i) the Effectiveness Deadline, (ii) the date on which the Initial Registration Statement (as defined in the
Registration Rights Agreement) is declared effective by the Commission, and (iii) the date the Conversion Shares can be sold, assigned
or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act, the Company shall fail for any reason to deliver
Freely Tradable Conversion Shares prior to the 5th Trading Day after a the Share Delivery Date or, immediately, if the Company shall
provide at any time notice to the Holder, including by way of public announcement, of the Company’s intention to not honor requests
for conversions of any Notes in accordance with the terms hereof;
(vii)
the occurrence of more than three (3) Conversion Failures;
(viii)
the electronic transfer by the Company of shares of Common Stock through the Depository Trust Company or another established clearing
corporation is no longer available or is subject to a “chill” and such failure remains uncured after the Cure Period;
(ix)
any Transaction Document shall for any reason fail or cease to create a valid Lien on the collateral described therein in favor of the
Collateral Agent, or any material provision of any Transaction Document shall at any time for any reason cease to be valid and binding
on or enforceable against the Company or the applicable Subsidiary, the validity or enforceability thereof shall be contested by any
party thereto, or a proceeding shall be commenced by the Company, any Subsidiary or any Governmental Authority having jurisdiction over
the Company or any such Subsidiary, seeking to establish the invalidity or unenforceability thereof, and such failure is not cured, if
possible to cure, within the Cure Period;
(x)
any Material Adverse Effect occurs;
(xi)
(A) the suspension from trading or the failure of the shares of Common Stock to be listed on a Trading Market for a period of 5 consecutive
Trading Days or (B) the threatened failure of the shares of Common Stock to be listed on a Trading Market if such failure is not cured
45 Trading Days prior to the deadline set by such Trading Market (each of (A) and (B), a “Trading Market Default”);
25
(xii)
one or more judgments, orders, or decrees for the payment of money in excess of $500,000 in the aggregate (to the extent not covered
by independent third-party insurance as to which the insurer has been notified of such judgment, order, or decree and has not disputed
coverage) shall be rendered against the Company or any of its Subsidiaries and remain undischarged, unvacated, unbonded, or unstayed
pending appeal for a period of sixty (60) consecutive days;
(xiii)
the failure of the applicable Registration Statement (as defined in the Registration Rights Agreement) to be filed with the Commission
within five (5) days after the applicable Filing Date (as defined under the Registration Rights Agreement) or to be declared effective
by the Commission within five (5) days after the applicable Effectiveness Deadline, in each case as set forth in the Registration Rights
Agreement;
(xiv)
at any time that the applicable Registration Statement is required to be maintained effective pursuant to the Registration Rights Agreement,
the effectiveness thereof lapses for any reason (including, without limitation, the issuance of a stop order) or such Registration Statement
(or the prospectus contained therein) is unavailable for the resale of all Registrable Securities (as defined under the Registration
Rights Agreement) by the Holder in accordance with the Registration Rights Agreement, and such lapse or unavailability continues for
five (5) consecutive days or more than an aggregate of ten (10) days in any 365-day period (excluding any allowable grace period under
the Registration Rights Agreement); or
(xv)
if Jolie Kahn, the Company’s Chief Executive Officer, ceases to be the Chief Executive Officer.
(b)
Remedies Upon Event of Default.
(i)
Upon the occurrence of any Event of Default and until the date that is thirty (30) Trading Days following the date such Event of Default
is cured (the “Event of Default Redemption Right Period”), this Note shall become, at the Required Holder’s
election, immediately due and payable in cash equal to (i) the Outstanding Value of this Note to be redeemed multiplied by (ii) 125%
(the “Event of Default Redemption Amount”); provided that such acceleration shall be automatic, without any notice or other
action of the Required Holders, in respect of an Event of Default occurring pursuant to Section 8(a)(iv). Commencing on the occurrence
and continuance of any Event of Default, the interest rate on the Outstanding Value of this Note shall be 12% per annum. Interest shall
accrue daily from the occurrence of an Event of Default and shall cease upon the cure of such Event of Default and shall be calculated
based on a 360-day year and the actual number of days elapsed, to the extent permitted by applicable law. Interest hereunder will be
paid to the Person in whose name this Note is registered in the Note Register. Upon the payment in full of the amount owing set forth
above, the Holder shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described
herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and
the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all
other remedies available to it under applicable law and applying such funds to this Note. Such acceleration may be rescinded and annulled
by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any,
as the Holder receives full payment pursuant to this Section 8(b). No such rescission or annulment shall affect any subsequent Event
of Default or impair any right consequent thereon. In addition, upon the occurrence of an Event of Default pursuant to Section 8(a)(vi),
the Holder shall be entitled to an amount in cash equal to the product of (a) the undelivered Freely Tradable Conversion Shares that
should have been delivered to the Holder pursuant to the applicable Conversion Notice (including any Conversion Shares issuable under
a Conversion Notice held in abeyance pursuant to Section 4(c)(ii)) but for such Event of Default multiplied by (b) the greatest VWAP
of the shares of Common Stock on any Trading Day during the period commencing on the Conversion Date applicable to such undelivered Freely
Tradable Conversion Shares and ending on the date the Company makes the entire payment required to be made under this Section 8(b). For
the avoidance of doubt, during the Event of Default Redemption Right Period, the Holder may convert the Event of Default Redemption Amount
into Conversion Shares, in whole or in part and from time to time, by submitting a Conversion Notice in accordance with Section 4 using
the Alternate Conversion Price in lieu of the Fixed Conversion Price (each conversion an “Alternate Conversion” and each
day on which the Holder effects an Alternate Conversion, an “Alternate Conversion Date”).
26
(ii)
Notice. Upon the occurrence and continuation of an Event of Default with respect to this Note, the Company shall within two (2)
Business Days of the Company becoming aware of such Event of Default deliver written notice thereof to the Holder via electronic mail
to the Holder.
Section
9. Miscellaneous.
(a)
Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without
limitation, any Conversion Notice, shall be in writing and delivered personally, by email attachment, or sent by a nationally recognized
overnight courier service, addressed to the Company, at the address set forth above, or such other email address, or address as the Company
may specify for such purposes by notice to the Holder delivered in accordance with this Section 9(a). Any and all notices or other communications
or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by email attachment, or sent by a
nationally recognized overnight courier service addressed to each Holder at the email address or address of the Holder appearing on the
books of the Company, or if no such email attachment or address appears on the books of the Company, at the principal place of business
of such Holder, as set forth in the Purchase Agreement. 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 email attachment to the
email address set forth on the signature pages attached hereto 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 email attachment to the email address 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, (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 Note shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this
Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company.
This Note ranks pari passu with all other Notes now or hereafter issued under the terms set forth herein.
27
(c)
Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in
exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of
such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.
(d)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note 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 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 Note 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 Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any
provisions of this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorney’s
fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
(e)
Waiver. Any waiver by the Company or the Required Holders of a breach of any provision of this Note 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 Note. The failure of the
Company or the Required Holders to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on
any other occasion. Any waiver by the Company or the Required Holders must be in writing. Any provision of this Note may be waived by
the Required Holders, which waiver shall be binding on all of the Holders of the Note and their successors and assigns. Any provision
of this Note may be amended by a written instrument executed by the Company and the Required Holders, which amendment shall be binding
on all of the Holders of the Notes and their successors and assigns.
28
(f)
Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect,
and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and
circumstances. 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. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit
or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to
any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution
of every such as though no such law has been enacted.
(g)
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including
a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual
and consequential damages for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that
there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided
for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the
Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof).
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy
at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach,
the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened
breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide
all information and documentation to the Holder that is reasonably requested by the Holder to enable the Holder to confirm the Company’s
compliance with the terms and conditions of this Note.
(h)
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.
(i)
Headings. The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed
to limit or affect any of the provisions hereof.
29
(j)
Secured Obligation. The obligations of the Company under this Note are secured by the collateral pursuant to the Security Documents.
Section
10. Disclosure. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company
has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the
Company or its Subsidiaries, the Company shall within the time required by the rules and regulations of Commission, but in no event within
two (2) Trading Days, publicly disclose such material, nonpublic information on a Current Report 8-K or otherwise. In the event that
the Company believes that a notice contains material, non-public information relating to the Company or its Subsidiaries, the Company
so shall indicate to the Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder
shall be allowed to presume that all matters relating to such notice do not constitute material, nonpublic information relating to the
Company or its Subsidiaries.
Section
11. Certain Tax Matters. All payments to be made by the Company under this Note (whether in cash or in shares of Common Stock)
shall be made without any Tax Deduction (as defined below) unless a Tax Deduction is required by law. The Company shall promptly upon
becoming aware that it must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the
Holder accordingly. If a Tax Deduction is required by law to be made by the Company, the amount of the payment due from the Company under
this Note shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have
been due under this Note if no Tax Deduction had been required; provided, however, no such increase is required to the
extent any holder changes its residency for tax purposes or assigns or transfers its rights and obligations pursuant to this Note and
such action leads to the imposition of Tax Deduction on payment that would not have been imposed in the absence of such action or an
increase in such liability above the liability that would have been imposed in the absence of such action. If the Company is required
to make a Tax Deduction, it shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time
allowed and in the minimum amount required by law. Within thirty (30) days of making either a Tax Deduction or any payment required in
connection with that Tax Deduction, the Company shall deliver to the Holder evidence reasonably satisfactory to the Holder that the Tax
Deduction has been made and that any appropriate payment has been paid to the relevant taxing authority. For greater certainty, (i) this
Section 11 applies to all payments, whether in the form of cash, shares of Common Stock or otherwise, made under this Note, and (ii)
the Company is obligated to indemnify the Holder pursuant to this Section 11 in the event that a Tax Deduction is required in respect
of any payment to be made to the Holder under this Note and the Company and/or its Subsidiaries fail to comply with this Section 11.
For purposes of this Section 11, “Tax” means any tax, levy, impost, duty or other charge or withholding of a similar
nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same) and “Tax
Deduction” means any deduction or withholding for or on account of any Tax.
*********************
(Signature
Page Follows)
30
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.
FINGERMOTION,
INC.
By:
Name:
Jolie Kahn
Title:
Chief Executive Officer
ANNEX
A
The
undersigned hereby elects to convert $_________ of [Monthly Redemption Conversion Amount]/[Outstanding Value] under the Senior Secured
Convertible Note due August 16, 2027 (the “Note”) of FingerMotion, Inc., a Delaware corporation (the “Company”),
into shares of Common Stock (the “Conversion Shares”) of the Company according to the conditions of the Note, as of the date
written below. If Conversion Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the
Company in accordance therewith. No fee will be charged to the Holder for any conversion, except for such transfer taxes, if any.
By
the delivery of this Conversion Notice, the undersigned represents and warrants to the Company that its ownership of the Common Stock
does not exceed the amounts specified under Section 4(d) of the Note, as determined in accordance with Section 13(d) of the Exchange
Act.
Conversion
Date: ______________
Amount
of Note to be Converted (Monthly Redemption Conversion Amount or Outstanding Value): $______________
Applicable
Conversion Price (Fixed Conversion Price / Redemption Conversion Price / Alternate Conversion Price): $______________
Number
of Conversion Shares to be issued: ______________
Signature:
______________
Name:
______________
Address
for Delivery of Common Stock Certificates:
Or
DWAC
Instructions:
Broker
No: ______________
Account
No: ______________
EX-10.3
EX-10.3
Filename: ex10-3.htm · Sequence: 4
Exhibit
10.3
Execution
Version
COMMON
STOCK PURCHASE WARRANT
fingermotion,
inc.
Warrant
Shares: 4,092,993
Initial
Exercise Date: August 16, 2026
Issue
Date: August 16, 2026
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Alto Opportunity Master Fund, SPC
– Segregated Master Portfolio B or its assigns (the “Holder”) is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on or after August 16, 2026 (the “Initial Exercise
Date”) and on or prior to 5:00 p.m. (New York City time) on August 16, 2031 (the “Termination Date”) but
not thereafter, to subscribe for and purchase from FingerMotion, Inc., a Delaware corporation (the “Company”), up
to 4,092,993 shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price
of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section
1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain
Securities Purchase Agreement (the “Purchase Agreement”), dated August 16, 2026, among the Company and the purchasers
signatory thereto.
Section
2. Exercise.
a) Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on
or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF copy submitted
by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”).
Within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined
in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the
shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless
the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice
of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise
be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to
the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full,
in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which
the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the
total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records
showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice
of Exercise on the Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge
and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the
number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
1
b) Exercise
Price. The exercise price per share of Common Stock under this Warrant shall be $0.35, subject to adjustment hereunder (the “Exercise
Price”).
c) Cashless
Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained
therein is not available for the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in
part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant
Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A)
=
as applicable: (i) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) delivered pursuant to Section 2(a) hereof on
a day that is not a Trading Day or (2) delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular
trading hours” (as defined in Rule 600 of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii)
the highest Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”)
within two (2) hours of the time of the Holder’s delivery of the Notice of Exercise pursuant to Section 2(a) hereof if such Notice
of Exercise is delivered during “regular trading hours,” or within two (2) hours after the close of “regular trading
hours” on a Trading Day or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise
is a Trading Day and such Notice of Exercise is delivered pursuant to Section 2(a) hereof after two (2) hours following the close of
“regular trading hours” on such Trading Day;
(B) = the Exercise
Price of this Warrant, as adjusted hereunder; and
(X) = the number of
Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were
by means of a cash exercise rather than a cashless exercise.
If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not
to take any position contrary to this Section 2(c).
