ConnectM披露高成本有担保可转债融资并授予认股权证

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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):
August 31, 2026
ConnectM
Technology Solutions, Inc.
(Exact name of registrant as specified
in its charter)
Delaware
001-41389
87-2898342
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
2 Mount
Royal Avenue
,
Suite 550
Marlborough
,
Massachusetts
01752
(Address
of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code:
(
617
)
395-1333
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 (see General Instruction A.2.
below):
¨
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
N/A
N/A
N/A
Indicate by check mark whether the
registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
x
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
Item 1.01 Entry into a Material Definitive
Agreement.
Securities Purchase Agreement and Ancillary Documents
On August 31, 2026, ConnectM Technology Solutions, Inc. (the “Company”)
entered into a securities purchase agreement (the “Purchase Agreement”) with Ascent Partners Fund LLC, a Delaware limited
liability company (the “Purchaser”), pursuant to which the Company agreed to issue and sell to the Purchaser certain senior
secured convertible promissory notes and warrants, for aggregate gross proceeds of up to $5,000,000 in a private placement transaction
(the “Transaction”).
Pursuant to the Purchase
Agreement, on the initial closing date, the Company issued to the Purchaser: (i) a senior secured convertible promissory note in the original
principal amount of $200,000 (“Note One”), with a purchase price of $228,571.43 (reflecting an original issue discount of
$28,571.43) and (ii) warrants (the “Warrants”) to purchase shares of the Company’s common stock (“Common Stock”).
The closing of the $200,000
tranche represents the first initial tranche under the Purchase Agreement, and the Company expects the closing of a second tranche of $2,300,000 to occur by Friday,
September 4, 2026.
Note One bears interest at a rate of 10% per annum and matures in August
2027. Upon the occurrence of a listing event (the “Listing Event”), Note One will automatically convert into shares of the
Company’s Series C Convertible Preferred Stock (“Series C Preferred Stock”), having the rights, preferences, powers,
qualifications, limitations and restrictions set forth in the Certificate of Designation and Preferences relating thereto filed with the
Secretary of State of the State of Delaware on September 3, 2026 (“Certificate of Designation”). Note One is also convertible
into shares of Common Stock at the option of the holder at a conversion price determined in accordance with the terms thereof, subject
to adjustment. The Warrants are exercisable for a period of five years from the date of issuance at an exercise price to be determined,
subject to adjustment. The number of warrant shares is calculated by dividing 50% of the initial principal amount of the Notes by the
exercise price.
In connection with the
Transaction, the Company entered into a Security Agreement (the “Security Agreement”) with the Purchaser, pursuant to which
the Company granted a first-priority security interest in substantially all assets of the Company, including 160,000,000 equity shares
of Blue Cloud Softech Solutions Limited (the “Blue Cloud Shares”), as collateral to secure the Company’s obligations
under the Notes and the other Transaction Documents.
The Purchase Agreement
contains customary representations, warranties, covenants and indemnification provisions for a transaction of this type, including negative
covenants restricting the Company from incurring additional indebtedness, creating liens, making restricted payments, and entering into
certain issuances without the Purchaser’s consent. The Purchase Agreement also provides the Purchaser with a right of first refusal
on subsequent financings (up to 33% participation, or 100% for equity lines of credit) and most-favored-nation protections.
Registration Rights
Agreement
In connection with the Offering, the Company entered into a registration
rights agreement with each of the Purchaser (the “Registration Rights Agreement”), pursuant to which the Company is required
to prepare and file a registration statement (the “Registration Statement”) with the Securities and Exchange Commission (the
“SEC”) under the Securities Act, covering the resale of the shares underlying the senior secured convertible promissory notes
and warrants The Company is required to file the Registration Statement with the SEC within 60 days of the Closing Date and is required
to have the Registration Statement declared effective by the SEC in accordance with the terms of the Registration Rights Agreement.
The foregoing
summaries of the Purchase Agreement, Note One, the Warrants, the Certificate of Designation, the Security Agreement and the
Registration Rights Agreement do not purport to be complete and are qualified in their entirety by reference to such agreements,
copies of which are filed as Exhibits 3.1, 4.1, 10.1, 10.2, 10.3 and 10.4 to this Current Report on Form 8-K and incorporated herein
by reference.
Item 3.02. Unregistered Sales of Equity
Securities.
The information
set forth in Item 1.01 of this Current Report on Form 8-K regarding the issuance of the Note and the Warrants is incorporated herein by
reference. The securities were offered and sold in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities
Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder. The Purchaser represented that it is an “accredited
investor” as defined in Rule 501(a) under the Securities Act.
Item 5.03. Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Series C Convertible
Preferred Stock
On September 4, 2026,
in connection with the Purchase Agreement, the Company filed the Certificate of Designation with the Secretary of State of the State of
Delaware, designating 4,000 shares of preferred stock as Series C Convertible Preferred Stock, par value $0.0001 per share, with a stated
value of $1,000.00 per share.
Dividends
The Series C Preferred
Stock bears cumulative dividends at a rate of 10% per annum on the Stated Value, payable monthly in cash or by increasing the Conversion
Amount. During the continuance of a Negative Event, the dividend rate automatically increases to 24% per annum.
Conversion Rights
At any time following
the date that is six months after the Listing Event, holders are entitled to convert their shares into Common Stock at a Conversion Rate
determined by dividing the Conversion Amount by the Conversion Price. The Conversion Price is the lower of (i) the Listing Event Price
or (ii) during a Negative Event, 95% of the lowest VWAP of the Common Stock during the five consecutive trading days ending on the trading
day immediately preceding delivery of the conversion notice. A holder shall not convert to the extent it would beneficially own in excess
of 9.99% of the outstanding Common Stock (the “Beneficial Ownership Limitation”).
Redemption Rights
Upon the occurrence of
a Redemption Trigger Event (including a Change of Control, Fundamental Transaction, Subsequent Offering, or Negative Event), holders may
require the Company to redeem their shares at the Redemption Price, which is 110% of the Liquidation Amount (or 100% in the case of a
Subsequent Offering). The Company may also redeem shares at its option at the Redemption Price upon not less than 30 days’ prior
written notice, subject to each holder’s conversion right.
Liquidation Preference
In the event of a liquidation,
dissolution or winding up, holders are entitled to receive the greater of (a) 110% of the Stated Value plus accrued and unpaid Dividends
and Late Charges, or (b) the amount the holder would receive upon conversion into Common Stock immediately prior to such event, in each
case before any distribution to holders of Common Stock.
The foregoing description
of the Certificate of Designation does not purport to be complete and is qualified in its entirety by reference to the full text of the
Certificate of Designation, a copy of which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No.
Description
3.1
Certificate of Designation and Preferences of The Series C Convertible Preferred, filed with the Secretary of State of the State of Delaware on September 3, 2026.
4.1
Warrant to Purchase Common Stock, dated August 31, 2026.
10.1
Securities Purchase Agreement, dated August 31, 2026.
10.2
Senior Secured Convertible Promissory Note One, dated August 31, 2026
10.3
Security Agreement, dated August 31, 2026.
10.4
Registration Rights Agreement
104
Cover Page Interactive Data File (embedded within the Inline XBRL document).
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: September 4, 2026
ConnectM Technology Solutions, Inc.
By:
/s/ Bhaskar Panigrahi
Name:
Bhaskar Panigrahi
Title:
Chief Executive Officer

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EX-10.1
4
tm2624767d1_ex10-1.htm
EXHIBIT 10.1
Exhibit 10.1
SECURITIES PURCHASE
AGREEMENT
This Securities
Purchase Agreement (this “
Agreement
”) is dated as of August 31, 2026, by and between ConnectM Technology Solutions, Inc.,
a Delaware corporation (together with its successors and, if permitted, assigns, the “
Company
”), and Ascent Partners
Fund LLC, a Delaware limited liability company (together with its successors and assigns, including any other holder of Purchased Securities,
the “
Purchaser
”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933,
as amended (together with the Regulations promulgated thereunder, the “
Securities Act
”), the Company desires to issue
and sell to the Purchaser, and the Purchaser desires to purchase from the Company for cash and other valuable consideration, the Purchased
Securities as defined and described more fully in this Agreement; and
WHEREAS, Schedule
II
contains a list of terms defined in this Agreement or in other Transaction Documents, all of which are used in this Agreement
and the other Transaction Documents as so defined;
NOW, THEREFORE,
in consideration of the representations, warranties and covenants contained in this Agreement, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
PURCHASES
AND SALES
1.1           Closings
.
(a)
Initial
Closing.
On the trading day on which the conditions set forth in
Section 1.3 (Conditions to Initial Closing)
shall have
been satisfied or duly waived (or, if such day is not a trading day, on the trading day next following such day) (the
“Initial
Closing Date”
), upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution
and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchaser agrees to purchase, only Note One
(the
“Initial Note”
) set forth on
Schedule I
, in exchange for the purchase price (the
“Initial Purchase
Price
”) set forth on
Schedule I
(the closing of such purchase and sale being referred to herein as the
“Initial
Closing
”). The
“Initial Purchased Securities”
means only the Initial Note, and the Initial Note and the
Additional Notes are collectively the
“Notes”
, each of which is a
“Note”
. The Initial Purchase
Price reflects the original issue discount shown on
Schedule I
.
