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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) December
28, 2023
HEALTHCARE
TRIANGLE, INC.
(Exact
name of registrant as specified in its charter)
Delaware |
|
001-40903 |
|
84-3559776 |
(State
or other jurisdiction of incorporation) |
|
(Commission
File Number) |
|
(IRS
Employer Identification No.) |
7901
Stoneridge Dr., Suite
220 Pleasanton, CA
94588
(Address
of principal executive offices)
(925)-270-4812
(Registrant’s
telephone number, including area code)
N/A
(Former
name or former address, if changed since last report.)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☐
Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange
on which registered |
Common
Stock, par value $0.00001 per share |
|
HCTI |
|
The
Nasdaq Stock Market LLC |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01. Entry Into a Material Definitive Agreement.
On December 28, 2023,
Healthcare Triangle, Inc., a Delaware corporation (the “Company”), entered into a Securities Purchase Agreement (the
“Purchase Agreement”) with an institutional investor (the “Investor”), pursuant to which the Company
agreed to issue to the Investor Senior Secured 15% Original Issue Discount Convertible Promissory Notes (the “Notes”)
in the aggregate principal amount of up to $5,200,000 which will result in gross proceeds to the Company in the amount of up to $4,420,000
due to the original issue discount, and warrants (the “Warrants”) to purchase a number of shares of the Company’s
common stock (the “Warrant Shares”) equal to 50% of the face value of the Notes divided by the volume weighted average
price, in three tranches (such transaction, the “Private Placement”). The Purchase Agreement contains customary representations
and warranties by the Company and, additional closings are subject to additional closing conditions detailed in the transaction documents.
Under the first tranche
of funding, which closed upon signing of the Purchase Agreement on December 28, 2023, the Company issued a Note to the Investor in the
principal amount of $2,000,000 which resulted in gross proceeds to the Company of $1,700,000 and Warrants to purchase up to an aggregate
of 357,500 Warrant Shares. The Note and Warrants issued in the first tranche of funding have an initial fixed conversion and exercise
price of $3.44688 per share, respectively, subject to adjustment. The Warrants carry a 5-year term and, if not exercised, will terminate
on December 28, 2028.
Upon the 60th
day following the effectiveness of the Registration Statement (as defined below), and subject to the satisfaction of certain conditions,
a second tranche of funding may be provided by the Investor with the mutual consent of the Company and the Investor in the aggregate principal
amount of $1,000,000, for gross proceeds to the Company of $850,000. Such additional principal amounts, if funded, will be represented
by a new Note, and the Investor will be entitled to receive additional Warrants to purchase Warrant Shares equal to 50% of the face value
of the Note divided by the volume weighted average price.
Upon the 90th
day following the closing of the second tranche of funding, and subject to the satisfaction of certain conditions, a third tranche of
funding may be provided by the Investor with the mutual consent of the Company and the Investor in the aggregate principal amount of $2,200,000,
for gross proceeds to the Company of $1,870,000. Such additional principal amounts, if funded, will be represented by a new Note, and
the Investor will be entitled to receive additional Warrants to purchase Warrant Shares equal to 50% of the face value of the Note divided
by the volume weighted average price.
Each Note matures 18 months after issuance, does
not bear any interest unless an event of default occurs, in which case the Note will bear interest at an annual rate of 18%, and is convertible
into shares of the Company’s common stock (the “Conversion Shares”) at an initial conversion price equal to $3.44688,
provided that if an event of default has occurred and is continuing without cure, the conversion price will be the lesser of (i) $3.44688,
(ii) 95% of the average of the three lowest daily volume weighted average prices of the common stock during the 20 trading days immediately
preceding the notice of conversion of the Note, and (iii) 80% of the lowest daily volume weighted average price in the 10 trading days
immediately preceding the applicable conversion date, subject to adjustment as further specified in the Note. Each Note is fully repayable
in cash upon maturity. In addition, the Investor has the option of requiring prepayment of up to 25% of the issuance amount of a subsequent
financing. In addition, as to each Note, beginning on the earlier of (i) 60 days from issuance and (ii) the date on which the resale
registration statement registering the Conversion Shares issuable under the Note and the Warrant Shares issuable under the corresponding
Warrants has been declared effective by the Securities and Exchange Commission, the Company must make monthly payments equal to 105% of
the total principal amount multiplied by the quotient determined by dividing one by the number of months remaining until the maturity
date as of the initial payment date (the “Monthly Payments”), until the principal amount has been paid in full prior
to or on the maturity date or, if earlier, upon acceleration, conversion or redemption of the Note in accordance with its terms. The Monthly
Payments are payable in cash; provided that subject to certain limitations the Company may elect to pay all or part of a Monthly
Payment in Conversion Shares in lieu of a cash payment based on a price per share equal to the lower of (i) conversion price then in effect,
and (ii) 95% of the average of the three lowest daily volume weighted average prices of the common stock during the 20 trading days immediately
preceding the applicable payment date, subject to adjustment and to the floor price set forth in the applicable Note. If for any Monthly
Payment the number of Conversion Shares issued as payment is limited by the floor price, the Company is required to pay the economic difference
in cash.
The Note contains a number
of customary events of default. Additionally, the Notes are secured by all of the assets of the Company and its subsidiaries, pursuant
to a security agreement that was entered into with the Investor, in connection with the issuance of the Note (the “Security Agreement”). In
addition to the Security Agreement, the Company also entered into a pledge agreement pledging the entire capital stock and other equity
interests in its subsidiaries to the Investor, in connection with the issuance of the Notes (the “Pledge Agreement”).
Lastly, to further secure the Company’s obligations under the Notes, Devcool, Inc., Company’s wholly owned subsidiary (“Devcool”),
also executed a Subsidiary Guarantee (the “Subsidiary Guarantee”), pursuant to which Devcool agrees to guaranty the
Company’s obligations owed to the Investor. An Intercreditor Agreement (the “Intercreditor Agreement”) by and
between Seacoast Business Funding and the Investor was also entered into.
In connection with the
Private Placement, the Company also entered into a registration rights agreement (the “Registration Rights Agreement”)
with the Investor, pursuant to which the Company agreed to file a registration statement (a “Registration Statement”)
with the Securities and Exchange Commission registering the resale of the Conversion Shares and the Warrant Shares within 15 days after
the closing of the first tranche of funding and within 15 days each after the closing of the second tranche and the third tranche of funding,
as applicable, and to cause any such Registration Statement to become effective within 60 days after filing.
The offer and sale of
the Notes, Conversion Shares, Warrants and Warrant Shares have not been registered under the Securities Act of 1933, as amended (the “Securities
Act”), or applicable state securities laws, and accordingly 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 and
such applicable state securities laws.
The above descriptions of the terms and conditions
of the Form of the Notes, the Form of the Warrants, the Purchase Agreement, the Security Agreement, the Pledge Agreement, the Subsidiary
Agreement, the Intercreditor Agreement and the Registration Rights Agreement do not purport to be complete, and are qualified in their
entirety by reference to the full text of such agreements and instruments, which are attached to this Current Report on Form 8-K as Exhibits
4.1, 4.2, 10.1, 10.2, 10.3, 10.4, 10.5 and 10.6, respectively, and are incorporated by reference herein.
Separately, on January 2, 2024, the Company issued
a press release announcing the Private Placement, a copy of which is attached as Exhibit 99.1 to this Form 8-K.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth
in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 2.03 in its entirety.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth
in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 3.02 in its entirety.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
* Certain information in these exhibits
has been omitted because it is both not material and the type of information that the registrant treats as private or confidential.
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.
|
Healthcare
Triangle, Inc. |
|
|
Date:
January 2, 2024 |
By:
/s/ Thyagarajan Ramachandran |
|
Name:
Thyagarajan Ramachandran |
|
Title:
Chief Financial Officer |
THIS NOTE 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 UPON RECEIPT BY THE COMPANY
OF AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT. THIS NOTE AND THE SECURITIES
ISSUABLE UPON CONVERSION OF THIS NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES. ANY TRANSFEREE
OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES
ISSUABLE UPON CONVERSION HEREOF, MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF, PURSUANT TO THE TERMS OF THIS NOTE.
Healthcare Triangle, Inc.
Senior Secured 15% Original Issue Discount
Convertible Promissory Note
| Original Issuance Date: December 28, 2023 | | |
Principal: $2,000,000 |
| Maturity Date: June 28, 2025 | | |
Loan Amount: $1,700,000 |
FOR VALUE RECEIVED,
Healthcare Triangle, Inc., a Delaware corporation (the “Maker” or the “Company”), hereby promises
to pay to the order of ___________________________________, a __________________ company, or its registered assigns (the “Holder”)
the principal sum of $2,000,000 (the “Principal”) pursuant to the terms of this Senior Secured 15% Original Issue Discount
Convertible Promissory Note (this “Note”). In exchange for delivery of this Note on the Original Issuance Date referred
to above, the Holder shall lend the Maker $2,000,000 in United States dollars net of an original issuance discount of $300,000.
Unless earlier converted pursuant
to the terms of Article 3, the Maturity Date of this Note shall be 18 months from the Original Issuance Date of this Note which is specified
above, unless the Holder and Maker, by mutual consent, elect to accelerate the Maturity Date to the extent explicitly permitted by this
Note (the “Maturity Date”) or the Maturity Date is otherwise accelerated. The Maturity Date is the date upon which
the Principal and other amounts shall be due and payable unless earlier due or prepaid or converted. This Note may not be repaid in whole
or in part except as otherwise explicitly set forth herein.
This Note is secured by a
security interest as evidenced by and to the extent set forth in that certain Security Agreement by and among the Maker and its Subsidiaries,
on the one hand, and the Holder, on the other hand, dated as of the Original Issuance Date. On or before 90 days from the Original Issuance
Date, the Company shall terminate the Lien held by the Current Lender, as defined in the Securities Purchase Agreement between the Company
and the Holder dated the Original Issuance Date (the “Purchase Agreement”). The A/R Lender’s security interest
shall be a first priority security interest solely as reflected under the definition of the Permitted Indebtedness under this Note. The
Holder shall have a first priority security interest on the Original Issuance Date as to all assets of the Company and its Subsidiaries
except for accounts receivable, contracts and goodwill, and following the replacement of the Current Lender by the A/R Lender, it shall
have a first priority security interest on all assets of the Company and its Subsidiaries, except for accounts receivable.
ARTICLE
1
1.1 Purchase
Agreement; Subsidiary Guarantee. This Note has been executed and delivered pursuant to, and is issued pursuant to, the Purchase Agreement,
by and between the Maker and the Holder, and is subject to, and incorporates, the provisions of the Purchase Agreement. The full amount
of this Note and all the cash payment obligations of the Company under the Transaction Documents shall be guaranteed in full by each Subsidiary
pursuant to a Guarantee in the form attached as an exhibit to the Purchase Agreement.
1.2 Interest.
This Note has been issued with an original issue discount and no interest shall accrue hereunder prior to the occurrence of an Event of
Default. From and after the occurrence and during the continuance of any Event of Default, interest shall accrue hereunder at a rate equal
to 18% per annum or, if less, the highest amount permitted by law (such interest upon an Event of Default shall be referred to as “Interest”
or “Default Interest”), shall compound monthly based upon a 360-day year, and shall be due and payable on the first
Trading Day of each month during the continuance of such Event of Default (a “Default Interest Payment Date”). In the
event that such Event of Default is subsequently cured and no other Event of Default then exists (including, without limitation, for the
Company’s failure to pay such Default Interest on the applicable Default Interest Payment Date), the Default Interest shall cease
to accrue hereunder as of the day immediately following the date of such cure; provided that the Interest as calculated and unpaid
at such increased rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after
the occurrence of such Event of Default through and including the date of such cure of such Event of Default.
1.3
Principal Installment Payments. (a) Commencing on the earlier of (i) the day that is 60 days from the Original Issuance
Date and (ii) the date on which the Resale Registration Statement registering the Conversion Shares issuable under this Note and the Warrant
Shares issuable under the Warrants issued at the First Tranche Closing (the “First Tranche Warrants”) shall have been
declared effective by the SEC, the Maker shall pay to the Holder the Principal Amount hereunder in monthly installments, on such date
and each one month anniversary thereof (each, a “Payment Date”), a payment equal to 105% of the total Principal Amount
multiplied by the quotient determined by dividing one by the number of months remaining until the Maturity Date as of the initial Payment
Date (the “Monthly Payments”), until the Principal Amount has been paid in full prior to or on the Maturity Date or,
if earlier, upon acceleration, conversion or redemption of this Note in accordance with the terms herein. The Maker and the Holder agree
that all payments made under this Note, including without limitation the provisions of Article 1, shall be subject in all cases to the
terms of the Purchase Agreement, including, without limitation, Section 2.4 thereof. The Monthly Payments shall be payable in cash; provided,
however, that subject to the terms and conditions hereof, as to any Monthly Payment and upon no less than five Trading Days’
prior written irrevocable notice (the “Monthly Payment Notice”), the Company may elect to pay all or part of a Monthly
Payment in Conversion Shares in lieu of a cash payment based on a price per share equal to the lesser of (i) the Conversion Price then
in effect, and (ii) 95% of the average of the three lowest daily VWAPs during the 20 Trading Days prior to the applicable Payment Date
(the “Market Price”) (subject to adjustment for any stock dividend, stock split, stock combination or other similar
event affecting the Common Stock during the 20 Trading Day measuring period described in the definition of “Market Price”
herein), provided that such price shall not be less than the Floor Price (such price calculated in this sentence as to a Monthly Payment,
as applicable, the “Monthly Conversion Price” and such 20 Trading Day period, the “Monthly Conversion Period”);
provided, that the Company may not pay the Monthly Payment in Conversion Shares if at any time from the date the
Holder receives the duly delivered Monthly Payment Notice through and until the date such Monthly Payment is paid in full, the Equity
Conditions have not been satisfied or such Conversion Shares are not registered on an effective Resale Registration Statement, unless
waived in writing by the Holder. If a Monthly Conversion Price for a Monthly Payment (without regard to the Floor Price) is less than
the Floor Price then in effect (unless such Floor Price is lowered by notice, in writing, from the Company to the Holder, which may be
by e-mail), and the Monthly Payment is made in Conversion Shares, the Company shall issue a number of shares equal to the Monthly Payment
divided by such Floor Price and pay the economic difference between the Monthly Conversion Price (without regard to the Floor Price) and
such Floor Price in cash. For further clarification, the economic difference shall be equal to (A) the number of shares that would have
been delivered using the Monthly Payment Price, minus (B) the number of shares delivered using the Floor Price, multiplied by (C) the
daily VWAP of the Common Stock on the applicable Payment Date ((A-B)*C). The Holder may convert, pursuant to Section 3, any principal
amount of this Note subject to a Monthly Payment at any time prior to the date that the Monthly Payment, plus accrued but unpaid interest,
liquidated damages and any other amounts then owing to the Holder are due and paid in full. Unless otherwise indicated by the Holder in
the applicable Notice of Conversion, any principal amount of this Note converted during the applicable Monthly Conversion Period until
the date the Monthly Payment is paid in full shall be first applied to the Principal Amount subject to the Monthly Payment payable in
cash and then to the Monthly Payment payable in Conversion Shares. The Company covenants and agrees that it will honor all Conversion
Notices tendered up until the amounts due hereunder are paid in full.
(b) Notwithstanding
anything to the contrary contained herein, upon two Trading Days’ notice to the Company (the date of such notice, the “Monthly
Payment Adjustment Notice Date”), the Holder may elect at its sole option, to defer or accelerate up to six Monthly Payments or
any portion of a Monthly Payment, to any Trading Day succeeding such Monthly Payment Adjustment Notice Date provided such date precedes
the next Monthly Payment Date. In the event that the Holder elects to defer or accelerate any such Monthly Payments, to the extent applicable,
the procedures set forth in this Section 1.3 shall continue to apply to the Company.
(c) Following
the receipt of a Monthly Payment in the form of Conversion Shares, excluding the final Monthly Payment, if during the 20 Trading Day period
beginning on the Trading Date following the Payment Date on which such Conversion Shares were delivered (the “Succeeding Measurement
Period”), 95% of the Market Price of the average of the three lowest daily VWAPs during such Succeeding Measurement Period (the
“Succeeding Market Price”) shall be less than the Monthly Conversion Price during the prior Monthly Conversion Period,
then on the Trading Day following such Succeeding Measurement Period, the Company shall transfer to the Holder an additional number of
Conversion Shares (the “Make Whole Shares”) equal to the difference between the number of Conversion Shares the Holder
received in such prior Monthly Payment and the number of Conversion Shares which the Holder would have received had the Succeeding Market
Price applied to such prior Monthly Payment. If a Succeeding Market Price for a Monthly Payment
(without regard to the Floor Price) is less than the Floor Price then in effect (unless such Floor Price is lowered by notice, in writing
from the Company to the Holder, which may be by e-mail), then with respect to the Make Whole Shares for such Monthly Payment, the Company
shall issue a number of shares based upon such Floor Price and pay the economic difference between the Make Whole Shares (without regard
to the Floor Price) and shares so issued based upon such Floor Price in cash. For further clarification, the economic difference shall
be equal to (A) the number of shares that would have been delivered using the Succeeding Market Price, minus (B) the number of shares
delivered using the Floor Price, multiplied by (C) the daily VWAP of the Common Stock on the applicable Payment Date ((A-B)*C).
(d) For
the avoidance of doubt, to the extent that the Succeeding Market Price is in excess of the Monthly Conversion Price during the applicable
prior Monthly Conversion Period, the Holder shall not be required to refund any Conversion Shares nor shall the Company receive a credit
in respect of such excess in connection with any following Monthly Payment. With respect to the final Monthly Payment, if the Company
intends to pay such Monthly Payment in the form of Conversion Shares, prior to the applicable Monthly Conversion Period (but not more
than two Trading Days prior to the commencement of the Monthly Conversion Period), the Company shall deliver to the Holder a number of
Conversion Shares to be applied against such Monthly Payment equal to the quotient of (x) the applicable Monthly Payment divided by (y)
the lesser of (A) the Conversion Price then in effect and (B) 95% of the Market Price during the 20 Trading Day period preceding
the delivery of such Conversion Shares (the “Final Monthly Payment Provisional Conversion Price”). If the Monthly Conversion
Price with respect to the final Payment Date is less than the Final Monthly Payment Provisional Conversion Price, then on the final Payment
Date, the Company shall transfer to the Holder an additional number of Conversion Shares equal to the amount of the final Monthly Payment
divided by the difference between the Final Monthly Payment Provisional Conversion Price and the Monthly Conversion Price with respect
to the final Payment Date.
1.4
Prepayment. This Note may not be prepaid without the consent of the Holder, which consent may be withheld for any reason
or no reason, or as otherwise provided.
1.5
Prepayment Upon Subsequent Financing. If following the Original Issuance Date while this Note is outstanding the Maker directly
or indirectly receives proceeds from and closes any kind of financing including through the issuance of any equity securities or Indebtedness,
the Maker shall give written notice to the Holder within one Trading Day, and the Holder within 10 Trading Days after receipt of such
written notice may request a prepayment of the Principal Amount and any accrued and unpaid interest thereon (if any) in an amount up to
25% of the gross proceeds received by the Maker.
1.6
Payment on Non-Trading Days. Whenever any payment to be made on this Note shall be due on a day which is not a Trading Day,
such payment may be made on the next succeeding Trading Day.
1.7
Replacement. Upon receipt of a duly executed Affidavit of Loss and Indemnity Agreement in customary form from the Holder
with respect to the loss, theft or destruction of this Note (or any replacement hereof), or, in the case of a mutilation of this Note,
upon surrender and cancellation of such Note, the Maker shall issue a new Note, of like tenor and amount, in lieu of such lost, stolen,
destroyed or mutilated Note. The Holder shall not be required to post a bond or other security.
1.8
Status of Note. The obligations of the Maker under this Note shall, subject to the Lien of the Current Lender with respect
to the Company and its Subsidiaries’ accounts receivable, contracts and goodwill until such Lien is terminated in accordance with
the Security Agreement and Intercreditor Agreement, rank senior to all other existing Indebtedness and equity of the Company. Upon any
Liquidation Event (as hereinafter defined), but subject in all cases to the Purchase Agreement, the Holder will be entitled to receive,
before any distribution or payment is made upon, or set apart with respect to, any Indebtedness of the Maker or any class of capital stock
of the Maker, an amount equal to the outstanding Principal, Interest and any other sums due. For purposes of this Note, “Liquidation
Event” means a merger or consolidation of the Company with another entity in which the Company is not the surviving entity (except
where the sole purpose is to change the domicile of the Company), the sale of all or substantially all of the assets of the Company in
one or more related transactions, a liquidation pursuant to a filing of a petition for bankruptcy under applicable law or any other insolvency
or debtor’s relief, an assignment for the benefit of creditors, or a voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Maker.
ARTICLE
2
2.1
Events of Default. An “Event of Default” under this Note shall mean the following (unless the Event of
Default is waived in writing by the Holder):
(a)
Any default in the payment of the Principal, Interest or other sums due under this Note or any Additional Note issued to the Holder
when due (whether on the Maturity Date or by acceleration or otherwise);
(b)
Except as otherwise permitted in this Note, the Maker shall fail to observe or perform any other covenant, condition or agreement
contained in this Note or any Transaction Document, including, for the avoidance of doubt, (i) the Maker issues any Indebtedness or a
Person imposes a Lien upon any of the assets of the Maker or any Subsidiary, except for Permitted Indebtedness or Permitted Liens, respectively,
(ii) any failure to timely file, obtain and maintain the effectiveness of the Resale Registration Statement(s) within the timeframes prescribed
pursuant to the Registration Rights Agreement, or (iii) any other breach of its covenants and obligations under the Purchase Agreement
and other Transaction Documents entered into by and between the Maker and the Holder dated the Original Issuance Date;
(c)
the Maker or any of its Subsidiaries shall (A) default in any payment of any amount or amounts of principal of or interest (if
any) on $100,000 or more of any Indebtedness other than this Note or (B) default in the observance or performance of any other agreement
or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated
maturity;
(d)
the Maker’s notice to the Holder, including by way of public announcement at any time of its inability to comply (including
for any of the reasons described in Section 3.5(a) hereof) or its intention not to comply with proper requests for conversion of this
Note into Common Stock;
(e)
Shareholder Approval, as defined in the Purchase Agreement, is not received by the earlier of (i) 30 days from the Original Issuance
Date or (ii) the Company fails to use its best efforts to promptly (1) file with the SEC the applicable Schedule 14A or 14C, (2) respond
to comments from the SEC Staff with respect to the applicable Schedule 14A or 14C, and (3) mail any Schedule 14C to its shareholders within
five Trading Days after (A) 10 calendar days have elapsed and the SEC Staff has not indicated it will have comments or (B) it has complied
with SEC Staff comments and the Staff has notified the Company it has no further comments, or (iii) prior to clauses (i) or (ii) occurring
the Required Consent is revoked or modified without the prior written consent of the Holder.
(f)
at any time after the Initial Resale Registration Statement is effective and subject to compliance with applicable law or if the
Holder has sold shares of Common Stock pursuant to Rule 144, when available, but only to the extent of the number of shares sold, the
failure of the Maker to instruct its Transfer Agent (as hereinafter defined) to remove any legends from the Common Stock and issue such
unlegended certificates to the Holder within the Standard Settlement Period. As used herein, “Standard Settlement Period”
means the standard settlement period, expressed in a number of Trading Days, on the Company’s Trading Market with respect to the
Common Stock as in effect on the date of delivery of a Conversion Notice so long as the Holder has provided reasonable assurances to the
Maker that such Common Stock will be sold pursuant to Rule 144, once it is available, or any other applicable exemption from registration
under the Securities Act or if there is an effective Resale Registration Statement that may be used. For avoidance of doubt, as of the
Original Issuance Date the Standard Settlement Period is two Trading Days;
(g)
the Maker shall fail to timely deliver the Common Stock as and when required in Section 3.2;
(h)
other than as provided in Section 3.5(c), the Maker shall fail to have the Required Minimum of Common Stock authorized, reserved
and available for issuance to satisfy the potential conversion in full (disregarding for this purpose any and all limitations of any kind
including beneficial ownership limitations on such conversion) of this Note or upon the exercise of the Warrants;
(i)
any representation or warranty made by the Maker or any of its Subsidiaries in the Purchase Agreement, this Note, the Warrant or
any other Transaction Document shall prove to have been false or misleading or breached in a material respect on the date as of which
made;
(j)
the Maker or any of its Subsidiaries shall: (i) apply for or consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of its property or assets; (ii) make a general assignment for
the benefit of its creditors; (iii) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect)
or under the comparable laws of any jurisdiction (foreign or domestic); (iv) file a petition seeking to take advantage of any bankruptcy,
insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors’ rights generally; (v) acquiesce
in writing to any petition filed against it in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect)
or under the comparable laws of any jurisdiction (foreign or domestic); (vi) issue a notice of bankruptcy or winding down of its operations
or issue a press release regarding same; or (vii) take any action under the laws of any jurisdiction (foreign or domestic) analogous
to any of the foregoing;
(k)
a proceeding or case shall be commenced in respect of the Maker or any of its Subsidiaries, without its application or consent,
in any court of competent jurisdiction, seeking: (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition
or readjustment of its debts; (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial
part of its assets in connection with the liquidation or dissolution of the Maker or any of its Subsidiaries; or (iii) similar relief
in respect of it under any law providing for the relief of debtors, and such proceeding or case described in clause (i), (ii) or (iii)
shall continue undismissed, or unstayed and in effect, for a period of 45 days or any order for relief shall be entered in an involuntary
case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or
domestic) against the Maker or any of its Subsidiaries or action under the laws of any jurisdiction (foreign or domestic) analogous to
any of the foregoing shall be taken with respect to the Maker or any of its Subsidiaries and shall continue undismissed, or unstayed and
in effect for a period of 45 days;
(l)
one or more final judgments or orders for the payment of money aggregating in excess of $100,000 (or its equivalent in the relevant
currency of payment) are rendered against one or more of the Company and/or any of its Subsidiaries, that is not dismissed or stayed within
10 days;
(m)
the Company fails to comply with the reporting requirements of the Exchange Act (including but not limited to becoming delinquent
in the filing of any report required to be filed under the Exchange Act including any extension permitted by Rule 12b-25 under the Exchange
Act) or ceases to be subject to the reporting requirements of the Exchange Act. For avoidance of doubt, a failure to timely file any Exchange
Act report shall be deemed to be an Event of Default;
(n)
the Company files a Form 8-K or other Report with the SEC disclosing that it intends to restate any financial statements it previously
filed with the SEC or it restates any financial statements it previously filed with the SEC (a “Restatement Default”);
(o)
the Maker’s Common Stock ceases to be listed on the Trading Market, a delisting of the Common Stock by the Trading Market
is otherwise threatened or reasonably likely to occur as evidenced by a writing issued by the Trading Market, or the Maker fails to list
the Underlying Shares on the Trading Market (a “Delisting Default”);
(p)
after the six-month anniversary of the Original Issuance Date, any Common Stock including Underlying Shares may not be immediately
resold under Rule 144 without restriction on the number of shares to be sold or manner of sale, unless (i) the Holder is then deemed to
be an “affiliate” as such term is defined under the Securities Act; (ii) such restriction or prohibition is as a result of
any actions or inactions on the part of the Holder and not in any way on the part of the Company, or (iii) such Common Stock has been
registered for resale under the Securities Act and may be sold without restriction;
(q)
the Maker consummates a “going private” transaction and as a result its Common Stock is no longer registered under
Sections 12(b) of the Exchange Act;
(r)
there shall be any SEC stop order with respect to any Resale Registration Statement, a trading suspension by the SEC or the Trading
Market of the Common Stock, or any restriction in place with the Transfer Agent for the Common Stock restricting the trading of such Common
Stock;
(s)
the electronic transfer by the Company of shares of Common Stock through the Depository Trust Company or another established clearing
corporation is no longer available or is subject to a “chill”;
(t)
the Company replaces its Transfer Agent, and the Company fails to instruct the new Transfer Agent to provide prior to the effective
date of such replacement, a fully executed irrevocable transfer agent instructions (including but not limited to the provision to irrevocably
reserve the Required Minimum) signed by the successor Transfer Agent and the Company;
(u)
the Company or a Subsidiary enters into a Variable Rate Transaction at any time from the Original Issuance Date while any Note
is outstanding;
(v)
any provision of any Transaction Document and/or Security Documents (as defined in the Purchase Agreement) shall at any time for
any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against the Company or any
of its Subsidiaries, or the validity or enforceability thereof shall be contested by any party thereto and it is finally determined by
a court of competent jurisdiction that any such Transaction Document is not valid or enforceable against the Company or any of its Subsidiaries,
or a proceeding shall be commenced by the Company or any Subsidiary or any Governmental Authority having jurisdiction over any of them,
seeking to establish the invalidity or unenforceability thereof against the Company or any of its Subsidiaries, or the Company or any
Subsidiary shall deny in writing that it has any liability or obligation purported to be created under any Transaction Document and/or
any Security Document;
(w)
except for the Current Lender or the A/R Lender as provided under the definition of Permitted Indebtedness in this Note, any Security
Document shall for any reason fail or cease to create a separate valid and perfected, first priority Lien (as defined in the Purchase
Agreement) on the Collateral (as defined in the Security Documents) in favor of the Holder or any material provision of any Security Document
shall at any time for any reason cease to be valid and binding on or enforceable against the Company or the validity or enforceability
thereof shall be contested by any party thereto and it is finally determined by a court of competent jurisdiction that any such Security
Document is not valid or enforceable against the Company, or a proceeding shall be commenced by the Company or any Governmental Authority
having jurisdiction over the Company, seeking to establish the invalidity or unenforceability thereof against the Company;
(x)
any material damage to, or loss, theft or destruction of, any collateral, whether or not insured, while the security interest(s)
provided under the Security Documents remain in effect, or any strike, lockout, labor dispute, embargo, condemnation, act of god or public
enemy, or other casualty which causes, for more than 15 consecutive days, the cessation or substantial curtailment of the Company’s
current operations or revenue producing activities at any facility of the Company or any Subsidiary, if any such event or circumstance
could reasonably expected to have a Material Adverse Effect (as defined in the Purchase Agreement);
(y)
the Company organizes a new Subsidiary and the Company fails to pledge the equity interests of such Subsidiary within 15 Trading
Days of such organization or fails to cause the new Subsidiary to guarantee the Note pursuant to a Subsidiary Guarantee and become a party
to the Security Agreement (including the delivery of the pledged securities) within such period; and
(z)
the Maker shall fail to comply with the covenant set forth in Section 4.1(a) to terminate the Lien held by the Current Lender and
to enter into a new factoring facility with an A/R Lender and on terms and conditions acceptable to Holder within 90 days of the Original
Issuance Date.
2.2
Remedies Upon an Event of Default.
(a)
Upon the occurrence of any Event of Default that has not been remedied or waived within three Trading Days, provided, however,
that there shall be no cure period for an Event of Default described in Section 2.1(j) or 2.1(k) and none for Section 2.1(l) beyond the
10 days contained therein, the Maker shall be obligated to pay to the Holder the Mandatory Default Amount, which Mandatory Default Amount
shall be immediately due and payable to the Holder. In the event this Note shall be converted under an Event of Default, the Holder shall
have the option to convert the Mandatory Default Amount at the Alternative Conversion Price. For this purpose, the Holder shall have the
option to have the Alternative Conversion Price determined as of the date the Conversion Notice was given to the Maker.
(b)
Upon the occurrence of any Event of Default, the Maker shall, as promptly as possible but in any event within three Trading Days
after the occurrence of such Event of Default, notify the Holder of the occurrence of such Event of Default, describing the event or factual
situation giving rise to the Event of Default and specifying the relevant subsection or subsections of Section 2.1 hereof under which
such Event of Default has occurred.
(c)
Subject to Section 2.2(a), upon the occurrence of any Event of Default, the Holder may at any time at its option declare, by written
notice to the Maker, the Mandatory Default Amount due and payable, and thereupon, the same shall be accelerated and so due and payable
within two Trading Days of receipt of such notice. Upon the failure of the Maker to cure an Event of Default within the time permitted
by this Note, or if the Event of Default is not capable of being cured, the remedies provided in this Note including the use of the Alternative
Conversion Price shall continue and not be affected by any cure.
(d)
The provisions of Section 3.2(b) shall also apply upon any Events of Default relating to Conversion Shares in addition to the remedies
under this Section 2.2.
(e)
Any Event of Default hereunder may be waived upon the mutual agreement of the Company and the Holder.
ARTICLE
3
3.1
Conversion.
(a)
Conversion. At any time after the Original Issuance Date, this Note shall be convertible (in whole or in part) at the option
of the Holder into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing (x) that portion of
the outstanding Principal and any accrued and unpaid Interest thereon that the Holder elects to convert (the “Conversion Amount”)
by (y) the Applicable Conversion Price then in effect on the date on which the Holder delivers to the Maker a notice of conversion in
substantially the form attached hereto as Exhibit A (the “Conversion Notice”) in accordance with Section 5.1.
The Holder shall deliver this Note to the Maker at the address designated in the Purchase Agreement at such time that this Note is fully
converted. With respect to partial conversions of this Note, the Maker shall keep written records of the amount of this Note converted
as of the date of such conversion (each, a “Conversion Date”).
(b)
Conversion Price. The Conversion Price means $3.4548 (the “Fixed Conversion Price”) as such Fixed Conversion
Price may be adjusted as provided herein; provided, however, that if any Conversion Price under the foregoing definition
results in a fractional amount, the fractional amount shall be rounded down to the nearest whole cent. For avoidance of doubt, all references
in this Note to the Fixed Conversion Price or any other Conversion Price including the Alternative Conversion Price shall be construed
to include adjustments as provided in this Note. Notwithstanding the foregoing, at any time when an Event of Default has occurred and
is continuing without cure or the Company shall have failed to meet the Equity Conditions and while such failure is continuing, the Holder
may convert this Note at the Alternative Conversion Price.
(c)
If the Company receives a Conversion Notice at a time at which the Conversion Price (or, as applicable, the Alternative Conversion
Price or Monthly Conversion Price) then in effect (as applicable, the “Applicable Conversion Price”) (without regard
to the Floor Price) is less than the Floor Price then in effect (unless such Floor Price is lowered with the written consent of the Company
and the Holder, which may be by e-mail), the Company shall issue a number of shares equal to the Conversion Amount divided by such Floor
Price and pay the economic difference between the Applicable Conversion Price (without regard to the Floor Price) and such Floor Price
in cash. For further clarification, the economic difference shall be equal to (A) the number of shares that would have been delivered
using the Applicable Conversion Price, minus (B) the number of shares delivered using the Floor Price, multiplied by (C) the daily VWAP
of the Common Stock on the Conversion Date ((A-B)*C).
(d)
Voluntary Adjustment of Fixed Conversion Price. Subject to the rules and regulations of the Trading Market, the Company
may at any time during the term of this Note, with the prior written consent of the Holder, reduce the then current Fixed Conversion Price
of the Note to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.
3.2
Delivery of Conversion Shares.
(a)
As soon as practicable after any conversion or payment of any amount due hereunder in the form of shares of Common Stock in accordance
with this Note, and in any event within the Standard Settlement Period thereafter (such date, the “Share Delivery Date”),
the Maker shall, at its expense, cause to be issued in the name of and delivered to the Holder, or as the Holder may direct, a certificate
or certificates evidencing the number of shares of fully paid and non-assessable Common Stock to which the Holder shall be entitled on
such conversion or payment (the “Conversion Shares”), in the applicable denominations based on the applicable conversion or
payment, which certificate or certificates shall be free of restrictive and trading legends (except for any such legends as may be required
under the Securities Act). In lieu of delivering physical certificates for the Common Stock issuable upon any conversion of this Note,
provided the Company’s transfer agent (the “Transfer Agent”) is participating in the Depository Trust Company
(“DTC”) DTC Fast Automated Securities Transfer Program (“FAST”) or a similar program, upon request
of the Holder, the Company shall cause the Transfer Agent to electronically transmit such Conversion Shares issuable upon conversion of
this Note to the Holder (or its designee), by crediting the account of the Holder’s (or such designee’s) broker with DTC through
its Deposit Withdrawal At Custodian system (provided that the same time periods herein as for stock certificates shall apply) as
instructed by the Holder (or its designee).
(b)
Obligation Absolute. The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this
Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or
any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the
issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Company of
any such action the Company may have against the Holder. In the event the Holder of this Note shall elect to convert any or all of the
outstanding Principal and any accrued and unpaid Interest thereon (if any) hereof, the Company may not refuse conversion based on any
claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any
other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this Note
shall have been sought and obtained, and the Company posts a surety bond for the benefit of the Holder in the amount of 120% of the outstanding
Principal and any accrued and unpaid Interest thereon (if any) of this Note, which is subject to the injunction, which bond shall remain
in effect until the completion of litigation of the underlying dispute and the proceeds of which shall be payable to the Holder to the
extent it obtains any judgment. In the absence of such injunction, the Company shall issue the Conversion Shares or, if applicable, cash,
upon delivery of a Conversion Notice.
(c)
The Company’s Failure to Timely Convert. If the Company shall fail for any reason or for no reason, on or prior
to the applicable Share Delivery Date, if the Transfer Agent is not participating in FAST, to issue and deliver to the Holder (or its
designee) a certificate for the number of Conversion Shares to which the Holder is entitled and register such Conversion Shares on the
Company’s share register or, if the Transfer Agent is participating in FAST, to credit the balance account of the Holder or the
Holder’s designee with DTC for such number of Conversion Shares to which the Holder is entitled upon the Holder’s conversion
of this Note (as the case may be) (a “Conversion Failure”), then, in addition to all other remedies available to the
Holder, the Holder may by notice to the Company (in lieu of receiving such Conversion Shares subject to such Conversion Failure), require
the Company to prepay, in cash, the Conversion Amount in such Conversion Failure at a prepayment price equal to the Mandatory Default
Amount with respect to such Conversion Amount arising from such Conversion Failure. In addition to the foregoing, if on or prior to the
Share Delivery Date, if the Transfer Agent is not participating in FAST, the Company shall fail to issue and deliver to the Holder (or
its designee) a certificate and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is
participating in FAST, the Transfer Agent shall fail to credit the balance account of the Holder or the Holder’s designee with DTC
for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder or pursuant to the
Company’s obligation pursuant to clause (II) below, and if on or after such Share Delivery Date the Holder acquires (in an open
market transaction, stock loan or otherwise) shares of Common Stock corresponding to all or any portion of the number of shares of Common
Stock issuable upon such conversion that the Holder is entitled to receive from the Company and has not received from the Company in connection
with such Conversion Failure or Notice Failure, as applicable (a “Buy-In”), then, in addition to all other remedies
available to the Holder, the Company shall, within two Trading Days after receipt of the Holder’s request and in the Holder’s
discretion, either: (I) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions
and/or markups, stock loan costs and other out-of-pocket expenses, if any) for the shares of Common Stock so acquired (including, without
limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s
obligation to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit the balance account of such Holder
or such Holder’s designee, as applicable, with DTC for the number of shares of Common Stock to which the Holder is entitled upon
the Holder’s conversion hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate, or (II) promptly
honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit
the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of shares of Common Stock to
which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) and pay cash to the Holder in an amount
equal to the excess (if any) of the Buy-In Price over the product of (x) such number of shares of Common Stock multiplied by (y) the lowest
closing sale price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Conversion Notice
and ending on the date of such issuance and payment under this clause (II) (the “Buy-In Payment Amount”). Nothing shall
limit the 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 (or to electronically deliver such shares of Common Stock) upon the conversion of this Note as required pursuant
to the terms hereof.
(d)
Conversion Priority. In the event that the Company receives a Conversion Notice from the Holder and any holders of Options
or other Convertible Securities for the same Conversion Date and the Company can effect the conversion and exercise of some, but not all,
of such portions of the Note, Options or other Convertible Securities submitted for conversion and exercise, the Company, subject to this
Section 3.2(d), shall (i) first effect the conversion of the entire Conversion Amount submitted for conversion on such date by the Holder,
and (ii) shall thereafter effect the exercise and conversion from each holder of Options or other Convertible Securities electing to have
Options or other Convertible Securities exercised or converted on such date (other than the Note).
(e)
Beneficial Ownership Limitation. The Company shall not effect the conversion of any portion of this Note, and the Holder
shall not have the right to convert any portion of this Note pursuant to the terms and conditions of this Note and any such conversion
shall be null and void and treated as if never made, to the extent that after giving effect to such conversion, the Holder together with
the other Attribution Parties collectively would beneficially own in excess of 4.99% (the “Maximum Percentage”) of
the shares of Common Stock outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence,
the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include the number
of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock issuable upon
conversion of this Note with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock
which would be issuable upon (A) conversion of the remaining, non-converted portion of this Note beneficially owned by the Holder or any
of the other Attribution Parties and (B) exercise or conversion of the unexercised or non-converted portion of any other securities of
the Company (including, without limitation, any convertible notes or convertible preferred stock or warrants, including, without limitation,
the Warrants) beneficially owned by the Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous
to the limitation contained in this Section 3.2(e). For purposes of this Section 3.2(e), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act. For purposes of determining the number of outstanding shares of
Common Stock the Holder may acquire upon the conversion of this Note without exceeding the Maximum Percentage, the Holder may rely on
the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as the case may be, (y) a more recent public announcement
by the Company or (z) any other written notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common
Stock outstanding (the “Reported Outstanding Share Number”). If the Company receives a Conversion Notice from
the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number,
the Company shall notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Conversion
Notice would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section 3.2(e), to exceed the
Maximum Percentage, the Holder must notify the Company of a reduced number of shares of Common Stock to be issued pursuant to such Conversion
Notice. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one Trading Day confirm
orally and in writing or by electronic mail 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 and any other Attribution Party since the date as of which the Reported Outstanding Share
Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon conversion of this Note results
in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of
the number of outstanding shares of Common Stock (as determined under Section 13(d) of the Exchange Act), the number of shares so issued
by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the
“Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the
power to vote or to transfer the Excess Shares. Furthermore, the Company shall indemnify the Holder in accordance with the Purchase Agreement,
if the Holder suffers any damages or claims as a result of Excess Shares being issued. Upon delivery of a written notice to the Company,
the Holder may from time to time increase (with such increase not effective until the 61st day after delivery of such notice)
or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that (i)
any such increase in the Maximum Percentage will not be effective until the 61st day after such notice is delivered to the
Company and (ii) any such increase or decrease will apply only to the Holder and the other Attribution Parties. For purposes of
clarity, the shares of Common Stock issuable pursuant to the terms of this Note in excess of the Maximum Percentage shall not be deemed
to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act.
No prior inability to convert this Note pursuant to this Section 3.2(e) shall have any effect on the applicability of the provisions of
this Section 3.2(e) with respect to any subsequent determination of convertibility. The provisions of this Section 3.2(e) shall be construed
and implemented in a manner otherwise than in strict conformity with the terms of this Section 3. 2(e) to the extent necessary to correct
any provision which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 3.2(e)
or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation contained in
this Section 3.2(e) may not be waived and shall apply to a successor holder of this Note.
3.3
Adjustment of Fixed Conversion Price.
(a)
Until this Note has been paid in full or converted in full, the Fixed Conversion Price shall be subject to adjustment from time-to-time,
and the Floor Price shall be subject to adjustment solely as to Section 3.3(a) (but in either case shall not be increased, other than
pursuant to a combination or reverse stock split) as follows:
(i)
Adjustments for Stock Splits and Combinations. If the Maker shall at any time or from time-to-time after the Original Issuance
Date effect a forward stock split of the outstanding Common Stock or pays a dividend in Common Stock to holders of its Common Stock, the
applicable Fixed Conversion Price in effect immediately prior to such event shall be proportionately decreased. If the Maker shall at
any time or from time-to-time after the Original Issuance Date, effect a combination or reverse stock split of the outstanding Common
Stock, the applicable Fixed Conversion Price in effect immediately prior to such event shall be proportionately increased. Any adjustments
under this Section 3.3(a)(i) shall be effective at the close of business on the date the applicable event occurs. If at any time and from
time-to-time on or after the Original Issuance Date the Maker effects a combination or reverse stock split, and the Event Market Price
(as defined below) is less than the Fixed Conversion Price then in effect (after giving effect to the adjustment in this Section 3.3(a)(i)
above), then on the fifth Trading Day immediately following such event, the Fixed Conversion Price then in effect on such fifth Trading
Day (after giving effect to the adjustment in Section 3.3(a)(i) above) shall be reduced (but in no event increased) to the Event Market
Price. For the avoidance of doubt, if the adjustment in the immediately preceding sentence would otherwise result in an increase in the
Fixed Conversion Price hereunder, no adjustment shall be made. “Event Market Price” means, with respect to any of the
events described above, the quotient determined by dividing (x) the sum of the VWAP of the shares of Common Stock for each of the five
Trading Days following such event, divided by (y) two. All such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination, recapitalization or other similar event during such period.
(ii)
Adjustments for Certain Dividends and Distributions. If the Maker shall at any time or from time-to-time after the Closing
Date (but whether before or after the Original Issuance Date) make or issue or set a record date for the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in Common Stock, then, and in each event, the applicable Fixed Conversion
Price in effect immediately prior to such event shall be decreased as of the time of such issuance or, in the event such record date shall
have been fixed, as of the close of business on such record date, by multiplying the applicable Fixed Conversion Price then in effect
by a fraction:
(1)
the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time
of such issuance or the close of business on such record date; and
(2)
the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time
of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend
or distribution.