“Bid
Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock
is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price
of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then
listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a similar
organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported,
or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good
faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
2
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time)), (b) if the OTCQB Venture Market (“OTCQB”) or the OTCQX Best
Market (“OTCQX”) is not a Trading Market, the volume weighted average price of the Common Stock for such date (or
the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB
or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (“Pink Market”) operated by
the OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price
per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined
by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and
reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
d) Mechanics
of Exercise.
i. Delivery
of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer
Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust
Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such
system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the
Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate,
registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which
the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is
the earlier of (i) one (1) Trading Day after the delivery to the Company of the Notice of Exercise and (ii) the number of Trading Days
comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant
Share Delivery Date”); provided that the Company shall not be required to deliver the
Warrant Shares until payment of the Exercise Price (other than in the case of a cashless exercise) has been received. Upon delivery
of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares
with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment
of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) one (1) Trading
Day and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the
Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery
Date, (provided that the Company shall have received payment of the Exercise Price (other than in the case of a cashless exercise) on
or prior to the Warrant Share Delivery Date), the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty,
for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice
of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the third Trading Day after the Warrant Share Delivery Date)
for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise.
The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding
and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a
number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery
of the Notice of Exercise.
ii. Delivery
of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and
upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing
the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant.
iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i)
by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
3
iv. Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if
the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section
2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by
its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon
such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x)
the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds
(y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection
with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B)
at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise
was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock
that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the
Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares
of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares
of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v. No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall,
at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the
Exercise Price or round up to the next whole share.
vi. Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and
such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company
shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company
(or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii. Closing
of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
4
e) Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and
a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section
2 or otherwise, to the extent that after giving effect to such issuance after exercise as
set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s
Affiliates, and any other Persons acting as a group together with the Holder or any of the
Holder’s Affiliates (such Persons, “Attribution Parties”)), would
beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For
purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned
by the Holder and its Affiliates and Attribution Parties shall include the number of shares
of Common Stock issuable upon exercise of this Warrant with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which would be issuable
upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned
by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion
of the unexercised or nonconverted portion of any other securities of the Company (including,
without limitation, any other Common Stock Equivalents) subject to a limitation on conversion
or exercise analogous to the limitation contained herein beneficially owned by the Holder
or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence,
for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder,
it being acknowledged by the Holder that the Company is not representing to the Holder that
such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is
solely responsible for any schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(e) applies, the determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder together
with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable
shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise
shall be deemed to be the Holder’s determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with any Affiliates and Attribution
Parties) and of which portion of this Warrant is exercisable, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm
the accuracy of such determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder. For purposes of this Section 2(e),
in determining the number of outstanding shares of Common Stock, a Holder may rely on the
number of outstanding shares of Common Stock as reflected in (A) the Company’s most
recent periodic or annual report filed with the Commission, as the case may be, (B) a more
recent public announcement by the Company or (C) a more recent written notice by the Company
or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon
the written or oral request of a Holder, the Company shall within one Trading Day confirm
orally and in writing to the Holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including this Warrant,
by the Holder or its Affiliates or Attribution Parties since the date as of which such number
of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% of the number of shares of Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.
The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation
in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant
held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase
in the Beneficial Ownership Limitation will not be effective until the 61st day
after such notice is delivered to the Company. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with the terms
of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective
or inconsistent with the intended Beneficial Ownership Limitation herein contained or to
make changes or supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
5
f) Exchange
Cap. The Company shall not issue any shares of Common Stock upon the exercise of this
Warrant if the issuance of such shares of Common Stock would exceed the aggregate number
of shares of Common Stock which the Company may issue upon exercise or conversion or otherwise
pursuant to the terms of the Notes, the Warrants and the May Securities (as defined in the
Purchase Agreement) without breaching the Company’s obligations under the rules or
regulations of the Principal Market, which number of shares is 12,256,260 shares of Common
Stock (representing 19.99% of the total number of shares of Common Stock outstanding on the
date of the May SPA (as defined in the Purchase Agreement)) (the number of shares which may
be issued without violating such rules and regulations, the “Exchange Cap”),
except that such limitation shall not apply in the event that the Company (A) obtains the
requisite approval of its stockholders to issue shares of Common Stock in excess of the Exchange
Cap or (B) obtains a written opinion from outside counsel to the Company that such approval
is not required, which opinion shall be reasonably satisfactory to the Holder. Until such
approval or such written opinion is obtained, no Buyer shall be issued in the aggregate,
upon conversion or exercise (as the case may be) of any Notes, Warrants or May Securities
or otherwise pursuant to the terms thereof, shares of Common Stock in an amount greater than
the product of (i) the Exchange Cap as of the Issue Date multiplied by (ii) the quotient
of (1) the original principal amount of Notes issued to such Buyer pursuant to the Purchase
Agreement on the Closing Date (as defined in the Purchase Agreement) divided by (2) the aggregate
original principal amount of all Notes issued to the Buyers pursuant to the Purchase Agreement
on the Closing Date (with respect to each Buyer, the “Exchange Cap Allocation”).
In the event that any Buyer shall sell or otherwise transfer any of such Buyer’s Notes,
the transferee shall be allocated a pro rata portion of such Buyer’s Exchange Cap Allocation
with respect to such portion of such Notes so transferred, and the restrictions of the prior
sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation
so allocated to such transferee. Upon conversion and exercise in full of a Buyer’s
Notes, the difference (if any) between such Buyer’s Exchange Cap Allocation and the
number of shares of Common Stock actually issued to such Buyer upon such Buyer’s conversion
in full of such Notes shall be allocated to the respective Exchange Cap Allocations of the
remaining Buyers on a pro rata basis in proportion to the shares of Common Stock underlying
the Notes then held by each such Buyer.
Section
3. Certain Adjustments.
a) Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes
a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of
Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the
Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of
shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
6
b) Adjustment
Upon Issuance of Shares of Common Stock. If and whenever on or after the date of issuance (the “Issuance Date”),
the Company issues or sells (or enters into any agreement to grant, issue or sell), or in accordance with this Section 3(b) is deemed
to have issued or sold, any shares of Common Stock and/or Common Stock Equivalents (including the issuance or sale of shares of Common
Stock owned or held by or for the account of the Company, but excluding any Exempt Issuance (as defined in Section 3(b)(v)) issued or
sold or deemed to have been issued or sold) for a consideration per share (the “New Issuance Price”) less than a price
equal to the Exercise Price in effect immediately prior to such issuance or sale or deemed issuance or sale (such Exercise Price then
in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”),
then simultaneously with the consummation (or, if earlier, the announcement) of each such Dilutive Issuance, the Exercise Price then
in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of the foregoing (including, without limitation,
determining the adjusted Exercise Price and the New Issuance Price under this Section 3(b)), the following shall be applicable:
(i)
Issuance of Options. If the Company in any manner grants or sells any rights, warrants or options to subscribe for or purchase
shares of preferred stock and/or Common Stock or Common Stock Equivalents (“Options”) and the lowest price per share
for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange
of any Common Stock Equivalents issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the
Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at
the time of the granting or sale of such Option for such price per share. For purposes of this Section 3(b)(i), the “lowest price
per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange
of any Common Stock Equivalents issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall be
equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect
to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise
or exchange of any Common Stock Equivalents issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y)
the lowest exercise price set forth in such Option for which one share of Common Stock is issuable upon the exercise of any such Options
or upon conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise of any such Option or otherwise pursuant
to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting,
issuance or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Common Stock Equivalents
issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration received or
receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment
of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock or of such Common Stock Equivalents upon
the exercise of such Options or otherwise pursuant to the terms of or upon the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Common Stock Equivalents. This Section 3(b)(i) shall not apply to any Exempt Issuance.
(ii)
Issuance of Common Stock Equivalents. If the Company in any manner issues or sells any Common Stock Equivalents and the lowest
price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise
pursuant to the terms thereof is less than the Exercise Price, then such share of Common Stock shall be deemed to be outstanding and
to have been issued and sold by the Company at the time of the issuance or sale of such Common Stock Equivalents for such price per share.
For the purposes of this Section 3(b)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the
sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon
the issuance or sale of the Common Stock Equivalent and upon conversion, exercise or exchange of such Common Stock Equivalent or otherwise
pursuant to the terms thereof and (y) the lowest conversion price set forth in such Common Stock Equivalent for which one share of Common
Stock is issuable upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts
paid or payable to the holder of such Common Stock Equivalent (or any other Person) upon the issuance or sale of such Common Stock Equivalent
plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Common Stock Equivalent
(or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance
of such shares of Common Stock upon conversion, exercise or exchange of such Common Stock Equivalents or otherwise pursuant to the terms
thereof, and if any such issuance or sale of such Common Stock Equivalents is made upon exercise of any Options for which adjustment
of the Warrant has been or is to be made pursuant to other provisions of this Section 3(b), except as contemplated below, no further
adjustment of the Exercise Price shall be made by reason of such issuance or sale. This Section 3(b)(ii) shall not apply to any Exempt
Issuance.
7
(iii)
Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Common Stock Equivalents, or the rate at which any Common Stock
Equivalents are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other
than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 3(a)),
the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in
effect at such time had such Options or Common Stock Equivalents provided for such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes
of this Section 3(b)(iii), if the terms of any Option or Common Stock Equivalents that was outstanding as of the Issuance Date are increased
or decreased in the manner described in the immediately preceding sentence, then such Option or Common Stock Equivalents and the shares
of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such
increase or decrease. No adjustment pursuant to this Section 3(b) shall be made if such adjustment would result in an increase of the
Exercise Price then in effect. This Section 3(b)(iii) shall not apply to any Exempt Issuance.
(iv)
Calculation of Consideration Received. If any Option and/or Common Stock Equivalent and/or Adjustment Right is issued in connection
with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary
Security”, and such Option and/or Common Stock Equivalent and/or Adjustment Right, the “Secondary Securities”
and together with the Primary Security, each a “Unit”), together comprising one integrated transaction, the aggregate
consideration per share of Common Stock with respect to such Primary Security shall be deemed to be the lowest of (x) the purchase price
of such Unit, (y) if such Primary Security is an Option and/or Common Stock Equivalent, the lowest price per share for which one share
of Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in accordance with Section 3(b)(i) or
3(b)(ii) above and (z) the lowest VWAP on any Trading Day during the five (5) Trading Day period (the “Adjustment Period”)
immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public announcement is released
prior to the opening of the applicable Trading Market on a Trading Day, such Trading Day shall be the first Trading Day in such five
Trading Day period and if this Warrant is exercised, on any given Exercise Date during any such Adjustment Period, solely with respect
to such portion of this Warrant converted on such applicable Exercise Date, such applicable Adjustment Period shall be deemed to have
ended on, and included, the Trading Day immediately prior to such Exercise Date). If any shares of Common Stock, Options or Common Stock
Equivalents are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to
be the net amount of consideration received by the Company therefor. If any shares of Common Stock, Options or Common Stock Equivalents
are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value
of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration
received by the Company for such securities will be the lowest VWAP on any Trading Day during the five (5) Trading Day period immediately
preceding the date of receipt. If any shares of Common Stock, Options or Common Stock Equivalents are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed
to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of
Common Stock, Options or Common Stock Equivalents (as the case may be). The fair value of any consideration other than cash or publicly
traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten
(10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration
will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties
absent manifest error and the fees and expenses of such appraiser shall be borne by the Company. For purposes of hereof, “Adjustment
Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or sale
(or deemed issuance or sale in accordance with this Section 3(b)) of shares of Common Stock (other than rights of the type described
in Section 3(c) and Section 3(d) hereof) that could result in a decrease in the net consideration received by the Company in connection
with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar
rights).
8
(iv) Record
Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend
or other distribution payable in shares of Common Stock, Options or in Common Stock Equivalents or (B) to subscribe for or purchase shares
of Common Stock, Options or Common Stock Equivalents, then such record date will be deemed to be the date of the issuance or sale of
the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase (as the case may be).
(v) Exempt
Issuance. For the purposes of this Section 3(b), “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 or other form of equity compensation
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) shares of Common Stock
or warrants to purchase shares of Common Stock to consultants or advisors to the Company or any of its Subsidiaries pursuant to a plan,
agreement or arrangement approved by the Board of Directors, 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 Standstill Period (as defined in the Purchase Agreement), (c) securities upon the exercise or exchange of or conversion
of (i) any Securities issued pursuant to the Purchase Agreement, and/or (ii) any other securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date of the Purchase Agreement, provided that such securities have
not been amended since the date of the Purchase 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, (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 Standstill
Period (as defined in the Purchase Agreement), 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, and (e) any shares of Common Stock issued and sold pursuant to an ATM Program at prevailing market
prices for the shares of Common Stock by a bona fide investment bank.
c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells
any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any
class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number
of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are
to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the
Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation,
then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of
Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for
the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) Pro
Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution
of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification,
corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent
that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership
Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided,
however, that, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent
(or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such
Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result
in the Holder exceeding the Beneficial Ownership Limitation). To the extent that this Warrant has not been partially or completely exercised
at the time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the
Holder has exercised this Warrant.
