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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 25, 2024
FATHOM
HOLDINGS INC.
(Exact name of registrant as specified in its
charter)
| |
North Carolina |
|
| |
(State or other jurisdiction of incorporation) |
|
| |
|
|
| 001-39412 |
|
82-1518164 |
| (Commission File Number) |
|
(IRS Employer Identification
No.) |
2000
Regency Parkway Drive, Suite 300,
Cary, North
Carolina 27518
(Address of principal executive offices) (Zip
Code)
Registrant's telephone number, including area
code 888-455-6040
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| | |
| ¨ | Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| | |
| ¨ | Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| | |
| ¨ | Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title
of each Class |
Trading
Symbol(s) |
Name
of each exchange on which registered |
| Common
Stock, No Par Value |
FTHM |
Nasdaq
Capital Market |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
Growth Company x
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
September 25, 2024, Fathom Holdings Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase
Agreement”) with two accredited investors (each an “Investor” and together, the “Investors”) and issued
Senior Secured Convertible Promissory Notes in an aggregate principal amount of $5,000,000 (the “Notes”), in a private placement
(the “Offering”). The Company paid no placement agent fees in connection with the Offering. The cash proceeds disbursed to
the Company from the issuance of the Notes were $5,000,000.
In
connection with the Offering, the Company amended and restated the Security Agreement (the “A&R Security Agreement) and Subsidiary
Guarantee (the “A&R” Subsidiary Guarantee”) which it entered into and provided in connection with the 2023 Senior
Secured Convertible Promissory Note due April 12, 2025 (the “2023 Note”), as previously disclosed on April 14, 2023 on Form
8-K.
In
connection with the Offering, the Company also entered into or provided a Security Agreement (the “2024 Security Agreement”),
a Subsidiary Guarantee (the “2024 Subsidiary Guarantee”), a Registration Rights Agreement (the “Registration Rights
Agreement”), an Intercreditor Agreement (by and among the purchaser of the 2023 Note and the Investors) (the “Intercreditor
Agreement”) and various ancillary certificates, disclosure schedules and exhibits in support thereof (together with the Purchase
Agreement, the A&R Security Agreement, the A&R Subsidiary Guarantee, the 2024 Security Agreement, the 2024 Subsidiary Guarantee,
the Intercreditor Agreement and the Registration Rights Agreement, the “Transaction Documents”) concurrent with the closing
of the sale of the Notes.
Scott
Flanders, the chairman of the Company’s Board of Directors, was an Investor in the Offering. As required by the Company’s
internal policies, this related-party transaction was approved by the Audit Committee of the Company’s Board of Directors, which
consists of independent disinterested directors.
Purchase
Agreement
The
Purchase Agreement obligates the Company to pay the Investor’s reasonable out-of-pocket costs and expenses related to the negotiation,
due diligence, preparation, closing and other items regarding or related to the Transaction Documents, up to an aggregate of $25,000.
The Purchase Agreement also obligates the Company to indemnify the Investors for certain losses resulting from (i) any breach of any of
the representations or warranties, or any failure to perform or comply with any covenants or agreements, made by the Company in the Purchase
Agreement or other Transaction Documents and (ii) certain third-party claims.
Convertible
Note
General.
The Company shall pay the Investors the principal amount owed under each Note on October 1, 2026 (the “Maturity Date”), or
such earlier date as the Notes are required or permitted to be repaid as provided by the Notes. The Company shall pay interest to the
Investors on the first calendar day of each calendar quarter commencing on each of October 1, 2025, January 1, 2026, April 1, 2026, July
1, 2026 and on the Maturity Date in cash on the principal amount of the Note at a rate which fluctuates every calendar month, and is equal
to (i) the monthly average Secured Overnight Financing Rate (SOFR) plus (ii) 4%, per annum (subject to certain adjustments, as provided
therein); provided, that the rate of interest for any month will be at least 8% per annum. Solely with respect to the interest payment
due on October 1, 2025, the Investors, in their sole discretion, may elect to receive such interest payment in the Company’s common
stock (“Common Stock”), with such Common Stock valued for this purpose at $4.25 per share (subject to certain adjustment,
as provided therein). The Notes are required to be senior to all the Company’s other indebtedness other than the permitted indebtedness
as specified in the Purchase Agreement.
Security.
The Notes are secured by all the existing and future assets of the Company and certain of the Company’s existing material subsidiaries
(the “Subsidiary Debtors” as defined in the 2024 Security Agreement), pursuant to the 2024 Security Agreement by and between
the Company, certain of the Company’s existing material subsidiaries and the Investors.
Guarantee.
The obligations under the Notes are guaranteed by certain of the Company’s existing and future material subsidiaries (the “Material
Subsidiaries”), pursuant to the 2024 Subsidiary Guarantee by the Material Subsidiaries in favor of the Investors.
Voluntary
Conversion. All or any portion of the principal amount of the Notes, plus accrued and unpaid interest and any late charges thereon,
is convertible at any time, in whole or in part, at each of the Investors’ option, into shares of the Company’s common stock
at an initial fixed conversion price of $4.25 per share, subject to certain customary adjustments. The Notes impose penalties on the Company
for any failure to timely deliver any shares of the Company’s common stock issuable upon conversion.
Beneficial
Ownership Limitation. The Notes may not be converted by the Investor into shares of common stock if such conversion would result in
the Investor and its affiliates owning an aggregate of in excess of 9.99% of the then-outstanding shares of the Company’s common
stock.
Nasdaq
Limitation. The Company is prohibited from issuing any shares of common stock upon conversion of the Notes or otherwise pursuant to
the terms of the Notes, if the issuance of such shares of common stock would exceed 19.99% of the Company’s outstanding shares of
common stock as of the closing date or otherwise exceed the aggregate number of shares of common stock which the Company may issue without
breaching the Company’s obligations under the rules and regulations of the Nasdaq Capital Market.
Events
of Default. The Notes provide for certain events of default that are typical for a transaction of this type, including, among other
things, any breach of the covenants described below. In connection with any event of default that results in the eventual acceleration
of the Notes and while it is continuing, the interest rate on the Notes shall accrue at an interest rate equal to the lesser of 18% per
annum or the maximum rate permitted under applicable law.
Covenants.
The Company will be subject to certain customary affirmative and negative covenants regarding the incurrence and repayment of indebtedness
and the making of investments, distributions or redemptions, the transfer of assets, and transactions with affiliates, among other customary
matters.
Registration
Rights Agreement
In
connection with the Purchase Agreement, the Company entered into the Registration Rights Agreement with the Investors. Pursuant to the
Registration Rights Agreement, the Company has agreed to file a registration statement registering for resale the shares of Common Stock
issuable upon the conversion of the Notes, including any shares of Common Stock used to pay interest, each in accordance with the terms
therein. The Company has agreed to file such registration statement within 90 days of the closing of the Offering (the “Closing”)
and have such registration statement declared effective within 135 days of the Closing. If the registration statement is not declared
effective by that date, the Company will pay to the Investor an amount in cash as partial liquidated damages equal to 1.0% of the aggregate
amount invested by the Investor upon such date of failure and the same amount on each monthly anniversary thereafter until the registration
statement is declared effective.
Additional
Information
The
form of Note, Purchase Agreement, 2024 Security Agreement, the 2024 Subsidiary Guarantee, Registration Rights Agreement, A&R Security
Agreement and A&R Subsidiary Guarantee are attached hereto as Exhibit 4.1, 10.1, 10.2, 10.3, 10.4, 10.5 and 10.6 respectively, and
are incorporated herein by reference. The foregoing description of the Offering and the documentation related thereto does not purport
to be complete and is qualified in its entirety by reference to such exhibits.
The
form of Note, Purchase Agreement, 2024 Security Agreement, the 2024 Subsidiary Guarantee, the Registration Rights Agreement, the A&R
Security Agreement and A&R Subsidiary Guarantee have been included to provide investors and security holders with information regarding
their terms. The documents are not intended to provide any other factual information about the Company. The Transaction Documents contain
representations, warranties, covenants and indemnities customary for similar transactions. Such representations, warranties, covenants
and indemnities are being made only for purposes of such agreements and as of specific dates, were solely for the benefit of the parties
to such agreements, may in some cases be made solely for the allocation of risk between the parties and may be subject to limitations
agreed upon by the contracting parties.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The
information included in Item 1.01 of this Current Report is incorporated by reference into this Item 2.03 of this Current Report to the
extent required.
Item 3.02 Unregistered
Sales of Equity Securities.
The
information included in Item 1.01 of Current Report is also incorporated by reference into this Item 3.02 of this Current Report to the
extent required. The Note, and the shares of the Company’s common stock issuable upon conversion or in payment thereof, are being
offered and sold pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended, afforded by Section
4(a)(2) thereof, for the sale of securities not involving a public offering.
Item 3.03 Material
Modification to Rights of Security Holders.
The
information included in Item 1.01 of Current Report is also incorporated by reference into this Item 3.03 of this Current Report to the
extent required.
Item 8.01 Other
Events.
On September
26, 2024, the Company issued a press release announcing the Offering. A copy of the press release is filed as Exhibit 99.1 and incorporated
by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| |
FATHOM HOLDINGS INC. |
| |
|
| Date: September 27, 2024 |
/s/ Marco Fregenal |
| |
Marco Fregenal |
| |
President and Chief Executive Officer |
Exhibit 4.1
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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL IN A
FORM ACCEPTABLE TO THE COMPANY.
| Original Issue
Date: [●] |
Principal
Amount: $[●] |
SENIOR
SECURED CONVERTIBLE PROMISSORY NOTE
DUE
[●]
THIS SENIOR SECURED CONVERTIBLE
PROMISSORY NOTE is the duly authorized and validly issued convertible promissory note of Fathom Holdings Inc., a North Carolina corporation
(the “Company”), having its principal place of business at 2000 Regency Parkway Drive, Suite 300, Cary, NC 27518,
designated as its Senior Secured Convertible Promissory Note due [●] (the “Note”).
FOR
VALUE RECEIVED, the Company promises to pay to [●] or its registered assigns (the
“Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of $[●]on
[●] (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 (as defined below) and (b) the following terms shall have the following
meanings:
“Alternate
Consideration” shall have the meaning set forth in Section 5(e).
“Bankruptcy
Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of
Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief
of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary
thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not
dismissed within sixty (60) days after commencement, (c) the Company or any Significant 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 Significant
Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged
or stayed within sixty (60) calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a
general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors
with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company or any Significant Subsidiary
thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes
any corporate or other action for the purpose of effecting any of the foregoing.
“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 4(d).
“Board
of Directors” means the board of directors of the Company.
“Buy-In”
shall have the meaning set forth in Section 4(c)(v).
“Change
of Control Transaction” means the occurrence after the date hereof 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 capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%)
of the aggregate votes of the then-issued and outstanding voting securities of the Company on such basis as is then required by the Company’s
charter documents (other than by means of conversion of 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 stockholders of the Company
immediately prior to such transaction own less than fifty percent (50%) of the aggregate voting power of the Company or the successor
entity of such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the
stockholders of the Company immediately prior to such transaction own less than fifty percent (50%) of the aggregate voting power of
the acquiring entity immediately after the transaction, or (d) the execution by the Company of an agreement to which the Company
is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (c) above.
“Conversion
Date” shall have the meaning set forth in Section 4(a).
“Conversion
Limitation” shall have the meaning set forth in Section 4(d).
“Conversion
Price” shall have the meaning set forth in Section 4(b).
“Conversion
Schedule” means the Conversion Schedule in the form of Schedule 1 attached hereto.
“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the terms
hereof, including any shares of Common Stock used to pay interest pursuant to Section 2(a).
“DTC”
means the Depository Trust Company.
“DTC/FAST
Program” means the DTC’s Fast Automated Securities Transfer Program.
“Event
of Default” shall have the meaning set forth in Section 6(a).
“Exempt
Issuance” means the issuance of (a) shares of Common Stock, options or other equity awards (including, without limitation,
restricted awards) to employees, consultants, officers or directors of the Company pursuant to any stock or option plan duly adopted
for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose and subsequently ratified by the stockholders of the Company, (b) securities
upon the exercise or exchange of or conversion of any Securities issued pursuant to the Purchase Agreement and/or other securities directly
or indirectly exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the Original Issue
Date, provided that such securities have not been amended since the Original Issue Date to increase the number of such securities
or to decrease the exercise price, exchange price or conversion price of such securities, or (c) securities issued pursuant to mergers,
consolidations, acquisitions, similar business combinations or strategic transactions approved by a majority of the disinterested directors
of the Company, provided that any such issuance shall only be to a Person (or to the direct or indirect 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.
“Fundamental
Transaction” shall have the meaning set forth in Section 5(e).
“Late
Fees” shall have the meaning set forth in Section 2(c).
“New York
Courts” shall have the meaning set forth in Section 7(d).
“Note
Register” shall have the meaning set forth in Section 2(b).
“Notice
of Conversion” shall have the meaning set forth in Section 4(a).
“Original
Issue Date” means the date of the first issuance of this Note, regardless of any transfers of any Note and regardless of the
number of instruments which may be issued to evidence such Note.
“Purchase
Agreement” means the Securities Purchase Agreement, dated as of [●],
by and among the Company, the original Holder, and the other parties named therein, if any, as amended, modified or supplemented from
time to time in accordance with its terms.
“Registration
Statement” means a registration statement covering the resale of the Underlying Shares by each Holder.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Share
Delivery Date” shall have the meaning set forth in Section 4(c)(ii).
“Successor
Entity” shall have the meaning set forth in Section 5(e).
Section 2. Interest.
a) Payment
of Interest. The Company shall pay interest to the Holder in cash on the principal amount of this Note at a rate which fluctuates
every calendar month, and is equal to (i) the monthly average Secured Overnight Financing Rate (SOFR) plus (ii) 4% per annum
(which interest rate may be increased as provided elsewhere herein); provided, however, that in no event will the rate
of interest for any month be less than 8% per annum. The monthly average SOFR rate will be based on the New York Fed website located
at: https://www.newyorkfed.org/markets/reference-rates/sofr. Interest provided for in this Section (2)(a) shall be due
and payable on the first calendar day of each calendar quarter commencing on each of October 1, 2025, January 1, 2026, April 1,
2026, July 1, 2026 and on the Maturity Date (the “Fixed Interest Payment Date”); provided, however,
notwithstanding anything to the contrary provided herein or elsewhere, interest accrued but not yet paid will be due and payable upon
any conversion, prepayment, and/or acceleration whether as a result of an Event of Default or otherwise with respect to the principal
amount being so converted, prepaid and/or accelerated. Solely with respect to the interest payment due on October 1, 2025, the Holder,
in its sole discretion, may elect to receive such interest payment in Common Stock, with such Common Stock valued for this purpose at
$4.25 per share, subject to adjustment as set forth in Section 5 herein.
b) Interest
Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30-calendar day periods, and shall
accrue commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued and unpaid
interest, liquidated damages and other amounts which may become due hereunder, has been made. Interest hereunder will be paid to the
Person in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note (the “Note
Register”).
c) Late
Fees. All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the lesser
of 10% per annum or the maximum rate permitted by applicable law (the “Late Fees”) which shall accrue daily from the
date such interest is due hereunder through and including the date of actual payment in full.
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 therewith 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, commencing on the Original Issue Date until this Note is no longer outstanding, this
Note shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to
time (subject to the conversion limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering
to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”),
specifying therein the principal amount of this Note and/or any other amounts due under this Note to be converted and the date on which
such conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice
of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original Notice
of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion
form be required so long as the shares to be issued pursuant thereto are to be registered in the name of the holder of the Note. To effect
conversions hereunder, the Holder shall not be required to physically surrender this Note to the Company unless the entire principal
amount of this Note, all accrued and unpaid interest thereon and all other amounts due under this Note have been so converted. Conversions
hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion
amount. The Holder and the Company shall maintain a Conversion Schedule showing the principal amount(s) and/or any other amounts
due under this Note converted and the date of such conversion(s). The Company may deliver an objection to any Notice of Conversion within
one (1) Business Day of delivery of such Notice of Conversion. 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.
b) Conversion
Price. The conversion price in effect on any Conversion Date shall be equal to $4.25, subject to adjustment as set forth herein (the
“Conversion Price”). All such foregoing determinations will be appropriately adjusted for any stock dividend, stock
split, stock combination, reclassification or similar transaction that proportionately decreases or increases the Common Stock during
such measuring period.
c) Mechanics
of Conversion.
i. Conversion
Shares Issuable Upon a Conversion. The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the
quotient obtained by dividing (x) the sum of (i) the outstanding principal to be converted as provided in the applicable Notice
of Conversion, (ii) accrued and unpaid interest thereon (if the Company has elected to pay interest in shares of Common Stock)
and (iii) any other amount due under this Note by (y) the Conversion Price.
ii. Delivery
of Certificate Upon Conversion. Not later than two (2) Trading Days after each Conversion Date (the “Share Delivery
Date”), the Company shall deliver, or cause to be delivered, to the Holder (A) a certificate or certificates representing
the Conversion Shares, which, on or after the date on which the resale of such Conversion Shares are covered by and are being sold pursuant
to an effective Registration Statement or such Conversion Shares are eligible to be sold under Rule 144 without the need for current
public information and the Company has received an opinion of counsel to such effect acceptable to the Company (which opinion the Company
will be responsible for obtaining at its own cost) shall be free of restrictive legends and trading restrictions (other than those which
may then be required by the Purchase Agreement) representing the number of Conversion Shares being acquired or being sold, as the case
may be, upon the conversion of this Note, and (B) payment in the amount of accrued and unpaid interest (if the Company has elected
to pay accrued interest in cash). All certificate or certificates required to be delivered by the Company under this Section 4(c) shall
be delivered electronically through DTC or another established clearing corporation performing similar functions, unless the Company
or its Transfer Agent does not have an account with DTC and/or is not participating in the DTC/FAST System, in which case the Company
shall issue and deliver to the address as specified in such Notice of Conversion a certificate (or certificates), registered in the name
of the Holder or its designee, for the number of Conversion Shares to which the Holder shall be entitled. If the Conversion Shares are
not being sold pursuant to an effective Registration Statement or if the Conversion Date is prior to the date on which such Conversion
Shares are eligible to be sold under Rule 144 without the need for current public information, the Conversion Shares shall bear
a restrictive legend in the following form, as appropriate:
“THE ISSUANCE AND SALE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”
iii. Failure
to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not delivered to or as
directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Company
at any time on or before its receipt of such certificate or certificates, to rescind such Notice of Conversion, 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
certificate or certificates issued to such Holder pursuant to the rescinded Notice of Conversion.
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 that 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.
v. Compensation
for Buy-In on Failure to Timely Deliver Certificates 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 certificate or certificates 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 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 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. 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 certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms
hereof.
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 a number of shares of Common Stock at least equal to the Required Minimum (as defined in the Purchase
Agreement) for the sole purpose of issuance upon conversion of this Note and payment of interest on this Note, each as herein provided,
free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder. 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.
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 that 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.
viii. Transfer
Taxes and Expenses. The issuance of certificates for shares of the Common Stock 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
certificates, 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 certificate 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 certificates 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 Notice of Conversion.
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 conversion set forth on the applicable Notice of Conversion,
the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s
Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below) (the “Conversion Limitation”).
For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates 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 that are issuable upon (i) conversion of the remaining, unconverted
principal amount of this Note beneficially owned by the Holder or any of its Affiliates 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 beneficially owned by the Holder or any of its Affiliates. 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. To the extent that the limitation contained in this Section 4(d) applies,
the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates)
and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice
of Conversion shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation to other securities
owned by the Holder together with any Affiliates) and which principal amount of this Note is convertible, in each case subject to the
Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each
time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph
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 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 stated in the most recent of the following: (i) the
Company’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement
by the Company, or (iii) a more recent written notice by the Company or the Company’s 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 two (2) Trading
Days 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 Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder. 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.
e) Principal
Market Regulation. The Company shall not issue any shares of Common Stock pursuant to the terms of this Note if the issuance of such
shares of Common Stock would exceed 19.99% of the issued and outstanding Common Stock on the Closing Date or otherwise exceed the aggregate
number of shares of Common Stock which the Company may issue without breaching the Company’s obligations under the rules or
regulations of the Principal Market (the number of shares which may be issued without violating such rules and regulations, the
“Exchange Cap”).
Section 5. Certain
Adjustments.
a) Stock
Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which,
for the avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, or payment of interest
on, the Note), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including
by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event
of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the 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 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 reclassification.
b) Reserved.
c) 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 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 that the Holder could have acquired if the Holder had held
the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on exercise
hereof, including without limitation, the Beneficial Ownership Limitation and the Conversion 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, 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 or the Conversion 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 or the Conversion Limitation, as applicable).
d) 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, 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 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 (without regard to any limitations on conversion hereof, including without limitation, the Beneficial Ownership
Limitation and the Conversion 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, to the extent that the Holder’s right to participate in any such Distribution would
result in the Holder exceeding the Beneficial Ownership Limitation or the Conversion 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 or the Conversion Limitation,
as applicable).
e) 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, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in
one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their
shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the
Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization
of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for
other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates
a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person, whereby such other Person acquires more than 50% of the outstanding shares of
Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each, a
“Fundamental Transaction”), then, upon any subsequent conversion of this Note, the Holder shall have the right to
receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental
Transaction (without regard to any limitation in Section 4(d) on the conversion of this Note), 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) on the conversion of this Note). For purposes of any such conversion, the determination of the 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 Common Stock in such Fundamental Transaction, and the Company shall apportion the 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 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
Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 5(d) pursuant to written
agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior
to such Fundamental Transaction and shall, at the option of the holder 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 that is
convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares
of Common Stock acquirable and receivable upon conversion of this 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 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 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 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 Documents with the same effect as if such Successor
Entity had been named as the Company herein.
f) 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.
g) Notice
to the Holder.
i. Adjustment
to Conversion Price. Whenever the 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 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
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 of rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all
or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding-up
of the affairs of the Company, then, in each case, the Company shall cause to be 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 fifteen (15) 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 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 on Form 8-K. The Holder shall
remain entitled to convert this Note during the 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.
Section 6. 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 (A) the principal amount of the Note or (B) interest, liquidated damages, Late Fees and other
amounts owing to the Holder on the Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity
Date or by acceleration or otherwise), which default, solely in the case of an interest payment or other default under clause (B) above,
is not cured within three (3) Trading Days;
ii. the
Company shall fail to observe or perform any other material covenant or agreement contained in the Note (other than a breach by the Company
of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (vii) below),
which failure is not cured, if possible to cure, within the earlier to occur of (A) five (5) Trading Days after notice of such
failure sent by the Holder to the Company and (B) ten (10) Trading Days after the Company has become or should have become
aware of such failure;
iii. a
default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall
occur under any of the Documents;
iv. any
representation or warranty made in this Note, any other Documents, any written statement pursuant hereto or thereto or any other report,
financial statement or certificate made or delivered to the Holder shall be untrue or incorrect in any material respect as of the date
when made or deemed made;
v. the
Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to
a Bankruptcy Event;
vi. the
Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume listing
or quotation for trading thereon within five (5) Trading Days or the transfer of shares of Common Stock through the DTC is
no longer available, “frozen” or “chilled”;
vii. the
Company shall fail for any reason to deliver Conversion Shares to a Holder prior to the fifth (5th) Trading Day after
a Share Delivery Date pursuant to Section 4(d) or 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 the Note in accordance with the
terms hereof;
viii. the
Company fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it is
not in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable); and
ix. the
Company shall fail to maintain sufficient reserved shares pursuant to Section 4.4 of the Purchase Agreement.
b) Remedies
Upon Event of Default. If any Event of Default occurs and is continuing, then at the Holder’s election, the outstanding principal
amount of this Note, plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date
of acceleration, shall become immediately due and payable. After the occurrence of any Event of Default that results in the eventual
acceleration of this Note and while it is continuing, the interest rate on this Note shall accrue at an interest rate equal to the lesser
of 18% per annum or the maximum rate permitted under applicable law (with a credit for any “unused” guaranteed interest).