(b)
Additional
Closings.
The Purchaser and the Company currently do not intend to sell or purchase Note Two, any additional Notes or Warrants. Nevertheless,
the Company and the Purchaser may, in their sole discretion, agree in the future to purchase Note Two and any additional Notes (collectively,
the
“Additional Notes
”) and additional Warrants (the
“Additional Warrants
” and, together with the
Additional Notes and the Initial Purchased Securities, the
“Purchased Securities”
) for purchase prices (including,
if applicable, original issue discounts) to be agreed upon (the
“Additional Purchase Prices
” and, together with the
Initial Purchase Price, the
“Purchase Prices
”) at the additional closings, if applicable (the
“Additional
Closings
” and, together with the Initial Closing, the
“Closings”
) on days mutually acceptable to them on
or after the day on which the conditions set forth in
Section 1.4
shall have been satisfied or duly waived (the
“Additional
Closing Date”
and, together with the Initial Closing Date, the
“Closing Dates
”).
(c)
Mechanics
.
At each Closing, (i) the Purchaser shall deliver to the Company, without set off or counterclaim, via wire transfer to an account
designated by the Company, the Purchase Price for such Closing in immediately available dollars, (ii) the Company shall deliver
to the Purchaser, the Purchased Securities purchased at such Closing and (iii) the Company and the Purchaser shall deliver to each
other the other items set forth in
Section 1.2 (Deliveries)
applicable to such Closing. Upon satisfaction of the terms and
conditions set forth in
Section 1.3 (Conditions to Initial Closing)
(or, as the case may be,
Section 1.4 (Conditions
to Additional Closings)
), such Closing shall occur remotely by electronic exchange of Closing documentation using DocuSign or a similar
service or, if the parties mutually agree, physically at any location chosen by the parties.
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“
Issuable Securities
”
means (i) the shares of Common Stock issuable upon conversion of any Note in accordance with the terms thereof, including shares
of Common Stock issued upon conversion, redemption, or amortization of such Note, and shares of Common Stock issued and issuable in lieu
of the cash payment of interest on such Note in accordance with the terms of such Note, (ii) the shares of Series C Preferred
issuable upon conversion of Note Two in accordance with the terms thereof, (iii) the shares of Common Stock issuable upon conversion
of any share of Series C Preferred Stock in accordance with the terms thereof, (iv) the shares of Common Stock that may be
purchased upon exercise of any Warrant in accordance with the terms of such Warrant, and (v) any other shares of Common Stock either
issued or required to be issued by the Company hereunder to the Purchaser under any Transaction Document after the Initial Closing Date,
whether as payment for an Obligation or otherwise.
“Transaction Securities”
means the Purchased Securities and the Issuable Securities.
1.2           Deliveries.
(a)
At
Each Closing.
On or prior to each Closing Date, each of the Company and the Purchaser shall deliver or cause to be delivered to the
other party the items identified in
Section I
(or, as the case may be,
Section II
) of the closing list attached
hereto as
Schedule III
(the
“Closing List
”) as being delivered to such party on or prior to such Closing, each
dated as of the Closing Date for such Closing and in form and substance satisfactory to the party receiving them. Notwithstanding the
foregoing, the only deliverables required at the Initial Closing under this Section 1.2(a) or the Closing List are (i) this
Agreement, (ii) Note One, and (iii) the Security Agreement, and no other Transaction Document or item identified on the Closing
List shall be required to be delivered at the Initial Closing. At each Additional Closing, delivery of all Transaction Documents other
than this Agreement, Note One and the Security Agreement shall be a condition to such Additional Closing and a deliverable required at
such Additional Closing. In addition, except at the Initial Closing, the Company shall deliver to the Purchaser, such other opinions,
statements, agreements and other documents as the Purchaser may require for such Closing, each in form and substance satisfactory to
the Purchaser.
(b)
Post-Closing.
The Company shall deliver or cause to be delivered to the Purchaser the items identified in
Section II
of the Closing
List by the deadlines identified therein, each in form and substance satisfactory to the Purchaser, along with, upon request by the Purchaser,
such other opinions, statements, agreements and other documents as the Purchaser may reasonably require to effect the transactions contemplated
in the Transaction Documents.
1.3           Conditions
to Initial Closing.
(a)
To
the Company’s Obligations.
The obligations of the Company pursuant to
Section 1.1(a)
(
Closings; Initial
Closing)
in connection with the Initial Closing are subject to the satisfaction, or waiver in accordance with this Agreement, of
the following conditions on or before the Initial Closing Date:
(i)            the
representations and warranties of the Purchaser contained herein shall be true and correct as of the Initial Closing Date (unless expressly
made as of an earlier date herein in which case they shall be accurate as of such date);
(ii)           all
obligations, covenants and agreements required to be performed by the Purchaser on or prior to the Initial Closing Date (other than the
obligations set forth in
Section 1.1(a)
(
Closings; Initial Closing)
to be performed at the Initial Closing) shall
have been performed; and
(iii)          the
delivery by the Purchaser of the items the Purchaser is required to deliver prior to the Initial Closing Date pursuant to
Section 1.2(a)
(
Deliveries;
At Each Closing)
.
(b)
To
the Purchaser’s Obligations.
The obligations of the Purchaser pursuant to
Section 1.1(a)
(
Closings; Initial
Closing)
in connection with the Initial Closing are subject to the satisfaction, or waiver in accordance with this Agreement, of
the following conditions on or before the Initial Closing Date, both before and after giving effect to the Initial Closing:
(i)            the
representations and warranties of each Company Party contained in any Transaction Document shall be true and correct as of the Initial
Closing Date (unless expressly made as of an earlier date herein in which case they shall be accurate as of such date);
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(ii)           all
obligations, covenants and agreements required to be performed by any Company Party on or prior to the Initial Closing Date pursuant
to any Transaction Document (other than the obligations set forth in
Section 1.1(a)
(
Closings; Initial Closing)
to
be performed at the Initial Closing) shall have been performed;
(iii)          the
items that the Company is required to deliver on or prior to the Initial Closing Date pursuant to
Section 1.2(a) (Deliveries;
At Each Closing)
shall have been delivered;
(iv)          there
shall exist no Default or Event of Default;
(v)           no
Material Adverse Effect shall have occurred from the date hereof through the Initial Closing Date;
(vi)          (A) from
the date hereof through the Initial Closing Date, trading in the shares of Common Stock shall not have been suspended by the SEC or the
Principal Trading Market for such Common Stock, minimum prices shall not have been established on Securities of the Company whose trades
are reported by such service or on any Trading Market for such Securities, and at any time prior to the Initial Closing Date, trading
in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, and (B) from the date hereof through
the Initial Closing Date, there shall not have occurred any banking moratorium declared by any State or United States Governmental Authorities,
any general suspension of trading on any major Trading Market lasting at least a full trading day, any material outbreak or escalation
of hostilities or any other national or international calamity of such magnitude in its effect on, or any material adverse change in,
any financial market that, in the reasonable judgment of the Purchaser and without regard to any factors unique to the Purchaser, makes
it impracticable or inadvisable to purchase Initial Purchased Securities at the Initial Closing;
(vii)         the
Company meets the current public information requirements under Rule 144 in respect of the Transaction Securities, where “
Rule 144
”
means Rule 144 promulgated by the United States Securities and Exchange Commission (the
“SEC”
) pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar Regulation hereafter adopted by the SEC having substantially
the same effect as such rule;
(viii)        to
the extent required, the Company has duly notified the SEC and its Principal Trading Market of the issuance of all Transaction Securities
to be issued pursuant to this Agreement (including filing a Listing of Additional Shares Notification Form with its Principal Trading
Market if required);
(ix)          all
Consents and Permits listed in the Disclosure Certificate as required to be obtained prior to the Initial Closing Date have been obtained
by the Company;
(x)           there
shall not have occurred any event that, solely with the passage of time or the giving of notice or both, would cause any of the conditions
above to fail to be satisfied at any time after the Initial Closing (regardless of whether such event could later be remedied before
such failure); and
(xi)          any
other conditions to the Initial Closing or the obligations of the Purchaser contained herein or in the other Transaction Documents shall
have been satisfied.
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1.4           Conditions
to Additional Closings.
As of the date hereof, the parties do not currently intend to conduct any Additional Closings. Nevertheless,
if the Purchaser and the Company agree to Additional Closings, this
Section 1.4
shall apply.
(a)
To
the Company’s Obligations.