9
e) Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person, (ii) the Company or any Subsidiary, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in
one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares
for other securities, cash or property and has been accepted by the holders of greater than 50% of the outstanding Common Stock or greater
than 50% of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions
effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which
the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly,
in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby
such other Person or group acquires greater than 50% of the outstanding shares of Common Stock or greater than 50% of the voting power
of the common equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this
Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately
prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e)
on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if
it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a
result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately
prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes
of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and
the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash
or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the
event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable
at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the
public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder an amount
of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date of the consummation
of such Fundamental Transaction; provided, however, that, if the Fundamental Transaction is not within the Company’s
control, including not approved by the Company’s Board of Directors, the Holder shall only be entitled to receive from the Company
or any Successor Entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised
portion of this Warrant, that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental
Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock
are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided,
further, that if holders of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction,
such holders of Common Stock will be deemed to have received common stock of the Successor Entity (which Successor Entity may be the
Company following such Fundamental Transaction) in such Fundamental Transaction. “Black Scholes Value” means the value
of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg determined as
of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable
contemplated Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of (1) the 30 day volatility,
(2) the 100 day volatility or (3) the 365 day volatility, each of clauses (1)-(3) as obtained from the HVT function on Bloomberg (determined
utilizing a 365 day annualization factor) as of the Trading Day immediately following the public announcement of the applicable contemplated
Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the greater of (i) the sum of the price
per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction
and (ii) the highest VWAP during the period beginning on the Trading Day immediately preceding the public announcement of the applicable
contemplated Fundamental Transaction (or the consummation of the applicable Fundamental Transaction, if earlier) and ending on the Trading
Day of the Holder’s request pursuant to this Section 3(e), (D) a remaining option time equal to the time between the date of the
public announcement of the applicable contemplated Fundamental Transaction and the Termination Date and (E) a zero cost of borrow. The
payment of the Black Scholes Value will be made by wire transfer of immediately available funds (or such other consideration) within
the later of (i) five Business Days of the Holder’s election and (ii) the date of consummation of the Fundamental Transaction.
The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of
this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder
(without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange
for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to
this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity)
equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on
the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder
to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the
purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and
which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor
Entity shall be added to the term “Company” under this Warrant (so that from and after the occurrence or consummation of
such Fundamental Transaction, each and every provision of this Warrant referring to the “Company” shall refer instead to
each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities,
jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor
Entities shall assume all of the obligations of the Company prior thereto under this Warrant with the same effect as if the Company and
such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance of doubt,
the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless of (i) whether the Company has sufficient
authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs prior to the
Initial Exercise Date.
10
f) Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice
to Holder.
i. Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly
deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number
of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common
Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock
of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer of
all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into other securities,
cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall
appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled
to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to
deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to
be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such
notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
11
h) Voluntary
Adjustment By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during the term of
this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors
of the Company.
i) Share
Combination Event Adjustment. In addition to the adjustments set forth in Section 3(a) above, if at any time and from time to time
on or after the Issue Date, there occurs any share split, share dividend, share combination recapitalization or other similar transaction
involving the Common Stock (each, a “Share Combination Event”, and each such date thereof, the “Share Combination
Event Date”) and the lowest VWAP during the period commencing five (5) consecutive Trading Days immediately preceding and ending
immediately after the five (5) consecutive Trading Days commencing on the applicable Share Combination Event Date (the “Event
Market Price”) (provided if the Share Combination Event is effective after close of trading on the primary Trading Market,
then commencing on the next Trading Day which period shall be the “Share Combination Adjustment Period”) is less than
the Exercise Price then in effect (after giving effect to the adjustment in Section 3(a) above), then at the close of trading on the
primary Trading Market on the last day of the applicable Share Combination Adjustment Period, the Exercise Price then in effect on such
fifth (5th) Trading Day shall be reduced (but in no event increased) to the Event Market Price, provided, however, that any adjusted
Exercise Price shall not be less than the Floor Price (as defined below). For the avoidance of doubt, (a) if the adjustment in the immediately
preceding sentence would otherwise result in an increase in the Exercise Price hereunder, no adjustment shall be made, (b) if this Warrant
is exercised, on any given exercise date during a Share Combination Adjustment Period, solely with respect to such portion of this Warrant
exercised on such applicable exercise date, such applicable Share Combination Adjustment Period shall be deemed to have ended on, and
included, the Trading Day immediately prior to such exercise date and the Event Market Price on such applicable exercise date will be
the lowest VWAP of the Common Stock during such Share Combination Adjustment Period immediately prior to such exercise date and ending
on, and including the Trading Day immediately prior to such exercise date and (c) all adjustments pursuant to this Section 3(i) shall
also be subject to Section 3(a) above, including any Event Market Price. As used herein, “Floor Price” shall mean
$0.06 (subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations or other similar events). An adjustment
to the Exercise Price pursuant to this Section 3(i) shall take place as a result of each Share Combination Event that occurs while this
Warrant remains outstanding.
Section
4. Transfer of Warrant.
a) Transferability.
This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part,
upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of
this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay
any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not
so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required
to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the
Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for
the purchase of Warrant Shares without having a new Warrant issued.
12
b) New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or
its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination,
the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and
shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant
Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder
of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.
Section
5. Miscellaneous.
a) No
Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends
or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set
forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to
Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be required
to net cash settle an exercise of this Warrant.
b) Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include
the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make
and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
13
d) Authorized
Shares.
The
Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with
the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants
that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction thereof.
14
e) Jurisdiction.
All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement.
f) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not
utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as
a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of
this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which
results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs
and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the
Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h) Notices.
Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered
in accordance with the notice provisions of the Purchase Agreement.
i) Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase
price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the
Company.
j) Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any
action for specific performance that a remedy at law would be adequate.
k) Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable
by the Holder or holder of Warrant Shares.
l) Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
m) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this
Warrant.
********************
(Signature
Page Follows)
15
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above
indicated.
fingermotion,
inc.
By:
Name:
Jolie
Kahn
Title:
Chief
Executive Officer
16
NOTICE
OF EXERCISE
To: fingermotion,
inc.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised
in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment
shall take the form of (check applicable box):
[
] in lawful money of the United States; or
[ ] [if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name
of Investing Entity: __________________________________________________________________________
Signature
of Authorized Signatory of Investing Entity: ____________________________________________________
Name
of Authorized Signatory: ______________________________________________________________________
Title
of Authorized Signatory: _______________________________________________________________________
Date:
__________________________________________________________________________________________
EXHIBIT
B
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
Name:
(Please
Print)
Address:
(Please
Print)
Phone
Number:
Address:
Dated:
_______________ __, ______
Holder’s
Signature: ___________________________
Holder’s
Address: ___________________________
EX-10.4
EX-10.4
Filename: ex10-4.htm · Sequence: 5
Exhibit
10.4
Execution Version
REGISTRATION
RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”) is made and entered into as of August 16, 2026, by and between FingerMotion,
Inc., a Delaware corporation (the “Company”), and each of the several buyers signatory hereto (each such Buyer, a
“Buyer” and, collectively, the “Buyers”).
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and each Buyer (the
“Purchase Agreement”), pursuant to which the Company agreed to issue and sell to the Buyers Senior Secured Convertible
Notes due August 16, 2027, in the original principal amount of $5,000,000 (the “Notes”) and Common Stock purchase
warrants (the “Warrants”).
The
Company and each Buyer hereby agrees as follows:
1.
Definitions.
Capitalized
terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the
Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Advice”
shall have the meaning set forth in Section 6(c).
“Effectiveness
Deadline” means, (i) with respect to the Initial Registration Statement required to be filed hereunder, the 60th calendar day
following the Closing Date (or the 90th calendar day in the event of a full review by the Commission), or if the Company is not then
eligible to register the resale of the Registrable Securities on Form S-3, the 75th calendar day following the date hereof (or the 105th
calendar day in the event of a full review by the Commission), and (ii) with respect to any additional Registration Statements which
may be required pursuant to Section 2(c) or Section 3(c), the 60th calendar day following the date on which an 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 Deadline as to such Registration Statement shall be the 5th Trading Day following the date on which the
Company is so notified if such date precedes the dates otherwise required above, provided, further, if such Effectiveness Deadline falls
on a day that is not a Trading Day, then the Effectiveness Deadline 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, (i) with respect to the Initial Registration Statement required hereunder, the 15th calendar day following the
Closing Date, and, (ii) with respect to any additional Registration Statements which may be required pursuant to Section 2(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, and with respect to any additional Registration Statements which may be required pursuant to Section 3(c), not later than
the 30th calendar day after the necessity therefor arises.
“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).
“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, (i) 150% of the maximum number of Conversion Shares issuable upon conversion
of the Notes (assuming for purposes hereof that (x) such Notes are convertible at the prevailing Redemption Conversion Price (as defined
in the Notes), and (y) any such conversion shall not take into account any limitations on the conversion of the Notes set forth therein),
(ii) 100% of the maximum number of Warrant Shares (as defined in the Purchase Agreement) issuable upon exercise of the Warrants, and
(iii) 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) the Registration Statement with respect to the resale 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).
2
“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.
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 the resale of 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 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 Deadline, and shall use its best efforts to keep such Registration
Statement continuously effective under the Securities Act until the date that all Registrable Securities covered by such Registration
Statement are no longer Registrable Securities (the “Effectiveness Period”). The Company shall telephonically request
effectiveness of a Registration Statement as of 5:00 p.m. (New York City time) on a Trading Day. The Company shall immediately notify
the Holders via e-mail of the effectiveness of a Registration Statement on the same Trading Day that the Company telephonically confirms
effectiveness with the Commission, which shall be the date requested for effectiveness of such Registration Statement. The Company shall,
by 9:30 a.m. (New York City time) on the Trading Day after the effective date of such Registration Statement, file a final Prospectus
with the Commission as required by Rule 424. Failure to 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).
3
(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 commercially reasonable 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 commercially reasonable 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 to register a lesser number, the number of securities to be registered on such Registration
Statement will be reduced as follows: (i) first, the Company shall reduce or eliminate any securities to be included other than Registrable
Securities; and (ii) second, the Company shall reduce Registrable Securities on a pro rata basis based on the total number of unregistered
Registrable Securities held by such Holders; provided, however, that all Warrant Shares shall be removed before any Conversion Shares
are removed. In the event of a cutback hereunder, the Company shall give the Holder at least five (5) Trading Days prior written notice
along with the calculations as to such Holder’s allotment. In the event the Company amends the Initial Registration Statement in
accordance with the foregoing, the Company will use its commercially reasonable 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, including any Warrant Shares, that were
not registered for resale on the Initial Registration Statement, as amended.
4
(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
subsequent withdraws the filing of the Registration Statement, the Company shall be deemed to have not satisfied this clause (i) as of
the Filing Date), or (ii) the Company fails to file with the Commission a request for acceleration of a Registration Statement in accordance
with Rule 461 promulgated by the Commission pursuant to the Securities Act, within five (5) Trading Days of the date that the Company
is notified (orally or in writing, whichever is earlier) by the Commission that such Registration Statement will not be “reviewed”
or will not be subject to further review, or (iii) prior to the effective date of a Registration Statement, the Company fails to file
a pre-effective amendment and otherwise respond in writing to comments made by the Commission in respect of such Registration Statement
within 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 any Registrable Securities
is not declared effective by the Commission by its Effectiveness Deadline (provided if the Registration Statement does not allow for
the resale of Registrable Securities at prevailing market prices (i.e., only allows for fixed price sales), the Company shall have been
deemed to have not satisfied this clause) or (v) after the effective date of a Registration Statement, such Registration Statement ceases
for any reason to remain continuously effective as to all Registrable Securities included in such Registration Statement, other than
with respect to the filing of a post-effective amendment to a Registration Statement on Form S-1 to update such Registration Statement
to incorporate by reference or otherwise include the information contained in an Annual Report on Form 10-K filed by the Company with
the Commission, or the Holders are otherwise not permitted to utilize the Prospectus therein to resell such Registrable Securities, for
more than 10 consecutive calendar days or more than an aggregate of 15 calendar days (which need not be consecutive calendar days) during
any 12-month period (any such failure or breach being referred to as an “Event”, and for purposes of clauses (i) and
(iv), the date on which such Event occurs, and for purpose of clause (ii) the date on which such 5 Trading Day period is exceeded, and
for purpose of clause (iii) the date on which such 10 calendar day period is exceeded, and for purpose of clause (v) the date on which
such 10 or 15 calendar day period, as applicable, is exceeded being referred to as “Event Date”), then, in addition
to any other rights the Holders may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of
each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company
shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 2.0% multiplied
by the sum of the Outstanding Value (as defined in the Notes) of the Notes. The parties agree that the maximum aggregate liquidated damages
payable to a Holder under this Agreement shall be 10.00% of 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 14% 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. No Event shall be deemed to have occurred under this Section 2(d) if such securities
are eligible for resale without volume or manner-of-sale restrictions and the Company remains in compliance with the current public information
requirement under Rule 144.
(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.
Notwithstanding anything to the contrary contained herein, any reference herein to a filing of an alternative form where Form S-3 is
not available shall include such filing on Form S-1.
5
(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 5 Trading Days prior to the filing of each Registration Statement and not less than 1 Trading Day prior to the filing of
any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated
therein by reference), the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed, which documents
(other than those incorporated or deemed to be incorporated by reference) will be subject to the review of such Holders, and (ii) cause
its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be necessary,
in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation within the meaning of the Securities
Act. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which the
Holders of a majority of the Registrable Securities shall reasonably object in good faith, provided that, the Company is notified of
such objection in writing no later than four (4) Trading Days after the Holders have been so furnished copies of a Registration Statement
or 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, other than with respect to
the filing of a post-effective amendment on Form S-1 after the Company has filed an Annual Report on Form 10-K with the Commission, provided
that (x) such Annual Report on Form 10-K has been properly filed with the Commission in accordance with the Exchange Act and (y) the
Company files such post-effective amendment no later than ten (10) days after the filing of such Annual Report on Form 10-K, 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 practicable to any comments received from the Commission
with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably practicable 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.