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. Such acceleration may be rescinded and
annulled by the 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 6(b). No such rescission or annulment shall affect any
subsequent Event of Default or impair any right consequent thereon.
Section 7. Miscellaneous.
a) Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any
Notice of Conversion, shall be in writing and delivered personally, by facsimile, by electronic mail or sent by a nationally recognized
overnight courier service, addressed to the Company, at the address set forth above or such other address as the Company may specify
for such purposes by notice to the Holder delivered in accordance with this Section 7(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 facsimile, by electronic mail
or sent by a nationally recognized overnight courier service addressed to the Holder at the facsimile number or address of the Holder
appearing on the books of the Company, or if no such facsimile number 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
facsimile or electronic mail prior to 5:00 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 facsimile or electronic mail on a day that is not a Trading Day or
later than 5:00 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.
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 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 New York, New York (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 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 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.
e) Amendment;
Waiver. Any provision of this Note and any other Notes issued pursuant to the Purchase Agreement may be amended by a written instrument
executed by the Company and Purchasers holding a majority of the then outstanding principal under all Notes issued pursuant to the Purchase
Agreement, which amendment shall be binding on all successors and assigns. Any provision of this Note may be waived by the party seeking
enforcement thereof, which waiver shall be binding on all successors and assigns. Any waiver by the Company or the Holder must be in
writing. Any waiver by the Company or the Holder 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
Holder 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.
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.
g) Usury.
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 power as though no such law has been enacted.
h) 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 Documents (including, without limitation, the security
agreements referenced in the Purchase Agreement), 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 requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of
this Note.
i) 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.
j) 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.
k) Secured
Obligation. The obligations of the Company under this Note are secured by all assets of the Company pursuant to the Security Agreement,
dated as of April 13, 2023, as amended, between the Company and the Secured Party (as defined therein).
l) 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 one (1) Business Days after such receipt or delivery publicly disclose such material, nonpublic
information on a Current Report on Form 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 shall so 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.
m) Surrender
of Note. Upon the payment (or conversion) in full of the outstanding principal amount of this Note, plus accrued but unpaid interest,
liquidated damages and other amount owing in respects thereof, the Holder shall promptly surrender this Note to or as directed by the
Company.
*********************
(Signature Pages Follow)
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.
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FATHOM HOLDINGS INC. |
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By: |
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Name: Marco Fregenal |
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Title: President and CEO |
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E-mail address for delivery of Notices: |
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marco@fathominc.com |
ANNEX A
NOTICE OF CONVERSION
The
undersigned hereby elects to convert the Senior Secured Convertible Promissory Note due October 1, 2026, of Fathom Holdings
Inc., a North Carolina corporation (the “Company”), into shares of common stock of the Company (the “Common
Stock”), according to the conditions hereof, as of the date written below. If shares of Common Stock 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 Notice
of Conversion, the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts
specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.
The undersigned agrees to
comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid
shares of Common Stock, if the resale of any such shares of Common Stock are covered by and are being sold pursuant to an effective Registration
Statement.
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Schedule 1
CONVERSION SCHEDULE
This
Senior Secured Convertible Promissory Note due on [●], in the principal amount
of $[●]is issued by Fathom Holdings Inc., a North Carolina corporation. This Conversion
Schedule reflects conversions made under Section 4 of the above referenced Note.
Dated:
Date of Conversion
(or for first entry,
Original Issue Date) |
Amount of
Conversion |
Aggregate
Principal
Amount
Remaining
Subsequent to
Conversion
(or original
Principal
Amount) |
Company Attest |
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Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of [●], by and among Fathom Holdings Inc.,
a North Carolina corporation (the “Company”), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser” and, collectively, the “Purchasers”).
RECITALS
A. The
Company and each Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).
B. Each
Purchaser, severally and not jointly, wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this
Agreement, the Notes, all in the amounts and for the price set forth on Schedule 1 hereto.
NOW, THEREFORE, IN CONSIDERATION
of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser hereby agrees as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined
Terms. In addition to terms defined elsewhere in this Agreement or in any Supplement, Amendment or Exhibit hereto, when used
herein, the following terms shall have the following meanings:
(a) “Affiliate”
means any Person which, directly or indirectly, owns or controls, on an aggregate basis, a ten percent (10%) or greater interest in any
other Person, or which is controlled by or is under common control with any other Person.
(b) “Business
Day” means any day other than a Saturday or Sunday or any other day on which the Federal Reserve Bank of New York is not open
for business.
(c) “Closing”
means the time of issuance and sale by the Company of the Notes to the Purchasers.
(d) “Closing
Date” means the date the Notes are purchased by the Purchasers from the Company.
(e) “Closing
Statement” means the Closing Statement in the form on Annex A attached hereto.
(f) “Collateral”
has the meaning set forth in the Security Agreement.
(g) “Collateral
Date” has the meaning set forth in the Security Agreement.
(h) “Common
Stock” means (i) the Company’s common stock, no par value per share, and (ii) any capital stock into
which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(i) “Common
Stock Equivalents” means any capital stock or other security of the Company that is at any time and under any circumstances
directly or indirectly convertible into, exercisable or exchangeable for, and/or which otherwise entitles the holder thereof to acquire,
any capital stock or other security of the Company (including, without limitation, Common Stock).
(j) “Contingent
Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect
to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in
whole or in part) against loss with respect thereto.
(k) “Conversion
Date” has the meaning set forth in the Notes.
(l) “Conversion
Shares” has the meaning set forth in the Notes.
(m) “Documents”
means, collectively, this Agreement, the Notes, the Registration Rights Agreement, the Security Agreement, the Subsidiary Guarantee
and such other documents, instruments, certificates, supplements, amendments, exhibits and schedules required and/or attached pursuant
to this Agreement and/or any of the above documents, and/or any other document and/or instrument related to the above agreements, documents
and/or instruments, and the transactions hereunder and/or thereunder and/or any other agreement, documents or instruments required or
contemplated hereunder or thereunder, whether now existing or at any time hereafter arising.
(n) “Dollar(s)”
and “$” means lawful money of the United States.
(o) “Event
of Default” shall have the meaning set forth in the Notes.
(p) “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(q) “GAAP”
means generally accepted accounting principles in the United States of America as in effect from time to time.
(r) “Indebtedness”
means, with respect to any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or services (other than trade payables and accrued expenses
incurred in the ordinary course of business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar
instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the seller or the Purchasers under such agreement in the event
of default are limited to repossession or sale of such property), (e) the capitalized amount of all capital lease obligations of
such Person that would appear on a balance sheet in accordance with GAAP (provided, however, capital lease obligations shall
not include any obligations under operating leases that are required to be treated as capital leases on account of the adoption of FAS
842 where such leases would not have been required to be treated as capital leases under GAAP as in effect on December 31, 2015),
(f) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any capital
stock of such Person, (g) all obligations of such Person, contingent or otherwise, with respect to all unpaid drawings in respect
of letters of credit, bankers’ acceptances and similar obligations, (h) all guarantee obligations of such Person in respect
of obligations of the kind referred to in clauses (a) through (g) above, (i) all obligations of the kind referred
to in clauses (a) through (g) above secured by (or for which the holder of such obligation has an existing right, contingent
or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person,
whether or not such Person has assumed or become liable for the payment of such obligation; provided that, if such Person has not
assumed or become liable for the payment of such obligation, the amount of such Indebtedness shall be limited to the lesser of (A) the
principal amount of the obligation being secured and (B) the fair market value of the encumbered property; and (j) all Contingent
Obligations in respect to indebtedness or obligations of any Person of the kind referred to in clauses (a)-(i) above. The Indebtedness
of any Person shall include, without duplication, the Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship
with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.
(s) “Liabilities”
means all direct or indirect liabilities and obligations of any kind of Company to the Purchasers pursuant to the Notes, this Agreement
and/or any of the other Documents.
(t) “Liens”
or “liens” means a lien, mortgage, charge, pledge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction, or other clouds on title.
(u) “Material
Adverse Effect” means a material adverse effect on (a) the business, assets, property, prospects, operations, or condition
(financial or otherwise) of Company and all of its Subsidiaries, taken as a whole, (b) the validity or enforceability of this Agreement
or any of the other Documents or (c) the rights or remedies of the Purchasers hereunder or thereunder.
(v) “Material
Subsidiaries” means the following Subsidiaries of the Company: E4:9 Holdings LLC, a Delaware limited liability company, IntelliAgent,
LLC, a Texas limited liability company, Fathom Realty Holdings LLC, a Texas limited liability company, and Verus Holdings Inc., a North
Carolina corporation (each a “Material Subsidiary”).
(w) “Notes”
means all of the Senior Secured Convertible Promissory Notes in the form annexed hereto as Exhibit A and any and all
Note(s) issued in exchange, transfer or replacement of the Notes.
(x) “OFAC”
means the United States Department of the Treasury’s Office of Foreign Assets Control.
(y) “OFAC
Regulations” means the regulations promulgated by OFAC, as amended from time to time.
(z) “Permitted
Indebtedness” means (i) Indebtedness of the Company evidenced by the Notes, this Agreement and/or any other Document
in favor of the Purchasers including all Liabilities, (ii) Indebtedness of the Company and its Subsidiaries set forth in the Company’s
most recent SEC Reports, provided none of such Indebtedness, has been materially increased, extended and/or otherwise changed since
the date of the most recent SEC Reports), (iii) Indebtedness that is subordinated to and not equal to or senior to the Notes, (iv) trade
Indebtedness incurred in the ordinary course of business, (v) Indebtedness secured by Permitted Liens described in clauses “(iv)”
and “(v)” of the definition of Permitted Liens, and (vi) Indebtedness existing as of the date hereof.
(aa) “Permitted
Liens” means (i) 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 GAAP, (ii) 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, (iii) any Lien created by operation
of law, such as materialman’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, (iv) Liens
(A) upon or in any equipment acquired or held by the Company to secure the purchase price of such equipment or indebtedness
incurred solely for the purpose of financing the acquisition or lease of such equipment, and (B) existing on such equipment at the
time of its acquisition, provided that the Lien is confined solely to the property so acquired and improvements thereon, and the
proceeds of such equipment, (v) Liens arising in connection with capital lease obligations (and attaching only to the property being
leased) or (vi) any Liens securing Permitted Indebtedness set forth in Sections (i) through (iii) and (vi) of the
definition of Permitted Indebtedness.
(bb) “Person”
means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution,
entity, party or government (whether national, federal, state, county, city, municipal or otherwise including, without limitation, any
instrumentality, division, agency, body or department thereof).
(cc) “Principal
Market” means the market or exchange on which the Common Stock is listed or quoted for trading on the date in question.
(dd) “Purchase
Price” means the price to be paid by each Purchaser, in cash, to purchase such Purchaser’s Note.
(ee) “Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date hereof, as hereinafter amended and/or supplemented,
together with all exhibits, schedules and annexes to such Registration Rights Agreement.
(ff) “Required
Minimum” has the meaning set forth in Section 4.4.
(gg) “SEC”
or “Commission” means the United States Securities and Exchange Commission.
(hh) “SEC
Reports” has the meaning set forth in Section 3.1(p) hereof.
(ii) “Securities”
means the Notes purchased pursuant to this Agreement and all Underlying Shares and any securities of the Company issued in replacement,
substitution and/or in connection with any exchange, conversion and/or any other transaction pursuant to which all or any of such securities
of the Company to the Purchasers.
(jj) “Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(kk) “Security
Agreement” means the Security Agreement, dated as of the date hereof, as hereinafter amended and/or supplemented, together
with all exhibits, schedules and annexes to such Security Agreement.
(ll) “Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not
be deemed to include the location and/or reservation of borrowable shares of Common Stock).
(mm) “Subsidiary”
means, with respect 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.
(nn) “Subsidiary
Guarantee” means the Subsidiary Guarantee, dated as of the date hereof, as hereinafter amended and/or supplemented, together
with all exhibits, schedules and annexes to such Security Agreement.
(oo) “Trading
Day” means any day on which the Common Stock is traded on the Trading Market, provided that “Trading Day”
shall not include any day on which the Common Stock is scheduled to trade on the Trading Market for less than 4.5 hours or any day that
the Common Stock is suspended from trading during the final hour of trading on the Trading Market (or if the Trading Market does not designate
in advance the closing time of trading on the Trading Market, then during the hour ending at 4:00:00 p.m., New York City time) unless
such day is otherwise designated as a Trading Day in writing by the Purchasers.
(pp) “Trading
Market” means any of the following markets or exchanges on which the Common Stock (or any other common stock of any other Person
that references the Trading Market for its common stock) is listed or quoted for trading on the date in question: the OTC Bulletin Board,
The NASDAQ Global Market, The NASDAQ Global Select Market, The NASDAQ Capital Market, the New York Stock Exchange, NYSE Arca, the NYSE
MKT, or the OTCQX Marketplace, the OTCQB Marketplace, the OTCPink Marketplace or any other tier operated by OTC Markets Group Inc. (or
any successor to any of the foregoing).
(qq) “Transfer
Agent” means Continental Stock Transfer & Trust Company, with a mailing address of 1 State Street Plaza, 30th
Floor, New York, NY 10004 and a phone number of (212) 509-4000, and any successor transfer agent of the Company.
(rr) “UCC”
means the Uniform Commercial Code of as in effect from time to time in the State of New York; provided, however, that, in
the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, priority, or remedies with respect
to the Purchasers’ Liens on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction
other than the State of New York, the term “UCC” shall mean the Uniform Commercial code as enacted and in effect in
such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies.
(ss) “Underlying
Shares” means the Conversion Shares.
1.2 Other
Definitional Provisions.
(a) Use
of Defined Terms. Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used
in the other Documents or any certificate or other document made or delivered pursuant hereto or thereto.
(b) Construction.
The words “hereof”, “herein” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule
and Exhibit references are to this Agreement unless otherwise specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) UCC
Terms. Terms used in this Agreement that are defined in the UCC shall, unless the context indicates otherwise or are otherwise defined
in this Agreement, have the meanings provided for by the UCC.
ARTICLE 2
PURCHASE AND SALE OF THE NOTES
2.1 Closing.
The Closing shall occur at 10:00 am (EDT) on the Closing Date at the offices of Pryor Cashman LLP,
7 Times Square, New York, New York 10036, on the first (1st) Trading Day on which the conditions to the Closing set
forth in Article V hereof are satisfied or waived in writing as provided elsewhere herein, or on such other date and time
as agreed to by the Company and the Purchasers.
2.2 Conditions
to Purchase of Notes. Subject to the terms and conditions of this Agreement, each Purchaser will at the Closing, on
the Closing Date, purchase from the Company the Note in the amount and for the Purchase Price as set forth on Schedule 1.
2.3 Purchase
Price and Payment of the Purchase Price for the Notes. The Purchase Price for the Note to be purchased by each Purchaser
at the Closing shall be as set forth on Schedule 1 and shall be paid at the Closing (less all of the Purchasers’ Expenses
(as defined below)) by such Purchaser by wire transfer of immediately available funds to the Company in accordance with the Company’s
written wiring instructions, against delivery of the Note.
2.4 Purchasers’
Costs and Expenses. On the Closing Date, all reasonable, documented direct and indirect out-of-pocket costs and expenses of the Purchasers
related to the negotiation, due diligence, preparation, closing, and all other items regarding or related to this Agreement and the other
Documents and all of the transactions contemplated herein and/or therein, including, but not limited to, the reasonable legal fees and
expenses of the Purchasers’ legal counsel, Pryor Cashman LLP, and for clarity no other legal fees or expenses (collectively, the
“Purchasers’ Expenses”), shall be due and payable from the Company to the Purchasers; provided, however,
that the Company’s responsibility for the Purchasers’ Expenses shall not exceed, in the aggregate, $25,000 for Pryor Cashman
LLP as Purchasers’ legal counsel.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES; OTHER ITEMS
3.1 Representation
and Warranties of the Company. Except as set forth in the SEC Reports or the Schedule of Exceptions, which Schedule
of Exceptions shall be deemed a part hereof and shall qualify any representation or warranty otherwise made herein to the extent of the
disclosure contained in the corresponding section of the Schedule of Exceptions, the Company represents and warrants to each Purchaser
that as of the Closing Date (unless as of a specific date therein):
(a) Material
Subsidiaries. All of the direct and indirect Material Subsidiaries of the Company are set forth
in the SEC Reports. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Material Subsidiary
free and clear of any Liens, other than Permitted Liens, and all of the issued and outstanding shares of capital stock or other equity
ownership interest of each Material 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 Material Subsidiaries is an entity duly incorporated or otherwise organized and validly
existing, and the Company and each Material Subsidiary is in good standing, under the respective 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 Material Subsidiary is in violation nor default of any of the provisions of its respective certificate
or articles of incorporation, bylaws or other organizational or charter documents. The Company and each Material Subsidiary 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 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.
(c) No
Conflict. The execution, delivery and performance of the Documents and the transactions contemplated thereby by the Company, including,
but not limited to, the sale and issuance of the Notes for the Purchase Price, the reservation for issuance of the shares of Common
Stock required to be reserved pursuant to the terms of the Notes and of the sale and issuance the Conversion Shares into which the Notes
are convertible do not and shall not contravene or conflict with any provision of, or require any consents (except such consents as have
already been received) under (1) any law, rule, regulation or ordinance, (2) the Company’s organizational documents; and/or
(3) any agreement binding upon the Company or any of the Company’s properties, except in the case of (1) and (3) as
would not reasonably be expected to have a Material Adverse Effect, and do not result in, or require, the creation or imposition of any
Lien and/or encumbrance on any of the Company’s properties or revenues pursuant to any law, rule, regulation or ordinance or otherwise,
except as would not reasonably be expected to have a Material Adverse Effect.
(d) Authorization;
Enforcement. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization,
execution and delivery of the Documents and the performance of all obligations of the Company under the Documents and have been taken
on or prior to the date hereof. Each of the Documents has been duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance
with its terms, except: (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as limited by general equitable principles regardless
of whether such enforcement is considered in a proceeding in equity or at law, (iii) as limited by laws relating to the availability
of specific performance, injunctive relief or other equitable remedies and (iv) insofar as indemnification and contribution provisions
may be limited by applicable law.
(e) Title
to Assets. The Company has good and marketable title to all assets owned by Company that are material to the business of the
Company.
(f) No
Violations of Laws. The Company is not in violation of any law, ordinance, rule, regulation, judgment, decree or order of any
federal, state or local governmental body or court and/or regulatory or self-regulatory body, except as would not reasonably be expected
to have a Material Adverse Effect.
(g) Taxes.
All federal, and material state and local tax returns required to be filed by the Company have been filed with the appropriate
governmental agencies and all taxes due and payable by the Company have been timely paid.
(h) Fiscal
Year. The fiscal year of the Company ends on December 31 of each year.
(i) Accuracy
of Information, etc. No statement or information contained in this Agreement, the SEC Reports, any other Document or any other
document, certificate or statement furnished to the Purchasers by or on behalf of the Company in writing for use in connection with the
transactions contemplated by this Agreement and/or the other Documents contained, as of the date such statement, information, document
or certificate was made or furnished, as the case may be, any untrue statement of a material fact or omitted to state a material fact
necessary to make the statements contained herein or therein, taken as a whole, not materially misleading. There is no fact known to the
Company that could have a Material Adverse Effect that has not been expressly disclosed herein, in the other Documents, or in any other
documents, certificates and statements furnished to the Purchasers for use in connection with the transactions contemplated hereby and
by the other Documents.
(j) Affiliate
Transactions. Except for participation as a Purchaser, none of the officers or directors of the Company and, to the knowledge
of the Company, none of the employees of the Company is presently a party to any transaction with the Company (other than for services
as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services
to or by, providing for rental of real or personal property to or from providing for the borrowing of money from or lending of money to,
or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which
any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner,
in each case in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement
for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock
option plan of the Company.
(k) Intellectual
Property. The Company has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service
marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as described
in the SEC Reports as necessary or required for use in connection with its business and which the failure to so have would have a Material
Adverse Effect (collectively, the “Intellectual Property Rights”). None of, and the Company has not received a notice
(written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire
or terminate or be abandoned. The Company has not received a written notice of a claim that, nor does the Company otherwise have any knowledge
that, the Intellectual Property Rights violate or infringe upon the rights of any Person, except as would not have or reasonably be expected
to not have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there
is no existing infringement by another Person of any of the Intellectual Property Rights. The Company has taken reasonable security measures
to protect the secrecy, confidentiality and value of all of its intellectual property, except where failure to do so would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect. All Intellectual Property Rights of the Company are set
forth in the SEC Reports.
(l) USA
Patriot Act. The Company is in compliance, in all material respects, with (i) the Trading with the Enemy Act, as amended,
and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended)
and any other enabling legislation or executive order relating thereto, and (ii) the USA Patriot Act (Title III of Pub. L. 107-56,
signed into law on October 26, 2001) (the “Act”). No part of the proceeds of the Notes will be used, directly
or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
(m) Foreign
Asset Control Laws. The Company is not a Person named on a list published by OFAC or a Person with whom dealings are prohibited
under any OFAC Regulations.
(n) Valid
Issuance of the Securities. The Securities have been duly authorized and, when issued and paid for in accordance with
the applicable Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens and all restrictions
on transfer other than those expressly imposed by the federal securities laws and vest in the Purchaser full and sole title and power
to the Securities. The Company has reserved from its duly authorized unissued capital stock a number of shares of Common Stock for issuance
of the Underlying Shares at least equal to the Required Minimum.
(o) Capitalization
and Voting Rights. The authorized capital stock of the Company and all securities of the Company issued and outstanding are set forth
in Schedule 3.1(o) as of the dates reflected therein. All of the outstanding shares of Common Stock and other securities
of the Company have been duly authorized and validly issued, and are fully paid and nonassessable. There are no agreements or arrangements
under which the Company is obligated to register the sale of any of the Company’s securities under the Securities Act. No shares
of Common Stock and/or other securities of the Company are entitled to preemptive rights and there are no outstanding debt securities
and no contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares
of the capital stock and/or other securities of the Company or options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, any shares of capital stock of
the Company other than those issued or granted in the ordinary course of business pursuant to the Company’s equity incentive and/or
compensatory plans or arrangements. Except for customary transfer restrictions contained in agreements entered into by the Company to
sell restricted securities, the Company is not a party to, and it has no knowledge of, any agreement restricting the voting or transfer
of any shares of the capital stock and/or other securities of the Company. To the Company’s knowledge, the offer and sale of all
capital stock, convertible or exchangeable securities, rights, warrants, options and/or any other securities of the Company when any such
securities of the Company were issued complied with all applicable federal and state securities laws, and no current and/or prior holder
of any securities of the Company has any right of rescission or damages or any “put” or similar right with respect thereto
that would have a Material Adverse Effect. There are no securities or instruments of the Company containing anti-dilution or similar provisions
that will be triggered by the issuance and/or sale of the Securities and/or the consummation of the transactions described herein or in
any of the other Documents.