The obligations of the Company pursuant to
Section 1.1(b) (Closings; Additional Closings)
in connection with each Additional Closing shall be subject to the satisfaction, or waiver in accordance with this Agreement, of
the following conditions on or before the Additional Closing Date for such Additional Closing:
(i)            the
representations and warranties of the Purchaser contained herein shall be true and correct as of such Additional Closing Date (unless
expressly made as of an earlier date herein in which case they shall be accurate as of such date);
(ii)           all
obligations, covenants and agreements required to be performed by the Purchaser on or prior to such Additional Closing Date (other than
the obligations set forth in
Section 1.1(b) (Closings; Additional Closings)
to be performed at such Additional Closing)
shall have been performed;
(iii)          the
delivery by the Purchaser of the items the Purchaser is required to deliver prior to such Additional Closing Date pursuant to
Section 1.2(a) (Deliveries;
At Each Closing)
, including, as applicable, all Transaction Documents other than this Agreement, Note One and the Security Agreement
that the Purchaser is required to deliver at such Additional Closing; and
(iv)          any
other condition to such obligations of the Company for such Additional Closing as may be agreed between the Purchaser and the Company,
each in their sole discretion, shall have been satisfied.
(b)
To
the Purchaser’s Obligations.
The obligations of the Purchaser pursuant to
Section 1.1(b)
in connection with
each Additional Closing shall be subject to the satisfaction, or waiver in accordance with this Agreement, of the following conditions
on or before the Additional Closing Date for such Additional Closing, both before and after giving effect to such Additional Closing:
(i)            the
representations and warranties of each Company Party contained in any Transaction Document shall be true and correct as of such Additional
Closing Date (unless expressly made as of an earlier date herein in which case they shall be accurate as of such date);
(ii)           all
obligations, covenants and agreements required to be performed by any Company Party on or prior to such Additional Closing Date pursuant
to any Transaction Document (other than the obligations set forth in
Section 1.1(b)
to be performed at such Additional
Closing) shall have been performed;
(iii)          the
items that the Company is required to deliver on or prior to such Additional Closing Date pursuant to
Section 1.2(a)
, including,
as applicable, all Transaction Documents other than this Agreement, Note One and the Security Agreement that the Company is required
to deliver at such Additional Closing;
(iv)          there
shall exist no Default or Event of Default;
(v)           no
Material Adverse Effect shall have occurred from the date hereof through such Additional Closing Date;
(vi)          (A) from
the date hereof through such Additional Closing Date, trading in the shares of Common Stock shall not have been suspended by the SEC
or the Principal Trading Market for such Common Stock, minimum prices shall not have been established on Securities of the Company whose
trades are reported by such service or on any Trading Market for such Securities, and at any time prior to such Additional Closing Date,
trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, and (B) from the date hereof
through such Additional Closing Date, there shall not have occurred any banking moratorium declared by any State or United States Governmental
Authorities, any general suspension of trading on any major Trading Market lasting at least a full trading day, any material outbreak
or escalation of hostilities, or any other national or international calamity of such magnitude in its effect on, or any material adverse
change in, any financial market that, in the reasonable judgment of the Purchaser and without regard to any factors unique to the Purchaser,
makes it impracticable or inadvisable to purchase Purchased Securities at such Additional Closing;
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(vii)         the
Company meets the current public information requirements under Rule 144 in respect of the Transaction Securities;
(viii)        to
the extent required, the Company has duly notified the SEC and its Principal Trading Market of the issuance of all Transaction Securities
to be issued pursuant to this Agreement (including filing a Listing of Additional Shares Notification Form with its Principal Trading
Market if required);
(ix)           all
Consents and Permits listed in the Disclosure Certificate as required to be obtained prior to the Additional Closing Date have been obtained
by the Company;
(x)            there
shall not have occurred any event that, solely with the passage of time or the giving of notice or both, would cause any of the conditions
above to fail to be satisfied at any time after such Additional Closing (regardless of whether such event could later be remedied before
such failure);
(xi)          any
other conditions to such Additional Closing or the obligations of the Purchaser contained herein or in the other Transaction Documents
shall have been satisfied; and
(xii)         any
other condition to such obligations of the Purchaser for such Additional Closing as may be agreed between the Purchaser and the Company,
each in their sole discretion, shall have been satisfied.
ARTICLE II
REPRESENTATIONS
AND WARRANTIES
2.1            Representations
and Warranties of the Company Parties
. The Company hereby makes the following representations and warranties as to each Company Party
(and, to the extent provided in the Guaranty or the Security Agreement or any other Transaction Document, each other Company Party makes
the following representations and warranties as, and to the extent applicable to, such Company Party) to the Purchaser as of the date
hereof and each Closing Date and each other date where such representations and warranties are required to be made pursuant to this Agreement
or the other Transaction Documents (unless expressly made as of a specific date therein in which case they shall be accurate as of such
date):
(a)
Disclosure
Schedule.
All of the representations and warranties set forth on the Disclosure Schedule.
(b)
Full
Disclosure
. All of the disclosures furnished on behalf of, and all of the representations and warranties made by, any Company Party
in any Transaction Document and all statements contained in the Disclosure Certificate or any certificate or other document furnished
or to be furnished to the Purchaser or any Purchaser Party or their attorneys or advisors pursuant to any Transaction Document, to the
Company’s knowledge, are true and correct and none contains any untrue statement of a material fact, or omits to state a material
fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. The Company
Parties have responded to all questions in the due diligence questionnaire (and any amendment or additional questions or questionnaires)
provided by the Purchaser prior to the date hereof completely and truthfully and have provided in response all of the information available
to them that would reasonably be qualified as responsive thereto, except where such Company Parties have indicated to the Purchaser that
specific information could not be provided and why. The press releases disseminated by the Company Parties during the twelve months preceding
the date of this Agreement, taken as a whole and to the Company’s knowledge, do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made and when made, not misleading.
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2.2          Representations
and Warranties of the Purchaser
. The Purchaser hereby represents and warrants as of the date hereof and as of each Closing Date to
the Company as follows (unless expressly made as of a specific date therein in which case they shall be accurate as of such date):
(a)
Organization;
Authority
. The Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company
or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by the
Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership,
limited liability company or similar action, as applicable, on the part of the Purchaser. Each Transaction Document to which it is a
party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute
the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, subject only to the Standard
Enforceability Exceptions.
(b)
Own
Account
. The Purchaser understands that the Purchased Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law. The Purchaser is acquiring the Transaction Securities acquired as of
the date this representation is made as principal for its own account, in the ordinary course of business, and not with a view to or
for distributing or reselling such Transaction Securities or any part thereof in violation of the Securities Act or any applicable state
securities law, has no present intention of distributing any such Security in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution
of any such Securities in violation of the Securities Act or any applicable state securities law;
provided
, that nothing in this
clause (b)
shall be construed to limit the Purchaser’s ability to sell such Securities or to require the Purchaser
to hold any such Securities for any minimum or other specific term and the Purchaser reserves the right to dispose of any such Securities
at any time in accordance with an exemption from the registration requirements of the Securities Act and applicable state securities
laws.
(c)
Purchaser
Status
. At the time the Purchaser was offered or otherwise purchased or acquired the Purchased Securities, it was, and as of the
date hereof it is, and on each date on which it acquires Issuable Securities it is and will be, a sophisticated investor accustomed to
transactions like the purchase of the Purchased Securities hereunder and an “accredited investor” as defined under the Securities
Act and the Regulations thereunder.
(d)
Experience
of The Purchaser
. The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Purchased
Securities, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment
in the Purchased Securities and, at the present time, is able to afford a complete loss of such investment.
(e)
General
Solicitation
. The Purchaser is not acquiring any Purchased Security as a result of any advertisement, article, notice or other communication
regarding Purchased Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented
at any seminar or any other general solicitation or general advertisement.
(f)
Certain
Transactions and Confidentiality
. Other than consummating the transactions contemplated hereunder, the Purchaser has not directly
or indirectly, nor has any person acting on behalf of or pursuant to any understanding with the Purchaser, executed any purchases or
sales, including any “short sale” (as defined in Rule 200 of Regulation SHO of the Exchange Act) (
“Short Sale”
),
of the Securities of the Company during the period commencing as of the time that the Purchaser first received a term sheet (written
or oral) from the Company or any other person representing the Company setting forth the material terms of the transactions contemplated
hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, if the Purchaser is a multi-managed investment
vehicle (whereby separate portfolio managers manage separate portions of the Purchaser’s assets and the portfolio managers have
no direct knowledge of the investment decisions made by the portfolio managers managing other portions of the Purchaser’s assets),
the representation set forth above in this clause (f) shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to acquire the Purchased Securities covered by this Agreement.
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Each Company Party acknowledges and
agrees that the representations and warranties of the Purchaser set forth in
Section 2.2
shall not modify, amend or affect
the Purchaser’s right to rely on the representations and warranties of any Company Party contained in this Agreement or in any
other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation
of the transaction contemplated hereby.
2.3          Credit
Reports and Inquiries
.
(a)
Credit
Reports.
Each Company Party authorizes the Purchaser Parties, their agents and representatives and any credit reporting agency engaged
by any Purchaser Party, to (i) investigate any references given or any other statements or data obtained from or about the Company
Parties for the purpose of the Transaction Documents, (ii) obtain consumer business credit reports on the Company Parties, (iii) contact
personal and business references provided by any Company Parties, at any time now or for as long as any amounts remains unpaid under
the Transaction Documents, and (iv) share information regarding the Company Parties’ performance under this Agreement with
affiliates and unaffiliated third parties.