6
(c)
If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 75% 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 Filing Date, an additional Registration Statement covering the resale by the Holders of not less than the number of such Registrable
Securities.
Notwithstanding
the foregoing, if at any time any Registrable Securities are not registered on an effective Registration Statement due to any limitation
related to the Exchange Cap (as defined in the Notes), the Company shall, no later than 30 calendar days following the Exchange Cap Stockholder
Approval Date file an additional Registration Statement or post-effective amendment covering the resale of all such previously excluded
Registrable Securities. Any failure to file timely or cause such Registration Statement or amendment to become effective shall constitute
an Event for purposes as outlined in Section 2(d).
(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 practicable
(and, in the case of (i)(A) below, not less than 1 Trading Day prior to such filing) and (if requested by any such Person) confirm such
notice in writing no later than 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, and the Company agrees that the Holders shall not have any duty of confidentiality
to the Company or any of its Subsidiaries and shall not have any duty to the Company or any of its Subsidiaries not to trade on the basis
of such information.
7
(e)
Use its commercially reasonable 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.
(i)
If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted
by the Purchase Agreement or the Notes, as applicable, 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.
8
(j)
Upon the occurrence of any event contemplated by Section 3(d), as promptly as reasonably practicable 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 commercially reasonable 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 45 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 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 3 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.
9
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 shares of Common Stock are 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.
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 shares 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).
10
(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.
(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.
11
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 10 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.
(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.
12
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 until all Registrable Securities
are registered pursuant to a Registration Statement that is declared effective by the Commission, provided that this Section 6(b) shall
not prohibit the Company from filing amendments to registration statements filed prior to the date of this Agreement or a Registration
Statement on Form S-8 relating to any stock option or similar plan.
(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 commercially reasonable 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).
13
(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.
(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 or Notes, as applicable, and for the avoidance of doubt, shall be in writing.
(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 the Purchase Agreement and Notes, as applicable.
(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(i), 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.
14
(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.
(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 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)
15
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.
FINGERMOTION, INC.
By:
Name:
Jolie Kahn
Title:
Chief Executive Officer
Signature
Page to Registration Rights Agreement
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.
NAME OF HOLDER:
Alto Opportunity Master Fund, SPC –
Segregated Master Portfolio B
By:
Name:
Waqas Khatri
Title:
Managing Member
Signature
Page to Registration Rights Agreement
Annex
A
Plan
of Distribution
Each
Selling Stockholder (the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest
may, from time to time, sell any or all of their securities covered hereby on the Principal Market or any other stock exchange, market
or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices.
A Selling Stockholder may use any one or more of the following methods when selling securities:
●
ordinary brokerage transactions
and transactions in which the broker-dealer solicits Buyers;
●
block trades in which the
broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate
the transaction;
●
purchases by a broker-dealer
as principal and resale by the broker-dealer for its account;
●
an exchange distribution
in accordance with the rules of the applicable exchange;
●
privately negotiated transactions;
●
settlement of short sales;
●
in transactions through broker-dealers
that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security;
●
through the writing or settlement
of options or other hedging transactions, whether through an options exchange or otherwise;
●
through the distribution
of securities by any Selling Stockholder to its partners, members or securityholders;
●
a combination of any such
methods of sale; or
●
any other method permitted
pursuant to applicable law.
The
Selling Stockholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act of 1933,
as amended (the “Securities Act”), if available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the Buyer of securities, from the Buyer) in amounts
to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of
a customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal transaction a markup or markdown
in compliance with FINRA Rule 2121.
In
connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they
assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan
or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option
or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the
delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer
or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).The Company
is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has
agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.
The
Selling Stockholders may from time to time pledge or grant a security interest in some or all of their securities to their broker-dealers
under the margin provisions of customer agreements or to other parties to secure other obligations. If a Selling Stockholder defaults
on a margin loan or other secured obligation, the broker-dealer or secured party may, from time to time, offer and sell the securities
pledged or secured thereby pursuant to this prospectus.
A
Selling Stockholder that is an entity may elect to make a pro rata in-kind distribution of securities to its members, partners or shareholders
pursuant to the registration statement of which this prospectus is part by delivering a prospectus. To the extent that such members,
partners or shareholders are not affiliates of the Company, such members, partners or shareholders would thereby receive freely tradeable
securities pursuant to the distribution through a registration statement.
We
agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders
without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for
the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar
effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule
of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable
state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered
or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is
complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously
engage in market making activities with respect to the shares of common stock for the applicable restricted period, as defined in Regulation
M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the
shares of common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this prospectus to each Buyer at or prior to the time of the sale
(including by compliance with Rule 172 under the Securities Act).
Annex
B
SELLING
STOCKHOLDER
The
shares of common stock being offered by the selling stockholders are those issuable to the selling stockholders upon conversion of the
notes and exercise of the warrants. For additional information regarding the issuances of those shares of common stock, notes and warrants,
see “Private Placement of Notes and Warrants” above. We are registering the shares of common stock in order to permit the
selling stockholders to offer the shares for resale from time to time. Except for the ownership of the notes, warrants and shares of
common stock issuable upon conversion or exercise thereof, the selling stockholders have not had any material relationship with us within
the past three years.
The
table below lists the selling stockholders and other information regarding the beneficial ownership of the shares of common stock by
each selling stockholder. The second column lists the number of shares of common stock beneficially owned by each selling stockholder,
based on its ownership of the notes and warrants, as of ________, 2026, assuming conversion of the notes and exercise of the warrants
held by the selling stockholders on that date, without regard to any limitations on conversion or exercise.
The
third column lists the shares of common stock being offered by this prospectus by the selling stockholders.
In
accordance with the terms of a registration rights agreement with the selling stockholders, this prospectus generally covers the resale
of the sum of (i) the maximum number of shares of common stock issuable upon conversion of the notes, determined as if the outstanding
notes were converted in full at the applicable conversion price set forth in the notes, and (ii) the maximum number of shares of common
stock issuable upon exercise of the warrants, determined as if the outstanding warrants were exercised in full as of the trading day
immediately preceding the date this registration statement was initially filed with the SEC, each as of the trading day immediately preceding
the applicable date of determination and all subject to adjustment as provided in the registration rights agreement, without regard to
any limitations on the conversion of the notes or exercise of the warrants. The fourth column assumes the sale of all of the shares offered
by the selling stockholders pursuant to this prospectus.
Under
the terms of the notes, a selling stockholder may not convert the notes to the extent such conversion would cause such selling stockholder,
together with its affiliates and attribution parties, to beneficially own a number of shares of common stock which would exceed 9.99%
of our then outstanding shares of common stock following such conversion, excluding for purposes of such determination shares of common
stock issuable upon conversion of such notes which have not been converted. Under the terms of the warrants, a selling stockholder may
not exercise the warrants to the extent such exercise would cause such selling stockholder, together with its affiliates and attribution
parties, to beneficially own a number of shares of common stock which would exceed 4.99% of our then outstanding shares of common stock
following such exercise, excluding for purposes of such determination shares of common stock issuable upon exercise of such warrants
which have not been exercised. The number of shares in the second and fourth columns do not reflect these limitations. The selling stockholders
may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
Name
of Selling Stockholder
Number
of Shares
of
Common Stock
Owned
Prior to Offering
Maximum
Number of Shares of
Common
Stock to be Sold
Pursuant
to this Prospectus
Number
of Shares
of
Common Stock
Owned
After Offering
Annex
C
FINGERMOTION,
INC.
Selling
Stockholder Notice and Questionnaire
The
undersigned beneficial owner of shares of common stock (the “Registrable Securities”) of FingerMotion, Inc., a Delaware
corporation the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange
Commission (the “Commission”) a registration statement (the “Registration Statement”) for the registration
and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities,
in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this
document is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth
below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.
Certain
legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly,
holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.
NOTICE
The
undersigned beneficial owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable
Securities owned by it in the Registration Statement.
The
undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:
QUESTIONNAIRE
1.
Name.
(a)
Full Legal Name of Selling Stockholder
(b)
Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:
(c)
Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to
vote or dispose of the securities covered by this Questionnaire):
2.
Address for Notices to
Selling Stockholder:
Telephone:
E-Mail:
Contact
Person:
3.
Broker-Dealer Status:
(a)
Are you a broker-dealer?
Yes
☐ No ☐
(b)
If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to
the Company?
Yes
☐ No ☐
Note:
If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the
Registration Statement.
(c)
Are you an affiliate of a broker-dealer?
Yes
☐ No ☐
(d)
If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business,
and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly,
with any person to distribute the Registrable Securities?
Yes
☐ No ☐
Note:
If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the
Registration Statement.
4.
Beneficial Ownership of Securities of the Company Owned
by the Selling Stockholder.
Except
as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than
the securities issuable pursuant to the Purchase Agreement.
(a)
Type and Amount of other securities beneficially owned by the Selling Stockholder:
5.
Relationships with the Company:
Except
as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5%
of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three years.
State
any exceptions here:
The
undersigned agrees to promptly notify the Company of any material inaccuracies or changes in the information provided herein that may
occur subsequent to the date hereof at any time while the Registration Statement remains effective; provided, that the undersigned shall
not be required to notify the Company of any changes to the number of securities held or owned by the undersigned or its affiliates.
By
signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and
the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto.
The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment
of the Registration Statement and the related prospectus and any amendments or supplements thereto.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either
in person or by its duly authorized agent.
Date:
Beneficial Owner:
Name:
Title:
PLEASE
EMAIL A PDF COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO:
EX-10.5
EX-10.5
Filename: ex10-5.htm · Sequence: 6
Exhibit
10.5
Execution
Version
SECURITY
AGREEMENT
This
SECURITY AGREEMENT, dated as of August 16, 2026 (this “Agreement”), is among FingerMotion, Inc., a Delaware corporation
(“Debtor”), the holders of the Notes (as defined below) and Alto Opportunity Master Fund, SPC – Segregated Master
Portfolio B, as collateral agent (in such capacity, the “Agent” and, collectively with the holders of the Notes, the
“Secured Parties”).
W
I T N E S S E T H:
WHEREAS,
Debtor and Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B (“Alto”), entered into that certain Securities
Purchase Agreement dated as of August 16, 2026 (the “Securities Purchase Agreement”), pursuant to which Debtor agreed to
issue to Alto Notes due August 16, 2027, in the original principal amount of $5,000,000 (the “Notes”);
WHEREAS,
it is a requirement under the Securities Purchase Agreement that Debtor grant to the Secured Parties a security interest in substantially
all of its assets to secure its obligations under the Notes;
NOW,
THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
1.
Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.
Terms used but not otherwise defined in this Agreement (x) that are defined in Article 9 of the UCC (such as “account”, “chattel
paper”, “commercial tort claim”, “deposit account”, “document”, “equipment”, “fixtures”,
“general intangibles”, “goods”, “instruments”, “inventory”, “investment property”,
“letter-of-credit rights”, “proceeds” and “supporting obligations”) shall have the respective meanings
given such terms in Article 9 of the UCC, (y) that are defined in the Notes shall have the respective meanings given to such terms in
the Notes, and (z) that are defined in the Securities Purchase Agreement or the Note shall have the respective meanings given to such
terms in the Securities Purchase Agreement or the Note, as applicable.
(a)
“Collateral” means the following personal property of Debtor, whether presently owned or existing or hereafter acquired
or coming into existence, wherever situated, and all additions and accessions thereto and all substitutions and replacements thereof,
and all proceeds, products and accounts thereof, including, without limitation, all proceeds from the sale or transfer of the Collateral
and of insurance covering the same and of any tort claims in connection therewith, and all dividends, interest, cash, notes, securities,
equity interest or other property at any time and from time to time acquired, receivable or otherwise distributed in respect of, or in
exchange for, any or all of the Pledged Securities:
(i)
All goods, including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind and nature and wherever
situated, together with all documents of title and documents representing the same, all additions and accessions thereto, replacements
therefor, all parts therefor, and all substitutes for any of the foregoing and all improvements thereto; and (B) all inventory;
(ii)
All contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests, shares
or other securities, rights under any of the Organizational Documents, agreements related to the Pledged Securities, licenses, distribution
and other agreements, computer software (whether “off-the-shelf”, licensed from any third party or developed by Debtor),
computer software development rights, leases, franchises, customer lists, quality control procedures, grants and rights, goodwill, Intellectual
Property and income tax refunds;
(iii)
All accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising,
goods, equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties with respect
to each account, including any right of stoppage in transit;
(iv)
All documents, letter-of-credit rights, instruments and chattel paper;
(v)
All commercial tort claims;
(vi)
All deposit accounts and all cash (whether or not deposited in such deposit accounts and, for clarity, all such accounts shall be subject
to customary control agreements in favor of the Agent, including the DACA with respect to the Deposit Account);
(vii)
All investment property;
(viii)
All supporting obligations;
(ix)
All files, records, books of account, business papers, and computer programs; and
(x)
The products and proceeds of all of the foregoing Collateral set forth in clauses (i) – (ix) above.