(iii)
Adjustment for Other Dividends and Distributions. If the Maker shall at any time or from time-to-time after the Closing
Date (but whether before or after the Original Issuance Date) make or issue or set a record date for the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in other Common Stock, then, and in each event, an appropriate revision
to the applicable Fixed Conversion Price shall be made and provision shall be made (by adjustments of the Fixed Conversion Price or otherwise)
so that the Holder of this Note shall receive upon conversions thereof, in addition to the number of shares of Common Stock receivable
thereon, the number of securities of the Maker or other issuer (as applicable) or other property that it would have received had this
Note been converted into Common Stock in full (without regard to any conversion limitations herein) on the date of such event and had
thereafter, during the period from the date of such event to and including the Conversion Date, retained such securities (together with
any distributions payable thereon during such period) or assets, giving application to all adjustments called for during such period under
this Section 3.3(a)(iii) with respect to the rights of the holders of this Note; provided, however, that if such record
date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the
Fixed Conversion Price shall be adjusted pursuant to this Section 3.3(a)(iii) as of the time of actual payment of such dividends or distributions.
(iv)
Adjustments for Reclassification, Exchange or Substitution. If the Common Stock at any time or from time-to-time after the
Closing Date (but whether before or after the Original Issuance Date) shall be changed to the same or different number of shares or other
securities of any class or classes of stock or other property, whether by reclassification, exchange, substitution or otherwise (other
than by way of a forward stock split, stock dividend, or combination of shares or reverse stock split provided for in Sections 3.3(a)(i),
(ii) and (iii) hereof), then, and in each event, an appropriate revision to the Fixed Conversion Price shall be made and provisions shall
be made (by adjustments of the Fixed Conversion Price or otherwise) so that the Holder shall have the right thereafter to convert this
Note into the kind and amount of shares of stock or other securities or other property receivable upon reclassification, exchange, substitution
or other change, by holders of the number of shares of Common Stock into which such Note might have been converted immediately prior to
such reclassification, exchange, substitution or other change, all subject to further adjustment as provided herein.
(v)
Rights Upon Issuance of Other Securities.
(1)
Adjustment of Fixed Conversion Price upon Issuance of Common Stock. If and whenever on or after the Original Issuance Date
the Company issues or sells, or in accordance with this Section 3.3(a)(v) is deemed to have issued or sold, any shares of Common Stock
(including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any Exempt
Issuance (other than clause (c) of the definition of Exempt Issuance in the Purchase Agreement which shall not be deemed to be an Exempt
Issuance for purposes of this Section 3.3(a)(v) issued or sold or deemed to have been issued or sold) for a consideration per share (the
“Dilutive Issuance Price”) less than a price equal to the Fixed Conversion Price in effect immediately prior to such
issuance or sale or deemed issuance or sale (such Fixed Conversion Price then in effect is referred to herein as the “Applicable
Price”) (the foregoing a “Dilutive Issuance”), then, immediately after such Dilutive Issuance, the Fixed
Conversion Price then in effect shall be reduced to an amount equal to the Dilutive Issuance Price. For the avoidance of doubt, any amendment
to an outstanding Option or Convertible Security, or issuance of any new Option or Convertible Security to reduce the exercise or conversion
price thereof or at an exercise or conversion price lower than the Applicable Price, other than an Exempt Issuance, shall be deemed to
be an issuance and subject to the adjustment provisions set forth this Section 3.3(a)(v).
(2)
Issuance of Options. If the Company in any manner grants or sells any options or rights to acquire Common Stock or Convertible
Securities (“Options”) (other than pursuant to any Exempt Issuance) and the lowest price per share for which one share
of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then
such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting
or sale of such Option for such price per share, excluding any transactions involving an Exempt Issuance. For purposes of this Section
3.3(a)(v) the “lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such
Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant
to the terms thereof” shall be equal to (a) the lower of (x) the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such
Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant
to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable (or may
become issuable assuming all possible market conditions) upon the exercise of any such Options or upon conversion, exercise or exchange
of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof, minus (b) the sum
of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting or sale of such Option, upon exercise
of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise
pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder
of such Option (or any other Person). Except as contemplated below, no further adjustment of the Fixed Conversion Price shall be made
upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise
pursuant to the terms thereof or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such
Convertible Securities.
(3)
Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest
price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise
pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and
to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share.
For the purposes of this Section 3.3(a)(v), the “lowest price per share for which one share of Common Stock is at any time issuable
upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (a) the lower of
(x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common
Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security or
otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security for which one share
of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon conversion, exercise or exchange thereof
or otherwise pursuant to the terms thereof, minus (b) the sum of all amounts paid or payable to the holder of such Convertible Security
(or any other Person) upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable
by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment
of the Fixed Conversion Price shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange
of such Convertible Securities or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities
is made upon exercise of any Options for which adjustment of the Fixed Conversion Price has been or is to be made pursuant to other provisions
of this Section 3.3(a)(v), except as contemplated below, no further adjustment of the Fixed Conversion Price shall be made by reason of
such issuance or sale.
(4)
Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional
consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any
Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock decreases at any time (other than
proportional changes in connection with an event referred to Section 3.3(a)(i) above), the Fixed Conversion Price in effect at the time
of such decrease shall be adjusted to the Fixed Conversion Price which would have been in effect at such time had such Options or Convertible
Securities provided for such decreased purchase price, additional consideration or decreased conversion rate (as the case may be) at the
time initially granted, issued or sold. For purposes of this Section 3.3(a)(v), if the terms of any Option or Convertible Security that
was outstanding as of the Original Issuance Date are decreased in the manner described in the immediately preceding sentence, then such
Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed
to have been issued as of the date of such decrease. No adjustment pursuant to this Section 3.3(a)(v) shall be made if such adjustment
would result in an increase of the Fixed Conversion Price then in effect.
(5)
Issuances of Units. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance
or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”,
and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”), together comprising
one integrated transaction (or one or more transactions if such issuances or sales or deemed issuances or sales of securities of the Company
either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity to each other and/or (C) are
consummated under the same plan of financing), the “lowest price per share for which one share of Common Stock is at any time issuable
upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” with respect to such Primary Security
shall be deemed to be equal to (a) the lowest price per share for which one share of Common Stock was issued (or was deemed to be issued
pursuant to this Section 3.3(a)(v), as applicable) in such integrated transaction solely with respect to such Primary Security, minus
(b) with respect to such Secondary Securities, the sum of (x) the VWAP of the number of shares of Common Stock underlying each such Option,
if any, calculated as of the Trading Day prior to such issuance, (y) the fair market value (as mutually determined by the Holder and the
Company), of such Adjustment Right, if any, and (z) the fair market value (as mutually determined by the Holder and the Company) of such
Convertible Security, if any, in each case, as determined on a per share basis in accordance with this Section 3.3(a)(v). If any shares
of Common Stock, Options (other than Exempt Issuances) or Convertible Securities are issued or sold or deemed to have been issued or sold
for cash, the consideration received therefor (for the purpose of determining the consideration paid for such Common Stock, Option or
Convertible Security) will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common Stock,
Options (other than Exempt Issuances) or Convertible Securities are issued or sold for a consideration other than cash, the amount of
such consideration received by the Company (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible
Security) will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which
case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security
for each of the five Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options (other than Exempt
Issuances) or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company
is the surviving entity, the amount of consideration therefor (for the purpose of determining the consideration paid for such Common Stock,
Option or Convertible Security) will be deemed to be the fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any
consideration other than cash or publicly traded securities will be determined jointly by the Company and the Holder. If the Company and
the Holder are unable to reach agreement within 10 days after the occurrence of any event requiring valuation in this Section 3.3(a)(v)(5)
(the “Valuation Event”), the fair value of such consideration will be determined within five Trading Days after the
10th day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination
of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall
be borne by the Company. For the avoidance of doubt, in the event of a transaction provided in this Section 3.3(a)(v)(5), the calculation
of the consideration per share for the Secondary Securities shall be as provided in Section 3.3(a)(v)(2) and/or (3), as applicable.
(6)
Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A)
to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe
for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the
issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making
of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be); provided,
however, that, if the Company shall at any time set a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or to subscribe for or
purchase shares of Common Stock, Options or in Convertible Securities and (A) such dividend is not fully paid or if such distribution
is not fully made, or the subscription rights are not fully granted, on the date fixed therefor, the Fixed Conversion Price shall be adjusted
pursuant to this Section 3.3(a)(v) as of the time of actual payment of such dividends or distributions or the effectiveness of such subscription
rights or (B) the Company shall subsequently rescind or otherwise cancel or determine not to make such dividend or distribution or to
grant such subscription rights, then any adjustment to the Fixed Conversion Price made pursuant to this Section 3.3(a)(v) with respect
to the fixing of such record date shall be reversed and of no further force or effect as of the date of the Company’s public announcement
that it is rescinding or otherwise canceling or determining not making such dividend or distribution or the grant of such subscription
rights.
(b)
Fractional Shares. The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance
would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock
up to the nearest whole share. If any adjustments to the Fixed Conversion Price under this Section 3.3 result in a fractional amount,
the fractional amount shall be rounded down to the nearest whole cent.
(c)
No Impairment. The Maker shall not, by amendment of its Certificate of Incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the Maker, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 3.3 and in the taking of all such action as may be necessary or appropriate in order
to protect the conversion rights of the Holder against impairment. In the event the Holder shall elect to convert this Note as provided
herein, the Maker cannot refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been
engaged in any violation of law, violation of an agreement to which the Holder is a party or for any reason whatsoever, unless, an injunction
from a court on prior notice, enjoining conversion of this Note shall have issued and the Maker posts a surety bond for the benefit of
the Holder as provided in Section 3.2(b).
(d)
Certificates as to Adjustments. Upon occurrence of each adjustment or readjustment of the Fixed Conversion Price or number
of shares of Common Stock issuable upon conversion of this Note pursuant to this Section 3.3, the Maker at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder a certificate setting forth such
adjustment and readjustment, showing in detail the facts upon which such adjustment or readjustment is based. The Maker shall, upon written
request of the Holder, at any time, furnish or cause to be furnished to the Holder a like certificate setting forth such adjustments and
readjustments, the applicable Fixed Conversion Price in effect at the time, and the number of shares of Common Stock and the amount, if
any, of other securities or property which at the time would be received upon the conversion of this Note. Notwithstanding the foregoing,
the Maker shall not be obligated to deliver a certificate unless such certificate would reflect an increase or decrease of at least one
percent of such adjusted amount.
(e)
Issuance Taxes. The Maker shall pay any and all issuance and other taxes, excluding federal, state or local income taxes,
that may be payable in respect of any issue or delivery of Common Stock on conversion of this Note pursuant thereto; provided,
however, that the Maker shall not be obligated to pay any transfer taxes resulting from any transfer requested by the Holder in
connection with any such conversion.
(f)
Reservation of Common Stock. The Maker shall at all times while this Note shall be outstanding, reserve and keep available
out of its authorized but unissued Common Stock the Required Minimum of Common Stock (disregarding for this purpose any and all limitations
of any kind on such conversion). The Maker shall, from time-to-time, increase the authorized number of shares of Common Stock or take
other effective action if at any time the unissued number of authorized shares shall not be sufficient to satisfy the Maker’s obligations
under this Section 3.3(f).
(g)
Regulatory Compliance. If any Common Stock to be reserved for the purpose of conversion of this Note requires registration
or listing with or approval of any Governmental Authority, national securities exchange or other regulatory body under any federal or
state law or regulation or otherwise before such shares may be validly issued or delivered upon conversion, the Maker shall, at its sole
cost and expense, in good faith and as expeditiously as possible, secure such registration, listing or approval, as the case may be.
3.4
Rights Upon Fundamental Transaction
(a)
Assumption. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Person (which
may be the Company) formed by, resulting from or surviving any Fundamental Transaction or the Person with which such Fundamental Transaction
shall have been entered into (the “Successor Entity”) assumes in writing all of the obligations of the Company under
this Note and the other Transaction Documents in accordance with the provisions of this Section 3.4(a) pursuant to written agreements
in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements
to deliver to the Holder in exchange for the Note a security of the Successor Entity evidenced by a written instrument substantially similar
in form and substance to the Note, including, without limitation, having Principal and Interest equal to the Principal then outstanding
and any accrued and unpaid Interest thereon (if any) of the Note held by the Holder, having similar conversion rights as the Note and
having similar ranking and security to the Note, and satisfactory to the Holder and (ii) the Successor Entity (including its parent
entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on any eligible market listed in the definition
of Trading Market in the Purchase Agreement. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed
to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other
Transaction Documents referring to the “Company” or the “Maker” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other
Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of
a Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon conversion or
redemption of this Note at any time after the consummation of such Fundamental Transaction, in lieu of the shares of Common Stock issuable
upon the conversion or redemption of the Note prior to such Fundamental Transaction, such shares of the publicly traded common stock (or
their equivalent) of the Successor Entity (including its parent entity) which the Holder would have been entitled to receive upon the
happening of such Fundamental Transaction had this Note been converted immediately prior to such Fundamental Transaction (without regard
to any limitations on the conversion of this Note), as adjusted in accordance with the provisions of this Note. Notwithstanding the foregoing,
the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 3.4(a) to permit the Fundamental
Transaction without the assumption of this Note. The provisions of this Section 3.4(a) shall apply similarly and equally to successive
Fundamental Transactions and shall be applied without regard to any limitations on the conversion of this Note.
(b)
Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation
of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets
with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate
provision to ensure that the Holder will thereafter have the right to receive upon a conversion of this Note, at the Holder’s option,
(i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would
have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation
of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Note) or (ii) in lieu
of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares
of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to
receive had this Note initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common
Stock) at a conversion price for such consideration commensurate with the Conversion Price. Provision made pursuant to the preceding sentence
shall be in a form and substance satisfactory to the Holder. The provisions of this Section 3.4(b) shall apply similarly and equally
to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Note.
(c)
Prepayment Following a Change of Control. No later than 15 days following the entry by the Company into an agreement for
a Change of Control but in no event prior to the public announcement of such Change of Control, the Maker shall deliver written notice
describing the entry into such agreement (“Notice of Change of Control”) to the Holder. Within 15 days after receipt
of a Notice of Change of Control, the Holder may require the Maker to prepay, effective immediately prior to the consummation of such
Change of Control, an amount equal to 120% of the sum of (x) the outstanding Principal of this Note, (y) and any accrued and unpaid Interest
thereon (if any) and (z) any other amounts due under this Note (if any) (the “COC Repayment Price”), by delivering
written notice thereof (“Notice of Prepayment at Option of Holder Upon Change of Control”) to the Maker.
(d)
Payment of COC Repayment Price. Upon the Maker’s receipt of a Notice(s) of Prepayment at Option of Holder Upon Change
of Control from the Holder, the Maker shall deliver the COC Repayment Price to the Holder immediately prior to the consummation of the
Change of Control; provided, that the Holder’s original Note shall have been so delivered to the Maker.
3.5
Inability to Fully Convert.
(a)
Holder’s Option if Maker Cannot Fully Convert. If, upon the Maker’s receipt of a Conversion Notice or as otherwise
required under this Note, including with respect to repayment of Principal and any accrued and unpaid Interest thereon (if any) in Common
Stock as permitted under this Note, the Maker cannot issue Common Stock for any reason, including, without limitation, because the Maker
(x) does not have a sufficient number of shares of Common Stock authorized and available, (y) is precluded from issuing Conversion Shares
due to the Maximum Percentage or failure to obtain Shareholder Approval in accordance with the Rules of the Trading Market, or (z) is
otherwise prohibited by applicable law or by the rules or regulations of any national securities exchange, interdealer quotation system
or other self-regulatory organization with jurisdiction over the Maker or any of its securities from issuing all of the shares of Common
Stock which are to be issued to the Holder pursuant to this Note, then the Maker shall issue as many shares of Common Stock as it is able
to issue and, with respect to the unconverted portion of this Note or with respect to any Common Stock not timely issued in accordance
with this Note, the Holder, solely at Holder’s option, can elect to:
(i)
require the Maker to prepay that portion of this Note for which the Maker is unable to issue Common Stock or for which Common Stock
were not timely issued (the “Mandatory Prepayment”) at a price equal to the number of shares of Common Stock that the
Maker is unable to issue multiplied by the higher of (A) the Fixed Conversion Price and (B) the VWAP as of the date of the Conversion
Notice (the “Mandatory Prepayment Price”);
(ii)
void its Conversion Notice and retain or have returned, as the case may be, this Note that was to be converted pursuant to the
Conversion Notice (provided that the Holder’s voiding its Conversion Notice shall not affect the Maker’s obligations
to make any payments which have accrued prior to the date of such notice); or
(iii)
defer issuance of the applicable Conversion Shares until such time as the Maker can legally issue such shares; provided that
the Principal and any accrued and unpaid Interest and other sums due thereon (if any) underlying such Conversion Shares shall remain outstanding
until the delivery of such Conversion Shares; and provided, further, that if the Holder elects to defer the issuance
of the Conversion Shares, it may exercise its rights under either clause (i) or (ii) above at any time prior to the issuance of the Conversion
Shares upon two Trading Days’ notice to the Maker.
(b)
Mechanics of Fulfilling Holder’s Election. The Maker shall immediately send to the Holder, upon receipt of a Conversion
Notice from the Holder, which cannot be fully satisfied as described in Section 3.5(a) above, a notice of the Maker’s inability
to fully satisfy the Conversion Notice (the “Inability to Fully Convert Notice”). Such Inability to Fully Convert Notice
shall indicate (i) the reason why the Maker is unable to fully satisfy the Holder’s Conversion Notice; and (ii) the amount of this
Note which cannot be converted. The Holder shall notify the Maker of its election pursuant to Section 3.5(a) above by delivering written
notice to the Maker (“Notice in Response to Inability to Convert”).
(c)
Payment of Mandatory Prepayment Price. If the Holder shall elect to have its Note prepaid pursuant to Section 3.5(a)(i)
above, the Maker shall pay the Mandatory Prepayment Price to the Holder within five Trading Days of the Maker’s receipt of the Holder’s
Notice in Response to Inability to Convert; provided that prior to the Maker’s receipt of the Holder’s Notice in Response
to Inability to Convert the Maker has not delivered a notice to the Holder stating, to the satisfaction of the Holder, that the event
or condition resulting in the Mandatory Prepayment has been cured and all Conversion Shares issuable to the Holder can and will be delivered
to the Holder in accordance with the terms of this Note. If the Maker shall fail to pay the applicable Mandatory Prepayment Price to the
Holder on the date that is two Trading Days following the Maker’s receipt of the Holder’s Notice in Response to Inability
to Convert, in addition to any remedy the Holder may have under this Note and the Purchase Agreement, such unpaid amount shall bear interest
at the rate of 2% per month (prorated for partial months) until paid in full. Until the full Mandatory Prepayment Price is paid in full
to the Holder, the Holder may (i) void the Mandatory Prepayment with respect to that portion of the Note for which the full Mandatory
Prepayment Price has not been paid and (ii) receive back such Note.
(d)
Purchase Rights. If at any time the Company grants, issues or sells any Options, other Convertible Securities or rights
to purchase stock, warrants, securities or other property pro rata to all or substantially all of the record holders of Common Stock (the
“Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable
upon complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note
and assuming for such purpose that the Note was converted at the Applicable Conversion Price as of the applicable record date) immediately
prior to the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken,
the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right would result
in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate
in such Purchase Right to the extent of the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common
Stock as a result of such Purchase Right (and beneficial ownership) to the extent of any such excess) and such Purchase Right to such
extent shall be held in abeyance (and, if such Purchase Right has an expiration date, maturity date or other similar provision, such term
shall be extended by such number of days held in abeyance, if applicable) for the benefit of the Holder until such time or times, if ever,
as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time
or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any
subsequent Purchase Right held similarly in abeyance (and, if such Purchase Right has an expiration date, maturity date or other similar
provision, such term shall be extended by such number of days held in abeyance, if applicable)) to the same extent as if there had been
no such limitation).
(e)
No Rights as Shareholder. Nothing contained in this Note shall be construed as conferring upon the Holder, prior to the
conversion of this Note, the right to vote or to receive dividends or to consent or to receive notice as a shareholder of the Company
in respect of any meeting of shareholders for the election of directors of the Maker or of any other matter, or any other rights as a
shareholder of the Maker.
ARTICLE
4
4.1
Covenants. For so long as any Principal of this Note remains outstanding, unless Holder has otherwise given prior written
consent, the Company shall be bound by the following covenants:
(a)
Rank. Except as otherwise provided with respect to Permitted Indebtedness held by the Current Lender or issued to the A/R
Lender or any Additional Note upon issuance, all payments due under this Note shall rank senior to all other Indebtedness of the Company
and its Subsidiaries. The Company shall terminate the Liend held by the Current Lender and enter into a new factoring facility with an
A/R Lender, on terms and conditions reasonably acceptable to the Holder, within 90 days of the Original Issuance Date.
(b)
Incurrence of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, incur or guarantee or assume any Indebtedness, other than (i) this Note and any Additional Note upon issuance, and (ii)
Permitted Indebtedness.
(c)
Existence of Liens. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
allow or suffer to exist any mortgage, lien, pledge, charge, security interest, deed of trust, or other encumbrance upon or in any property
or assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, “Liens”)
other than Permitted Liens.
(d)
Restricted Payments. Except as otherwise provided for in this Note or the other Transaction Documents, the Company shall
not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, prepay, defease, repurchase, repay or make any
payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender
offers, private transactions or otherwise), all or any portion of any Indebtedness (other than the Note and any Additional Note) whether
by way of payment in respect of principal of (or premium, if any) or Interest on, such Indebtedness if at the time such payment is due
or is otherwise made or, after giving effect to such payment, (i) an event constituting an Event of Default has occurred and is continuing
or (ii) an event that with the passage of time and without being cured would constitute an Event of Default has occurred and is continuing.
(e)
Restriction on Prepayment and Cash Dividends. At any time that an Event of Default exists and is continuing under this Note,
the Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, prepay, repurchase or declare
or pay any cash dividend or other distribution on any of its capital stock excluding any intercompany transfers.
(f)
Restriction on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, sell, lease, license, assign, transfer, spin-off, split-off, convey or otherwise dispose of any assets or rights of the
Company or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions, other than
(i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by the Company and its
Subsidiaries in the ordinary course of business consistent with its past practice, (ii) sales of inventory and products in the ordinary
course of business, and (iii) sales of unwanted or obsolete assets.
(g)
Preservation of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain
and preserve, its existence, rights and privileges, 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.
(h)
Maintenance of Properties, Etc. The Company shall maintain and preserve, and cause each of its material Subsidiaries to
maintain and preserve, all of its properties which are necessary or useful in the proper conduct of its business in good working order
and condition, ordinary wear and tear excepted, and comply, and cause each of its material Subsidiaries to comply, at all times with the
provisions of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture
thereof or thereunder.
(i)
Maintenance of Intellectual Property. The Company will, and will cause each of its material Subsidiaries to, take all action
necessary or advisable to maintain all of the rights or licenses to use all trademarks, trade names, service marks, service mark registrations,
service names, original works of authorship, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations,
trade secrets and other intellectual property rights and all applications and registrations therefor of the Company and/or any of its
Subsidiaries, in each case that are necessary or material to the conduct of its business in full force and effect.
(j)
Maintenance of Insurance. The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible
and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business
interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts
and covering such risks as is required by any Governmental Authority having jurisdiction with respect thereto or as is carried generally
by companies in similar businesses similarly situated. Within 30 days of the Original Issuance Date, the Company shall have in effect
a directors and officers liability insurance policy in an amount at least equal to $3,000,000, and maintain such insurance policy at all
times.
(k)
Transactions with Affiliates. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew,
extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease,
transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except in the ordinary
course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of
its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable
arm’s length transaction with a Person that is not an Affiliate thereof.
(l)
Use of Proceeds. The Maker shall use the proceeds of this Note as set forth in the Purchase Agreement.
(m)
Operation of Business. The Company shall operate its business in the ordinary course consistent with past practices.
(n)
Compliance with Transaction Documents. The Maker shall, and shall cause its Subsidiaries to, comply with its obligations
under this Note and the other Transaction Documents.
(o)
Payment of Taxes, Etc. The Maker shall, and shall cause each of its Subsidiaries to, promptly pay and discharge, or cause
to be paid and discharged, when due and payable, all lawful taxes, assessments and governmental charges or levies imposed upon the income,
profits, property or business of the Maker and the Subsidiaries, except for such failures to pay that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Material Adverse Effect; provided, however, that any
such tax, assessment, charge or levy need not be paid if the validity thereof shall currently be contested in good faith by appropriate
proceedings and if the Maker or such Subsidiaries shall have set aside on its books adequate reserves with respect thereto, and provided,
further, that the Maker and such Subsidiaries will pay all such taxes, assessments, charges or levies forthwith upon the commencement
of proceedings to foreclose any lien which may have attached as security therefor.
(p)
Variable Rate Transactions. From the Original Issuance Date until the 18-month anniversary of the Original Issuance Date,
the Company shall not enter into any Variable Rate Transactions, except as otherwise permitted under the Purchase Agreement.
4.2
Option of the Holder. In connection with the number of Trading Days referred to in Sections 3.1(b), 3.1(c) 3.3(a)(i),
5.11(c) and 5.11(ww) of this Note, the Holder shall have the option to add the number of Trading Days for which a temporary “chill”
has been in effect as specified in the Purchase Agreement. This Section 4.2 and any election by the Holder shall not be deemed to modify
the Events of Default.
4.3
Subsidiary Guaranty. If the Company organizes or acquires a new Subsidiary, the Company shall pledge the equity interests
of such Subsidiary to secure this Note no later than 15 Trading Days after such organization or acquisition, and shall cause the new Subsidiary
to guarantee this Note pursuant to a Subsidiary Guarantee reasonably acceptable to the Holder and become a party to the Security Agreement
(including the delivery of the pledged securities) within such period.
ARTICLE
5
5.1
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall
be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication
is delivered via email at the email address specified in this Section 5.1 prior to 5:00 p.m. (New York, N.Y time) on a Trading Day, (b)
the next Trading Day after the date of transmission, if such notice or communication is delivered via email at the email address specified
in this Section 5.1 on a day that is not a Trading Day or later than 5:00 p.m. (New York, N.Y. time) on any date and earlier than 11:59
p.m. (New York, N.Y. time) on such date, (c) the Trading Day following the date of delivery to a carrier , if sent by U.S. nationally
recognized overnight courier service next Trading Day delivery, or (d) upon actual receipt by the party to whom such notice is required
to be given. The addresses for notice shall be as set forth in the Purchase Agreement.
5.2
Governing Law. This Note shall be governed by and construed in accordance with the Purchase Agreement. This Note shall not
be interpreted or construed with any presumption against the party causing this Note to be drafted.
5.3
Headings. Article and section headings in this Note are included herein for purposes of convenience of reference only and
shall not constitute a part of this Note for any other purpose.
5.4
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, at law or in equity (including, without limitation, a decree
of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions
giving rise to such remedy and nothing herein shall limit the Holder’s right to pursue actual damages for any failure by the Maker
to comply with the terms of this Note. 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 Maker (or the performance thereof). The Maker acknowledges that a breach by it of its obligations hereunder
will cause irreparable and material harm to the Holder and that the remedy at law for any such breach would be inadequate. Therefore,
the Maker agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available
rights and remedies, at law or in equity, to seek equitable relief, including but not limited to an injunction restraining any such breach
or threatened breach, without the necessity of pleading and proving irreparable harm or lack of an adequate remedy at law and without
any bond or other security being required.
5.5
Enforcement Expenses. The Maker agrees to pay all costs and expenses of the Holder in enforcing or exercising its rights
under this Note, including, without limitation, reasonable attorneys’ fees and expenses and the fees and expenses of any expert
witnesses.
5.6
Binding Effect. The obligations of the Maker set forth herein shall be binding upon its successors and assigns, whether
or not such successors or assigns are permitted by the terms herein.
5.7
Amendments; Waivers. Except for Section 3.2(e), which may not be amended, modified or waived by the Company or the Holder
except as expressly set forth therein, no provision of this Note may be waived or amended except in a written instrument signed by the
Company and the Holder. No waiver of any default with respect to any provision, condition or requirement of this Note shall be deemed
to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of the Holder to exercise any right hereunder in any manner impair the exercise of any such right.
5.8
Compliance with Securities Laws. The Holder of this Note acknowledges that this Note is being acquired solely for the Holder’s
own account and not as a nominee for any other party, and for investment, and that the Holder shall not offer, sell or otherwise dispose
of this Note in violation of applicable securities laws. This Note and any Note issued in substitution or replacement therefor shall be
stamped or imprinted with a legend in substantially the form as the legend on the face of this Note.
5.9
Exclusive Jurisdiction; Venue. Any action, proceeding or claim arising out of, or relating in any way to, this Agreement
shall be brought and enforced as provided in the Purchase Agreement.
5.10
Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege.
5.11
Maker Waivers. Except as otherwise specifically provided herein, the Maker and all others that may become liable for all
or any part of the obligations evidenced by this Note, hereby waive presentment, demand, notice of nonpayment, protest and all other demands’
and notices in connection with the delivery, acceptance, performance and enforcement of this Note, and do hereby consent to any number
of renewals of extensions of the time or payment hereof and agree that any such renewals or extensions may be made without notice to any
such persons and without affecting their liability herein and do further consent to the release of any Person liable hereon, all without
affecting the liability of the other persons, firms or the Maker liable for the payment of this Note, and do hereby waive the right
to a trial by jury.
5.12
Transferability. Subject to compliance with any applicable securities laws, this Note and all rights hereunder (including,
without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Note at the principal office
of the Company or its designated agent and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute and deliver a new Note or Notes in the name of the assignee or assignees,
as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a
new Note evidencing the portion of this Note not so assigned, and this Note shall promptly be cancelled. Notwithstanding anything herein
to the contrary, the Holder shall not be required to physically surrender this Note to the Company unless the Holder has assigned this
Note in full, in which case, the Holder shall surrender this Note to the Company within three Trading Days of the date the Holder delivers
an assignment form to the Company assigning this Note in full. The Note, if properly assigned in accordance herewith, may be converted
by a new holder for the issuance of Conversion Shares without having a new Note issued.
5.13
Definitions. Capitalized words and phrases used herein and not defined shall have the meanings set forth in the Purchase
Agreement. For the purposes hereof, the following words and phrases shall have the following meanings.
(a)
“Additional Note” means a Note the Maker may issue the Holder upon the Holder lending the Maker additional funds
in, and subject to the other applicable terms and conditions of, the Second Tranche and the Third Tranche (as each term is defined in
the Purchase Agreement).
(b)
“Adjustment Right” means any right granted with respect to any securities issued in connection with, or with
respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 3) of shares of Common Stock (other than rights
of the type described in Section 3.5(d)) that could result in a decrease in the net consideration received by the Company in connection
with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar
rights).
(c)
“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition
that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary
voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
(d)
“Alternative Conversion Price” means the lower of (i) the Conversion Price, as adjusted, or (ii) 80% of the
lowest daily VWAP in the 10 Trading Days immediately preceding the applicable Conversion Date, provided, however, that if
any Alternative Conversion Price under this definition results in a fractional amount, the fractional amount shall be rounded down to
the nearest whole cent.
(e)
“Applicable Conversion Price” has the meaning contained in Section 3.1(c)
(f)
“Applicable Price” has the meaning contained in Section 3.3(a)(v).
(g)
“Attribution Parties” means, collectively, the following Persons and entities:
(i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Original
Issuance Date, directly or indirectly managed or advised by the Holder’s investment manager or any of its Affiliates or principals,
(ii) any direct or indirect Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting
as a Group together with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s
Common Stock would or could be aggregated with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the
Exchange Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties
to the Maximum Percentage.
(h)
“Buy-In” has the meaning contained in Section 3.2(c)
(i)
“Buy-In Price” has the meaning contained in Section 3.2(c)
(j)
“Buy-In Payment Amount” has the meaning contained in Section 3.2(c)
(k)
“Change of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its,
direct or indirect, wholly-owned Subsidiaries with or into each other, (ii) any reorganization, recapitalization or reclassification of
the shares of Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization
or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly
or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority
or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or
entities) after such reorganization, recapitalization or reclassification, or (iii) pursuant to a migratory merger effected solely for
the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries.
(l)
“COC Repayment Price” has the meaning contained in Section 3.4(c).
(m)
“Common Stock” shall have the meaning as defined in the Purchase Agreement, and for the purposes of this Note,
shall also refer to Conversion Shares unless otherwise apparent from the context.
(n)
“Company” has the meaning contained on page 1 of this Note.
(o)
“Conversion Amount” has the meaning contained in Section 3.1(a).
(p)
“Conversion Date” has the meaning contained in Section 3.1(a).
(q)
“Conversion Failure” has the meaning contained in Section 3.2(c).
(r)
“Conversion Notice” has the meaning contained in Section 3.1(a).
(s)
“Conversion Price” has the meaning contained in Section 3.1(b).
(t)
“Conversion Shares” has the meaning contained in Section 3.2(a). In this Note, the use of Common Stock shall
also refer to Conversion Shares unless otherwise apparent from the context.
(u)
“Convertible Securities” means any stock or other security (other than Options) that is at any time and under
any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof
to acquire, any shares of Common Stock.
(v)
“Corporate Event” has the meaning contained in Section 3.4(b).
(w)
“Default Interest” has the meaning contained in Section 1.2
(x)
“Default Interest Payment Date” has the meaning contained in Section 1.2.
(y)
“Dilutive Issuance” has the meaning contained in Section 3.3(a)(v).
(z)
“Dilutive Issuance Price” has the meaning contained in Section 3.3(a)(v).
(aa)
“DTC” has the meaning contained in Section 3.2(a).
(bb)
“Equity Conditions” means, as of any given date of determination, all of the following have been met: (a) the
Company has complied with all of the conversion and other provisions of the Notes and related Transaction Documents; (b) the Company shall
be current in filing required reports with the SEC and there is no pending extension under Rule 12b-25 of the Exchange Act; (c) the Notes
shall not otherwise be in default or an Event of Default shall not have occurred; (d) the Common Stock has not been subject to a trading
suspension by the SEC or the Trading Market or been delisted by the Trading Market nor shall delisting or suspension by the Trading Market
have been threatened or reasonably likely to occur or pending as evidenced by a writing issued by the Trading Market, nor shall the Company
have received notice from its Trading Market of delisting or non-compliance with the rules, regulations and continued listing standards
thereof even if subject to cure; (e) the Company’s Common Stock must be DWAC Eligible; (f) the Common Stock shall have not been
subject to a “chill” or similar event imposed by The Depository Trust Co.; (g) the Company has met each delivery deadline
in connection with prior conversions of the Notes; (h) the Company has complied with all Transaction Documents in all respects; (i) the
Company shall not have engaged in the sale of any securities under Section 3(a)(10) of the Securities Act; (j) the Holder shall not be
in possession of any material, non-public information provided to it by the Company, any of its Subsidiaries or any of their respective
affiliates, employees, officers, representatives, agents or attorneys (except, with respect to a Closing hereunder, where such material,
non-public information will be disclosed to the public no later than 9:00 a.m. (New York, N.Y. time) on the Trading Day immediately following
the date of such Closing); (k) (i) for the Second Tranche Closing, the Resale Registration Statement covering the First Tranche Underlying
Shares, has been filed and declared effective and the prospectus contained in such Resale Registration Statement complies with Sections
5(b) and 10 of the Securities Act (and the Company shall have no knowledge of any fact that would reasonably be expected to cause such
prospectus thereunder to not be true and correct or to contain any untrue statement of a material fact or to omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading) and (ii) for the Third Tranche Closing,
the Resale Registration Statement covering the Second Tranche Underlying Shares, has been filed and declared effective and the prospectus
contained in such Resale Registration Statement complies with Sections 5(b) and 10 of the Securities Act (and the Company shall have no
knowledge of any fact that would reasonably be expected to cause such prospectus thereunder to not be true and correct or to contain any
untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements
therein not misleading); (l) any shares of Common Stock underlying the Notes to be issued in connection with the event requiring determination
may be issued in full without violating the rules or regulations of the Trading Market; (m) the Company has available shares of Common
Stock as necessary to issue all Underlying Shares; (n) no bona fide material dispute shall exist, by and between any of holder of the
Notes and the Company, the Trading Market and/or the Financial Industry Regulatory Authority with respect to any term or provision of
any Note or any other Transaction Document; (o) the Company shall be in compliance with all SEC regulations and all listing requirements
of the Trading Market; (p) in the case of a Monthly Payment pursuant to Section 1.3 or Conversion pursuant Section 3.1 only, the average
daily trading volume for the Common Stock on the principal Trading Market for the 10 consecutive Trading Days prior to the applicable
Monthly Payment date exceeds 50% of the amount of Common Stock that is proposed to be paid by the Company in respect of such Monthly Payment;
(q) there has been an average daily trading volume for the past 20 Trading Days of at least $100,000; (r) the market capitalization of
the Company as reported on Bloomberg (or other Person such as the Trading Market) is at least $30 million, and (s) the closing price of
the Common Stock on the prior Trading Day is not less than the Floor Price as in effect as of the Original Issuance Date.
(cc)
“Event Market Price” has the meaning contained in Section 3.3(a)(i).
(dd)
“Event of Default” has the meaning contained in Section 2.1.
(ee)
“Excess Shares” has the meaning contained in Section 3.2(e)
(ff)
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(gg)
“FAST” has the meaning contained in Section 3.2(a).
(hh)
“Fixed Conversion Price” has the meaning contained in Section 3.1(b)
(ii)
“Floor Price” means $2.16; provided, that the Company may lower the Floor Price at any time upon
written notice to the Holder; provided, further, that any such reduction shall only be effective on any given date, if notice
of such reduction is delivered by the Company to the Holder prior to 9:30 a.m. (New York, N.Y. time) on such given date (and any such
notice delivered after 9:30 a.m. (New York, N.Y. time) on such given date, shall be effective at 9:30 a.m. (New York, N.Y. time) on the
Trading Day immediately following such given date (unless otherwise agreed to in writing by the Holder and the Company, which may be an
e-mail).
(jj)
“Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through Subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the
surviving corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to
one or more Persons, or (iii) make, or allow one or more Persons to make, or allow the Company to be subject to or have its Common Stock
be subject to or party to one or more Persons making, a purchase, tender or exchange offer that is accepted by the holders of at least
either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares
of Common Stock held by all Persons making or party to, or Affiliated with any Person or group of Persons making or party to, such purchase,
tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Persons making or party to,
or Affiliated with any Person making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as
defined in Rule 13d-3 under the Exchange Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or
share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with one or more Persons whereby all such Persons, individually or in the aggregate, acquire, either (x) at least
50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares
of Common Stock held by all the Persons making or party to, or Affiliated with any Person making or party to, such stock purchase agreement
or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Persons become collectively
the beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of at least 50% of the outstanding shares of Common Stock, or
(v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall, directly or indirectly, including through Subsidiaries,
Affiliates or otherwise, in one or more related transactions, allow any Person individually or the Persons in the aggregate to be or become
the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, whether through acquisition,
purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation,
business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification
or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding
Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all
such Persons as of the date of this Note calculated as if any shares of Common Stock held by all such Persons were not outstanding, or
(z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities
of the Company sufficient to allow such Persons to effect a statutory short form merger or other transaction requiring other shareholders
of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly,
including through Subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any
other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case
this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to
the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended
treatment of such instrument or transaction.
(kk)
“Governmental Authority” means the government of the United States, or any political subdivision thereof, whether
state or local, and any agency, authority, instrumentality, regulatory body, court, central bank, or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
(ll)
“Group” means a “group” as that term is used in Section 13(d) of the
Exchange Act and as defined in Rule 13d-5 thereunder.
(mm)
“Holder” has the meaning contained on page 1 of this Note.
(nn)
“Inability to Fully Convert Notice” has the meaning contained in Section 3.5(b).
(oo)
“Indebtedness” shall have the meaning in the Purchase Agreement.
(pp)
“Interest” has the meaning contained in Section 1.2.
(qq)
“Liens” has the meaning contained in Section 4.1(c).
(rr)
“Liquidation Event” has the meaning contained in Section 1.9.
(ss)
“Maker” has the meaning contained on page 1 of this Note.
(tt)
“Mandatory Default Amount” means an amount equal to 120% (or in the event of a Delisting Default or a Restatement
Default, 130%) of the sum of (x) the outstanding Principal of this Note on the date on which the first Event of Default has occurred hereunder,
(y) any accrued and unpaid Interest thereon, if any, and (z) any other sums due under this Note.
(uu)
“Mandatory Prepayment” and “Mandatory Prepayment Price” have the meaning contained in Section
3.5(a)(i).
(vv)
“Market Price” means the average of the two lowest closing bid prices of the Common Stock on the Trading Market
for the 10 consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable date of determination.
(ww)
“Maturity Date” has the meaning contained on page 1 of this Note.
(xx)
“Maximum Percentage” has the meaning contained in Section 3.2(e).
(yy)
“Note” has the meaning contained on page 1 of this Note.
(zz)
“Notes” means this Note and any Additional Note(s) (if and when issued).
(aaa)
“Notice in Response to Inability to Convert” has the meaning contained in Section 3.5(b).
(bbb)
“Notice of Change of Control” has the meaning contained in Section 3.4(a).
(ccc)
“Notice of Prepayment at Option of Holder Upon Change of Control” has the meaning contained in Section 3.4(c).
(ddd)
“Permitted Indebtedness” means the Indebtedness evidenced by this Note and any Additional Note when issued,
and up to a total of $100,000 in the aggregate of the following: (i) Indebtedness described on any Disclosure Schedule attached hereto;
(ii) Indebtedness incurred solely for the purpose of financing the acquisition or lease of any equipment, including capital lease obligations
with no recourse other than to such equipment; (iii) Indebtedness owing to the Current Lender which shall be terminated within 90-days
of the First Tranche Closing Date; and (iv) any Indebtedness owed to an A/R Lender, which is permitted under an Intercreditor Agreement
by and among, the Company, the Holder and the A/R Lender.
(eee)
“Permitted Liens” means (i) Liens under the Transaction Documents, (ii) 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,
(iii) 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, (iv) all Liens under that certain UCC-1 Financing Statement filed on February 2, 2022 in favor of the Current Lender which
UCC-1 Financing Statement shall be terminated within 90-days of the Original Issuance Closing Date; and (v) Liens in favor of an A/R Lender
that is limited to accounts receivables of the Company and which A/R Lender is a party to an Intercreditor Agreement with the Company
and the Holder which Intercreditor Agreement is reasonably satisfactory to the Holder.
(fff)
“Primary Security” has the meaning contained in Section 3.3(a)(v)(5).
(ggg)
“Principal” has the meaning contained on page 1 of this Note.
(hhh)
“Purchase Agreement” has the meaning contained in Section 1.1.
(iii)
“Purchase Rights” has the meaning contained in Section 3.5(d).
(jjj)
“Reported Outstanding Share Number” has the meaning contained in Section 3.2 (e).
(kkk)
“Required Minimum” shall have the meaning contained in the Purchase Agreement.
(lll)
“SEC” means the United States Securities and Exchange Commission or the successor thereto.
(mmm)
“Secondary Securities” has the meaning contained in Section 3.3(a)(v)(5).
(nnn)
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(ooo)
“Security Agreement” has the meaning contained in the third paragraph on page 1.
(ppp)
“Share Delivery Date” has the meaning contained in Section 3.2(a).
(qqq)
“Shareholder Approval” shall have the meaning contained in the Purchase Agreement.
(rrr)
“Standard Settlement Period” has the meaning contained in Section 2.1(f).
(sss)
“Subsidiary” shall have the meaning contained in the Purchase Agreement.
(ttt)
“Successor Entity” has the meaning contained in Section 3.4(a).
(uuu)
“Trading Day” means a day on which the Common Stock are traded on a Trading Market for at least 4.5 hours.
(vvv)
“Trading Market” has the meaning contained in the Purchase Agreement.
(www)
“Transaction Documents” has the meaning contained in the Purchase Agreement.
(xxx)
“Transfer Agent” has the meaning contained in Section 3.2 (a).
(yyy)
“Underlying Shares” has the meaning contained in the Purchase Agreement.
(zzz)
“Variable Rate Transactions” has the meaning contained in the Purchase Agreement.
(aaaa)
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if
the Common Stock is then listed or quoted on the Trading Market, the daily volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then
listed or quoted as reported by Bloomberg L.P. (or other Person such as the Trading Market) (based on a Trading Day from 9:30 a.m. (New
York, N.Y. time) to 4:02 p.m. (New York, N.Y. time)), (b) if the Common Stock is traded on OTCQB or OTCQX, the volume weighted average
sales price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock is then reported in the “Pink Open
Market” or successor operated by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share
of Common Stock as determined by an independent broker-dealer selected in good faith by the Holder and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
[Signature Page Follows]
IN WITNESS WHEREOF, the Maker
has caused this Note to be duly executed by its duly authorized officer as of the date first above indicated.
Healthcare Triangle, Inc.
By:
Name: Thyagarajan Ramachandran
Title: Chief Financial Officer
EXHIBIT A
FORM OF CONVERSION NOTICE
(To be Executed by the Holder in order to Convert
the Note)
The undersigned hereby irrevocably
elects to convert $ ________________ of the Principal of Note No. ___ into shares of Common Stock of Healthcare Triangle, Inc. (the “Maker”)
according to the terms and conditions set forth in the aforementioned Note, as of the date written below.
Date of Conversion:
Conversion Amount:
Applicable Conversion Price:
Number of shares of Common Stock beneficially owned or deemed
beneficially owned by the Holder on the Conversion Date:
Number of shares of Common Stock to be issued:
[HOLDER]
By:
Name:
Title:
Address:
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE
OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
HEALTHCARE TRIANGLE, INC.
Warrant Shares: 357,500 Original Issuance Date:
December 28, 2023
THIS COMMON STOCK PURCHASE
WARRANT (the “Warrant”) certifies that, for value received, ___________________________, a _____________________ company,
or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after December 28, 2023 (the “Initial Exercise Date”) and on or prior to 5:00
p.m. (New York City time) on December 28, 2028 (the “Termination Date”) but not thereafter, to subscribe for and purchase
from Healthcare Triangle, Inc., a Delaware corporation (the “Company”), up to Three Hundred and Fifty Seven Thousand
Five Hundred (357,500) shares of Common Stock (as subject to adjustment hereunder, the “Warrant Shares”). The purchase
price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement
(the “Purchase Agreement”), dated December 28, 2023 by and between the Company and the Holder.