(p) SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be
filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the one (1) year preceding the date hereof (the foregoing materials, including the exhibits thereto and documents incorporated
by reference therein, being collectively referred to herein as the “SEC Reports”). As of their respective dates, the
SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none
of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the
periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects
the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations
and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(q) Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included within
the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (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) the
Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in
the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the Commission; (iii) the Company has not altered its method
of accounting other than as required by GAAP; (iv) the Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock; and
(v) the Company has not issued any equity securities to any officer, director or Affiliate,
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 Material Subsidiaries or their respective businesses, properties, operations, assets or financial condition,
that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made.
(r) Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Material Subsidiaries are in compliance with any and all applicable requirements
of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Material Subsidiaries
maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the
Material Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
for the Company and the Material Subsidiaries and designed such disclosure controls and procedures to ensure that information required
to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated
the effectiveness of the disclosure controls and procedures of the Company and the Material Subsidiaries as of the end of the period covered
by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented
in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of
the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been
no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) that have materially affected,
or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Material Subsidiaries.
(s) Absence
of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company,
the Common Stock or any of the Company’s officers or directors or 5% or greater stockholders in their capacities as such.
(t) No
Integrated Offering. Assuming the accuracy of the representations and warranties set forth in Section 3.2, neither the
Company, nor any of its affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales
of any security or solicited any offers to buy any security, under circumstances that would cause the issuance and/or sale of the Securities
to be integrated with prior offerings of securities by the Company for purposes of the Securities Act that would require the registration
of any such Securities and/or any other securities of the Company under the Securities Act.
(u) No
Consents. No direct or indirect consent, approval, authorization or similar item is required to be obtained by the Company to enter
into this Agreement, the Notes, and/or the other Documents to which it is a party and to perform or undertake any of the transactions
contemplated pursuant to this Agreement, the Notes, and/or any of the other Documents to which it is a party, except for such consents
as have already been received.
(v) No
General Solicitation. Neither the Company, nor any of its affiliates, nor, to the knowledge of the Company, any Person
acting on its behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection
with the offer or sale of the Securities.
(w) Acknowledgment
Regarding the Purchaser’s Purchase of Note. The Company acknowledges and agrees that the Purchaser is acting
solely in the capacity of an arm’s length purchaser with respect to this Agreement and the other Documents. The Company further
acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect
to the Documents and the transactions contemplated hereby and thereby, and any advice given by the Purchaser or any of its representatives
or agents in connection with the Documents and the transactions contemplated hereby and thereby is merely incidental to the Purchaser’s
purchase of the Securities. The Company further represents to the Purchaser that the Company’s decision to enter into the
Documents has been based solely on the independent evaluation by the Company and its representatives.
(x) Certain
Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Documents.
The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Documents.
(y) Private
Placement. Assuming the accuracy of each Purchaser’s representations and warranties set forth in Section 3.2,
no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby.
(z) Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be
or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company
shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the
Investment Company Act of 1940, as amended.
(aa) Accountants.
The Company’s accounting firm is Deloitte & Touche LLP. To the knowledge and belief of the Company, such accounting
firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect
to the financial statements to be included in the Company’s Annual Report for the fiscal year ending December 31, 2024.
(bb) Rule 506(d) Bad
Actor Disqualification Representations and Covenants.
| (1) | No Disqualification Events. Neither the Company, nor any of its predecessors, affiliates, any manager,
executive officer, other officer of the Company participating in the offering, any beneficial owner (as that term is defined in Rule 13d-3
under the Exchange Act) of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting
power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity
as of the date of this Agreement and on the Closing Date (each, a “Company Covered Person” and, together, “Company
Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to
(viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or
(d)(3). The Company has exercised reasonable care to determine (A) the identity of each person that is a Company Covered Person;
and (B) whether any Company Covered Person is subject to a Disqualification Event. The Company will comply with its disclosure obligations
under Rule 506(e). |
| (2) | Other Covered Persons. The Company is not aware of any person (other than any Company Covered Person)
who has been or will be paid (directly or indirectly) remuneration in connection with the purchase and sale of the Notes who is subject
to a Disqualification Event (each, an “Other Covered Person”). |
| (3) | Reasonable Notification Procedures. With respect to each Company Covered Person, the Company has
established procedures reasonably designed to ensure that the Company receives notice from each such Company Covered Person of (A) any
Disqualification Event relating to that Company Covered Person, and (B) any event that would, with the passage of time, become a
Disqualification Event relating to that Company Covered Person; in each case occurring up to and including the Closing Date. |
| (4) | Notice of Disqualification Events. The Company will notify the Purchasers immediately in writing
upon becoming aware of (A) any Disqualification Event relating to any Company Covered Person and (B) any event that would, with
the passage of time, become a Disqualification Event relating to any Company Covered Person and/or Other Covered Person. |
(cc) Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser
is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving any Securities hereunder or under any
other agreement between the Company and the Purchasers.
(dd) Off-Balance
Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or
other off-balance sheet entity.
(ee) Seniority.
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, other than indebtedness secured by purchase money security interests (which
is senior only as to underlying assets covered thereby) and capital lease obligations (which is senior only as to the property covered
thereby).
(ff) Listing
of Securities. All Underlying Shares have been approved, if so required, for listing or quotation on the Trading Market, subject
only to notice of issuance.
(gg) DTC
Eligible. The Common Stock is DTC eligible and DTC has not placed a “freeze” or a “chill” on the Common Stock
and the Company has no reason to believe that DTC has any intention to make the Common Stock not DTC eligible, or place a “freeze”
or “chill” on the Common Stock.
(hh) Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act,
and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. Except as disclosed in the SEC Reports, the Company has not, in the twelve (12) months preceding the date hereof,
received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not
in compliance with the listing or maintenance requirements of such Trading Market.
3.2 Representations
and Warranties of each Purchaser. Each Purchaser, severally and not jointly, hereby represents and warrants as of the date hereof
and as of the Closing Date to the Company as follows:
(a) Authorization.
Such Purchaser has full power and authority to enter into this Agreement and the other Documents to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby and has taken all action necessary
to authorize the execution and delivery of this Agreement and the other Documents to which it is a party, the performance of its obligations
hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby.
(b) Own
Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered under
the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with
a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state
securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution
of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting
such Purchaser’s right to sell the Securities pursuant to an effective registration statement or otherwise in compliance with applicable
federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.
(c) Accredited
Investor Status; Investment Experience. At the time such Purchaser was offered the Securities it was, and as of the date hereof and
as of the Closing Date it is, and on each date on which it converts any portion of the Note it will be, an “accredited investor”
as that term is defined in Rule 501(a) of Regulation D.
(d) Experience
of Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities,
and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such investment.
(e) General
Solicitation. Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any
seminar or any other general solicitation or general advertisement.
(f) Reliance
on Exemptions. Such Purchaser understands that the Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the
truth and accuracy of, and the Purchasers’ compliance with, the representations, warranties, agreements, acknowledgments and understandings
of the Purchasers set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchasers to
acquire the Securities.
(g) Information.
Such Purchaser has been furnished with all materials relating to the business, finances and operations of the Company and materials relating
to the offer and sale of the Securities, which have been requested by such Purchaser. Such Purchaser has been afforded the opportunity
to ask questions of the Company. Such Purchaser understands that its investment in the Securities involves a high degree of risk. Such
Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with
respect to its acquisition of its Securities. Such Purchaser is relying solely on its own accounting, legal and tax advisors, and not
on any statements of the Company or any of its agents or representatives, for such accounting, legal and tax advice with respect to its
acquisition of the Securities.
(h) No
Governmental Review. Such Purchaser understands that no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities, or the fairness or suitability of an investment in the
Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
(i) Validity;
Enforcement; No Conflicts. This Agreement and each Document to which such Purchaser is a party have been duly and validly authorized,
executed and delivered on behalf of such Purchaser and shall constitute the legal, valid and binding obligations of such Purchaser enforceable
against such Purchaser in accordance with their respective terms, except as such enforceability may be limited by general principles of
equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors’ rights and remedies.
(j) Organization
and Standing. Such Purchaser is duly organized, validly existing and in good standing under the laws of the State where it was formed.
(k) Brokers
or Finders. No brokerage or finder’s fees or commissions are or will be payable by such Purchaser to any broker, financial advisor
or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Documents.
The Company shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Documents.
(l) Ability
to Perform. There are no actions, suits, proceedings or investigations pending against such Purchaser or such Purchaser’s assets
before any court or governmental agency (nor is there any threat thereof) that would impair in any way such Purchaser’s ability
to enter into and fully perform its commitments and obligations under this Agreement and the Documents to which it is a party or the transactions
contemplated hereby or thereby.
(m) Confidentiality.
Other than confidential disclosure to other Persons party to this Agreement or to the Purchaser’s representatives, including,
without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, such Purchaser has
maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of
this transaction).
ARTICLE 4
COVENANTS
4.1 Transfer
Restrictions.
(a) The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser, the Company
may require, at the Company’s expense, 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 satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer,
any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of a Purchaser
under this Agreement.
(b) The
Purchasers 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]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL IN A FORM ACCEPTABLE TO THE COMPANY.
4.2 Rule 144
Availability; Public Information. If at any time during the period commencing from the six (6) month anniversary of the
date hereof and ending on the date that the Notes are no longer outstanding, if the Company shall fail for any reason to satisfy the current
public information requirement under Rule 144(c) under the Securities Act (a “Public Information Failure”),
then, in addition to the Purchasers’ other available remedies, the Company shall pay to the Purchasers, as liquidated damages and
not as a penalty, by reason of any such delay in or reduction of its ability to sell any Underlying Shares, an amount in cash equal to
one percent (1.0%) of such Purchaser’s Purchase Price on the day of a Public Information Failure and on every thirtieth (30th) day
(pro-rated for periods totaling less than thirty (30) days) thereafter until the earlier of (1) the date such Public Information
Failure is cured and (2) such time that such public information is no longer required for the Purchasers to transfer the Securities
pursuant to Rule 144 under the Securities Act. The payments to which the Purchasers shall be entitled pursuant to this Section 4.2
are referred to herein as “Rule 144 Failure Payments”. Rule 144 Failure Payments shall be paid on the earlier
of (i) the last day of the calendar month during which such Rule 144 Failure Payments are incurred and (ii) the third (3rd)
Trading Day after the event or failure giving rise to the Rule 144 Failure Payments is cured.
4.3 Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Documents, the Company
covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its agents or counsel with
any information that constitutes, or that the Company reasonably believes constitutes, material non-public information, unless prior thereto
such Purchaser shall have consented to the receipt of such information and agreed with the Company to keep such information confidential
and not trade Company securities while in possession of such information. The Company understands that each Purchaser may be relying on
the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company delivers any material, non-public
information to a Purchaser without such Purchaser’s consent, the Company hereby covenants and agrees that such Purchaser shall not
have any duty of confidentiality to Company or any of its officers, directors, agents, employees or Affiliates, or a duty to the Company
or any of its officers, directors, agents, employees or Affiliates not to trade on the basis of such material, non-public information,
provided that the Purchaser shall remain subject to applicable law. To the extent that any notice provided pursuant to any Document
constitutes, or contains, material, non-public information regarding the Company, the Company shall simultaneously file such notice with
the Commission pursuant to a Current Report on Form 8-K. Such Purchaser shall not have any liability to the Company or any of its
directors, officers, employees, stockholders or agents, for any such disclosure. The Company understands that each Purchaser may be relying
on the foregoing covenants and obligations in effecting transactions in securities of the Company.
4.4 Reservation
of Shares.
(a) The
Company covenants and agrees that it will at all times reserve and keep available out of its authorized and unissued shares of Common
Stock a number of shares of Common Stock at least equal to the Required Minimum (as defined below). The “Required Minimum”
means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future pursuant
to the Documents, including any Underlying Shares issuable upon conversion in full of the Notes, ignoring any conversion limits set forth
therein. For purposes of calculating the Required Minimum, the Company shall assume that all outstanding principal of all Notes will remain
outstanding until the applicable Maturity Date.
(b) The
Company shall, if applicable: (i) in the time and manner required by the Principal Market, prepare and file with such Trading Market
an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum on the date
of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing or quotation on
such Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing or quotation and (iv) maintain
the listing or quotation of such Common Stock on any date at least equal to the Required Minimum on such date on such Trading Market or
another Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic transfer through the Depository
Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to the Depository
Trust Company or such other established clearing corporation in connection with such electronic transfer.
4.5 Securities
Law Disclosure; Publicity. (i) No later than 9:30 am (EDT) on the second Trading Day after the date hereof, the Company shall
issue a Current Report on Form 8-K (the “Current Report”) disclosing the material terms of the transactions contemplated
hereby, and including the Documents required to be included in such Current Report as exhibits thereto. The Company represents to the
Purchasers that, as of the issuance of the first such Current Report, the Company shall have publicly disclosed all material, non-public
information delivered to the Purchasers, if any, as of such time by the Company, or any of its respective officers, directors, employees
or agents in connection with the transactions contemplated by the Documents. The Company shall afford each Purchaser and Pryor Cashman
as Purchasers’ counsel with a reasonable opportunity to review and comment upon, shall consult with them on the form and substance
of, and shall give due consideration to all such comments from them on, any press release, SEC filing or any other public disclosure made
by or on behalf of the Company relating to such Purchaser, the Documents and/or the transactions contemplated by any Document, prior to
the issuance, filing or public disclosure thereof, and the Company shall not issue, file or publicly disclose any such information to
which any Purchaser shall reasonably object, unless required by law. For the avoidance of doubt, the Company shall not be required to
submit for review any such disclosure contained in periodic reports filed with the SEC under the Exchange Act if it shall have previously
provided the same disclosure for review in connection with a previous filing. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or
Trading Market, without the prior written consent of such Purchaser, except: (a) as required by federal securities law in connection
with the filing of final Documents with the Commission and (b) to the extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).
4.6 Taxes
and Liabilities. The Company shall pay when due all of its material taxes, assessments and other liabilities, except as contested
in good faith and by appropriate proceedings and for which adequate reserves in conformity with GAAP have been established.
4.7 Maintenance
of Business; Company Names. The Company shall (i) keep all property and systems useful and necessary in its business in
good working order and condition, (ii) preserve its existence, rights and privileges in the jurisdiction of its organization or formation
and become or remain, and cause each of its Material Subsidiaries to become or remain, duly
qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary, (iii) not operate in any business other than a business substantially the same
as the business as in effect on the date of this Agreement; provided, however, that it may change its jurisdiction of organization
or formation establishment upon ten (10) days’ prior written notice to the Purchasers. The Company shall give Purchasers ten
(10) days’ prior written notice before the Company changes its name or does business under any other name.
4.8 Employee
Benefit Plans, Etc. The Company shall (i) maintain each plan and/or each employee benefit plan as to which it may have
any liability in substantial compliance with all applicable requirements of law and regulations; (ii) make all payments and contributions
required to be made pursuant to such Plans and/or plans in a timely manner; and (iii) neither establish any new Plan and/or employee
benefit plan, agree or contribute to any Plan and/or multi-employer plan nor amend any existing Plan and/or employee pension benefit plan
in a manner that would materially increase its obligation to contribute to such Plan and/or plan.
4.9 Good
Title. The Company shall at all times maintain good and marketable title to all of its assets necessary for the operation of
its business.
4.10 Maintenance
of Intellectual Property Rights. The Company will take all reasonable action necessary or advisable to maintain all of the Intellectual
Property Rights of the Company that are necessary or material to the conduct of its business in full force and effect.
4.11 Locations.
The Company shall give the Purchasers ten (10) days’ prior written notice of a change in its jurisdiction of organization
or the location of its Chief Executive Office or sole place of business or principal residence.
4.12 Negative
Covenants. Until all the Liabilities are paid in full, Company covenants and agrees that:
(a) Restricted
Payments. Except as contemplated by the Documents, and except for payments to a Purchaser, the Company shall 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, whether
by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness, except for Permitted Indebtedness;
provided, however, that, notwithstanding anything to the contrary provided herein or elsewhere, in no event shall the Company directly
and/or indirectly make any payment to any officer, director, or 5% or greater beneficial holder of the Company’s voting stock or
Common Stock or an affiliate of the Company and/or any affiliate of any such person representing the direct and/or indirect repayment
of Indebtedness, premiums and/or interest on Indebtedness, and/or accrued but unpaid interest.
(b) Restriction
on Redemption and Dividends. Other than as permitted or required under the Documents, the Company shall not, directly or indirectly,
redeem or repurchase more than a de minimis number of shares of or declare or pay any dividend or distribution on any of its capital
stock whether in cash, stock rights and/or property.
(c) Indebtedness.
The Company shall not incur or permit to exist any Indebtedness, except for Permitted Indebtedness.
(d) Liens.
The Company shall not create or permit to exist any Liens or security interests with respect to any assets, whether now owned or
hereafter acquired and owned, except for Permitted Liens.
(e) Guaranties,
Loans or Advances. The Company shall not become or be a guarantor or surety of, or otherwise become or be responsible in any
manner with respect to any undertaking of any other Person, or make or permit to exist any loans or advances to or investments in any
other Person, except for (i) guarantee obligations that are Permitted Indebtedness and (ii) the endorsement, in the ordinary
course of collection, of instruments payable to it or to its order.
(f) Change
of Control. The Company shall not effect any Change of Control Transaction (as defined in the Note) unless all Liabilities under the
Notes are paid in full prior to or contemporaneously with the closing of such Change of Control Transaction.
(g) Change
in Nature of Business. The Company shall not, directly or indirectly, engage in any business substantially different from the
business conducted by the Company on the Closing Date or any business substantially related or incidental thereto. The Company shall not,
directly or indirectly, modify its corporate structure for any purpose.
(h) Violation
of Law. The Company shall not violate any law, statute, ordinance, rule, regulation, judgment, decree, order, writ or injunction
of any federal, state or local authority, court, agency, bureau, board, commission, department or governmental body if such violation
could have a Material Adverse Effect.
(i) Transactions
with Affiliates. The Company shall not directly and/or indirectly enter into, renew, extend or be a party to, any transaction or series
of related transactions which would be required to be disclosed in any public filing with the SEC (including, without limitation, lending
funds to an Affiliate and/or borrowing funds from any Affiliate, the purchase, sale, lease, transfer or exchange of property, securities
or assets of any kind or the rendering of services of any kind) with any officer, director, Affiliate and/or any Affiliate of such person,
unless such transaction is made on an arms’ length basis and expressly approved by a majority of the disinterested directors (even
if less than a quorum otherwise required for board approval).
4.13 Further
Assurances. The Company shall, from time to time execute and deliver, or cause to be executed and delivered, such additional
instruments, certificates or documents, and take such actions, as the Purchasers may reasonably request for the purposes of implementing
or effectuating the provisions of this Agreement and the other Documents.
4.14 Secured
Obligation. For the avoidance of doubt, the obligations of the Company under the Documents are secured by the Security Agreement.
Further, the term “Obligations” as defined in the Security Agreement shall include, without limitation, principal of, and
interest on the Notes and the loans extended pursuant thereto.
ARTICLE 5
CLOSING CONDITIONS
5.1 Closing
Conditions of Purchaser. Each Purchaser’s obligation to purchase the Note at Closing is subject to the fulfillment of
each and every one of the following conditions prior to or contemporaneously with such Closing (unless waived by such Purchaser in writing
in its sole and absolute discretion):
(a) Delivery
of Documents. Each Purchaser shall have received from the Company each of the following (together with all Exhibits, Schedules,
and annexes to each of the following), in form and substance reasonably satisfactory to such Purchaser and its counsel and, where applicable,
duly executed and recorded (to the extent required):
(i) this
Agreement;
(ii) the
Note in such Purchaser’s name having the principal amount set forth on Schedule 1;
(iii) the Registration Rights Agreement;
(iv) the Security Agreement;
(v) the Subsidiary
Guarantee; and
(vi) the
fully executed Closing Statement.
(b) Approvals.
The receipt by each Purchaser of all governmental and third-party approvals necessary in connection with the execution and performance
of the Documents and the transactions contemplated thereby, all of which consents/approvals shall be in full force and effect.
(c) Additional
Conditions. The fulfillment of each and every one of the following conditions prior to or contemporaneously with the Closing:
(i) Representations
and Warranties. Each of the representations and warranties made by Company in or pursuant to the Documents and all Schedules and/or
Exhibits to this Agreement and/or any of the other Documents shall be true and correct in all material respects on and as of the Closing
Date as if made (or given) on and as of such date (except where such representation and warranty speaks of a specific date, in which case
such representation and warranty shall be true and correct as of such date).
(ii) No
Events of Default. No Event of Default or any other event that, with the passage of time or the giving of notice or both, would
become an Event of Default shall have occurred or would result from the sale of the Notes to the Purchaser or the performance of any other
transaction set forth or contemplated by any of the Documents.
(iii) Compliance
with Laws. The Company shall have complied with all applicable federal, state and local governmental laws, rules, regulations and
ordinances in connection with the execution, delivery and performance of this Agreement and the other Documents to which it is a party
and the consummation of the transactions contemplated hereby and thereby, including, without limitation, the Company shall have obtained
all permits and qualifications required by any applicable state securities or “Blue Sky” laws for the offer and sale of the
Securities by the Company to the Purchasers.
(iv) No Injunction.
No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated, threatened in writing
or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of or which would materially
modify or delay the execution and performance of the Documents and/or any of the transactions contemplated by the Documents.
(v) No Proceedings
or Litigation. No action, suit or proceeding before any arbitrator or any court or governmental authority shall have been commenced
or threatened in writing, and no inquiry or investigation by any governmental authority shall have been commenced or threatened in writing,
against the Company, or any of the officers, directors or affiliates of the Company, seeking to restrain, prevent or change the Documents
and/or any of the transactions contemplated by the Documents, or seeking material damages in connection with such Documents and/or transactions.
(vi) No Material
Adverse Effect. No condition, occurrence, state of facts or event constituting a Material Adverse Effect shall have occurred and be
continuing.
(vii) Completion
of Due Diligence. Each Purchaser shall have completed its legal, business and financial due diligence of the Company to its
full satisfaction and shall be fully satisfied with the results thereof.
(viii) No
Suspension of Trading in or Notice of Delisting of Common Stock. Trading in the Common Stock shall not have been suspended and/or
halted by the SEC, the Principal Market or FINRA. The Company shall not have received any final and non-appealable notice that the listing
or quotation of the Common Stock on the Principal Market shall be terminated on a date certain (unless, prior to such date certain, the
Common Stock is listed or quoted on any other Trading Market); trading in securities generally as reported on the Principal Market shall
not have been suspended or limited, nor shall a banking moratorium have been declared either by the U.S. or New York State authorities;
there shall not have been imposed any suspension of electronic trading or settlement services by the Depository Trust Company (“DTC”)
with respect to the Common Stock that is continuing; the Company shall not have received any notice from DTC to the effect that a suspension
of electronic trading or settlement services by DTC with respect to the Common Stock is being imposed or is contemplated (unless, prior
to such suspension, DTC shall have notified the Company in writing that DTC has determined not to impose any such suspension); nor shall
there have occurred any material outbreak or escalation of hostilities or other national or international calamity or crisis that has
had or would reasonably be expected to have a material adverse change in any U.S. financial, credit or securities market that is continuing.
5.2 Closing
Conditions of Company. The obligation of the Company to sell and issue the Notes to the Purchasers at the Closing is subject
to the fulfillment, to the Company’s reasonable satisfaction, prior to or contemporaneously with the Closing, of each of the following
conditions (unless waived by the Company in writing in its sole and absolute discretion):
(a) Delivery
of Documents. The Company shall have received from each Purchaser each of the following (together with all Exhibits, Schedules, and
annexes to each of the following), in form and substance reasonably satisfactory to the Company and its counsel and, where applicable,
duly executed and recorded (to the extent required):
(i) this Agreement;
(ii) the Registration Rights Agreement;
(iii) the Security Agreement; and
(iv) the fully executed Closing Statement.