Notwithstanding
anything to the contrary contained herein, the “Collateral” shall not include (a) any property that is the subject
of a lien securing purchase money indebtedness or leases permitted under the Notes pursuant to documents that prohibit Debtor from granting
any other liens in such property, (b) any application to register a trademark with the United States Patent and Trademark Office on the
basis of an “intent-to-use” until an applicable statement of use has been submitted and accepted by the United States Patent
and Trademark Office with respect thereto, (c) any leasehold real property interests; (d) any lease, license or other contract of Debtor
if the grant of a security interest in such lease, license or contract in the manner contemplated by this Agreement is prohibited by
the terms of such lease, license or contract or by applicable law and would result in the termination of such lease, license or contract
or give the other parties thereto the right to terminate, accelerate or otherwise adversely alter Debtor’s rights, titles and interests
thereunder (including upon the giving of notice or the lapse of time or both), and (e) motor vehicles and other equipment the perfection
of a security interest in which is governed by certificate of title statutes.
2
(b)
“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual
property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights
arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered
and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United States Copyright Office, (ii) all letters patent of
the United States, any other country or any political subdivision thereof, all reissues and extensions thereof, and all applications
for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, (iii)
all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade dress, service marks, logos,
domain names and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired,
all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof,
or otherwise, and all common law rights related thereto, (iv) all trade secrets arising under the laws of the United States, any other
country or any political subdivision thereof, (v) all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all
licenses for any of the foregoing, and (vii) all causes of action for infringement of the foregoing.
(c)
“Majority in Interest” means, at any time of determination, the majority in interest (based on then-outstanding principal
amounts of Notes at the time of such determination) of the Secured Parties.
(d)
“Necessary Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment duly
executed and such other instruments or documents as the Agent (as that term is defined below) may reasonably request.
(e)
“Obligations” means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or
several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing to, of Debtor to the Secured Parties,
in each case arising under this Agreement, the Notes, the Securities Purchase Agreement, or any other agreements or instruments executed
by Debtor in connection therewith, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and
later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any
part of such payment is avoided or recovered directly or indirectly from any of the Secured Parties as a preference, fraudulent transfer
or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time. Without limiting the
generality of the foregoing, the term “Obligations” shall include, without limitation: (i) principal of, and interest
on the Notes and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of
Debtor from time to time under or in connection with this Agreement, the Notes, the Securities Purchase Agreement, or any other agreements
or instruments executed by Debtor in connection therewith; (iii) enforcement costs and attorney’s fees and expenses payable pursuant
to the terms of the foregoing; and (iv) all amounts (including but not limited to post-petition interest) in respect of the foregoing
that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving Debtor.
3
(f)
“Organizational Documents” means with respect to Debtor, the documents by which Debtor was organized (such as a certificate
of incorporation, certificate of limited partnership or articles of organization, and including, without limitation, any certificates
of designation for preferred stock or other forms of preferred equity) and which relate to the internal governance of Debtor (such as
bylaws, a partnership agreement or an operating, limited liability or members agreement).
(g)
Reserved.
(h)
“Pledged Interests” shall have the meaning ascribed to such term in Section 4(j).
(i)
“Pledged Securities” shall have the meaning ascribed to such term in Section 4(i).
(j)
“UCC” means the Uniform Commercial Code of the State of New York and/or any other applicable law of any state or states
which has jurisdiction with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent
of the parties that defined terms in the UCC should be construed in their broadest sense so that the term “Collateral” will
be construed in its broadest sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that broaden the
definitions, they are incorporated herein and if existing definitions in the UCC are broader than the amended definitions, the existing
ones shall be controlling.
2.
Grant of Security Interest in Collateral. To secure the complete and timely payment, performance and discharge in full,
as the case may be, of all of the Obligations, Debtor hereby unconditionally and irrevocably pledges, grants and hypothecates to the
Agent for the benefit of the Secured Parties a security interest in and to, a lien upon and a right of set-off against all of its right,
title and interest of whatsoever kind and nature in and to, the Collateral (a “Security Interest” and, collectively,
the “Security Interests”).
3.
Delivery of Certain Collateral. As soon as reasonably practical after the execution of this Agreement, Debtor shall deliver
or cause to be delivered to the Agent (a) any and all certificates and other instruments representing or evidencing the Pledged Securities,
and (b) any and all certificates and other instruments or documents representing any of the other Collateral which require or permit
possession by the Agent to perfect its Security Interest therein (but excluding checks to be deposited in the ordinary course of business
and any items that represent obligations or value not in excess of $250,000 individually or $500,000 in the aggregate), in each case,
together with all Necessary Endorsements. Debtor is, contemporaneously with the execution hereof, delivering to Agent, or have previously
delivered to Agent, a true and correct copy of each Organizational Document governing any of the Pledged Securities.
4
4.
Representations, Warranties, Covenants and Agreements of Debtor. Except as disclosed in the SEC Reports or set forth under
the corresponding section of the disclosure schedules delivered to the Secured Parties concurrently herewith (the “Disclosure
Schedules”), which Disclosure Schedules shall be deemed a part hereof, Debtor represents and warrants to, and covenants and
agrees with, the Secured Parties as follows:
(a)
Debtor has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement
and otherwise to carry out its obligations hereunder. The execution, delivery and performance by Debtor of this Agreement and the filings
contemplated therein have been duly authorized by all necessary action on the part of Debtor and no further action is required by Debtor.
This Agreement has been duly executed by Debtor. This Agreement constitutes the legal, valid and binding obligation of Debtor, enforceable
against Debtor in accordance with its terms except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization
and similar laws of general application relating to or affecting the rights and remedies of creditors and by general principles of equity.
(b)
Debtor has no place of business or offices where its respective books of account and records are kept (other than temporarily at the
offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth in Schedule 2 (other than
Collateral with a book or fair market value (whichever is less) not exceeding $500,000 in any such location or $1,000,000 in the aggregate
for all such locations, Collateral in transit between locations or out for repair or refurbishment, or which consists of laptops or other
equipment used by an employee of a Debtor in the ordinary course of business). Except as specifically set forth on Schedule 2, Debtor
is the lessee or record owner of the real property where such Collateral is located, and there exist no mortgages or other liens on any
such real property except for Permitted Liens (as defined in the Notes). Except as disclosed on Schedule 2, (other than Collateral with
a value not exceeding $1,000,000 in the aggregate and Collateral in transit between locations or out for repair or refurbishment), none
of such Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor.
(c)
Except for Permitted Liens (as defined in the Notes) and except as set forth in Schedule 2, Debtor is the sole legal and beneficial owner
of the Collateral (except for licenses granted by Debtor in the ordinary course of business and except for inventory and equipment that
is provided to Debtor’s customers in the ordinary course of business), free and clear of any liens, security interests, encumbrances,
rights or claims, and is fully authorized through all corporate or limited liability company power, as applicable, to grant the Security
Interests. Except as set forth in Schedule 2, there is not on file in any governmental or regulatory authority, agency or recording office
an effective financing statement, security agreement, license or transfer or any notice of any of the foregoing (other than those that
will be filed in favor of the Secured Parties pursuant to this Agreement) covering or affecting any of the Collateral. Except as set
forth in Schedule 2, as long as this Agreement shall be in effect, Debtor shall not execute and shall not knowingly permit to be on file
in any such office or agency any other financing statement or other document or instrument (except to the extent filed or recorded in
favor of the Secured Parties pursuant to the terms of this Agreement or in connection with any Permitted Lien).
5
(d)
No written claim has been received that any Collateral or Debtor’s use of any Collateral violates the rights of any third party.
There has been no adverse decision to Debtor’s claim of ownership rights in or exclusive rights to use the Collateral in any jurisdiction
or to Debtor’s right to keep and maintain such Collateral in full force and effect, and there is no proceeding involving said rights
pending or, to the best knowledge of Debtor, threatened before any court, judicial body, administrative or regulatory agency, arbitrator
or other governmental authority.
(e)
Debtor shall at all times maintain its books of account and records relating to the Collateral at its principal place of business and
its Collateral at the locations set forth on Schedule 2 (which shall be deemed to be updated from time to time pursuant to valid notice
received by the Secured Parties of new locations in accordance with this subsection (e)) and may not relocate such books of account and
records or tangible Collateral unless it delivers to the Secured Parties at least 10 days prior to such relocation (i) written notice
of such relocation and the new location thereof and (ii) evidence that appropriate financing statements under the UCC and other necessary
documents, if any, have been filed and recorded and other steps have been taken to perfect the Security Interests to create in favor
of the Agent for the benefit of the Secured Parties a valid, perfected and continuing perfected first priority lien in the Collateral.
(f)
This Agreement creates in favor of the Agent for the benefit of the Secured Parties a valid security interest in the Collateral, subject
only to Permitted Liens (as defined in the Notes), securing the payment and performance of the Obligations. Upon making the filings described
in the immediately following paragraph, all security interests created hereunder in any Collateral which may be perfected by filing Uniform
Commercial Code financing statements shall have been duly perfected. Except for the filing of the Uniform Commercial Code financing statements
referred to in the immediately following paragraph, the recordation of the Intellectual Property Security Agreement (as defined in Section
4(n) hereof) with respect to copyrights and copyright applications in the United States Copyright Office referred to in paragraph (m),
the execution and delivery of the DACA with respect to the Deposit Account on or prior to the Closing Date and, with respect to each
other deposit account of Debtor constituting Collateral, deposit account control agreements satisfying the requirements of Section 9-104(a)(2)
of the UCC, and the delivery of the certificates and other instruments provided in Section 3, no action is necessary to create, perfect
or protect the security interests created hereunder. Without limiting the generality of the foregoing, except for the filing of said
financing statements, the recordation of said Intellectual Property Security Agreement and the execution and delivery of said DACA and
deposit account control agreements, no consent of any third parties and no authorization, approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for (i) the execution, delivery and performance of this
Agreement, (ii) the creation or perfection of the Security Interests created hereunder in the Collateral to the extent such Security
Interests can be created and perfected by such actions or (iii) the enforcement of the rights of the Agent and the Secured Parties hereunder.
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(g)
Debtor hereby authorizes the Agent to file one or more financing statements under the UCC, with respect to the Security Interests, with
the proper filing and recording agencies in any jurisdiction deemed proper by it.
(h)
The execution, delivery and performance of this Agreement by Debtor does not (i) violate any of the provisions of any Organizational
Documents of Debtor or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law, rule
or regulation applicable to Debtor or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any material agreement, credit facility, debt or other material instrument (evidencing Debtor’s
debt or otherwise) or other material understanding to which Debtor is a party or by which any property or asset of Debtor is bound or
affected. If any, all required consents (including, without limitation, from shareholders or creditors of Debtor) necessary for Debtor
to enter into and perform its obligations hereunder have been obtained.
(i)
The share capital and other equity interests listed on Schedule 1 (the “Pledged Securities”) represent all of the
share capital and other equity interests of the direct Subsidiaries, and represent all share capital and other equity interests owned
directly by Debtor. All of the Pledged Securities are duly authorized, validly issued, fully paid and nonassessable, and Debtor is the
legal and beneficial owner of the Pledged Securities, free and clear of any lien, security interest or other encumbrance except for the
security interests created by this Agreement and other Permitted Liens (as defined in the Notes).
(j)
The ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the “Pledged
Interests”) by their express terms do not provide that they are securities governed by Article 8 of the UCC and are not held
in a securities account or by any financial intermediary.
(k)
Except for Permitted Liens (as defined in the Notes), Debtor shall at all times maintain the liens and Security Interests provided for
hereunder as valid and perfected first priority liens and security interests in the Collateral in favor of the Secured Parties until
this Agreement and the Security Interest hereunder shall be terminated pursuant to Section 14 hereof. Debtor hereby agrees to defend
the same against the claims of any and all persons and entities. Debtor shall safeguard and protect all Collateral for the account of
the Secured Parties. At the request of the Agent, Debtor will sign and deliver to the Agent on behalf of the Secured Parties at any time
or from time to time one or more financing statements pursuant to the UCC in form reasonably satisfactory to the Agent and will pay the
cost of filing the same in all public offices wherever filing is, or is deemed by the Agent to be, necessary or desirable to effect the
rights and obligations provided for herein. Without limiting the generality of the foregoing, Debtor shall pay all fees, taxes and other
amounts necessary to maintain the Collateral and the Security Interests hereunder (other than those fees and taxes that are being contested
in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP), and Debtor shall
obtain and furnish to the Agent from time to time, upon demand, such releases and/or subordinations of claims and liens which may be
required to maintain the priority of the Security Interests hereunder.
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(l)
Within 30 days after the date hereof (or such later date agreed to by the Agent), Debtor shall cause each insurance policy issued in
connection herewith to provide, and the insurer issuing such policy to certify to the Agent, that (a) the Agent will be named as lender
loss payee and additional insured under each such insurance policy; (b) if such insurance be proposed to be cancelled or materially changed
for any reason whatsoever, such insurer will promptly notify the Agent and such cancellation or change shall not be effective as to the
Agent for at least thirty (30) days after receipt by the Agent of such notice, unless the effect of such change is to extend or increase
coverage under the policy; and (c) the Agent will have the right (but no obligation) at its election to remedy any default in the payment
of premiums within ten (10) days of notice from the insurer of such default.
(m)
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Parties promptly, in sufficient detail, of any
material adverse change in the Collateral, taken as a whole, and of the occurrence of any event which would have a material adverse effect
on the value of the Collateral, taken as a whole, or on the Secured Parties’ security interest, through the Agent, therein.