Section 2. Exercise.
(a) Exercise of Warrant.
Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy (or e-mail attachment)
of the Notice of Exercise in the form attached as Exhibit A hereto (the “Notice of Exercise”). Within the earlier
of (i) two Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) following the
date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable
Notice of Exercise by wire transfer of immediately available funds to a designated Company account or cashier’s check drawn on a
United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise.
As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days,
on the Company’s Principal Market with respect to the Common Stock as in effect on the date of delivery of a Notice of Exercise.
No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of
any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender
this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised
in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three Trading Days of the date
on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion
of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing
the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise
within one Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree
that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of
Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
(b) Exercise Price. The
exercise price per Common Stock under this Warrant shall be $3.44688, subject to adjustment as provided herein (the “Exercise
Price”).
(c) Cashless Exercise.
If at any time beginning 60 days after the Initial Exercise Date there is no effective registration statement registering the Warrant
Shares, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder, then this Warrant may
also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled
to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = as applicable: (i) the VWAP on the
Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered
pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof
on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated
under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported
by Bloomberg L.P. (or such other publicly available information if Bloomberg L.P. is unavailable) as of the time of the Holder’s
execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a
Trading Day and is delivered within two hours thereafter (including until two hours after the close of “regular trading hours”
on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such
Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the
close of “regular trading hours” on such Trading Day;
(B) = the Exercise Price of this Warrant,
as adjusted hereunder; and
(X) = the number of Warrant Shares that
would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash
exercise rather than a cashless exercise.
If Warrant Shares are issued
in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant
Shares shall take on the characteristics of the Warrants being exercised and the holding period of the Warrants being exercised may be
tacked on to the holding period of the Warrant Shares. The Company agrees not to take any position contrary to this Section 2(c).
“Bid Price”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock are then listed
or quoted on a Trading Market (as defined below), the bid price of the Common Stock for the time in question (or the nearest preceding
date) on the Trading Market on which the Common Stock are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day
from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Stock are traded on OTCQB or OTCQX, the volume
weighted average sales price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if
the Common Stock are not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the
“Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of an Common
Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.
“VWAP” means,
for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock are then listed or quoted
on The New York Stock Exchange, the NYSE American or any tier of The Nasdaq Stock Market (each,
a “Trading Market”), the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock are then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York, N.Y. time)), (b) if the Common Stock are traded on OTCQB or OTCQX , the
volume weighted average sales price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable,
(c) if the Common Stock are not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported
in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions
of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market
value of an Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the Company.
Notwithstanding anything contained
herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this
Section 2(c).
(d) Mechanics of Exercise.
(i) Delivery of Warrant Shares Upon
Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Company’s share transfer agent
(the “Transfer Agent”) to the Holder by crediting the account of the Holder’s or its designee’s balance
account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company
is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant
Shares to or resale of the Warrant Shares by Holder, or (B) if there is no effective registration statement and the Warrant is exercised
via cashless exercise at a time when such Warrant Shares would be eligible for resale under Rule 144 by a non-affiliate of the Company,
such Warrant Shares are delivered to Holder’s broker, and the Company receives a statement from Holder’s broker that it has
received instructions to sell the Warrant Shares or that it would take responsibility that the sales of the Warrant Shares will only be
made if the Warrant Shares are eligible to be sold under Rule 144, and otherwise by physical delivery of a certificate, registered in
the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is
entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of
(i) three Trading Days after the delivery to the Company of the Notice of Exercise or (ii) one Trading Day after delivery of the aggregate
Exercise Price to the Company (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise,
the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which
this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise
Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of
Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason
to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay
to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based
on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading
Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date
until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to use commercially reasonable efforts to
maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable.
(ii) Delivery of New Warrants Upon
Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with
this Warrant.
(iii) Rescission Rights. If the
Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share
Delivery Date, then the Holder will have the right to rescind such exercise; provided, however, that the Holder shall be required to return
any Warrant Shares subject to any such rescinded exercise notice concurrently with the return to Holder of the aggregate Exercise Price
paid to the Company for such Warrant Shares and the restoration of Holder’s right to acquire such Warrant Shares pursuant to this
Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).
(iv) Compensation for Buy-In on Failure
to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause
the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to
an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in
an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, Common Stock to deliver in satisfaction
of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”),
then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including
brokerage commissions and/or mark-ups, if any) for the Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the
price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate
the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored and return any amount received
by the Company in respect of the Exercise Price for those Warrant Shares (in which case such exercise shall be deemed rescinded) or deliver
to the Holder the number of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted exercise of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A)
of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount
of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to
timely deliver Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
(v) No Fractional Shares or Scrip.
No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a
cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round down to
the next whole share.
(vi) Charges, Taxes and Expenses.
Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect
of the issuance of such Warrant Shares, all of which transfer taxes and expenses shall be paid by the Company, and such Warrant Shares
shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however,
that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached as Exhibit B hereto duly executed by the Holder and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company
shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company
(or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
(vii) Closing of Books. The Company
will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms
hereof.
(e) Holder’s Exercise
Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion
of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth
on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group
together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of Common
Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of Common Stock issuable upon
exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of Common Stock which would
be issuable upon (i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates
or Attribution Parties and (ii) exercise or conversion of the unexercised or non-converted portion of any other securities of the Company
(including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the
preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing
to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any
schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the
determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates
and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission
of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to
other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable,
in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy
of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining
the number of outstanding Common Stock, a Holder may rely on the number of outstanding Common Stock as reflected in (A) the Company’s
most recent periodic or annual report filed with the SEC, as the case may be, (B) a more recent public announcement by the Company or
(C) a more recent written notice by the Company or the Transfer Agent setting forth the number of Common Stock outstanding. Upon the written
or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of Common
Stock then outstanding. In any case, the number of outstanding Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date
as of which such number of outstanding Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99%
of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of Common Stock issuable upon exercise
of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this
Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of Common Stock upon exercise of this Warrant held by the Holder and the provisions
of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st
day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective
or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable
to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
Section 3. Certain
Adjustments.
(a) Stock Dividends and Splits.
If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions
on shares of its Common Stock or any other equity or equity equivalent securities payable in Common Stock (which, for avoidance of doubt,
shall not include any Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding Common Stock into
a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding Common Stock into a smaller number of
shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case
the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Stock (excluding treasury shares,
if any) outstanding immediately before such event and of which the denominator shall be the number of Common Stock outstanding immediately
after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate
Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination or re-classification.
(b) Subsequent Rights Offerings.
In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents
or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase
Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase
Rights which the Holder could have acquired if the Holder had held the number of Common Stock acquirable upon complete exercise of this
Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of 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, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial
ownership of such 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).
(c) Pro Rata Distributions.
During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets
(or rights to acquire its assets) to holders of Common Stock, by way of return of capital or otherwise, other than cash (including, without
limitation, any distribution of stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance
of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the
Holder would have participated therein if the Holder had held the number of Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately
before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders
of 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, then
the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any 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).
(d) Subsequent Equity Sales.
Except in the case of an Exempt Issuance (as defined in the Purchase Agreement), to which this Section 3(d) shall not apply, if and whenever,
at any time while this Warrant is outstanding, the Company issues or sells or in accordance with this Section 3 is deemed to have issued,
sold or granted, any Common Stock and/or Common Stock Equivalents (including the issuance or sale of Common Stock owned or held by or
for the account of the Company) for a consideration per share (the “New Issuance Price”) less than a price equal to
the Exercise Price in effect immediately prior to such issuance or sale or deemed issuance or sale (such Exercise Price then in effect
is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then immediately
after such Dilutive Issuance the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price. Until the
Warrants are no longer outstanding, whenever the Exercise Price is adjusted under Section 3(d), then
simultaneously with the consummation (or, if earlier, the announcement) of such Dilutive Issuance, the Exercise Price then in effect shall
be reduced to an amount equal to the New Issuance Price and the number of shares of Common Stock issuable upon exercise of this Warrant
shall be proportionately adjusted such that the aggregate proceeds to be received upon exercise of this Warrant (assuming no cashless
exercise) shall remain unchanged. The number of Warrant Shares shall be increased by multiplying the Exercise Price then in effect
immediately prior to such adjustment by the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. By way of example, if E is the total
number of Warrant Shares in effect immediately prior to such Dilutive Issuance, F is the Exercise Price in effect immediately prior to
such Dilutive Issuance, and G is the Dilutive Issuance Price, the adjustment to the number of Warrant Shares can be expressed in the following
formula: Total number of Warrant Shares after such Dilutive Issuance = the number obtained from dividing [E x F] by G. For the avoidance
of doubt, the price protection provided for under this Agreement shall survive the repayment of the Notes.
For all purposes of the foregoing
(including, without limitation, determining the adjusted Exercise Price and the New Issuance Price under this Section 3(d)), the following
shall be applicable:
(i) Issuance of Options. If the
Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell) any Options (as defined below) and
the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option (as defined
below) or upon conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise of any such Option (as defined
below) or otherwise pursuant to the terms thereof is less than the Applicable Price, then such Common Stock shall be deemed to be outstanding
and to have been issued and sold by the Company at the time of the granting or sale of such Option (as defined below) for such price per
share. For purposes of this Section 3(d)(i), the “lowest price per share for which one share of Common Stock is at any time issuable
upon the exercise of any such Options (as defined below) or upon conversion, exercise or exchange of any Common Stock Equivalents issuable
upon exercise of any such Option (as defined below) or otherwise pursuant to the terms thereof” shall be equal to (1) the lower
of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of
Common Stock upon the granting, issuance or sale of such Option (as defined below), upon exercise of such Option (as defined below) and
upon conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise of such Option (as defined below) or otherwise
pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option (as defined below) for which one share of Common
Stock is issuable (or may become issuable assuming all possible market conditions) upon the exercise of any such Options (as defined below)
or upon conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise of any such Option (as defined below)
or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other
Person) upon the granting, issuance or sale of such Option (as defined below), upon exercise of such Option (as defined below) and upon
conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise of such Option (as defined below) or otherwise
pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder
of such Option (as defined below) (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall
be made upon the actual issuance of such Common Stock or of such Common Stock Equivalents upon the exercise of such Options (as defined
below) or otherwise pursuant to the terms of or upon the actual issuance of such Common Stock upon conversion, exercise or exchange of
such Common Stock Equivalents. “Option” means any rights, warrants or options to subscribe for or purchase Common Stock
or Convertible Securities. “Convertible Securities” means any shares or other security (other than Options) that is
at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise
entitles the holder thereof to acquire, any Common Stock.
(ii) Issuance of Convertible Securities.
If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any Common Stock Equivalents and the lowest
price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise
pursuant to the terms thereof is less than the Applicable Price, then such Common Stock shall be deemed to be outstanding and to have
been issued and sold by the Company at the time of the issuance or sale of such Common Stock Equivalents for such price per share. For
the purposes of this Section 3(d)(ii), the “lowest price per share for which one share of Common Stock is at any time issuable upon
the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x)
the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock
upon the issuance or sale of the Common Stock Equivalents and upon conversion, exercise or exchange of such Common Stock Equivalents or
otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Common Stock Equivalents for which one share
of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon conversion, exercise or exchange thereof
or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Common Stock Equivalents
(or any other Person) upon the issuance or sale of such Common Stock Equivalents plus the value of any other consideration received or
receivable by, or benefit conferred on, the holder of such Common Stock Equivalents (or any other Person). Except as contemplated below,
no further adjustment of the Exercise Price shall be made upon the actual issuance of such Common Stock upon conversion, exercise or exchange
of such Common Stock Equivalents or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Common Stock Equivalents
is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this
Section 3(d), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.
(iii) Change in Option Price or Rate
of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the
issue, conversion, exercise or exchange of any Common Stock Equivalents, or the rate at which any Common Stock Equivalents are convertible
into or exercisable or exchangeable for Common Stock increases or decreases at any time (other than proportional changes in conversion
or exercise prices, as applicable, in connection with an event referred to in Section 3(a)), the Exercise Price in effect at the time
of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time had such Options or
Common Stock Equivalents provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion
rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 3(d)(iii), if the terms of any Option
or Common Stock Equivalents that was outstanding as of the date this Warrant was issued are increased or decreased in the manner described
in the immediately preceding sentence, then such Option or Common Stock Equivalents and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant
to this Section 3(d) shall be made if such adjustment would result in an increase of the Exercise Price then in effect.
(iv) Change in Option Price or Rate
of Conversion. If any Option and/or Common Stock Equivalents and/or Adjustment Right (as defined below) is issued in connection with
the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary
Security”, and such Option and/or Common Stock Equivalents and/or Adjustment Right (as defined below), the “Secondary
Securities”), together comprising one integrated transaction, (or one or more transactions if such issuances or sales or deemed
issuances or sales of securities of the Company either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable
proximity to each other and/or (C) are consummated under the same plan of financing) the aggregate consideration per Common Stock with
respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for which one share of
Common Stock was issued (or was deemed to be issued pursuant to Section 3(d)(i) or 3(d)(ii) above, as applicable) in such integrated transaction
solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (I) the Black Scholes Consideration
Value (as defined below) of each such Option, if any, (II) the fair market value (as determined by the Holder in good faith) or the Black
Scholes Consideration Value (as defined below), as applicable, of such Adjustment Right (as defined below), if any, and (III) the fair
market value (as determined by the Holder) of such Common Stock Equivalents, if any, in each case, as determined on a per share basis
in accordance with this Section 3(d)(iv). If any Common Stock, Options or Common Stock Equivalents are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor (for the purpose of determining the consideration paid for such Common
Stock, Option or Common Stock Equivalents, but not for the purpose of the calculation of the Black Scholes Consideration Value (as defined
below)) will be deemed to be the net amount of consideration received by the Company therefor. If any Common Stock, Options or Common
Stock Equivalents are issued or sold for a consideration other than cash, the amount of such consideration received by the Company (for
the purpose of determining the consideration paid for such Common Stock, Option or Common Stock Equivalents, but not for the purpose of
the calculation of the Black Scholes Consideration Value (as defined below)) will be the fair value of such consideration, except where
such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such
securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the
date of receipt. If any Common Stock, Options or Common Stock Equivalents are issued to the owners of the non-surviving entity in connection
with any merger in which the Company is the surviving entity, the amount of consideration therefor (for the purpose of determining the
consideration paid for such Common Stock, Option or Common Stock Equivalents, but not for the purpose of the calculation of the Black
Scholes Consideration Value (as defined below)) will be deemed to be the fair value of such portion of the net assets and business of
the non-surviving entity as is attributable to such Common Stock, Options or Common Stock Equivalents (as the case may be). The fair value
of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Holder. If such parties
are unable to reach agreement within 10 days after the occurrence of an event requiring valuation (the “Valuation Event”),
the fair value of such consideration will be determined within five Trading Days after the 10th day following such Valuation Event by
an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final
and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company). “Adjustment
Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or
sale (or deemed issuance or sale hereunder) of Common Stock (other than rights of the type described in Sections 3(b) and 3(c) hereof)
that could result in a decrease in the net consideration received by the Company in connection with, or with respect to, such securities
(including, without limitation, any cash settlement rights, cash adjustment or other similar rights). “Black Scholes Consideration
Value” means the value of the applicable Option, Convertible Security or Adjustment Right (as the case may be) as of the date
of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing
(i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the public
announcement of the execution of definitive documents with respect to the issuance of such Option or Convertible Security (as the case
may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of such Option,
Convertible Security or Adjustment Right (as the case may be) as of the date of issuance of such Option, Convertible Security or Adjustment
Right (as the case may be), (iii) a zero cost of borrow and (iv) an expected volatility equal to the greater of 100% and the 30 day volatility
obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be).
(v) Change in Option Price or Rate
of Conversion. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend
or other distribution payable in Common Stock, Options or in Common Stock Equivalents or (B) to subscribe for or purchase Common Stock,
Options or Common Stock Equivalents, then such record date will be deemed to be the date of the issuance or sale of the Common Stock deemed
to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting
of such right of subscription or purchase (as the case may be).
(e) Fundamental Transaction.
If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects
any merger or consolidation of the Company with or into another Person, (ii) the Company, 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 or group of Persons whereby such other Person or group acquires more than 50% of the outstanding Common Stock (not including any
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 exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without
regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of common equity 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 Common Stock for which this Warrant is exercisable
immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant).
For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction,
and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash
or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in
a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all
of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(e) pursuant to written agreements
in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding
number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the Common Stock acquirable and receivable
upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction,
and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative
value of the Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares
of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the
consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence
of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of
such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company”
shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations
of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named
as the Company herein.
(f) Calculations. All
calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of
Common Stock (excluding treasury shares, if any) issued and outstanding.
(g) Share Combination Event
Adjustment. In addition to the adjustments set forth in Section 3(a) above, if at any time on or after the Issue Date there occurs
any share split, share dividend, share combination recapitalization or other similar transaction involving the Common Stock (each, a “Share
Combination Event”, and such date thereof, the “Share Combination Event Date”) and the lowest VWAP during
the five consecutive Trading Days commencing on the Share Combination Event Date (the “Event Market Price”) (provided
if the Share Combination Event is effective after close of Trading on the primary Trading Market, then commencing on the next Trading
Day which period shall be the “Share Combination Adjustment Period”) is less than the Exercise Price then in effect
(after giving effect to the adjustment in Section 3(a) above), then at the close of trading on the primary Trading Market on the
last day of the Share Combination Adjustment Period, the Exercise Price then in effect on such fifth Trading Day shall be reduced (but
in no event increased) to the Event Market Price and the number of Warrant Shares issuable hereunder shall be increased such that the
aggregate proceeds to be received by the Company from the exercise of this Warrant (assuming no cashless exercise), after taking into
account the decrease in the Exercise Price, shall be equal to the aggregate proceeds to be received by the Company from the exercise of
this Warrant (assuming no cashless exercise) as of the Issuance Date. For the avoidance of doubt, if the adjustment in the immediately
preceding sentence would otherwise result in an increase in the Exercise Price hereunder, no adjustment shall be made, and if this Warrant
is exercised, on any given exercise date during the Share Combination Adjustment Period, solely with respect to such portion of this Warrant
exercised on such applicable exercise date, such applicable Share Combination Adjustment Period shall be deemed to have ended on, and
included, the Trading Day immediately prior to such exercise date and the Event Market Price on such applicable exercise date will be
the lowers VWAP of the Ordinary Shares immediately prior to the Share Combination Event Date and ending on, and including the Trading
Day immediately prior to such exercise date.
(h) Notice to Holder.
(i) Adjustment to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder
by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant
Shares and setting forth a brief statement of the facts requiring such adjustment.
(ii) Notice to Allow Exercise by Holder.
If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare
a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders
of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the
approval of any shareholders 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 are converted into other securities, cash or property, or (E) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause
to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant
Register (as defined below), at least 10 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 Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in
the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that
any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company, the Company shall
simultaneously file a Form 8-K with the SEC disclosing such information. The Holder shall remain entitled to exercise this Warrant during
the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be
expressly set forth herein.
Section 4. Transfer of Warrant.
(a) Transferability.
Subject to compliance with any applicable securities laws, and the conditions set forth in Section 4(d) hereof, this Warrant and all rights
hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant
at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the
form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender
this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant
to the Company within three Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant in full.
The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without
having a new Warrant issued.
(b) New Warrants. This
Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with
a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.
All Warrants issued on transfers or exchanges shall be dated the Original Issuance Date of this Warrant and shall be identical with this
Warrant except as to the number of Warrant Shares issuable pursuant thereto.
(c) Warrant Register.
The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.
(d) Representation by the
Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof,
will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling
such Warrant or Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant
to sales registered or exempted under the Securities Act.
Section 5. Registration
Rights. The Warrant Shares shall be subject to the registration rights and the terms and conditions thereof as provided for in the
Registration Rights Agreement, which terms and conditions are incorporated herein by reference to the extent applicable to the Warrant
Shares.
Section 6. Miscellaneous.
(a) No Rights as Shareholder
Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a shareholder of the Company
prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
(b) Loss, Theft, Destruction
or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting
of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver
a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
(c) Saturdays, Sundays, Holidays,
etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not
be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
(d) Authorized Shares.
The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock
such number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant as
required under Section 4.11 of the Purchase Agreement. The Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase
rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may
be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon
which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase
rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant
Shares in accordance herewith, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges
created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such
issue).
Except and to the extent as
waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its Amended and Restated
Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate
to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the
Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior
to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts
to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary
to enable the Company to perform its obligations under this Warrant.
Before taking any action which
would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company
shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or
bodies having jurisdiction thereof.
(e) Jurisdiction. All
questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with
the provisions of the Purchase Agreement.
(f) Restrictions. The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize
cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
(g) Non-waiver and Expenses.
No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right
or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Purchase
Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages
to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but
not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts
due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
(h) Notices. Any notice,
request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance
with the notice provisions of the Purchase Agreement.
(i) Limitation of Liability.
No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of
any Common Stock or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
(j) Remedies. The Holder,
in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance
of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for
specific performance that a remedy at law would be adequate.
(k) Successors and Assigns.
Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and
be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions
of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder
or holder of Warrant Shares.
(l) Amendment. This Warrant
may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
(m) Severability. Wherever
possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if
any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
(n) Headings. The headings
used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the Company
has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
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HEALTHCARE TRIANGLE, INC. |
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By: |
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Name: Thyagarajan Ramachandran |
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Title: Chief Financial Officer |
EXHIBIT A
NOTICE OF EXERCISE
TO: HEALTHCARE TRIANGLE, INC.
(1) The undersigned hereby elects
to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders
herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form
of (check applicable box):
[ ] in lawful money of the United States;
or
[ ] if permitted the cancellation of
such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue said Warrant
Shares in the name of the undersigned or in such other name as is specified below:
______________________
The Warrant Shares shall be delivered to the following
DWAC Account Number:
______________________
______________________
______________________
[SIGNATURE OF HOLDER]
Name of Investing Entity: _________________________________________________________
Signature of Authorized Signatory of Investing
Entity: __________________________________
Name of Authorized Signatory: ____________________________________________________
Title of Authorized Signatory: _____________________________________________________
Date: _________________________________________________________________________
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this
form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and
all rights evidenced thereby are hereby assigned to
Name: |
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Address: |
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(Please Print) |
Phone Number: |
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Email Address: |
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(Please Print) |
Dated: ___________ __, _____ |
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Holder’s Signature: |
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Holder’s Address: |
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Warrant Exercise Log
Date |
Number of Warrant
Shares Available to be
Exercised |
Number of Warrant Shares
Exercised |
Number of
Warrant Shares
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement
(this “Agreement”) is dated as of December 28, 2023, between Healthcare Triangle, Inc., a Delaware corporation (the
“Company”), and the purchaser identified on the signature pages hereto (together with its successors and assigns, the
“Investor”). Except where clear from the context, Investor also refers to any transferee(s) of the Investor.
WHEREAS, subject to the terms
and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act (as defined below), and Rule 506(b) promulgated
thereunder, the Company desires to issue and sell to the Investor, and the Investor desires to purchase from the Company, securities of
the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION
of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and the Investor agrees as follows:
ARTICLE I.
DEFINITIONS
1.1
Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized words and terms that are not
otherwise defined herein have the meanings given to such terms in the Notes (as defined herein), and (b) the following word and terms
have the meanings set forth in this Section 1.1:
“Acquiring Person”
shall have the meaning ascribed to such term in Section 4.7.
“Action”
shall have the meaning ascribed to such term in Section 3.1(j).
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Alternative Conversion
Price” shall have the meaning defined in the Notes.
“Board of Directors”
means the board of directors of the Company.
“Business Day”
means any day other than Saturday, Sunday or other day on which commercial banks in New York, N.Y. are authorized or required by Law to
remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by
Law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other
similar orders or restrictions or the closure of any physical branch locations at the direction of any Governmental Authority so long
as the electronic funds transfer systems (including for wire transfers) of commercial banks in the New York, N.Y. are generally are open
for use by customers on such day.
“Closing”
means the Closing of the First Tranche, the Second Tranche and the Third Tranche, as applicable.
“Closing Date”
means any of the First Tranche Closing Date, the Second Tranche Closing Date and the Third Tranche Closing Date.
“Common Stock”
means the common stock of the Company, par value $0.00001 per share, and any other class of securities into which such securities may
hereafter be reclassified or changed.
“Common Stock Equivalents”
means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Company Counsel”
means Sichenzia Ross Ference Carmel LLP.
“Company Intellectual
Property” means all Intellectual Property that is owned or purported to be owned or held for use by the Company.
“Company IP Agreements”
means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, permissions and
other contracts (including any right to receive or obligation to pay royalties or any other consideration), whether written or oral, relating
to Intellectual Property to which the Company is a party, beneficiary or otherwise bound.
“Company IP Registrations”
means all Company Intellectual Property that is subject to any issuance registration, application or other filing by, to or with any governmental
authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names and copyrights, issued and
reissued patents and pending applications for any of the foregoing.
“Company Privacy
Policy” means each external or internal, past or present privacy policy or privacy or data security-related policy of Company,
as well as any representation, obligation or promise of Company under any contract, relating to: (i) the privacy of customers or users
of any Company Products, website, products or services operated by or on behalf of Company; and (ii) the collection, storage, hosting,
disclosure, transmission, transfer, disposal, other processing or security of any Customer Data or Personal Information, each as defined.
“Company Products”
means all proprietary products and services of the Company that are currently being, or at any time since the Company’s inception
have been, offered, licensed, sold, distributed, hosted, maintained, supported or otherwise provided or made available by or on behalf
of Company.
“Company Systems”
means all Software, and computer hardware, servers, networks, platforms, peripherals, data communication lines and other information technology
equipment and related systems, including any outsourced systems and processes, that are owned or used by Company in the conduct of its
business as currently conducted.
“Conversion Price”
shall have the meaning ascribed to such term in the Notes.
“Conversion Shares”
means the shares of Common Stock issuable upon conversion, payment or otherwise pursuant to the Notes.
“Current Lender”
shall have the meaning ascribed to such term in Section 2.2(a)(xix).
“Current Lender Intercreditor
Agreement” means an agreement between the Company, the Investor and the Current Lender, and which Current Lender Intercreditor
Agreement is satisfactory to the Investor in its sole discretion.
“Customer Data”
means all data, text, content, information or other material uploaded or otherwise transmitted by Company’s customers to, or stored
by Company’s customers on or in, Company Products or any service of Company.
“Disclosure Schedules”
refer to the Schedules attached to this Agreement.
“Disclosure Time”
means, (i) if this Agreement is signed on a day that is not a Trading Day or after 9:00 a.m. (New York, N.Y. time) and before midnight
(New York, N.Y. time) on any Trading Day, 9:01 a.m. (New York, N.Y. time) on the Trading Day immediately following the date hereof, and
(ii) if this Agreement is signed between midnight (New York, N.Y. time) and 9:00 a.m. (New York, N.Y. time) on any Trading Day, no later
than 9:01 a.m. (New York, N.Y. time) on the date hereof.
“Equity Conditions”
has the meaning set forth in the Notes.
“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Evaluation Date”
shall have the meaning ascribed to such term in Section 3.1(ff).
“Exempt Issuance”
means the issuance of (a) shares of Common Stock or options not to exceed 10% of the shares of Common Stock outstanding at any given time
to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of
the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services
rendered to the Company, (b) securities upon the exercise or exchange of or conversion of (i) any Securities issued hereunder, (ii) any
warrants issued to the Placement Agent in connection with the transactions pursuant to this Agreement and any securities upon exercise
of warrants to the Placement Agent, and/or (iii) other securities exercisable or exchangeable for or convertible into shares of Common
Stock issued and outstanding on the date of this Agreement (without regard to any vesting requirements), provided that such securities
have not been amended since the date of this Agreement (other than any amendments to such securities in connection with a Fundamental
Transaction) to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities
(other than in connection with stock splits or combinations or the contemplated holding company merger) or to extend the term of such
securities, or (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors
of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144) and carry
no registration rights that require or permit the filing of any registration statement in connection therewith during the prohibition
period in Section 4.13(a) herein, and provided that any such issuance shall only be to a Person (or to the equity holders of a
Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the
business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include
a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business
is investing in securities.
“First Tranche”
means $2,000,000 in face value of Note issuable upon the First Tranche Closing Date, in accordance with Section 2.1(a).
“First Tranche Closing”
means the Closing of the First Tranche.
“First Tranche Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties
thereto, and all conditions precedent to (i) the Investor’s obligations to pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Securities to be issued and sold, in each case, have been satisfied, subject to the terms and conditions set
forth herein.
“First Tranche Note”
means the Senior Secured Convertible Note due, subject to the terms therein, 18 months from the date of issuance, issued by the Company
to the Investor hereunder, in the form of Exhibit A attached hereto.
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).
“Governmental Authority”
means any federal, state, county, local, municipal or other government or political subdivision thereof, whether domestic or foreign,
and any agency, authority, commission, ministry, instrumentality, regulatory body, court, tribunal, arbitrator, central bank or other
Person exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to any such
government.
“Guarantee Agreement”
means the Guarantee Agreement, dated the date hereof, among the Company, its Subsidiaries and the Investor, in the form of Exhibit
E attached hereto.
“Indebtedness”
means (a) any liabilities of the Company including all Subsidiaries for borrowed money or amounts owed in excess of $10,000 (other than
trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations
of the Company including all Subsidiaries in respect of indebtedness of others, whether or not the same are or should be reflected in
the Company’s consolidated balance sheet (or the footnotes thereto), except guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of business; (c) the present value of any lease payments of the
Company including all Subsidiaries in excess of $10,000 due under leases required to be capitalized in accordance with GAAP; and (d) transactions
relating to the sale of any existing or future sales of accounts receivables including merchant cash advances or sales of future accounts
receivable of the Company including all Subsidiaries.
“Initial Resale Registration
Statement” means the resale registration on Form S-1 or S-3, if available, covering the Underlying Shares of the Securities
issued at the First Tranche Closing.
“Intellectual Property”
means all intellectual property and industrial property rights and assets, and all rights, interests and protections that are associated
with, similar to, or required for the exercise of, any of the foregoing, however arising, pursuant to the Laws of any jurisdiction throughout
the world, whether registered or unregistered, including any and all: (a) trademarks, service marks, trade names, brand names, logos,
trade dress, design rights and other similar designations of source, sponsorship, association or origin, together with the goodwill connected
with the use of and symbolized by, and all registrations, applications and renewals for, any of the foregoing; (b) internet domain names,
whether or not trademarks, registered in any top-level domain by any authorized private registrar or Governmental Authority, web addresses,
web pages, websites and related content, social media accounts, including but not limited to X (formerly Twitter) and Facebook and the
content found thereon and related thereto, and URLs; (c) works of authorship, expressions, designs and design registrations, whether or
not copyrightable, including copyrights, author, performer, moral and neighboring rights, and all registrations, applications for registration
and renewals of such copyrights; (d) inventions, discoveries, trade secrets, business and technical information and know-how, data, databases,
and data collections, and confidential and proprietary information and all rights therein; (e) patents (including all reissues, divisionals,
provisionals, continuations and continuations-in-part, re-examinations, renewals, substitutions and extensions thereof), patent applications,
and other patent rights and any other Governmental Authority-issued indicia of invention ownership (including inventor’s certificates,
petty patents and patent utility models); and (f ) Software.
“Investor Party”
shall have the meaning ascribed to such term in Section 4.10.
“Investor Reserve
Amount” shall have the meaning ascribed to such term in Section 4.19.
“Key Executives”
means all of the Company’s officers and directors as of the date hereof.
“Laws”
with respect to a Person means any federal, state, local, municipal, or other laws, common law, statutes, constitutions, ordinances, rules,
regulations, codes, orders, or legally enforceable requirements enacted, issued, adopted, promulgated, enforced, ordered, or applied by
any Governmental Authority applicable to such Person or any of its Subsidiaries, including its respective business and operations.
“Legend Removal Date”
shall have the meaning ascribed to such term in Section 4.1(c).
“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Material Adverse
Effect” shall have the meaning assigned to such term in Section 3.1(b).
“Material Permits”
shall have the meaning ascribed to such term in Section 3.1(n).
“Maximum Rate”
shall have the meaning ascribed to such term in Section 5.17.
“Nason Yeager”
means Nason Yeager Gerson Harris & Fumero, P.A., with offices located at 3001 PGA Boulevard, Suite 305, Palm Beach Gardens, Florida
33410.
“Notes”
means any of the First Tranche Note, the Second Tranche Note and the Third Tranche Note.
“Open Source Software”
means any Software or Intellectual Property that is distributed as “free” or “open source” or pursuant to any
license identified as an “open source license” by the Open Source Initiative (www.opensource.org/licenses) or other license
that substantially conforms to the Open Source Definition (http://opensource.org/osd) including but not limited to the GNU General Public
License (GPL), GNU Lesser General Public License (LGPL), GNU Affero General Public License (AGPL), MIT License (MIT), Apache License,
Artistic License and BSD Licenses.
“Participation Maximum”
shall have the meaning ascribed to such term in Section 4.12(a).
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company,
joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Personal Information”
means: (i) a natural person’s name, street address, telephone number, email address, photograph, social security number or tax identification
number, driver’s license number, passport number, credit card number, bank information, or customer or account number, biometric
identifiers or any other piece of information that allows the identification of or contact with a natural person and for greater certainty
includes all such information with respect to employees, (ii) data collected from an IP address, unique device identifier or MAC address,
web beacon, pixel tag, ad tag, cookie, local storage object, software, or by any other means, or from a particular computer, web browser,
mobile device, or other device or application, where such data (a) is collected from a particular computer or device regarding online
activities; or (b) is or may be used to identify or contact an individual or device or application, to predict or infer the preferences,
interests, or other characteristics of the device or application or of a user of such device or application, or to target advertisements
or other content to a device or application, or to a user of such device or application, and (iii) any information that is associated,
directly or indirectly (by, for example, records linked via unique keys), to any of the foregoing. Personal Information also includes
any information not listed in (i), (ii) or (iii) above if such information is defined as “personal data”, “personally
identifiable information”, “individually identifiable health information,” “protected health information,”
or “personal information” under any Law.
“Permitted Indebtedness”
shall have the meaning ascribed to such term in the Notes.
“Placement Agent”
means Alliance Global Partners.
“Pledge Agreement”
means the Pledge Agreement, dated the date hereof, among the Company and the Investor, in the form of Exhibit F attached hereto.
“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.12(b).
“Principal Amount”
means, as to the Investor, the amounts set forth below the Investor’s signature block on the signature pages hereto next to the
heading “Principal Amount,” in United States Dollars.
“Principal Market”
means the Nasdaq Capital Market.
“Principal Market
Rules” means the rules and regulations of the Principal Market.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
“Public Information
Failure” shall have the meaning ascribed to such term in Section 4.3(b).
“Public Information
Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b).
“Registration Rights
Agreement” means the Registration Rights Agreement, dated on or about the date hereof, among the Company and the Investor, in
the form of Exhibit B attached hereto.
“Required Approvals”
shall have the meaning ascribed to such term in Section 3.1(e).
“Required Consent”
shall have the meaning ascribed to such term in Section 2.2(a)(ii).
“Required Holders”
means (i) prior to the First Tranche Closing Date, the Investor and (ii) on or after the First Tranche Closing Date, holders of at least
66.0% of the aggregate Principal Amount of Notes issued and shall include the Investor so long as the Investor or any of its affiliates
holds any Securities issued hereunder.
“Required Minimum”
means, as of any date, the 300% of the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future
pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants or conversion in
full of all Notes (including Underlying Shares issuable as payment of interest on the Notes), ignoring any conversion or exercise limits
set forth therein (including, without limitation, the Floor Price or the Event Market Price (each as defined in the Notes)), and assuming
that the Conversion Price is at all times on and after the date of determination equal to the Floor Price.
“Resale Registration
Statement” means the initial Resale Registration Statement and any other registration statement meeting the requirements set
forth in the Registration Rights Agreement and covering the resale of the Underlying Shares by the Investor as provided for in the Registration
Rights Agreement.
“Rule 144”
means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule
or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.
“Rule 424”
means Rule 424 promulgated by the SEC 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 SEC having substantially the same purpose and effect as such Rule.
“SEC” means
the United States Securities and Exchange Commission.
“SEC Reports”
shall have the meaning ascribed to such term in Section 3.1(h).
“Second Tranche”
means, subject to mutual consent up to $1,000,000 in Principal Amount of a Note issuable upon the Second Tranche Closing in accordance
with Section 2.1(b). As used in this Agreement, the phrase “upon mutual consent” shall mean the consent of each of the Company
and the Investor, which consent may be withheld for any reason or no reason.
“Second Tranche Closing”
means the Closing of the Second Tranche.
“Second Tranche Closing
Date” means 60 days following effectiveness of the initial Resale Registration Statement, upon which date: (i) the applicable
portion of the Subscription Amount is transmitted to the Company from a bank in the United States and (ii) the Company’s obligations
to deliver the corresponding Securities in the Second Tranche to be issued and sold, in each case, have been satisfied, and subject to
satisfaction of the conditions set forth herein.
“Second Tranche Note”
means the Senior Secured Convertible Note due, subject to the terms therein, 18 months from the date of issuance, issued by the Company
to the Investor hereunder, in the form of Exhibit A attached hereto.
“Securities”
means the Notes, the Warrants, and the Underlying Shares.
“Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Security Agreement”
means the Security Agreement, dated the date hereof, among the Company and the Investor, in the form of Exhibit D attached hereto.
“Security Documents”
shall mean the Security Agreement and any other documents and filing required thereunder in order to grant the Investor a first priority
security interest in the assets of the Company and the Subsidiaries to the extent provided in the Security Agreement, including all UCC-1
filing receipts.
“Shareholder Approval”
means such approval as may be required by the Principal Market Rules from the shareholders of the Company with respect to the transactions
contemplated by the Transaction Documents, including the issuance of all of the Underlying Shares in excess of 19.99% of the issued and
outstanding Common Stock on the Closing Date.
“Software”
means any and all computer software and code, including all new versions, updates, revisions, improvements and modifications thereof,
whether in source code, object code, or executable code format, including systems software, application software (including mobile apps),
firmware, middleware, programming tools, scripts, routines, interfaces, architecture, schematics, records, libraries, and data, databases
and data collections, and all related specifications and documentation, including developer notes, comments and annotations, user manuals
and training materials relating to any of the foregoing.
“Subscription Amount”
means, as to the Investor, the aggregate amount to be paid for each Note and Warrants purchased hereunder as specified below the Investor’s
name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in
immediately available funds, which Subscription Amount shall be 85% of the applicable Principal Amount.
“Subsequent Financing”
shall have the meaning ascribed to such term in Section 4.12(a).
“Subsequent Financing
Notice” shall have the meaning ascribed to such term in Section 4.12(b).
“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date hereof.
“Third Tranche”
means upon mutual consent $2,200,000 in Principal Amount of a Note issuable upon the Third Tranche Closing, in accordance with Section
2.1(c).
“Third Tranche Closing”
means the Closing of the Third Tranche.
“Third Tranche Closing
Date” means 90 days following the Second Tranche Closing and, subject to the mutual consent of the Company and the Investor,
upon which date: (i) the applicable portion of the Subscription Amount is transmitted to the Company from a bank in the United States;
and (ii) the Company’s obligations to deliver the corresponding Securities in the Third Tranche to be issued and sold, in each case,
have been satisfied, and subject to satisfaction of the conditions set forth herein.
“Third Tranche Note”
means the Senior Secured Convertible Note due, subject to the terms therein, 18 months from the date of issuance, issued by the Company
to the Investor hereunder, in the form of Exhibit A attached hereto.
“to the Knowledge
of the Company,” “to the Company’s Knowledge” and similar words and phrases relating to the Company’s
“Knowledge” means the actual knowledge of any of the Key Executives of the Company upon reasonable investigation.
“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
Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the NYSE American, the New York Stock Exchange (or
any successors to any of the foregoing).
“Transaction Documents”
means this Agreement, the Notes, the Warrants, the Registration Rights Agreement, the Required Consent, the Security Agreement, the Pledge
Agreement, the Guarantee Agreement and all exhibits and schedules thereto and hereto and any other documents or agreements executed in
connection with the transactions contemplated hereunder including the Current Lender Intercreditor Agreement.
“Transfer Agent”
means VStock Transfer, LLC, the current transfer agent of the Company, and any successor transfer agent of the Company.
“Underlying Shares”
means the Warrant Shares, the Conversion Shares and shares of Common Stock issued and issuable pursuant to the terms of the Notes, including
without limitation, shares of Common Stock issued and issuable in lieu of the cash payment of interest on each of the Notes in accordance
with the terms of each of the Notes, in each case without respect to any limitation or restriction on the conversion of the Notes or the
exercise of the Warrants.
“Variable Rate Transaction”
shall have the meaning ascribed to such term in Section 4.13(b).
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York, N.Y. time) to 4:02 p.m. (New York, N.Y. time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market
(or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common
Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the Investor and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“Warrants”
means, collectively, the Common Stock Purchase Warrants delivered to the Investor at each Closing in accordance with Section 2.2(a) hereof,
which Warrants shall have a term of exercise equal to five years, in the form of Exhibit C attached hereto.
“Warrant Shares”
means the shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1
Closing.
(a)
First Tranche Closing. On the First Tranche Closing Date, provided that the Equity Conditions shall be satisfied
as of such date, and upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery
of this Agreement by the parties hereto, the Company agrees to sell, and the Investor agrees to purchase $2,000,000 of Principal Amount
of the First Tranche Note and the number of Warrants listed on the Investor Signature Page. The Investor shall deliver to the Company,
via wire transfer, immediately available funds equal to the Subscription Amount as to the First Tranche Closing as set forth on the signature
page hereto executed by the Investor, and the Company shall deliver to the Investor the First Tranche Note and Warrants, as determined
pursuant to Section 2.2(a), and the Company and the Investor shall deliver the other items set forth in Section 2.2 at the First Tranche
Closing. Within two days of the satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3 and subject to the Equity
Conditions, the First Tranche Closing shall occur at the offices of Nason Yeager, at such other location as the parties shall mutually
agree, or shall take place remotely by electronic transfer of applicable Transaction Documents.
(b)
Second Tranche Closing.
On the Second Tranche Closing
Date, subject to mutual consent, provided that the Equity Conditions shall be satisfied as of such date and upon the terms and
subject to the conditions set forth herein, the Company agrees to sell, and the Investor agrees to purchase $1,000,000 of Principal Amount
of the Second Tranche Note and the number of Warrants as determined pursuant to Section 2.2(a). The Investor shall deliver to the Company,
via wire transfer, immediately available funds equal to the Investor’s Subscription Amount as to the Second Tranche Closing as set
forth on the signature page hereto executed by the Investor, and the Company shall deliver to the Investor the Second Tranche Note and
the Warrants, and the Company and the Investor shall deliver the other items set forth in Section 2.2 at the Second Tranche Closing. Upon
satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, but only to the extent the Company shall also previously
complied with all Transaction Documents prior to and as of the Second Tranche Closing Date, the Second Tranche Closing shall occur at
the offices of Nason Yeager, at such other location as the parties shall mutually agree, or shall take place remotely by electronic transfer
of applicable Transaction Documents. The obligation of the Investor to fund the Second Tranche shall be subject to the Registrable Securities,
as defined by the Registration Rights Agreement, underlying the First Tranche Note and Warrants sold to the Investor at the First Tranche
Closing being included for public sale in the Prospectus that is part of the Initial Resale Registration Statement, and to the Equity
Conditions having been met as of the Second Tranche Closing Date.
(c)
Third Tranche Closing. On the Third Tranche Closing Date, subject to mutual consent, provided that the Equity Conditions
shall be satisfied as of such date, and upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and
the Investor agrees to purchase, an aggregate of $2,200,000 of Principal Amount of the Third Tranche Note together with a number of Warrants
as determined by Section 2.2(a). The Investor shall deliver to the Company, via wire transfer, immediately available funds equal to the
Investor’s Subscription Amount as to the Third Tranche Closing as set forth on the signature page hereto executed by the Investor,
and the Company shall deliver to the Investor the Third Tranche Note and the Warrants, as determined pursuant to Section 2.2(a), and the
Company and the Investor shall deliver the other items set forth in Section 2.2 at the Third Tranche Closing. Upon satisfaction of the
covenants and conditions set forth in Sections 2.2 and 2.3, but only to the extent the Company shall also previously complied with all
Transaction Documents prior to and as of the Third Tranche Closing Date, the Third Tranche Closing shall occur at the offices of Nason
Yeager, at such other location as the parties shall mutually agree, or shall take place remotely by electronic transfer of applicable
Transaction Documents. The obligation of the Investor to fund the Third Tranche shall be subject to the Registrable Securities, as defined
by the Registration Rights Agreement, underlying the Securities issued in the First Tranche and the Second Tranche being included for
public sale in the Prospectus that is part of the Resale Registration Statement(s), and to the Equity Conditions having been met as of
the Third Tranche Closing Date.
2.2
Deliveries.