(b) Approvals.
The receipt by the Company of all governmental and third-party approvals necessary in connection with the execution and performance
of the Documents and the transactions contemplated thereby, all of which consents/approvals shall be in full force and effect.
(c) Additional
Conditions. The fulfillment of each and every one of the following conditions prior to or contemporaneously with the Closing:
(i) Representations
and Warranties. Each of the representations and warranties made by the Purchasers in or pursuant to the Documents and all Schedules
and/or Exhibits to this Agreement and/or any of the other Documents shall be true and correct in all material respects on and as of the
Closing Date as if made (or given) on and as of such date (except where such representation and warranty speaks of a specific date, in
which case such representation and warranty shall be true and correct as of such date).
(ii) Compliance
with Laws. The Purchasers shall have complied with all applicable federal, state and local governmental laws, rules, regulations
and ordinances in connection with the execution, delivery and performance of this Agreement and the other Documents to which it is a party
and the consummation of the transactions contemplated hereby and thereby, including, without limitation, any applicable state securities
or “Blue Sky” laws.
(iii) No
Injunction. No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated, threatened
in writing or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of or that
would materially modify or delay any of the transactions contemplated by the Documents.
(iv) Receipt
of the Purchase Price. The Company shall have received the Purchase Price from each Purchaser as set forth on Schedule 1
hereto (less the applicable pro rata portion of the Purchasers’ Expenses).
ARTICLE 6
MISCELLANEOUS
6.1 No
Waiver; Modifications In Writing. No failure or delay on the part of any Purchaser in exercising any right, power or remedy
pursuant to the Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof, or the exercise of any other right, power or remedy. No provision of the Documents may
be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and Purchasers
holding a majority of the then outstanding principal under the Notes, or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought. Any waiver of any provision of the Documents and any consent by any Purchaser to any departure
by the Company from the terms of any provision of the Documents shall be effective only in the specific instance and for the specific
purpose for which given. No notice to or demand on the Company in any case shall entitle the Company to any other or further notice or
demand in similar or other circumstances.
6.2 Notices.
All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified, (b) when sent by confirmed facsimile or e-mail if sent during normal business hours of the recipient;
if not, then on the next Business Day, (c) five (5) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt:
If to Company:
[●]
With copies to:
(which shall not constitute notice):
[●]
If to the Purchasers:
To the address on each Purchaser’s
signature page.
With copies to:
(which shall not constitute notice):
[●]
Any party hereto may from time to time change
its address for notices by giving written notice of such changed address to the other party hereto.
6.3 Costs,
Expenses and Taxes. Notwithstanding anything to the contrary provided herein or elsewhere, Company agrees to pay the Purchasers’
Expenses in accordance with Section 2.4. In addition, Company shall pay any and all stamp, transfer and other similar taxes
payable or determined to be payable in connection with the execution and delivery of the Documents and the Company agrees to hold the
Purchasers harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay
such taxes. If any suit or proceeding arising from any of the foregoing is brought against any Purchaser, Company, to the extent and in
the manner reasonably directed by the Purchaser, will resist and defend such suit or proceeding or cause the same to be resisted and defended
by counsel reasonably approved by such Purchaser. If Company shall fail to do any act or thing which each has covenanted and/or agreed
to do under this Agreement and/or any other Document or any representation or warranty on the part of Company contained in this Agreement
and/or any other Document shall be breached, such Purchaser may, in its sole and absolute discretion, do the same or cause it to be done
or remedy any such breach, and may expend its funds for such purpose; and any and all reasonable amounts so expended by such Purchaser
shall be repayable to the Purchaser by Company immediately upon such Purchaser’s demand therefor, with interest at a rate equal
to eighteen (18%) percent during the period from and including the date funds are so expended by such Purchaser to the date of repayment
in full, and any such amounts due and owing to such Purchaser shall be deemed to be part of the Liabilities secured hereunder and under
the other Documents. The obligations of Company under this Section 6.3 shall survive the termination of this Agreement and
the discharge of the other obligations of Company under the Documents.
6.4 Indemnity,
Etc. In addition to the payment of expenses pursuant to Section 6.3, Company agrees to indemnify, pay and hold
each Purchaser, and such Purchaser’s affiliates and their respective officers, directors, employees, agents, consultants, auditors,
and attorneys of any of them (collectively called the “Indemnitees”) harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims, reasonable documented out-of-pocket costs, reasonable documented
out-of-pocket expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel
for such Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not
such Indemnitee shall be designated a party thereto) that may be imposed on, incurred by, or asserted against that Indemnitee, in any
manner relating to (a) any breach of any of the representations or warranties, or any failure to perform or comply with any covenants
or agreements, made by the Company in this Agreement or in any other Documents or (b) any proceeding instituted against any Indemnitee,
in any capacity, by any stockholder of the Company who is not an Affiliate of such Indemnitee, with respect to any of the transactions
contemplated by the Documents (unless such proceeding is based upon a breach of an Indemnitee’s representations or warranties, or
any failure of an Indemnitee to perform or comply with any of its covenants or agreements, in this Agreement or in any other Documents,
or any violations by an Indemnitee of state or federal securities or other laws, or any conduct by such Indemnitee which constitutes bad
faith, fraud, gross negligence or willful misconduct) (the “Indemnified Liabilities”); provided that Company
shall have no obligation to an Indemnitee hereunder with respect to Indemnified Liabilities directly resulting from the violation of law
or this Agreement, bad faith, fraud, gross negligence or willful misconduct of that Indemnitee, as determined by a court of competent
jurisdiction by a final and nonappealable judgment. In no event shall such Purchaser and/or any of its employees, agents, partners, affiliates,
members, equity and/or debt holders, managers, officers, directors and/or other related or similar type of Person, have any liability
to the Company and/or any of its officers, directors, employees, agent, attorneys, affiliates, consultants, equity and/or debt holders
except for any actions or lack of actions of such persons that are found by a court of competent jurisdiction after the time for all appeals
has passed to have resulted directly from such Person’s violation of law or this Agreement, bad faith, fraud, willful misconduct
or gross negligence.
6.5 Counterparts;
Signatures. This Agreement may be executed in any number of counterparts, each of which counterparts, once they are executed and delivered,
shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same agreement. This
Agreement and the Documents may be executed by any party to this Agreement or any of the Documents by original signature, facsimile and/or
electronic signature.
6.6 Binding
Effects; Assignment. This Agreement shall be binding upon, and inure to the benefit of, each Purchaser, Company and their respective
successors, assigns, representatives and heirs. Neither the Company nor any Purchaser shall assign any of its rights nor delegate any
of its obligations under the Documents without the prior written consent of the other party.
6.7 Headings.
Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent
of this Agreement or any provision of this Agreement and shall not affect the construction of this Agreement.
6.8 Entire
Agreement. This Agreement, together with the other Documents, contains the entire agreement between the parties hereto with respect
to the transactions contemplated herein and therein and supersedes all prior representations, agreements, covenants and understandings,
whether oral or written, related to the subject matter of this Agreement and the other Documents.
6.9 GOVERNING
LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
EXCLUSIVELY IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS.
6.10 Severability
of Provisions. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions
of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
6.11 Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the 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 Documents or any amendments thereto. In addition, each and every reference to share prices
and shares of Common Stock in any Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.
6.12 JURISDICTION;
WAIVER. EACH PARTY HEREBY ACKNOWLEDGES THAT THIS AGREEMENT IS BEING SIGNED BY EACH OTHER PARTY IN PARTIAL CONSIDERATION OF
SUCH OTHER PARTY’S RIGHT TO ENFORCE IN THE JURISDICTION STATED BELOW THE TERMS AND PROVISION OF THIS AGREEMENT AND THE DOCUMENTS.
EACH PARTY IRREVOCABLY CONSENTS TO THE EXCLUSIVE AND SOLE JURISDICTION IN NEW YORK, NEW YORK AND VENUE IN ANY FEDERAL OR STATE COURT IN
NEW YORK, NEW YORK FOR SUCH PURPOSES AND WAIVES ANY AND ALL RIGHTS TO CONTEST SAID JURISDICTION AND VENUE AND ANY OBJECTION THAT NEW YORK,
NEW YORK IS NOT CONVENIENT. EACH PARTY HEREBY WAIVES ANY RIGHTS TO COMMENCE ANY ACTION AGAINST ANY OTHER PARTY IN ANY JURISDICTION EXCEPT
NEW YORK, NEW YORK. EACH PARTY HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY WITH RESPECT TO ANY MATTER WHATSOEVER RELATING TO, ARISING OUT OF OR IN ANY WAY CONNECTED
WITH THE LOAN, THE DOCUMENTS AND/OR THE TRANSACTIONS WHICH ARE THE SUBJECT OF THE DOCUMENTS.
6.13 Survival.
The representations, and warranties of the Company and each Purchaser herein and/or in the other Documents shall survive the execution
and delivery hereof and the Closing Date; the obligations, Liabilities, agreements and covenants of the Company and each Purchaser set
forth herein and/or in the other Documents shall survive the execution and delivery hereof and the Closing Date, as shall all rights and
remedies of the Company and each Purchaser set forth in this Agreement and/or in any of the other Documents.
6.14 No
Integration. Neither the Company, nor any of its affiliates, nor any person acting on behalf of the Company or such affiliate, will
sell, offer for sale, or solicit offers to buy or otherwise negotiate with respect to any security (as defined in the Securities Act)
which will be integrated with the sale and/or issuance of any of the Securities in a manner which would require the registration of the
Securities under the Securities Act, or require stockholder approval, under the rules and regulations of the Trading Market for the
Common Stock. The Company will take all action that is appropriate or necessary to assure that its offerings of other securities will
not be integrated for purposes of the Securities Act or the rules and regulations of the Trading Market, with the issuance of Securities
contemplated herein.
6.15 Termination.
This Agreement can be terminated by the mutual written consent of the Company and the Purchasers.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE
PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed and delivered as of the date first above written.
| COMPANY:
FATHOM HOLDINGS INC. |
| | | |
| | By: | |
| | | Name: |
| | | Title: |
SIGNATURE
PAGE TO SECURITIES PURCHASE AGREEMENT
PURCHASER
SIGNATURE PAGES TO FATHOM HOLDINGS INC. 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.
| Signature of Authorized Signatory of Purchaser: |
|
| Name of Authorized Signatory: |
|
| Title of Authorized Signatory: |
|
| Email Address of Authorized Signatory: |
|
| Facsimile Number of Authorized Signatory: |
|
| Address for Notice to Purchaser: |
Address for Delivery of Securities to Purchaser (if not same as address for notice):
| Principal Amount of Notes Purchased:$ |
|
|
Annex A
CLOSING STATEMENT
Pursuant
to the attached Securities Purchase Agreement, dated as of [●], the purchasers shall purchase the Notes from Fathom Holdings
Inc. (the “Company”). All funds will be wired into an account maintained by the Company. All funds will be disbursed
in accordance with this Closing Statement.
Disbursement
Date: [●]
|
I.
PURCHASE PRICE
|
|
| |
Gross Proceeds to be Received |
$5,000,000 |
| |
|
| |
|
| |
Total Amount Disbursed to Company: |
$5,000,000 |
WIRE INSTRUCTIONS:
RECEIVING BANK: [●]
BENEFICIARY:
Fathom Holdings Inc.
ACCOUNT
Number: [●]
ABA
ROUTING NUMBER: [●]
Duly executed this [●]:
| FATHOM HOLDINGS INC. | |
| | | |
| By: | | |
| Name: Marco Fregenal | |
| Title: President and CFO | |
EXHIBIT A
Form of Note
SCHEDULE 1
Notes
| Purchaser |
Principal Amount |
| [●] |
$ |
| [●] |
$f |
SCHEDULE 3.1(o)
Capitalization
The
authorized capital stock of the Company consists of one hundred million (100,000,000) shares, no par value per share, all of one class
designated Common Stock. As of June 30, 2024, there were (i) approximately 21,007,879 shares of the Company’s Common Stock
outstanding, (ii) approximately 147,707 unexercised options outstanding, (iii) approximately 826,315 non-vested restricted
stock awards, (iv) approximately 2,777,715 non-vested restricted stock units, and (v) approximately 240,100 common stock warrants.
Exhibit 10.2
SECURITY
AGREEMENT (2024)
THIS SECURITY AGREEMENT
(2024), (this “Security Agreement”) dated [●], by and between Fathom Holdings Inc., a North Carolina corporation,
with headquarters located at 2000 Regency Parkway Drive, Suite 300, Cary, NC 27518 (the “Company”), E4:9 Holdings
LLC, a Delaware limited liability company (“E4:9”), IntelliAgent, LLC, a Texas limited liability company (“IntelliAgent”),
Fathom Realty Holdings LLC, a Texas limited liability company (“FRH”), and Verus Holdings Inc., a North Carolina corporation
(“Verus” and together with E4:9, IntelliAgent and FRH, each a “Subsidiary Debtor” and collectively
the “Subsidiary Debtors”; the Subsidiary Debtors and the Company, each a “Debtor” and collectively,
the “Debtors”), and the investors set forth on Schedule A hereof (collectively, the “Secured Party”).
Capitalized terms used herein and not otherwise defined have the meanings given to them in the Purchase Agreement (as defined below).
Each Debtor hereby agrees in
favor of Secured Party as follows:
1. In
consideration for loans made or to be made to Company evidenced by the Senior Secured Convertible Promissory Notes of Company in the initial
principal amounts set forth on Schedule A hereto, payable to the order of Secured Party (such Senior Secured Convertible Promissory
Notes, as amended, modified, supplemented, replaced or substituted from time to time, being herein referred to as the “Notes”),
each Debtor hereby grants to Secured Party a continuing security interest in, lien upon and a right of setoff against, and each Debtor
hereby assigns to Secured Party, all of such Debtor’s right, title and interest in and to the Collateral described in Section 2,
to secure the full and prompt payment, performance and observance of all present and future indebtedness, obligations, liabilities and
agreements of any kind of the Debtors to Secured Party arising under or in connection with the Notes, the Subsidiary Guarantee, and the
other Documents, which are existing now or hereafter (all of the foregoing being herein referred to as the “Obligations”).
2. The
Collateral is described on Schedule B annexed hereto as part hereof and on any separate schedule(s) identified as Collateral
at any time or from time to time furnished by the Debtors to Secured Party (all of which are hereby deemed part of this Security Agreement)
and includes claims of the Debtors against third parties for loss or damage to or destruction of any Collateral.
3. Each
Debtor hereby warrants, represents, covenants and agrees (as of the date hereof and so long as any Obligation remains outstanding) that:
(a) the chief executive office of each Debtor, the books and records relating to the Collateral (except for such records as are
in the possession or control of Secured Party) and the Collateral are located at 2000 Regency Parkway Drive, Suite 300, Cary, NC
27518, and no Debtor will change any of the same, change its name or conduct its business under any trade, assumed or fictitious name
without providing at least ten (10) days’ prior written notice of same to Secured Party (and in the case of the location of
Collateral, will from time to time notify Secured Party of the locations thereof), or merge or consolidate with any person without prior
written notice to and consent of Secured Party; (b) the Collateral is and will be used in the business of the Debtors; (c) the
Collateral is now, and at all times will be, owned by the applicable Debtor free and clear of all liens, security interests, claims and
encumbrances, except for Permitted Liens; (d) no Debtor will abandon or assign, sell, lease, transfer or otherwise dispose of, other
than in the ordinary course of such Debtor’s business or as permitted by that certain Securities Purchase Agreement dated [●],
by and between the Company and the purchasers defined therein (the “Purchase Agreement”), nor will any Debtor suffer
or permit any of the same to occur with respect to, any Collateral, without prior written notice to and consent of a designated representative
of the Secured Party; (e) each Debtor will make payment or will provide for the payment, when due, of all taxes, assessments or
contributions or other public or private charges which have been or may be levied or assessed against such Debtor, with respect to the
Collateral or with respect to any wages or salaries paid by such Debtor (except for any taxes, assessments, contributions or charges
being contested in good faith and as to which adequate reserves have been made), and will deliver to Secured Party, on demand, certificates
or other evidence satisfactory to Secured Party attesting thereto; (f) each Debtor will use the Collateral for lawful purposes only,
with all reasonable care and caution and in conformity in all material respects with all applicable laws, ordinances and regulations;
(g) each Debtor will, at such Debtor’s sole cost and expense, keep the Collateral in good order, repair, running condition
and in substantially the same condition as on the date hereof, reasonable wear and tear excepted, and such Debtor will not, without the
prior written consent of Secured Party, alter or remove any identifying symbol or number upon any of the Collateral; (h) Secured
Party shall at all times have reasonable access to and right of inspection of any Collateral, upon reasonable prior notice and during
regular business hours) and any papers, instruments and records pertaining thereto (and the right to make extracts from and to receive
from each Debtor originals or true copies of such records, papers and instruments upon request therefor) and each Debtor hereby grants
to Secured Party a security interest in all such records, papers and instruments to secure the payment, performance and observance of
the Obligations; (i) the Collateral is now and shall remain personal or intangible property, and no Debtor will permit any other
types of Collateral to become a fixture without prior written notice to and consent of Secured Party (which consent will not be unreasonably
withheld, conditioned or delayed) and without first making all arrangements, and delivering, or causing to be delivered, to Secured Party
all instruments and documents, including, without limitation, waivers and subordination agreements by any landlords or mortgagees, requested
by and reasonably satisfactory to Secured Party to preserve and protect the primary security interest granted herein against all persons;
(j) each Debtor will, at its sole cost and expense, perform all acts and execute all documents reasonably requested by Secured Party
from time to time to evidence, perfect, maintain or enforce Secured Party’s security interest granted herein or otherwise in furtherance
of the provisions of this Security Agreement; (k) at any time and from time to time, each Debtor shall, at its sole cost and expense,
execute and deliver, or cause to be executed and delivered, to Secured Party such financing statements pursuant to the Uniform Commercial
Code (“UCC”), applications for certificate of title and other papers, documents or instruments as may reasonably be
requested by Secured Party in connection with this Security Agreement, and to the extent permitted by applicable law, each Debtor hereby
authorizes Secured Party to execute and file at any time and from time to time one or more financing statements or copies thereof or
of this Security Agreement with respect to the Collateral signed only by Secured Party, and each Debtor agrees to pay (or cause to be
paid) any recording tax or similar tax arising in connection with the filing of any such financing statement and further agrees to pay
any additional recording or similar tax which is incurred in connection therewith; (l) each Debtor assumes all responsibility and
liability arising from the Collateral; (m) in their discretion, Secured Party may, at any time and from time to time, upon the occurrence
and during the continuance of a Default (as hereinafter defined), demand, sue for, collect or receive any money or property at any time
payable or receivable on account of or in exchange for, or make any compromise or settlement deemed desirable by Secured Party with respect
to, any Collateral, and/or extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, or release,
any of the Obligations and/or the Collateral, or any obligor, maker, endorser, acceptor, surety or guarantor of, or any Party to, any
of the Obligations or the Collateral, all without notice to or consent by any Debtor and without otherwise discharging or affecting the
Obligations or the Collateral; (n) in their discretion, Secured Party may, at any time and from time to time, for the account of
any Debtor, pay any amount or do any act required of such Debtor hereunder that such Debtor fails to do or pay, and any such payment
shall be deemed an advance by Secured Party to the Debtors payable on demand together with interest at the highest rate then payable
on any of the Obligations; (o) each Debtor will promptly pay Secured Party for any and all reasonable and documented out-of-pocket
sums, costs, and expenses which Secured Party may pay or incur pursuant to the provisions of this Security Agreement or in perfecting,
defending, protecting or enforcing this Security Agreement or the security interest granted herein or in enforcing payment of the Obligations
or otherwise in connection with the provisions hereof, including, but not limited to, all search, filing and recording fees, taxes, fees
and expenses for the service and filing of papers, premium on bonds and undertakings, fees of marshals, sheriffs, custodians, auctioneers,
court costs, collection charges, travel expenses, and reasonable attorneys’ fees, all of which together with interest at the highest
rate then payable on any of the Obligations, shall be part of the Obligations and be payable on demand; and (p) upon the occurrence
and during the continuance of a Default, at Secured Party’s option and following written notice to the Company, any proceeds of
the Collateral received by any Debtor shall not be commingled with other property of the Debtors, but shall be segregated, held by such
Debtor in trust for Secured Party, and promptly delivered to Secured Party in the form received, duly endorsed in blank where appropriate
to effectuate the provisions hereof, the same to be held by Secured Party as additional Collateral hereunder or, at Secured Party’
option, to be applied to payment of the Obligations, whether or not due and in any order. Whenever any act is referred to herein as being
taken by the Secured Party, it shall include any act taken by any Agent appointed by the Secured Party pursuant to Section 6 hereof.
4. The
term “Default” as used in this Security Agreement shall mean any Event of Default, as such term is defined in the Notes.
5. Upon
the occurrence and during the continuance of any Default, Secured Party may, without notice to (except as herein set forth) or demand
upon any Debtor, declare any Obligations immediately due and payable, and Secured Party shall have the following rights and remedies (to
the extent permitted by applicable law) in addition to all rights and remedies of a Secured Party under the UCC or of Secured Party under
the Obligations, all such rights and remedies being cumulative, not exclusive and enforceable alternatively, successively or concurrently:
(a) Secured
Party may, at any time and from time to time, with or without judicial process or the aid and assistance of others, (i) enter upon
any premises in which any Collateral may be located and, without resistance or interference by any Debtor, take possession of the Collateral,
(ii) dispose of any part or all of the Collateral on any such premises, (iii) require any Debtor to assemble and make available
to Secured Party at the expense of the Debtors any part or all of the Collateral at any place and time designated by Secured Party which
is reasonably convenient to both parties, (iv) remove any part or all of the Collateral from any such premises for the purpose of
effecting sale or other disposition thereof (and if any of the Collateral consists of motor vehicles, Secured Party may use any Debtor’s
license plates), and (v) sell, resell, lease, assign and deliver, grant options for or otherwise dispose of any part or all of the
Collateral in its then condition or following any commercially reasonable preparation or processing, at public or private sale or proceedings
or otherwise, by one or more contracts, in one or more parcels, at the same or different times, with or without having the Collateral
at the place of sale or other disposition, for cash and/or credit, and upon any terms, at such place(s) and time(s) and to
such person(s) as Secured Party deems best, all without demand, notice or advertisement whatsoever, except that where an applicable
statute requires reasonable notice of sale or other disposition, each Debtor hereby agrees that the sending of ten days’ notice
by overnight mail, postage prepaid, to the Debtors in accordance with Section 14 of this Security Agreement shall be deemed reasonable
notice thereof. If any Collateral is sold by Secured Party upon credit or for future delivery, Secured Party shall not be liable for
the failure of the purchaser to pay for same, and in such event Secured Party may resell or otherwise dispose of such Collateral. Secured
Party may buy any part or all of the Collateral at any public sale and, if any part or all of the Collateral is of a type customarily
sold in a recognized market or is of the type which is the subject of widely distributed standard price quotations, Secured Party may
buy such Collateral at private sale and in each case may make payment therefor by any means, whether by credit against the Obligations
or otherwise. Secured Party may apply the cash proceeds actually received from any sale or other disposition to the reasonable and documented
expenses of retaking, holding, preparing for sale, selling, leasing and the like, to reasonable and documented external attorneys’
fees and all legal, travel and other expenses which may be incurred by Secured Party in attempting to collect the Obligations, proceed
against the Collateral or enforce this Security Agreement or in the prosecution or defense of any action or proceeding related to the
Obligations, the Collateral or this Security Agreement; and then to the Obligations in such order and as to principal or interest as
Secured Party may desire; and each Debtor shall remain liable and will pay Secured Party on demand for any deficiency remaining, together
with interest thereon at the highest rate then payable on the Obligations and the balance of any expenses unpaid, with any surplus to
be paid to the Debtors, subject to any duty of Secured Party imposed by law to the holder of any subordinate security interest in the
Collateral known to Secured Party.