(n)
Debtor shall promptly execute and deliver to the Agent such further deeds, mortgages, assignments, security agreements, financing statements
or other instruments, documents, certificates and assurances and take such further action as the Agent may from time to time reasonably
request and may in its sole discretion deem necessary to perfect, protect or enforce the Secured Parties’ security interest in
the Collateral including, without limitation, if applicable and if requested by the Agent, the execution and delivery of a separate security
agreement with respect to Debtor’s Intellectual Property (“Intellectual Property Security Agreement”) in which
the Agent has been granted a security interest hereunder, substantially in a form reasonably acceptable to the Agent, which Intellectual
Property Security Agreement, other than as stated therein, shall be subject to all of the terms and conditions hereof.
(o)
Debtor shall permit the Agent and its representatives and agents to inspect the Collateral during normal business hours and upon 3 days
prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the Agent from time to time;
provided, that unless an Event of Default has occurred and is continuing, Debtor shall not be obligated to reimburse the Agent for more
than one such inspection in any calendar year and inspection shall not occur more than once in any calendar year.
(p)
Debtor shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes
of action and accounts receivable in respect of the Collateral except as otherwise permitted in accordance with the terms of the Notes.
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(q)
All information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of Debtor with respect to the Collateral
is accurate and complete in all material respects as of the date furnished.
(r)
Except as permitted by the Transaction Documents, Debtor shall at all times preserve and keep in full force and effect their respective
valid existence and good standing in its jurisdiction of organization and any rights and franchises material to its business.
(s)
No Debtor will change its name, type of organization, jurisdiction of organization, organizational identification number (if it has one),
legal or corporate structure, or identity, or add any new fictitious name unless it provides at least 10 days prior written notice to
the Secured Parties of such change and, at the time of such written notification, Debtor provides any financing statements or fixture
filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
(t)
Except in the ordinary course of business or as otherwise permitted by the Transaction Documents, no Debtor may consign any of its inventory
or sell any of its inventory on bill and hold, sale or return, sale on approval, or other conditional terms of sale without the consent
of the Agent which shall not be unreasonably withheld.
(u)
No Debtor may relocate its chief executive office to a new location without providing 10 days prior written notification thereof to the
Secured Parties and so long as, at the time of such written notification, Debtor provides any financing statements or fixture filings
necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
(v)
Debtor was organized and remains organized solely under the laws of the state set forth next to Debtor’s name on Schedule 3, which
Schedule 3 sets forth Debtor’s organizational identification number or, if Debtor does not have one, states that one does not exist.
(w)
(i) The actual name of Debtor is the name set forth in Schedule 3; (ii) no Debtor has any trade names except as set forth on Schedule
3; (iii) no Debtor has used any name other than that stated in the preamble hereto or as set forth in Schedule 3 for the preceding five
years; and (iv) no entity has merged into Debtor or been acquired by Debtor within the past five years except as set forth in Schedule
3.
(x)
At any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require or
permit possession by the secured party to perfect the security interest created hereby, the applicable Debtor shall deliver such Collateral
to the Agent.
(y)
Debtor, in its capacity as issuer, hereby agrees, to comply with any and all orders and instructions of Agent regarding the Pledged Interests
consistent with the terms of this Agreement without the further consent of Debtor as contemplated by Section 8-106 (or any successor
section) of the UCC. Further, Debtor agrees that it shall not enter into a similar agreement (or one that would confer “control”
within the meaning of Article 8 of the UCC) with any other person or entity.
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(z)
Debtor shall cause all tangible chattel paper constituting Collateral with a book or fair market value (whichever is lower) in excess
of $250,000 individually or $1,000,000 in the aggregate to be delivered to the Agent, or, if such delivery is not possible, then to cause
such tangible chattel paper to contain a legend noting that it is subject to the security interest created by this Agreement. To the
extent that any Collateral consists of electronic chattel paper, the applicable Debtor shall cause the underlying chattel paper to be
“marked” within the meaning of Section 9-105 of the UCC (or successor section thereto).
(aa)
With respect to the Deposit Account, Debtor shall cause the DACA, in form and substance satisfactory to the Agent, to be entered into
and delivered to the Agent for the benefit of the Secured Parties on or prior to the Closing Date. With respect to any other deposit
account, securities account or investment property included as Collateral that can be perfected by “control” through an account
control agreement, the applicable Debtor shall cause such an account control agreement, in form and substance in each case satisfactory
to the Agent, to be entered into and delivered to the Agent for the benefit of the Secured Parties within 30 days of the Closing Date
(with respect to deposit or securities accounts included in Collateral as of the Closing Date) or creation or acquisition thereof (with
respect to deposit or securities accounts created or acquired after the Closing Date).
(bb)
To the extent that any Collateral consists of letter-of-credit rights with a face amount in excess of $250,000 for any single letter
of credit or $1,000,000 for all applicable letters of credit in the aggregate, the applicable Debtor shall cause the issuer of each underlying
letter of credit with respect thereto to consent to an assignment of the proceeds thereof to the Secured Parties.
(cc)
To the extent that any Collateral with a book or fair market value (whichever is less) in excess of $250,000 with respect to any single
third party and $1,000,000 with respect to all third parties combined is in the possession of any third party, the applicable Debtor
shall, at Agent’s request, join with the Agent in notifying such third party of the Secured Parties’ security interest in
such Collateral and shall use its best efforts to obtain an acknowledgement and agreement from such third party with respect to the Collateral,
in form and substance reasonably satisfactory to the Agent.
(dd)
If Debtor shall at any time hold or acquire a commercial tort claim with an expected value in excess of $1,000,000 individually or $2,000,000
in the aggregate for all commercial tort claims, Debtor shall promptly notify the Secured Parties in a writing signed by Debtor of the
particulars thereof and grant to the Secured Parties in such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance satisfactory to the Agent.
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(ee)
Debtor shall vote the Pledged Securities to comply with the covenants and agreements set forth herein and in the Notes.
(ff)
Debtor shall register the pledge of the applicable Pledged Securities on the books of Debtor. Debtor shall notify each issuer of Pledged
Securities to register the pledge of the applicable Pledged Securities in the name of the Secured Parties on the books of such issuer.
(gg)
In the event that, upon an occurrence and during the continuance of an Event of Default, Agent shall sell all or any of the Pledged Securities
to another party or parties (herein called the “Transferee”) or shall purchase or retain all or any of the Pledged
Securities, Debtor shall, to the extent applicable: (i) deliver to Agent or the Transferee, as the case may be, the articles of incorporation,
bylaws, minute books, share certificate books, corporate seals, deeds, leases, indentures, agreements, evidences of indebtedness, books
of account, financial records and all other Organizational Documents and records of Debtor and their direct and indirect subsidiaries;
(ii) use its best efforts to obtain resignations of the persons then serving as officers and directors of Debtor and their direct and
indirect subsidiaries, if so requested; and (iii) use its best efforts to obtain any approvals that are required by any governmental
or regulatory body in order to permit the sale of the Pledged Securities to the Transferee or the purchase or retention of the Pledged
Securities by Agent and allow the Transferee or Agent to continue the business of Debtor and their direct and indirect subsidiaries.
(hh)
[Reserved.]
(ii)
Without limiting the generality of the other obligations of Debtor hereunder, Debtor shall promptly (i) cause to be registered at the
United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with respect to all
Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office to be duly recorded
at the applicable office, and (iii) give the Agent notice whenever it acquires (whether absolutely or by license) or creates any additional
material Intellectual Property.
(jj)
Schedule 4 lists all of the registered patents, patent applications, registered trademarks, trademark applications, registered copyrights,
and domain names owned by any of Debtor as of the date hereof. Schedule 4 lists all material licenses in favor of Debtor for the use
of any patents, trademarks, copyrights and domain names as of the date hereof.
5.
Effect of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting equity or
ownership interests (regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests
upon the occurrence of certain events (including, without limitation, upon the transfer of all or any of the other shares or assets of
the issuer), it is agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement of any
of Agent’s rights hereunder shall not be deemed to be the type of event which would trigger such conversion rights notwithstanding
any provisions in the Organizational Documents or agreements to which any Debtor is subject or to which any Debtor is party.
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6.
Events of Default. The following events shall be an “Event of Default” hereunder: (i) an “Event of Default”
under the Notes, (ii) an “Event of Default” under the Securities Purchase Agreement or (iii) the failure of any Debtor to
observe or perform its obligations under this Agreement for a period of thirty (30) days after Debtor’s receipt of a written notice
from Secured Parties.
7.
Duty To Hold In Trust.
(a)
Upon the occurrence of any Event of Default, Debtor shall, upon receipt of any revenue, income, dividend, interest or other sums subject
to the Security Interests, whether payable pursuant to the Notes or otherwise, or of any check, draft, note, trade acceptance or other
instrument evidencing an obligation to pay any such sum, hold the same in trust for the Secured Parties and shall forthwith endorse and
transfer any such sums or instruments, or both, to the Secured Parties, pro-rata in proportion to their respective then-currently outstanding
principal amount of Notes for application to the satisfaction of the Obligations (and if any Note is not outstanding, pro-rata in proportion
to the initial purchases of the remaining Notes).
(b)
If a Debtor shall become entitled to receive or shall receive any securities or other property (including, without limitation, shares
of Pledged Securities or instruments representing Pledged Securities acquired after the date hereof, or any options, warrants, rights
or other similar property or certificates representing a dividend, or any distribution in connection with any recapitalization, reclassification
or increase or reduction of capital, or issued in connection with any reorganization of Debtor or any of its direct or indirect subsidiaries)
in respect of the Pledged Securities (whether as an addition to, in substitution of, or in exchange for, such Pledged Securities or otherwise),
Debtor agrees to (i) accept the same as the agent of the Secured Parties; (ii) hold the same in trust on behalf of and for the benefit
of the Secured Parties; and (iii) to deliver any and all certificates or instruments evidencing the same to Agent on or before the close
of business on the fifth business day following the receipt thereof by Debtor, in the exact form received together with the Necessary
Endorsements, to be held by Agent subject to the terms of this Agreement as Collateral.
8.
Rights and Remedies Upon Default.
(a)
Upon the occurrence of any Event of Default, the Secured Parties, acting through the Agent, shall have the right to exercise all of the
remedies conferred hereunder and under the Notes, and the Secured Parties shall have all the rights and remedies of a secured party under
the UCC. Without limitation, the Agent, for the benefit of the Secured Parties, shall have the following rights and powers:
(i)
The Agent shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any
person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and Debtor shall assemble the
Collateral and make it available to the Agent at places which the Agent shall reasonably select, whether at a Debtor’s premises
or elsewhere, and make available to the Agent, without rent, all of Debtor’s respective premises and facilities for the purpose
of the Agent taking possession of, removing or putting the Collateral in saleable or disposable form.
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(ii)
Upon notice to Debtor by Agent, all rights of Debtor to exercise the voting and other consensual rights which it would otherwise be entitled
to exercise and all rights of Debtor to receive the dividends and interest which it would otherwise be authorized to receive and retain,
shall cease. Upon the giving of such notice, Agent shall have the right to receive, for the benefit of the Secured Parties, any interest,
cash dividends or other payments on the Collateral and, at the option of Agent, to exercise in such Agent’s discretion all voting
rights pertaining thereto. Without limiting the generality of the foregoing, Agent shall have the right (but not the obligation) to exercise
all rights with respect to the Collateral as it were the sole and absolute owner thereof, including, without limitation, to vote and/or
to exchange, at its sole discretion, any or all of the Collateral in connection with a merger, reorganization, consolidation, recapitalization
or other readjustment concerning or involving the Collateral or Debtor or any of its direct or indirect subsidiaries.
(iii)
The Agent shall have the right to operate the business of Debtor using the Collateral and shall have the right to assign, sell, lease
or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with or without
special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at such time or times
and at such place or places, and upon such terms and conditions as the Agent may deem commercially reasonable, all without (except as
shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to any Debtor or right of redemption
of a Debtor, which are hereby expressly waived. Upon each such sale, lease, assignment or other transfer of Collateral, the Agent, for
the benefit of the Secured Parties, may, unless prohibited by applicable law which cannot be waived, purchase all or any part of the
Collateral being sold, free from and discharged of all trusts, claims, right of redemption and equities of any Debtor, which are hereby
waived and released.
(iv)
The Agent shall have the right (but not the obligation) to notify any account debtor and any obligors under instruments or accounts to
make payments directly to the Agent, on behalf of the Secured Parties, and to enforce any Debtor’s rights against such account
debtor and obligors.
(v)
The Agent, for the benefit of the Secured Parties, may (but is not obligated to) direct any financial intermediary or any other person
or entity holding any investment property to transfer the same to the Agent, on behalf of the Secured Parties, or its designee.
(vi)
The Agent may (but is not obligated to) transfer any or all Intellectual Property registered in the name of a Debtor at the United States
Patent and Trademark Office and/or Copyright Office into the name of the Secured Parties or any designee or any purchaser of any Collateral.
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(b)
The Agent shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral. The Agent may sell the Collateral without giving any
warranties and may specifically disclaim such warranties. If the Agent sells any of the Collateral on credit, Debtor will only be credited
with payments actually made by the purchaser. In addition, Debtor waives any and all rights that it may have to a judicial hearing in
advance of the enforcement of any of the Agent’s rights and remedies hereunder, including, without limitation, its right following
the occurrence and during the continuance of an Event of Default to take immediate possession of the Collateral and to exercise its rights
and remedies with respect thereto.
(c)
For the purpose of enabling the Agent to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement
or applicable law, Debtor hereby grants to the Agent, for the benefit of the Agent and the Secured Parties, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to Debtor) to use, license or sublicense following the occurrence
of an Event of Default, any Intellectual Property now owned or hereafter acquired by Debtor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software
and programs used for the compilation or printout thereof.