(a)
On or prior to the applicable Closing Date, the Company shall deliver or cause to be delivered to the Investor the following:
(i)
as to the First Tranche Closing, this Agreement duly executed by the Company;
(ii)
as to the First Tranche Closing, an irrevocable written shareholder consent, duly executed by the holder of a majority of the total
outstanding voting power of the Company approving the issuance of the Underlying Shares (the “Required Consent”), which
Required Consent shall be sufficient to satisfy the Shareholder Approval required by the Principal Market Rules, and the filing of an
Information Statement on Schedule 14C with the SEC with respect thereto;
(iii)
as to each Closing, a legal opinion of Company Counsel dated as of the applicable Closing Date, in a form reasonably acceptable
to the Investor;
(iv)
as to each Closing, a Note convertible at 120% of the three-day VWAP, calculated prior to each Closing Date, registered in the
name of the Investor with the Principal Amount reflected on to the Investor’s signature page;
(v)
as to each Closing, a Warrant registered in the name of the Investor to purchase up to a number of shares of Common Stock equal
to 50% of the Investor’s Principal Amount divided by the VWAP of the Common Stock on the date prior to such Closing, with an initial
exercise price equal to the Conversion Price of the Note issued at such Closing, subject to adjustment therein;
(vi)
as to each Closing, the Company shall have provided the Investor with the Company’s wire instructions, on Company letterhead
and executed by the Chief Executive Officer or Chief Financial Officer;
(vii)
as to the First Tranche Closing, the Security Agreement, Pledge Agreement and Guarantee Agreement duly executed by the parties
thereto, in each case in favor of the Investor as the secured party thereunder;
(viii)
as to the First Tranche Closing, the Required Consent executed by the principal shareholder(s) of the Company;
(ix)
as to each Closing, a letter executed by the Company and the Transfer Agent reserving the Required Minimum for the benefit of the
Investor;
(x)
as to the First Tranche Closing, the Registration Rights Agreement duly executed by the Company, and a waiver signed by all holders
of registration rights outstanding as of the date of this Agreement waiving and subordinating such rights to the registration rights of
the Investor under this Agreement and the Registration Rights Agreement in the form satisfactory to the Investor;
(xi)
as to each Closing, an officer’s certificate certifying that the representations and warranties of the Company in the Purchase
Agreement are true and correct as of the applicable Closing Date as though originally made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct as of such specific date) and the Company shall have performed,
satisfied and complied in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied with
by the Company at or prior to the applicable Closing Date under any Transaction Documents and no Event of Default has occurred;
(xii)
as to each Closing, a certificate evidencing the formation and good standing of the Company and each of its Subsidiaries in each
such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction of formation
as of a date within 10 days of the applicable Closing Date;
(xiii)
as to each Closing, a certificate evidencing the Company’s and each Subsidiary’s qualification as a foreign corporation
and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company or each Subsidiary
conducts business and is required to so qualify, as of a date within 10 days of the applicable Closing Date;
(xiv)
as to the First Tranche Closing, a certified copy of the Certificate of Incorporation (or such equivalent organizational document)
of the Company and each Subsidiary, dated within 10 days of the applicable Closing Date;
(xv)
as to each Closing, an officer’s certificate, in the form acceptable to the Investor, executed by an officer of the Company
and each Subsidiary and dated as of the applicable Closing Date, as to (i) the resolutions adopted by the Board of Directors and each
Subsidiary’s Board of Directors authorizing the transactions contemplated hereby in a form reasonably acceptable to the Investor,
and (ii) the Certificate of Incorporation of the Company and the organizational documents of each Subsidiary, each as in effect at the
applicable Closing;
(xvi)
as to each Closing, a letter from the Transfer Agent certifying the number of shares of Common Stock outstanding on the applicable
Closing Date immediately prior to the applicable Closing;
(xvii)
as to the First Tranche Closing, a copy of the application for the listing of the Underlying Shares on the Principal Market;
(xviii)
as to each Closing, certified copies of requests for copies of information on Form UCC-1 dated within two days prior to the applicable
Closing Date, listing all effective financing statements which name as debtor the Company or any of its Subsidiaries and which are filed
in such office or offices as may be necessary or, in the opinion of the Investor, desirable to perfect the security interests purported
to be created by the Security Agreement, together with copies of such financing statements, none of which, except as otherwise agreed
in writing by the Investor, shall cover any of the Collateral (as defined in the Security Agreement), and the results of searches for
any tax Lien and judgment Lien filed against such Person or its property, which results, except as otherwise agreed to in writing by the
Investor, shall not show any such Liens;
(xix)
as to the First Tranche Closing, the Current Lender Intercreditor Agreement executed by the Company, the Investor and the Current
Lender, an appropriate amended Form UCC-1 and other instruments and releases as may be requested by the Investor as to all Liens of the
Company and all security interests related including that certain UCC-1 Financing Statement filed on February 2, 2022 in favor of a lender
identified on Schedule 2.1(a)(xix) (the “Current Lender”); and
(xx)
such other documents, instruments or certificates relating to the transactions contemplated by this Agreement as the Investor or
its counsel may reasonably request.
(b)
On or prior to the applicable Closing Date, the Investor shall deliver or cause to be delivered to the Company, the following:
(i)
as to the First Tranche Closing, this Agreement duly executed by the Investor;
(ii)
as to each Closing, the Investor’s Subscription Amount by wire transfer to the account specified in writing by the Company;
(iii)
as to the First Tranche Closing, the Security Agreement, Pledge Agreement and Guarantee Agreement duly executed by the Investor;
and
(iv)
as to the First Tranche Closing, the Registration Rights Agreement duly executed by the Investor.
2.3
Closing Conditions.
(a)
The obligations of the Company hereunder in connection with each Closing are subject to the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material
Adverse Effect, in all respects) on each Closing Date of the representations and warranties of the Investor contained herein (unless as
of a specific date therein in which case they shall be accurate as of such date);
(ii)
all obligations, covenants and agreements of the Investor required to be performed at or prior to each Closing Date shall have
been performed; and
(iii)
the delivery by the Investor of the items set forth in Section 2.2(b) of this Agreement.
(b)
The obligations of the Investor hereunder in connection with each Closing (except as indicated in this Section 2.2(b) are subject
to the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material
Adverse Effect, in all respects) when made and on each Closing Date of the representations and warranties of the Company contained herein
(unless as of a specific date therein in which case they shall be accurate as of such date);
(ii)
all obligations, covenants and agreements of the Company required to be performed at or prior to each Closing Date shall have been
performed;
(iii)
the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv)
Intentionally omitted;
(v)
there shall have been no Material Adverse Effect with respect to the Company since the date hereof;
(vi)
from the date hereof to each Closing Date, as applicable, trading in the Common Stock shall not have been suspended by the SEC
or the Company’s principal Trading Market and, at any time prior to the applicable Closing Date, trading in securities generally
as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities
whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United
States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national
or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case,
in the reasonable judgment of the Investor, makes it impracticable or inadvisable to purchase the Securities at each applicable Closing.
(vii)
the Company shall have filed with the Principal Market an application for the listing of the Underlying Shares on the Principal
Market, a copy of which shall have been provided to the Investor, and the Principal Market shall have raised no objection with respect
thereto; and
(viii)
no statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated
hereby;
(ix)
the Equity Conditions (as defined in the Note) shall have been met;
(x)
the Resale Registration Statements for all Underlying Shares issuable as a result of the First Tranche Closing and the Second Tranche
Closing are effective and the Prospectuses covering the Underlying Shares meet the requirements of Sections 5(b) and 10 of the Securities
Act; and
(xi)
The holders of piggyback registration rights have agreed in writing to not exercise their registrations rights in connection with
any Resale Registration Statement.
2.4
Conditions Subsequent to Closing. As an accommodation to the Company, the Investor has agreed to execute this Agreement
and to consummate the transactions contemplated herein on the First Tranche Closing Date notwithstanding the failure by the Company to
satisfy the conditions set forth in Section 2.4(a) and (b) on or before the First Tranche Closing Date. In consideration of such accommodation,
the Company agrees that, in addition to all other terms, conditions and provisions set forth in this Agreement and the other Transaction
Documents, the Company shall satisfy each of the conditions subsequent set forth below on or before the date applicable thereto (it being
understood that the failure by the Company to perform or cause to be performed any such condition subsequent on or before the date applicable
thereto shall constitute an Event of Default (as defined under the Notes)):
(a)
Pursuant to this Agreement and the Security Agreement, within 30 days after the First Tranche Closing Date (or such later date
as may be permitted by the Investor in its sole discretion), the Investor shall have received a deposit account control agreement in form
and substance reasonably satisfactory to Investor with respect to the deposit account in accordance with Section 4.19.
(b)
Pursuant to the Security Agreement, within 30 days after the First Tranche Closing Date (or such later date as may be permitted
by the Investor in its sole discretion), the Investor shall have received insurance certificates and endorsements in form and substance
reasonably satisfactory to it.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1
Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules
shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained
in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to the
Investor, which representations shall be true and correct on each respective Closing Date:
(a)
Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company
owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary, except as indicated in the Disclosure
Schedules, free and clear of any Liens, except for Liens created under the Transaction Documents, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights
to subscribe for or purchase securities. If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in
the Transaction Documents shall be disregarded.
(b)
Organization and Qualification. The Company and each of the Subsidiaries is an entity incorporated, validly existing and
in good standing under the Laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own
and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation
nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter
documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result
in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect
on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken
as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding
has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority
or qualification.
(c)
Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate
the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and
the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part
of the Company and no further action is required by the Company, the Board of Directors or the Company’s shareholders in connection
herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which
it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms
hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with
its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other Laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by Laws relating to the
availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable Laws.
(d)
No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents
to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or
articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties
or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, anti-dilution or similar adjustments,
acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict
with or result in a violation of any Law to which the Company or a Subsidiary is subject (including federal and state securities Laws
and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(e)
Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give
any notice to, or make any filing or registration with, any court or other federal, state, local or other Governmental Authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings
required pursuant to Section 4.6 of this Agreement, (ii) the filings with the SEC pursuant to the Registration Rights Agreement, (iii)
the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing of the
Conversion Shares and Warrant Shares for trading thereon in the time and manner required thereby, (iv) the filing of Form D with the SEC
and such filings as are required to be made under applicable state securities Laws, and (v) obtaining Shareholder Approval (collectively,
the “Required Approvals”).
(f)
Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer provided for in the Transaction Documents or by Law. The Underlying Shares, when issued in accordance
with the terms of the Transaction Documents, will be validly issued, fully paid and non-assessable, free and clear of all Liens imposed
by the Company other than restrictions on transfer provided for in the Transaction Documents or by Law. The Company has reserved from
its duly authorized capital stock a number of shares of Common Stock for issuance of the Underlying Shares at least equal to the Required
Minimum on the date hereof.
(g)
Capitalization. The capitalization of the Company as of the date hereof is as set forth on Schedule 3.1(g), which
Schedule 3.1(g) shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the
Company as of the date hereof. The Company has not issued any capital stock since its most recently filed periodic report under the Exchange
Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares
of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise
of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has
any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated
by the Transaction Documents. Except as set forth in Schedule 3.1(g), there are no outstanding options, warrants, scrip rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock or the capital stock of any
Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or Common Stock Equivalents or capital stock of any Subsidiary. The issuance and sale of the Securities
will not obligate the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other than the Investor).
There are no outstanding securities or instruments of the Company or any Subsidiary with any provision that adjusts the exercise, conversion,
exchange or reset price of such security or instrument upon an issuance of securities by the Company or any Subsidiary. There are no outstanding
securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem a security of the
Company or such Subsidiary. The Company does not have any stock appreciation rights or “phantom stock” plans or agreements
or any similar plan or agreement. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully
paid and non-assessable, have been issued in compliance with all federal and state securities Laws, and none of such outstanding shares
was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization
of any shareholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no shareholders
agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a
party or, to the Knowledge of the Company, between or among any of the Company’s shareholders, except for the Required Consent.
(h)
SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
two years preceding the date hereof (or such shorter period as the Company was required by Law or regulation to file such material) (the
foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein
as the “SEC Reports”) on a timely basis or has received or obtained a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has never been
an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply
in all material respects with applicable accounting requirements and the rules and regulations of the SEC 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.
(i)
Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements
included within the SEC Reports, (i) there has been no event, occurrence or development that has had or that could reasonably be expected
to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required
to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the SEC, (iii) the Company
has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property
to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company
has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The
Company does not have pending before the SEC any request for confidential treatment of information. Except for the issuance of the Securities
contemplated by this Agreement, no event, liability, fact, circumstance, occurrence or development has occurred, exists, or is reasonably
expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, prospects, properties, operations,
assets or financial condition, that would be required to be disclosed by the Company under applicable securities Laws at the time this
representation is made or deemed made that has not been publicly disclosed at least one Trading Day prior to the date that this representation
is made.
(j)
Litigation. There is no Action, suit, inquiry, notice of violation, Proceeding or investigation pending or, to the Knowledge
of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an
“Action”). Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject
of any Action involving a claim of violation of or liability under federal or state securities Laws or a claim of breach of fiduciary
duty. There has not been, and to the Knowledge of the Company, there is not pending or contemplated, any investigation or preliminary
investigation by the SEC involving the Company or any current or former director or officer of the Company. The SEC has not issued any
stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the
Exchange Act or the Securities Act.
(k)
Labor Relations. No labor dispute exists or, to the Knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the
Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that
their relationships with their employees are good. To the Knowledge of the Company, no executive officer of the Company or any Subsidiary,
is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary
information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third
party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability
with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and
foreign Laws relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the
failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. To
the Company's Knowledge,
(i)
no allegations of sexual harassment, sexual misconduct or discrimination, whether such discrimination arises from race, ethnic
background, sex, gender status, age or otherwise (“Misconduct”) have been made involving any current or former director, officer,
employee or independent contractor of the Company or any of its Subsidiaries; and
(ii)
neither the Company nor any of its Subsidiaries have entered into any settlement agreements related to allegations of Misconduct
by any current or former director, officer, employee, or independent contractor of the Company or any of its Subsidiaries.
(l)
Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred
that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator
or other Governmental Authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any Governmental
Authority, including without limitation all foreign, federal, state and local Laws relating to taxes, environmental protection, occupational
health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be
expected to result in a Material Adverse Effect. Without limiting the generality of the foregoing, the Company has maintained, and has
implemented reasonable policies, measures and infrastructure to maintain, compliance with Laws and regulations relates to the administration
or involvement in the provision of Company Products, including without limitation the federal Anti-Kickback Statute (42 U.S.C. §
1320a-7b(6)), the Stark Law (42 U.S.C. § 1395nn), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the federal health
care program exclusion provisions (42 U.S.C. § 1302a-7) and the Civil Monetary Penalties Act (42 U.S.C. § 1302a-7a), the Health
Insurance Portability and Accountability Act of 1996, commonly referred to as "HIPAA," (“HIPAA”) and the
Health Information Technology for Economic and Clinical Health Act, commonly referred to as "HITECH," the health insurance program
for the aged and disabled established by Title XVIII of the Social Security Act (42 U.S.C. §§ 1395 et seq.) commonly known as
“Medicare,” the healthcare assistance program established by Title XIX of the Social Security Act (42 U.S.C. §§
1396 et seq.) commonly known as “Medicaid,” the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the
Health Information Technology for Economic and Clinical Health Act, any Laws relating to opioids (including the electronic or digital
prescription thereof), and Laws enforced or implemented by the U.S. Federal Trade Commission, in each case as have been or may be amended,
supplemented or replaced from time-to-time, and the rules and regulations promulgated under each of the foregoing. To the Company’s
Knowledge, none if its customers or suppliers are in material violation with any such Laws in a manner that could adversely affect the
Company.
(m)
Environmental Laws. The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign
Laws relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface
or subsurface strata), including Laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants,
or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental Laws”);
(ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws to conduct their respective
businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or approval where in each clause (i),
(ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
(n)
Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the
SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect
(“Material Permits”), and neither the Company nor any Subsidiary has received any notice of Proceedings relating to
the revocation or modification of any Material Permit.
(o)
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned
by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment
of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which
is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.
(p)
Intellectual Property. Schedule 3.1(p) lists all (i) Company IP Registrations and (ii) Company Intellectual Property,
including Software, that is not registered but that is material to the Company’s business or operations. All required filings and
fees related to the Company IP Registrations have been timely filed with and paid to the relevant Governmental Authorities and authorized
registrars, and all Company IP Registrations are otherwise in good standing, except as listed on Schedule 3.1(p). The Company has
made available to the Investor true and complete copies of file histories, documents, certificates, office actions, correspondence and
other materials related to all Company IP Registrations. There are no actions that must be taken by the Company (or any third party on
the Company’s behalf) prior to the First Tranche Closing Date, including the payment of any registration, maintenance or renewal
fees or the filing of any responses to office actions, documents, applications or certificates for the purposes of obtaining, maintaining,
perfecting, preserving or renewing any Company IP Registrations. To the Company’s Knowledge, there are no facts or circumstances
that would render any Company IP Registrations invalid or unenforceable. To the Company’s Knowledge, there has been no misrepresentation
or failure to disclose any fact or circumstances in any application for any Company IP Registrations that would constitute fraud or a
misrepresentation with respect to such application or that would otherwise affect the validity or enforceability of any Company IP Registrations.
The Company has not claimed a particular status, including “small entity status,” in the application for any Company IP Registrations,
which claim of status was not at the time made, or which has since become, inaccurate or false or that will no longer be true and accurate
as a result of the First Tranche Closing.
(i)
Schedule 3.1(q) lists all Company IP Agreements that are material to the Company’s business as it presently is being
conducted. The Company has made available to the Investor true and complete copies of all such Company IP Agreements, including all modifications,
amendments and supplements thereto and waivers thereunder. Each Company IP Agreement is valid and binding on the Company in accordance
with its terms and is in full force and effect. Neither the Company, nor to the Company’s Knowledge any other party thereto, is
in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any notice of breach or
default of or any intention to terminate, any Company IP Agreement.
(ii)
The Company is the sole and exclusive legal and beneficial, and with respect to the Company IP Registrations, record owner of all
right, title and interest in and to the Company Intellectual Property, or has the valid right to use all other Intellectual Property used
in or necessary for the conduct of the Company’s current business or operations, in each case, free and clear of Liens.
(iii)
The Company has entered into binding, written agreements with every current and former employee since its inception, and with every
current and former independent contractor since its inception, whereby such employees and independent contractors (i) assign to the Company
any ownership interest and right they may have in the Company Intellectual Property; and (ii) acknowledge the Company’s exclusive
ownership of all Company Intellectual Property. The Company has provided the Investor with true and complete copies of all such agreements.
(iv)
The consummation of the transactions contemplated hereunder will not result in the loss or impairment of or payment of any additional
amounts with respect to, nor require the consent of any other Person in respect of, the Company’s right to own, use or hold for
use any Intellectual Property as owned, used or held for use in the conduct of the Company’s business or operations as currently
conducted.
(v)
The Company’s rights in the Company Intellectual Property are, and, since inception, have been, valid, subsisting and enforceable.
The Company has taken all reasonable steps to maintain the Company Intellectual Property and to protect and preserve the confidentiality
of all confidential information and trade secrets included in the Company Intellectual Property, including requiring all Persons having
access thereto to execute written non-disclosure agreements.
(vi)
The conduct of the Company’s business as currently and formerly conducted, and the Company Products and related processes
and infrastructure, have not infringed, misappropriated, diluted or otherwise violated, and do not and will not infringe, dilute, misappropriate
or otherwise violate the Intellectual Property or other rights of any Person. To the Company’s Knowledge, no Person has infringed,
misappropriated, diluted or otherwise violated, or is currently infringing, misappropriating, diluting or otherwise violating, any Company
Intellectual Property.
(vii)
There are no Actions (including any oppositions, interferences or re-examinations) settled, pending or threatened (including in
the form of offers to obtain a license or inquiries regarding the need to obtain a license): (i) alleging any infringement, misappropriation,
dilution or violation of the Intellectual Property of any Person by the Company; (ii) challenging the validity, enforceability, registrability
or ownership of any Company Intellectual Property or the Company’s rights with respect to any Company Intellectual Property; or
(iii) by the Company or any other Person alleging any infringement, misappropriation, dilution or violation by any Person of the Company
Intellectual Property. The Company is not subject to any outstanding or prospective governmental order (including any motion or petition
therefor) that does or would restrict or impair the use of any Company Intellectual Property.
(q)
Company Products; Proprietary Software.
(i)
Schedule 3.1(q)(i) contains a correct, current and complete list of all currently distributed Company Products, identifying
for each item all previous major releases. Since inception, as used in this Agreement, the term “major release” means any
change embodied by the phrase “Version 1 to Version 2” etc. in contrast to changes labeled “Version 1.1 to Version 1.2”
or “8.3.29” etc.
(ii)
For all of the Company Products identified in Schedule 3.1(q)(ii), Schedule 3.1(q)(ii) identifies all Company Intellectual
Property and all Intellectual Property licensed to the Company under a Company IP Agreement and that are (A) used in the development,
maintenance, use or support of such Company Product, (B) incorporated in or distributed or licensed with such Company Product in any manner
for use in connection with such Company Product, or (C) used to deliver, host or otherwise provide services with respect to such Company
Product, and in each case (except for non-customized, off-the-shelf Software that is commercially available pursuant to shrink-wrap, click-through
or other standard form agreements or with an annual license fee or replacement value of less than $10,000), the Company IP Agreement relating
to Company’s use of such item.
(iii)
All Company Products are fully transferable, alienable or licensable by the Company without restriction and without payment of
any kind to any third party. The Company has not transferred ownership of, or granted any exclusive license of (or exclusive right to
use), or authorized the retention of any exclusive rights to use or joint ownership of, any Company Product or any related Software or
other Intellectual Property to any other Person. The Company is not subject to any Company IP Agreement (other than with respect to current
customers pursuant to the Company’s standard form of customer agreement entered into in the ordinary course of business) that includes
any unperformed obligations that require the Company to develop any Software or other Intellectual Property, including any enhancements
or customizations that are part of or used in connection with the Company Products (collectively, “Customizations”),
and the Company owns and will continue to own all right, title and interest in and to all such Customizations developed by the Company.
(iv)
Schedule 3.1(q)(iv) identifies all Company Intellectual Property that was developed under a contract with a governmental
entity using any government or university funding, resources or staff, and identifies all Company Intellectual Property to which any government
entity or university has any rights (other than non-exclusive license rights granted to current customers to use Company Products pursuant
to the Company’s form of customer agreement entered into and as modified in the ordinary course of business).
(r)
Source Code.
(i)
The Company is in actual possession of and has exclusive control over a complete and correct copy of the source code for all Software
included in the Company Intellectual Property.
(ii)
Except for application programming interfaces and other interface code that is generally available to customers, the Company has
not disclosed, delivered, licensed or otherwise made available, and does not have a duty or obligation (whether present, contingent or
otherwise) to disclose, deliver, license or otherwise make available, any source code for any Company Product to any escrow agent or any
other Person, other than an independent contractor or consultant of the Company pursuant to a valid and enforceable written agreement
prohibiting use or disclosure except in the performance of services for the Company. Without limiting the foregoing, neither the execution
of this Agreement nor the consummation of any of the transactions contemplated by this Agreement will, or would reasonably be expected
to, result in the release from escrow or other delivery to any Person of any source code for any Company Product.
(iii)
As of the date hereof, there has been no unauthorized theft, reverse engineering, decompiling, disassembling or other unauthorized
disclosure of or access to any source code for any Company Product.
(s)
Open Source Software.
(i)
Schedule 3.1(s)(i) sets forth a true and complete list of each item of open source software that is or has been used by
or on behalf Company, in the development of or that is incorporated into, combined with, linked with, distributed with, provided to any
Person as a service, provided via a network as a service or application, or otherwise made available with, any Company Product, and for
each such item of Open Source Software, (A) the applicable Company Product, and (B) the name and version number of the applicable license
agreement.
(ii)
The Company has complied in all material respects with all notice, attribution and other requirements of each license applicable
to the Open Source Software required to be disclosed in Schedule 3.1(s)(ii).
(iii)
The Company has not used any Open Source Software in a manner that does, will or would reasonably be expected to, require Company
or any other Person to (A) disclose or distribute the source code of the Software of any Company Product, (B) license or otherwise offer
or distribute any Company Product on a royalty-free basis, or (C) grant any patent license, non-assertion covenant or, rights to modify,
make derivative works based on, decompile, disassemble or reverse engineer or any other rights to any Company Product or Company Intellectual
Property.
(t)
Conformance with Specifications; Defects; Malicious Code.
(i)
All Company Products conform in all material respects to all applicable warranties in all contracts with customers.
(ii)
To the Company’s Knowledge, none of the Company Products contain any bug, defect or error that materially adversely affects
the functionality or performance of such Company Product against its applicable specifications.
(iii)
To the Company’s Knowledge none of the Company Products, and no other Software used in the provision of any Company Product
or otherwise in the operation of its business, contains any “time bomb,” “Trojan horse,” “back door,”
“worm,” virus, malware, spyware, or other device or code (“Malicious Code”) designed or intended to, or
that could reasonably be expected to, (A) disrupt, disable, harm or otherwise impair the normal and authorized operation of, or provide
unauthorized access to, any computer system, hardware, firmware, network or device on which any Company Product or such other Software
is installed, stored or used, or (B) damage, destroy or prevent the access to or use of any data or file without the user’s consent.
The Company has taken reasonable steps designed to prevent the introduction of Malicious Code into the Company Products.
(u)
IT Systems.
(i)
To the Company’s Knowledge, the Company Systems are reasonably sufficient for the needs of the Company’s business as
currently conducted, including as to capacity, scalability, and ability to process current and anticipated peak volumes in a timely manner.
The Company Systems are in sufficiently good working condition to perform all information technology operations and include sufficient
licensed capacity (whether in terms of authorized sites, units, users, seats or otherwise) for all Software, in each case as necessary
for the conduct of the Company’s business as currently conducted.
(ii)
Since its inception, there has been no unauthorized access, use, intrusion or breach of security, or material failure, breakdown,
performance reduction or other adverse event affecting any Company Systems, that has resulted in or could reasonably be expected to result
in any: (A) substantial disruption of or interruption in or to the use of such Company Systems or the conduct of the Company’s business;
(B) material loss, destruction, damage or harm of or to Company or its operations, personnel, property or other assets; or (C) material
liability of any kind to the Company. The Company has taken reasonable actions, consistent with applicable industry best practices in
the Company’s industry, to protect the integrity and security of the Company Systems and the data and other information stored thereon.
(iii)
The Company maintains commercially reasonable back-up and data recovery, disaster recovery and business continuity plans, procedures
and facilities, has acted in material compliance therewith, and has tested such plans and procedures on a regular basis, and such plans
and procedures have been proven effective in all material respects upon such testing.
(v)
Data Privacy and Protection; Cybersecurity.
(i)
The Company has complied with all Company Privacy Policies and with all applicable Laws and contracts to which it is a party relating
to: (A) the privacy of customers or users of the Company Products, any website, product or service operated by or on behalf of the Company;
and (B) the collection, storage, hosting, disclosure, transmission, transfer, disposal, other processing or security of any Customer Data
or Personal Information by the Company or by third parties having authorized access to the records of the Company, with respect to each
of (A) and (B) in all material respects. No claims have been asserted or, are threatened against the Company alleging a violation of any
person’s privacy, confidentiality or other rights under any Company Privacy Policy, under any contract, or under any Law relating
to any Customer Data or Personal Information. With respect to any Customer Data and Personal Information, the Company has taken commercially
reasonable measures (including implementing and monitoring compliance with respect to technical and physical security) designed to safeguard
such data against loss and against unauthorized access, use, modification, disclosure or other misuse. There has been no unauthorized
access to or other misuse of any Customer Data and Personal Information. The Company has not received any complaint from any Person (including
any action letter or other inquiry from any Governmental Authority) regarding the Company’s collection, storage, hosting, disclosure,
transmission, transfer, disposal, other processing or security of Customer Data or Personal Information. There have been no facts or circumstances
that would require Company to give notice to any customers, suppliers, consumers or other similarly situated Persons of any actual or
perceived data security breaches pursuant to an applicable Laws requiring notice of such a breach.
(ii)
Without limiting the generality of the foregoing, the Company is compliant with all Laws relating to data privacy and data protection,
and the collection, storage, maintenance and transmission of personal data and health information, including, without limitation, HIPAA,
the European General Data Protection Regulation, the California Consumer Privacy Act of 2018, the California Privacy Rights Act of 2020,
and all other applicable Laws. The Company is compliant with the agreements, terms and policies of, and has not reason to believe that
it will not continue to have access to, the third party data hosting and transmission services and infrastructure it utilizes or anticipates
utilizing in its operations as presently conducted or planned, including without limitation, Amazon Web Services, Google Cloud and Microsoft
Azure Cloud.
(iii)
The Company has complied with the SEC’s rules related to cybersecurity risks and related disclosures.
(w)
Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged,
including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount. Neither
the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant
increase in cost.
(x)
Transactions with Affiliates and Employees. Except as set forth on Schedule 3.1(x), none of the officers, directors
5% beneficial owners of the Company’s Common Stock or any Subsidiary, and any employees of the Company or any Subsidiary is presently
a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal
property to or from providing for the borrowing of money from or lending of money to, or otherwise requiring payments to or from any officer,
director or such employee or, to the Knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee, shareholder, member or partner (“Related Party Transactions”). Any Related
Party Transactions reflect market terms and rates which would reasonably be expected to be obtained in an equivalent arms-length transaction
with a third party, and were negotiated in good faith and on an arms-length basis.
(y)
Sarbanes-Oxley; Internal Accounting Controls. Except as disclosed in the SEC Reports, the Company and the 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 SEC thereunder that are effective as of the date hereof and as of each
Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance
that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
The Company and the Subsidiaries have established disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required
to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the SEC’s rules and forms. The Company’s certifying officers have evaluated the effectiveness
of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently
filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most
recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in
the internal control over financial reporting (as such term is defined in the Exchange Act) that have materially affected, or are reasonably
likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.
(z)
Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiaries
to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents other than the fee payable to the Placement Agent. The Investor 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
3.1(z) that may be due in connection with the transactions contemplated by the Transaction Documents.
(aa)
Private Placement. Assuming the accuracy of the Investor’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 Investor as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.
(bb)
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.
(cc)
Registration Rights. Other than the Investor, no Person has any right to cause the Company or any Subsidiary to effect the
registration under the Securities Act of any securities of the Company or any Subsidiaries, except for Person who have agreed to subordinate
their registration rights to those of the Investor as required by Section 2.3(b)(xi).
(dd)
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 the Company’s 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 SEC is contemplating
terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market
on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is and has no reason to believe that it will not in the foreseeable future continue to
be, in compliance with all such listing and maintenance requirements. The Common Stock is currently eligible for electronic transfer through
the Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees to the Depository
Trust Company (or such other established clearing corporation) in connection with such electronic transfer.
(ee)
Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents)
or the Laws of its state of incorporation that is or could become applicable to the Investor as a result of the Investor and the Company
fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the
Company’s issuance of the Securities and the Investor’s ownership of the Securities.
(ff)
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided the Investor or its agents or counsel
with any information that it believes constitutes or might constitute material non-public information. The Company understands and confirms
that the Investor will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure
furnished by or on behalf of the Company to the Investor regarding the Company and its Subsidiaries, their respective businesses and the
transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct in all material respects and
does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company
during the 12 months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made and when made, not misleading. The Company acknowledges and agrees that the Investor does not make and has
not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth
in Section 3.2 hereof.
(gg)
No Integrated Offering. Assuming the accuracy of the Investor’s representations and warranties set forth in Section
3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration
of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which
any of the securities of the Company are listed or designated.
(hh)
Solvency. Based on the consolidated financial condition of the Company as of each Closing Date, after giving effect to the
receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on
its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements
of the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii)
the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after
taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when
such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no Knowledge of any facts or
circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization Laws
of any jurisdiction within one year from each Closing Date. Schedule 3.1(hh) sets forth as of the date hereof all outstanding secured
and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes
of this Agreement, Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.
(ii)
Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income
and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has
paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for
periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for
any such claim.
(jj)
No General Solicitation. Neither the Company nor any Person acting on behalf of the Company has offered or sold any of the
Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Investor
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.
(kk)
Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the Knowledge of the Company or any Subsidiary,
any agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate
funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf
of which the Company is aware) which is in violation of Law or (iv) violated in any material respect any provision of the FCPA.
(ll)
Accountants. The Company’s accounting firm is set forth on Schedule 3.1(ll). 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 Form 10-K Annual Report for the fiscal year ending December 31, 2023. To the Company’s Knowledge,
such accounting firm has not been subject to any disciplinary actions or other adverse Actions or Proceedings from the Public Company
Accounting Oversight Board (the “PCAOB”). Nor does the Company have any Knowledge that the PCAOB is conducting any investigation
or inquiry, however termed, which may lead to disciplinary action against such accounting firm.
(mm)
Seniority. As of each Closing Date, no Indebtedness or other claim against the Company is senior to any of the Notes in
right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, except for the facility with the
Current Lender.
(nn)
No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company
and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability
to perform any of its obligations under any of the Transaction Documents.
(oo)
Acknowledgment Regarding Investor’s Purchase of Securities. The Company acknowledges and agrees that the Investor
is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by the Investor
or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely
incidental to the Investor’s purchase of the Securities. The Company further represents to the Investor that the Company’s
decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions
contemplated hereby by the Company and its representatives.
(pp)
Acknowledgment Regarding the Investor’s Trading Activity. Anything
in this Agreement or elsewhere herein to the contrary notwithstanding, it is understood and acknowledged by the Company that: (i) the
Investor has not been asked by the Company to agree, nor has the Investor agreed, to desist from purchasing or selling long and/or short
securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities
for any specified term, (ii) past or future open market or other transactions by the Investor, specifically including, “derivative”
transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of
the Company’s publicly-traded securities, (iii) the Investor, and counter-parties in “derivative” transactions to which
the Investor is a party, directly or indirectly, may presently have a “short” position in the Common Stock and (iv) the Investor
shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative”
transaction. The Company further understands and acknowledges that (A) the Investor
may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation,
during the periods that the value of the Underlying Shares deliverable with respect to Securities are being determined, and (B) such hedging
activities (if any) could reduce the value of the existing shareholders' equity interests in the Company at and after the time that the
hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a
breach of any of the Transaction Documents.
(qq)
Regulation M Compliance. The Company has not, and to the Company’s Knowledge no one acting on its behalf has, (i)
taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to
purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s
Placement Agent in connection with the placement of the Securities.
(rr)
Stock Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the Company’s
stock option or similar plan and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such
stock option would be considered granted under GAAP and applicable Law. No stock option granted by the Company has been backdated. The
Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options or other
equity securities or rights to equity securities including restricted stock units prior to, or otherwise knowingly coordinate the grant
of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their
financial results or prospects.
(ss)
Office of Foreign Assets Control. Neither the Company, any Subsidiary nor, to the Company's Knowledge, any director, officer,
agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(tt)
U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within
the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon the Investor’s
request.
(uu)
Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company
Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the
“Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly,
5% or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity of a bank or
any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates
exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation
by the Federal Reserve.
(vv)
Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering
Laws”), and no Action or Proceeding by or before any court or Governmental Authority or any arbitrator involving the Company
or any Subsidiary with respect to the Money Laundering Laws is pending or, to the Knowledge of the Company or any Subsidiary, threatened.
(ww)
No Disqualification Events. With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under
the Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer
of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting
equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities
Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and, together,
“Issuer 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 whether any Issuer Covered Person is subject to a Disqualification
Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the
Investor a copy of any disclosures provided thereunder.
(xx)
Other Covered Persons. Other than the Placement Agent, the Company is not aware of any person (other than any Issuer Covered
Person) that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale
of any Securities.
(yy)
Notice of Disqualification Events. The Company will notify the Investor and the Placement Agent in writing, prior to each
Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of
time, become a Disqualification Event relating to any Issuer Covered Person.
(zz)
Majority Voting Power. As of each Closing Date, SecureKloud Technologies, Inc. and any Affiliate are the holders of the
majority of the outstanding voting power of the Company.
3.2
Representations and Warranties of the Investor. The Investor hereby represents and warrants as of the date hereof and as
of each Closing Date to the Company as follows (unless as of a specific date therein, in which case they shall be accurate as of such
date):
(a)
Organization; Authority. The Investor is either an individual or an entity duly incorporated or formed, validly existing
and in good standing under the Laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited
liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance
by the Investor of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership,
limited liability company or similar action, as applicable, on the part of the Investor. Each Transaction Document to which it is a party
has been duly executed by the Investor, and when delivered by the Investor in accordance with the terms hereof, will constitute the valid
and legally binding obligation of the Investor, enforceable against it in accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other Laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by Laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable Law.
(b)
Own Account. The Investor (i) 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, (ii) has no present intention of distributing any of such Securities in violation of the Securities Act
or any applicable state securities Law, and (iii) has no direct or indirect arrangement or understandings with any other persons to distribute
or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities Law (this representation
and warranty not limiting the Investor’s right to sell the Securities pursuant to any Resale Registration Statement or otherwise
in compliance with applicable federal and state securities Laws). The Investor is acquiring the Securities hereunder in the ordinary course
of its business.
(c)
Investor Status. At the time the Investor was offered the Securities, it was, and as of the date hereof it is, either: (i)
an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), (a)(8), (a)(9), (a)(12), or (a)(13) under the
Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.
(d)
Experience of the Investor. The Investor, either alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. The Investor is able to bear the economic risk of an
investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(e)
General Solicitation. The Investor is not, to the Investor’s knowledge, purchasing the Securities as a result of any
advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or, to the knowledge of the Investor, any other general solicitation or
general advertisement.
(f)
Access to Information. The Investor acknowledges that it has had the opportunity to review the Transaction Documents (including
all exhibits and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities
and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition, results
of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity
to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary
to make an informed investment decision with respect to the investment. The Investor acknowledges and agrees that neither the Placement
Agent nor any Affiliate of the Placement Agent has provided the Investor with any information or advice with respect to the Securities
nor is such information or advice necessary or desired. Neither the Placement Agent nor any Affiliate has made or makes any representation
as to the Company of the quality of the Securities and the Placement Agent and any Affiliate may have acquired non-public information
with respect to the Company which the Investor agrees need not be provided to it. In connection with the issuance of the Securities to
the Investor, neither the Placement Agent nor any of its Affiliates has acted as a financial advisor or fiduciary to the Investor.
The Company acknowledges and agrees that the representations
contained in this Section 3.2 shall not modify, amend or affect the Investor’s right to rely on the Company’s representations
and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other
document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transactions contemplated
hereby.
ARTICLE IV.
OTHER AGREEMENTS OF THE
PARTIES
4.1
Transfer Restrictions.
(a)
The Securities may only be disposed of in compliance with state and federal securities Laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of the Investor or
in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall
be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities
under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement
and the Registration Rights Agreement and shall have the rights and obligations of the Investor under this Agreement and the Registration
Rights Agreement.
(b)
The Investor agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the
following form:
[NEITHER] THIS SECURITY [NOR THE SECURITIES
INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS
SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
(c)
The Company acknowledges and agrees that the Investor may from time-to-time pledge pursuant to a bona fide margin agreement with
a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, the Investor
may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval
of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith.
Further, no notice shall be required of such pledge. At the appropriate Investor’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer
of the Securities, including, if the Securities are subject to registration pursuant to the Registration Rights Agreement, the preparation
and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities
Act to appropriately amend the list of Selling Stockholders (as defined in the Registration Rights Agreement) thereunder.
(d)
Certificates evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof):
(i) while a Resale Registration Statement covering the resale of such security is effective under the Securities Act, (ii) following any
sale of such Underlying Shares pursuant to Rule 144 when available, or (iii) if such legend is not required under applicable requirements
of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the SEC). For the avoidance of doubt
the Company shall pay all costs associated with legal opinions needed to remove restrictive legends. If all or any portion of a Note is
converted or Warrant is exercised at a time when there is an effective Resale Registration Statement to cover the resale of the Underlying
Shares, or if such Underlying Shares may be sold under Rule 144 without the requirement for the Company to be in compliance with the current
public information requirements of Rule 144(c) and without volume or manner of sale restrictions or if such legend is not otherwise required
under applicable requirements of the Securities Act (including Sections 4(a)(1) or 4(a)(7), judicial interpretations and pronouncements
issued by the staff of the SEC including what is known as Section 4(a)(1½)), then such Underlying Shares shall be issued free of
all legends. For the avoidance of doubt, the Company agrees that after the requisite holding period to comply with Rule 144, the legend
may be removed under Rule 144 of the Securities Act, assuming the holder satisfies the requirements of Rule 144. The Company agrees that
at such time as such legend is no longer required under this Section 4.1(d), it will, no later than the earlier of (i) two Trading Days
and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) following the delivery by the Investor
to the Company or the Transfer Agent of a certificate (or stock power if issued in book entry form) representing Shares or Warrant Shares,
as applicable, issued without a restrictive legend (such date, the “Legend Removal Date”), deliver or cause to be delivered
to the Investor a certificate representing such shares that is free from all restrictive and other legends (or provide evidence of issuance
in book entry form). The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the
restrictions on transfer set forth in this Section 4. Certificates for Underlying Shares subject to legend removal hereunder shall
be transmitted by the Transfer Agent to the Investor by crediting the account of the Investor’s prime broker with the Depository
Trust Company System as directed by the Investor. As used herein, “Standard Settlement Period” means the standard settlement
period, expressed in a number of Trading Days, on the Company’s Principal Market with respect to the Common Stock as in effect on
the date of delivery of a certificate representing Shares and Warrant Shares, as applicable, issued with a restrictive legend. Certificates
for the Underlying Shares subject to legend removal hereunder shall be transmitted by the transfer agent to the Investor by crediting
the account of the Investor’s prime broker with the Depository Trust Company System as directed by the Investor.
(e)
The Company acknowledges and agrees that the Investor may from time-to-time pledge, pursuant to a bona fide margin agreement with
a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, the Investor
may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval
of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith.
Further, no notice shall be required of such pledge. At the Investor’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of the Securities may reasonably request, including, if the Securities have been registered
for resale pursuant to a Resale Registration Statement, the preparation and filing of any required Prospectus Supplement under Rule 424(b)(3)
under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling shareholders thereunder.
(f)
In addition to the Investor’s other available remedies, the Company shall pay to the Investor, in cash, (i) as partial liquidated
damages and not as a penalty, for each $1,000 of Underlying Shares (based on the VWAP of the Common Stock on the date such Securities
are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading Day
(increasing to $20 per Trading Day five Trading Days after such damages have begun to accrue) for each Trading Day after the Legend Removal
Date until such certificate is delivered without a legend the Investor and (ii) if the Company fails to (a) issue and deliver (or cause
to be delivered) to the Investor by the Legend Removal Date a certificate representing the Securities so delivered to the Company by the
Investor that is free from all restrictive and other legends and (b) if after the Legend Removal Date the Investor purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Investor of all or any portion of
the number of shares of Common Stock, or a sale of a number of shares of Common Stock equal to all or any portion of the number of shares
of Common Stock that the Investor anticipated receiving from the Company without any restrictive legend, then, an amount equal to the
excess of the Investor’s total purchase price (including brokerage commissions or mark-ups and other out-of-pocket expenses, if
any) for the shares of Common Stock so purchased (including brokerage commissions or mark-ups and other out-of-pocket expenses, if any)
(the “Buy-In Price”) over the product of (A) such number of Underlying Shares that the Company was required
to deliver to the Investor by the Legend Removal Date multiplied by (B) the lowest closing sale price of the Common Stock on any Trading
Day during the period commencing on the date of the delivery by the Investor to the Company of the applicable Underlying Shares (as the
case may be) and ending on the date of such delivery and payment under this clause (ii) above.
(g)
The Investor agrees with the Company that the Investor will sell any Securities pursuant to either the registration requirements
of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are
sold pursuant to a Registration Statement, including any Resale Registration Statement, they will be sold in compliance with the plan
of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Securities
as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding. The Company acknowledges that
if the Investor cashlessly exercises any Warrants, Section 3(a)(9) of the Securities Act shall apply and the holding period of the Underlying
Shares issued as a result shall be the Closing Date on which the Warrants were issued. The Company covenants that it shall not challenge
this issuance date of such Underlying Shares.
4.2
Acknowledgment of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding
shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations
under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant to the Transaction
Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the
effect of any such dilution or any claim the Company may have against the Investor and regardless of the dilutive effect that such issuance
may have on the ownership of the other shareholders of the Company.
4.3
Furnishing of Information; Public Information.
(a)
Until the earliest of the time that (i) the Investor no longer owns any Securities or (ii) the Warrants have expired, the Company
covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date
hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act or has the
legal power to suspend the obligation to file reports, except in the case of a sale of all or substantially all of the assets of the Company,
a merger or reorganization of the Company with one or more other entities in which the Company is not the surviving entity, or any transaction
or series of related transactions as a result of which any Person (together with its Affiliates) acquires a majority of the then outstanding
securities of the Company.
(b)
At any time during the period commencing from the six-month anniversary of the date hereof (and also following the Second Tranche
Closing Date and the Third Tranche Closing Date, as applicable), and ending at such time that all of the Securities may be sold without
the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule
144, if the Company (i) shall fail for any reason to satisfy the current public information requirement under Rule 144(c) or (ii) has
ever been an issuer described in Rule 144 (i)(1)(i) or becomes an issuer in the future, and the Company shall fail to satisfy any condition
set forth in Rule 144(i)(2) (a “Public Information Failure”) then, in addition to the Investor’s other available
remedies, the Company shall pay to the Investor, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay
in or reduction of its ability to sell the Securities, an amount in cash equal one percent of the aggregate Subscription Amount of the
Investor’s Securities on the day of a Public Information Failure and on every 30th day (pro-rated for periods totaling
less than 30 days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public
information is no longer required for the Investor to transfer the Underlying Shares pursuant to Rule 144. The payments to which the Investor
shall be entitled pursuant to this Section 4.3(b) are referred to herein as “Public Information Failure Payments.”
Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information
Failure Payments are incurred and (ii) the third Business Day after the event or failure giving rise to the Public Information Failure
Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information
Failure Payments shall bear interest at the rate of one and one-half percent per month (prorated for partial months) until paid in full.
Nothing herein shall limit the Investor’s right to pursue actual damages for the Public Information Failure, and the Investor shall
have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief.
4.4
Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner
that would require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer
or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require Shareholder Approval
prior to the closing of such other transaction unless Shareholder Approval is obtained before the closing of such subsequent transaction.