(b)
Credit
Inquiries.
Each Company Party hereby authorizes the Purchaser (but it shall have no obligation) to respond to usual and customary
credit inquiries from third parties concerning any Company Party.
ARTICLE III
Negative
covenants
3.1            Negative
Covenants
. From and after the date hereof, and for as long as any Note or any shares of Preferred Stock remain outstanding, no Company
Party shall, and no Company Party shall permit any of its Subsidiaries to, directly or indirectly, do, or enter into any Contractual
Obligation or arrangement to do, any of the following:
(a)
Indebtedness.
create, incur, assume, enter into or suffer to exist, any Indebtedness (other than Permitted Debt), or repay the principal amount
of, redeem, purchase or otherwise acquire or offer to repay the principal amount of, redeem, repurchase or otherwise acquire, any Indebtedness
(other than Permitted Debt), whether or not existing on the date hereof;
(b)
Liens.
create, incur, assume, permit or suffer to exist any Lien of any kind, on or with respect to any of its assets now owned or hereafter
acquired or any interest therein or any income or profits therefrom, other than the Liens securing the Obligations created pursuant to
the Transactions Documents and Permitted Liens;
(c)
Asset
Sales.
Sell any of its assets other than disposition of assets in the ordinary course of business;
“Sale”
means a sale,
lease or sublease (as lessor or sublessor), sale and leaseback, conveyance, transfer, assignment or other disposition to, or any exchange
of property (other than cash and cash equivalents) with, any person of, or any other transaction permitting any person to acquire, in
one transaction or a series of transactions, any right, title or interest in, all or any part of a business or any property of any kind
(other than cash and cash equivalents) including a sale, factoring at maturity, collection of or other disposal, with or without recourse,
of any notes or accounts receivable and including acquiring or Selling any Derivative intended to transfer, or having the effect of transferring,
any risk relating to any such right, title or interest in such business or property, including any risk of Loss relating to holding any
such right, title or interest. To
“Sell”
shall have a correlative meaning;
(d)
Restricted
Payments.
make, approve, or offer to make any Restricted Payment with respect to any shares of Capital Stock or Stock Equivalents
(other than the issuance and distribution of the Transaction Securities, and then only as otherwise required under the Transaction Documents);
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“Restricted Payment”
means, for any person, (i) any dividend, stock split or other distribution, direct or indirect (including by way of spin off, reclassification,
corporate rearrangement, scheme of arrangement or similar transaction), on account of, or otherwise to the holder or holders of, any
shares of any class of Capital Stock of such person now or hereafter outstanding, (ii) any redemption, retirement, sinking fund
or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of Capital Stock of such
person by such person or any Affiliate thereof now or hereafter outstanding, and (iii) any payment made to retire, or to obtain
the surrender of, any Stock Equivalents now or hereafter outstanding;
provided
, that, for the avoidance of doubt, (A) any
cashless exercise of an employee stock option in which options are cancelled to the extent needed such that the “in-the-money”
value of the options (i.e. the excess of market price over exercise price) that are cancelled is utilized to pay the exercise price,
and applicable taxes, shall not constitute a “
Restricted Payment
” and (B) a distribution of rights (including
rights to receive assets) or options shall constitute a “
Restricted Payment
”.
(e)
Issuances
of Capital Stock to Related Parties.
issue any Capital Stock or Stock Equivalents to any Related Party that is not a Company Party
or a Subsidiary of any Company Party, except for Exempt Issuances;
“
Exempt Issuance
”
means the issuance of (i) shares of Common Stock or options or other awards of Capital Stock or Stock Equivalents to employees,
officers, directors, advisors or independent contractors of the Company Parties as compensation for services provided to any Company
Party or any of their Subsidiaries;
provided
, that such issuance is approved by a majority of the board of directors of the Company;
and
provided
,
further
that such issuance shall not exceed in the aggregate five percent (5%) of the outstanding shares
of Common Stock without the prior approval of the Purchaser, (ii) shares of Common Stock, warrants or options to advisors or independent
contractors of any Company Party for compensatory purposes, which shall also include any securities issuable pursuant to the Company’s
equity incentive plan, (iii) Securities upon the exercise or exchange of or conversion of any Transaction Securities issued hereunder
and/or other Securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date
hereof as well as repricing certain existing notes to the Company’s uplisting price,
provided
that such Securities have
not been amended since the date hereof to increase the number of such Securities or to decrease the exercise price, exchange price or
conversion price of such Securities, (iv) Securities issuable pursuant to any contractual anti-dilution obligations of the Company
in effect as of the date hereof,
provided
that such obligations have not been materially amended since the date of hereof, (v) Securities
issued pursuant to acquisitions or any other strategic transactions approved by a majority of the disinterested members of the board
of directors of the Company;
provided
, that (a) such acquisitions and other strategic transactions shall not include transactions
in which any Company Party or any of its Subsidiaries is issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities and (b) such Securities are not issued to persons who were officers, directors
or other Related Parties or advisors or independent contractors of the Company Parties and its Subsidiaries prior to such acquisition
or strategic transaction (unless such Securities are issued to such advisors or independent contractors for the purpose of compensation
for work done solely in connection with such acquisition or other strategic transaction) and (vi) shares of Common Stock solely
to effect the Listing Event. Notwithstanding the foregoing,
“Exempt Issuance”
shall not include an issuance of any
Variable-Priced Equity Linked Instruments or any issuance pursuant to any Equity Line of Credit.
“Equity Line of Credit”
means any transaction involving a Contractual Obligation of any person with a counterparty whereby such person has an option to Sell
its Securities to such counterparty over an agreed period of time and at future determined price or price formula, other than customary
“preemptive” or “participation” rights or “weighted average” or “full-ratchet” anti-dilution
provisions and other than in connection with fixed-price rights public offerings and similar transactions that are not Variable-Priced
Equity-Linked Instruments.
(f)
Fundamental
Transactions.
consummate a Fundamental Transaction, amend its charter documents in any manner that materially and adversely affects
any rights of the Purchaser or change the nature of its business from the business conducted by it on the date hereof;
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“
Fundamental Transaction
”
means any of the following transactions, whether effected directly or indirectly or through one or a series of related transactions:
(i) any merger or consolidation of the Company, (ii) any merger or consolidation of any other Company Party with or into another
person that is not a Company Party; (iii) any Sale or license of any right, title or interest in the assets of any Company Party,
other than to a Company Party and other than transactions in the ordinary course of business and transactions that, individually or in
the aggregate, affect less than 10% of the market value of the consolidated assets of the Company Parties, (iv) the completion of
any purchase offer, tender offer or exchange offer (whether by the Company or another person) pursuant to which holders of Common Stock
Sell, tender or exchange their shares for other Securities, cash or property, and (v) any other corporate reorganization, Securities
purchase or other business combination involving the Company or, if all surviving entities are not a Company Party, any other Company
Party, including any spin-off or scheme of arrangement of any Company Party, any reorganization, recapitalization or reclassification
of the Common Stock, any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for
other Securities, cash or other assets. Notwithstanding the foregoing, this Section 3.1(f) shall not include the Company’s
uplisting to a National Exchange.
(g)
Related
Party Transactions.
(i) make loans or advances to any Related Party otherwise own, create, cause to be created or suffer to
exist any new Indebtedness (including any renewal, extension, increase or replacement of any Indebtedness existing as of the date hereof)
owed by, or incurred for the benefit of, any Related Party or (ii)
enter into any other transaction with, or make any other
payment to, any Related Party of the Company that is not a Company Party or Subsidiary of any Company Party, including (A) investments
by any Company Party or any Subsidiary thereof in such other Related Party, whether in Capital Stock, Stock Equivalents, other Securities, Indebtedness
owing by such Related Party or otherwise, or Indebtedness owing to any such other Related Party, (B) Indebtedness issued to or by
any such Related Party and (C) Sales, whether by such Related Party or any Company Party, of any asset), except, in the case of
this
clause (ii),
for (x) payments with respect to Permitted Debt permitted pursuant to
Section 3.1(a) (Indebtedness)
,
(y) transactions in the ordinary course of business on a basis no less favorable to the Company Parties and their Subsidiaries as
would be obtained in a comparable arm’s length transaction with a person that is not a Related Party and that are expressly approved
by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for board approval) and (z) salaries
and other director or employee or other staff or agent compensation, including expense reimbursements and employee benefits, of the Company
Parties and their Subsidiaries that, in the case of officers, directors and employees, staff and agents that are also Related Parties
even if their employee, staff or agent relationship is not taken into account, does not include any increase from the compensation in
effect on, and disclosed to the Purchaser on or before the date hereof;
(h)
Use
of Proceeds.
fail to use the proceeds received from the issuance of the Transaction Securities as represented in
Schedule 17
of the Disclosure Certificate (including by being engaged in operations involving the financing of any investments or activities in,
or any payments to, any Sanctioned Person) or conduct its business in a manner that causes it to become an “investment company”
subject to registration under the Investment Company Act of 1940, as amended, or a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended) or fail to provide a certification to the Purchaser with
respect to any of the foregoing items in this
Section 3.1(h)
upon the Purchaser’s request; or
(i)
Compliance
with Sanctions, Permits and other Regulations.
directly or indirectly (including through agents, contractors, trustees, representatives
or advisors) (a) be in violation of any Sanctions Law or engage in, or conspire or attempt to engage in, any transaction evading
or avoiding any prohibition in any Sanctions Law, (b) be a Sanctioned Person or derive revenues from investments in, or transactions
with Sanctioned Persons, (c) have any assets located in Sanctioned Jurisdictions, (d) deal in, or otherwise engage in any transactions
relating to, any property or interest in property blocked pursuant to any Regulation administered or enforced by OFAC or (e) fail
to comply with any material Regulations or Contractual Obligations applicable to it or fail to obtain or comply with any material Permits.