(b) Secured
Party may, at any time and from time to time, as appropriate, after the occurrence and during the continuance of a Default set off and
apply to the payment of the Obligations, any Collateral in or coming into the possession of Secured Party or their agents, without notice
to any Debtor and in such manner as Secured Party may in their discretion determine.
6. Secured
Party may designate and appoint a collateral agent (“Agent”), as attorney-in-fact of the Debtors, irrevocably and with
power of substitution, with authority to: endorse the name of any Debtor on any notes, acceptances, checks, drafts, money orders, instruments
or other evidences of Collateral that may come into Secured Party’s possession; sign the name of any Debtor on any invoices, documents,
assignments; execute proofs of claim and loss; execute endorsements, assignments or other instruments of conveyance or transfer; adjust
and compromise any claims under insurance policies or otherwise; execute releases; and do all other acts and things necessary or advisable
in the sole discretion of Secured Party to carry out and enforce this Security Agreement or the Obligations. Neither Secured Party nor
any designee or agent thereof shall be liable for any acts of commission or omission done in good faith, for any error of judgment or
for any mistake of fact or law. This power of attorney being coupled with an interest is irrevocable while any Obligations shall remain
unpaid.
7. With
respect to the enforcement of Secured Party’s rights under this Security Agreement, each Debtor hereby releases Secured Party and
Agent from any claims, causes of action and demands at any time arising out of or with respect to this Security Agreement, the Obligations,
the Collateral and its use and/or any actions taken or omitted to be taken by Secured Party or Agent in good faith with respect thereto,
and each Debtor hereby agrees to hold Secured Party and Agent harmless from and with respect to any and all such claims, causes of action
and demands; provided that no Debtor shall have any obligation to Secured Party and Agent with respect to any claims, causes of
action or demands directly resulting from any violation of law or this Security Agreement, bad faith, fraud, gross negligence or willful
misconduct of Secured Party or Agent, as determined by a court of competent jurisdiction by a final and nonappealable judgment.
8. Secured
Party’s prior recourse to any Collateral shall not constitute a condition of any demand, suit or proceeding for payment or collection
of the Obligations nor shall any demand, suit or proceeding for payment or collection of the Obligations constitute a condition of any
recourse by Secured Party to the Collateral. Any suit or proceeding by Secured Party to recover any of the Obligations shall not be deemed
a waiver of, or bar against, subsequent proceedings by Secured Party with respect to any other Obligations and/or with respect to the
Collateral. No act, omission or delay by Secured Party shall constitute a waiver of their rights and remedies hereunder or otherwise.
No single or partial waiver by Secured Party of any covenant, warranty, representation, Default or right or remedy which they may have
shall operate as a waiver of any other covenant, warranty, representation, Default, right or remedy or of the same covenant, warranty,
representation, Default, right or remedy on a future occasion. Each Debtor hereby waives presentment, notice of dishonor and protest of
all instruments included in or evidencing any Obligations or Collateral, and all other notices and demands whatsoever (except as expressly
provided herein).
9. Each
Debtor hereby agrees to pay, on demand, all reasonable and documented out-of-pocket expenses incurred by Secured Party in connection with
the enforcement of the Notes, this Security Agreement, and the Obligations and in connection with any amendment, including, without limitation,
the reasonable fees and disbursements of counsel to Secured Party.
10. In
the event of any litigation with respect to any matter connected with this Security Agreement, the Obligations, the Collateral or the
Notes, each Debtor hereby waives the right to a trial by jury and all rights of setoff. Each Debtor hereby waives personal service of
any process in connection with any such action or proceeding and agrees that the service thereof may be made by certified or registered
mail directed to the Company in accordance with Section 14 of this Security Agreement. In the alternative, Secured Party may in their
discretion effect service upon the Debtors in any other form or manner permitted by law.
11. Upon
the payment in full of the Notes and satisfaction of all Obligations in accordance with the Notes, the security interest granted hereby
in the Collateral shall terminate and all rights to the Collateral under this Security Agreement shall revert to the applicable Debtor.
Upon any such termination, each Debtor shall have the right to file UCC–3 financing statement releases or other documents of release
reasonably required to reflect the termination of the security interest contemplated hereby.
12. Secured
Party may assign their rights and obligation hereunder to any Affiliate of Secured Party, provided that such Affiliate assumes
all of the liabilities or obligations of Secured Party hereunder. For purposes of this section, “Affiliate” of any
person means any other person or entity which, directly or indirectly, controls or is controlled by that person, or is under common control
with that person or entity. “Control” (including, with correlative meaning, the terms “controlled by” and
“under common control with”), as used with respect to any person or entity, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of such person or entity, whether through the ownership of
voting securities, by contract or otherwise.
13. All
terms herein shall have the meanings as defined in the UCC, unless the context otherwise requires. No provision hereof shall be modified,
altered, waived, released, terminated or limited except by a written instrument expressly referring to this Security Agreement and to
such provision, and executed by the party to be charged. The execution and delivery of this Security Agreement has been authorized by
any necessary vote or consent of each Debtor. This Security Agreement and all Obligations shall be binding upon the successors and assigns
of each Debtor and shall, together with the rights and remedies of Secured Party hereunder, inure to the benefit of Secured Party, their
executors, administrators, successors, permitted endorsees and permitted assigns. This Security Agreement and the Obligations shall be
governed in all respects by the laws of the State of New York applicable to contracts executed and to be performed in such state. If any
term of this Security Agreement shall be held to be invalid, illegal or unenforceable, the validity of all other terms hereof shall in
no way be affected thereby. Secured Party is authorized to annex hereto any schedules referred to herein. Each Debtor acknowledges receipt
of a copy of this Security Agreement.
14. All
notices and other communications under this Security Agreement shall be in writing and shall be deemed given when delivered personally,
by e-mail, by overnight mail or delivery service or mailed by certified mail, return receipt requested, if to the Company or the Secured
Party, to the Company as set forth in the Notes and if to the Secured Party, as set forth in the Notes.
15. The
obligations of the Debtors hereunder shall be joint and several.
[BALANCE OF PAGE INTENTIONALLY
LEFT BLANK;
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IN WITNESS WHEREOF, the undersigned
have executed or caused this security agreement to be executed on the date first above set forth.
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FATHOM HOLDINGS INC. |
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E4:9 HOLDINGS LLC |
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INTELLIAGENT, LLC |
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By: |
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FATHOM REALTY HOLDINGS LLC |
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VERUS HOLDINGS INC. |
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SCHEDULE A
| Investor/Secured Party |
Principal Amount |
| [●] |
$[●] |
| [●] |
$[●] |
SCHEDULE B
As used in this Security Agreement,
the term “Collateral” means, collectively, wherever located, whether now owned or hereafter acquired or now existing
or hereafter acquired or created, all right, title and interest of each Debtor in and to all of its assets, including, without limitation:
(i) accounts, chattel paper, deposit accounts, documents, general intangibles (including, but not limited to intellectual property,
payment intangibles, software, licenses, franchises and customer information), goods (including, but not limited to equipment, fixtures
and inventory), instruments, investment property, letter-of-credit rights, money, other personal property, software, and any commercial
tort claims; (ii) to the extent not referred to in clause (i) of this sentence, all (A) supporting obligations and incidental
property rights incident to, arising or accruing pursuant to or otherwise relating to any of the things referred to in clause (i) of
this sentence, whether arising or accruing from any action taken by such Debtor, the Secured Party or any Agent or otherwise, (B) proceeds
of any of the items referred to in clauses (i) and (ii)(A) of this sentence and (C) books and records relating to any of
the items referred to in clauses (i) and (ii)(A) and (B) of this sentence.
Exhibit 10.3
SUBSIDIARY
GUARANTEE (2024)
SUBSIDIARY
GUARANTEE (2024), dated as of [●] (this “Guarantee”), made by each signatory hereto (together with any
other entity that may become a party hereto as provided herein, the “Guarantors”), in favor of the Purchasers (as defined
below).
W I T N E S S E T H:
WHEREAS,
pursuant to that certain Securities Purchase Agreement dated the date hereof (the “Purchase Agreement”), by and between
Fathom Holdings Inc., a North Carolina corporation (the “Company”) and each of [●] and
[●] as purchaser (together with any other purchasers from time to time party to the Purchase
Agreement, the “Purchasers”), the Company has agreed to sell and issue to the Purchasers, and the Purchasers have agreed
to purchase from the Company, the Notes, subject to the terms and conditions set forth therein; and
WHEREAS, each Guarantor will
directly benefit from the extension of credit to the Company represented by the issuance of the Notes;
NOW, THEREFORE, in consideration
of the premises and to induce the Purchasers to enter into the Purchase Agreement and to carry out the transactions contemplated thereby,
each Guarantor hereby agrees with the Purchasers as follows:
1. Definitions.
Unless otherwise defined herein, terms defined in the Purchase Agreement and used herein shall have the meanings given to them in the
Purchase Agreement. The words “hereof,” “herein,” “hereto” and “hereunder” and words of
similar import when used in this Guarantee shall refer to this Guarantee as a whole and not to any particular provision of this Guarantee,
and Section and Schedule references are to this Guarantee unless otherwise specified. The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such terms. The following terms shall have the following meanings:
“Guarantee”
means this Subsidiary Guarantee (2024), as the same may be amended, supplemented or otherwise modified from time to time.
“Notes”
means the Senior Secured Convertible Promissory Notes due October 1, 2026 of the Company issued pursuant to the Purchase Agreement.
“Obligations”
means, in addition to all other costs and expenses of collection incurred by Purchasers in enforcing any of such Obligations and/or this
Guarantee, 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 the Company or any Guarantor to the Purchasers, pursuant to
this Guarantee, the Notes, the Security Agreement and any other instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith, in each case, 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 the Purchasers 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 the Company or any Guarantor from time to time under or in connection with this Guarantee, the Notes and any other instruments, agreements
or other documents executed and/or delivered in connection herewith or therewith; and (iii) 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 the Company or
any Guarantor.
2. Guarantee.
(a) Guarantee.
(i) The
Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantee to the Purchasers and their respective successors,
endorsees, transferees and assigns, the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration
or otherwise) of the Obligations.
(ii) Anything
herein or in any other Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other
Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws, including
laws relating to the insolvency of debtors, subsidiary guarantors, fraudulent conveyance or transfer or laws affecting the rights of creditors
generally (after giving effect to the right of contribution established in Section 2(b)).
(iii) Each
Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder
without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Purchasers hereunder.
(iv) The
guarantee contained in this Section 2 shall remain in full force and effect until all the Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been satisfied by indefeasible payment in full (or converted
into Common Stock of the Company as contemplated by the Notes) (other than contingent indemnification obligations for which no claim has
been asserted).
(v) No
payment made by the Company, any of the Guarantors, any other guarantor or any other Person or received or collected by the Purchasers
from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off
or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify,
reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than
any payment made by such Guarantor in respect of the Obligations or any payment received or collected from such Guarantor in respect of
the Obligations), remain liable for the Obligations up to the maximum liability of such Guarantor hereunder until the Obligations (other
than contingent indemnification obligations for which no claim has been asserted) are indefeasibly paid in full, or converted into Common
Stock of the Company as contemplated in the Notes.
(vi) Notwithstanding
anything to the contrary in this Guarantee, with respect to any defaulted non-monetary Obligations, the specific performance of which
by the Guarantors is not reasonably possible (e.g., the issuance of the Company’s Common Stock), the Guarantors shall only be liable
for making the Purchasers whole on a monetary basis for the Company’s failure to perform such Obligations in accordance with the
Documents.
(b) Right
of Contribution. Subject to Section 2(c), each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more
than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and
against any other Guarantor hereunder which has not paid its proportionate share of such payment. Each Guarantor’s right of contribution
shall be subject to the terms and conditions of Section 2(c). The provisions of this Section 2(b) shall in no respect limit
the obligations and liabilities of any Guarantor to the Purchasers, and each Guarantor shall remain liable to the Purchasers for the full
amount guaranteed by such Guarantor hereunder.
(c) No
Subrogation. Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Purchasers, no Guarantor shall be entitled to be subrogated to any of the rights of the Purchasers against the Company or any other
Guarantor or any collateral security or guarantee or right of offset held by the Purchasers for the payment of the Obligations, nor shall
any Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other Guarantor in respect of payments
made by such Guarantor hereunder, until all amounts owing to the Purchasers by the Company on account of the Obligations are indefeasibly
paid in full (or otherwise converted in accordance with the terms of the Notes). If any amount shall be paid to any Guarantor on account
of such subrogation rights at any time when all of the Obligations shall not have been paid in full (or otherwise converted in accordance
with the terms of the Notes), such amount shall be held by such Guarantor in trust for the Purchasers, segregated from other funds of
such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Purchasers in the exact form received by such
Guarantor (duly indorsed by such Guarantor to the Purchasers, if required), to be applied against the Obligations, whether matured or
unmatured, in such order as the Purchasers may determine.
(d) Amendments,
Etc. With Respect to the Obligations. Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation
of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Obligations
made by the Purchasers may be rescinded by the Purchasers and any of the Obligations continued, and the Obligations, or the liability
of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto,
may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Purchasers, and the Purchase Agreement and the other Documents and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Purchasers may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held by the Purchasers for the payment of the Obligations
may be sold, exchanged, waived, surrendered or released. The Purchasers shall have no obligation to protect, secure, perfect or insure
any Lien at any time held by them as security for the Obligations or for the guarantee contained in this Section 2 or any property
subject thereto.
(e) Guarantee
Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Purchasers upon the guarantee contained in this Section 2 or acceptance of
the guarantee contained in this Section 2; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted
or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings
between the Company and any of the Guarantors, on the one hand, and the Purchasers, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives to the
extent permitted by law diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Company
or any of the Guarantors with respect to the Obligations. Each Guarantor understands and agrees that the guarantee contained in this Section 2
shall be construed as a continuing, absolute and unconditional guarantee of payment and performance without regard to (i) the validity
or enforceability of the Purchase Agreement or any other Document, any of the Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to time held by the Purchasers, (ii) any defense, set-off
or counterclaim (other than a defense of payment or performance or fraud by Purchasers) which may at any time be available to or be asserted
by the Company or any other Person against the Purchasers, or (iii) any other circumstance whatsoever (with or without notice to
or knowledge of the Company or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge
of the Company for the Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any
other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Purchasers
may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as they may have against
the Company, any other Guarantor or any other Person or against any collateral security or guarantee for the Obligations or any right
of offset with respect thereto, and any failure by the Purchasers to make any such demand, to pursue such other rights or remedies or
to collect any payments from the Company, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee
or to exercise any such right of offset, or any release of the Company, any other Guarantor or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair
or affect the rights and remedies, whether express, implied or available as a matter of law, of the Purchasers against any Guarantor.
For the purposes hereof, “demand” shall include the commencement and continuance of any legal proceedings.
(f) Reinstatement.
The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment,
or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Purchasers upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Company or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the Company or any Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.
(g) Payments.
Each Guarantor hereby guarantees that payments hereunder will be paid to the Purchasers without set-off or counterclaim in U.S. dollars
at the address set forth or referred to in the signature pages to the Purchase Agreement.
3. Representations
and Warranties. Each Guarantor hereby makes the following representations and warranties to Purchasers as of the date hereof:
(a) Organization
and Qualification. The Guarantor is a corporation or a limited liability company, duly incorporated or formed, validly existing and
in good standing under the laws of the applicable jurisdiction set forth on Schedule 1, with the requisite corporate or limited liability
company power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Guarantor
has no Material Subsidiaries other than those identified in the Purchase Agreement. The Guarantor is duly qualified to do business and
is in good standing as a foreign corporation or limited liability company 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, individually or in the aggregate, (i) adversely affect the legality, validity or enforceability of any of this
Guaranty in any material respect, (ii) have a material adverse effect on the results of operations, assets, prospects, or financial
condition of the Guarantor or (iii) adversely impair in any material respect the Guarantor’s ability to perform fully on a
timely basis its obligations under this Guaranty (a “Material Adverse Effect”).
(b) Authorization;
Enforcement. The Guarantor has the requisite corporate or limited liability company power and authority to enter into and to consummate
the transactions contemplated by this Guaranty, and otherwise to carry out its obligations hereunder. The execution and delivery of this
Guaranty by the Guarantor and the consummation by it of the transactions contemplated hereby have been duly authorized by all requisite
corporate or limited liability company action on the part of the Guarantor. This Guaranty has been duly executed and delivered by the
Guarantor and constitutes the valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of
general application.
(c) No
Conflicts. The execution, delivery and performance of this Guaranty by the Guarantor and the consummation by the Guarantor of the
transactions contemplated thereby do not and will not (i) conflict with or violate any provision of its Certificate of Incorporation
or other organizational document or By-laws or operating agreement, or (ii) conflict with, constitute a default (or an event which
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 of, any agreement, indenture or instrument to which the Guarantor is a party, or (iii) result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Guarantor
is subject (including Federal and State securities laws and regulations), or by which any material property or asset of the Guarantor
is bound or affected, except in the case of each of clauses (ii) and (iii), such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate, have or result in a Material Adverse Effect. The business
of the Guarantor is not being conducted in violation of any law, ordinance or regulation of any governmental authority, except for violations
which, individually or in the aggregate, do not have a Material Adverse Effect.
(d) Consents
and Approvals. The Guarantor is not required to obtain any consent, waiver, authorization or order of, or make any filing or registration
with, any court or other federal, state, local, foreign or other governmental authority or other person in connection with the execution,
delivery and performance by the Guarantor of this Guaranty.
(e) Purchase
Agreement. The representations and warranties of the Company set forth in the Purchase Agreement as they relate to such Guarantor,
each of which is hereby incorporated herein by reference, are true and correct as of each time such representations are deemed to be made
pursuant to such Purchase Agreement, and the Purchasers shall be entitled to rely on each of them as if they were fully set forth herein,
provided that each reference in each such representation and warranty to the Company’s knowledge shall, for the purposes of this
Section 3, be deemed to be a reference to such Guarantor’s knowledge.
4. Covenants.
(a) Each
Guarantor covenants and agrees with the Purchasers that, from and after the date of this Guarantee until the termination of such Guarantee,
such Guarantor shall take, and/or shall refrain from taking, as the case may be, each commercially reasonable action that is necessary
to be taken or not taken, as the case may be, so that no Event of Default (as defined in the Notes) is caused by the failure to take such
action or to refrain from taking such action by such Guarantor.
(b) So
long as any of the Obligations are outstanding (other than contingent indemnification claims which have not been asserted), unless the
holders of at least 51% of the aggregate principal amount of the then outstanding Notes shall otherwise consent in writing, each Guarantor
will not directly or indirectly on or after the date of this Guarantee:
(i) enter
into, create, incur, assume or suffer to exist any indebtedness for borrowed money of any kind, including but not limited to, a guarantee,
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,
other than Permitted Indebtedness;
(ii) 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, other than Permitted Liens;
(iii) amend
its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of any Purchaser;
(iv) repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its securities or debt obligations,
except as otherwise required by the express terms of any Permitted Indebtedness;
(v) pay cash dividends on any equity securities of the Company;
(vi) enter
into any transaction with any Affiliate of the Guarantor which would be required to be disclosed in any public filing of the Company 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); or
(vii) enter
into any agreement with respect to any of the foregoing.
5. Miscellaneous.
(a) Amendments
in Writing. None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except in
writing by the Purchasers.
(b) Notices. All notices, requests and demands to or upon the Purchasers or any Guarantor hereunder shall be effected in the
manner provided for in the Purchase Agreement, provided that any such notice, request or demand to or upon any Guarantor shall be addressed
to such Guarantor at its notice address set forth on Schedule A of the Security Agreement, and if not listed thereon, than in the
manner set forth in the Purchase Agreement.
(c) No
Waiver By Course Of Conduct; Cumulative Remedies. The Purchasers shall not by any act (except by a written instrument pursuant to
Section 5(a)), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced
in any default under the Documents or Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Purchasers,
any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the
Purchasers of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Purchasers
would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by law.
(d) Enforcement
Expenses; Indemnification.
(i) Each
Guarantor agrees to pay, or reimburse each Purchaser for, all its reasonable and documented out-of-pocket costs and expenses incurred
in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under
this Guarantee and the other Documents to which such Guarantor is a party, including, without limitation, the reasonable and documented
fees and disbursements of external counsel to such Purchaser.
(ii) Each
Guarantor agrees to pay, and to save the Purchasers harmless from, any and all liabilities with respect to, or resulting from any delay
in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable in connection with any of
the transactions contemplated by this Guarantee.
(iii) Each
Guarantor agrees to pay, and to save the Purchasers harmless from, any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Guarantee to the extent the Company would be required to do so pursuant to the Purchase Agreement.
(iv) The
agreements in this Section shall survive repayment of the Obligations and all other amounts payable under the Purchase Agreement
and the other Documents.
(e) Successor
and Assigns. This Guarantee shall be binding upon the successors and assigns of each Guarantor and shall inure to the benefit of the
Purchasers and their respective successors and assigns; provided that no Guarantor may assign, transfer or delegate any of its rights
or obligations under this Guarantee without the prior written consent of the Purchasers.
(f) Set-Off.
Each Guarantor hereby irrevocably authorizes the Purchasers at any time and from time to time while an Event of Default under any of the
Documents shall have occurred and be continuing, without notice to such Guarantor or any other Guarantor, any such notice being expressly
waived by each Guarantor, to set-off and appropriate and apply any and all deposits, credits, indebtedness or claims, in any currency,
in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Purchasers to
or for the credit or the account of such Guarantor, or any part thereof in such amounts as the Purchasers may elect, against and on account
of the obligations and liabilities of such Guarantor to the Purchasers hereunder and claims of every nature and description of the Purchasers
against such Guarantor, in any currency, whether arising hereunder, under the Purchase Agreement, any other Document or otherwise, as
the Purchasers may elect, whether or not the Purchasers have made any demand for payment and although such obligations, liabilities and
claims may be contingent or unmatured. The Purchasers shall notify such Guarantor promptly of any such set-off and the application made
by the Purchasers of the proceeds thereof, provided that the failure to give such notice shall not affect the validity of such set-off
and application. The rights of the Purchasers under this Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Purchasers may have.
(g) Counterparts.
This Guarantee may be executed by one or more of the parties to this Guarantee on any number of separate counterparts (including by telecopy),
and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
(h) Severability.
Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
(i) Section Headings.
The Section headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
(j) Integration.
This Guarantee and the other Documents represent the agreement of the Guarantors and the Purchasers with respect to the subject matter
hereof and thereof, and there are no promises, undertakings, representations or warranties by the Purchasers relative to subject matter
hereof and thereof not expressly set forth or referred to herein or in the other Documents.
(k) Governing
Laws. All questions concerning the construction, validity, enforcement and interpretation of this Guarantee shall be governed by and
construed and enforced in accordance with the internal laws of the State of New York. Each of the Company and the Guarantors agree that
all proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Guarantee (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. Each of the Company and
the Guarantors 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 Guarantee 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 Guarantee or
the transactions contemplated hereby.