4.5
Conversion and Exercise Procedures. Each of the form of Notice of Exercise included in the Warrants and the form of Notice
of Conversion included in the Notes set forth the totality of the procedures required of the Investor in order to exercise the Warrants
or convert any of the Notes. Without limiting the preceding sentences, no ink-original Notice of Exercise or Notice of Conversion shall
be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise or Notice of Conversion
form be required in order to exercise the Warrants or convert any of the Notes. No additional legal opinion, other information or instructions
shall be required of the Investor to exercise its Warrants or convert any of the Notes. The Company shall honor exercises of the Warrants
and conversions of the Notes and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in
the Transaction Documents.
4.6
Securities Laws Disclosure; Publicity. The Company shall (a) by the Disclosure Time, issue a press release disclosing the
material terms (which shall include the name of the Placement Agent) of the transactions contemplated hereby, and (b) file a Current Report
on Form 8-K, including the Transaction Documents as exhibits thereto, with the SEC within the time required by the Exchange Act. From
and after the issuance of such press release, the Company represents to the Investor that it shall have publicly disclosed all material,
non-public information delivered to any of the Investor by the Company or any of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon
the issuance of such press release, the Company acknowledges and agrees that any and all confidentiality or similar obligations under
any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents,
employees or Affiliates on the one hand, and the Investor or any of its Affiliates on the other hand, shall terminate. The Company and
the Investor shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and
neither the Company nor the Investor shall issue any such press release nor otherwise make any such public statement without the prior
consent of the Company, with respect to any press release of the Investor, or without the prior consent of the Investor, with respect
to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required
by Law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.
Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Investor, or include the name of the Investor in
any filing with the SEC or any regulatory agency or Trading Market, without the prior written consent of the Investor, except (a) as required
by federal securities Law in connection with (i) any registration statement contemplated by the Registration Rights Agreement and (ii)
the filing of final Transaction Documents with the SEC and (b) to the extent such disclosure is required by Law or Trading Market regulations,
in which case the Company shall provide the Investor with prior notice of such disclosure permitted under this clause (b).
4.7
Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other
Person, that the Investor is an “Acquiring Person” under any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted
by the Company, or that the Investor could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving
Securities under the Transaction Documents or under any other agreement between the Company and the Investor.
4.8
Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the
Transaction Documents, which shall be disclosed pursuant to Section 4.6, the Company covenants and agrees that neither it, nor any other
Person acting on its behalf will provide the Investor or its agents or counsel with any information that constitutes, or the Company reasonably
believes constitutes, material non-public information, unless prior thereto the Investor shall have consented to the receipt of such information
and agreed with the Company to keep such information confidential. The Company understands and confirms that the Investor shall be relying
on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company, any of its Subsidiaries,
or any of their respective officers, director, agents, employees or Affiliates delivers any material non-public information to the Investor
without the Investor’s consent, the Company hereby covenants and agrees that the Investor shall not have any duty of confidentiality
to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty to
the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates not to trade on the
basis of, such material, non-public information, provided that the Investor shall remain subject to applicable Law. To the extent
that any notice provided pursuant to any Transaction Document constitutes, or contains, material non-public information regarding the
Company or any Subsidiaries, the Company shall simultaneously file such notice with the SEC pursuant to a Current Report on Form 8-K.
The Company understands and confirms that the Investor shall be relying on the foregoing covenant in effecting transactions in securities
of the Company.
4.9
Use of Proceeds. Except as set forth on Schedule 4.9 attached hereto and subject to Section 4.19 with respect to
the Investor Reserve Amount, the Company shall use the net proceeds from the sale of the Securities hereunder for working capital and
general corporate purposes and shall not use such proceeds for any other purpose, including payments to any shareholder, except under
existing employment agreements.
4.10
Indemnification of the Investor. Subject to the provisions of this Section 4.10, the Company will indemnify and hold the
Investor and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls the
Investor (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding
a lack of such title or any other title) of such controlling persons (each, a “Investor Party”) harmless from any and
all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements,
court costs and reasonable attorneys’ fees and costs of investigation that any such Investor Party may suffer or incur as a result
of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement
or in the other Transaction Documents or (b) any action instituted by the Company or its affiliates or representatives or agents against
the Investor Parties in any capacity, or any of them or their respective Affiliates, with respect to any of the transactions contemplated
by the Transaction Documents (unless such action is solely based upon a material breach of such Investor Party’s representations,
warranties or covenants under the Transaction Documents or any agreements or understandings such Investor Party may have with any such
shareholder or any violations by such Investor Party of state or federal securities Laws or any conduct by such Investor Party which is
finally judicially determined to constitute fraud, gross negligence or willful misconduct). If any action shall be brought against any
Investor Party in respect of which indemnity may be sought pursuant to this Agreement, such Investor Party shall promptly notify the Company
in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable
to the Investor Party. Any Investor Party shall have the right to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of such Investor Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any
material issue between the position of the Company and the position of such Investor Party, in which case the Company shall be responsible
for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Investor Party under
this Agreement (y) for any settlement by the Investor Party effected without the Company’s prior written consent, which shall not
be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable
to any Investor Party’s breach of any of the representations, warranties, covenants or agreements made by such Investor Party in
this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.10 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity
agreements contained herein shall be in addition to any cause of action or similar right of any Investor Party against the Company or
others and any liabilities the Company may be subject to pursuant to Law.
4.11
Reservation and Listing of Securities.
(a)
The Company shall maintain a reserve of the Required Minimum from its duly authorized shares of Common Stock for issuance pursuant
to the Transaction Documents in such amount as may then be required to fulfill its obligations in full under the Transaction Documents.
(b)
If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required
Minimum on such date, then the Board of Directors shall use commercially reasonable efforts to amend the Company’s certificate or
articles of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the Required Minimum at
such time, as soon as possible and in any event not later than the 75th day after such date.
(c)
The Company shall, if applicable: (i) in the time and manner required by the principal Trading 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 Investor 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.
4.12
Participation in Future Financing.
(a)
From the date hereof until the 12-month anniversary of the date of this Agreement, upon any issuance by the Company or any of its
Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration, Indebtedness or a combination of units thereof (a “Subsequent
Financing”), the Investor shall have the right to participate in aggregate up to an amount of the Subsequent Financing equal
to 25% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for
in the Subsequent Financing.
(b)
At least 10 Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to the Investor a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask the Investor if
it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”). Upon the
request of the Investor, and only upon a request by the Investor, for a Subsequent Financing Notice, the Company shall promptly, but no
later than one Trading Day after such request, deliver a Subsequent Financing Notice to the Investor. The Subsequent Financing Notice
shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder
and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet or
similar document relating thereto as an attachment.
(c)
If the Investor desires to participate in such Subsequent Financing, it must provide written notice to the Company by not later
than 5:30 p.m. (New York, N.Y. time) on the fifth Trading Day after the Investor has received the Pre-Notice that the Investor is willing
to participate in the Subsequent Financing, the amount of the Investor’s participation, and representing and warranting that the
Investor has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice. If the
Company receives no such notice from the Investor as of such fifth Trading Day, the Investor shall be deemed to have notified the Company
that it does not elect to participate.
(d)
If by 5:30 p.m. (New York, N.Y. time) on the fifth Trading Day after the Investor has received the Pre-Notice, notification by
the Investor of its willingness to participate in the Subsequent Financing (or to cause its designees to participate) has been provided,
then the Company may effect the remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent
Financing Notice.
(e)
Intentionally Omitted.
(f)
The Company must provide the Investor with a second Subsequent Financing Notice, and the Investor will again have the right of
participation set forth above in this Section 4.12, if the Subsequent Financing subject to the initial Subsequent Financing Notice is
not consummated for any reason on the terms set forth in such Subsequent Financing Notice within 30 Trading Days after the date of the
initial Subsequent Financing Notice.
(g)
The Company and the Investor agree that if the Investor elects to participate in the Subsequent Financing, the transaction
documents related to the Subsequent Financing shall not include any term or provision that, directly or indirectly, will, or is intended
to, exclude the Investor from participating in a Subsequent Financing, including, but not limited to, provisions whereby the Investor
shall be required to agree to any restrictions on trading as to any securities of the Company or be required to consent to any amendment
to or termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written
consent of the Investor.
(h)
Notwithstanding anything to the contrary in this Section 4.12 and
unless otherwise agreed to by the Investor, the Company shall
either confirm in writing to the Investor that the transaction
with respect to the Subsequent Financing has been abandoned or shall publicly disclose its intention to issue the securities in the Subsequent
Financing, in either case in such a manner such that the Investor will
not be in possession of any material, non-public information, by the 10th Business Day following delivery of the Subsequent
Financing Notice. If by such 10th Business Day, no public disclosure regarding a transaction with respect to the Subsequent Financing
has been made, and no notice regarding the abandonment of such transaction has been received by the Investor,
such transaction shall be deemed to have been abandoned and the Investor shall
not be deemed to be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries.
(i)
Notwithstanding the foregoing, this Section 4.12 shall not apply in respect of an Exempt Issuance.
(j)
In addition, if while any Notes are outstanding the Company receives cash proceeds from any financing including the sale of any
securities or any commercial Indebtedness which is Permitted Indebtedness, the Investor shall have the option exercisable on at least
three Trading Days prior written notice to cause the Company to prepay the Notes in an amount up to 25% of the gross proceeds of any such
financing. With regard to an “at the market offering” the Company shall give the Investor notice on the last Trading Day of
each week of the amount of proceeds it has received or will receive from such sales during the week after which the Investor may exercise
its prepayment option.
4.13
Subsequent Equity Sales.
(a)
From the date hereof until the earlier of the one-year anniversary of the date of this Agreement and until 30 days after the effectiveness
of the Resale Registration Statement(s) covering all of the First Tranche Closing Underlying Shares, neither the Company nor any Subsidiary
shall (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common
Stock Equivalents or (ii) file any registration statement or any amendment or supplement thereto, in each case other than as contemplated
pursuant to the Registration Rights Agreement. Furthermore, if the Second Tranche Closing occurs, from the date thereof until 30 days
after the effectiveness of the Resale Registration Statement(s) covering all of the Second Tranche Closing Underlying Shares, neither
the Company nor any Subsidiary shall (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any
shares of Common Stock or Common Stock Equivalents or (ii) file any registration statement or any amendment or supplement thereto, in
each case other than as contemplated pursuant to the Registration Rights Agreement.
(b)
From the date hereof as long as any Note is outstanding, the Company shall be prohibited from effecting or entering into an agreement
to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units
thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company
(i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to
receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based
upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of
such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date
after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock or (ii) enters into, or effects a transaction under, any agreement
whereby the Company may issue securities at a future determined price; provided, however, that the entry into and/or issuance of shares
in an “at the market” offering and/or in an “equity line of credit” shall not be deemed a Variable Rate Transaction,
provided that the Company shall not engage in any equity line of credit transaction during any Monthly Conversion Period, or in any period
beginning on receipt of a Conversion Notice (as such terms are defined in the Note) through the close of business on the last Trading
Day equal to a number of Trading Days comprising the Standard Settlement Period then existing. The Investor shall be entitled to obtain
injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
(c)
While any Note is outstanding, if the Company issues any equity option, warrant or similar instrument which contains an “alternative
cashless exercise” provision that provides for the exercise of such security without payment of the exercise price in cash and does
not require the security to be “in the money,” the Investor shall be entitled to obtain injunctive relief against the Company
to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
4.14
Subsequent Public Financing. The Company acknowledges that the funds contemplated by this Agreement are not sufficient to
fund the Company’s operations for the next 12 months, and covenants and agrees to prepare and file a registration statement on Form
S-1 within 60 days of the First Tranche Closing Date for purposes of raising capital through a public offering of the Company’s
Common Stock (which may include warrant coverage).
4.15
Nasdaq Compliance. The Company acknowledges that the continued listing of the Common Stock on the Principal Market is an
important benefit to the Investor with respect to the Securities, and covenants and agrees to remain compliant with the Principal Market
Rules. The Company will confer with its legal counsel at least once every three months to address the Company’s continued compliance
and any potential issues concerning the Principal Market Rules, and will promptly notify the Investor in writing of any issues that may
arise with respect to compliance with the Principal Market Rules.
4.16
Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of the Investor. The Company shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Investor at each Closing under
applicable securities or “blue sky” Laws of the states of the United States and shall provide evidence of such actions promptly
upon request of the Investor.
4.17
Capital Changes. From the date hereof until such time as the Investor does not hold any of the Notes, the Company shall
not undertake a reverse or forward stock split or reclassification of the Common Stock without the prior written consent of the Investor.
4.18
Appointment of New CEO. The Company shall appoint a new Chief Executive Officer of the Company within 45 days of the First
Tranche Closing.
4.19
Investor Reserve Amount. Notwithstanding anything to the contrary set forth in this Agreement, immediately upon the First
Tranche Closing the Company shall deposit $700,000 of the proceeds received from the Investor in the First Tranche Closing to an account
established for such purpose with a U.S. federally chartered bank set forth on Schedule 4.19 as restricted cash plus accrued interest
(the “Investor Reserve Amount”), and the Investor shall have a first priority security Lien on the Investor Reserve
Amount. Following the First Tranche Closing and the deposit of the Investor Reserve Amount pursuant hereto, the Company shall enter into
a deposit account control agreement in the form reasonably acceptable to the Company, the Investor and the bank. Upon the Company’s
filing of a registration statement on Form S-1 for a primary public offering of securities by the Company, the Investor Reserve Amount
shall be reduced to $500,000. Notwithstanding any reduction in the Investor Reserve Amount, within 60 days of the First Tranche Closing,
the Investor Reserve Amount shall be increased to $1,000,000, and the Company shall deposit the additional cash or other collateral acceptable
to the Investor. After the date that is 60 days following the First Tranche Closing, the Company shall maintain at least $1,000,000 in
the account set up pursuant to the deposit account control agreement at all times.
4.20
Maintenance of DTC Eligibility. 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.
4.21
Shareholder Approval. The Company shall obtain Shareholder Approval by written consent of the Required Holders, and prepare
and file an Information Statement on Schedule 14C, on the date of the First Tranche Closing and if the SEC Staff issues any comments use
best efforts to comply with comments and otherwise comply with the Principal Market Rules to permit issuance of all Securities required
under this Agreement.
4.22
Intentionally omitted.
4.23
No Amendment of Existing Registration Rights. The Company shall not amend the registration rights presently in existence
in any manner which adversely affects the rights of the Investor.
ARTICLE V.
MISCELLANEOUS
5.1
Termination. This Agreement may be terminated by the Investor, as to the Investor’s obligations hereunder only and
without any effect whatsoever on the obligations between the Company and the Investor, by written notice to the other parties, if the
First Tranche Closing has not been consummated on or before the fifth Trading Day following the date hereof, provided, however,
that no such termination will affect the right of any party to sue for any breach by any other party (or parties).
5.2
Fees and Expenses. At the First Tranche Closing, the Company has agreed to reimburse the Investor for its legal fees and
expenses, up to a maximum of $75,000, of which $50,000 has been received on account. The Company shall deliver to the Investor, prior
to the First Tranche Closing, a completed and executed copy of the closing statement or flow of funds document, attached hereto as Annex
A. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement including the obligation of the Company to pay the Placement Agent. The Company
shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter
delivered by the Company and any conversion or exercise notice delivered by the Investor), stamp taxes and other taxes and duties levied
in connection with the delivery of any Securities to the Investor and costs necessary to provide the Investor with a lien on all of the
assets of the Company.
5.3
Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding
of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.4
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall
be in writing and shall be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication
is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached
hereto at or prior to 5:30 p.m. (New York, N.Y. time) on a Trading Day, (b) the next Trading Day after the time of transmission, if such
notice or communication is delivered via facsimile at the facsimile number or email attachment as set forth on the signature pages attached
hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York, N.Y. time) on any Trading Day, (c) the second Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages
attached hereto.
5.5
Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written
instrument signed, in the case of an amendment, by the Company and the Investor or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right. Any amendment effected in accordance with this Section 5.5 shall be binding upon the Investor and
holder of Securities and the Company. Such amendment provision shall not be construed to mean that the Beneficial Ownership Limitation
of the Notes and the Warrants may be amended.
5.6
Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed
to limit or affect any of the provisions hereof.
5.7
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent
of the Investor (other than by merger or acquisition). The Investor may assign any or all of its rights under this Agreement to any Person
to whom the Investor assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions of the Transaction Documents that apply to the Investor.
5.8
No Third-Party Beneficiaries. The Placement Agent shall be the third-party beneficiary of the representations and warranties
of the Company in Section 3.1 and the representations and warranties of the Investor in Section 3.2. Except as expressly set forth herein,
this Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for
the benefit of, nor may any provision hereof be enforced by, any other Person.
5.9
Governing Law; Exclusive Jurisdiction. Except as otherwise provided under the Security Documents, all questions concerning
the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced
in accordance with the internal Laws of the Cayman Islands, without regard to the principles of conflicts of Law thereof. Each party agrees
that all legal Actions or Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this
Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts located in the George
Town, Cayman Islands. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts located in George
Town, Cayman Islands for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and
agrees not to assert in any Action or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that
such Action or Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any other manner permitted by Law. If any party shall commence an Action or Proceeding
to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.10, the prevailing
party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other
costs and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding.
5.10
Survival. The representations and warranties contained herein shall survive each Closing and the delivery of the Securities.
5.11
Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party,
it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by 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.
5.12
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by
such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
5.13
Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar
provisions of) any of the other Transaction Documents, whenever the Investor exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then the Investor may rescind
or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights; provided, however, that, in the case of a rescission of a
conversion of a Note or exercise of a Warrant, the Investor shall be required to return any shares of Common Stock subject to any such
rescinded conversion or exercise notice concurrently with the return to the Investor of the aggregate exercise price paid to the Company
for such shares and the restoration of the Investor’s right to acquire such shares pursuant to the Investor’s Warrant (including,
issuance of a replacement warrant certificate evidencing such restored right).
5.14
Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to
the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also
pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.15
Remedies. In addition to being entitled to exercise all rights provided herein or granted by Law, including recovery of
damages, each of the Investor and the Company will be entitled to specific performance under the Transaction Documents. The parties agree
that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction
Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that a
remedy at Law would be adequate.
5.16
Payment Set Aside. To the extent that the Company makes a payment or payments to the Investor pursuant to any Transaction
Document or the Investor enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement
or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any Law
(including, without limitation, any bankruptcy Law, state or federal Law, common Law or equitable cause of action), then to the extent
of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff had not occurred.
5.17
Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever
claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury Laws wherever enacted, now or at
any time hereafter in force, in connection with any Action or Proceeding that may be brought by the Investor in order to enforce any right
or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest
shall not exceed the maximum lawful rate authorized under applicable Law (the “Maximum Rate”), and, without limiting
the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate. It is agreed that
if the maximum contract rate of interest allowed by Law and applicable to the Transaction Documents is increased or decreased by statute
or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by Law will be the
Maximum Rate applicable to the Transaction Documents from the effective date thereof forward, unless such application is precluded by
applicable Law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to the Investor with
respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by the Investor to the unpaid principal balance
of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at the Investor’s election.
5.18
Intentionally omitted.
5.19
Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the
Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and
other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.
5.20
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Business Day, then such action may be taken, or such right may be exercised on the next succeeding
Business Day.
5.21
Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to
revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition,
each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the
date of this Agreement.
5.22
WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY,
THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
IN WITNESS WHEREOF, the parties
hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first
indicated above.
Healthcare
Triangle, Inc. |
Address for Notice:
Healthcare Triangle, Inc.
7901 Stoneridge Drive,
Suite 220 Pleasanton, California
Attn: Chief Financial Officer |
By: __________________________________
Name: Thyagarajan Ramachandran
Title: Chief Financial Officer
With a copy to (which shall not constitute notice): |
Email: rt@healthcaretriangle.com |
Sichenzia Ross Ference Carmel LLP
1185 Avenue of the Americas,
31st floor
New York, NY, 10036
Attn: Ross D. Carmel
Email: |
|
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR INVESTOR FOLLOWS]
[INVESTOR SIGNATURE PAGE TO SECURITIES PURCHASE
AGREEMENT]
IN WITNESS WHEREOF, the undersigned
has caused this Securities Purchase Agreement to be duly executed by its authorized signatory as of the date first indicated above.
Name of Investor: ________________________________________________________
Signature of Authorized Signatory of Investor:
__________________________________
Name of Authorized Signatory: ____________________________________________________
Title of Authorized Signatory: _____________________________________________________
Email Address of Authorized Signatory: _____________________________________________
Address for Notice to Investor:
Address for Delivery of Securities to Investor
(if not same as address for notice):
Principal Amount for the First Tranche:
Principal Amount for the Second Tranche:
Principal Amount for the Third Tranche:
Subscription Amount for First Tranche:
Subscription Amount for Second Tranche:
Subscription Amount for Third Tranche:
First Tranche Warrant Shares: _________________1
Second Tranche Warrant Shares________________1
Third Tranche Warrant Shares________________1
EIN Number: _______________________
Wire Instructions to Investor for Interest
Payments or Note Repayment:
Bank Name:
SECURITIES PURCHASE AGREEMENT -- SCHEDULES
[●]
1
Number of Warrant Shares for each Tranche equals 50% of the principal of the applicable Note divided by
the VWAP prior to the applicable Closing Date.
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as
amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) dated as of December 28, 2023,
between Healthcare Triangle, Inc., a Delaware corporation (the “Company”), with corporate headquarters at 7901 Stoneridge
Drive, Suite 220, Pleasanton, CA 95488 (the Company, each Subsidiary, and each other Person who becomes a party to this Agreement by execution
of a joinder in the form of Exhibit A attached hereto, which shall include all Subsidiaries of the Company formed or acquired after
the date hereof, are hereinafter sometimes referred to individually as a “Debtor” and, collectively, as the “Debtors”)
and ______________________, a business entity organized under the laws of __________________, in its capacity as the Investor (as defined
in the Purchase Agreement (as hereinafter defined)) and as Collateral Agent for the benefit of itself as the Investor (together with their
respective successors and permitted assigns, each a “Secured Party” and collectively, the “Secured Parties”) who
execute this Agreement.
WHEREAS, the Secured Parties
are purchasing from the Company certain Notes (as defined in the Purchase Agreement) in an original aggregate principal amount of up to
$5,200,000 (consisting of the First Tranche Note and if funded, the Second Tranche Note and the Third Tranche Note, each as may be amended,
supplemented, restated or modified and in effect from time to time), it being understood that if the Second Tranche Closing and the Third
Tranche Closing do not occur, reference to “Notes” hereunder shall only refer to the First Tranche Note), and receive certain
Warrants (as defined in the Purchase Agreement) (all such Warrants as any of the same may be amended, supplemented, restated or modified
and in effect from time to time);
WHEREAS, the Notes are being
acquired by the Secured Parties, and the Secured Parties have made certain financial accommodations to the Company pursuant to the Securities
Purchase Agreement, dated as of the dated the date of this Agreement, by and among the Company and the Secured Parties (as the same may
be amended, restated, supplemented or otherwise modified from time-to-time, the “Purchase Agreement”). Capitalized words and
terms used herein but not otherwise defined shall have the meanings set forth in the Purchase Agreement;
WHEREAS, each Debtor will
derive substantial direct or indirect benefit and advantage from the financial accommodations to the Company set forth in the Purchase
Agreement and the Notes, and it will be to each such Debtor’s direct or indirect interest and economic benefit to assist the Company
in procuring said financial accommodations from the Secured Parties;
NOW, THEREFORE, in consideration
of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
Section
1.
Definitions.
(a) Capitalized
words and terms used herein without definition and defined in the Purchase Agreement are used herein as defined therein. In addition,
as used herein:
“Accounts” means
any “account,” as such term is defined in the UCC, and, in any event, shall include, without limitation, “supporting
obligations” as defined in the UCC.
“A/R Lender” shall
mean a Person that obtains a first priority Lien on accounts receivable pursuant to an Intercreditor Agreement, which Lien is Permitted
Indebtedness under the Notes(s).
“Chattel Paper”
means any “chattel paper,” as such term is defined in the UCC.
“Collateral” shall
have the meaning ascribed thereto in Section 3 hereof.
“Collateral Agent”
shall mean ______________________, in its capacity as Collateral Agent.
“Commercial Tort Claims”
means “commercial tort claims”, as such term is defined in the UCC.
“Contracts” means
all contracts, undertakings, or other agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) in or under
which a Debtor may now or hereafter have any right, title or interest, including, without limitation, with respect to an Account, any
agreement relating to the terms of payment or the terms of performance thereof.
“Copyrights” means
any copyrights, rights and interests in copyrights, works protectable by copyrights, copyright registrations and copyright applications,
including, without limitation, the copyright registrations and applications listed on Schedule III attached hereto (if any), and
all renewals of any of the foregoing, all income, royalties, damages and payments now and hereafter due and/or payable under or with respect
to any of the foregoing, including, without limitation, damages and payments for past, present and future infringements of any of the
foregoing and the right to sue for past, present and future infringements of any of the foregoing.
“Deposit Accounts”
means all “deposit accounts” as such term is defined in the UCC, now or hereafter held in the name of a Debtor.
“Documents” means
any “documents,” as such term is defined in the UCC, and shall include, without limitation, all documents of title (as defined
in the UCC), bills of lading or other receipts evidencing or representing Inventory or Equipment.
“Equipment” means
any “equipment,” as such term is defined in the UCC and, in any event, shall include, Motor Vehicles.
“Event of Default”
shall have the meaning set forth in the Notes.
“Excluded Assets”
means any lease, license or other agreement or any property subject to a capital lease, purchase money security interest or similar arrangement,
to the extent that a grant of a Lien thereon in favor of the Collateral Agent would violate or invalidate such lease, license, agreement
or capital lease, purchase money security interest or similar arrangement or create a right of termination in favor of any other party
thereto (other than the Debtors), so long as such provision exists and so long as such lease, license or agreement was not entered into
in contemplation of circumventing the obligation to provide Collateral hereunder or in violation of the Purchase Agreement, other than
to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor
provision or provisions) of any relevant jurisdiction or any other applicable law including the bankruptcy code, or principles of equity.
“General Intangibles”
means any “general intangibles,” as such term is defined in the UCC, and, in any event, shall include, without limitation,
all right, title and interest in or under any Contract, models, drawings, materials and records, claims, literary rights, goodwill, rights
of performance, Copyrights, Trademarks, Patents, warranties, rights under insurance policies and rights of indemnification.
“Goods” means any
“goods”, as such term is defined in the UCC, including, without limitation, fixtures and embedded Software to the extent included
in “goods” as defined in the UCC.
“Instruments” means
any “instrument,” as such term is defined in the UCC, and shall include, without limitation, promissory notes, drafts, bills
of exchange, trade acceptances, letters of credit, letter of credit rights (as defined in the UCC), and Chattel Paper.
“Intercreditor Agreement”
means an agreement between the Company, the Investor, and the A/R Lender, and which Intercreditor Agreement is satisfactory to the Investor
in its sole discretion.
“Inventory” means
any “inventory,” as such term is defined in the UCC.
“Investment Property”
means any “investment property”, as such term is defined in the UCC.
“Motor Vehicles”
shall mean motor vehicles, tractors, trailers and other like property, whether or not the title thereto is governed by a certificate of
title or ownership.
“Obligations” means
the full amount due under each Note, as it may change from time-to-time, and the cash payment obligations of the Company under the Transaction
Documents, including, without limitation, the principal amount of all debts, claims and indebtedness, accrued and unpaid interest and
all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from time to
time hereafter owing, due or payable whether before or after the filing of a bankruptcy, insolvency or similar proceeding under applicable
federal, state, foreign or other law and whether or not an allowed claim in any such proceeding.
“Patents” means
any patents and patent applications, including, without limitation, the inventions and improvements described and claimed therein, all
patentable inventions and those patents and patent applications listed on Schedule IV attached hereto (if any), and the reissues,
divisions, continuations, renewals, extensions and continuations-in-part of any of the foregoing, and all income, royalties, damages and
payments now or hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and
payments for past, present and future infringements of any of the foregoing and the right to sue for past, present and future infringements
of any of the foregoing.
“Permitted Indebtedness”
has the meaning set forth in the Notes.
“Permitted Lien”
has the meaning set forth in the Notes.
“Proceeds” means
“proceeds,” as such term is defined in the UCC and, in any event, includes, without limitation, (a) any and all proceeds of
any insurance, indemnity, warranty or guaranty payable with respect to any of the Collateral, (b) any and all payments (in any form whatsoever)
made or due and payable from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Collateral by any Governmental Authority (or any person acting under color of Governmental Authority), and (c) any
and all other amounts from time to time paid or payable under, in respect of or in connection with any of the Collateral.
“Representative”
means any Person acting as agent, representative or trustee on behalf of the Collateral Agent from time-to-time.
“Software” means
all “software” as such term is defined in the UCC, now owned or hereafter acquired by a Debtor, other than software embedded
in any category of Goods, including, without limitation, all computer programs and all supporting information provided in connection with
a transaction related to any program.
“Trademarks” means
any trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos,
other business identifiers, prints and labels on which any of the foregoing have appeared or appear, all registrations and recordings
thereof, and all applications in connection therewith, including, without limitation, the trademarks and applications listed in Schedule
V attached hereto (if any) and renewals thereof, and all income, royalties, damages and payments now or hereafter due and/or payable
under or with respect to any of the foregoing, including, without limitation, damages and payments for past, present and future infringements
of any of the foregoing and the right to sue for past, present and future infringements of any of the foregoing.
“UCC” shall mean
the Uniform Commercial Code as in effect from time to time in the State of Delaware; provided, that to the extent that the
Uniform Commercial Code is used to define any term herein and such term is defined differently in different Articles of the Uniform Commercial
Code, the definition of such term contained in Article 9 shall govern.
(b) All
references to an “Investor” or “Investors” and “Secured Party” or “Secured Parties” hereunder
shall include the Collateral Agent acting in its capacity as the Investor. For clarity, because the Collateral Agent is the sole Investor
under the Purchase Agreement, the parties acknowledge that notwithstanding references to Collateral Agent or Investor in this Agreement,
the term “Collateral Agent” refers to the Investor, and the terms “Investor” or “Investors” and “Secured
Party” or “Secured Parties” refers to the Collateral Agent, unless one or more investors acquire a portion of the Investor’s
Notes in which case the Investor shall act as Collateral Agent for all parties who hold such Notes in accordance with this Agreement,
and their respective successors and assigns. In such event, the Collateral Agent may require amendments to the applicable Transaction
Documents to reflect the inclusion of additional secured parties.
Section
2.
Representations, Warranties and Covenants of the Debtors. Each Debtor represents and warrants to, and covenants with,
the Collateral Agent and each Secured Party as follows:
(a)
Subject to the Permitted Liens, such Debtor has rights in and the power to transfer the Collateral in which it purports
to grant a security interest pursuant to Section 3 hereof (subject, with respect to after acquired Collateral, to such Debtor acquiring
the same) and no Lien other than a Permitted Lien exists upon such Collateral.
(b)
Subject to the Permitted Liens, this Agreement is effective to create in favor of the Collateral Agent a valid security interest
in and Lien upon all of such Debtor’s right, title and interest in and to the Collateral pursuant to which a security interest may
be perfected by the following actions, and upon (i) the filing of appropriate UCC financing statements in the jurisdictions listed on
Schedule I attached hereto, (ii) filings in the United States Patent and Trademark Office, or United States Copyright Office with
respect to Collateral that constitutes Patents and Trademarks, or Copyrights, as the case may be, (iii) the delivery to the Collateral
Agent of the Pledged Collateral together with assignments in blank, (iv) delivery to the Collateral Agent or its Representative of Instruments
duly endorsed by such Debtor or accompanied by appropriate instruments of transfer duly executed by such Debtor with respect to Instruments
not constituting Chattel Paper, and (v) the execution and delivery of control agreements with the depository or other institution with
which the applicable Deposit Accounts are maintained, such security interest will be a duly perfected first priority perfected security
interest (subject to Permitted Indebtedness with respect to certain SBF Collateral, as that phrase is defined in an Intercreditor Agreement
dated the date of this Agreement as to which the Company and the Investor are each parties, on which the Collateral Agent will have a
second priority security interest) in all of such Collateral in which such a security interest may be perfected by such action, except
as limited in the parenthetical in this clause (v) of Section 2(b); provided, however, that the Debtors covenant to terminate
the Current Lender Lien and to enter into a new Intercreditor Agreement with the new A/R Lender within 90 days after the First Tranche
Closing Date; and provided, further, that after all Liens of the Debtor and all security interests related to that certain UCC-1 Financing
Statement filed on February 2, 2022 in favor of the Current Lender which UCC-1 Financing Statement shall have been terminated, such security
interest will be a duly perfected first priority security interest in all Collateral, except for Accounts on which the Collateral Agent
will have a second priority security interest.
(c)
All of the Equipment, Inventory and Goods owned by such Debtor is located at the places as specified on Schedule I attached
hereto. Except as disclosed on Schedule I, none of the Collateral is in the possession of any bailee, warehousemen, processor
or consignee. Schedule I discloses such Debtor’s name as of the date hereof as it appears in official filings in the state
or province, as applicable, of its incorporation, formation or organization, the type of entity of such Debtor (including corporation,
partnership, limited partnership or limited liability company), organizational identification number issued by such Debtor’s state
of incorporation, formation or organization (or a statement that no such number has been issued), such Debtor’s state or province,
as applicable, of incorporation, formation or organization and the chief place of business, chief executive office and the office where
such Debtor keeps its books and records and the states in which such Debtor conducts its business. Such Debtor has only one state or province,
as applicable, of incorporation, formation or organization. Such Debtor does not do business and has not done business during the past
five years under any trade name or fictitious business name except as disclosed on Schedule II attached hereto.
(d)
No Copyrights, Patents or Trademarks listed on Schedules III, IV and V, respectively, if any, have been adjudged invalid
or unenforceable or have been canceled, in whole or in part, or are not presently subsisting. Each of such Copyrights, Patents and Trademarks
(if any) is valid and enforceable. Subject to the Permitted Lien, such Debtor is the sole and exclusive owner of the entire and unencumbered
right, title and interest in and to each of such Copyrights, Patents and Trademarks, identified on Schedules III, IV and V, as
applicable, as being owned by such Debtor, free and clear of any liens (subject to the Permitted Lien), charges and encumbrances, including
without limitation licenses, shop rights and covenants by such Debtor not to sue third persons. Such Debtor has adopted, used and is currently
using, or has a current bona fide intention to use, all of such Trademarks and Copyrights. Such Debtor has no notice of any suits or actions
commenced or threatened with reference to the Copyrights, Patents or Trademarks owned by it.
(e)
Each Debtor agrees to deliver to the Collateral Agent an updated Schedule I, II, III, IV and/or V
within five Trading Days of any material change thereto which, if omitted, would make such Schedules materially misleading, taken as a
whole. Notwithstanding anything to the contrary in this Agreement, for the avoidance of doubt, any representation or warranty made by
Debtors with respect to such Schedules during such five Trading Day period shall be deemed true and correct, and any covenant of the Debtors
with respect to such Schedules during such five Trading Day period shall be deemed complied with until the earlier of (a) the expiration
of such five Trading Day period and (b) the delivery of such updated Schedule(s).
(f)
Such Debtor does not own any Commercial Tort Claim except for those disclosed on Schedule VII hereto (if any) as of the
date hereof.
(g)
Such Debtor does not have any interest in owned real property with respect to real property except as disclosed on Schedule
VIII (if any). Each Debtor shall deliver to the Collateral Agent a revised version of Schedule VIII showing any changes thereto
within 10 Trading Days of any such change thereto which, if omitted, would make such Schedule VIII materially misleading, taken
as a whole. Notwithstanding anything to the contrary in this Agreement, for the avoidance of doubt, any representation or warranty made
by Debtors with respect to such Schedule VIII during such 10 Trading Day period shall be deemed true and correct, and any covenant
of the Debtors with respect to such Schedules during such 10 Trading Day period shall be deemed complied with until the earlier of (a)
the expiration of such 10 Trading Day period and (b) the delivery of such updated Schedule VIII.
(h)
All Equipment owned by a Debtor and subject to a certificate of title or ownership statute is described on Schedule IX hereto
as of the date hereof.
Section
3.
Collateral. As collateral security for the prompt payment in full when due (whether at stated maturity, by acceleration
or otherwise) of the Obligations, each Debtor hereby pledges and grants to the Collateral Agent, for the benefit of itself and each Secured
Party, a Lien on and security interest in and to all of such Debtor’s right, title and interest all of the properties and assets
of such Debtor, whether now owned by such Debtor or hereafter acquired and whether now existing or hereafter coming into existence and
wherever located and of every kind, nature and description, whether tangible or intangible, including, but not limited to, the following
(all being collectively referred to herein as “Collateral”):
(a)
all Instruments, together with all payments thereon or thereunder:
(b)
all Accounts;
(c)
all Inventory;
(d)
all General Intangibles (including payment intangibles (as defined in the UCC) and Software);
(e)
all Equipment;
(f)
all Documents;
(g)
all Contracts;
(h)
all Goods (including, without limitation, all embedded Software);
(i)
all Investment Property, including without limitation all equity interests now owned or hereafter acquired by such Debtor;
(j)
all Deposit Accounts, including, without limitation, the balance from time to time in all bank accounts maintained by such Debtor;
(k)
all Commercial Tort Claims specified on Schedule VII;
(l)
all Trademarks, Patents, Copyrights and licenses related to such Trademarks, Patents and Copyrights; and
(m)
all other tangible and intangible property of such Debtor, including, without limitation, all interests in real property, Proceeds,
tort claims, products, accessions, rents, profits, income, benefits, substitutions, additions and replacements of and to any of the property
of such Debtor described in the preceding clauses of this Section 3 (including, without limitation, any proceeds of insurance thereon,
insurance claims and all rights, claims and benefits against any Person relating thereto), other rights to payments not otherwise included
in the foregoing, and all books, correspondence, files, records, invoices and other papers, including without limitation all tapes, cards,
computer runs, computer programs, computer files and other papers, documents and records in the possession or under the control of such
Debtor, or any computer bureau or service company from time to time acting for such Debtor.
(n)
all capital stock and equity interests of each Subsidiary.
Notwithstanding anything to the contrary contained
herein or in any Transaction Document, in no event shall the security interest granted herein or therein attach to any Excluded Assets.
Section
4.
Covenants; Remedies. In furtherance of the grant of the pledge and security interest pursuant to Section 3 hereof,
each Debtor hereby agrees as follows:
4.1
Delivery and Other Perfection; Maintenance, etc.
(a)
Delivery of Instruments, Documents, Etc. Each Debtor shall deliver and pledge to the Collateral Agent or its Representative
any and all Instruments, negotiable Documents, Chattel Paper and certificated securities (accompanied by stock powers executed in blank,
which stock powers may be filled in and completed at any time upon the occurrence of any Event of Default) duly endorsed and/or accompanied
by such instruments of assignment and transfer executed by such Debtor in such form and substance as the Collateral Agent or its Representative
may request; provided, that so long as no Event of Default shall have occurred and be continuing, each Debtor may retain
for collection in the ordinary course of business any Instruments, negotiable Documents and Chattel Paper received by such Debtor in the
ordinary course of business, and the Collateral Agent or its Representative shall, promptly upon request of a Debtor, make appropriate
arrangements for making any other Instruments, negotiable Documents and Chattel Paper pledged by such Debtor available to such Debtor
for purposes of presentation, collection or renewal (any such arrangement to be effected, to the extent deemed appropriate by the Collateral
Agent or its Representative, against a trust receipt or like document). If a Debtor retains possession of any Chattel Paper, negotiable
Documents or Instruments pursuant to the terms hereof, such Chattel Paper, negotiable Documents and Instruments shall be marked with the
following legend: “This writing and the obligations evidenced or secured hereby are subject to the security interest of __________________________,
in its capacity as Collateral Agent for the benefit of the Secured Parties.” Within 30 days after the Closing Date (or such later
date as may be permitted by the Collateral Agent in its sole discretion), the Collateral Agent shall have received a deposit account control
agreement in form and substance reasonably satisfactory to it with respect to the Debtor’s Deposit Account selected by the Collateral
Agent as more particularly described in the Purchase Agreement. The deposit account control agreement shall provide that the cash deposited
in the Deposit Account and any accrued interest shall be subject to the Collateral Agent’s security interest. and no funds shall
be permitted to be withdrawn without the prior written consent of the Collateral Agent, which consent may be withheld for any reason as
long as the outstanding Principal, interest and other sums due including any Mandatory Default Amount (together, the “Balance”)
under that Senior Secured 15% Original Issue Discount Convertible Promissory Note (the “Note”) is at least equal to or more
than the amount deposited in the Deposit Account, subject to the next sentence. If the balance in the Debtor’s Deposit Account at
any time exceeds $1,000,000, the Company may request the Collateral Agent to permit withdrawals of cash from the Deposit Account in an
amount equal to the excess over $1,000,000, and the Collateral Agent shall promptly agree to any such requested withdrawal.
(b)
Other Documents and Actions. Each Debtor shall, upon the reasonable request of the Collateral Agent, give, execute,
deliver, file and/or record any financing statement, registration, notice, instrument, document, agreement, mortgage or other papers that
may be necessary to create, preserve, perfect or validate the security interest granted pursuant hereto (or any security interest or mortgage
contemplated or required hereunder, including with respect to Section 2(h) of this Agreement) or to enable the Collateral Agent or its
Representative to exercise and enforce the rights of the Secured Parties hereunder with respect to such pledge and security interest,
provided that notices to account debtors in respect of any Accounts or Instruments shall be subject to the provisions of clause
(e) below. Notwithstanding the foregoing each Debtor hereby irrevocably authorizes the Collateral Agent at any time and from time to time
to file in any filing office in any jurisdiction any initial financing statements (and other similar filings or registrations under other
applicable laws and regulations pertaining to the creation, attachment, or perfection of security interests) and amendments thereto that
(a) indicate the Collateral (i) as all assets of such Debtor or words of similar effect, regardless of whether any particular asset comprised
in the Collateral falls within the scope of Article 9 of the UCC, or (ii) as being of an equal or lesser scope or with greater detail,
and (b) contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether such Debtor is an organization, the type of organization and any organization
identification number issued to such Debtor, and (ii) in the case of a financing statement filed as a fixture filing, a sufficient description
of real property to which the Collateral relates. Each Debtor agrees to furnish any such information to the Collateral Agent promptly
upon reasonable request. Each Debtor also ratifies its authorization for the Collateral Agent to have filed in any jurisdiction any like
initial financing statements or amendments thereto if filed prior to the date hereof.
(c)
Books and Records. Each Debtor shall maintain at its own cost and expense reasonably complete and accurate books
and records of the Collateral, including, without limitation, a record of payments received and credits granted with respect to the Collateral.
Upon the occurrence and during the continuation of any Event of Default, each Debtor shall deliver and turn over any such books and records
(or true and correct copies thereof) to the Collateral Agent or its Representative at any time on demand. Each Debtor shall permit the
Collateral Agent or any Representative of the Collateral Agent to inspect such books and records at any time during reasonable business
hours and upon reasonable notice; provided that a representative of such Debtor may attend such inspection, if desired by such Debtor,
and will provide photocopies thereof at such Debtor’s expense to the Collateral Agent or its Representative upon reasonable request
of the Collateral Agent or its Representative.
(d)
Notice to Account Debtors; Verification. Upon the occurrence and during the continuance of any Event of Default,
(i) upon request of the Collateral Agent or its Representative, each Debtor shall promptly notify (and each Debtor hereby authorizes the
Collateral Agent and its Representative so to notify) each account debtor in respect of any Accounts or Instruments or other Persons obligated
on the Collateral that such Collateral has been assigned to the Collateral Agent hereunder, and that any payments due or to become due
in respect of such Collateral are to be made directly to the Collateral Agent, and (ii) the Collateral Agent and its Representative shall
have the right at any time or times to make direct verification with the account debtors or other Persons obligated on the Collateral
of any and all of the Accounts or other such Collateral.
(e)
Intellectual Property. Each Debtor represents and warrants that the Copyrights, Patents and Trademarks listed on
Schedules III, IV and V, respectively (if any), constitute all of the registered Copyrights and all of the Patents and Trademarks
now owned by such Debtor. If such Debtor shall (i) obtain rights to any new patentable inventions, any registered Copyrights or any Patents
or Trademarks, or (ii) become entitled to the benefit of any registered Copyrights or any Patents or Trademarks or any improvement on
any Patent, the provisions of this Agreement above shall automatically apply thereto and such Debtor shall give to the Collateral Agent
prompt written notice thereof. Each Debtor hereby authorizes the Collateral Agent to modify this Agreement by amending Schedules III,
IV and V, as applicable, to include any such registered Copyrights or any such Patents and Trademarks. Each Debtor shall have the
duty (i) to prosecute diligently any patent, trademark, or service mark applications pending as of the date hereof or hereafter, (ii)
to preserve and maintain all rights in the Copyrights, Patents and Trademarks, to the extent material to the operations of the business
of such Debtor and (iii) to ensure that the Copyrights, Patents and Trademarks are and remain enforceable, to the extent material to the
operations of the business of such Debtor. Any expenses incurred in connection with such Debtor’s obligations under this Section
4.1(e) shall be borne by such Debtor. Except for any such items that a Debtor reasonably believes (using prudent industry customs and
practices) are no longer necessary for the on-going operations of its business, no Debtor shall abandon any material right to file a patent,
trademark or service mark application, or abandon any pending patent, trademark or service mark application or any other Copyright, Patent
or Trademark without the prior written consent of the Collateral Agent.
(f)
Further Identification of Collateral. Each Debtor will, when and as often as reasonably requested by the Collateral
Agent or its Representative, furnish to the Collateral Agent or such Representative, statements and schedules further identifying and
describing the Collateral and such other reports in connection with the Collateral as the Collateral Agent or its Representative may reasonably
request, all in reasonable detail.