3.2           Limits
on Future Issuances.
(a)
No
Issuance of Variable-Priced Equity-Linked Instruments.
For as long as any Note or any shares of Preferred Stock remain outstanding,
no Company Party shall effect, or enter into any Contractual Obligation to effect, any issuance by any Company Party or any Subsidiary
of a Variable-Priced Equity-Linked Instrument.
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“Variable-Priced Equity-Linked
Instrument”
means (A) any Stock Equivalent convertible into, exercisable or exchangeable for, or carrying the right to
receive, shares of Common Stock or any other Securities of any Company Party either (1) at any conversion, exercise or exchange
rate or other price that is based upon and/or varies with the trading prices of or quotations for such Common Stock or Securities at
any time after the initial issuance of such Stock Equivalent, or (2) with a conversion, exercise or exchange price that is subject
to being reset on more than one occasion at some future date at any time after the initial issuance of such Stock Equivalent due to a
change in the market price of such Common Stock or Securities since such initial issuance (other than customary “preemptive”
or “participation” rights or “weighted average” or “full-ratchet” anti-dilution provisions or in
connection with fixed-price rights offerings and similar transactions), and (B) any amortizing, convertible Stock Equivalent that
amortizes prior to its maturity date, where any Company Party is required or has the option to (or any investor in such transaction has
the option to require such Company Party to) make such amortization payments in shares of Common Stock or other Securities which are
valued at a price that is based upon and/or varies with the trading prices of or quotations for Common Stock or other Securities at any
time after such initial issuance of such Stock Equivalent (regardless of whether making such payments in such manner is subject to various
conditions). The Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any issuance of any Variable-Priced
Equity-Linked Instrument (without the need for the posting of any bond or similar item, which the Company hereby expressly and irrevocably
waives the requirement for), which remedy shall be in addition to any right to collect damages.
(b)
No
Exchange Transactions.
For as long as any Note or any shares of Preferred Stock remain outstanding, no Company Party, no Related
Party of any Company Party will, directly or indirectly (including through agents, contractors, trustees, representatives or advisors):
(a) solicit, initiate, encourage or accept any other inquiries, proposals or offers from any person relating to any exchange (i) of
any Security of any Company Party for any other Security of any Company Party, except to the extent consummated pursuant to the terms
of Stock Equivalents of the Company as in effect as of the date hereof and disclosed in the Disclosure Certificate on the date hereof
or (ii) of any Indebtedness for any Security of, or claim against, any Company Party (any such transaction described in clauses
(i) or (ii), an “
Exchange Transaction
”); (b) enter into, effect, alter, amend, announce or recommend to
its stockholders any Exchange Transaction with any person; or (c) participate in any discussions, conversations, negotiations or
other communications with any person regarding any Exchange Transaction, or furnish to any person any information with respect to any
Exchange Transaction, or otherwise cooperate in any way, assist or participate in, facilitate or encourage, any effort or attempt by
any person to seek an Exchange Transaction involving any Company Party. For as long as any Note or any shares of Preferred Stock remains
outstanding, no Company Party and no Related Party of any Company Party, will, either directly or indirectly (including through agents,
contractors, trustees, representatives or advisors), cooperate in any way, assist or participate in, facilitate or encourage any effort
or attempt by any person to effect any acquisition of Securities or Indebtedness of, or claim against, the Company by such person from
an existing holder of such Securities, Indebtedness or claim in connection with a proposed exchange of such Securities or Indebtedness
of, or claim against, the Company (whether pursuant to Section 3(a)(9) or 3(a)(10) of the Securities Act or otherwise)
(a “
Third Party Exchange
Transfer
”). Notwithstanding the foregoing, this Section 3.2(b) and
any other Section as set forth herein shall not prohibit the Company from repricing certain existing notes to the Company’s
uplisting price. The Company Parties and each of their Related Parties shall immediately cease and cause to be terminated all existing
discussions, conversations, negotiations and other communications with any persons with respect to any of the foregoing. For all purposes
of this Agreement, violations of the restrictions set forth in this
Section 3.2
by any Company Party, or any Subsidiary or
Affiliate of any Company Party, or any officer, employee, director, agent or other representative of any Company Party or any Subsidiary
or Affiliates of any Company Party shall be deemed a direct breach of this
Section 3.2
by the Company.
(c)
No
At the Market Offerings or Equity-Lines of Credit.
For as long as any Note or any shares of Preferred Stock remain outstanding, except
with the consent of the Purchaser and except for facilities led by the Purchaser, no Company Party and no Subsidiary of any Company Party
shall (i) effect, or enter into any Contractual Obligation to effect, any “at-the-market” offering for any Capital Stock
or (ii) enter into any Equity Line of Credit or draw on any existing Equity Line of Credit.
(d)            The
Purchaser shall be entitled to obtain injunctive relief against any Company Party to preclude any such issuance, which remedy shall be
in addition to any right to collect damages.
3.3            No
Claims Under Stockholder’s Rights Plan
. No claim will be made or enforced by any Company Party or, with the consent of any
Company Party, by any other person, that any Purchaser Party is an “acquiring person” (or similar or equivalent term) under
any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover
plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser Party could be deemed to trigger the provisions
of any such plan or arrangement, by virtue of receiving Transaction Securities under the Transaction Documents or under any other agreement
between the Company and any Purchaser Party.
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3.4           No
Integration
. The Company shall not engage in any Sale, offer for Sale or engage in any solicitation of offers to buy, any Security
(or otherwise negotiate in respect of any of the foregoing) that would be integrated with (i) the offer or sale of the Transaction
Securities in a manner that would require the registration under the Securities Act of the sale of the Transaction Securities or (ii) the
offer or sale of the Transaction Securities for purposes of the Regulations of any Trading Market of any Securities of any Company Party
in a manner that would require shareholder approval prior to the closing thereof, unless such shareholder approval is obtained before
such closing.
ARTICLE IV
affirmative
covenants
4.1           Right
of First Refusal.
(a)            From
and after the date hereof and thereafter for the next twelve (12) full calendar months following the last Closing, upon any issuance
by any Company Party of Common Stock, any other Capital Stock or Stock Equivalents or other Indebtedness or other equity or debt or hybrid
securities (other than any offering of Common Stock marketed to the general public), including any preferred Capital Stock, Equity Line
of Credit and convertible Indebtedness, whether for cash consideration or a combination of units thereof, (a “
Subsequent Financing
”),
the Purchaser shall have the right to participate up to (i) in the case of any issuance qualifying as an Equity Line of Credit,
100% and (ii) otherwise, 33% of such issuance (the “
Participation Maximum
”) on the same terms, conditions and
price provided for in the Subsequent Financing.
(b)            At
least three (3) trading days (four (4) hours in case of a Subsequent Financing structured as a public offering or as an “overnight”
deal or other similar transaction) prior to the closing of a Subsequent Financing, the Company shall deliver to the Purchaser a written
notice of its intention to effect a Subsequent Financing (“
Pre-Notice,
” together with a verbal confirmation in case
of a Subsequent Financing structured as a public offering or as an “overnight” deal or other similar transaction), which
Pre-Notice shall ask the Purchaser if it wants to review the details of such financing (each additional notice containing such details,
a “
Subsequent Financing Notice
”). 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 persons through or with whom such
Subsequent Financing is proposed to be effected, the Participation Maximum of the Purchaser, and shall include a term sheet or similar
document relating thereto as an attachment.
(c)            If
the Purchaser desires to participate in such Subsequent Financing, the Purchaser must provide written notice to the Company within one
(1) trading day of receipt of the Subsequent Financing Notice (four (4) hours in the event of a Subsequent Financing structured
as a public offering or as an “overnight” deal or other similar transaction) that the Purchaser is willing to participate
in the Subsequent Financing, the amount for which the Purchaser is willing to participate (up to the Participation Maximum), and representing
and warranting that the Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent
Financing Notice. Upon effective delivery of such notice, the Purchaser shall be allocated such amount in such Subsequent Financing.