9.
Applications of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from
payments made on account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking,
holding, storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other
costs incurred in connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses incurred by the Agent
in enforcing the Secured Parties’ rights hereunder and in connection with collecting, storing and disposing of the Collateral,
and then to satisfaction of the Obligations pro rata among the Secured Parties (based on then-outstanding principal amounts of Notes
at the time of any such determination), and to the payment of any other amounts required by applicable law, after which the Secured Parties
shall pay to the applicable Debtor any surplus proceeds. If, upon the sale, license or other disposition of the Collateral, the proceeds
thereof are insufficient to pay all amounts to which the Secured Parties are legally entitled, Debtor will be liable for the deficiency
together with the reasonable fees of any attorneys employed by the Secured Parties to collect such deficiency. To the extent permitted
by applicable law, Debtor waives all claims, damages and demands against the Secured Parties arising out of the repossession, removal,
retention or sale of the Collateral, unless due solely to the gross negligence or willful misconduct of the Secured Parties as determined
by a final judgment (not subject to further appeal) of a court of competent jurisdiction.
10.
Securities Law Provision. Debtor recognizes that Agent may be limited in its ability to effect a sale to the public of
all or part of the Pledged Securities by reason of certain prohibitions in the Securities Act of 1933, as amended, or other federal or
state securities laws (collectively, the “Securities Laws”), and may be compelled to resort to one or more sales to
a restricted group of purchasers who may be required to agree to acquire the Pledged Securities for their own account, for investment
and not with a view to the distribution or resale thereof. Debtor agrees that sales so made may be at prices and on terms less favorable
than if the Pledged Securities were sold to the public, and that Agent has no obligation to delay the sale of any Pledged Securities
for the period of time necessary to register the Pledged Securities for sale to the public under the Securities Laws. Debtor shall cooperate
with Agent in its attempt to satisfy any requirements under the Securities Laws (including, without limitation, registration thereunder
if requested by Agent) applicable to the sale of the Pledged Securities by Agent.
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11.
Costs and Expenses. Debtor agrees to pay all reasonable and documented out-of-pocket fees, costs and expenses incurred
in connection with any filing required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation
statements, partial releases and/or termination statements related thereto or any expenses of any searches reasonably required by the
Agent. The Debtor shall also pay all other claims and charges which in the reasonable opinion of the Agent is reasonably likely to prejudice,
imperil or otherwise affect the Collateral or the Security Interests therein. The Debtor will also, upon demand, pay to the Agent the
amount of any and all reasonable and documented expenses, including the reasonable and documented fees and expenses of its counsel and
of any experts and agents, which the Agent, for the benefit of the Secured Parties, may incur in connection with the creation, perfection,
protection, satisfaction, foreclosure, collection or enforcement of the Security Interest and the preparation, administration, continuance,
amendment or enforcement of this Agreement and pay to the Agent the amount of any and all reasonable and documented expenses, including
the reasonable fees and expenses of its counsel and of any experts and agents, which the Agent, for the benefit of the Secured Parties,
and the Secured Parties may incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the rights
of the Secured Parties under the Notes. Until so paid, any fees payable hereunder shall be added to the principal amount of the Notes
and shall bear interest at the Applicable Rate.
12.
Responsibility for Collateral. The Debtor assumes all liabilities and responsibility in connection with all Collateral,
and the Obligations shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral
or its unavailability for any reason. Without limiting the generality of the foregoing, (a) neither the Agent nor any Secured Party (i)
has any duty (either before or after an Event of Default) to collect any amounts in respect of the Collateral or to preserve any rights
relating to the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the Collateral for sale, and (b) Debtor shall
remain obligated and liable under each contract or agreement included in the Collateral to be observed or performed by Debtor thereunder.
Neither the Agent nor any Secured Party shall have any obligation or liability under any such contract or agreement by reason of or arising
out of this Agreement or the receipt by the Agent or any Secured Party of any payment relating to any of the Collateral, nor shall the
Agent or any Secured Party be obligated in any manner to perform any of the obligations of any Debtor under or pursuant to any such contract
or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Agent or any Secured Party in respect of
the Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any
claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the Agent
or to which the Agent or any Secured Party may be entitled at any time or times.
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13.
Security Interests Absolute. All rights of the Secured Parties and all obligations of Debtor hereunder, shall be absolute
and unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Notes or any agreement entered
into in connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance
of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from
the Notes or any other agreement entered into in connection with the foregoing; (c) any exchange, release or nonperfection of any of
the Collateral, or any release or amendment or waiver of or consent to departure from any other collateral for, or any guarantee, or
any other security, for all or any of the Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and cancel in
its sole discretion any insurance claims or matters made or arising in connection with the Collateral; or (e) any other circumstance
which might otherwise constitute any legal or equitable defense available to a Debtor, or a discharge of all or any part of the Security
Interests granted hereby. Until the Obligations shall have been paid in full in cash, converted or otherwise satisfied in full in accordance
with the Notes (other than inchoate reimbursement obligations for which no demand has been made), the rights of the Secured Parties shall
continue even if the Obligations are barred for any reason, including, without limitation, the running of the statute of limitations
or bankruptcy. Debtor expressly waives presentment, protest, notice of protest, demand, notice of nonpayment and demand for performance.
In the event that at any time any transfer of any Collateral or any payment received by the Secured Parties hereunder shall be deemed
by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy
or insolvency laws of the United States, or shall be deemed to be otherwise due to any party other than the Secured Parties, then, in
any such event, Debtor’s obligations hereunder shall survive cancellation of this Agreement, and shall not be discharged or satisfied
by any prior payment thereof and/or cancellation of this Agreement, but shall remain a valid and binding obligation enforceable in accordance
with the terms and provisions hereof. Debtor waives all right to require the Secured Parties to proceed against any other person or entity
or to apply any Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other remedy. Debtor
waives any defense arising by reason of the application of the statute of limitations to any obligation secured hereby.
14.
Term of Agreement; Termination and Release. This Agreement and the Security Interests shall terminate on the date on which
all amounts owing under the Notes and all other Obligations have been paid in full in cash, converted or otherwise satisfied in full
in accordance with the Notes and this Agreement (other than inchoate reimbursement obligations for which no demand has been made); provided,
however, that all indemnities of Debtor contained in this Agreement shall survive and remain operative and in full force and effect regardless
of the termination of this Agreement. Upon the effectiveness of any written consent executed by the Agent releasing the security interest
granted hereby in any Collateral pursuant to this Agreement or the Notes, the security interest in such Collateral shall be automatically
released.
16
15.
Power of Attorney; Further Assurances.
(a)
Debtor authorizes the Agent, and does hereby make, constitute and appoint the Agent and its officers, agents, successors or assigns with
full power of substitution, as Debtor’s true and lawful attorney-in-fact, with power, in the name of the Agent or Debtor, to, after
the occurrence and during the continuance of an Event of Default, (i) endorse any note, checks, drafts, money orders or other instruments
of payment (including payments payable under or in respect of any policy of insurance) in respect of the Collateral that may come into
possession of the Agent; (ii) to sign and endorse any financing statement pursuant to the UCC or any invoice, freight or express bill,
bill of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with accounts,
and other documents relating to the Collateral; (iii) to pay or discharge taxes, liens, security interests or other encumbrances at any
time levied or placed on or threatened against the Collateral; (iv) to demand, collect, receipt for, compromise, settle and sue for monies
due in respect of the Collateral; (v) to transfer any Intellectual Property or provide licenses respecting any Intellectual Property;
and (vi) generally, at the option of the Agent, and at the expense of Debtor, at any time, or from time to time, to execute and deliver
any and all documents and instruments and to do all acts and things which the Agent deems necessary to protect, preserve and realize
upon the Collateral and the Security Interests granted therein in order to effect the intent of this Agreement and the Notes all as fully
and effectually as Debtor might or could do; and Debtor hereby ratifies all that said attorney shall lawfully do or cause to be done
by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable for until the Obligations shall have been
paid in full in cash (other than inchoate reimbursement obligations for which no demand has been made). The designation set forth herein
shall be deemed to amend and supersede any inconsistent provision in the Organizational Documents or other documents or agreements to
which a Debtor is subject or to which a Debtor is a party. Without limiting the generality of the foregoing, after the occurrence and
during the continuance of an Event of Default, each Secured Party is specifically authorized to execute and file any applications for
or instruments of transfer and assignment of any patents, trademarks, copyrights or other Intellectual Property with the United States
Patent and Trademark Office and the United States Copyright Office.
(b)
On a continuing basis, Debtor will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper filing and
recording agencies in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule 2, all such instruments,
and take all such action as may reasonably be deemed necessary or advisable, or as reasonably requested by the Agent, to perfect the
Security Interests granted hereunder and otherwise to carry out the intent and purposes of this Agreement, or for assuring and confirming
to the Agent the grant or perfection of a perfected security interest in all the Collateral under the UCC.
(c)
Debtor hereby irrevocably appoints the Agent as Debtor’s attorney-in-fact, with full authority in the place and instead of Debtor
and in the name of Debtor, from time to time in the Agent’s discretion, to take any action and to execute any instrument which
the Agent may deem necessary or advisable to perfect the security interests granted pursuant to this Agreement, including the filing,
in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral
without the signature of Debtor where permitted by law, which financing statements may (but need not) describe the Collateral as “all
assets” or “all personal property” or words of like import, and ratifies all such actions taken by the Agent. This
power of attorney is coupled with an interest and shall be irrevocable until the Obligations shall have been paid in full in cash (other
than inchoate reimbursement obligations for which no demand has been made).
17
16.
Notices. All notices, requests, demands and other communications hereunder shall be subject to the notice provision of
the Securities Purchase Agreement, as applicable.
17.
Other Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or
by the guarantee, endorsement or property of any other person, firm, corporation or other entity, then the Agent shall have the right,
in its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way
modifying or affecting any of the Secured Parties’ rights and remedies hereunder.
18.
Appointment of Agent. Pursuant to Section 4.11 of the Securities Purchase Agreement, the Secured Parties have appointed
the Agent to act as their collateral agent for purposes of exercising any and all rights and remedies of the Secured Parties hereunder.
19.
Miscellaneous.
(a)
No course of dealing between Debtor and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on the part of
the Secured Parties, any right, power or privilege hereunder or under the Notes shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
(b)
All of the rights and remedies of the Secured Parties with respect to the Collateral, whether established hereby or by the Notes or by
any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.
(c)
This Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the
parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto. 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 Debtor and the Secured
Parties holding 50.1% or more of the principal amount of Notes then outstanding, or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought.
(d)
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.
18
(e)
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.
(f)
This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Debtor may
not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Agent (other than by merger).
Any Secured Party may assign any or all of its rights under this Agreement to any Person to whom such Secured Party assigns or transfers
any Obligations, provided such transferee agrees in writing to be bound, with respect to the transferred Obligations, by the provisions
of this Agreement that apply to the “Secured Parties.”
(g)
Each party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order
to carry out the provisions and purposes of this Agreement.
(h)
Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning the
construction, validity, enforcement and interpretation of this Agreement 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. Except to the extent mandatorily
governed by the jurisdiction or situs where the Collateral is located, Debtor agrees that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and the Notes (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, Borough of Manhattan. Except to the extent mandatorily governed by the jurisdiction
or situs where the Collateral is located, Debtor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding, any
claim that it is not personally subject to the jurisdiction of any such court, that such proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being served in any such 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 manner permitted by 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 AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
19
(i)
This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all
of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by .pdf via email transmission,
such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such .pdf via email signature were the original thereof.
(j)
[Reserved].
(k)
Debtor shall indemnify, reimburse and hold harmless the Agent and the Secured Parties and their respective partners, members, shareholders,
officers, directors, employees and agents (and any other persons with other titles that have similar functions) (collectively, “Indemnitees”)
from and against any and all losses, claims, liabilities, damages, penalties, suits, costs and expenses, of any kind or nature, (including
fees relating to the cost of investigating and defending any of the foregoing) imposed on, incurred by or asserted against such Indemnitee
in any way related to or arising from or alleged to arise from this Agreement or the Collateral, except any such losses, claims, liabilities,
damages, penalties, suits, costs and expenses which result from the gross negligence or willful misconduct of the Indemnitee as determined
by a final, nonappealable decision of a court of competent jurisdiction. This indemnification provision is in addition to, and not in
limitation of, any other indemnification provision in the Notes, the Securities Purchase Agreement, or any other agreement, instrument
or other document executed or delivered in connection herewith or therewith.
(l)
Nothing in this Agreement shall be construed to subject Agent or any Secured Party to liability as a partner in any Debtor or any of
its direct or indirect subsidiaries that is a partnership or as a member in any Debtor or any of its direct or indirect subsidiaries
that is a limited liability company, nor shall Agent or any Secured Party be deemed to have assumed any obligations under any partnership
agreement or limited liability company agreement, as applicable, of any Debtor or any of its direct or indirect subsidiaries or otherwise,
unless and until any such Secured Party exercises its right to be substituted for any Debtor as a partner or member, as applicable, pursuant
hereto.
(m)
To the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent,
approval or action of any partner or member, as applicable, of any Debtor or any direct or indirect subsidiary of any Debtor or compliance
with any provisions of any of the Organizational Documents, any Debtor hereby grants such consent and approval and waive any such noncompliance
with the terms of said documents.
[SIGNATURE
PAGES FOLLOW]
20
IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed on the day and year first above written.
FINGERMOTION,
INC.