(g)
Investment Property. Each Debtor will take any and all actions reasonably required or requested by the Collateral
Agent or its Representative, from time to time, to (i) cause the Collateral Agent to obtain exclusive control of any Investment Property
owned by such Debtor in a manner acceptable to the Collateral Agent and (ii) use its commercially reasonable efforts to obtain from any
issuers of Investment Property and such other Persons written confirmation of the Collateral Agent’s control over such Investment
Property. For purposes of this Section 4.1(g), the Collateral Agent shall have exclusive control of Investment Property if (i) such Investment
Property consists of certificated securities and a Debtor delivers such certificated securities to the Collateral Agent (with appropriate
endorsements if such certificated securities are in registered form); (ii) such Investment Property consists of uncertificated securities
and either (x) a Debtor delivers such uncertificated securities to the Collateral Agent or (y) the issuer thereof agrees, pursuant to
documentation in form and substance satisfactory to the Collateral Agent, that it will comply with instructions originated by the Collateral
Agent without further consent by such Debtor, and (iii) such Investment Property consists of security entitlements and either (x) the
Collateral Agent becomes the entitlement holder thereof or (y) the appropriate securities intermediary agrees, pursuant to the documentation
in form and substance satisfactory to the Collateral Agent, that it will comply with entitlement orders originated by the Collateral Agent
without further consent by any Debtor; provided, however, each Debtor shall use its best efforts to cause any uncertificated
securities constituting Collateral to be certificated within 10 Trading Days of the date of this Agreement or the date on which such uncertificated
securities are acquired by such Debtor, as applicable.
(h)
Commercial Tort Claims. Each Debtor shall promptly notify the Collateral Agent of any Commercial Tort Claim acquired
by it that concerns a claim in excess of $50,000 and if requested by the Collateral Agent, such Debtor shall enter into a supplement to
this Agreement granting to the Secured Parties a Lien on and security interest in such Commercial Tort Claim.
4.2
Other Liens. Other than Permitted Liens as defined in the Notes, Debtors will not create, permit or suffer to exist,
and will defend the Collateral against and take such other action as is necessary to remove, any Lien on the Collateral except Permitted
Indebtedness, and will defend the right, title and interest of the Secured Parties in and to the Collateral and in and to all Proceeds
thereof against the claims and demands of all Persons whatsoever.
4.3
Preservation of Rights. Whether or not an Event of Default has occurred or is continuing, and subject to a minimum
of five Trading Days’ notice to each Debtor when an Event of Default has not occurred and is not continuing, the Collateral Agent
and its Representative may, but shall not be required to, take any steps the Collateral Agent or its Representative reasonably deems reasonably
necessary or reasonably appropriate to preserve any Collateral or any rights against third parties to any of the Collateral, including
obtaining insurance for the Collateral at any time when such Debtor has failed to do so, and Debtors shall promptly pay, or reimburse
the Collateral Agent for, all reasonable and documented out of pocket expenses incurred in connection therewith.
4.4
Formation of Subsidiaries; Name Change; Location; Bailees.
(a)
No Debtor shall form or acquire any Subsidiary unless (i) within 10 days (or such longer period as the Collateral Agent
may agree) of such formation or acquisition, (A) such Debtor pledges all of the capital stock or equity interests of such Subsidiary to
the Collateral Agent for the benefit of the Secured Parties pursuant to an agreement in a form agreed to by the Collateral Agent, (B)
such Subsidiary becomes a party to this Agreement by execution of a joinder in the form of Exhibit A attached hereto and (ii) the
formation or acquisition of such Subsidiary is not prohibited by the terms of the Transaction Documents.
(b)
Except for transactions not prohibited by the terms of the Transaction Documents, no Debtor shall (i) reincorporate or reorganize
itself under the laws of any jurisdiction other than the jurisdiction in which it is incorporated or organized as of the date hereof,
or (ii) otherwise change its name, identity or corporate structure, in each case, without the prior written consent of the Collateral
Agent, which consent shall not be unreasonably withheld, conditioned or delayed. Each Debtor will notify the Collateral Agent promptly
in writing prior to any such change in the proposed use by such Debtor of any tradename or fictitious business name other than any such
name set forth on Schedule II attached hereto.
(c)
Except for the sale of Inventory in the ordinary course of business and other sales of assets not prohibited by the terms
of the Transaction Documents, each Debtor will keep the Collateral at the locations specified in Schedule I. Each Debtor will give
the Collateral Agent written notice within five Trading Days after any change in such Debtor’s chief place of business or of any
new location for any of the Collateral.
(d)
If any Collateral is at any time in the possession or control of any warehousemen, bailee, consignee or processor, such
Debtor shall, upon the reasonable request of the Collateral Agent or its Representative, notify such warehousemen, bailee, consignee or
processor of the Lien and security interest created hereby.
(e)
Each Debtor acknowledges that it is not authorized to file any financing statement or amendment or termination statement
with respect to any financing statement without the prior written consent of the Collateral Agent and agrees that it will not do so without
the prior written consent of the Collateral Agent, subject to such Debtor’s rights under Section 9-509(d)(2) to the UCC.
(f)
No Debtor shall enter into any Contract that restricts or prohibits the grant to any Secured Party of a security interest
in favor of the Collateral Agent in Accounts, Chattel Paper, Instruments or payment intangibles or the proceeds of the foregoing.
4.5
Events of Default, Etc. During the period during which an Event of Default shall have occurred and be continuing
subject to Permitted Liens:
(a)
each Debtor shall, at the request of the Collateral Agent or its Representative, assemble the Collateral and make it available
to the Collateral Agent or its Representative at a place or places designated by the Collateral Agent or its Representative which are
reasonably convenient to the Collateral Agent or its Representative, as applicable, and such Debtor;
(b)
the Collateral Agent or its Representative may make any reasonable compromise or settlement deemed desirable with respect
to any of the Collateral and may extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, any
of the Collateral;
(c)
the Collateral Agent shall have all of the rights and remedies with respect to the Collateral of a secured party under the
UCC (whether or not said UCC is in effect in the jurisdiction where the rights and remedies are asserted) and such additional rights and
remedies to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may
be asserted, including, without limitation, the right, to the maximum extent permitted by law, to: (i) upon one Trading Day’s prior
written notice to each Debtor, exercise all voting, consensual and other powers of ownership pertaining to the Collateral as if the Collateral
Agent were the sole and absolute owner thereof (and each Debtor agrees to take all such action as may be appropriate to give effect to
such right) and (ii) the appointment of a receiver or receivers for all or any part of the Collateral or business of a Debtor, whether
such receivership be incident to a proposed sale or sales of such Collateral or otherwise and without regard to the value of the Collateral
or the solvency of any person or persons liable for the payment of the Obligations secured by such Collateral. Each Debtor hereby consents
to the appointment of such receiver or receivers, waives any and all defenses to such appointment and agrees that such appointment shall
in no manner impair, prejudice or otherwise affect the rights of the Collateral Agent or any Secured Party under this Agreement. Each
Debtor hereby expressly waives notice of a hearing for appointment of a receiver and the necessity for bond or an accounting by the receiver;
(d)
the Collateral Agent or its Representative in its discretion may, in the name of the Collateral Agent or in the name of
a Debtor or otherwise, demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in
exchange for any of the Collateral, but shall be under no obligation to do so;
(e)
the Collateral Agent or its Representative may take immediate possession and occupancy of any premises owned, used or leased
by a Debtor and exercise all other rights and remedies which may be available to the Collateral Agent or a Secured Party;
(f)
the Collateral Agent may, upon reasonable notice (such reasonable notice to be determined by the Collateral Agent in its
sole and absolute discretion, which shall not be less than 10 days), with respect to the Collateral or any part thereof which shall then
be or shall thereafter come into the possession, custody or control of the Collateral Agent or its Representative, sell, lease, license,
assign or otherwise dispose of all or any part of such Collateral, at such place or places as the Collateral Agent deems best, and for
cash or for credit or for future delivery (without thereby assuming any credit risk), at public or private sale, without demand of performance
or notice of intention to effect any such disposition or of the time or place thereof (except such notice as is required above or by applicable
statute and cannot be waived), and the Collateral Agent or anyone else may be the purchaser, lessee, licensee, assignee or recipient of
any or all of the Collateral so disposed of at any public sale (or, to the extent permitted by law, at any private sale) and thereafter
hold the same absolutely, free from any claim or right of whatsoever kind, including any right or equity of redemption (statutory or otherwise),
of Debtors, any such demand, notice and right or equity being hereby expressly waived and released. The Collateral Agent may, without
notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time
and place fixed for the sale, and such sale may be made at any time or place to which the sale may be so adjourned;
(g)
the Collateral Agent, shall, upon one Trading Day’s prior written notice to each Debtor, have the right (in its sole
and absolute discretion) to cause each of the pledged securities to be transferred of record into the name of the Collateral Agent or
into the name of its nominee (as pledgee or as sub-agent) or the name of the applicable Debtor, endorsed or assigned in blank or in favor
of the Collateral Agent and to the extent permitted by the documentation governing such pledged securities and applicable law, the Collateral
Agent shall have the right to exchange the certificates representing pledged securities for certificates of smaller or larger denominations
for any purpose consistent with this Agreement. Each Debtor shall take any and all actions reasonably requested by the Collateral Agent
to facilitate compliance with this Section 4.5(g);
(h)
all rights of any Debtor to dividends, interest, principal or other distributions that such Debtor is entitled to receive
shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right
and authority to receive and retain such dividends, interest, principal or other distributions as part of the pledged Collateral hereunder.
All dividends, interest, principal or other distributions received by any Debtor contrary to the provisions of Section 4.5(g) or this
Section 4.5(h) shall be held in trust for the benefit of the Collateral Agent and shall be forthwith delivered to the Collateral Agent
upon demand in the same form as so received (with any necessary endorsement reasonably requested by the Collateral Agent); and
(i)
the rights, remedies and powers conferred by this Section 4.5 are in addition to, and not in substitution for, any other
rights, remedies or powers that the Collateral Agent or any Secured Party may have under any Transaction Document, at law, in equity or
by or under the UCC or any other statute or agreement. The Collateral Agent may proceed by way of any action, suit or other proceeding
at law or in equity and no right, remedy or power of the Collateral Agent will be exclusive of or dependent on any other. The Collateral
Agent may exercise any of its rights, remedies or powers separately or in combination and at any time.
The proceeds of each collection, sale or other
disposition under this Section 4.5 shall be applied in accordance with Section 4.8 hereof.
4.6
Deficiency. If the proceeds of sale, collection or other realization of or upon the Collateral are insufficient to
cover the reasonable and documented costs and expenses of such realization and the payment in full of the Obligations, Debtors shall remain
jointly and severally liable for any deficiency.
4.7
Private Sale. Each Debtor recognizes that the Collateral Agent may be unable to effect a public sale of any or all
of the Collateral consisting of securities by reason of certain prohibitions contained in the Securities Act, and applicable state securities
laws, but may be compelled to resort to one or more private sales thereof to a restricted group of purchasers who will be obliged to agree,
among other things, to acquire such Collateral for their own account for investment and not with a view to the distribution or resale
thereof. Each Debtor acknowledges and agrees that any such private sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale and each Debtor agrees that it is not commercially unreasonable for the Collateral Agent to engage
in any such private sales or dispositions under such circumstances. The Collateral Agent shall be under no obligation to delay a sale
of any of the Collateral to permit a Debtor to register such Collateral for public sale under the Act, or under applicable state securities
laws, even if Debtors would agree to do so. The Collateral Agent shall not incur any liability as a result of the sale of any such Collateral,
or any part thereof, at any private sale provided for in this Agreement conducted in a commercially reasonable manner, and so long as
the Collateral Agent conducts such sale in a commercially reasonable manner each Debtor hereby waives any claims against the Collateral
Agent or any Secured Party arising by reason of the fact that the price at which the Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even
if the Collateral Agent accepts the first offer received and does not offer the Collateral to more than one offeree.
Each Debtor further agrees to
do or cause to be done all such other acts and things as may be necessary to make such sale or sales of any portion or all of any such
Collateral valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards
of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales,
all at such Debtor’s expense. Each Debtor further agrees that a breach of any of the covenants contained in this Section 4.7 will
cause irreparable injury to the Secured Parties, that the Secured Parties have no adequate remedy at law in respect of such breach and,
as a consequence, agrees that each and every covenant contained in this Section 4.7 shall be specifically enforceable against Debtors
by Collateral Agent of behalf of each Secured Party, and each Debtor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that no Event of Default has occurred and is continuing.
4.8
Application of Proceeds. The proceeds of any collection, sale or other realization of all or any part of the Collateral,
and any other cash at the time held by the Collateral Agent under this Agreement, shall be applied to the Obligations in accordance with
the Pro Rata Portion of each Secured Party. “Pro Rata Portion” shall mean the ratio of (x) the subscription amount of the
Notes purchased by a Secured Party participating under this Section 4.8 and (y) the sum of the aggregate subscription amounts of the Notes
purchased by all Secured Parties participating under this Section 4.8.
4.9
Attorney-in-Fact. Each Debtor hereby irrevocably constitutes and appoints the Collateral Agent, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Debtor
and in the name of such Debtor or in its own name, upon the occurrence and during the continuation of an Event of Default (except in connection
with the perfection of the security interest granted to the Collateral Agent hereunder), from time to time in the discretion of the Collateral
Agent, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute and deliver
any and all documents and instruments which may be necessary or desirable to perfect or protect any security interest granted hereunder,
to maintain the perfection or priority of any security interest granted hereunder, or to otherwise accomplish the purposes of this Agreement,
and, without limiting the generality of the foregoing, hereby gives the Collateral Agent the power and right, on behalf of such Debtor,
without notice to or assent by such Debtor (to the extent permitted by applicable law), to do the following upon the occurrence and during
the continuation of an Event of Default:
(a)
to take any and all appropriate action and to execute and deliver any and all documents and instruments which may be necessary
or desirable to accomplish the purposes of this Agreement;
(b)
to ask, demand, collect, receive and give acquittance and receipts for any and all moneys due and to become due under any
Collateral and, in the name of such Debtor or its own name or otherwise, to take possession of and endorse and collect any checks, drafts,
notes, acceptances or other Instruments for the payment of moneys due under any Collateral and to file any claim or to take any other
action or proceeding in any court of law or equity or otherwise deemed appropriate by the Collateral Agent for the purpose of collecting
any and all such moneys due under any Collateral whenever payable and to file any claim or to take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the Collateral Agent for the purpose of collecting any and all such moneys due
under any Collateral whenever payable;
(c)
to pay or discharge charges or liens levied or placed on or threatened against the Collateral, to effect any insurance called
for by the terms of this Agreement and to pay all or any part of the premiums therefor;
(d)
to direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due, and to
become due thereunder, directly to the Collateral Agent or as the Collateral Agent shall direct, and to receive payment of and receipt
for any and all moneys, claims and other amounts due, and to become due at any time, in respect of or arising out of any Collateral;
(e)
to sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with accounts and other Documents constituting or relating to the Collateral;
(f)
to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any part thereof and to enforce any other right in respect of any Collateral;
(g)
to defend any suit, action or proceeding brought against a Debtor with respect to any Collateral;
(h)
to settle, compromise or adjust any suit, action or proceeding described above and, in connection therewith, to give such
discharges or releases as the Collateral Agent may deem appropriate;
(i)
to the extent that a Debtor’s authorization given in Section 4.1(b) of this Agreement is not sufficient to file such
financing statements with respect to this Agreement, with or without such Debtor’s signature, or to file a photocopy of this Agreement
in substitution for a financing statement, as the Collateral Agent may deem appropriate and to execute in such Debtor’s name such
financing statements and amendments thereto and continuation statements which may require such Debtor’s signature;
(j)
generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Collateral Agent were the absolute owners thereof for all purposes; and
(k)
to do, at the Collateral Agent’s option and at such Debtor’s expense, at any time, or from time to time, all
acts and things which the Collateral Agent reasonably deems necessary to protect or preserve or realize upon the Collateral and the Secured
Parties’ Liens therein, in order to effect the intent of this Agreement, all as fully and effectively as such Debtor might do.
Each Debtor hereby ratifies,
to the extent permitted by law, all that such attorneys lawfully do or cause to be done by virtue hereof provided the same is performed
in a commercially reasonable manner. The power of attorney granted hereunder is a power coupled with an interest and shall be irrevocable
until the Obligations are indefeasibly paid in full in cash (other than Obligations which expressly survive by their terms and contingent
indemnification Obligations) and this Agreement is terminated in accordance with Section 4.11 hereof.
Each Debtor also authorizes
the Collateral Agent, at any time from and after the occurrence and during the continuation of any Event of Default, (x) to communicate
in its own name with any party to any Contract with regard to the assignment of the right, title and interest of such Debtor in and under
the Contracts hereunder and other matters relating thereto and (y) to execute, in connection with any sale of Collateral provided for
hereunder, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral.
4.10
Perfection. Prior to or concurrently with the execution and delivery of this Agreement, each Debtor shall:
(a)
file such financing statements, assignments for security and other documents in such offices as may be necessary or as the
Collateral Agent or the Representative may request to perfect the security interests granted by Section 3 of this Agreement;
(b)
at the Collateral Agent’s request, deliver to the Collateral Agent or its Representative the originals of all Instruments
together with, in the case of Instruments constituting promissory notes, allonges attached thereto showing such promissory notes to be
payable to the order of a blank payee;
(c)
If the Debtor has not done so, the Collateral Agent may do the actions set forth in clauses (a) and (b) above at any later
time at the sole cost of the Debtors.
4.11
Termination; Partial Release of Collateral. This Agreement and the Liens and security interests granted hereunder
shall not terminate until the full and complete performance and indefeasible satisfaction of all of the Obligations (other than Obligations
which expressly survive by their terms and contingent indemnification Obligations), whereupon the Collateral Agent shall forthwith cause
to be assigned, transferred and delivered, against receipt but without any recourse, warranty or representation whatsoever, any remaining
Collateral to or on the order of the Debtors. The Collateral Agent shall also execute and deliver to the Debtors upon such termination
and at Debtors’ expense such UCC termination statements, certificates for terminating the Liens on the Motor Vehicles (if any) and
such other documentation as shall be reasonably requested by the Debtors or otherwise necessary to effect the termination and release
of all Liens and security interests in favor of the Collateral Agent affecting the Collateral. Notwithstanding anything to the contrary
in this Agreement, upon full and complete satisfaction of the Obligations (other than Obligations which expressly survive by their terms
and contingent indemnification Obligations), the Debtors’ obligations under this Agreement shall immediately terminate and any Liens
shall thereupon be void. If any of the Collateral shall be sold, transferred to or otherwise disposed of by any Debtor in a transaction
permitted by and in compliance with all applicable provisions of the applicable Transaction Document, then the Liens granted hereunder
with respect to such Collateral shall be automatically released (unless otherwise specified herein or in the other Transaction Documents),
all without delivery of any instrument or performance of any act by any party, and Collateral Agent shall, at the written request and
sole expense of such Debtor, execute and deliver to such Debtor all releases or other documents reasonably necessary or reasonably desirable
for the release of the Liens created hereby on such Collateral.
4.12
Further Assurances. At any time and from time to time, upon the written reasonable request of the Collateral Agent
or its Representative, and at the sole expense of the Debtors, Debtors will promptly and duly execute and deliver any and all such further
instruments, documents and agreements and take such further actions as the Collateral Agent or its Representative may reasonably require
in order for the Collateral Agent to obtain the full benefits of this Agreement and of the rights and powers herein granted in favor of
the Collateral Agent, including, without limitation, using the Debtors’ commercially reasonable efforts to secure all consents and
approvals necessary or appropriate for the assignment to the Collateral Agent of any Collateral held by the Debtors or in which a Debtor
has any rights not heretofore assigned, the filing of any financing or continuation statements under the UCC with respect to the Liens
and security interests granted hereby, transferring Collateral to the Collateral Agent’s possession (if a security interest in such
Collateral can be perfected by possession), placing the interest of the Collateral Agent as lienholder on the certificate of title of
any Motor Vehicle, and obtaining waivers of liens from landlords and mortgagees. Each Debtor also hereby authorizes the Collateral Agent
and its Representative to file any such financing or continuation statement without the signature of such Debtor to the extent permitted
by applicable law.
4.13
Limitation on Duty of Secured Party. The powers conferred on the Collateral Agent under this Agreement are solely
to protect the Collateral Agent’s interest on behalf of itself and the other Secured Parties in the Collateral and shall not impose
any duty upon it to exercise any such powers. The Collateral Agent shall be accountable only for amounts that it actually receives as
a result of the exercise of such powers and neither the Collateral Agent nor its Representative nor any of their respective officers,
directors, employees or agents shall be responsible to Debtors for any act or failure to act, except for gross negligence, bad faith or
willful misconduct. Without limiting the foregoing, the Collateral Agent and any Representative shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in their possession if such Collateral is accorded treatment substantially equivalent
to that which the Collateral Agent or any Representative, in its individual capacity, accords its own property consisting of the type
of Collateral involved, it being understood and agreed that neither the Collateral Agent nor any Representative shall have any responsibility
for taking any necessary steps (other than steps taken in accordance with the standard of care set forth above) to preserve rights against
any Person with respect to any Collateral.
Also without limiting the
generality of the foregoing, neither the Collateral Agent nor any Representative shall have any obligation or liability under any Contract
or license by reason of or arising out of this Agreement or the granting to the Collateral Agent of a security interest therein or assignment
thereof or the receipt by the Collateral Agent or any Representative of any payment relating to any Contract or license pursuant hereto,
nor shall the Collateral Agent or any Representative be required or obligated in any manner to perform or fulfill any of the obligations
of Debtors under or pursuant to any Contract or license, or to make any payment, or to make any inquiry as to the nature or the sufficiency
of any payment received by it or the sufficiency of any performance by any party under any Contract or license, or to present or file
any claim, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it
or to which it may be entitled at any time or times.
Section
5.
Miscellaneous.
5.1
No Waiver. No failure on the part of the Collateral Agent or any of its Representatives to exercise, and no course
of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by the Collateral Agent or any of its Representatives of any right, power or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right, power or remedy. The rights and remedies hereunder provided
are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by law.
5.2
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement
shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to conflicts of law principles.
5.3
Notices. All notices, approvals, requests, demands and other communications hereunder shall be delivered or made
in the manner set forth in, and shall be effective in accordance with the terms of, the Purchase Agreement. The Debtors and the Collateral
Agent may change their respective notice addresses by written notice given to each other party five days prior to the effectiveness of
such change.
5.4
Amendments, Etc. The terms of this Agreement may be waived, altered or amended only by an instrument in writing duly
executed by the Debtor sought to be charged or benefited thereby and the Secured Parties holding a majority of the outstanding principal
of the Notes. Any such amendment or waiver shall be binding upon all the Secured Parties (including the Collateral Agent in its capacity
as a Secured Party) and the Debtor(s) sought to be charged or benefited thereby and their respective successors and assigns.
5.5
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors
and assigns of each of the parties hereto, provided, that no Debtor shall assign or transfer its rights hereunder without
the prior written consent of each Secured Party. Any Secured Party, including the Collateral Agent in its capacity as a Secured Party,
may assign its rights hereunder without the consent of the Debtors, in which event such assignee shall be deemed to be a Secured Party
and/or the Collateral Agent, as applicable, hereunder with respect to such assigned rights.
5.6
Counterparts; Headings. This Agreement may be authenticated in any number of counterparts, all of which taken together
shall constitute one and the same instrument and any of the parties hereto may authenticate this Agreement by signing any such counterpart.
This Agreement may be authenticated by manual signature or facsimile, .pdf or similar electronic signature, all of which shall be equally
valid. The headings in this Agreement are for convenience of reference only and shall not alter or otherwise affect the meaning hereof.
5.7
Severability. If any provision hereof is invalid and unenforceable in any jurisdiction, then, to the fullest extent
permitted by law, (a) the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed
in favor of the Collateral Agent, its Representative and each other Secured Party (and all of their respective successors and assigns)
in order to carry out the intentions of the parties hereto as nearly as may be possible and (b) the invalidity or unenforceability of
any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction.
5.8
Exclusive Jurisdiction. Any action or proceeding arising out of, or relating in any way to, this Agreement shall
be brought and enforced only as provided in the Purchase Agreement.
5.9
Waiver of Right to Trial by Jury. Each Debtor and each Secured Party waive their respective rights to a trial
by jury of any claim or cause of action based upon or arising out of or related to this Agreement or the transactions contemplated hereby,
in any action, proceeding or other litigation of any type brought by any of the parties against any other party or parties, whether with
respect to contract claims, tort claims, or otherwise. Each Debtor and each Secured Party agree that any such claim or cause of action
shall be tried by a court trial without a jury. Without limiting the foregoing, the parties further agree that their respective right
to a trial by jury is waived by operation of this Section 5.9 as to any action, counterclaim or other proceeding which seeks, in whole
or in part, to challenge the validity or enforceability of this agreement or any provision hereof. This waiver shall apply to any subsequent
amendments, renewals, supplements or modifications to this Agreement.
5.10
Joint and Several. The obligations, covenants and agreements of the Debtors hereunder shall be the joint and several
obligations, covenants and agreements of each Debtor, whether or not specifically stated herein without preferences or distinction among
them.
5.11
Collateral Agent and Secured Parties Indemnification.
(a)
Each Secured Party has, pursuant to the Purchase Agreement, designated and appointed the Collateral Agent as the administrative
agent of such Secured Party under this Agreement and the related agreements.
(b)
Nothing in this Section 5.11 shall be deemed to limit or otherwise affect the rights of the Collateral Agent to exercise
any remedy provided in this Agreement or any other Transaction Document.
(c)
If pursuant to any Transaction Document a Secured Party (including the Collateral Agent) is given the discretion to allocate
proceeds received by such Secured Party (including the Collateral Agent) pursuant to the exercise of remedies under the Transaction Documents
or at law or in equity (including without limitation with respect to any secured creditor remedies exercised against the Collateral and
any other collateral security provided for under any Transaction Document), the Collateral Agent shall apply such proceeds to the then
outstanding Obligations in the following order of priority (with amounts received being applied in the numerical order set forth below
until exhausted prior to the application to the next succeeding category and each Secured Party entitled to payment shall receive an amount
equal to its Pro Rata Portion of amounts available to be applied pursuant to clauses second, third and fourth below):
first, to
payment of fees, costs and expenses (including reasonable attorney’s fees) owing to the Collateral Agent;
second, to
payment of all accrued unpaid interest and fees (other than fees owing to Collateral Agent) on the Obligations;
third, to
payment of principal of the Obligations;
fourth, to
payment of any other amounts owing constituting Obligations; and
fifth, any
remainder shall be for the account of and paid to whoever may be lawfully entitled thereto.
(d)
Each Debtor agrees, jointly and severally, to indemnify, defend and hold harmless the Collateral Agent (both in its capacity
as collateral agent hereunder and as a Secured Party), every other Secured Party, their respective successors and assigns and all of their
respective officers, directors, shareholders, members, managers, partners, employees, attorneys and agents, and any Person in control
of any thereof (collectively, the “Indemnitees”), from and against any claims, debts, liabilities, losses, demands, obligations,
actions, causes of action, fines, penalties, reasonable and documented out of pocket costs and expenses (including attorneys’ fees
and consultants’ fees), of every nature, character and description (each, an “Indemnified Liability” and collectively
the “Indemnified Liabilities”), under federal and state securities laws or otherwise insofar as such Indemnified Liability
arises out of or is based upon any of the transactions contemplated by this Agreement, any other Transaction Document, any of the Obligations,
or any other cause or thing whatsoever occurred, done, omitted or suffered to be done by a Debtor relating to any Secured Party or the
Obligations (except any such amounts sustained or incurred solely as the result of the gross negligence, bad faith or willful misconduct
of such Indemnitees, as finally determined by a court of competent jurisdiction); but limited, in the case of legal fees and expenses,
to one counsel to all such Indemnitees, taken as a whole and, solely in the case of an actual or potential conflict of interest, one additional
counsel to all affected Indemnitees, taken as a whole (and, if reasonably necessary, one local counsel in any relevant jurisdiction to
all such Persons, taken as a whole and, solely in the case of any such an actual or potential conflict of interest, one additional local
counsel to all affected Indemnitees taken as a whole, in each such relevant jurisdiction)). If and to the extent that the foregoing undertakings
in this paragraph may be unenforceable for any reason, each Debtor agrees to jointly and severally make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The obligations of each Debtor
under this Section 5.11(d) shall survive any termination of this Agreement or any other Transaction Document.
5.12
No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict construction will be applied against any party.
5.13
Securities Purchase Agreement. This Agreement modifies and supplements the Purchase Agreement in the following respects:
(a)
The following is added to Section 2.2(b) as a condition to the Investor’s obligations thereunder: “as to the Second
Tranche Closing assuming that there is mutual consent, the Company and the Investor shall have entered into a new Intercreditor Agreement
with an A/R Lender providing such A/R Lender with a first priority security interest solely limited to the accounts receivable of the
Company limited to the principal balance due of the accounts receivable subject to the A/R Lender’s Lien, which Intercreditor Agreement
shall be subject to the satisfaction of the Investor in its sole discretion and further provide that the Investor has a first priority
security interest on all other assets of the Company and its Subsidiaries and a second priority security interest on the accounts receivable
of the Company and its Subsidiaries to the extent of the A/R Lender’s Lien.”
(b)
The definition of “Required Approvals” in Section 3.1(e) of the Purchase Agreement is supplemented with the following:
“and (vi) the entry into the Intercreditor Agreement pursuant to the Security Agreement”.
(c)
Section 3.1(mm) is amended to provide as follows: “Seniority. As of each Closing Date, no Indebtedness or other claim
against the Company is senior to any of the Notes in right of payment, whether with respect to interest or upon liquidation or dissolution,
or otherwise, except for the facility with the Current Lender, and the facility with the A/R Lender solely with respect to accounts receivable
in accordance with the Transaction Documents and Intercreditor Agreement.”
5.14
Entire Agreement; Amendment. This Agreement, together with the other transaction documents, supersedes all other
prior oral or written agreements between the Secured Parties, the Collateral Agent, the Debtors, their affiliates and persons acting on
their behalf with respect to the matters discussed herein, and this Agreement, together with the other transaction documents and the other
instruments referenced herein and therein, contain the entire understanding of the parties with respect to the matters covered herein
and therein and, except as specifically set forth herein or therein, neither the secured party nor any Debtor makes any representation,
warranty, covenant or undertaking with respect to such matters. As of the date of this Agreement, there are no unwritten agreements between
the parties with respect to the matters discussed herein. No provision of this Agreement may be amended, modified or supplemented other
than by an instrument in writing signed by the Debtors and the Secured Party.
- Remainder
of Page Intentionally Left Blank; Signature Page Follows -
IN WITNESS WHEREOF, the parties
hereto have caused this Security Agreement to be duly executed and delivered as of the day and year first above written.
DEBTORS:
Healthcare Triangle, Inc., a Delaware corporation
By: _____ ______________________
Name: Thyagarajan Ramachandran
Title: Chief Financial Officer
Devcool, Inc., a California corporation
By: _____ ______________________
Name: Thyagarajan Ramachandran
Title: Chief Financial Officer
COLLATERAL AGENT:
_____________________,
a business entity organized under the laws of _________________, in its capacity as Collateral Agent for the Secured Parties
By:
Name:
Title:
INVESTOR:
_______________________________
By:
Name:
Title:
EXHIBIT A
Form of Joinder
Joinder to Security Agreement
The undersigned, ______________________________,
hereby joins in the execution of that certain Security Agreement dated as of December __, 2023 (as amended, restated, supplemented or
otherwise modified from time to time, the “Security Agreement”) by the Debtors (as defined therein), the Secured Parties (as
defined therein), and each other Person that becomes a Debtor or a Secured Party thereunder after the date thereof and hereof and pursuant
to the terms thereof, to and in favor of _________________, a business entity organized under the laws of _________________, in its capacity
as Collateral Agent for the Secured Parties. By executing this Joinder, the undersigned hereby agrees that it is a Debtor thereunder and
agrees to be bound by all of the terms and provisions of the Security Agreement. The undersigned represents and warrants that the representations
and warranties set forth in the Security Agreement are, with respect to the undersigned, true and correct as of the date hereof.
The undersigned represents
and warrants to Secured Party that:
(a)
all of the Equipment, Inventory and Goods owned by such Debtor is located at the places as specified on Schedule I and such
Debtor conducts business in the jurisdiction set forth on Schedule I;
(b)
except as disclosed on Schedule I, none of such Collateral is in the possession of any bailee, warehousemen, processor or
consignee;
(c)
the chief place of business, chief executive office and the office where such Debtor keeps its books and records are located at
the place specified on Schedule I;
(d)
such Debtor (including any Person acquired by such Debtor) does not do business or has not done business during the past five years
under any tradename or fictitious business name, except as disclosed on Schedule II;
(e)
all Copyrights, Patents and Trademarks owned or licensed by the undersigned are listed in Schedules III, IV and V,
respectively;
(f)
all Deposit Accounts, securities accounts, brokerage accounts and other similar accounts maintained by such Debtor, and the financial
institutions at which such accounts are maintained, are listed on Schedule VI;
(g)
all Commercial Tort Claims of such Debtor are listed on Schedule VII;
(h)
all interests in real property and mining rights held by such Debtor are listed on Schedule VIII;
(i)
all Equipment owned by such debtor that is subject to a certificate of title or ownership statute is listed on Schedule IX.
________________, a ________
By:
Title:
FEIN: ______________
SECURITY AGREEMENT – SCHEDULES
SCHEDULE I
Jurisdictions and Debtor’s
Information
State of Incorporation of Healthcare
Triangle, Inc.: Delaware
State of Incorporation of Devcool,
Inc., Inc.: California
Addresses:
Headquarters: 7901 Stoneridge
Dr. Suite 220, Pleasanton, CA -94588
Principal Office: 7901 Stoneridge
Dr. Suite 220, Pleasanton, CA -94588
SCHEDULE II
Trade Names
Tradenames: HCTI, Healthcare
Triangle and CloudEz
Copyrights:
Patents:
Assumed or Fictitious Names:
DBAs:
Confirm or disclose:
Such Debtor has no notice of any suits or actions commenced or threatened with reference to Trademarks owned by it.
We confirm that there are
no notice of any suits or actions commenced or threatened with reference to the Trademarks owned by Healthcare Triangle, Inc.
SCHEDULE III
Copyrights
Not applicable
SCHEDULE IV
Patents
Not applicable
SCHEDULE V
Trademarks
Trademark |
Country |
Application No |
Reg Date |
Status |
Owner |
HEALTHCARE TRIANGLE |
US |
88918845 |
11/16/2021 |
Application filed |
Healthacare Triangle, Inc |
HEALTHCARE TRIANGLE REINFORCING HEALTHCARE PROGRESS |
US |
88918851 |
11/16/2021 |
Application filed |
Healthacare Triangle, Inc |
REINFORCING HEALTHCARE PROGRESS |
US |
88918856 |
11/16/2021 |
Application filed |
Healthcare Triangle, Inc |
SCHEDULE VI
Depository and Other Accounts
Account – Healthcare Triangle, Inc. (Investor
Reserve Amount)
Bank - Chase Bank
Account number – 3861702778
ABA / Routing – 021000021
Swift Code: CHASUS33
Account – Healthcare Triangle, Inc. (Working
Capital)
Bank - Chase Bank
Account number – 695587912
ABA / Routing – 021000021
Swift Code: CHASUS33
SCHEDULE VII
Commercial Tort Claim
None
SCHEDULE VIII
Real Property Interests
None
SCHEDULE IX
Debtor’s Equipment
None
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT made
as of December 28, 2023 (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), by
Healthcare Triangle, Inc., a Delaware corporation (the “Pledgor”) and ___________________________, a _______________ entity,
in its capacity as agent (“Collateral Agent”) for itself as an Investor (together with its successors and assigns).
WHEREAS, the Pledgor has executed
and delivered to the Investor identified in that certain Purchase Agreement (as defined below) (and together with its successors and assigns
and each other purchaser of a Note (as defined in the Purchase Agreement) and their respective successors and assigns, individually the
“Investor”) that certain Note made by the Company in an original aggregate principal amount of $2,000,000 in the First Tranche,
and subject to the terms and conditions of the Purchase Agreement may execute and deliver the Second Tranche Note and the Third Tranche
Note, as defined and provided for under the Purchase Agreement dated as the date hereof (as the same may be amended, restated, supplemented
or otherwise modified, the “Purchase Agreement”), by and between the Pledgor and the Investor;
WHEREAS, the Pledgor legally
and beneficially owns the interests specified on Exhibit A hereto and each other corporation or other entity, the capital stock
or other equity interests and securities (any, “Securities”) of which are owned or acquired by the Pledgor and described on
an addendum hereto from time-to-time executed by the Pledgor in form and substance satisfactory to the Collateral Agent (each such entity
is referred to herein as a “Pledge Entity” and collectively as the “Pledge Entities,” which shall include all
subsidiaries of the Pledgor during the time this Agreement remains in effect); provided that the parties hereto agree that, as
of the date hereof, the Pledge Entities specified on Exhibit A are the only Pledge Entities. The failure to execute an addendum
shall not relieve the Pledgor of its obligation to pledge any after acquired Securities;
WHEREAS, pursuant to a Security
Agreement dated as of the date of this Agreement by and among the Collateral Agent, the Pledgor and the other entities party thereto as
“Debtors” (as the same may be amended, restated, modified or supplement and in effect from time to time, the “Security
Agreement”), the Pledgor and each other Debtor has granted the Collateral Agent, for its benefit and the benefit of the other Investors,
a security interest in, Lien upon and pledge of all of such Pledgor’s or other Debtor’s rights in such Pledgor’s or
other Debtor’s Collateral (as defined in the Security Agreement), subject to Permitted Liens (as defined in the Purchase Agreement);
and
WHEREAS, to induce the Investor
to enter into the Purchase Agreement, to purchase the Notes and any Additional Notes and to make the financial accommodations available
to the Pledgor under the Purchase Agreement, and in order to secure the payment and performance by the Pledgor of the Obligations (as
defined in the Security Agreement), the Pledgor has agreed to pledge to the Collateral Agent, for the benefit of itself and the other
the Investors, the Securities (the “Pledged Equity”) of the Pledge Entities now or hereafter owned or acquired by such Pledgor
to secure the Obligations.
NOW, THEREFORE, in consideration
of the premises and in order to induce the Investor to purchase the Notes under the Purchase Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Pledgor hereby agrees with the Collateral Agent as follows:
1.
Defined Terms.
(a)
Unless otherwise defined or referenced herein, all capitalized words and terms used herein shall have the meanings given
them in the Purchase Agreement.
(b)
All references to a “Investor” or “Investors” hereunder shall include the Collateral Agent acting
in its capacity as the Investor. For clarity, because the Collateral Agent is the sole Investor under the Purchase Agreement, the parties
acknowledge that notwithstanding references to Collateral Agent or Investor in this Agreement, the term “Collateral Agent”
refers to the Investor, and the terms “Investor” or “Investors” refers to the Collateral Agent, unless one or
more investors acquire a portion of the Investor’s Notes in which case the Investor shall act as Collateral Agent for all parties
who hold such Notes in accordance with this Agreement, and their respective successors and assigns. In such event, the Collateral Agent
may require amendments to the applicable Transaction Documents to reflect the inclusion of additional secured parties.
2.
Pledge.
(a)
The Pledgor hereby pledges, assigns, hypothecates, transfers, delivers and grants to the Collateral Agent, for the benefit
of itself and the other Investors, a first lien on and first priority perfected security interest in (i) all of the Pledged Equity of
the Pledge Entities now owned or hereafter acquired by such Pledgor (collectively, the “Pledged Interests”), (ii) any other
shares of Pledged Equity hereafter pledged or referred to be pledged to the Collateral Agent pursuant to this Agreement; (ii) all “investment
property” as such term is defined in §9-102(a)(49) of the UCC (as defined in Section 7) with respect thereto; (iv) any “security
entitlement” as such term is defined in § 8-102(a)(17) of the UCC with respect thereto; (v) all books and records relating
to the foregoing; and (vi) all Accessions and Proceeds (as each is defined in the UCC) of the foregoing, including, without limitation,
all distributions (cash, stock, or otherwise), dividends, stock dividends, securities, cash, instruments, rights to subscribe, purchase,
or sell, and other property, rights, and interest that such Pledgor is at any time entitled to receive or is otherwise distributed in
respect of, or in exchange for, any or all of the Pledged Collateral (as defined below), and without affecting the obligations of the
Pledgor under any provision of the Security Agreement, in the event of any consolidation or merger in which the Pledgor is not the surviving
corporation, all shares of each class or Pledged Equity of the successor entity formed by or resulting from such consolidation or merger
(the collateral described in clauses (i) through (vi) of this Section 2 being collectively referred to as the “Pledged Collateral”),
as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations. All of the Pledged Interests owned as of the date hereof by the Pledgor, which are presently represented
by certificates, are listed on Exhibit A hereto, which certificates, with undated assignments separate from the certificates or
capital stock/membership interest powers duly executed in blank by such Pledgor and to the extent such certificates are available and
not covered by an existing Lien or pledge, or irrevocable proxies, are being delivered to the Collateral Agent simultaneously with the
execution of this Agreement. Upon the creation or acquisition of any new Pledged Interests, to the extent such certificates are available
and not covered by an existing Lien or pledge, the Pledgor shall execute an Addendum in the form of Exhibit B attached hereto (a
“Pledge Addendum”). Any Pledged Collateral described in a Pledge Addendum executed by the Pledgor shall thereafter be deemed
to be listed on Exhibit A hereto. Upon delivery to the Collateral Agent, the Collateral Agent shall maintain possession and custody
of the certificates representing the Pledged Interests and any additional Pledged Collateral.
(b)
Each Pledged Interest consisting of either (i) a membership interest in a Person that is a limited liability company or
(ii) a partnership interest in a Person that is a partnership (if any) (1) will be caused to be certificated by the Pledgor within 10
Trading Days of the date of this Agreement or the date on which such uncertificated securities are acquired by the Pledgor, as applicable,
at the Pledgor’s sole cost and expense, and (2) is not and will not be deemed a “security” governed by Article 8 of
the UCC.
3.
Representations and Warranties of Pledgor. The Pledgor represents and warrants to the Collateral Agent, and covenants
with the Collateral Agent, that:
(a)
As of the date hereof, and as of the date of any Pledge Addendum, Exhibit A sets forth (i) the authorized capital
stock and other equity interests of each Pledge Entity, (ii) the number of shares of capital stock and other equity interests of each
Pledge Entity that are issued and outstanding as of the date hereof, and (iii) the percentage of the issued and outstanding shares of
capital stock and other equity interests of each Pledge Entity held by such Pledgor. Except as set forth on Exhibit A, such Pledgor
is the record and beneficial owner of, and has good and marketable title to, the Pledged Interests of such Pledgor, and such shares are
and will remain free and clear of all pledges, Liens, security interests and other encumbrances and restrictions whatsoever, except the
Liens and security interests in favor of the Collateral Agent created by this Agreement;
(b)
As of the date hereof, or as of the date of any Pledge Addendum, except as set forth on Exhibit A, there are no outstanding
options, warrants or other similar agreements with respect to the Pledged Interests or any of the other Pledged Collateral;
(c)
This Agreement is the legal, valid and binding obligation of the Pledgor, enforceable against the Pledgor in accordance
with its terms except to the extent that such enforceability is subject to applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance and moratorium laws and other laws of general application affecting enforcement of creditors’ rights generally, or the
availability of equitable remedies, which are subject to the discretion of the court before which an action may be brought;
(d)
The Pledged Interests have been duly and validly authorized and issued, are fully paid and non-assessable, and the Pledged
Interests listed on Exhibit A, as of the date hereof, and as of the date of any Pledge Addendum, constitute all of the issued and
outstanding capital stock or other equity interests of the Pledge Entities;
(e)
No consent, approval or authorization of or designation or filing with any Governmental Authority on the part of the Pledgor
is required in connection with the pledge and security interest granted under this Agreement;
(f)
The execution, delivery and performance of this Agreement will not violate any provision of any applicable law or regulation
or of any order, judgment, writ, award or decree of any Governmental Authority, which are applicable to the Pledgor, or of the articles
or certificate of incorporation, certificate of formation, bylaws or any other similar organizational documents of the Pledgor or any
Pledge Entity or of any securities issued by the Pledgor or any Pledge Entity of any mortgage, indenture, lease, contract, or other agreement,
instrument or undertaking to which the Pledgor or any Pledge Entity is a party or which is binding upon the Pledgor or any Pledge Entity
or upon any of the assets of the Pledgor or any Pledge Entity, and will not result in the creation or imposition of any Lien, charge or
encumbrance on or security interest in any of the assets of the Pledgor or any Pledge Entity, except as otherwise contemplated by this
Agreement;
(g)
The pledge, assignment and delivery of the Pledged Interests and the other Pledged Collateral pursuant to this Agreement
creates a valid first Lien on and perfected first priority security interest in such Pledged Interests and Pledged Collateral and the
proceeds thereof in favor of the Collateral Agent, subject to Permitted Liens. Until this Agreement is terminated pursuant to Section
11 hereof, the Pledgor covenants and agrees that it will defend, for the benefit of the Collateral Agent and each other Investor, the
Collateral Agent’s right, title and security interest in and to the Pledged Interests, the other Pledged Collateral and the proceeds
thereof against the claims and demands of all other Persons; and
(h)
Neither the Pledgor nor any Pledged Entity (i) will become a Person whose property or interests in property are blocked
or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions
with Persons Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001), (ii) will engage in any dealings or transactions
prohibited by Section 2 of such executive order, or (iii) will otherwise become a Person on the list of Specially Designated Nationals
and Blocked Persons or subject to the limitations or prohibitions under any other Office of Foreign Asset Control regulation or executive
order.
4.