(d)           To
the extent the Purchaser chooses to participate in such Subsequent Financing, the transaction documents for such Subsequent Financing
applicable to the Purchaser shall not include any term or provision whereby the Purchaser shall be required to agree to any restrictions
on trading as to any of the Transaction Securities. In addition, the transaction documents related to the Subsequent Financing shall
not include any requirement to consent to any amendment to or termination of, or grant any waiver, release or other modification or the
like under or in connection with, this Agreement, without the prior written consent of the Purchaser.
(e)            Notwithstanding
anything to the contrary in this
Section 4.1
and unless otherwise agreed to by the applicable Purchaser, the Company shall
either confirm in writing to the Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall
publicly disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that the Purchaser
will not be in possession of any material, non-public information, by the fifth (5
th
) trading day following delivery of the
Subsequent Financing Notice. If by such fifth (5
th
) trading 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 Purchaser,
such transaction shall be deemed to have been abandoned and the Purchaser shall not be deemed to be in possession of any material, non-public
information with respect to the Company or any of its Subsidiaries.
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(f)             Notwithstanding
the foregoing, this
Section 4.1
shall not apply in respect of an Exempt Issuance, any issuance of Permitted Debt or YA II
PN, LTD.’s Right of First Refusal as referenced in the Company’s SEC Filings. [PLEASE CONFIRM CONSENT HAS BEEN OBTAINED
FOR THIS TRANSACTION]
4.2           Most
Favorable Terms (MFN).
From and after the date hereof and thereafter for as long as at least 5% of any Note, or the Warrant, or any
Obligation remains outstanding, if the Company grants, issues, Sell or modifies any term of, any Securities or Indebtedness in the future
or has entered into on or prior to the date of this Agreement, or shall in the future enter into, any Contractual Obligation with any
purchaser or holder of any Securities or Indebtedness of the Company, in each case that provides any purchaser or holder of any such
Security or Indebtedness with any term that is more favorable than a term available to the Purchaser in the Transaction Documents, the
Company shall notify the Purchaser of such term in writing on or before the date that is three (3) trading days after the date of
such grant, issuance, Sale or modification or, as the case may be, of execution of such Contractual Obligation, and the Purchaser shall
have the right, by notifying the Company of its election to do so, to elect in writing within thirty (30) days of the receipt of such
notice to elect to have such terms apply to such Transaction Documents. Upon effective delivery of such notice from a Purchaser, the
applicable Transaction Documents shall, automatically and without any further action (and notwithstanding the requirements of
Section 5.3)
,
be deemed to be amended to include such more favorable term (and, if applicable, replace any less favorable term). On the next trading
day following receipt of such notice and request from the Purchaser, the Company shall deliver an acknowledgment of such amendment in
form and substance satisfactory to the Purchaser in its sole discretion;
provided
, that the Company’s failure to timely
provide such acknowledgement shall not change the effectiveness of such amendment.
4.3           Reservation
and Listing.
(a)            The
Company shall reserve for issuance of the Issuable Securities from its duly authorized Capital Stock a number of shares of Common Stock
and Series C Preferred Stock at least equal to the higher of the Reserve Amount or such amount as may then be required to fulfill
its obligations in full under the Transaction Documents. Upon a reverse stock split or increase in the authorized Common Stock of the
Company, the Company will immediately instruct the Transfer Agent to reserve at least the new amount applicable under this
Section 4.3(a)
after
giving effect to such stock split or increase. In addition, the Company shall update with the Transfer Agent at least monthly the amount
reserved pursuant to this
Section 4.3(a)
.
(b)            If,
on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock or Series C Preferred Stock
is less than the Reserve Amount on such date, then the board of directors of the Company shall amend the Company’s Articles of
Incorporation (or equivalent governing document) to increase the number of authorized but unissued shares of Common Stock or Series C
Preferred Stock to the Reserve Amount at such time, as soon as possible and in any event not later than the 60
th
day after
such date.
(c)            The
Company shall, after the Listing Event: (i) in the time and manner required by the Principal Trading Market for the Common Stock,
prepare and file with such Principal Trading Market an additional shares listing application covering a number of shares of Common Stock
at least equal to the Reserve Amount 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 Principal Trading Market as soon as possible thereafter; (iii) provide to
the Purchaser 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 Reserve Amount on such date on such Principal Trading Market or any other Trading Market for such Common Stock.
(d)            “
Reserve
Amount
” means, as of any date, (x) 250% of the maximum aggregate number of shares of Common Stock then issued or potentially
issuable in the future pursuant to the Transaction Documents, calculated (i) including any Issuable Securities issuable upon conversion
or exercise of the Purchased Securities, (ii) ignoring any conversion or exercise limits set forth therein, (iii) assuming
that the conversion prices of the Notes and the exercise prices of the Warrants are, at all times on and after the date of determination,
the conversion prices or exercise prices, as the case may be, effective on the trading day immediately prior to the date of determination
and (iv) adjusting all of the foregoing ratably to account for any reverse stock split or similar reclassification of the Common
Stock, and (y) 100% of the maximum aggregate number of shares of Series C Preferred Stock issuable upon conversion of Note
Two at the initial amounts owing thereunder divided by the stated value of a share of Series C Preferred Stock.
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4.4           Disclosures.
(a)
No
Material Non-Public Information.
Except with respect to the material terms and conditions of the transactions contemplated by the
Transaction Documents, each Company Party covenants and agrees that none of it, its Related Parties or any other person acting on their
behalf, will provide the Purchaser, any Purchaser Party or their respective agents or counsel with any information that constitutes,
could constitute, or that any Company Party believes constitutes or could constitute, material non-public information, unless prior thereto
such information is disclosed to the public or the Purchaser shall have entered after the date hereof into a written agreement with the
Company regarding the confidentiality and use of such information. There has been no public announcement of a pending or proposed Fundamental
Transaction or Change of Control that has not been consummated. Each Company Party represents and warrants that the Purchaser has not
been provided by any Company Party, any Related Party of any Company Party, or any other person acting on their behalf, any information,
that constitutes, or may constitute, or that any such person believes constitutes or may constitute, material non-public information
with respect to any Company Party. Any non-disclosure agreement entered into between the Purchaser and any Company Party is terminated
as provided in
clause (b) below
. Therefore, the Purchaser does not have any duty of confidentiality (or a duty not to trade
on the basis of material non-public information) to any Company Party, any of Related Party of any Company Party, or any other person
acting on their behalf, and is governed only by applicable Regulations. Each Company Party understands and confirms that the Purchaser
is and shall be relying on the foregoing representations, warranties and covenants in effecting transactions in Transaction Securities
and any other Securities of the Company.
(b)
Disclosure
of Transaction Documents.
The Company shall by 9 a.m. on the trading day next following the date hereof (i) issue a press
release publicly announcing the execution of the initial Transaction Documents executed on or before the date hereof and (ii) file
with the SEC a current report on Form 8-K that includes such initial Transaction Documents as exhibits thereto within the time required
by the Exchange Act. The Company represents and warrants to, and agree with, each Purchaser Party that, from and after such disclosure,
it shall have publicly disclosed all material, non-public information delivered to any Purchaser Party or their Related Parties (or their
respective agents, contractors, trustees, representatives and advisors) by any Company Party (including through agents, contractors,
trustees, representatives and advisors) in connection with the transactions contemplated by the Transaction Documents. Thereafter, to
the extent any new Transaction Document (including any notice provided thereunder) could be argued to include any material non-public
information, the Company shall within two (2) trading days disclose such material non-public information through a press release
and Form 8-K. The Company represents and warrants to each Purchaser Party that, from and after such disclosure of the initial Transaction
Documents, it shall have publicly disclosed (and the Company shall ensure that thereafter it shall publicly disclose within two (2) trading
days) all material, non-public information delivered to any Purchaser Party or any of their Related Parties (or their respective agents,
contractors, trustees, representatives and advisors) by any Company Party or any of their Affiliates or any of their respective Related
Parties (or their respective agents, contractors, trustees, representatives and advisors), in connection with the transactions contemplated
by the Transaction Documents. In addition, effective upon such disclosure, any and all confidentiality or similar obligations under any
Contractual Obligation, whether written or oral, between any Company Party, any of their Affiliates or any of their respective Related
Parties (or their respective agents, contractors, trustees, representatives and advisors), on the one hand, and any Purchaser Party or
any of their Related Parties (or their respective agents, contractors, trustees, representatives and advisors), on the other hand, shall
immediately terminate and, from and after such disclosure, no such obligations shall be valid, even if entered into after the date of
this Agreement (unless such obligation specifically mentions and refers to this
clause (a)
as inapplicable in a writing
signed by such Purchaser Party), including “click through” agreements and confidentiality clauses incorporated in larger
agreements.
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13
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(c)
No
Form D Filing.
This is a private transaction negotiated with, and tailored to, the Purchaser and no Securities were offered
or sold to the Purchaser by means of any form of general solicitation or general advertising. This transaction does not rely on Regulation
D under the Securities Act and, therefore, the Company does not intend or need to file a Form D.