(l) Acknowledgements.
Each Guarantor hereby acknowledges that:
(i) it
has been advised by counsel in the negotiation, execution and delivery of this Guarantee and the other Documents to which it is a party;
(ii) no
Purchaser has any fiduciary relationship with or duty to any Guarantor arising out of or in connection with this Guarantee or any of the
other Documents, and the relationship between the Guarantors, on the one hand, and the Purchasers, on the other hand, in connection herewith
or therewith is solely that of debtor and creditor; and
(iii) no
joint venture is created hereby or by the other Documents or otherwise exists by virtue of the transactions contemplated hereby among
the Guarantors and the Purchasers.
(m) Additional
Guarantors. The Company shall cause each of its Subsidiaries formed or acquired on or subsequent to the date hereof, which
are designated as Material Subsidiaries upon the mutual agreement of the Company and the Purchasers, to become a Guarantor for all purposes
of this Guarantee by executing and delivering an Assumption Agreement in the form of Annex 1 hereto and to grant a lien in substantially
all of their assets pursuant to documentation satisfactory to the Purchasers.
(n) Release
of Guarantors. Each Guarantor will be automatically released from all liability hereunder concurrently with the indefeasible repayment
in full (or conversion into common stock of the Company) of all amounts (other than contingent indemnification obligations for which
no claim has been asserted) owed under the Purchase Agreement, the Notes and the other Documents.
(o) Seniority. The Obligations of each of the Guarantors hereunder rank senior in priority to any other Indebtedness (as defined in
the Purchase Agreement) of such Guarantor (other than any (i) Permitted Indebtedness that is secured pursuant to Permitted Liens
which are permitted under the Purchase Agreement to be senior to the liens granted under the Security Agreement and (ii) purchase
money financing incurred in connection with the acquisition of any Additional Guarantor (as defined in Annex 1 hereto)).
(p) WAIVER
OF JURY TRIAL. EACH GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE PURCHASERS, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.
*********************
(Signature Pages Follow)
IN WITNESS WHEREOF, each of
the undersigned has caused this Guarantee to be duly executed and delivered as of the date first above written.
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E4:9 Holdings LLC |
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By: |
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Name: |
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Title: |
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IntelliAgent, LLC |
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By: |
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Name: |
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Title: |
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Fathom Realty Holdings LLC |
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By: |
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Name: |
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Title: |
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Verus Holdings Inc. |
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By: |
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SCHEDULE 1
GUARANTORS
The following are the names, notice addresses
and jurisdiction of organization of each Guarantor.
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COMPANY |
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JURISDICTION OF |
OWNED BY |
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INCORPORATION |
PERCENTAGE |
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| E4:9 Holdings LLC |
Delaware |
100% |
| IntelliAgent, LLC |
Texas |
100% |
| Fathom Realty Holdings LLC |
Texas |
100% |
| Verus Holdings Inc. |
North Carolina |
100% |
Annex 1 to
SUBSIDIARY GUARANTEE
ASSUMPTION AGREEMENT, dated as of [ ], made by
[ ], a [ ] [corporation][limited liability company] (the “Additional Guarantor”), in favor of the Purchasers pursuant
to the Purchase Agreement referred to below. All capitalized terms not defined herein shall have the meaning ascribed to them in such
Purchase Agreement.
W I T N E S S E T H:
WHEREAS,
Fathom Holdings Inc., a North Carolina corporation (the “Company”) and the Purchasers have entered into a Securities
Purchase Agreement, dated as of [●] (as amended, supplemented or otherwise modified from time
to time, the “Purchase Agreement”);
WHEREAS,
in connection with the Purchase Agreement, certain Subsidiaries of the Company (other than the Additional Guarantor) have entered into
the Subsidiary Guarantee (2024), dated as of [●] (as amended, supplemented or otherwise modified from time to time, the “Guarantee”)
in favor of the Purchasers;
WHEREAS, the Guarantee requires
the Additional Guarantor to become a party to the Guarantee; and
WHEREAS, the Additional Guarantor
has agreed to execute and deliver this Assumption Agreement in order to become a party to the Guarantee;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee.
By executing and delivering this Assumption Agreement, the Additional Guarantor, as provided in Section 5(m) of the Guarantee,
hereby becomes a party to the Guarantee as a Guarantor thereunder with the same force and effect as if originally named therein as a Guarantor
and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor thereunder.
The information set forth in Annex 1 hereto is hereby added to the information set forth in Schedule 1 to the Guarantee. The Additional
Guarantor hereby represents and warrants that each of the representations and warranties contained in Section 3 of the Guarantee
is true and correct on and as the date hereof as to such Additional Guarantor (after giving effect to this Assumption Agreement) as if
made on and as of such date.
2. Governing
Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the undersigned
has caused this Assumption Agreement to be duly executed and delivered as of the date first above written.
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[ADDITIONAL GUARANTOR] |
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Exhibit 10.4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement
(this “Agreement”) is made and entered into as of [●], by and among Fathom Holdings Inc., a North Carolina corporation
(the “Company”), and the parties signatory hereto (each such purchaser, a “Purchaser” and, collectively,
the “Purchasers”).
This Agreement is made pursuant
to that certain Securities Purchase Agreement, dated as of the date hereof, between the Company and the Purchasers (the “Purchase
Agreement”).
The Company and each Purchaser
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
Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 135th calendar
day following the Closing Date (or, in the event of a “full review” by the Commission, the 75th calendar day following the
date such additional Registration Statement is required to be filed hereunder) and with respect to any additional Registration Statements
which may be required pursuant to Section 2(c) or Section 3(c), the 30th calendar day following the date on which an additional
Registration Statement is required to be filed hereunder (or, in the event of a “full review” by the Commission, the 60th
calendar day following the date such additional Registration Statement is required to be filed hereunder); provided, however,
that in the event the Company is notified by the Commission that one or more of the above Registration Statements will not be reviewed
or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth Trading
Day following the date on which the Company is so notified if such date precedes the dates otherwise required above, provided, further,
if such Effectiveness Date falls on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading
Day.
“Effectiveness
Period” shall have the meaning set forth in Section 2(a).
“Event”
shall have the meaning set forth in Section 2(d).
“Event
Date” shall have the meaning set forth in Section 2(d).
“Filing
Date” means, with respect to the Initial Registration Statement required hereunder, the 90th calendar day following
the Closing Date and, with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or
Section 3(c), the earliest practical date on which the Company is permitted by SEC Guidance to file such additional Registration
Statement related to the Registrable Securities.
“Holder”
or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.
“Indemnified
Party” shall have the meaning set forth in Section 5(c).
“Indemnifying
Party” shall have the meaning set forth in Section 5(c).
“Initial
Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.
“Losses”
shall have the meaning set forth in Section 5(a).
“Plan of
Distribution” shall have the meaning set forth in Section 2(a).
“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) all Underlying Shares, and (ii) any securities issued or then
issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided,
however, that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain
the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long as (a) a Registration
Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and
such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (b) such
Registrable Securities have been previously sold in accordance with Rule 144, or (c) such securities become eligible for resale
without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 as set forth in a written
opinion letter to such effect, addressed, delivered and acceptable to the Transfer Agent and the affected Holders (assuming that such
securities and any securities issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were
issued or are issuable, were at no time held by any Affiliate of the Company), as reasonably determined by the Company, upon the advice
of counsel to the Company and the Transfer Agent has issued certificates or delivered book-entry statements, as applicable, for such Registrable
Securities to the Holder thereof, or as such Holder may direct, without any restrictive legend.
“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.
“Trading Day”
means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange (or any successors to any of the foregoing).
2. Shelf
Registration.
(a) On
or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all
of the Registrable Securities that are not then registered on an effective Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415. Each Registration Statement filed hereunder shall be on Form S-3 (except if the Company is not then
eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate
form in accordance herewith, subject to the provisions of Section 2(e)) and shall contain (unless otherwise directed by the Required
Purchasers) substantially the “Plan of Distribution” attached hereto as Annex A and substantially the “Selling
Stockholder” section attached hereto as Annex B; provided, however, that no Holder shall be required to
be named as an “underwriter” without such Holder’s express prior written consent. Subject to the terms of this Agreement,
the Company shall use its reasonable best efforts to cause a Registration Statement filed under this Agreement (including, without limitation,
under Section 3(c)) to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any
event no later than the applicable Effectiveness Date, and shall use its reasonable best efforts to keep such Registration Statement continuously
effective under the Securities Act until the date that all Registrable Securities covered by such Registration Statement (i) have
been sold, thereunder or pursuant to Rule 144, or (ii) no longer constitute Registrable Securities pursuant to clause (c) of
the definition thereof (the “Effectiveness Period”). The Company shall 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 facsimile or by 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 so notify the Holder within one (1) Trading Day of such notification of effectiveness or
failure to file a final Prospectus as foresaid shall be deemed an Event under Section 2(d).
(b) If
at any time the staff of the Commission (the “Staff”) takes the position that the offering of some or all of the Registrable
Securities in the Registration Statement is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415
under the Securities Act or requires any Holder to be named as an “underwriter”, the Company shall use its reasonable best
efforts to persuade the Staff that the offering contemplated by a Registration Statement is a bona fide secondary offering and not an
offering “by or on behalf of the issuer” as defined in Rule 415 and that none of the Holders is an “underwriter”.
The Holders shall have the right to participate or have their counsel participate in any meetings or discussions with the Staff regarding
the Staff’s position and to comment or have their counsel comment on any written submission made to the Staff with respect thereto.
No such written submission shall be made to the Staff to which counsel to a Holder reasonably objects. In the event that, despite the
Company’s reasonable best efforts and compliance with the terms of this Section 2(b), the Staff refuses to alter its position,
the Company shall (i) notify 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 and/or (ii) agree to such restrictions and limitations on the registration and resale
of the Registrable Securities as the Staff may require to assure the Company’s compliance with the requirements of Rule 415;
provided, however, that the Company shall not agree to name any Holder as an “underwriter” in such Registration
Statement without the prior written consent of such Holder.
(c) Notwithstanding
any other provision of this Agreement and subject to the payment of liquidated damages pursuant to Section 2(d), if the Staff or
any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration
Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the
registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable
Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows:
| a. | First, the Company shall reduce or eliminate any securities to be included other than Registrable Securities;
and |
| b. | Second, the Company shall reduce Registrable Securities on a pro rata basis based on the total number
of unregistered shares of Common Stock beneficially held by such Holders. |
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
best efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to the Company or to registrants
of securities in general, one or more registration statements on Form S-3 or such other form available to register for resale those
Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended.
(d) If:
(i) the Initial Registration Statement is not filed on or prior to its Filing Date (if the Company files the Initial Registration
Statement without affording the Holders the opportunity to review (and, with respect to disclosure on such Holder, to comment) on the
same as required by Section 3(a) herein, the Company shall be deemed to have not satisfied this clause (i)), 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) a Registration Statement registering for resale all of the Registrable Securities is not declared
effective by the Commission by the Effectiveness Date of the Initial Registration Statement, or (iv) after the effective date of
a Registration Statement, such Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities
included in such Registration Statement, or the Holders are otherwise not permitted to utilize the Prospectus therein to resell such Registrable
Securities, for more than thirty (30) consecutive calendar days or more than an aggregate of forty five (45) 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 (iii), the date on which such Event occurs, and for purpose of clause (ii) the date on which
such five (5) Trading Day period is exceeded, and for purpose of clause (iv) the date on which such thirty (30) or forty five
(45) 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 or, if earlier, the Company
shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 1.0% multiplied
by the aggregate Purchase Price paid by such Holder pursuant to the Purchase Agreement, provided, however, that the Company shall
not be required to make any payments with respect to Registrable Securities which may be freely tradable pursuant to Rule 144. If
the Company fails to pay any partial liquidated damages pursuant to this Section in full within seven days after the date payable,
the Company will pay interest thereon at a rate of 12% per annum (or such lesser maximum amount that is permitted to be paid by applicable
law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of
a month prior to the cure of an Event.
(e) If
Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register
the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable Securities on
Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement
then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective
by the Commission.
(f) Notwithstanding
anything to the contrary contained herein, in no event shall the Company be permitted to name any Holder or affiliate of a Holder as any
Underwriter without the prior written consent of such Holder.
3. Registration
Procedures.
In connection with the Company’s
registration obligations hereunder, the Company shall:
(a) Not
less than five (5) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior
to the filing of any related Prospectus or any amendment or supplement thereto, the Company shall (i) furnish to each Holder copies
of all such documents proposed to be filed, which documents will be subject to review by 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 three (3) Trading Days after the Holders have been so furnished copies of a Registration Statement or one (1) Trading
Day after the Holders have been so furnished copies of any related Prospectus or amendments or supplements thereto. Each Holder agrees
to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex C (a “Selling Stockholder
Questionnaire”) on a date that is not less than two (2) Trading Days prior to the Filing Date or by the end of the third
(3rd) Trading Day following the date on which such Holder receives draft materials in accordance with this Section. If Holder
does not respond by the third (3rd) Trading Day following the date on which such Holder receives draft materials, such Holder
shall be deemed to have approved of such disclosure.
(b) (i) Prepare
and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used
in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities
for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for
resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be amended or supplemented
by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant
to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a
Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holders true and complete copies
of all correspondence from and to the Commission relating to a Registration Statement (provided that, the Company shall excise any information
contained therein which would constitute material non-public information regarding the Company or any of its Subsidiaries), and (iv) comply
in all material respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of
all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this
Agreement) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in
such Prospectus as so supplemented.
(c) If
during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common Stock
then registered in a Registration Statement, then the Company shall file as soon as reasonably practicable, but in any case prior to the
applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than the number of such Registrable
Securities.
(d) Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied
by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible
(and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the
Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on
such Registration Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has
become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements
to a Registration Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal
or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage
of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made
in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration
Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading, and (vi) of the occurrence or existence of any pending corporate development with respect to the Company that the
Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow
continued availability of a Registration Statement or Prospectus; provided, however, that in no event shall any such notice
contain any information which would constitute material, non-public information regarding the Company or any of its Subsidiaries.
(e) Use
its reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending
the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any
of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.
(f) Furnish
to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested
by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission, provided that any such item which is available on the EDGAR system (or
successor thereto) need not be furnished in physical form.
(g) Subject
to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by
each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any
amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).
(h) Reserved.
(i) If
requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of a book-entry statement representing
Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which book-entry statement representing Registrable
Securities shall be free, to the extent permitted by the Securities Act, of all restrictive legends, and to enable such Registrable Securities
to be in such denominations and registered in such names as any such Holder may request.
(j) Upon
the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible under the circumstances taking into
account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure
of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to
the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document
so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. If the Company notifies the Holders in accordance with clauses (iii) through (vi) of
Section 3(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then
the Holders shall suspend use of such Prospectus. The Company will use its reasonable best efforts to ensure that the use of the Prospectus
may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 3(j) to
suspend the availability of a Registration Statement and Prospectus, subject to the payment of partial liquidated damages otherwise required
pursuant to Section 2(d), for a period not to exceed 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 shall use its reasonable best efforts to maintain eligibility for use of Form S-3 (or any successor form thereto) for the
registration of the resale of Registrable Securities.
(m) The
Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially
owned by such Holder and the natural persons thereof that have voting and dispositive control over the shares. During any periods that
the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable Securities solely because
any Holder fails to furnish such information within three Trading Days of the Company’s request, any liquidated damages that are
accruing at such time as to such Holder only shall be tolled and any Event that may otherwise occur solely because of such delay shall
be suspended as to such Holder only, until such information is delivered to the Company.
4. Registration
Expenses. All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne by
the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to
in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made
with the Commission, (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed
for trading, and (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing
(including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions
of the Registrable Securities), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable
Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any
annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange
as required hereunder. In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to
the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders.
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 (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(g).
(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 reasonable fees and expenses incurred
in connection with defense thereof, provided that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined
by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have materially
and adversely prejudiced the Indemnifying Party.
An Indemnified Party
shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing
to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and
to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified
Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified
Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense
thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party).
The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent
shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party,
effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes
an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
Subject to the terms
of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid
to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party, provided that the
Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions
for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not subject to appeal
or further review) not to be entitled to indemnification hereunder.
(d) Contribution.
If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified
Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party,
in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with
the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has
been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable
attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have
been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance
with its terms.
The parties hereto
agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation
or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding
paragraph. In no event shall the contribution obligation of a Holder of Registrable Securities be greater in amount than the dollar amount
of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 5 and the amount of
any damages such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged
omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.
The indemnity and
contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6. Miscellaneous.
(a) Remedies.
In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery
of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company and each Holder agrees that
monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions
of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall
not assert or shall waive the defense that a remedy at law would be adequate.
(b) Prohibition
on Filing Other Registration Statements. 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 so long as no new
securities are registered on any such existing registration statements.
(c) Discontinued
Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of
the occurrence of any event of the kind described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue
disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”)
by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company will
use its reasonable best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company agrees
and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder
shall be subject to the provisions of Section 2(d).
(d) Piggyback
Rights If at any time following the date of this Agreement that any Registrable Securities remain outstanding and are not freely tradable
under Rule 144 (A) there is not one or more effective Registration Statements covering all of the Registrable Securities and
(B) the Company proposes for any reason to register any shares of Common Stock under the 1933 Act (other than pursuant to a registration
statement on Form S-4 or Form S-8 (or a similar or successor form)) with respect to an offering of Common Stock by the Company
for its own account or for the account of any of its stockholders, it shall at each such time promptly give written notice to the Holders
of its intention to do so (but in no event less than ten (10) Trading Days before the anticipated filing date) and, to the extent
permitted under the provisions of Rule 415 under the 1933 Act and SEC Guidance, include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion therein within ten (10) days after receipt of the Company’s
notice (a “Piggyback Registration”). Such notice shall offer the holders of the Registrable Securities the opportunity
to register such number of shares of Registrable Securities as each such holder may request and shall indicate the intended method of
distribution of such Registrable Securities. If the managing underwriter of any underwritten offering shall inform the Company by letter
of its belief that the number of Registrable Securities requested to be included in such registration pursuant to this Section 6(d),
when added to the number of other securities to be offered in such registration by the Company, would materially adversely affect such
offering, then the Company shall include in such registration, to the extent of the total number of securities which the Company is so
advised can be sold in (or during the time of) such offering without so materially adversely affecting such offering (the “Sale
Number”), securities in the following priority: (x) first, all Common Stock or securities convertible into, or exchangeable
or exercisable for, Common Stock that the Company proposes to register for its own account; and (y) second, the Holders on a pro
rata basis based on the number of Registrable Securities subject to registration rights owned by each holder requesting inclusion in relation
to the number of Registrable Securities then owned by all holders requesting inclusion. Notwithstanding the foregoing, (A) if such
registration involves an underwritten public offering, the Holders must sell their Registrable Securities to, if applicable, the underwriter(s) at
the same price and subject to the same underwriting discounts and commissions that apply to the other securities sold in such offering
(it being acknowledged that the Company shall be responsible for other expenses as set forth in Section 4) and subject to the Holders
entering into customary underwriting documentation for selling stockholders in an underwritten public offering, and (B) if, at any
time after giving written notice of its intention to register any Registrable Securities pursuant to this Section 6(e) and prior
to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason
not to cause such registration statement to become effective under the Securities Act, the Company shall deliver written notice to the
Holders and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such registration;
provided, however, that nothing contained in this Section 6(e) shall limit the Company’s liabilities and/or obligations
under this Agreement, including, without limitation, the obligation to pay liquidated damages under Section 2(d).
(e) 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 Holders of 50.1% or more of the then outstanding Registrable Securities, 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.
(f) 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.
(g) 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 so long as such assignment complies with applicable securities laws.
(h) 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. 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.
(i) 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 facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature
page were an original thereof.
(j) Governing
Law. This Agreement and the rights and obligations of the parties under this Agreement shall be governed by, and construed and interpreted
exclusively in accordance with, the law of the State of New York without giving effect to any conflict of laws.
(k) Cumulative
Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.
(l) 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.
(m) 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.
(n) 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)
IN WITNESS WHEREOF, the parties
have executed this Registration Rights Agreement as of the date first written above.
| FATHOM HOLDINGS INC. |
| | | |
| | | |
| | By: | |
| | | Name: |
| | | Title: |
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
[SIGNATURE
PAGE OF HOLDERS TO RRA]
Name of Holder: __________________________
Signature
of Authorized Signatory of Holder: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
[SIGNATURE PAGES CONTINUE]
Annex A
Plan of Distribution
The selling stockholders,
which as used herein includes donees, pledgees, assignees, transferees or other successors-in-interest selling shares of common stock
or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership
distribution or other transfer (the “Selling Stockholders”), may, from time to time, sell, transfer or otherwise dispose
of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility
on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the
time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.
The Selling Stockholders may use any one or more of the following methods when disposing of their securities or interests therein:
| · | on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; |
| · | in the over-the-counter market; |
| · | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| · | 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; |
| · | through brokers, dealers or underwriters that may act solely as agents; |
| · | 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; |
| · | delivery of shares in 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; |
| · | 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, underwriters and other agents
may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities,
from the purchaser) 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.
The Selling Stockholders may
from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and the pledgee or other
secured party, transferee or other successor in interest may sell shares of common stock from time to time under this prospectus, or under
a supplement or amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending
the list of Selling Stockholders to include the pledgee, secured party, transferee or other successors in interest as Selling Stockholders
under this prospectus. The Selling Stockholders also may transfer the shares of common stock in other circumstances in which case the
donees, pledgees, assignees, transferees or other successors-in-interest may be the selling beneficial owners for purposes of this prospectus
and may sell such shares of common stock from time to time under this prospectus after an amendment or supplement has been filed under
Rule 424(b)(3) under, or another applicable provision of, the Securities Act, amending, if necessary, the list of Selling Stockholders
to include the donees, pledgees, assignees, transferees or other successors-in-interest as a Selling Stockholder under this prospectus.
Upon being notified in writing
by the Selling Stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares of common stock
through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement
to this prospectus, if required, pursuant to Rule 424(b) under the Securities Act will be filed, disclosing (i) the name
of each such Selling Stockholder and of the participating broker-dealer(s), (ii) the number of shares of common stock involved, (iii) the
price at which such shares of common stock were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated
by reference in this prospectus, if applicable, and (vi) other facts material to the transaction.
The Selling Stockholders also
may transfer the shares of common stock in other circumstances, in which case the donees, pledgees, assignees, transferees or other successors-in-interest
will be the selling beneficial owners for purposes of this prospectus.
In connection with the sale
of the securities or interests therein, the Selling Stockholders may enter into hedging transactions after the effective date of the registration
statement of which this prospectus is a part 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 after the
effective date of the registration statement of which this prospectus forms a part 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 after the effective date of the registration statement of which this prospectus forms a part 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), including in the short sale transactions.
The Selling Stockholders and
any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning
of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities
Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly
or indirectly, with any person to distribute the securities. Any compensation paid to underwriters, broker-dealers or agents in connection
with the offering of the securities, and any discounts, concessions or commissions allowed by underwriters to participating dealers will
be provided in the applicable prospectus supplement and shall comply with the rules and requirements of the Financial Industry Regulatory
Authority.
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 to which they may become subject, including liabilities
under the Securities Act.
We agreed to keep this prospectus
effective until the earlier of (i) the date that such securities become eligible for resale without volume or manner-of-sale restrictions
and without current public information pursuant to Rule 144 and certain other conditions have been satisfied, 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.