Dividends, Distributions, Etc. If, prior to irrevocable repayment in full in cash of the Obligations (other than
Obligations which expressly survive termination of this Agreement by their terms which shall include without limitation any contingent
indemnification Obligations), the Pledgor shall receive any certificate (including, without limitation, any certificate representing a
dividend or a distribution in connection with any reclassification, increase or reduction of capital, or issued in connection with any
reorganization, merger or consolidation), or any options or rights, whether as an addition to, in substitution for, or in exchange for
any of the Pledged Interests or otherwise, such Pledgor agrees, in each case, to accept the same as the Collateral Agent’s agent
and to hold the same in trust for the Collateral Agent, and to deliver the same promptly (but in any event within five days) to the Collateral
Agent in the exact form received, with the endorsement of such Pledgor when necessary and/or with appropriate undated assignments separate
from certificates or stock powers duly executed in blank, to be held by the Collateral Agent subject to the terms hereof, as additional
Pledged Collateral. The Pledgor shall promptly deliver to the Collateral Agent (i) a Pledge Addendum with respect to such additional certificates,
and (ii) any financing statements or amendments to financing statements as requested by the Collateral Agent. The Pledgor hereby authorizes
the Collateral Agent to attach each such Pledge Addendum to this Agreement. Except as provided in Section 5(b) below, all sums of money
and property so paid or distributed in respect of the Pledged Interests which are received by the Pledgor shall, until paid or delivered
to the Collateral Agent, be held by the Pledgor in trust as additional Pledged Collateral.
5.
Voting Rights; Dividends; Certificates.
(a)
So long as no Event of Default (as defined in the Notes) has occurred and is continuing, the Pledgor shall be entitled (subject
to the other provisions hereof, including, without limitation, Section 8 below) to exercise its voting and other consensual rights with
respect to the Pledged Interests and otherwise exercise the incidents of ownership thereof in any manner not inconsistent with this Agreement,
the Purchase Agreement and/or any of the other Transaction Documents. The Pledgor hereby grants to the Pledgee or its nominee, an irrevocable
proxy to exercise all voting, corporate and limited liability company rights relating to the Pledged Interests in any instance, which
proxy shall be effective, at the discretion of the Collateral Agent, upon the occurrence and during the continuance of an Event of Default.
Upon the request of the Collateral Agent at any time, the Pledgor agrees to deliver to the Collateral Agent such further evidence of such
irrevocable proxy or such further irrevocable proxies to vote the Pledged Interests as the Collateral Agent may request.
(b)
So long as no Event of Default shall have occurred and be continuing, the Pledgor shall be entitled to receive cash dividends
or other distributions made in respect of the Pledged Interests, to the extent permitted to be made pursuant to the terms of the Notes
and the Purchase Agreement. Upon the occurrence and during the continuance of an Event of Default, in the event that the Pledgor, as record
and beneficial owner of the Pledged Interests, shall have received or shall have become entitled to receive, any cash dividends or other
distributions in the ordinary course, such Pledgor shall deliver to the Collateral Agent, and the Collateral Agent shall be entitled to
receive and retain, for the benefit of itself and the other Investors, all such cash or other distributions as additional security for
the Obligations.
(c)
Subject to any sale or other disposition by the Collateral Agent of the Pledged Interests, any other Pledged Collateral
or other property pursuant to this Agreement, upon the indefeasible full payment in cash, satisfaction and termination of all of the Obligations
(other than Obligations which expressly survive termination of this Agreement by their terms which shall include without limitation any
contingent indemnification Obligations) and the termination of this Agreement pursuant to Section 11 hereof and of the Liens and security
interests hereby granted, the Pledged Interests, the other Pledged Collateral and any other property then held as part of the Pledged
Collateral in accordance with the provisions of this Agreement shall be returned to the Pledgor or to such other Persons as shall be legally
entitled thereto.
(d)
The Pledgor shall use its best efforts to cause all Pledged Interests to be certificated at all times while this Agreement
is in effect.
6.
Rights of Collateral Agent. The Collateral Agent shall not be liable for failure to collect or realize upon the Obligations
or any collateral security or guaranty therefor, or any part thereof, or for any delay in so doing, nor shall the Collateral Agent be
under any obligation to take any action whatsoever with regard thereto. Any or all of the Pledged Interests held by the Collateral Agent
hereunder may, if an Event of Default has occurred and is continuing, without notice, be registered in the name of the Collateral Agent
or its nominee, and the Collateral Agent or its nominee may thereafter without notice exercise all voting and corporate rights at any
meeting with respect to any Pledge Entity and exercise any and all rights of conversion, exchange, subscription or any other rights, privileges
or options pertaining to any of the Pledged Interests as if it were the absolute owner thereof, including, without limitation, the right
to vote in favor of, and to exchange at its discretion any and all of the Pledged Interests upon the merger, consolidation, reorganization,
recapitalization or other readjustment with respect to any Pledge Entity or upon the exercise by any Pledge Entity, the Pledgor or the
Collateral Agent of any right, privilege or option pertaining to any of the Pledged Interests, and in connection therewith, to deposit
and deliver any and all of the Pledged Interests with any committee, depository, transfer agent, registrar or other designated agency
upon such terms and conditions as the Collateral Agent may reasonably determine, all without liability except to account for property
actually received by the Collateral Agent, but the Collateral Agent shall have no duty to exercise any of the aforesaid rights, privileges
or options and shall not be responsible for any failure to do so or delay in so doing.
7.
Remedies. Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent may exercise
in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the
rights and remedies of a secured party under the Uniform Commercial Code (“UCC”) of the jurisdiction applicable to the affected
Pledged Collateral from time-to-time. Without limiting the foregoing, the Collateral Agent may, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon
the Pledgor or any other Person (all and each of which demands, advertisements and/or notices are hereby expressly waived), upon the occurrence
and during the continuance of an Event of Default forthwith collect, receive, appropriate and realize upon the Pledged Collateral, or
any part thereof, and/or may forthwith date and otherwise fill in the blanks on any assignments separate from certificates or stock powers
or otherwise sell, assign, give an option or options to purchase, contract to sell or otherwise dispose of and deliver said Pledged Collateral,
or any part thereof, in one or more portions at one or more public or private sales or dispositions, at any exchange or broker’s
board or at any of the Collateral Agent’s offices or elsewhere upon such terms and conditions as the Collateral Agent may deem advisable
and at such prices as it may deem best, for any combination of cash and/or securities or other property or on credit or for future delivery
without assumption of any credit risk, with the right to the Collateral Agent upon any such sale, public or private, to purchase the whole
or any part of said Pledged Collateral so sold, free of any right or equity of redemption in the Pledgor, which right or equity is hereby
expressly waived or released. The Collateral Agent shall apply the net proceeds of any such collection, recovery, receipt, appropriation,
realization, sale or disposition, after deducting all costs and expenses of every kind incurred therein or incidental thereto pursuant
to Section 5.11(c) of the Security Agreement. The Pledgor shall remain liable for any deficiency remaining unpaid after such application.
Only after so paying over such net proceeds and after the payment by the Collateral Agent of any other amount required by any provision
of law, including, without limitation, Section 9-608 of the UCC, need the Collateral Agent account for the surplus, if any, to the Pledgor.
The Pledgor agrees that the Collateral Agent need not give more than 10 days’ notice of the time and place of any public sale or
of the time after which a private sale or other intended disposition is to take place and that such notice is reasonable notification
of such matters. No notification need be given to the Pledgor if after default it has signed a statement renouncing or modifying any right
to notification of sale or other intended disposition. Notwithstanding any provision in any shareholder’s agreement or any applicable
laws to the contrary, the Pledgor acknowledge and agrees that the Pledgor may pledge to the Collateral Agent all of the Pledgor’s
right, title and interest in all of the Pledged Entities, and upon foreclosure the successful bidder (which may include the Collateral
Agent) will be deemed admitted as a member and/or shareholder, as applicable, of each Pledged Entity, and will automatically succeed to
all of the Pledgor’s right, title and interest, including without limitation, the Pledgor’s limited liability company and
equity interests, right to vote and participate in the management and business affairs of the Pledged Entities, right to a share of the
profits and losses of the Pledged Entities and right to receive distributions from the Pledged Entities.
8.
No Disposition, Etc. Until the irrevocable payment in full, satisfaction or expiration of the Obligations (other
than Obligations which expressly survive termination of this Agreement by their terms which shall include without limitation any contingent
indemnification Obligations), the Pledgor agrees that it will not sell, assign, transfer, exchange, or otherwise dispose of, or grant
any option with respect to, the Pledged Interests or any other Pledged Collateral, nor will the Pledgor create, incur or permit to exist
any Lien or other encumbrance with respect to any of the Pledged Interests or any other Pledged Collateral, or any interest therein, or
any proceeds thereof, except for the Lien and security interest of the Collateral Agent provided for by this Agreement and the Security
Agreement, and except for Permitted Liens.
9.
Sale of Pledged Interests.
(a)
The Pledgor recognizes that the Collateral Agent may be unable to effect a public sale or disposition (including, without
limitation, any disposition in connection with a merger of a Pledged Entity) of any or all the Pledged Interests by reason of certain
prohibitions contained in the Securities Act, and applicable state securities laws, but may be compelled to resort to one or more private
sales or dispositions thereof to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such securities
for their own account, for investment and not with a view to the distribution or resale thereof. The Pledgor acknowledges and agrees that
any such private sale or disposition may result in prices and other terms (including the terms of any securities or other property received
in connection therewith) less favorable to the seller than if such sale or disposition were a public sale or disposition and the Pledgor
agrees that it is not commercially unreasonable for the Collateral Agent to engage in any such private sales or dispositions under such
circumstances. The Collateral Agent shall be under no obligation to delay a sale or disposition of any of the Pledged Interests in order
to permit the Pledgor or a Pledged Entity to register such securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Pledgor or a Pledged Entity would agree to do so.
(b)
The Pledgor further agrees to do or cause to be done all such other acts and things as may be reasonably necessary to make
such sales or dispositions of the Pledged Interests valid and binding and in compliance with any and all applicable laws, regulations,
orders, writs, injunctions, decrees or awards of any and all Governmental Authorities, domestic or foreign, having jurisdiction over any
such sales or dispositions, all at such Pledgor’s expense; provided that the Pledgor shall not have any obligation to register
the Pledged Interests as securities under the Securities Act or the applicable state securities laws solely by virtue of this Section
9(b). The Pledgor further agrees that a breach of any of the covenants contained in Sections 4, 5(a), 5(b), 8, 9 and 24 will cause irreparable
injury to the Collateral Agent and that the Collateral Agent has no adequate remedy at law in respect of such breach and, as a consequence,
agrees, without limiting the right of the Collateral Agent to seek and obtain injunctive relief and/or specific performance of other obligations
of the Pledgor contained in this Agreement, that each and every covenant referenced above shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants.
The Collateral Agent shall not be required to post a bond or other security as a condition of obtaining equitable relief.
(c)
The Pledgor further agrees to indemnify and hold harmless the Collateral Agent and each other Investor, their respective
successors and assigns and all of their collective officers, directors, shareholders, members, managers, partners, employees, attorneys
and agents, and any Person in control of any thereof (collectively, the “Indemnitees”), from and against any loss, liability,
claim, damage and expense, including, without limitation, legal fees and expenses (in this paragraph collectively called the “Indemnified
Liabilities”), under federal and state securities laws or otherwise insofar as such Indemnified Liability (i) arises out of or is
based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement, prospectus or
offering memorandum or in any preliminary prospectus or preliminary offering memorandum or in any amendment or supplement to any thereof
or in any other writing prepared by the Pledgor in connection with the offer, sale or resale of all or any portion of the Pledged Collateral
unless such untrue statement of material fact was provided by the Collateral Agent, in writing, specifically for inclusion therein, or
(ii) arises out of or is based upon any omission or alleged omission to state therein a material fact required to be stated or necessary
to make the statements therein not misleading, such indemnification to remain operative regardless of any investigation made by or on
behalf of the Collateral Agent or any successor thereof, or any Person in control of any thereof; but limited, in the case of legal fees
and expenses, to one counsel to all such Indemnitees, taken as a whole and, solely in the case of an actual or potential conflict of interest,
one additional counsel to all affected Indemnitees, taken as a whole (and, if reasonably necessary, one local counsel in any relevant
jurisdiction to all such Persons, taken as a whole and, solely in the case of any such an actual or potential conflict of interest, one
additional local counsel to all affected Indemnitees taken as a whole, in each such relevant jurisdiction)). In connection with a public
sale or other distribution, the Pledgor will provide customary indemnification to any underwriters, their successors and assigns, officers
and directors and each Person who controls any such underwriter (within the meaning of the Securities Act). If and to the extent that
the foregoing undertakings in this paragraph may be unenforceable for any reason, the Pledgor agrees to make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The obligations of the
Pledgor under this Section 9(c) shall survive any termination of this Agreement.
(d)
The Pledgor further agrees not to exercise any and all rights of subrogation it may have against a Pledged Entity upon the
sale or disposition of all or any portion of the Pledged Collateral by the Collateral Agent pursuant to the terms of this Agreement until
the termination of this Agreement in accordance with Section 11 below.
10.
No Waiver; Cumulative Remedies. The Collateral Agent shall not by any act, delay, omission or otherwise be deemed
to have waived any of its remedies hereunder, and no waiver by the Collateral Agent shall be valid unless in writing and signed by the
Collateral Agent, and then only to the extent therein set forth. A waiver by the Collateral Agent of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which the Collateral Agent would otherwise have on any further
occasion. No course of dealing between the Pledgor and the Collateral Agent or any other Investor, and no failure to exercise, nor any
delay in exercising on the part of the Collateral Agent or any other Investor of, any right, power or privilege hereunder or under the
other Transaction Documents shall impair such right or remedy or operate as a waiver thereof; nor shall any single or partial exercise
of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided are cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights or remedies provided by law or in the Purchase Agreement.
11.
Termination. This Agreement and the Liens and security interests granted hereunder shall terminate and the Collateral
Agent, at the Pledgor’s sole reasonable cost and reasonable expense, shall immediately return any Pledged Interests or other Pledged
Collateral then held by the Collateral Agent in accordance with the provisions of this Agreement to the Pledgor upon the full and complete
performance and indefeasible satisfaction of all of the Obligations (other than Obligations which expressly survive by their terms which
shall include without limitation any contingent indemnification Obligations).
12.
Possession of Collateral. Beyond the exercise of reasonable care to assure the safe custody of the Pledged Interests
in the physical possession of the Collateral Agent pursuant hereto, neither the Collateral Agent, nor any nominee of the Collateral Agent,
shall have any duty or liability to collect any sums due in respect thereof or to protect, preserve or exercise any rights pertaining
thereto (including any duty to ascertain or take action with respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to the Pledged Collateral and any duty to take any necessary steps to preserve rights against any parties with respect to the
Pledged Collateral), and shall be relieved of all responsibility for the Pledged Collateral upon surrendering them to the Pledgor. The
Pledgor assumes the responsibility for being and keeping itself informed of the financial condition of a Pledged Entity and of all other
circumstances bearing upon the risk of non-payment of the Obligations, and the Collateral Agent shall have no duty to advise the Pledgor
of information known to the Collateral Agent regarding such condition or any such circumstance. The Collateral Agent shall have no duty
to inquire into the powers of a Pledged Entity or its officers, directors, managers, members, partners or agents thereof acting or purporting
to act on its behalf.
13.
Taxes and Expenses. The Pledgor will pay to the Collateral Agent (or the applicable Governmental Authority within
the Applicable Time Frame (as hereafter defined) (a) any stamp, excise, sales or other taxes (excluding income taxes, franchise taxes
or other taxes levied on gross earnings, profits, income or the like of the Collateral Agent) payable or ruled payable by any Governmental
Authority with respect to any of the Pledged Collateral or in connection with any of the transactions contemplated by this Agreement,
together with interest and penalties, if any, and (b) all expenses, including the fees and expenses of counsel for the Collateral Agent
and of any experts or agents that the Collateral Agent may incur in connection with (i) the administration, modification or amendment
of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Pledged
Collateral, (iii) the exercise or enforcement of any of the rights of the Collateral Agent hereunder, or (iv) the failure of the Pledgor
to perform or observe any of the provisions hereof. For purposes hereof, the term “Applicable Time Frame” means the earlier
of (a) 10 days after the Collateral Agent’s written demand for such payment and (b) the date set forth in the Collateral Agent’s
written demand for such payment if such payment is required to be made by the Collateral Agent prior to the 10 day period referred to
in the foregoing clause “(a).”
14.
The Collateral Agent Appointed Attorney-In-Fact. The Pledgor hereby irrevocably appoints the Collateral Agent as
such Pledgor’s attorney-in-fact, with full authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise,
from time to time in the Collateral Agent’s discretion, to take any action and to execute any instrument that the Collateral Agent
deems reasonably necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to receive, endorse
and collect all instruments made payable to such Pledgor representing any dividend, interest payment or other distribution in respect
of the Pledged Collateral or any part thereof and to give full discharge for the same, when and to the extent permitted by this Agreement;
provided that the power of attorney granted hereunder shall only be exercised by the Collateral Agent after the occurrence and during
the continuance of an Event of Default.
15.
Governing Law; Exclusive Jurisdiction; No Jury Trial. All questions concerning the construction, validity, enforcement
and interpretation of this Pledge Agreement shall be governed by the Security Agreement. Any action, proceeding or claim arising out of,
or relating in any way to, this Agreement shall be subject to the exclusive jurisdiction of the courts as provided in the Purchase Agreement.
Each party hereby irrevocable waives any right it may have, and agrees not to request, a jury trial for the adjudication of any dispute
hereunder or in connection herewith or arising out of this agreement or any transaction contemplated hereby.
16.
Counterparts. This Agreement may be executed in two or more identical counterparts, all of which 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; provided that a facsimile, .pdf or similar electronically transmitted signature shall be considered due execution and
shall be binding upon the signatory thereto with the same force and effect as if the signature were an original signature.
17.
Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
18.
Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other jurisdiction.
19.
Entire Agreement; Amendments. This Agreement, together with the other transaction documents, supersedes all other
prior oral or written agreements between the Pledgor, the Pledgees, their affiliates and persons acting on their behalf with respect to
the matters discussed herein, and this agreement, together with the other transaction documents and the other instruments referenced herein
and therein, contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically
set forth herein or therein, neither the Collateral Agent nor the Pledgor makes any representation, warranty, covenant or undertaking
with respect to such matters. As of the date of this Agreement, there are no unwritten agreement between the parties with respect to the
matters discussed herein. Except as set forth in Section 2(a) hereof, no provision of this Agreement may be amended, modified or supplemented
other than by an instrument in writing signed by the Pledgor and the Required Holders (as defined in the Purchase Agreement).
20.
Notices. All notices, approvals, requests, demands and other communications hereunder shall be delivered or made
in the manner set forth in, and shall be effective in accordance with the terms of, the Purchase Agreement, in the case of communications
to the Collateral Agent, directed to the notice address set forth in the Security Agreement.
21.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any subsequent holder(s) of the Notes. The Pledgor shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Collateral Agent. The Collateral Agent may assign its rights hereunder
without the consent of the Pledgor or any Investor (including any Person who becomes an Investor after the date hereof), in which event
such assignee shall be deemed to be the Collateral Agent hereunder with respect to such assigned rights.
22.
No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective
successors and assigns including any other Investor, and is not for the benefit of, nor may any provision hereof be enforced by, any other
Person.
23.
Survival. All representations, warranties, covenants and agreements of the Pledgor and the Collateral Agent shall
survive the execution and delivery of this Agreement.
24.
Further Assurances. The Pledgor agrees that it will, at any time and from time to time upon the written request of
the Collateral Agent, execute and deliver all assignments separate from certificates or stock powers, financing statements and such further
documents and do such further acts and things as the Collateral Agent may reasonably request consistent with the provisions hereof in
order to carry out the intent and accomplish the purpose of this Agreement and the consummation of the transactions contemplated hereby.
25.
No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict construction will be applied against any party.
26.
Collateral Agent Authorized. The Pledgor hereby authorizes the Collateral Agent to file one or more financing or
continuation statements and amendments thereto (or similar documents required by any laws of any applicable jurisdiction) relating to
all or any part of the Pledged Interests or other Pledged Collateral without the signature of such Pledgor.
27.
Collateral Agent Acknowledgement. The Pledgor acknowledges receipt of an executed copy of this Agreement. The Pledgor
waives the right to receive any amount that it may now or hereafter be entitled to receive (whether by way of damages, fine, penalty,
or otherwise) by reason of the failure of the Collateral Agent to deliver to the Pledgor a copy of any financing statement or any statement
issued by any registry that confirms registration of a financing statement relating to this Agreement.
28.
Collateral Agent. The terms and provisions of the Security Agreement which set forth the appointment and indemnification
of ________________________ as Collateral Agent are hereby incorporated by reference herein as if fully set forth herein.
[Signature Page
Follows]
IN WITNESS WHEREOF, the parties
hereto have caused this Pledge Agreement to be duly executed and delivered by their duly authorized officers on the date first above written.
PLEDGOR:
Healthcare Triangle, Inc.
a Delaware corporation
By:
Name: Thyagarajan Ramachandran
Title: Chief Financial Officer
COLLATERAL AGENT:
________________________, a __________________________
entity, in its capacity as agent for the Investor
By:
Name:
Title:
ACKNOWLEDGEMENT
Each of the undersigned hereby
(i) acknowledges receipt of a copy of the foregoing Pledge Agreement, (ii) waives any rights or requirement at any time hereafter to receive
a copy of such Pledge Agreement in connection with the registration of any Pledged Interests (as defined therein) in the name of the Collateral
Agent or its nominee or the exercise of voting rights by the Collateral Agent and (iii) agrees promptly to note on its books and records
the grant of the security interest in the stock or other equity interests of the undersigned as provided in such Pledge Agreement.
Dated: December 28, 2023
[SUBSIDIARY]
By: ____________________________
Name: _______________
Title: _______________
[SUBSIDIARY]
By: ___________________________
Name: _______________
Title: _______________
[SUBSIDIARY]
By: ___________________________
Name: _______________
Title: _______________
[SUBSIDIARY]
By: ___________________________
Name: _______________
Title: _______________
EXHIBIT
A
to
Pledge Agreement
Description of Pledged Interests or Units
Pledgor |
Name of
Pledged Entity |
Class |
Stock or Unit Certificate No. or Book Entry |
Percentage of Units Held by Pledgor |
Healthcare Triangle, Inc. |
Devcool, Inc. |
Common |
|
100% |
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EXHIBIT
B
to
Pledge Agreement
Addendum to Pledge Agreement
The undersigned, being the
Pledgor pursuant to that certain Pledge Agreement dated as of December 28, 2023 (as amended, restated, supplemented or otherwise modified
from time to time, the “Pledge Agreement”) in favor of the holders of those certain Notes (as defined in the Pledge
Agreement), with ___________________, a business entity organized under the laws of ___________________, acting as Collateral Agent (as
defined in the Pledge Agreement), by executing this Addendum, hereby acknowledges that the Pledgor has acquired and legally and beneficially
owns all of the issued and outstanding shares of capital stock of __________________, a _______ [corporation/limited liability company/other
entity] (“Company”) described below (the “Shares”). The Pledgor hereby agrees and acknowledges that
the Shares shall be deemed Pledged Interests pursuant to the Pledge Agreement. The Pledgor hereby represents and warrants to the Pledgee
that (i) all of the [capital stock/membership interests/other type of interest] of the Company now owned by the Pledgor is presently represented
by the certificates listed below, which certificates, with undated assignments separate from certificate or stock powers duly executed
in blank by the Pledgor, are being delivered to the Collateral Agent, simultaneously herewith (or have been previously delivered to the
Collateral Agent), and (ii) after giving effect to this addendum, the representations and warranties set forth in Section 3 of the Pledge
Agreement are true, complete and correct as of the date hereof.
Pledged Interests
Name of the Pledged Entity |
Class of Equity Interest |
Certificate No. |
Percentage of Units Held by Pledgor |
|
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IN WITNESS WHEREOF, Pledgor
has executed this Addendum this _____ day of ____________.
Healthcare Triangle, Inc.
By:
Name:
Title:
FORM OF SUBSIDIARY GUARANTEE
This SUBSIDIARY GUARANTEE
(as amended, restated, supplemented, or otherwise modified and in effect from time to time, this “Guarantee”) is made as of
December 28, 2023, jointly and severally, between Healthcare Triangle, Inc., a Delaware corporation (the “Company”), Devcool,
Inc., a California corporation (“Devcool”, and together with each other Person who becomes a party to this Guarantee by execution
of a joinder in the form of Exhibit A attached hereto, which shall include all Subsidiaries (as defined in the Purchase Agreement
(as defined below)) of the Company acquired after the date hereof for so long as this Guarantee remains in effect, shall be referred to
individually as a “Guarantor” and collectively as the “Guarantors”), in favor of ____________________________,
a business entity organized under the laws of the ______________, as agent for the Investors (the “Collateral Agent”), for
the benefit of itself and each of the other Investors (as defined in the Purchase Agreement).
WHEREAS, pursuant to and in
accordance with the Purchase Agreement, the Company has executed and delivered that certain First Tranche Note dated as of December 28,
2023 (the “Closing Date”) in an original aggregate principal amount of $2,000,000 as provided in the Purchase Agreement;
WHEREAS, the Note was acquired
by the Investor pursuant to that certain Securities Purchase Agreement, dated as of the date hereof among the Company and the Investor
(as the same may be amended, restated, supplemented or otherwise modified from time-to-time, the “Purchase Agreement”);
WHEREAS, subject to the terms
and conditions of the Purchase Agreement, the Company and the Investor may execute and deliver the Second Tranche Note and the Third Tranche
Note (together with the First Tranche Note, the “Notes”), as defined and provided for under the Purchase Agreement, or such
different principal amount as the Company and the Investor may agree upon. The Notes were or may be issued pursuant to the Purchase Agreement;
WHEREAS, pursuant to a Pledge
Agreement, dated as of the Closing Date (as the same may be amended, restated, supplemented or otherwise modified from time to time, the
“Pledge Agreement”), the Company granted to the Collateral Agent for the benefit of the Investor a Lien on, and security interest
in, all of the issued and outstanding equity interests of the Pledge Entities (as defined in the Pledge Agreement);
WHEREAS, pursuant to a Security
Agreement, dated as of the Closing Date (as the same may be amended, restated, supplemented or otherwise modified and in effect from time
to time, the “Security Agreement”) by the Debtors (which term when used herein shall be as defined in the Security Agreement)
in favor of the Collateral Agent, such Debtors have granted the Collateral Agent, for its benefit and the benefit of the other Investors,
a Lien on and security interest in all of their respective rights in the Collateral (which term when used herein shall be as defined in
the Security Agreement); and
WHEREAS, each Guarantor is
a subsidiary of the Company and, as such, will derive substantial benefit and advantage from the Purchase Agreement, the Notes, the Pledge
Agreement, the Security Agreement and the other related agreements.
NOW, THEREFORE, for and in
consideration of the promises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
each Guarantor hereby jointly and severally agrees as follows:
1.
Definitions.
(a) Capitalized
words and terms used herein without definition and defined in the Purchase Agreement are used herein as defined therein or, if not defined
in the Purchase Agreement, as defined in the Security Agreement or the Notes, as applicable. In addition, as used herein:
“Bankruptcy Code”
shall mean the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et seq.), as amended and in effect from time-to-time
thereunder.
(b) All
references to an “Investor” or “Investors” hereunder shall include the Collateral Agent acting in its capacity
as the Investor. For clarity, because the Collateral Agent is the sole Investor under the Purchase Agreement, the parties acknowledge
that notwithstanding references to Collateral Agent or Investor in this Agreement, the term “Collateral Agent” refers to the
Investor, and the terms “Investor” or “Investors” refers to the Collateral Agent, unless one or more investors
acquire a portion of the Investor’s Notes in which case the Investor shall act as Collateral Agent for all parties who hold such
Notes in accordance with this Agreement, and their respective successors and assigns. In such event, the Collateral Agent may require
amendments to the applicable Transaction Documents to reflect the inclusion of additional secured parties.
(c) All references to a “Guarantor”
or “Guarantors” hereunder shall include the Devcool, which is the sole Subsidiary of the Company as of the date of this Agreement,
and to any additional Subsidiaries which may be formed or acquired by the Company subsequent to such date.
2.
Guarantee of Payment.
(a) Each
Guarantor, jointly and severally, hereby unconditionally and irrevocably guarantees the full and prompt payment and performance to the
Investors and the Collateral Agent, on behalf of itself and in its capacity as agent for the benefit of the Investors, as primary obligor
and not as surety, when due, whether at maturity or by reason of acceleration or otherwise, of any and all of the Obligations.
(b)
Each Guarantor acknowledges that valuable consideration supports this Guarantee, including, without limitation, the consideration
set forth in the recitals above; any extension, renewal or replacement of any of the Obligations; any forbearance with respect to any
of the Obligations or otherwise; any cancellation of an existing guaranty; any purchase of any of the Company’s assets by any Investor
or Collateral Agent; or any other valuable consideration.
(c)
Each Guarantor agrees that all payments under this Guarantee shall be made in United States currency and in the same manner as
provided for the Obligations.
(d)
Notwithstanding any provision of this Guarantee to the contrary, it is intended that this Guarantee, and any interests, Liens and
security interests granted by each Guarantor as security for this Guarantee, not constitute a “Fraudulent Conveyance” (as
defined below) in the event that this Guarantee or such interest is subject to the Bankruptcy Code or any applicable fraudulent conveyance
or fraudulent transfer law or other applicable laws of any state. Consequently, each Guarantor, the Collateral Agent and the Investors
all agree that if this Guarantee, or any such interests, Liens or security interests securing this Guarantee, would, but for the application
of this sentence, constitute a Fraudulent Conveyance, this Guarantee and each such Lien and security interest shall be valid and enforceable
only to the maximum extent that would not cause this Guarantee or such interest, Lien or security interest to constitute a Fraudulent
Conveyance, and this Guarantee shall automatically be deemed to have been amended accordingly at all relevant times. For purposes hereof,
“Fraudulent Conveyance” means a fraudulent conveyance under Section 548 of the Bankruptcy Code or a fraudulent conveyance
or fraudulent transfer under the provisions of any applicable fraudulent conveyance or fraudulent transfer law or other applicable laws
of any state, as in effect from time to time.
3.
Costs and Expenses. The Company and each Guarantor, jointly and severally, agrees to pay on demand, all reasonable and documented
out of pocket Costs and Expenses of every kind incurred by any Investor or the Collateral Agent: (a) in enforcing this Guarantee or any
other Transaction Document, (b) in collecting any of the Obligations from any Guarantor pursuant to this Guarantee or any other Transaction
Document, (c) in realizing upon or protecting or preserving any Collateral, and (d) in connection with any amendment of, modification
to, waiver or forbearance granted under, or enforcement or administration of this Guarantee or any other Transaction Document or for any
other purpose in connection with this Guarantee or any other Transaction Document, in each case, to the extent an Investor or the Collateral
Agent may take such action pursuant to the terms and conditions of this Guarantee; but limited, in the case of legal fees and expenses,
to one counsel to the Investors and the Collateral Agent, taken as a whole and, solely in the case of an actual or potential conflict
of interest, one additional counsel to all affected Investors and the Collateral Agent, taken as a whole (and, if reasonably necessary,
one local counsel in any relevant jurisdiction to all such Persons, taken as a whole and, solely in the case of any such an actual or
potential conflict of interest, one additional local counsel to all affected Investors and the Collateral Agent taken as a whole, in each
such relevant jurisdiction)). “Costs and Expenses” as used in the preceding sentence shall include, without limitation, reasonable
and documented out of pocket attorneys’ fees incurred by any Investor or the Collateral Agent in retaining legal counsel for advice,
suit, appeal, any insolvency or other proceedings under the Bankruptcy Code or otherwise, or for any purpose specified in the preceding
sentence.
4.
Nature of Guarantee: Continuing, Absolute and Unconditional.
(a) This
Guarantee is and is intended to be a continuing guaranty of payment of the Obligations when due, and not of collectability, and is intended
to be independent of and in addition to any other guaranty, endorsement, collateral or other agreement held by an Investor or the Collateral
Agent therefor or with respect thereto, whether or not furnished by a Guarantor. None of the Investors and the Collateral Agent shall
be required to prosecute collection, enforcement or other remedies against the Company, any other Guarantor or guarantor of the Obligations
or any other person or entity, or to enforce or resort to any of the Collateral or other rights or remedies pertaining thereto, before
calling on a Guarantor for payment. The obligations of each Guarantor to repay the Obligations hereunder shall be unconditional. No Guarantor
shall have any right to exercise any right of subrogation, reimbursement, indemnity, exoneration, contribution or any other claim which
it may now or hereafter have against the Company in connection with this Guarantee until the termination of this Guarantee in accordance
with Section 8 below, and hereby waives any benefit of, and any right to participate in, any security or collateral given to the Investors
to secure payment of the Obligations, and each Guarantor agrees that it will not take any action to enforce any obligations of the Company
to such Guarantor prior to the Obligations being finally and irrevocably paid in full in cash, provided that, in the event of the
bankruptcy or insolvency of the Company, to the extent the Obligations have not been finally and irrevocably paid in full in cash, the
Collateral Agent, for the benefit of itself and the Investors, and the Investors shall be entitled notwithstanding the foregoing, to file
in the name of any Guarantor or in its own name a claim for any and all indebtedness owing to a Guarantor by such Company (exclusive of
this Guarantee), vote such claim and to apply the proceeds of any such claim to the Obligations.
(b)
For the further security of the Investors and without in any way diminishing the liability of the Guarantors, following the occurrence
and during the continuance of an Event of Default (as defined in the Notes), all debts and liabilities, present or future, of the Company
to the Guarantors, and all monies received from the Company or for its account by the Guarantors in respect thereof shall be received
in trust for Investors and the Collateral Agent and shall, if requested by the Collateral Agent, be paid over to the Collateral Agent,
for its benefit and in its capacity as the Collateral Agent for the benefit of the Investors, until all of the Obligations have been paid
in full in cash (other than unasserted contingent indemnification obligations and unasserted expense reimbursement obligations which expressly
survive termination of this Agreement). This assignment and postponement is independent of and severable from this Guarantee and shall
remain in full effect whether or not any Guarantor is liable for any amount under this Guarantee.
(c)
This Guarantee is absolute and unconditional and shall not be changed or affected by any representation, oral agreement, act or
thing whatsoever, except as herein provided. This Guarantee is intended by the Guarantors to be the final, complete and exclusive expression
of the guarantee agreement among the Company, the Guarantors, the Investors and the Collateral Agent (except as expressly limited by the
express terms of this Guarantee). No modification or amendment of any provision of this Guarantee shall be effective against any party
hereto unless in writing and signed by a duly authorized officer of such party. This Guarantee, together with the other Transaction Documents,
supersedes all other prior oral or written agreements between the Investors, the Company, the Guarantors and the Collateral Agent, their
respective Affiliates and Persons acting on their respective behalves with respect to the matters discussed herein, and this Guarantee,
together with the other Transaction Documents and the other instruments referenced herein and therein, contain the entire understanding
of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither
the Company, any Guarantor, the Collateral Agent nor any Investor makes any representation, warranty, covenant or undertaking with respect
to such matters. As of the date of this Guarantee, there are no unwritten agreements between the parties with respect to the matters discussed
herein. No provision of this Guarantee may be amended, modified or supplemented other than by an instrument in writing signed by the parties
hereto.
(d)
Each Guarantor hereby releases each Investor and the Collateral Agent from all, and agrees not to assert or enforce (whether by
or in a legal or equitable proceeding or otherwise) any, “claims” (as defined in Section 101(5) of the Bankruptcy Code), whether
arising under any law, ordinance, rule, regulation, order, policy or other requirement of any domestic or foreign governmental authority
or any instrumentality or agency thereof, having jurisdiction over the conduct of its business or assets or otherwise, to which the Guarantors
are or would at any time be entitled by virtue of its obligations hereunder, any payment made pursuant hereto or the exercise by any Investor
or the Collateral Agent of its rights with respect to the Collateral, including any such claims to which such Guarantor may be entitled
as a result of any right of subrogation, exoneration or reimbursement.
5. Certain Rights
and Obligations.
(a) Each
Guarantor acknowledges and agrees that the Collateral Agent may, without notice, demand or any reservation of rights against such Guarantor
and without affecting such Guarantor’s obligations hereunder, from time to time:
(i)
renew, extend, increase, accelerate or otherwise change the time for payment of, the terms of or the interest on the Obligations
or any part thereof or grant other indulgences to any Guarantor or others;
(ii)
accept from any Person and hold Collateral for the payment of the Obligations or any part thereof, and modify, exchange, enforce
or refrain from enforcing, or release, compromise, settle, waive, subordinate or surrender, with or without consideration, such Collateral
or any part thereof;
(iii)
accept and hold any endorsement or guaranty of payment of the Obligations or any part thereof, and discharge, release or substitute
any such obligation of any such endorser or guarantor, or discharge and release or compromise any Guarantor, or any other Person who has
given any security interest in any Collateral as security for the payment of the Obligations or any part thereof, or any other Person
in any way obligated to pay the Obligations or any part thereof, and enforce or refrain from enforcing, or compromise or modify, the terms
of any obligation of any such endorser, guarantor or Person;
(iv)
dispose of any and all Collateral securing the Obligations in its reasonable discretion, as it may deem appropriate, and direct
the order or manner of such disposition and the enforcement of any and all endorsements and guaranties relating to the Obligations or
any part thereof as the Collateral Agent in its reasonable discretion may determine;
(v)
subject to the terms of the Notes, determine the manner, amount and time of application of payments and credits, if any, to be
made on all or any part of any component or components of the Obligations (whether principal, interest, fees, costs, and expenses, or
otherwise), including, without limitation, the application of payments received from any source to the payment of Indebtedness other than
the Obligations even though one or more Investors might lawfully have elected to apply such payments to the Obligations or to amounts
which are not covered by this Guarantee;
(vi)
take advantage or refrain from taking advantage of any security or accept or make or refrain from accepting or making any compositions
or arrangements when and in such manner as Collateral Agent, in its sole discretion, may deem appropriate; and
(vii)
generally do or refrain from doing any act or thing which might otherwise, at law or in equity, release the liability of such Guarantor
as a guarantor or surety in whole or in part, and in no case shall any Investor or Collateral Agent be responsible or shall any Guarantor
be released either in whole or in part for any act or omission in connection with an Investor or Collateral Agent having sold any security
at less than its fair market value.
(b) Following
the occurrence and during the continuance of an Event of Default, and upon demand by the Collateral Agent, each Guarantor, jointly and
severally, hereby agrees to pay the Obligations to the extent hereinafter provided and to the extent unpaid:
(i)
without deduction by reason of any setoff, defense (other than payment) or counterclaim of the Company or any other Guarantor;
(ii)
without requiring presentment, protest or notice of nonpayment or notice of default to the Company, any other Guarantor or any
other Person;
(iii)
without demand for payment or proof of such demand or filing of claims with a court in the event of receivership, bankruptcy or
reorganization of the Company or any other Guarantor;
(iv)
without requiring any Investor or the Collateral Agent to resort first to the Company (this being a guaranty of payment and not
of collection), to any other Guarantor, or to any other guaranty or any collateral which an Investor or the Collateral Agent may hold;
(v)
without requiring notice of acceptance hereof or assent hereto by any Investor or the Collateral Agent; and
(vi)
without requiring notice that any of the Obligations has been incurred, extended or continued or of the reliance by any Investor
or the Collateral Agent upon this Guarantee;
all of which each Guarantor hereby irrevocably waives.
(c) Each
Guarantor’s obligation hereunder shall not be affected by any of the following, all of which such Guarantor hereby waives:
(i)
any failure to perfect or continue the perfection of any security interest in or other Lien on any Collateral securing payment
of any of the Obligations or any Guarantor’s obligation hereunder;
(ii)
the invalidity, unenforceability, propriety of manner of enforcement of, or loss or change in priority of any document or security
interest or other Lien or guaranty of the Obligations;
(iii)
any failure to protect, preserve or insure any Collateral;
(iv)
failure of a Guarantor to receive notice of any intended disposition of any Collateral;
(v)
any defense arising by reason of the cessation from any cause whatsoever of liability of any Guarantor including, without limitation,
any failure, negligence or omission by any Investor or the Collateral Agent in enforcing its claims against the Company;
(vi)
any release, settlement or compromise of any Obligation of the Company, any other Guarantor or any other Person guaranteeing the
Obligations;
(vii)
the invalidity or unenforceability of any of the Obligations;
(viii)
any change of ownership of the Company, any other Guarantor or any other Person guaranteeing the Obligations or the insolvency,
bankruptcy or any other change in the legal status of the Company, any Guarantor or any other Person guaranteeing the Obligations;
(ix)
any change in, or the imposition of, any law, decree, regulation or other governmental act which does or might impair, delay or
in any way affect the validity, enforceability or the payment when due of the Obligations;
(x)
the existence of any claim, setoff or other rights which the Company, the Guarantor, any other Guarantor or guarantor of the Obligations
or any other Person may have at any time against any Investor or the Collateral Agent in connection herewith or any unrelated transaction;
(xi)
any Investor’s or the Collateral Agent’s election in any case instituted under Chapter 11 of the Bankruptcy Code, of
the application of Section 1111(b)(2) of the Bankruptcy Code;
(xii)
any use of cash Collateral, or grant of a security interest by any Company, as debtor in possession, under Sections 363 or 364
of the Bankruptcy Code;
(xii)
the disallowance of all or any portion of any of any Investor’s or the Collateral Agent’s claims for repayment of the
Obligations under Sections 502 or 506 of the Bankruptcy Code;
(xiii)
any stay or extension of time for payment by the Company or any Guarantor resulting from any proceeding under the Bankruptcy Code
or any other applicable law; or
(xiv)
any other fact or circumstance which might otherwise constitute grounds at law or equity for the discharge or release of a Guarantor
from its obligations hereunder, all whether or not such Guarantor shall have had notice or knowledge of any act or omission referred to
in the foregoing clauses (i) through (xiv) of this Section 5(c).
6.
Representations and Warranties. Each Guarantor further represents and warrants to each Investor and the Collateral Agent
that, as of the date hereof: (a) such Guarantor is a corporation or other entity duly incorporated or organized, as applicable, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or formation, as applicable, and has full power,
authority and legal right to own its property and assets and to transact the business in which it is presently engaged; (b) such Guarantor
has full power, authority and legal right to execute and deliver, and to perform its obligations under, this Guarantee, and has taken
all necessary action to authorize the guarantee hereunder on the terms and conditions of this Guarantee and to authorize the execution,
delivery and performance of this Guarantee; (c) this Guarantee has been duly executed and delivered by such Guarantor and constitutes
a legal, valid and binding obligation of such Guarantor enforceable against such Guarantor in accordance with its terms, except to the
extent that such enforceability is subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance and moratorium
laws and other laws of general application affecting enforcement of creditors’ rights generally, or the availability of equitable
remedies, which are subject to the discretion of the court before which an action may be brought; (d) the execution, delivery and performance
by each Guarantor of this Guarantee does not require any action by or in respect of, or filing with, any governmental body, agency or
official and do not violate, conflict with or cause a breach or a default under any provision of (i) applicable law or regulation, (ii)
the organizational documents of such Guarantor, (iii) any judgment, injunction, order, decree or other instrument binding upon it, or
(iv) any agreement binding upon it; and (e) the Guarantors are all of the subsidiaries of the Company.
7.
Covenants. Each Guarantor covenants with each Investor and the Collateral Agent that such Guarantor shall not grant any
security interest in or permit any Lien upon any of its assets in favor of any Person other than Permitted Liens (as defined in the Notes)
and security interests in favor of the Investors and the Collateral Agent. Each Guarantor agrees that it shall not take any action or
engage in any transaction that such Guarantor is prohibited from taking or engaging in pursuant to the terms of the Transaction Documents.
In addition, each Guarantor agrees to comply with the terms of the Transaction Documents to the same extent that the Company is required
to cause the Guarantors to comply with such terms of the Transaction Documents. Each Guarantor, by its signature hereto, hereby acknowledges
and agrees that a breach by such Guarantor of this Agreement constitutes an “Event of Default” under the Note and the other
Transaction Documents.
8.
Termination. This Guarantee shall not terminate until the full and complete performance and indefeasible satisfaction of
all of the Obligations (including, without limitation, the indefeasible payment in full in cash of all such Obligations (other than unasserted
contingent indemnification obligations and unasserted expense reimbursement obligations which expressly survive termination of this Agreement)).
Thereafter, but subject to the following, the Collateral Agent, on behalf of itself and as agent for the Investors, shall take such actions
and execute such documents as the Guarantors may reasonably request (and at the Guarantors’ cost and expense) in order to evidence
the termination of this Guarantee. Payment of all of the Obligations owing from time to time shall not operate as a discontinuance of
this Guarantee. Each Guarantor further agrees that, to the extent that the Company or a Guarantor makes a payment to the Investors or
the Collateral Agent on the Obligations, or the Investors or the Collateral Agent receive any proceeds from the Collateral securing the
Obligations or any other payments with respect to the Obligations, which payment or receipt of proceeds or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to be returned or repaid to the Company, a Guarantor or
any of their respective estates, trustees, receivers, debtors in possession or any other Person under any insolvency or bankruptcy law
(including, but not limited to the Bankruptcy Code), state or federal law, common law or equitable cause, then to the extent of such payment,
return or repayment, the obligation or part thereof which has been paid, reduced or satisfied by such amount shall be reinstated and continued
in full force and effect as of the date when such initial payment, reduction or satisfaction occurred, and this Guarantee shall continue
in full force notwithstanding any contrary action which may have been taken by any Investor or the Collateral Agent in reliance upon such
payment, and any such contrary action so taken shall be without prejudice to any Investor’s or the Collateral Agent’s rights
under this Guarantee and shall be deemed to have been conditioned upon such payment having become final and irrevocable. Upon satisfaction
of the Obligations in accordance with this Section 8, each Guarantor’s obligations under this Agreement shall immediately terminate
and the Guarantee shall be void.
9.