By:
Name:
Jolie Kahn
Title:
Chief Executive Officer
Signature
Page to Security Agreement
IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed on the day and year first above written.
ALTO
OPPORTUNITY MASTER FUND, SPC
SEGREGATED
MASTER PORTFOLIO B
By:
Name:
Waqas Khatri
Title:
Managing Member
Signature
Page to Security Agreement
EX-10.6
EX-10.6
Filename: ex10-6.htm · Sequence: 7
Exhibit
10.6
EX-99.1
EX-99.1
Filename: ex99-1.htm · Sequence: 8
Exhibit
99.1
FingerMotion
Completes Acquisition of 9.9% Interest in Lyken AI Computing
Transaction
Closes Following TSX Venture Exchange Approval; FingerMotion Formally Enters the Enterprise AI Compute Market
WEST
PALM BEACH, FL / ACCESS Newswire / August 17, 2026 / FingerMotion, Inc. (Nasdaq: FNGR) (“FingerMotion” or the “Company”),
a mobile data and telecommunications services company, today announced the completion of its previously announced acquisition of a 9.9%
interest in Lyken AI Computing Inc., operating as Lyken.AI (“Lyken”), from Alset AI Ventures Inc. (TSXV: GPUS) (“Alset
AI”).
The
transaction, announced on August 13, 2026, has closed following receipt of TSX Venture Exchange approval. FingerMotion has acquired 99,000
common shares of Lyken, representing 9.9% of Lyken’s issued and outstanding common shares, in consideration for the issuance of
1,674,480 restricted common shares of FingerMotion. No cash consideration was payable at closing. Alset AI retains 90.1% of Lyken.
“The
Lyken transaction connects FingerMotion with a pipeline of prospective enterprise clients in what remains the most underserved segment
of the data center market,” said Jolie Kahn, CEO of FingerMotion, Inc. “Enterprise customers can fall between traditional
retail colocation and hyperscale providers, particularly when they require specialized compute configurations and support. This investment
gives FingerMotion a meaningful starting point for addressing that underserved demand as we grow our data center strategy.”
“We’re
thrilled to be closing this transaction, which adds a strategically aligned Nasdaq-listed shareholder to our Lyken business,” said
Adam Ingrao, Chief Executive Officer of Alset AI. “We look forward to working in partnership with the team at FingerMotion, building
on Lyken’s vendor ecosystem, enterprise traction and cloud compute opportunity pipeline.”
The
completed transaction marks FingerMotion’s formal entry into the enterprise computing market and is the first step in a broader
strategy to build a recurring-revenue enterprise compute franchise alongside the Company’s existing mobile data and telecommunications
operations. The Company intends to pursue enterprise compute as a distinct and scalable line of business, with the objective of moving
from an initial minority position toward a larger participation in Lyken and in the underlying infrastructure that supports it, subject
to commercial performance, capital availability and applicable regulatory requirements.
About
FingerMotion, Inc.
FingerMotion
is a technology company serving a growing base of users across the mobile payment, recharge, and data-analytics markets in the People’s
Republic of China. The Company continues to develop new tools and services for those users, with the long-term objective of expanding
that base organically into a large and highly engaged community — scale the Company believes will support relationships with larger,
higher-value customers over time. The Company also evaluates emerging technologies for adjacent opportunities.
FingerMotion
is extending that strategy into the enterprise AI and cloud compute market through its equity position in Lyken AI Computing Inc. Under
the terms of the transaction, the Company may increase that position over time, subject to the conditions set out in the definitive agreements.
About
Lyken.AI
Lyken.AI
is Alset AI’s cloud compute business, providing access to outsourced cloud compute server capacity and related technical coordination
and support services. Lyken is developing an integrated offering spanning compute infrastructure, secure storage, private low-latency
networking and enterprise deployment support. For more information, please visit www.lyken.ai.
About
Alset AI Ventures Inc.
Alset
AI is an AI-focused venture investment platform dedicated to sourcing, funding, and developing companies across the artificial intelligence
value chain. The Company seeks to provide investors with diversified exposure to emerging applications and infrastructure that enable
advancements in AI technologies.
Investor
and Media Contact
FingerMotion,
Inc.
Investor
Relations
E:
ir@fingermotion.com
W:
www.fingermotion.com
Cautionary
Note Regarding Forward-Looking Statements
This
press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, and is intended to be covered by the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements regarding the Company’s
strategy for the enterprise computing market; the Company’s intention to expand its participation in Lyken or in related infrastructure
over time; the intended scope, components, delivery model and competitive positioning of the Company’s enterprise compute offering;
expected access to capacity, vendors, data centers, connectivity and power; anticipated go-to-market activity, customer demand, pipeline
conversion and revenue; expectations regarding cost of power and delivered compute economics; and the expected strategic relationship
among FingerMotion, Lyken and Alset AI.
Forward-looking
statements are typically identified by words such as “will”, “intend”, “anticipate”, “expect”,
“believe”, “plan”, “potential”, “project”, “estimate”, “target”,
“continue”, “position”, “may”, “might”, “could” and “should”.
These statements are predictions based on assumptions, including that the Company will be able to identify, contract and deliver commercially
viable enterprise compute offerings; that Lyken will maintain access to vendors, infrastructure, power and customers; and that general
economic, capital-market, technology and regulatory conditions will not change materially.
Forward-looking
statements are not guarantees of future performance. Actual results could differ materially due to risks and uncertainties including
the Company’s limited operating history in enterprise computing; competition from hyperscale and specialized compute providers;
GPU, data-center, power and supply-chain constraints; inability to convert pipeline opportunities into binding contracts; customer non-renewal,
termination or delayed purchasing decisions; pricing pressure and rapid technological change; the availability and cost of capital required
to expand the Company’s participation in Lyken or in related infrastructure; restrictions on the issuance, listing, transfer or
resale of securities; fluctuations in FingerMotion’s share price or foreign-exchange rates; third-party consent and confidentiality
limitations; and different accounting or tax outcomes than expected. This list is not exhaustive.
Additional
information concerning these and other risk factors is contained in FingerMotion’s most recent Annual Report on Form 10-K and subsequent
filings with the U.S. Securities and Exchange Commission, available at www.sec.gov. All forward-looking statements are expressly qualified
by these cautionary statements and are made as of the date of this press release. FingerMotion undertakes no obligation to update or
revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable
law.
This
press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.
SOURCE:
FingerMotion, Inc.
EX-99.2
EX-99.2
Filename: ex99-2.htm · Sequence: 9
Exhibit 99.2
FingerMotion,
Inc. Appoints Chris Polimeni as Chief Financial Officer
WEST
PALM BEACH, FL / GLOBENEWSWIRE / August 17, 2026 / FingerMotion, Inc. (Nasdaq: FNGR) (“FingerMotion” or the “Company”),
a mobile data and telecommunications services company, today announced the appointment of Chris Polimeni as Chief Financial Officer,
effective August 17, 2026. Mr. Polimeni succeeds Lee Yew Hon, whose resignation as Chief Financial Officer was accepted by the
Board of Directors.
The
appointment follows FingerMotion’s announcement earlier today of the completed acquisition of a 9.9% interest in Lyken AI Computing
Inc., marking the Company’s formal entry into the enterprise AI compute market.
“Chris
has spent more than three decades doing precisely what this next phase of the Company requires — structuring transactions, managing
capital, and building the financial discipline that lets a business grow without losing control of it,” said Jolie Kahn, Chief
Executive Officer of FingerMotion. “We are entering the enterprise compute market from a standing start, and that is a capital-intensive
undertaking. Chris has done this work before, at public companies, through cycles.”
“I
want to thank Lee Yew Hon for his service,” Ms. Kahn added. “He joined FingerMotion when it was still an OTC-quoted company
and helped guide it to a Nasdaq listing. That is a genuine achievement and the Company is better for it.”
“FingerMotion
has an operating business that already generates real revenue and a credible path into one of the most capital-intensive markets in technology,”
said Mr. Polimeni. “Those two things together are rarer than they sound. My focus will be on making sure the balance sheet, financial
reporting, and capital structure can support the Company’s growth plans.”
About
Chris Polimeni
Chris
Polimeni is an accomplished financial executive with more than 35 years of experience driving financial strategy and operational efficiency
at both public and private companies across publishing, distribution, waste management, and technology. He brings deep expertise in mergers
and acquisitions, capital raising across debt and equity markets, SEC reporting, contract negotiations, revenue recognition, auditing,
financial planning and analysis, treasury management, taxation, and ERP implementation.
A
results-driven leader, Mr. Polimeni combines strong analytical skills with a proven ability to structure complex financial transactions
and advance strategic growth initiatives. Most recently, he served as Chief Financial Officer of Avax One Technology Ltd. Since 2020,
he has also served as President and Chief Executive Officer of Polimeni & Associates, Inc. He holds a Bachelor of Business Administration
in Accounting and Management Information Systems from Hofstra University.
About
FingerMotion, Inc.
FingerMotion
is a technology company serving a growing base of users across the mobile payment, recharge, and data-analytics markets in the People’s
Republic of China. The Company continues to develop new tools and services for those users, with the long-term objective of expanding
that base organically into a large and highly engaged community — scale the Company believes will support relationships with larger,
higher-value customers over time. The Company also evaluates emerging technologies for adjacent opportunities.
FingerMotion
is extending that strategy into the enterprise AI and cloud compute market through its equity position in Lyken AI Computing Inc. Under
the terms of the transaction, the Company may increase that position over time, subject to the conditions set out in the definitive agreements.
Investor
and Media Contact
FingerMotion,
Inc.
Investor
Relations
E:
ir@fingermotion.com
W:
www.fingermotion.com
Cautionary
Note Regarding Forward-Looking Statements
This
press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, and is intended to be covered by the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements regarding the anticipated
contributions of the Company’s new Chief Financial Officer, the Company’s financial reporting, capital structure and treasury
management, and the Company’s strategy for the enterprise computing market.
Forward-looking
statements are typically identified by words such as “will”, “intend”, “anticipate”, “expect”,
“believe”, “plan”, “potential”, “project”, “estimate”, “target”,
“continue”, “position”, “may”, “might”, “could” and “should”.
These statements are predictions based on current assumptions and are not guarantees of future performance. Actual results could differ
materially due to risks and uncertainties affecting the Company’s business, including those described in the Company’s most
recent Annual Report on Form 10-K and subsequent filings with the U.S. Securities and Exchange Commission, available at www.sec.gov.
All
forward-looking statements are expressly qualified by these cautionary statements and are made as of the date of this press release.
FingerMotion undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future
events or otherwise, except as required by applicable law.
SOURCE:
FingerMotion, Inc.
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Aug. 12, 2026
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xbrli:dateItemType
Balance Type:
na
Period Type:
duration
X
- Definition
The type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
+ References
No definition available.
+ Details
Name:
dei_DocumentType
Namespace Prefix:
dei_
Data Type:
dei:submissionTypeItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Address Line 1 such as Attn, Building Name, Street Name
+ References
No definition available.
+ Details
Name:
dei_EntityAddressAddressLine1
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Address Line 2 such as Street or Suite number
+ References
No definition available.
+ Details
Name:
dei_EntityAddressAddressLine2
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Name of the City or Town
+ References
No definition available.
+ Details
Name:
dei_EntityAddressCityOrTown
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
ISO 3166-1 alpha-2 country code.
+ References
No definition available.
+ Details
Name:
dei_EntityAddressCountry
Namespace Prefix:
dei_
Data Type:
dei:countryCodeItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Code for the postal or zip code
+ References
No definition available.
+ Details
Name:
dei_EntityAddressPostalZipCode
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
A unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityCentralIndexKey
Namespace Prefix:
dei_
Data Type:
dei:centralIndexKeyItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Indicate if registrant meets the emerging growth company criteria.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityEmergingGrowthCompany
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Commission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
+ References
No definition available.
+ Details
Name:
dei_EntityFileNumber
Namespace Prefix:
dei_
Data Type:
dei:fileNumberItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Two-character EDGAR code representing the state or country of incorporation.
+ References
No definition available.
+ Details
Name:
dei_EntityIncorporationStateCountryCode
Namespace Prefix:
dei_
Data Type:
dei:edgarStateCountryItemType
Balance Type:
na
Period Type:
duration
X
- Definition
The exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityRegistrantName
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
The Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityTaxIdentificationNumber
Namespace Prefix:
dei_
Data Type:
dei:employerIdItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Local phone number for entity.
+ References
No definition available.
+ Details
Name:
dei_LocalPhoneNumber
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 13e
-Subsection 4c
+ Details
Name:
dei_PreCommencementIssuerTenderOffer
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14d
-Subsection 2b
+ Details
Name:
dei_PreCommencementTenderOffer
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Title of a 12(b) registered security.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b
+ Details
Name:
dei_Security12bTitle
Namespace Prefix:
dei_
Data Type:
dei:securityTitleItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Name of the Exchange on which a security is registered.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection d1-1
+ Details
Name:
dei_SecurityExchangeName
Namespace Prefix:
dei_
Data Type:
dei:edgarExchangeCodeItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14a
-Subsection 12
+ Details
Name:
dei_SolicitingMaterial
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Trading symbol of an instrument as listed on an exchange.
+ References
No definition available.
+ Details
Name:
dei_TradingSymbol
Namespace Prefix:
dei_
Data Type:
dei:tradingSymbolItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Securities Act
-Number 230
-Section 425
+ Details
Name:
dei_WrittenCommunications
Namespace Prefix:
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Data Type:
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Period Type:
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