There can be no assurance
that any Selling Stockholder will sell any or all of the shares of common stock registered pursuant to the registration statement of which
this prospectus forms a part.
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 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 common stock by the Selling Stockholders
or any other person. Regulation M may also restrict the ability of any person engaged in the distribution of the shares of common stock
to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect the marketability of
the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of
common stock.
Annex B
SELLING STOCKHOLDERS
The table below lists the
selling stockholders and other information regarding the beneficial ownership of the shares of common stock by each of the selling stockholders.
The second column lists the number of shares of common stock beneficially owned by each selling stockholder, based on its ownership of
the shares of common stock, as of [●].
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 number of shares
of common stock issued to the selling stockholders. The third column assumes the sale of all of the shares offered by the selling stockholders
pursuant to this prospectus.
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
FATHOM HOLDINGS INC.
Selling Stockholder Notice and Questionnaire
The undersigned beneficial
owner of common stock (the “Registrable Securities”) of Fathom Holdings Inc., a North Carolina 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.
Selling
Stockholders are required to complete and deliver this Questionnaire in order to verify the accuracy of information regarding the Selling
Stockholder that is included in the Registration Statement.
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
| (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: |
| |
| |
| Fax: |
| |
| |
| 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),
then in accordance with guidance provided by the Commission’s staff, the Company will
identify you 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),
then in accordance with guidance provided by the Commission’s staff, the Company will
identify you as an underwriter in the Registration Statement. |
4. Beneficial Ownership of Securities
of the Company Owned by the Selling Stockholder.
“Beneficial ownership”
is determined according to rules of the Commission. Securities “beneficially owned” by the Selling Stockholder include
not only securities held in his, her or its name, but also securities over which the Selling Stockholder, directly or indirectly, through
any contract, arrangement, understanding, relationship, or otherwise has or shares (i) voting power, which includes the power to
vote, or to direct the voting of, such security; and/or, (ii) investment power, which includes the power to dispose of, or to direct
the disposition of, such security. This may include, but is not limited to, securities held for the Selling Stockholder by custodians,
brokers, relatives, executors, administrators or trustees (including trusts in which the person has only a remainder interest) if by reason
of contract, relationship, understanding or arrangement he, she or it obtains benefits substantially equivalent to those of ownership;
securities held for the Selling Stockholder’s account by a partnership of which the Selling Stockholder is a partner; and securities
owned by any corporation which the Selling Stockholder should regard as a personal holding corporation.
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. Description of Beneficial Ownership:
The rules of the Commission require
that the Registration Statement identify all “beneficial owners” of the Registrable Securities to be sold by the Selling Stockholders
pursuant to the Registration Statement, including the beneficial owners of other shares of common stock held by such Selling Stockholders.
The beneficial owner is the person that, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise
has or shares (i) voting power which includes the power to vote, or to direct the voting of, such security, and/or (ii) investment
power which includes the power to dispose of, or to direct the disposition of, such security. Please set out below or as an attachment
a description of the beneficial ownership of your Registrable Securities and any other shares of common stock and convertible securities,
in the form that you wish it to appear in the base prospectus (including the names of and relationships with any indirect beneficial owners).
6. 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:
By signing below, the undersigned
consents to the disclosure of the information contained herein in its answers to Items 1 through 6 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.
PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF
THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO:
Exhibit 10.5
AMENDED AND RESTATED SECURITY AGREEMENT
THIS AMENDED AND RESTATED
SECURITY AGREEMENT, (this “Security Agreement”) dated [●], by and between Fathom Holdings Inc., a North Carolina
corporation, with headquarters located at 2000 Regency Parkway Drive, Suite 300, Cary, NC 27518 (the “Company”), E4:9
Holdings LLC, a Delaware limited liability company (“E4:9”), IntelliAgent, LLC, a Texas limited liability company (“IntelliAgent”),
Fathom Realty Holdings LLC, a Texas limited liability company (“FRH”), and Verus Holdings Inc., a North Carolina corporation
(“Verus” and together with E4:9, IntelliAgent and FRH, each a “Subsidiary Debtor” and collectively
the “Subsidiary Debtors”; the Subsidiary Debtors and the Company, each a “Debtor” and collectively,
the “Debtors”), and the investors set forth on Schedule A hereof (collectively, the “Secured Party”).
Capitalized terms used herein and not otherwise defined have the meanings given to them in the Purchase Agreement (as defined below).
Each Debtor hereby agrees in
favor of Secured Party as follows:
1. In
consideration for loans made or to be made to Company evidenced by the Senior Secured Convertible Promissory Notes of Company in the initial
principal amounts set forth on Schedule A hereto, payable to the order of Secured Party (such Senior Secured Convertible Promissory
Notes, as amended, modified, supplemented, replaced or substituted from time to time, being herein referred to as the “Notes”),
each Debtor hereby grants to Secured Party a continuing security interest in, lien upon and a right of setoff against, and each Debtor
hereby assigns to Secured Party, all of such Debtor’s right, title and interest in and to the Collateral described in Section 2,
to secure the full and prompt payment, performance and observance of all present and future indebtedness, obligations, liabilities and
agreements of any kind of the Debtors to Secured Party arising under or in connection with the Notes, the Subsidiary Guarantee, and the
other Documents, which are existing now or hereafter (all of the foregoing being herein referred to as the “Obligations”).
2. The
Collateral is described on Schedule B annexed hereto as part hereof and on any separate schedule(s) identified as Collateral at
any time or from time to time furnished by the Debtors to Secured Party (all of which are hereby deemed part of this Security Agreement)
and includes claims of the Debtors against third parties for loss or damage to or destruction of any Collateral.
3. Each
Debtor hereby warrants, represents, covenants and agrees (as of the date hereof and so long as any Obligation remains outstanding) that:
(a) the chief executive office of each Debtor, the books and records relating to the Collateral (except for such records as are in the
possession or control of Secured Party) and the Collateral are located at 2000 Regency Parkway Drive, Suite 300, Cary, NC 27518, and no
Debtor will change any of the same, change its name or conduct its business under any trade, assumed or fictitious name without providing
at least ten (10) days’ prior written notice of same to Secured Party (and in the case of the location of Collateral, will from
time to time notify Secured Party of the locations thereof), or merge or consolidate with any person without prior written notice to and
consent of Secured Party; (b) the Collateral is and will be used in the business of the Debtors; (c) the Collateral is now, and at all
times will be, owned by the applicable Debtor free and clear of all liens, security interests, claims and encumbrances, except for Permitted
Liens; (d) no Debtor will abandon or assign, sell, lease, transfer or otherwise dispose of, other than in the ordinary course of such
Debtor’s business or as permitted by that certain Securities Purchase Agreement dated April 13, 2023, by and between the Company
and the purchasers defined therein (the “Purchase Agreement”), nor will any Debtor suffer or permit any of the same
to occur with respect to, any Collateral, without prior written notice to and consent of a designated representative of the Secured Party;
(e) each Debtor will make payment or will provide for the payment, when due, of all taxes, assessments or contributions or other public
or private charges which have been or may be levied or assessed against such Debtor, with respect to the Collateral or with respect to
any wages or salaries paid by such Debtor (except for any taxes, assessments, contributions or charges being contested in good faith and
as to which adequate reserves have been made), and will deliver to Secured Party, on demand, certificates or other evidence satisfactory
to Secured Party attesting thereto; (f) each Debtor will use the Collateral for lawful purposes only, with all reasonable care and caution
and in conformity in all material respects with all applicable laws, ordinances and regulations; (g) each Debtor will, at such Debtor’s
sole cost and expense, keep the Collateral in good order, repair, running condition and in substantially the same condition as on the
date hereof, reasonable wear and tear excepted, and such Debtor will not, without the prior written consent of Secured Party, alter or
remove any identifying symbol or number upon any of the Collateral; (h) Secured Party shall at all times have reasonable access to and
right of inspection of any Collateral, upon reasonable prior notice and during regular business hours) and any papers, instruments and
records pertaining thereto (and the right to make extracts from and to receive from each Debtor originals or true copies of such records,
papers and instruments upon request therefor) and each Debtor hereby grants to Secured Party a security interest in all such records,
papers and instruments to secure the payment, performance and observance of the Obligations; (i) the Collateral is now and shall remain
personal or intangible property, and no Debtor will permit any other types of Collateral to become a fixture without prior written notice
to and consent of Secured Party (which consent will not be unreasonably withheld, conditioned or delayed) and without first making all
arrangements, and delivering, or causing to be delivered, to Secured Party all instruments and documents, including, without limitation,
waivers and subordination agreements by any landlords or mortgagees, requested by and reasonably satisfactory to Secured Party to preserve
and protect the primary security interest granted herein against all persons; (j) each Debtor will, at its sole cost and expense, perform
all acts and execute all documents reasonably requested by Secured Party from time to time to evidence, perfect, maintain or enforce Secured
Party’s security interest granted herein or otherwise in furtherance of the provisions of this Security Agreement; (k) at any time
and from time to time, each Debtor shall, at its sole cost and expense, execute and deliver, or cause to be executed and delivered, to
Secured Party such financing statements pursuant to the Uniform Commercial Code (“UCC”), applications for certificate
of title and other papers, documents or instruments as may reasonably be requested by Secured Party in connection with this Security Agreement,
and to the extent permitted by applicable law, each Debtor hereby authorizes Secured Party to execute and file at any time and from time
to time one or more financing statements or copies thereof or of this Security Agreement with respect to the Collateral signed only by
Secured Party, and each Debtor agrees to pay (or cause to be paid) any recording tax or similar tax arising in connection with the filing
of any such financing statement and further agrees to pay any additional recording or similar tax which is incurred in connection therewith;
(l) each Debtor assumes all responsibility and liability arising from the Collateral; (m) in their discretion, Secured Party may, at any
time and from time to time, upon the occurrence and during the continuance of a Default (as hereinafter defined), demand, sue for, collect
or receive any money or property at any time payable or receivable on account of or in exchange for, or make any compromise or settlement
deemed desirable by Secured Party with respect to, any Collateral, and/or extend the time of payment, arrange for payment in installments,
or otherwise modify the terms of, or release, any of the Obligations and/or the Collateral, or any obligor, maker, endorser, acceptor,
surety or guarantor of, or any Party to, any of the Obligations or the Collateral, all without notice to or consent by any Debtor and
without otherwise discharging or affecting the Obligations or the Collateral; (n) in their discretion, Secured Party may, at any time
and from time to time, for the account of any Debtor, pay any amount or do any act required of such Debtor hereunder that such Debtor
fails to do or pay, and any such payment shall be deemed an advance by Secured Party to the Debtors payable on demand together with interest
at the highest rate then payable on any of the Obligations; (o) each Debtor will promptly pay Secured Party for any and all reasonable
and documented out-of-pocket sums, costs, and expenses which Secured Party may pay or incur pursuant to the provisions of this Security
Agreement or in perfecting, defending, protecting or enforcing this Security Agreement or the security interest granted herein or in enforcing
payment of the Obligations or otherwise in connection with the provisions hereof, including, but not limited to, all search, filing and
recording fees, taxes, fees and expenses for the service and filing of papers, premium on bonds and undertakings, fees of marshals, sheriffs,
custodians, auctioneers, court costs, collection charges, travel expenses, and reasonable attorneys’ fees, all of which together
with interest at the highest rate then payable on any of the Obligations, shall be part of the Obligations and be payable on demand; and
(p) upon the occurrence and during the continuance of a Default, at Secured Party’s option and following written notice to
the Company, any proceeds of the Collateral received by any Debtor shall not be commingled with other property of the Debtors, but shall
be segregated, held by such Debtor in trust for Secured Party, and promptly delivered to Secured Party in the form received, duly endorsed
in blank where appropriate to effectuate the provisions hereof, the same to be held by Secured Party as additional Collateral hereunder
or, at Secured Party’ option, to be applied to payment of the Obligations, whether or not due and in any order. Whenever any act
is referred to herein as being taken by the Secured Party, it shall include any act taken by any Agent appointed by the Secured Party
pursuant to Section 6 hereof.
4. The
term “Default” as used in this Security Agreement shall mean any Event of Default, as such term is defined in the Notes.
5.
Upon the occurrence and during the continuance of any Default, Secured Party may, without notice to (except as herein set forth) or demand
upon any Debtor, declare any Obligations immediately due and payable, and Secured Party shall have the following rights and remedies (to
the extent permitted by applicable law) in addition to all rights and remedies of a Secured Party under the UCC or of Secured Party under
the Obligations, all such rights and remedies being cumulative, not exclusive and enforceable alternatively, successively or concurrently:
(a) Secured
Party may, at any time and from time to time, with or without judicial process or the aid and assistance of others, (i) enter upon any
premises in which any Collateral may be located and, without resistance or interference by any Debtor, take possession of the Collateral,
(ii) dispose of any part or all of the Collateral on any such premises, (iii) require any Debtor to assemble and make available to Secured
Party at the expense of the Debtors any part or all of the Collateral at any place and time designated by Secured Party which is reasonably
convenient to both parties, (iv) remove any part or all of the Collateral from any such premises for the purpose of effecting sale or
other disposition thereof (and if any of the Collateral consists of motor vehicles, Secured Party may use any Debtor’s license plates),
and (v) sell, resell, lease, assign and deliver, grant options for or otherwise dispose of any part or all of the Collateral in its then
condition or following any commercially reasonable preparation or processing, at public or private sale or proceedings or otherwise, by
one or more contracts, in one or more parcels, at the same or different times, with or without having the Collateral at the place of sale
or other disposition, for cash and/or credit, and upon any terms, at such place(s) and time(s) and to such person(s) as Secured Party
deems best, all without demand, notice or advertisement whatsoever, except that where an applicable statute requires reasonable notice
of sale or other disposition, each Debtor hereby agrees that the sending of ten days’ notice by overnight mail, postage prepaid,
to the Debtors in accordance with Section 14 of this Security Agreement shall be deemed reasonable notice thereof. If any Collateral is
sold by Secured Party upon credit or for future delivery, Secured Party shall not be liable for the failure of the purchaser to pay for
same, and in such event Secured Party may resell or otherwise dispose of such Collateral. Secured Party may buy any part or all of the
Collateral at any public sale and, if any part or all of the Collateral is of a type customarily sold in a recognized market or is of
the type which is the subject of widely distributed standard price quotations, Secured Party may buy such Collateral at private sale and
in each case may make payment therefor by any means, whether by credit against the Obligations or otherwise. Secured Party may apply the
cash proceeds actually received from any sale or other disposition to the reasonable and documented expenses of retaking, holding, preparing
for sale, selling, leasing and the like, to reasonable and documented external attorneys’ fees and all legal, travel and other expenses
which may be incurred by Secured Party in attempting to collect the Obligations, proceed against the Collateral or enforce this Security
Agreement or in the prosecution or defense of any action or proceeding related to the Obligations, the Collateral or this Security Agreement;
and then to the Obligations in such order and as to principal or interest as Secured Party may desire; and each Debtor shall remain liable
and will pay Secured Party on demand for any deficiency remaining, together with interest thereon at the highest rate then payable on
the Obligations and the balance of any expenses unpaid, with any surplus to be paid to the Debtors, subject to any duty of Secured Party
imposed by law to the holder of any subordinate security interest in the Collateral known to Secured Party.
(b) Secured
Party may, at any time and from time to time, as appropriate, after the occurrence and during the continuance of a Default set off and
apply to the payment of the Obligations, any Collateral in or coming into the possession of Secured Party or their agents, without notice
to any Debtor and in such manner as Secured Party may in their discretion determine.
6. Secured
Party may designate and appoint a collateral agent (“Agent”), as attorney-in-fact of the Debtors, irrevocably and with
power of substitution, with authority to: endorse the name of any Debtor on any notes, acceptances, checks, drafts, money orders, instruments
or other evidences of Collateral that may come into Secured Party’s possession; sign the name of any Debtor on any invoices, documents,
assignments; execute proofs of claim and loss; execute endorsements, assignments or other instruments of conveyance or transfer; adjust
and compromise any claims under insurance policies or otherwise; execute releases; and do all other acts and things necessary or advisable
in the sole discretion of Secured Party to carry out and enforce this Security Agreement or the Obligations. Neither Secured Party nor
any designee or agent thereof shall be liable for any acts of commission or omission done in good faith, for any error of judgment or
for any mistake of fact or law. This power of attorney being coupled with an interest is irrevocable while any Obligations shall remain
unpaid.
7. With
respect to the enforcement of Secured Party’s rights under this Security Agreement, each Debtor hereby releases Secured Party and
Agent from any claims, causes of action and demands at any time arising out of or with respect to this Security Agreement, the Obligations,
the Collateral and its use and/or any actions taken or omitted to be taken by Secured Party or Agent in good faith with respect thereto,
and each Debtor hereby agrees to hold Secured Party and Agent harmless from and with respect to any and all such claims, causes of action
and demands; provided that no Debtor shall have any obligation to Secured Party and Agent with respect to any claims, causes of
action or demands directly resulting from any violation of law or this Security Agreement, bad faith, fraud, gross negligence or willful
misconduct of Secured Party or Agent, as determined by a court of competent jurisdiction by a final and nonappealable judgment.
8. Secured
Party’s prior recourse to any Collateral shall not constitute a condition of any demand, suit or proceeding for payment or collection
of the Obligations nor shall any demand, suit or proceeding for payment or collection of the Obligations constitute a condition of any
recourse by Secured Party to the Collateral. Any suit or proceeding by Secured Party to recover any of the Obligations shall not be deemed
a waiver of, or bar against, subsequent proceedings by Secured Party with respect to any other Obligations and/or with respect to the
Collateral. No act, omission or delay by Secured Party shall constitute a waiver of their rights and remedies hereunder or otherwise.
No single or partial waiver by Secured Party of any covenant, warranty, representation, Default or right or remedy which they may have
shall operate as a waiver of any other covenant, warranty, representation, Default, right or remedy or of the same covenant, warranty,
representation, Default, right or remedy on a future occasion. Each Debtor hereby waives presentment, notice of dishonor and protest of
all instruments included in or evidencing any Obligations or Collateral, and all other notices and demands whatsoever (except as expressly
provided herein).
9. Each
Debtor hereby agrees to pay, on demand, all reasonable and documented out-of-pocket expenses incurred by Secured Party in connection with
the enforcement of the Notes, this Security Agreement, and the Obligations and in connection with any amendment, including, without limitation,
the reasonable fees and disbursements of counsel to Secured Party.
10. In
the event of any litigation with respect to any matter connected with this Security Agreement, the Obligations, the Collateral or the
Notes, each Debtor hereby waives the right to a trial by jury and all rights of setoff. Each Debtor hereby waives personal service of
any process in connection with any such action or proceeding and agrees that the service thereof may be made by certified or registered
mail directed to the Company in accordance with Section 14 of this Security Agreement. In the alternative, Secured Party may in their
discretion effect service upon the Debtors in any other form or manner permitted by law.
11. Upon
the payment in full of the Notes and satisfaction of all Obligations in accordance with the Notes, the security interest granted hereby
in the Collateral shall terminate and all rights to the Collateral under this Security Agreement shall revert to the applicable Debtor.
Upon any such termination, each Debtor shall have the right to file UCC–3 financing statement releases or other documents of release
reasonably required to reflect the termination of the security interest contemplated hereby.
12. Secured Party may assign
their rights and obligation hereunder to any Affiliate of Secured Party, provided that such Affiliate assumes all of the liabilities
or obligations of Secured Party hereunder. For purposes of this section, “Affiliate” of any person means any other
person or entity which, directly or indirectly, controls or is controlled by that person, or is under common control with that person
or entity. “Control” (including, with correlative meaning, the terms “controlled by” and “under
common control with”), as used with respect to any person or entity, means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such person or entity, whether through the ownership of voting securities,
by contract or otherwise.
13. All
terms herein shall have the meanings as defined in the UCC, unless the context otherwise requires. No provision hereof shall be modified,
altered, waived, released, terminated or limited except by a written instrument expressly referring to this Security Agreement and to
such provision, and executed by the party to be charged. The execution and delivery of this Security Agreement has been authorized by
any necessary vote or consent of each Debtor. This Security Agreement and all Obligations shall be binding upon the successors and assigns
of each Debtor and shall, together with the rights and remedies of Secured Party hereunder, inure to the benefit of Secured Party, their
executors, administrators, successors, permitted endorsees and permitted assigns. This Security Agreement and the Obligations shall be
governed in all respects by the laws of the State of New York applicable to contracts executed and to be performed in such state. If any
term of this Security Agreement shall be held to be invalid, illegal or unenforceable, the validity of all other terms hereof shall in
no way be affected thereby. Secured Party is authorized to annex hereto any schedules referred to herein. Each Debtor acknowledges receipt
of a copy of this Security Agreement.
14. All
notices and other communications under this Security Agreement shall be in writing and shall be deemed given when delivered personally,
by e-mail, by overnight mail or delivery service or mailed by certified mail, return receipt requested, if to the Company or the
Secured Party, to the Company as set forth in the Notes and if to the Secured Party, as set forth in the Notes.
15. The
obligations of the Debtors hereunder shall be joint and several.
16. This
Security Agreement amends and restates in its entirety that certain Security Agreement dated April 13, 2023 by and between Company and
Secured Party (as amended, the “Original Security Agreement”). This Security Agreement shall not effect a novation
of the obligations of the parties under the Original Security Agreement, but instead shall be merely a restatement and, where applicable,
an amendment of the terms governing such obligations. All references in the Notes and the Purchase Agreement to the Security Agreement
shall refer to the Original Security Agreement as amended and restated by this Security Agreement.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the undersigned
have executed or caused this security agreement to be executed on the date first above set forth.
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FATHOM HOLDINGS INC. |
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E4:9 HOLDINGS LLC |
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INTELLIAGENT, LLC |
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FATHOM REALTY HOLDINGS LLC |
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VERUS HOLDINGS INC. |
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SCHEDULE A
| Investor/Secured Party |
Principal Amount |
| [●] |
$[●] |
SCHEDULE B
As used in this Security Agreement,
the term “Collateral” means, collectively, wherever located, whether now owned or hereafter acquired or now existing
or hereafter acquired or created, all right, title and interest of each Debtor in and to all of its assets, including, without limitation:
(i) accounts, chattel paper, deposit accounts, documents, general intangibles (including, but not limited to intellectual property, payment
intangibles, software, licenses, franchises and customer information), goods (including, but not limited to equipment, fixtures and inventory),
instruments, investment property, letter-of-credit rights, money, other personal property, software, and any commercial tort claims; (ii)
to the extent not referred to in clause (i) of this sentence, all (A) supporting obligations and incidental property rights incident to,
arising or accruing pursuant to or otherwise relating to any of the things referred to in clause (i) of this sentence, whether arising
or accruing from any action taken by such Debtor, the Secured Party or any Agent or otherwise, (B) proceeds of any of the items referred
to in clauses (i) and (ii)(A) of this sentence and (C) books and records relating to any of the items referred to in clauses (i) and (ii)(A)
and (B) of this sentence.
Exhibit 10.6
AMENDED AND RESTATED SUBSIDIARY GUARANTEE
AMENDED
AND RESTATED SUBSIDIARY GUARANTEE, dated as of [●] (this
“Guarantee”), made by each signatory hereto (together with any other entity that may become a party hereto as provided
herein, the “Guarantors”), in favor of the Purchasers (as defined below).