(d)
Press
Releases and other Public Disclosures.
The Company, its legal counsel, and the Purchaser’s legal counsel shall consult with
each other in issuing other press releases and making any other public disclosure with respect to the transactions contemplated hereby,
and none of the Purchaser or any Company Party shall issue any such public disclosure without each other’s prior consent, which
consent shall not unreasonably be withheld or delayed, except if such disclosure is required by Regulation, in which case the disclosing
party shall promptly provide the other party with prior notice of such public statement or communication. Irrespective of the foregoing,
the Company shall not publicly disclose the name of the Purchaser, or include the name of the Purchaser in any filing with the SEC or
any Trading Market or any other Governmental Authority, without the prior written consent of the Purchaser, except as required by Regulations,
in which case the Company shall provide to the Purchaser prior notice of such disclosure permitted under this clause (d). For the
purposes of this clause (d) notice shall be delivered to the Purchaser’s counsel at the following email:
rsanchez@lucbro.com
,
or such other email as the Purchaser shall notify the Company in writing.
(e)
Use
of Purchaser Trademark.
Notwithstanding anything else in any Transaction Document, no Company Party shall, and each Company Party
shall ensure that their Subsidiaries do not, publicly disclose the name, trademark, service mark, symbol, logo (or any abbreviation,
contraction or simulation thereof) of, or otherwise refer to, the Purchaser or any other Purchaser Party (including in any filing with
the SEC, regulatory agency or Trading Market for any Securities of any Company Party or their Subsidiaries, including any Form 8-K
or, as applicable, Form 1-U filing) without the prior consent of the Purchaser (including in any press release, letterhead, public
announcement or marketing material), except, and then only after consulting with such Purchaser, to the extent required to do so under
applicable Regulations (including as required in any registration statement filed with the SEC). None of the Company Parties and their
Affiliates shall represent that any Company Party or any of its Affiliates, any product or service of the Company Parties or their Affiliates,
or any know how or policy or practice of the Company Parties or their Affiliates has been approved or endorsed by any Purchaser Party.
(f)
Financing
Statements and Other Periodic Filings.
(i) The Company covenants to maintain the registration of the Common Stock under Section 12(b) or
12(g) of the Exchange Act and shall not take any action or file any document (whether or not permitted by Exchange Act or the rules thereunder)
to terminate or suspend its reporting and filing obligations under the Exchange Act and (ii) the Company shall 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. Whether or not the Company shall be subject to the Exchange Act, the Company shall meet the
current public information requirements of Rule 144(c) under the Securities Act.
(g)
Public
Information Failure Payments.
At any time during the period commencing from the six (6)-month anniversary of the date hereof and
ending at such time that all of the Transaction Securities have been sold or may be sold by the Purchaser without the requirement for
the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144,
if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “
Public
Information Failure
”) then, in addition to the Purchaser’s other available remedies, the Company shall pay to the Purchaser,
in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell its Transaction
Securities, an amount in cash equal to two percent (2.0%) of the aggregate Purchase Price of the Purchaser’s Purchased Securities
on the day of a Public Information Failure and on every thirtieth (30
th
) day (pro-rated for periods totaling less than thirty
days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public
information is no longer required for the Purchaser to transfer pursuant to Rule 144 any Transaction Securities. The payments to
which the Purchaser shall be entitled pursuant to this
Section 4.4(g)
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 (3
rd
) 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 when required by the preceding sentence, such Public Information Failure Payments shall bear interest
at the rate of two percent (2.0%) per month (accruing and due daily and prorated for partial months) until paid in full. Nothing herein
shall limit the Purchaser’s right to pursue actual damages for the Public Information Failure, and the Purchaser shall have the
right to pursue all remedies available to it at law or in equity including a decree of specific performance and/or injunctive relief
and recovery of loss profits.
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(h)
Compliance
Certificates.
On the first business day of each calendar quarter, the Company shall deliver to the Purchaser a Compliance Certificate,
together with, as needed, any update to the Disclosure Certificate.
(i)
Disclosures
to the Purchaser.
The Company shall immediately notify the Purchaser in writing of the occurrence of (i) any Default or Event
of Default, (ii) any failure to comply with any Transaction Document, (ii) any Disqualification Event relating to any Company
Covered Person and (iii) any event that, with the passage of time, would become such a Disqualification Event. Each Company Party
shall promptly (and in any event within five (5) business days) provide to each Purchaser Party any documents or other information
requested by such Purchaser Party to determine compliance with any provision of any Transaction Document, to Sell any Transaction Security
or to enforce its rights under any Transaction Document.
4.5           DWAC
Eligible, Freely Tradeable and Listed
.
(a)
DWAC.
The Company shall ensure that (i) its shares of Common Stock are and remain eligible at the Depository Trust Company (
“DTC
”)
for full services pursuant to DTC’s operational arrangements, including transfer through DTC’s Deposits/Withdrawal at Custodian
(
“DWAC”
) system, and not subject to any restriction or limitation imposed by or on behalf of the Deposit Trust Corporation
on any of its services or any other restriction or limitation on the use of the services provided by DTC (i.e., a so-called DTC chill),
(ii) the Company has been approved (without revocation) by the DTC’s underwriting department, (iii) the Transfer Agent
is approved as an agent in the DTC’s Fast Automated Securities Transfer Program, (iv) the Issuable Securities are otherwise
eligible for delivery via DWAC, and (v) the Transfer Agent does not have a policy prohibiting or limiting delivery of the Issuable
Securities via DWAC (
“DWAC Eligible
”).
(b)
Freely
Tradeable.
Subject to the terms and conditions of the Registration Rights Agreement, following the Listing Event, the Company shall
ensure that all shares of Common Stock issued or issuable pursuant to the Transaction Documents (including the Issuable Securities) are
freely tradeable. For the purposes of this Agreement, such shares shall be deemed “
freely tradeable
” if such shares
are eligible for resale pursuant to (i) Rule 144 (provided the Company is compliant with its current public information requirements)
promulgated by the SEC pursuant to the Securities Act or such shares are the subject of a then effective registration statement or (ii) an
effective “shelf” or resale registration statement under the Securities Act, in customary form and reasonably acceptable
to all of the holders thereof, is effective under the Securities Act, registering the resale of such Transaction Securities by all such
holders and names all such holders as selling security holders thereunder.
(c)
Trading
Markets.
The shares of Common Stock are trading, and the Company believes in good faith that they shall continue to trade uninterrupted
following the Listing Event on the Principal Trading Market and all other Trading Markets for such Common Stock. All of the shares of
Common Stock issued or issuable pursuant to the Transaction Documents (including the Issuable Securities) are listed or quoted for trading,
and the Company shall use its best efforts to ensure that such shares continue to be listed or quoted for trading uninterrupted, on the
Principal Trading Market and each such other Trading Market.
“Listing Event”
means
a public offering pursuant to an effective registration statement under the Securities Act and, in connection with such offering, the
shares of Common Stock being listed for trading on the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market or the New York Stock Exchange.
4.6           Transfer
Restrictions.
(a)            The
Transaction Securities may only be disposed of in compliance with applicable securities Regulations. In connection with any transfer
of Transaction Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate
of a Purchaser or in connection with a pledge as contemplated in
Section 4.6(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, at the Company’s
sole expense in 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 Transaction Securities under the Securities Act. As a condition of transfer, any such
transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of a Purchaser
under this Agreement.
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-
(b)            The
Purchaser agrees to the imprinting, for as long as is required by this
Section 4.6
, of a legend on all of the Purchased Securities
in the following form:
[THIS SECURITY HAS NOT] [NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS [CONVERTIBLE][EXCHANGEABLE] HAVE] BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES REGULATIONS, AND, ACCORDINGLY, MAY NOT BE
SOLD, OFFERED FOR SALE OR PLEDGED AS SECURITY IN THE ABSENCE OF SUCH REGISTRATION WITHOUT RELIANCE ON AN EXEMPTION UNDER THE SECURITIES
ACT AND COMPLIANCE WITH APPLICABLE STATE SECURITIES REGULATIONS. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [CONVERSION] [EXERCISE]
OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN FROM
AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company acknowledges and agrees
that the Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security
interest in some or all of its Transaction Securities to a financial institution that is a sophisticated investor and an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, the Purchaser may transfer pledged or secured Transaction 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 Company’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Transaction
Securities may reasonably request in connection with a pledge or transfer of the Transaction Securities.
(c)            No
certificate evidencing any Transaction Security shall contain any legend (including the legend set forth in
Section 4.6(b)
)
in the following cases: (i) while a registration statement covering the resale of such Transaction Security is effective under the
Securities Act; (ii) following any sale of such Transaction Security pursuant to Rule 144; (iii) if such Transaction Security
is eligible for sale under Rule 144; or (iv) 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). The Company shall upon request of the Purchaser
and at the Company’s sole expense cause its counsel (or at the Purchaser’s option, exercised in its sole discretion, counsel
selected by the Purchaser) to issue a legal opinion to the Transfer Agent promptly after any of the events described in (i)-(iv) in
the preceding sentence to effect the removal of any legend (including that described in
Section 4.6(b)
), with a copy to the
Purchaser and its broker. If all or any portion of any Purchased Security is converted or exercised, respectively, at a time when there
is an effective registration statement to cover the resale of the Issuable Securities, or if any Transaction Security may be sold under
Rule 144 or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations
and pronouncements issued by the staff of the SEC) then such Issuable Security or Transaction Security shall be issued free of all legends.