Guarantee of Performance. Each Guarantor also, jointly and severally, guarantees the full, prompt and unconditional performance
of all Obligations and agreements of every kind owed or hereafter to be owed by the Company or the other Guarantors to the Investors or
the Collateral Agent under this Guarantee and the other Transaction Documents. Every provision for the benefit of the Investors or the
Collateral Agent contained in this Guarantee shall apply to the guaranty of performance given in this Section 9.
10.
Assumption of Liens and Obligations. To the extent that a Guarantor has received or shall hereafter receive distributions
or transfers from the Company of property or cash that are subject, at the time of such distribution or transfer, to Liens and security
interests in favor of the Investors or the Collateral Agent in accordance with the Transaction Documents, such Guarantor hereby expressly
agrees that (i) it shall hold such assets subject to such Liens and security interests, and (ii) it shall be liable for the payment of
the Obligations secured thereby. Each Guarantor’s obligations under this Section 10 shall be in addition to its obligations as set
forth in other sections of this Guarantee and not in substitution therefor or in lieu thereof.
11. Miscellaneous.
(a) The
terms “Company” and “Guarantor” as used in this Guarantee shall include: (i) any successor individuals, associations,
partnerships, limited liability companies, corporations or other entities and (ii) any other associations, partnerships, limited liability
companies, corporations or entities into or with which such Company or such Guarantor shall have been merged, consolidated, reorganized,
or absorbed.
(b) Without
limiting any other right of any Investor or the Collateral Agent, whenever any Investor or the Collateral Agent has the right to declare
any of the Obligations to be immediately due and payable (whether or not it has been so declared), the Collateral Agent, on its behalf
and in its capacity as agent for the benefit of the Investors, at its sole election without notice to the undersigned may appropriate
and set off against the Obligations:
(i)
any and all indebtedness or other moneys due or to become due the Company or to any Guarantor by any Investor or the Collateral
Agent in any capacity and whether arising out of or related to the Transaction Documents or otherwise; and
(ii)
any credits or other property belonging to the Company or any Guarantor (including all account balances, whether provisional or
final and whether or not collected or available) at any time held by or coming into the possession of any Investor or the Collateral Agent,
or any Affiliate of any Investor or the Collateral Agent, whether for deposit or otherwise;
in each case, whether or not then due and owing,
and the applicable Investor or the Collateral Agent, as applicable, shall be deemed to have exercised such right of set off immediately
at the time of such election even though any charge therefore is made or entered on such Investor’s or the Collateral Agent’s
records subsequent thereto. The Collateral Agent agrees to notify such Guarantor in a reasonable time of any such set-off; however, failure
of the Collateral Agent to so notify such Guarantor shall not affect the validity of any set-off.
(c) Each
Guarantor’s obligation hereunder is to pay the Obligations in full in cash when due according to this Guarantee, the Notes, the
other Transaction Documents, and any other agreements, documents and instruments governing the Obligations to the extent provided herein,
and shall not be affected by any stay or extension of time for payment for the benefit of the Company or any other Guarantor resulting
from any proceeding under the Bankruptcy Code or any other applicable law.
(d) No
course of dealing between the Company or any Guarantor, on the one hand, and an Investor or the Collateral Agent, on the other hand, and
no act, delay or omission by an Investors or the Collateral Agent in exercising any right or remedy hereunder or with respect to any of
the Obligations shall operate as a waiver thereof or of any other right or remedy, and no single or partial exercise thereof shall preclude
any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies of each Investor and the Collateral
Agent hereunder are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided
by law.
(e)
This Guarantee shall inure to the benefit of the parties hereto and their respective successors and assigns.
(f)
The Collateral Agent may assign its rights hereunder, in which event such assignee shall be deemed to be the Collateral Agent hereunder
with respect to such assigned rights.
(g)
Captions of the sections of this Guarantee are solely for the convenience of the parties hereto, and are not an aid in the interpretation
of this Guarantee and do not constitute part of the agreement of the parties set forth herein.
(h)
If any provision of this Guarantee is unenforceable in whole or in part for any reason, the remaining provisions shall continue
to be effective.
12. Notices.
All notices, approvals, requests, demands and other communications hereunder shall be delivered or made in the manner set forth in, and
shall be effective in accordance with the terms of, the Purchase Agreement; provided, that any communication shall be effective
as to any Guarantor if made or sent to the Company in accordance with the foregoing.
13. Waivers.
(a)
Each Guarantor waives the benefit of all valuation, appraisal and exemption laws.
(b)
Upon the occurrence of a default or Event of Default, each Guarantor hereby waives all rights to notice and hearing of any kind
prior to the exercise by any Investor or the Collateral Agent, on its behalf and in its capacity as agent for the benefit of the Investors,
of its rights to repossess the Collateral without judicial process or to replevy, attach or levy upon the Collateral without prior notice
or hearing. Each Guarantor acknowledges that it has been advised by counsel of its choice with respect to this transaction and this Guarantee.
(c)
Each Guarantor waives its rights to a trial by jury of any claim or cause of action based upon or arising out of or related to
this guaranty, or the other transaction documents, in any action, proceeding or other litigation of any type brought by any Investor or
the Collateral Agent. Each Guarantor agrees that any such claim or cause of action shall be tried by a court without a jury. Without limiting
the foregoing, each guarantor further agrees that its right to a trial by jury is waived by operation of this section as to any action,
counterclaim or other proceeding which seeks, in whole or in part, to challenge the validity or enforceability of this Guarantee or any
provision hereof. This waiver shall apply to any subsequent amendments, renewals, supplements or modifications to this Guarantee.
14. Agent.
The terms and provisions of the Purchase Agreement which set forth the appointment of the Collateral Agent and the terms and provisions
of the Security Agreement and the Pledge Agreement which set forth the indemnifications to which the Collateral Agent is entitled are
hereby incorporated by reference herein as if fully set forth herein.
15. Counterparts;
Headings. This Guarantee may be executed in two or more identical counterparts, all of which together shall be considered one and
the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party; provided
that a facsimile, .pdf or similar electronically transmitted signature shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the signature were an original signature. The headings in this Guarantee are for
convenience of reference only and shall not alter or otherwise affect the meaning hereof.
16.
Governing Law; Exclusive Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance with the Purchase Agreement, and all legal Proceedings
concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement shall be commenced and litigated
only as provided in the Purchase Agreement.
[Signature page follows]
IN WITNESS WHEREOF, each Company
and the Guarantors have executed this Guarantee as of the date first written above.
COMPANY:
Healthcare Triangle, Inc.
By: _____________________
Name: Thyagarajan Ramachandran
Title: Chief Financial Officer
GUARANTOR:
Devcool, Inc.
By: _____________________
Name: Thyagarajan Ramachandran
Title: Chief Financial Officer
COLLATERAL AGENT:
_____________________________________________,
a business entity organized under the laws of ___________, in its capacity as Collateral Agent for the Investors
By: ________________________________
Name: ______________
Title: _____________
EXHIBIT A
Form of Joinder to
Subsidiary Guarantee
This Joinder Agreement is made between the undersigned,____________ a
[_________],
(the “New Subsidiary”) and _____________________,
a business entity organized under the laws of ______________, as Collateral Agent under that certain Subsidiary Guarantee dated as of
December 28, 2023 (as amended, restated, supplemented or otherwise modified from time to time, the “Guarantee”) by and among
the Company, the Guarantors and the Collateral Agent; together with each other Person that becomes a Guarantor thereunder after the date
and pursuant to the terms thereof, to and in favor of the Investors. Capitalized terms herein and not otherwise defined herein shall have
the meanings assigned to such terms in the Guarantee.
1.
The New Subsidiary hereby acknowledges, agrees and confirms that, by its execution of this Agreement, the New Subsidiary will be
deemed to be a party to the Guarantee and a “Guarantor” for all purposes of the Guarantee, and shall have all of the obligations
of a Guarantor thereunder as if it had executed the Guarantee. The New Subsidiary hereby ratifies, as of the date hereof, and agrees to
be bound by, all of the terms, provisions and conditions applicable to the Guarantors contained in the Guarantee. Without limiting the
generality of the foregoing terms of this paragraph 1, the New Subsidiary hereby jointly and severally together with the other Guarantors,
guarantees to the Investors and the Collateral Agent, as provided in the Guarantee, the prompt payment and performance of the Obligations
in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in accordance with the
terms thereof.
2.
The New Subsidiary represents and warrants that the representations and warranties set forth in Section 6 of the Guarantee are,
with respect to the undersigned, true and correct as of the date hereof.
3.
From and after the date hereof, each reference to a Guarantor in the Guarantee shall be deemed to include the undersigned.
4.
This Agreement may be executed in multiple counterparts, each of which shall constitute an original but all of which when taken
together shall constitute one contract.
5.
All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the
Guarantee and the Purchase Agreement. Any action, proceeding or claim arising out of, or relating in any way to, this Agreement shall
be brought and enforced only as provided in the Guarantee and the Purchase Agreement.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned has executed
this Joinder this 28th day of
December, 2023.
[____________________________]
INTERCREDITOR AGREEMENT
THIS AGREEMENT made and entered
into this 28th day of December 2023 by and among SEACOAST BUSINESS FUNDING, a division of Seacoast National Bank with a place
of business at 1880 N Congress Ave., Suite 404, Boynton Beach, FL 33426 (hereinafter referred to as “SBF”), and ___________
(hereinafter referred to as “Investor”).
W I T N E S S E T H:
WHEREAS, SBF and the Investor
have each respectively entered or intend to enter into factoring or loan transactions with Healthcare Triangle, Inc., a Delaware corporation
(hereinafter referred to as “Debtor”);
WHEREAS, in connection with
said factoring and loan transactions, SBF and the Investor have been or are to be granted security interests in certain assets of Debtor;
WHEREAS, it is the intent
of the parties that the security interests to be granted to SBF in the SBF Priority Collateral (as defined herein), shall be a first priority
security interests and senior to the interests (if any) of the Investor therein;
WHEREAS, the parties hereto
desire to define their respective rights with respect to their respective interests in the assets of Debtor;
NOW, THEREFORE, in consideration
of the mutual terms, conditions and covenants contained herein, the parties hereby agree as follows:
1.
Definitions. When used in this Agreement, each of the following terms have the respective meaning ascribed thereto
by Article 9 of the UCC: “chattel paper”, “contracts,” “deposit account”, “document”,
“goods”, “instrument”, “inventory”, “proceeds”, and “supporting obligation”.
All other terms defined in the UCC and not defined in this Agreement have the meanings specified therein; provided, however,
that if a term is defined in Article 9 of the UCC differently than in another Article of the UCC, the term has the meaning specified in
Article 9. As used in this Agreement, the following terms have the meanings specified below:
a.
“Accounts” means all of the Debtor’s presently existing and hereafter arising or created accounts, accounts receivable,
contract rights, instruments, notes, drafts, documents, chattel paper, book debts, and all other forms of obligations owing to the Debtor
arising out of the sale or lease of goods or the rendition of services, whether or not earned by performance and all credit insurance,
guaranties, supporting obligations and other security therefor.
b.
“Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. §101 et seq.) and all related rules, all
as amended from time to time and any successor statute and rules.
c.
“Collateral” means now owned and hereafter acquired, present and future, all inventory, wherever located, now or hereafter
acquired, including without limitation, raw materials, work in process, finished goods, materials and supplies, all Accounts, contracts,
documents, instruments, chattel paper, machinery and equipment, and the computer software, programs, stored data, aging schedules, customer
lists, general intangibles, books, records, returns, repossessions, deposits and credit balances relating thereto and proceeds thereof,
together with any substitution, additions, and replacements thereof.
d.
“Investor Priority Collateral” shall mean Investor’s interest in and to the Collateral other than the SBF Priority
Collateral.
e.
“SBF Priority Collateral” shall mean SBF’s interest in Collateral constituting Accounts, contracts, general intangibles,
goodwill, books and records relating to the foregoing Collateral and all proceeds thereof. For avoidance of doubt, the phrase general
intangibles does not relate to any intellectual property including software, except to the extent directly related to the other items
of Collateral, and the phrase all proceeds thereof shall not be construed to modify Section 15.
f.
“SBF Obligations Principal Cap” means $8,000,000.
g.
“UCC” means the Uniform Commercial Code as in effect in the State of Delaware, as the same may be amended from time-to-time.
2.
SBF Representations. SBF represents that the loan transaction between the Investor and Debtor, and the granting of
security interests to the Investor as set forth herein will not be construed to be a default by Debtor under any agreements between Debtor
and SBF.
3.
Investor Representations. The Investor represents that the factoring transaction between SBF and Debtor, and the
granting of security interests to SBF as set forth herein will not be construed to be a default by Debtor under any agreements between
Debtor and the Investor.
4.
Priority.
a.
Notwithstanding anything contained in the provisions of the UCC or any other applicable law relative to the priority of such security
interests of the parties hereto as may now or in the future be perfected by the parties hereto: (1) the Investor acknowledges and agrees
that its security interests in the SBF Priority Collateral are hereby made subordinate and junior in priority to the security interests
of SBF and its successors and assigns, (2) SBF acknowledges and agrees that its security interests in the Investor Priority Collateral
are hereby made subordinate and junior in priority to the security interests of the Investor and its successors and assigns. The Investor
shall have a second priority lien on the SBF Priority Collateral which shall be subordinated to the rights of SBF in all respects as contemplated
in this Agreement, and SBF shall have a second priority lien on the Investor Priority Collateral which shall be subordinated to the rights
of Investor in all respects as contemplated in this Agreement.
b.
The priorities specified in this Agreement with respect to the SBF Priority Collateral and the Investor Priority Collateral shall
be applicable irrespective of the time or order of attachment or perfection of any security interest or the time or order of filing of
any financing statements or other documents, or the giving of any notices of purchase money security interests or other notices, or possession
of any Collateral, or any statutes, rules or law, or court decisions to the contrary.
c.
The priorities of the security interests provided in this Section 4 with respect to the SBF Priority Collateral and the Investor
Priority Collateral shall not be altered or otherwise affected by any amendment, modification, supplement, extension, renewal, restatement,
replacement or refinancing of any of the Debtor’s obligations under agreements with SBF or the Investor, nor by any action or inaction
which SBF or the Investor may take or fail to take in respect of the Collateral; provided that SBF shall not increase the aggregate
principal amount of Debtor’s obligations to SBF to an amount in excess of the SBF Principal Cap without the prior written consent
of the Investor, which consent shall not be unreasonably withheld, delayed or conditioned.
5.
Proceeds; Certain Other Matters.
a.
With respect to the SBF Priority Collateral, upon disposition by any party hereto, in exercise of its rights as secured party,
or upon any distribution, whether by reason of sale, reorganization, liquidation, dissolution, arrangement, any proceedings under the
Bankruptcy Code, receivership, assignment for the benefit of creditors, foreclosure or otherwise, of all or any portion of the SBF Priority
Collateral, the Investor shall have no right to any proceeds of such disposition or distribution until such time as SBF has realized all
amounts due to it from Debtor, including but not limited to, expenses of retaking, holding for sale, preparing for sale, selling, collecting,
attorneys’ fees and legal expenses; provided, however, nothing set forth hereunder shall prohibit the Investor from exercising its
rights and remedies under its loan and transaction documents to convert any amount of indebtedness owed to it into equity interests of
the Debtor pursuant to the terms and conditions of its loan and transaction documents.
b.
With respect to the Investor Priority Collateral, upon disposition by any party hereto, in exercise of its rights as secured party,
or upon any distribution, whether by reason of sale, reorganization, liquidation, dissolution, arrangement, any proceedings under the
Bankruptcy Code, receivership, assignment for the benefit of creditors, foreclosure or otherwise, of all or any portion of the Investor
Priority Collateral, SBF shall have no right to any proceeds of such disposition or distribution until such time as the Investor has realized
all amounts due to it from Debtor, including but not limited to, expenses of retaking, holding for sale, preparing for sale, selling,
collecting, attorneys’ fees and legal expenses.
c.
Each of SBF and the Investor agree that any collection, sale or other disposition of any or all of the Collateral in which the
other party has a priority interest (whether pursuant to the UCC or otherwise) shall be free and clear of any and all security interests,
liens, claims and/or rights of the junior secured party in such applicable Collateral. At the request of the SBF, the Investor shall promptly
provide the Investor with any reasonable and necessary or appropriate releases to permit the collection, sale or other disposition of
any or all of the SBF Priority Collateral by SBF free and clear of the Investor’s security interests and liens, with Investor retaining
their rights to an accounting and to any surplus, notwithstanding their release of their security interest. At the request of the Investor,
SBF shall promptly provide the Investor with any necessary or appropriate releases to permit the collection, sale or other disposition
of any or all of the Investor Priority Collateral by the Investor free and clear of the SBF’s security interests and liens, with
SBF retaining their rights to an accounting and to any surplus, notwithstanding their release of their security interest.
d.
Investor agrees that it will not at any time contest the validity, perfection, priority or enforceability of the agreements between
SBF and Debtor or obligations of Debtor to SBF, or the liens and security interests of SBF in the SBF Priority Collateral. SBF agrees
that it will not at any time contest the validity, perfection, priority or enforceability of the agreements between Investor and Debtor
or obligations of Debtor to Investor, or the liens and security interests of the Investor in the Investor Priority Collateral. It is acknowledged
and agreed by the parties hereto that this Agreement shall constitute a “subordination agreement” with the meaning of Section
510(a) of the Bankruptcy Code.
6.
With respect to the Collateral, so long as Debtor is indebted to SBF or its successors and assigns and so long as SBF has not notified
the Investor in writing of SBF's termination of its financing arrangements with Debtor, the Investor will take no action whatsoever, under
any circumstances, whether as a secured creditor, judgment creditor or otherwise, to exercise or enforce any rights or remedies which
it may have to the Collateral either under its agreements with Debtor or under the UCC or any applicable law, and will not accept any
payments from account debtors of the Debtor; provided, however, nothing set forth hereunder shall prohibit the Investor from exercising
its rights and remedies under its loan and transaction documents to convert any amount of indebtedness owed to it into equity interests
of the Debtor pursuant to the terms and conditions of its loan and transaction documents. In the event the Investor receives payments
from account debtors of Debtor, the Investor agrees to immediately remit the same, in kind, with all necessary endorsements, to SBF.
7.
With respect to those instances where both SBF and the Investor are or may be named as loss payees on any insurance policies of
Debtor, the rights of SBF and the Investor in any proceeds resulting from said insurance policies and loss payee endorsements shall be
in accordance with the respective priority of interests of SBF and the Investor as set forth in this Agreement.
8.
Certain Covenants.
a.
SBF and the Investor agree that neither of them will transfer or assign their security interests in the Collateral of Debtor or
any portion thereof without disclosing to any purchaser or assignee that its security interests are subject to the terms of this Agreement.
b.
The Investor agrees that it shall not, directly or indirectly, contact any account debtors of the Debtor or otherwise seek payment
from any obligor on any of the SBF Priority Collateral unless or until such time that the obligations of Debtor to the Investor are indefeasibly
paid in full;
c.
SBF agrees that it shall not, directly or indirectly, seek payment derived from any of the Investor Priority Collateral, except
inventory sold by the Debtor that constitutes the Investor Priority Collateral, unless or until such time that the obligations of Debtor
to the Investor are indefeasibly paid in full;
d.
Each party agrees that it will not take any action that interferes with, is prejudicial to or inconsistent with the rights of the
other party and such other party’s lien with respect to applicable Collateral including, without limitation, the taking of any action
that will impede, interfere with, restrict, or restrain the exercise by the other party of its rights and remedies.
e.
The Investor shall provide SBF with reasonable access to any accounting records relating to the SFB Priority Collateral including
delivering electronic or paper copies.
9.
Any requirement of this Agreement with respect to notice may be complied with by depositing said notice in the mails, registered
or certified, return receipt requested, or with an overnight delivery company (with provision for personal delivery and receipt certifying
thereto), addressed to the party to whom notice is being given at its address shown on the first page of this Agreement.
10.
This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.
11.
This Agreement is entered into solely for purposes set forth herein, and no party assumes any responsibility to any other party
to advise the other of information known to such party regarding the financial condition of the Debtor, or regarding the Collateral, or
of any circumstances bearing upon the risk of nonpayment of the obligations of Debtor. Each party shall be responsible for managing its
relationship with Debtor and no party shall be deemed the agent of any other party under this Agreement. Except as otherwise expressly
provided herein, each party may alter, amend, supplement, release, discharge or otherwise modify any terms of their respective loan agreements
with Debtor without notice to or consent of any other party. The provisions of this Agreement shall be applicable in any Bankruptcy or
other insolvency proceeding.
12.
Nothing contained in this Agreement shall be deemed to indicate that this Agreement has been entered into for the benefit of any
person other than the parties hereto.
13.
This Agreement shall be governed by the laws of the State of Florida, and any dispute arising hereunder shall be adjudicated exclusively
in the State courts of the State of Florida located in Palm Beach County or the United States District Court for the Southern District
of Florida. This choice of law and exclusive jurisdiction shall not be deemed to modify the choice of law in the Security Agreement between
the Investor and the Debtor or in any other transaction document to which the Debtor and the Investor are parties.
SBF AND THE INVESTOR HEREBY
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTER CLAIM, WHETHER IN CONTRACT IN TORT, AT LAW OR IN EQUITY, ARISING OUT OF
OR IN ANY WAY RELATED TO THIS AGREEMENT.
14.
Investor does hereby irrevocably appoint ___________ as its agent for service of process (the “Agent”) and agrees that
any pleading served upon the Agent shall constitute service upon the Investor.
15. Notwithstanding
anything to the contrary set forth in this Agreement or in the Purchasing Agreement among, inter alia, SBF and Debtor, SBF acknowledges
that the Investor Priority Collateral includes a first priority security lien in restricted cash equal to up to $1,000,000 plus
accrued interest from the proceeds of the Investor financing to the Debtor or otherwise , but in no event shall such sum at any time include
any proceeds of advances from SBF (the “Investor Reserve Amount”) that will be deposited into an account at a bank other than
SBF pursuant to a deposit account control agreement to be established by the Debtor with a financial institution acceptable to investor
(the “Investor DACA”). SBF acknowledges that from the date hereof, so long as no proceeds of advances from SBF are included
in the Investor Reserve Amount, SBF will have no security interest whatsoever in the Investor Reserve Amount or in the Investor DACA.
IN WITNESS WHEREOF, the undersigned
have hereunto set their hands on the day and year first above written.
SEACOAST BUSINESS
FUNDING,
a division of Seacoast
National Bank
By: /s/ Jerry Shea
Name: Jerry Shea
Its: Senior Vice President
INVESTOR
By: ________________________________
Its:
The undersigned hereby acknowledges
notice of the foregoing Intercreditor Agreement and agrees to be bound by all of the terms and conditions thereof.
Healthcare Triangle, Inc., a Delaware
corporation
By: /s/ Thyagaraja Ramachandran
Thyagarajan Ramachandran
Its: Chief Financial Officer
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT
(the “Agreement”) is dated as of December 28, 2023, by and among Healthcare Triangle, Inc., a Delaware corporation (the “Company”),
and the Investor identified on the signature page hereto (together with its successors and assigns, the “Investor”).
WHEREAS, the Company has agreed
to provide certain registration rights to the Investor in order to induce the Investor to enter into that certain Securities Purchase
Agreement by and among the Company and the Investor dated as of the date hereof (the “Purchase Agreement”).
Now, therefore, in consideration
of the mutual promises and the covenants as set forth herein, the parties hereto hereby agree as follows:
1.
Definitions. Unless the context otherwise requires, capitalized words and terms used herein without definition and defined
in the Purchase Agreement are used herein as defined therein. Notwithstanding the foregoing, as used herein the capitalized words and
terms defined in this Section 1 shall have the meanings herein specified for all purposes of this Agreement, applicable to both the singular
and plural forms of any of the terms herein defined:
“Agreement” means
this Registration Rights Agreement, as the same may be amended, modified or supplemented in accordance with the terms hereof.
“Board” means
the Board of Directors of the Company.
“Common Stock”
means the Company’s authorized common stock, as constituted on the date of this Agreement, any stock into which such Common Stock
may thereafter be changed and any stock of the Company of any other class, which is not preferred as to dividends or assets over any other
class of stock of the Company and which is not subject to redemption, issued to the holders of shares of such Common Stock upon any re-classification
thereof.
“Company” has
the meaning assigned to it in the introductory paragraph of this Agreement.
“Exchange Act”
means the Securities Exchange Act of 1934 (or successor statute).
“Excluded Forms”
means Registration Statements under the Securities Act on Forms S-4 and S-8 or any successors.
“Filing Date”
has the meaning assigned to it in Section 3(a) of this Agreement.
“Investor” has
the meaning assigned to it in the introductory paragraph of this Agreement.
“Person” includes
any natural person, corporation, trust, association, company, partnership, joint venture, limited liability company and other entity and
any government, governmental agency, instrumentality or political subdivision.
“Proposed Registration”
means any proposed Registration Statement to be filed pursuant to this Agreement.
“Purchase Agreement”
has the meaning assigned to it in the Recitals of this Agreement.
The terms “register”
“registered” and “registration” refer to a registration effected by preparing and filing a Registration Statement
on other than any of the Excluded Forms in compliance with the Securities Act, and the declaration or ordering of the effectiveness of
such Registration Statement.
“Registration Statement”
means any registration statement filed by the Company on behalf of the Investor that covers the resale of Registrable Securities under
the provisions of this Agreement.
“Registrable Securities”
means the greater of (a) (i) the Common Stock to be acquired by the Investor pursuant to the conversion of or other issuances of Common
Stock pursuant to the Notes (calculated using the applicable “Floor Price” then in effect as defined under the Notes) and
exercise of the Warrants and any other shares of Common Stock subsequently acquired by the Investor under any Transaction Documents, and
(ii) any securities of the Company issued with respect to such Common Stock by way of any stock dividend or stock split or in connection
with any merger, combination, recapitalization, share exchange, consolidation, reorganization or other similar transaction, or (b) the
highest Required Minimum determined between the applicable Closing Date and filing of the subject Registration Statement.
“Representatives”
means all shareholders, officers, directors, members, managers, partners, employees and agents.
“Rule 144” has
the meaning assigned to it in Section 7 of this Agreement.
“SEC” means the
Securities and Exchange Commission or any other governmental body at the time administering the Securities Act.
“Securities Act”
means the Securities Act of 1933 (or successor statute).
“Selling Expenses”
means all selling commissions, underwriting discounts, other fees paid by the Investor to a broker-dealer, finder’s fees and stock
transfer taxes applicable to the Registrable Securities contained in a Registration Statement for the benefit of the Investor.
2.
Required Registration.
(a)
Within 15 days after the First Tranche Closing, the Company shall file with the SEC a Registration Statement on Form S-1 or S-3,
or any successor form, covering the sale of all of the Registrable Securities issuable under the First Tranche Closing.
(b)
Within 15 days after the Second Tranche Closing, the Company shall file with the SEC a Registration Statement on Form S-1 or S-3,
or any successor form, covering the sale of all of the Registrable Securities issuable under the Second Tranche Closing.
(c)
Within 15 days after the Third Tranche Closing, the Company shall file with the SEC a Registration Statement on Form S-1 or S-3,
or any successor form, covering the sale of all of the Registrable Securities issuable under the Third Tranche Closing.
3.
Obligations of the Company. If and whenever the Company is required by the provisions hereof to effect or cause the
registration of any Registrable Securities under the Securities Act as provided herein, the Company shall:
(a)
prepare and file with the SEC within 15 days after the First Tranche Closing, the Second Tranche Closing and the Third Tranche
Closing, as applicable, a Registration Statement with respect to such Registrable Securities (each, a “Filing Date”) and cause
any such Registration Statement to become effective within 40 days after the applicable Filing Date if the Staff of the SEC indicates
to the Company that such Registration Statement will be subject to a “limited” review, or within 60 days after the applicable
Filing Date if the Staff of the SEC indicates to the Company that such Registration Statement will be subject to a “full”
review, and to remain effective until the sale or other disposition of all Registrable Securities covered by such Registration Statement
has occurred during such period in accordance with the intended methods of disposition by the Investor set forth in such Registration
Statement (the “Effectiveness Period”) (provided that before filing a Registration Statement or any amendment or supplement
thereto, the Company will at least three Trading Days prior to making any such filing it shall furnish to the Investor copies of the Registration
Statement, as amended if applicable and any response letter to the Staff of the SEC proposed to be filed). Notwithstanding the above 40-day
period, if the Staff of the SEC indicates to the Company that an applicable Registration Statement will not be reviewed, the Company shall
promptly, but in no event later than two Trading Days thereafter, cause such Registration Statement to become effective;
(b)
subject to complying with Section 3(a), prepare and file with the SEC such amendments to any such Registration Statement (including
post-effective amendments) and supplements to the prospectus included therein as may be necessary to keep such Registration Statement
effective and to comply with the provisions of the Securities Act during the Effectiveness Period;
(c)
furnish to the Investor such number of copies of such Registration Statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus included in such Registration Statement (including each
preliminary prospectus), in conformity with the requirements of the Securities Act, and such other documents, as the Investor may reasonably
request, in order to facilitate the public sale or other disposition of the Registrable Securities owned by the Investor;
(d)
make such filings under the securities or blue sky laws of such states or commonwealths as the Investor may reasonably request
to enable the Investor to consummate the sale;
(e)
promptly notify the Investor at any time when a prospectus relating to its Registrable Securities is required to be delivered under
the Securities Act, of the Company’s becoming aware that the prospectus included in the related Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances then existing, and promptly prepare and furnish to the Investor
a reasonable number of copies of a prospectus supplement or amendment so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus, as supplemented or amended, shall not include 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 not misleading in the light of the circumstances then existing.
In such event, the Company shall file a Form 8-K or amended prospectus or prospectus supplement within four Trading Days in order to permit
the Investor to be able to sell the Registrable Securities;
(f)
otherwise comply with all applicable rules and regulations of the SEC and to perform its obligations hereunder;
(g)
cause the Registrable Securities to continue to be quoted on the Principal Market;
(h)
provide a transfer agent for all Registrable Securities and promptly pay all fees and costs of the transfer agent;
(i)
provide a CUSIP number for all Registrable Securities, in each case not later than the effective date of the applicable Registration
Statement;
(j)
notify the Investor of any stop order threatened or issued by the SEC and take all actions reasonably necessary to prevent the
entry of such stop order or to remove it if entered; and
(k)
promptly email the Investor copies of all comment letters and other communications from and with the Staff of the SEC, file an
amendment to a Registration Statement within five Trading Days, subject to extension upon consent of the Collateral Agent as defined in
the Security Agreement (which consent shall not be unreasonably withheld), after receipt of a comment letter or oral comments, and request
acceleration of the effectiveness of the Registration Statement within two Trading Days after the Company or its counsel has been advised
that the Staff of the SEC will not review such Registration Statement or has no further comments thereon.
A failure to comply with Section 3 or Section
4 of this Agreement shall be deemed to be an Event of Default under the Notes.
4.
Other Procedures.
(a)
Subject to the remaining provisions of this Section 4 and the Company’s general obligations under Section 3, the Company
shall be required to maintain the effectiveness of a Registration Statement until the earlier of (i) the sale or other disposition of
all Registrable Securities, or (ii) two years following the effectiveness of the Registration Statement.
(b)
In consideration of the Company’s obligations under this Agreement, the Investor agree that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(e) herein, the Investor shall forthwith discontinue its sale
of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until the Investor’s receipt
of the copies of the supplemented or amended prospectus contemplated by said Section 3(e).
(c)
The Company’s obligation to file any Registration Statement or amendment including a post-effective amendment, shall be subject
to the Investor, as applicable, furnishing to the Company in writing such information and documents regarding the Investor and the distribution
of the Investor’s Registrable Securities as may reasonably be required to be disclosed in the Registration Statement in question
by the rules and regulations under the Securities Act or under any other applicable securities or blue sky laws of the jurisdiction referred
to in Section 3(d) herein. The Company’s obligations are also subject to the Investor promptly executing any representation letter
concerning compliance with Regulation M under the Exchange Act (or any successor rule or regulation). If the Investor fails to provide
all of the information required by this Section 4(c), the Company shall have no obligation to include its Registrable Securities in a
Registration Statement or it may withdraw the Investor’s Registrable Securities from the Registration Statement without incurring
any penalty or otherwise incurring liability to the Investor.
(d)
If any such registration or comparable statement refers to the Investor by name or otherwise as a stockholder of the Company, but
such reference to the Investor by name or otherwise is not required by the Securities Act or the rules thereunder, then the Investor shall
have the right to require the deletion of the reference to the Investor, as may be applicable.
(e)
If as result of an SEC Staff policy, rule or regulation or for any other reason, the Company is unable to register all Registrable
Securities in one Registration Statement, then upon the earlier of (i) 30 days (or such earlier time as is permitted by the Staff of the
SEC or any rule of the SEC) after any Registration Statement filed pursuant to this Agreement is declared effective by the SEC, or (ii)
when the registered but not issued Underlying Shares fall below 50% of the amount covered by the effective Resale Registration Statement(s),
the Company shall file another Registration Statement including all of the remaining Registrable Securities of the Investor, in which
event the conditions of this Agreement shall apply; provided, however, in no event shall the Company delay the effective
date of any Registration Statement for more than five Trading Days after receipt of notice from the SEC Staff that it will either not
review a Registration Statement or it has no further comments with respect to a Registration Statement.
(f)
The Company shall not include any securities for any other stockholder in any registration statement other than Registrable Securities
for the Investor in any Registration Statement.
5.
Registration Expenses. In connection with any registration of Registrable Securities pursuant to Section 2, the Company
shall, whether or not any such registration shall become effective, from time to time, pay all expenses (other than Selling Expenses)
incident to its performance of or compliance, including, without limitation, all registration, and filing fees, fees and expenses of compliance
with securities or blue sky laws, word processing, printing and copying expenses, messenger and delivery expenses, fees and disbursements
of counsel for the Company and all independent public accountants and other Persons retained by the Company. The Company shall also reimburse
the Investor for its reasonable legal fees in reviewing each Registration Statement, as amended.
6.
Indemnification.
(a)
In the event of any registration of any shares of Common Stock under the Securities Act pursuant to this Agreement, the Company
shall indemnify, defend and hold harmless the Investor, its Affiliates, and their respective Representatives, successors and assigns,
from and against any losses, claims, damages or liabilities, joint or several, to which the Investor, its Affiliates, and its respective
Representatives, successors and assigns may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement under which such Registrable Securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement thereto, or any document incident to registration or
qualification of any Registrable Securities pursuant to Section 3(d) herein, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or,
with respect to any prospectus, necessary to make the statements therein, in light of the circumstances under which they were made, not
misleading, or any violation by the Company of the Securities Act, the Exchange Act, or state securities or blue sky laws or relating
to action or inaction required of the Company in connection with such registration or qualification under the Securities Act or such state
securities or blue sky laws. If the Company fails to defend the Investor, its Affiliates, and its respective Representatives, successors
and assigns, as applicable, as required by Section 6(c) herein, it shall reimburse (after receipt of appropriate documentation) the Investor,
its Affiliates, and its respective Representatives, successors and assigns for any legal or any other reasonable and documented out-of-pocket
expenses incurred by any of them in connection with investigating or defending any such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable to the Investor, its Affiliates, or its respective Representatives, successors or
assigns in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in said Registration Statement, said preliminary prospectus, said prospectus,
or said amendment or supplement or any document incident to registration or qualification of any Registrable Securities pursuant to Section
3(d) hereof in reliance upon and in conformity with written information furnished to the Company by the Investor, its Affiliates, or its
respective Representatives, successors or assigns specifically for use in the preparation thereof.
(b)
In the event of any registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Investor
shall, severally and not jointly, indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 6(a))
the Company, each director of the Company, each officer of the Company who signs such Registration Statement, the Company’s attorneys
and auditors and any Person who controls the Company within the meaning of the Securities Act, from and against any loss, claim, damage
or liability that arises out of or is based upon any untrue statement or omission from such Registration Statement, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereto, if and to the extent that such untrue statement or omission
was made in reliance upon and in conformity with written information furnished to the Company by the Investor specifically for use in
the preparation of such Registration Statement, preliminary prospectus, final prospectus or amendment or supplement.
(c)
Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in Section
6(a) or (b), such indemnified party shall, if a claim in respect thereof is made against an indemnifying party, give written notice to
such indemnifying party of the commencement of such action. The indemnifying party shall be relieved of its obligations under this Section
6(c) if and to the extent that the indemnified party delays in giving notice and the indemnifying party is damaged or prejudiced by the
delay. In case any such action is brought against an indemnified party, the indemnifying party shall be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election
so as to assume the defense thereof, the indemnifying party shall be responsible for any legal or other expenses subsequently incurred
by the indemnifying party in connection with the defense thereof, provided, however, that, if counsel for an indemnified party
shall have reasonably concluded that there is an actual or potential conflict of interest between the indemnified party and the indemnifying
party, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party, and such
indemnifying party shall reimburse such indemnified party for the reasonable and documented fees and expenses of counsel (including local
counsel, if applicable) retained by the indemnified party which are reasonably related to the matters covered by the indemnity agreement
provided in this Section 6. Provided, further, that in no event shall any indemnification by the Investor under this Section 6
exceed the net proceeds from the sale of Registrable Securities received by the Investor. No indemnified party shall make any settlement
of any claims indemnified against hereunder without the written consent of the indemnifying party, which consent shall not be unreasonably
withheld. In the event that any indemnifying party enters into any settlement without the written consent of the indemnified party, the
indemnifying party shall not consent to entry of any judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff of a release of such indemnified party from all liability in respect to such claim
or litigation.
(d)
In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which (i) any
indemnified party makes a claim for indemnification pursuant to this Section 6, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the fact that this Section 6 provides for indemnification in
such case, or (ii) contribution under the Securities Act may be required in circumstances for which indemnification is provided under
this Section 6; then, in each such case, the Company and each the Investor shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject as is appropriate to reflect the relative fault of the Company and the Investor in connection
with the statements or omissions which resulted in such losses, claims, damages or liabilities, it being understood that the parties acknowledge
that the overriding equitable consideration to be given effect in connection with this provision is the ability of one party or the other
to correct the statement or omission (or avoid the conduct or take an act) which resulted in such losses, claims, damages or liabilities,
and that it would not be just and equitable if contribution pursuant hereto were to be determined by pro-rata allocation or by any other
method of allocation which does not take into consideration the foregoing equitable considerations. Notwithstanding the foregoing, (i)
no the Investor shall be required to contribute any amount in excess of the net proceeds to it of all Registrable Securities sold by it
pursuant to such Registration Statement, and (ii) no Person who is guilty of fraudulent misrepresentation within the meaning of Section
11(f) of the Securities Act shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.
7.
Rule 144. As long as the Investor holds restricted securities (as that term is used in Rule 144) or has the right to
acquire restricted Conversion Shares or restricted Warrant Shares, the Company covenants that it will (i) make and keep public information
available, as those terms are understood and defined in Rule 144, at all times, (ii) file in a timely manner the reports and other documents
required to be filed under the Securities Act or the Exchange Act and the rules and regulations adopted by the SEC thereunder, (iii) furnish
to the Investor promptly upon request (x) a written statement by the Company as to its compliance with the reporting requirements of Rule
144 and the Exchange Act, (y) a copy of the most recent annual or quarterly report of the Company, and (z) such other information as the
Investor may reasonably request, and (iv) cooperate with the Investor and respond as promptly as possible to any requests from the Investor
in connection with Rule 144 transfers of restricted securities, in each case to enable the Investor to sell its Registrable Securities
without registration under the Securities Act within the limitation of the exemption provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC (collectively, “Rule
144”); provided, however, nothing contained in this Section 7 or elsewhere in this Agreement shall prevent the Company
from consummating a transaction in which another entity acquires it through a merger or similar transaction, subject to the terms of the
Notes and Warrants.
8.
Severability. In the event any parts of this Agreement are found to be illegal, unenforceable or void, the remaining
provisions of this Agreement shall nevertheless be binding with the same effect as though the illegal, unenforceable or void parts were
deleted.
9.
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual, facsimile or
“.pdf” signature.
10.
Benefit. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their legal representatives,
successors and assigns.
11.
Notices and Addresses. All notices, approvals, requests, demands and other communications hereunder shall be delivered
or made in the manner set forth in, and shall be effective in accordance with the terms of, the Purchase Agreement.
12.
Attorneys’ Fees. In the event that there is any controversy or claim arising out of or relating to this Agreement,
or to the interpretation, breach or enforcement thereof, and any action or proceeding relating to this Agreement is filed, the prevailing
party shall be entitled to an award by the court of reasonable attorneys’ fees, costs and expenses.
13.
Entire Agreement; Oral Evidence. This Agreement constitutes the entire Agreement between the parties and supersedes
all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. Neither this Agreement nor
any provision hereof may be changed, waived, discharged or terminated, except by a statement in writing signed by the party or parties
against which enforcement of the change, waiver discharge or termination is sought.
14.
Additional Documents. The parties hereto shall execute such additional instruments as may be reasonably required by
their counsel in order to carry out the purpose and intent of this Agreement and to fulfill the obligations of the parties hereunder.
15.
Governing Law. This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder
whether relating to its execution, its validity, the obligations provided herein or performance shall be governed in accordance with the
Purchase Agreement.
16.
Section or Paragraph Headings. Section headings herein have been inserted for reference only and shall not be deemed
to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part any of the terms or provisions of this Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, each of
the parties hereto has caused this Agreement to be executed personally or by a duly authorized representative thereof as of the day and
year first above written.
Company:
Healthcare Triangle, Inc.
By:
Name: Thyagarajan Ramachandran
Title: Chief Financial Officer
Investor:
[See Investor Signature Page]
INVESTOR SIGNATURE PAGE
By:
Name:
Title:
Healthcare
Triangle, Inc. Completes $2.0 Million Private Placement Debt Offering
PLEASANTON,
Calif., January 2, 2024 (GLOBENEWSWIRE) -- Healthcare Triangle, Inc. (Nasdaq: HCTI) (“Healthcare Triangle,” “HCTI”
or the “Company”), a leader in digital transformation solutions including managed services, cloud enablement, cybersecurity,
data analytics, and AI data processing for the healthcare and life sciences industries, announced the execution on December 28, 2023
of a securities purchase agreement with an institutional investor for the sale of $2.0 million in aggregate principal amount of
its senior secured 15% original issue discount convertible promissory notes, due June 28, 2025, along with warrants to purchase 357,500
shares of common stock with an exercise price of $3.44688 per share in a private placement transaction (the “Offering”).
Due to the original issue discount, the Company received gross proceeds of approximately $1.7 million and net proceeds, after deducting
offering expenses, of approximately $1.5 million. There may be additional potential closings, for up to an additional $3.2 million aggregate
principal amount, subject to additional conditions detailed in the transaction documents.
“This
capital funding enables us to address a number of unmet critical needs in the healthcare industry and further builds upon the Company’s
growth to become a premier healthcare IT provider in the U.S. with its services and offerings,” said Thyagarajan Ramachandran,
Chief Financial Officer of HCTI.
“The
global healthcare IT market is projected to surpass $970 billion by 2027. We are aware of the many challenges facing healthcare and have
a suite of services to fill the need and demand. Our innovative solutions help organizations adopt a cloud-first strategy to improve
outcomes, quality, access and cost of healthcare. With this added capital, we can further support key initiatives, that are more important
during this time.”
In
connection with the Offering, the Company relied upon the exemption from registration provided under Section 4(a)(2) and Rule 506(b)
under the Securities Act of 1933, as amended (the “Securities Act”), for transactions not involving a public offering. The
notes, any shares of common stock issuable upon conversion of the notes, the warrants and any shares of common stock issuable upon exercise
of the warrants have not been registered under the Securities Act, or under any U.S. state securities laws or in any other
jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration
requirements. The Company intends to file a registration statement in the near future to register these securities.
Additional
details on the transaction are available in the Company’s Form 8-K, which is being today filed with the U.S. Securities and
Exchange Commission and is available at www.sec.gov.
This
press release does not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale
of these securities 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 other jurisdiction.
About
Healthcare Triangle
Healthcare
Triangle, Inc., based in Pleasanton, California, reinforces healthcare progress through breakthrough technology and extensive industry
knowledge and expertise. We support healthcare including hospitals and health systems, payers, and pharma/life sciences organizations
in their effort to improve health outcomes through better utilization of the data and information technologies that they rely on. Healthcare
Triangle achieves HITRUST Certification for Cloud and Data Platform (CaDP), marketed as CloudEz™ and DataEz™. HITRUST Risk-based,
2-year (r2) Certified status demonstrates to our clients the highest standards for data protection and information security. Healthcare
Triangle enables the adoption of new technologies, data enlightenment, business agility, and response to immediate business needs and
competitive threats. The highly regulated healthcare and life sciences industries rely on Healthcare Triangle for expertise in digital
transformation encompassing the cloud, security and compliance, identity management, data lifecycle management, healthcare interoperability,
and clinical and business performance optimization. www.healthcaretriangle.com.
Forward-Looking
Statements and Safe Harbor Notice
All
statements other than statements of historical facts included in this press release are “forward-looking statements” (as
defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements include our expectations and those
statements that use forward-looking words such as “projected,” “expect,” “possibility” and “anticipate.”
The achievement or success of the matters covered by such forward-looking statements involve significant risks, uncertainties and assumptions.
Actual results could differ materially from current projections or implied results. Investors should read the risk factors set forth
in the Company's Annual Report on Form 10-K filed with the SEC on March 28, 2023, subsequent filings and future reports filed with the
SEC. All the Company's forward-looking statements are expressly qualified by all such risk factors and other cautionary statements.
The
Company cautions that statements and assumptions made in this news release constitute forward-looking statements and make no guarantee
of future performance. Forward-looking statements are based on estimates and opinions of management at the time statements are made.
The information set forth herein speaks only as of the date hereof. The Company and its management undertake no obligation to revise
these statements following the date of this news release.
Contacts
Media:
Michael
Campana
michael.c@healthcaretriangle.com
Investors:
1-800-617-9550
ir@healthcaretriangle.com
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Healthcare Triangle (NASDAQ:HCTI)
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