W I T N E S S E T H:
WHEREAS,
pursuant to that certain Securities Purchase Agreement, dated April 13, 2023 (the “Purchase Agreement”), by
and between Fathom Holdings Inc., a North Carolina corporation (the “Company”) and [●], as purchaser (together
with any other purchasers from time to time party to the Purchase Agreement, the “Purchasers”), the Company has agreed
to sell and issue to the Purchasers, and the Purchasers have agreed to purchase from the Company, the Notes, subject to the terms and
conditions set forth therein; and
WHEREAS, each Guarantor will
directly benefit from the extension of credit to the Company represented by the issuance of the Notes;
NOW, THEREFORE, in consideration
of the premises and to induce the Purchasers to enter into the Purchase Agreement and to carry out the transactions contemplated thereby,
each Guarantor hereby agrees with the Purchasers as follows:
1. Definitions.
Unless otherwise defined herein, terms defined in the Purchase Agreement and used herein shall have the meanings given to them in the
Purchase Agreement. The words “hereof,” “herein,” “hereto” and “hereunder” and words of
similar import when used in this Guarantee shall refer to this Guarantee as a whole and not to any particular provision of this Guarantee,
and Section and Schedule references are to this Guarantee unless otherwise specified. The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such terms. The following terms shall have the following meanings:
“Guarantee”
means this Amended and Restated Subsidiary Guarantee, as the same may be amended, supplemented or otherwise modified from time to time.
“Notes”
means the Senior Secured Convertible Promissory Notes due April 12, 2025 of the Company issued pursuant to the Purchase Agreement.
“Obligations”
means, in addition to all other costs and expenses of collection incurred by Purchasers in enforcing any of such Obligations and/or this
Guarantee, 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 the Company or any Guarantor to the Purchasers, pursuant to
this Guarantee, the Notes, the Security Agreement and any other instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith, in each case, 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 the Purchasers 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 the Company or any Guarantor from time to time under or in connection with this Guarantee, the Notes and any other instruments, agreements
or other documents executed and/or delivered in connection herewith or therewith; and (iii) 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 the Company or
any Guarantor.
2. Guarantee.
(a) Guarantee.
(i) The
Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantee to the Purchasers and their respective successors,
endorsees, transferees and assigns, the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration
or otherwise) of the Obligations.
(ii) Anything
herein or in any other Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other
Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws, including
laws relating to the insolvency of debtors, subsidiary guarantors, fraudulent conveyance or transfer or laws affecting the rights of creditors
generally (after giving effect to the right of contribution established in Section 2(b)).
(iii) Each
Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder
without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Purchasers hereunder.
(iv) The
guarantee contained in this Section 2 shall remain in full force and effect until all the Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been satisfied by indefeasible payment in full (or converted
into Common Stock of the Company as contemplated by the Notes) (other than contingent indemnification obligations for which no claim has
been asserted).
(v) No
payment made by the Company, any of the Guarantors, any other guarantor or any other Person or received or collected by the Purchasers
from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off
or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify,
reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than
any payment made by such Guarantor in respect of the Obligations or any payment received or collected from such Guarantor in respect of
the Obligations), remain liable for the Obligations up to the maximum liability of such Guarantor hereunder until the Obligations (other
than contingent indemnification obligations for which no claim has been asserted) are indefeasibly paid in full, or converted into Common
Stock of the Company as contemplated in the Notes.
(vi) Notwithstanding
anything to the contrary in this Guarantee, with respect to any defaulted non-monetary Obligations, the specific performance of which
by the Guarantors is not reasonably possible (e.g., the issuance of the Company’s Common Stock), the Guarantors shall only be liable
for making the Purchasers whole on a monetary basis for the Company’s failure to perform such Obligations in accordance with the
Documents.
(b) Right
of Contribution. Subject to Section 2(c), each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more
than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and
against any other Guarantor hereunder which has not paid its proportionate share of such payment. Each Guarantor’s right of contribution
shall be subject to the terms and conditions of Section 2(c). The provisions of this Section 2(b) shall in no respect limit
the obligations and liabilities of any Guarantor to the Purchasers, and each Guarantor shall remain liable to the Purchasers for the full
amount guaranteed by such Guarantor hereunder.
(c) No
Subrogation. Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Purchasers, no Guarantor shall be entitled to be subrogated to any of the rights of the Purchasers against the Company or any other
Guarantor or any collateral security or guarantee or right of offset held by the Purchasers for the payment of the Obligations, nor shall
any Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other Guarantor in respect of payments
made by such Guarantor hereunder, until all amounts owing to the Purchasers by the Company on account of the Obligations are indefeasibly
paid in full (or otherwise converted in accordance with the terms of the Notes). If any amount shall be paid to any Guarantor on account
of such subrogation rights at any time when all of the Obligations shall not have been paid in full (or otherwise converted in accordance
with the terms of the Notes), such amount shall be held by such Guarantor in trust for the Purchasers, segregated from other funds of
such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Purchasers in the exact form received by such
Guarantor (duly indorsed by such Guarantor to the Purchasers, if required), to be applied against the Obligations, whether matured or
unmatured, in such order as the Purchasers may determine.
(d) Amendments,
Etc. With Respect to the Obligations. Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation
of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Obligations
made by the Purchasers may be rescinded by the Purchasers and any of the Obligations continued, and the Obligations, or the liability
of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto,
may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Purchasers, and the Purchase Agreement and the other Documents and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Purchasers may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held by the Purchasers for the payment of the Obligations
may be sold, exchanged, waived, surrendered or released. The Purchasers shall have no obligation to protect, secure, perfect or insure
any Lien at any time held by them as security for the Obligations or for the guarantee contained in this Section 2 or any property
subject thereto.
(e) Guarantee
Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Purchasers upon the guarantee contained in this Section 2 or acceptance of
the guarantee contained in this Section 2; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted
or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings
between the Company and any of the Guarantors, on the one hand, and the Purchasers, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives to the
extent permitted by law diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Company
or any of the Guarantors with respect to the Obligations. Each Guarantor understands and agrees that the guarantee contained in this Section 2
shall be construed as a continuing, absolute and unconditional guarantee of payment and performance without regard to (i) the validity
or enforceability of the Purchase Agreement or any other Document, any of the Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to time held by the Purchasers, (ii) any defense, set-off
or counterclaim (other than a defense of payment or performance or fraud by Purchasers) which may at any time be available to or be asserted
by the Company or any other Person against the Purchasers, or (iii) any other circumstance whatsoever (with or without notice to
or knowledge of the Company or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge
of the Company for the Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any
other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Purchasers
may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as they may have against
the Company, any other Guarantor or any other Person or against any collateral security or guarantee for the Obligations or any right
of offset with respect thereto, and any failure by the Purchasers to make any such demand, to pursue such other rights or remedies or
to collect any payments from the Company, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee
or to exercise any such right of offset, or any release of the Company, any other Guarantor or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair
or affect the rights and remedies, whether express, implied or available as a matter of law, of the Purchasers against any Guarantor.
For the purposes hereof, “demand” shall include the commencement and continuance of any legal proceedings.
(f) Reinstatement.
The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment,
or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Purchasers upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Company or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the Company or any Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.
(g) Payments.
Each Guarantor hereby guarantees that payments hereunder will be paid to the Purchasers without set-off or counterclaim in U.S. dollars
at the address set forth or referred to in the signature pages to the Purchase Agreement.
3. Representations
and Warranties. Each Guarantor hereby makes the following representations and warranties to Purchasers as of the date hereof:
(a) Organization
and Qualification. The Guarantor is a corporation or a limited liability company, duly incorporated or formed, validly existing and
in good standing under the laws of the applicable jurisdiction set forth on Schedule 1, with the requisite corporate or limited liability
company power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Guarantor
has no Material Subsidiaries other than those identified in the Purchase Agreement. The Guarantor is duly qualified to do business and
is in good standing as a foreign corporation or limited liability company 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, individually or in the aggregate, (i) adversely affect the legality, validity or enforceability of any of this
Guaranty in any material respect, (ii) have a material adverse effect on the results of operations, assets, prospects, or financial
condition of the Guarantor or (iii) adversely impair in any material respect the Guarantor’s ability to perform fully on a
timely basis its obligations under this Guaranty (a “Material Adverse Effect”).
(b) Authorization;
Enforcement. The Guarantor has the requisite corporate or limited liability company power and authority to enter into and to consummate
the transactions contemplated by this Guaranty, and otherwise to carry out its obligations hereunder. The execution and delivery of this
Guaranty by the Guarantor and the consummation by it of the transactions contemplated hereby have been duly authorized by all requisite
corporate or limited liability company action on the part of the Guarantor. This Guaranty has been duly executed and delivered by the
Guarantor and constitutes the valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of
general application.
(c) No
Conflicts. The execution, delivery and performance of this Guaranty by the Guarantor and the consummation by the Guarantor of the
transactions contemplated thereby do not and will not (i) conflict with or violate any provision of its Certificate of Incorporation
or other organizational document or By-laws or operating agreement, or (ii) conflict with, constitute a default (or an event which
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 of, any agreement, indenture or instrument to which the Guarantor is a party, or (iii) result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Guarantor
is subject (including Federal and State securities laws and regulations), or by which any material property or asset of the Guarantor
is bound or affected, except in the case of each of clauses (ii) and (iii), such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate, have or result in a Material Adverse Effect. The business
of the Guarantor is not being conducted in violation of any law, ordinance or regulation of any governmental authority, except for violations
which, individually or in the aggregate, do not have a Material Adverse Effect.
(d) Consents
and Approvals. The Guarantor is not required to obtain any consent, waiver, authorization or order of, or make any filing or registration
with, any court or other federal, state, local, foreign or other governmental authority or other person in connection with the execution,
delivery and performance by the Guarantor of this Guaranty.
(e) Purchase
Agreement. The representations and warranties of the Company set forth in the Purchase Agreement as they relate to such Guarantor,
each of which is hereby incorporated herein by reference, are true and correct as of each time such representations are deemed to be made
pursuant to such Purchase Agreement, and the Purchasers shall be entitled to rely on each of them as if they were fully set forth herein,
provided that each reference in each such representation and warranty to the Company’s knowledge shall, for the purposes of this
Section 3, be deemed to be a reference to such Guarantor’s knowledge.
4. Covenants.
(a) Each
Guarantor covenants and agrees with the Purchasers that, from and after the date of this Guarantee until the termination of such Guarantee,
such Guarantor shall take, and/or shall refrain from taking, as the case may be, each commercially reasonable action that is necessary
to be taken or not taken, as the case may be, so that no Event of Default (as defined in the Notes) is caused by the failure to take such
action or to refrain from taking such action by such Guarantor.
(b) So
long as any of the Obligations are outstanding (other than contingent indemnification claims which have not been asserted), unless the
holders of at least 51% of the aggregate principal amount of the then outstanding Notes shall otherwise consent in writing, each Guarantor
will not directly or indirectly on or after the date of this Guarantee:
(i) enter
into, create, incur, assume or suffer to exist any indebtedness for borrowed money of any kind, including but not limited to, a guarantee,
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,
other than Permitted Indebtedness;
(ii) 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, other than Permitted Liens;
(iii) amend
its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of any Purchaser;
(iv) repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its securities or debt obligations,
except as otherwise required by the express terms of any Permitted Indebtedness;
(v) pay cash dividends on any equity securities of the Company;
(vi) enter
into any transaction with any Affiliate of the Guarantor which would be required to be disclosed in any public filing of the Company 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); or
(vii) enter
into any agreement with respect to any of the foregoing.
5. Miscellaneous.
(a) Amendments
in Writing. None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except in
writing by the Purchasers.
(b) Notices. All notices, requests and demands to or upon the Purchasers or any Guarantor hereunder shall be effected in the
manner provided for in the Purchase Agreement, provided that any such notice, request or demand to or upon any Guarantor shall be addressed
to such Guarantor at its notice address set forth on Schedule A of the Security Agreement, and if not listed thereon, than in the
manner set forth in the Purchase Agreement.
(c) No
Waiver By Course Of Conduct; Cumulative Remedies. The Purchasers shall not by any act (except by a written instrument pursuant to
Section 5(a)), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced
in any default under the Documents or Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Purchasers,
any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the
Purchasers of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Purchasers
would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by law.
(d) Enforcement
Expenses; Indemnification.
(i) Each
Guarantor agrees to pay, or reimburse each Purchaser for, all its reasonable and documented out-of-pocket costs and expenses incurred
in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under
this Guarantee and the other Documents to which such Guarantor is a party, including, without limitation, the reasonable and documented
fees and disbursements of external counsel to such Purchaser.
(ii) Each
Guarantor agrees to pay, and to save the Purchasers harmless from, any and all liabilities with respect to, or resulting from any delay
in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable in connection with any of
the transactions contemplated by this Guarantee.
(iii) Each
Guarantor agrees to pay, and to save the Purchasers harmless from, any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Guarantee to the extent the Company would be required to do so pursuant to the Purchase Agreement.
(iv) The
agreements in this Section shall survive repayment of the Obligations and all other amounts payable under the Purchase Agreement
and the other Documents.
(e) Successor
and Assigns. This Guarantee shall be binding upon the successors and assigns of each Guarantor and shall inure to the benefit of the
Purchasers and their respective successors and assigns; provided that no Guarantor may assign, transfer or delegate any of its rights
or obligations under this Guarantee without the prior written consent of the Purchasers.
(f) Set-Off.
Each Guarantor hereby irrevocably authorizes the Purchasers at any time and from time to time while an Event of Default under any of the
Documents shall have occurred and be continuing, without notice to such Guarantor or any other Guarantor, any such notice being expressly
waived by each Guarantor, to set-off and appropriate and apply any and all deposits, credits, indebtedness or claims, in any currency,
in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Purchasers to
or for the credit or the account of such Guarantor, or any part thereof in such amounts as the Purchasers may elect, against and on account
of the obligations and liabilities of such Guarantor to the Purchasers hereunder and claims of every nature and description of the Purchasers
against such Guarantor, in any currency, whether arising hereunder, under the Purchase Agreement, any other Document or otherwise, as
the Purchasers may elect, whether or not the Purchasers have made any demand for payment and although such obligations, liabilities and
claims may be contingent or unmatured. The Purchasers shall notify such Guarantor promptly of any such set-off and the application made
by the Purchasers of the proceeds thereof, provided that the failure to give such notice shall not affect the validity of such set-off
and application. The rights of the Purchasers under this Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Purchasers may have.
(g) Counterparts.
This Guarantee may be executed by one or more of the parties to this Guarantee on any number of separate counterparts (including by telecopy),
and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
(h) Severability.
Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
(i) Section Headings.
The Section headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
(j) Integration.
This Guarantee and the other Documents represent the agreement of the Guarantors and the Purchasers with respect to the subject matter
hereof and thereof, and there are no promises, undertakings, representations or warranties by the Purchasers relative to subject matter
hereof and thereof not expressly set forth or referred to herein or in the other Documents.
(k) Governing
Laws. All questions concerning the construction, validity, enforcement and interpretation of this Guarantee shall be governed by and
construed and enforced in accordance with the internal laws of the State of New York. Each of the Company and the Guarantors agree that
all proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Guarantee (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. Each of the Company and
the Guarantors 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 Guarantee 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 Guarantee or
the transactions contemplated hereby.
(l) Acknowledgements.
Each Guarantor hereby acknowledges that:
(i) it
has been advised by counsel in the negotiation, execution and delivery of this Guarantee and the other Documents to which it is a party;
(ii) no
Purchaser has any fiduciary relationship with or duty to any Guarantor arising out of or in connection with this Guarantee or any of the
other Documents, and the relationship between the Guarantors, on the one hand, and the Purchasers, on the other hand, in connection herewith
or therewith is solely that of debtor and creditor; and
(iii) no
joint venture is created hereby or by the other Documents or otherwise exists by virtue of the transactions contemplated hereby among
the Guarantors and the Purchasers.
(m) Additional
Guarantors. The Company shall cause each of its Subsidiaries formed or acquired on or subsequent to the date hereof, which
are designated as Material Subsidiaries upon the mutual agreement of the Company and the Purchasers, to become a Guarantor for all purposes
of this Guarantee by executing and delivering an Assumption Agreement in the form of Annex 1 hereto and to grant a lien in substantially
all of their assets pursuant to documentation satisfactory to the Purchasers.
(n) Release
of Guarantors. Each Guarantor will be automatically released from all liability hereunder concurrently with the indefeasible repayment
in full (or conversion into common stock of the Company) of all amounts (other than contingent indemnification obligations for which
no claim has been asserted) owed under the Purchase Agreement, the Notes and the other Documents.
(o) Seniority. The Obligations of each of the Guarantors hereunder rank senior in priority to any other Indebtedness (as defined in
the Purchase Agreement) of such Guarantor (other than any (i) Permitted Indebtedness that is secured pursuant to Permitted Liens
which are permitted under the Purchase Agreement to be senior to the liens granted under the Security Agreement and (ii) purchase
money financing incurred in connection with the acquisition of any Additional Guarantor (as defined in Annex 1 hereto)).
(p) WAIVER
OF JURY TRIAL. EACH GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE PURCHASERS, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.
(q) This
Guarantee amends and restates in its entirety that certain Subsidiary Guarantee dated April 13, 2023 entered into by the Guarantors
defined therein for the benefit of the purchasers mentioned therein (the “Original Guarantee”). This Guarantee shall
not effect a novation of the obligations of the parties under the Original Guarantee, but instead shall be merely a restatement and, where
applicable, an amendment of the terms governing such obligations. All references in the Notes and the Purchase Agreement to the Subsidiary
Guarantee shall refer to the Original Guarantee as amended and restated by this Guarantee.
*********************
(Signature Pages Follow)
IN WITNESS WHEREOF, each of
the undersigned has caused this Guarantee to be duly executed and delivered as of the date first above written.
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E4:9 Holdings LLC |
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By: |
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Name: |
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Title: |
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IntelliAgent, LLC |
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By: |
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Name: |
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Title: |
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Fathom Realty Holdings LLC |
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By: |
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Name: |
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Title: |
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Verus Holdings Inc. |
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By: |
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Name: |
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Title: |
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| Accepted and agreed to by: |
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| [●] |
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| By: |
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| Name: |
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| Title: |
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SCHEDULE 1
GUARANTORS
The following are the names, notice addresses
and jurisdiction of organization of each Guarantor.
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|
COMPANY |
| |
JURISDICTION OF |
OWNED BY |
|
INCORPORATION |
PERCENTAGE |
| |
|
|
| E4:9 Holdings LLC |
Delaware |
100% |
| IntelliAgent, LLC |
Texas |
100% |
| Fathom Realty Holdings LLC |
Texas |
100% |
| Verus Holdings Inc. |
North Carolina |
100% |
Annex 1 to
SUBSIDIARY GUARANTEE
ASSUMPTION AGREEMENT, dated as of [ ], made by
[ ], a [ ] [corporation][limited liability company] (the “Additional Guarantor”), in favor of the Purchasers pursuant
to the Purchase Agreement referred to below. All capitalized terms not defined herein shall have the meaning ascribed to them in such
Purchase Agreement.
W I T N E S S E T H:
WHEREAS,
Fathom Holdings Inc., a North Carolina corporation (the “Company”) and the Purchasers have entered into a Securities
Purchase Agreement, dated as of April 13, 2023 (as amended, supplemented or otherwise modified from time to time, the “Purchase
Agreement”);
WHEREAS,
in connection with the Purchase Agreement, certain Subsidiaries of the Company (other than the Additional Guarantor) have entered into
the Amended and Restated Subsidiary Guarantee, dated as of [●] (as
amended, supplemented or otherwise modified from time to time, the “Guarantee”) in favor of the Purchasers;
WHEREAS, the Guarantee requires
the Additional Guarantor to become a party to the Guarantee; and
WHEREAS, the Additional Guarantor
has agreed to execute and deliver this Assumption Agreement in order to become a party to the Guarantee;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee.
By executing and delivering this Assumption Agreement, the Additional Guarantor, as provided in Section 5(m) of the Guarantee,
hereby becomes a party to the Guarantee as a Guarantor thereunder with the same force and effect as if originally named therein as a Guarantor
and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor thereunder.
The information set forth in Annex 1 hereto is hereby added to the information set forth in Schedule 1 to the Guarantee. The Additional
Guarantor hereby represents and warrants that each of the representations and warranties contained in Section 3 of the Guarantee
is true and correct on and as the date hereof as to such Additional Guarantor (after giving effect to this Assumption Agreement) as if
made on and as of such date.
2. Governing
Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the undersigned
has caused this Assumption Agreement to be duly executed and delivered as of the date first above written.
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[ADDITIONAL GUARANTOR] |
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By: |
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Name: |
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Title: |
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Exhibit 99.1
Fathom Holdings
Announces $5 Million Convertible Note Private Placement to Accelerate Agent and Transaction Growth
CARY, NC, September 26, 2024
– Fathom Holdings Inc. (Nasdaq: FTHM) (“Fathom” or the “Company”), a national, technology-driven,
end-to-end real estate services platform integrating residential brokerage, mortgage, title, and SaaS offerings for brokerages and
agents, has entered into a securities purchase agreement, under which the Company sold and issued senior secured convertible promissory
notes in aggregate principal amount of $5 million (the “Notes”) to an existing shareholder, who owns more than 5% of Fathom’s
common stock, and the chairman of the Company’s Board of Directors.
Interest on the Notes will be paid quarterly
commencing on October 1, 2025, in cash on the principal amount at a rate which fluctuates every calendar month and is equal to (i) the
monthly average Secured Overnight Financing Rate (SOFR) plus (ii) 4% per annum, subject to certain adjustments and a minimum rate of
8%. The Notes have a conversion price of $4.25 per share of common stock, representing an initial conversion premium of approximately
85% above the last reported sale price of Fathom’s common stock on September 26th, 2024. The Notes will mature on October
1st, 2026, unless repurchased or converted in accordance with their terms prior to such date.
Fathom intends to use the net proceeds
from the private placement to accelerate agent and transaction growth.
“This capital allows us to fast-track
our plans for agent and transaction growth, focusing on targeted walkovers and acquisitions,” said Fathom CEO Marco Fregenal. “The
demand for our revenue share model across both agent fee plans highlights our momentum, and this investment affirms our shareholders'
belief in our direction.”
The securities being issued and sold
in the private placement have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or
any states’ securities laws and may not be offered or sold in the United States, except pursuant to an effective registration statement
or an applicable exemption from the registration requirements of the Securities Act. This press release shall not constitute an offer
to sell or the solicitation of an offer to buy, nor shall there be any sale of securities of Fathom in any state or other jurisdiction
in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any
such state or jurisdiction.
About Fathom Holdings Inc.
Fathom Holdings Inc. is a national,
technology-driven, real estate services platform integrating residential brokerage, mortgage, title, insurance, and SaaS offerings to
brokerages and agents by leveraging its proprietary cloud-based software, intelliAgent. The Company's brands include Fathom Realty, Encompass
Lending, intelliAgent, LiveBy, Real Results, and Verus Title. For more information, visit www.FathomInc.com.
Cautionary
Note Concerning Forward-Looking Statements
This
press release contains "forward-looking statements," made pursuant to the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are subject to numerous conditions, many of which are beyond the control of the Company, including liquidity
risk and the possibility the Company might have to raise more money, including to service payments on the Notes; risks related to acquisitions
and the integration of acquisition; risks related to general economic conditions, including interest rates; risks in effectively managing
rapid growth in our business; reliance on key personnel; competitive risks; and the other risk factors set forth from time to time in
our SEC filings, copies of which are available on the SEC's website, www.sec.gov. The Company undertakes no obligation to
update these statements for revisions or changes after the date of this release, except as required by law.
Investor
Contact:
Matt Glover and Clay Liolios
Gateway Group, Inc.
949-574-3860
FTHM@gatewayir.com
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