The Company agrees that following such time as such legend is no longer required under this
Section 4.6(c)
, it will, no later
than two (2) trading days following the delivery by the Purchaser to the Company or the Transfer Agent of a certificate representing
a Transaction Security issued with a restrictive legend (such second (2
nd
) trading day being referred to as the “
Legend
Removal Date
” of such Transaction Securities of the Purchaser), instruct the Transfer Agent to deliver or cause to be delivered
to the Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make
any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this
Section 4.6
.
Certificates for the Transaction Securities subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser
by crediting the account of the Purchaser’s prime broker with DTC’s system as directed by the Purchaser.
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(d)            In
addition to the Purchaser’s other available remedies, the Company shall pay to the Purchaser, in cash, as partial liquidated damages
and not as a penalty, $1,000 per trading day for each trading day after the Legend Removal Date for such Transaction Securities of the
Purchaser until such certificate is delivered without a legend. Nothing herein shall limit the Purchaser’s right to pursue actual
damages for the Company’s failure to deliver certificates representing any Transaction Securities as required by the Transaction
Documents, and the Purchaser shall have the right to pursue all remedies available to it at law or in equity including a decree of specific
performance and/or injunctive relief.
4.7           Trading
Activities of Purchaser
. Anything in this Agreement or elsewhere herein to the contrary notwithstanding, it is understood and acknowledged
by the Company that (i) the Purchaser has not been asked by the Company to agree, nor has the Purchaser agreed, to desist from purchasing
or selling Transaction Securities of the Company or from entering into Short Sales or Derivatives based on securities issued by the Company
or to hold the Transaction Securities for any specified term, (ii) past or future open market or other transactions by the Purchaser,
specifically including Short Sales or Derivatives, before or after any Closing, as well as the closing of any future private placement
transactions, may negatively impact the market price of the Company’s publicly-traded securities, (iii) the Purchaser, and
counter-parties in Derivatives to which the Purchaser is a party, directly or indirectly, may presently have a “short” position
in the shares of Common Stock and (iv) the Purchaser shall not be deemed to have any affiliation with or control over any arm’s
length counter-party in any Derivative. The Company further understands and acknowledges that (y) the Purchaser may engage in hedging
activities at various times during the period that the Transaction Securities are outstanding, including, during the periods that the
value of the Issuable Securities deliverable with respect to Transaction Securities are being determined, and (z) such hedging activities
(if any) could reduce the value of the existing stockholders' 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 and Derivatives do not constitute
a breach of any of the Transaction Documents.
4.8           Indemnification
of Each Purchaser Party
.
(a)            Each
Company Party shall, jointly and severally, indemnify against, and hold harmless from, the Purchaser, any assignee, in whole or in part,
of any Note, their Related Parties, each person who controls any of them (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and their agents, contractors, trustees, representatives and advisors (each, a “
Purchaser
Party
”) any and all Losses that any Purchaser Party may suffer or incur as a result of or relating to any of the following:
(a) the execution, existence, administration, performance or enforcement by any Purchaser Party of any of the Transaction Documents
or consummation of any transaction described therein, including any real or alleged misrepresentation or untrue statement of a material
fact, or real or alleged omission of any material fact, in any SEC Report, including any registration statement, or any prospectus or
any amendment or supplement thereto, (b) the existence of, perfection of, a Lien upon or the Sale or collection of, or any other
damage, Loss, failure to return or other realization upon any Collateral, (c) any representation or warranty of any Company Party
or any of their Related Parties in any Transaction Document being untrue when made or the failure of any Company Party or any of their
Related Parties (whether directly or through their agents, contractors, trustees, representatives and advisors) to observe, perform or
discharge any of the covenants or duties under any of the Transaction Documents, or (d) any Proceeding, whether or not any Purchaser
Party is a party thereto (including Proceedings instituted by any Governmental Authority or any holder of any equity interest in, or
other direct or indirect investor in, the Company who is not an Affiliate of such Purchaser Party) with respect to any of the Transaction
Documents or the transactions contemplated therein. Additionally, if any Taxes (excluding Taxes imposed upon or measured solely by the
net income of the recipient of any payment made under any Transaction Document, but including any intangibles tax, stamp tax, recording
tax or franchise tax) shall be imposed on any Company Party or Purchaser Party, whether or not lawfully payable, on account of the execution
or delivery of this Agreement, or the execution, delivery, issuance or recording of any of the other Transaction Documents, or the
creation or repayment of any of obligations hereunder, by reason of any applicable Regulations now or hereafter in effect, each Company
Party shall, jointly and severally, pay (or shall promptly reimburse such Purchaser Party for the payment of) all such Taxes, including
any interest, penalties, expenses and other Losses with respect thereto), and will indemnify and hold the Purchaser Parties harmless
from and against all Losses arising therefrom or in connection therewith.
The foregoing indemnities shall not apply to Losses
(x) incurred by any Purchaser Party as a result of its own gross negligence or willful misconduct as determined by a final
non-appealable order of a court of competent jurisdiction or (y) incurred by any Purchaser Party and directly and solely caused
by the Company Parties including in SEC Reports or any prospectus or any amendment or supplement thereto information about such Purchaser
Party provided by such Purchaser Party and approved by such Purchaser Party for inclusion in such filing.
Notwithstanding anything
to the contrary in any Transaction Document, the obligations of the Company Parties with respect to each indemnity given by them in this
Agreement or any of the other Transaction Documents in favor of the Purchaser Parties shall survive the payment in full of the Notes,
the exercise of the Warrants, the Sale of the Transaction Securities and the termination of this Agreement. The indemnification required
by this
Section 4.8
shall be made by periodic payments of the amount thereof during the course of the investigation or defense,
as and when bills are received or are incurred. The indemnification contained herein shall be in addition to any cause of action or similar
right of any Purchaser Party against any Company Party or others and any liabilities any Company Party may be subject to pursuant to
any Regulation.
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(b)
“Losses”
means all liabilities, amounts due, rights, demands, covenants, duties, obligations (including Indebtedness, receivables and other Contractual
Obligations), claims, damages, Proceedings and causes of actions, settlements, judgments, damages, losses (including reductions in yield),
debts, responsibilities, fines, penalties, sanctions, commissions and interest, disbursements, Taxes, interest, charges, costs, fees
and expenses (including fees, charges, and disbursements of financial, legal and other advisors, consultants and professionals and, if
applicable, any value-added and other taxes and charges thereon), in each case of any kind or nature, whether joint or several, whether
now existing or hereafter arising and however acquired and whether or not known, asserted, direct, contingent, liquidated, due, consequential,
actual, punitive or treble. “
Taxes”
means any present or future taxes, levies, imposts, duties, fees, assessments,
deductions, withholdings or other charges of whatever nature, including income, receipts, excise, property, sales, use, transfer, license,
payroll, withholding, social security and franchise taxes now or hereafter imposed or levied by the United States or any other Governmental
Authority and all interest, penalties, additions to tax and similar liabilities with respect thereto, but excluding, in the case of the
Purchaser, taxes imposed on or measured by the net income or overall gross receipts of the Purchaser.
ARTICLE V
MISCELLANEOUS
5.1           Termination
and Survival
. This Agreement may be terminated by the Purchaser by written notice to the Company, if the Initial Closing has not
occurred on or before the tenth (10
th
) business day following the date hereof. Termination of this Agreement will not affect
the right of any party to sue for any breach by any other party (or parties) prior to such termination. The representations and warranties,
covenants and other provisions hereof shall survive each Closing and the delivery of the Purchased Securities. Notwithstanding any termination
of any Transaction Document, the reimbursement and indemnities to which the Purchaser Parties are entitled under the provisions of any
Transaction Document shall continue in full force and effect and shall protect the Purchaser Parties against events arising after such
termination as well as before.
5.2           Fees
and Expenses
. Whether or not the transactions contemplated hereby shall be consummated or any Purchased Securities shall be purchased,
the Company agrees to pay promptly to each Purchaser Party, or reimburse each Purchaser Party for, the following:
(a)            all
the actual and reasonable costs, fees and expenses of negotiation, preparation, execution and closing of any Transaction Document and
the transfer of any Transaction Security in connection therewith and the consummation of the other transactions contemplated thereby,
in each case on or about the Initial Closing Date, including the reasonable fees, expenses and disbursements of counsel to such Purchaser
Party in connection therewith;
(b)            all
the actual and reasonable costs, fees and expenses of negotiation, preparation, execution and closing of any Transaction Document (including,
if applicable, any intercreditor, subordination or similar agreement) issuance, delivery and transfer of any Transaction Security in
connection therewith and consummation of the other transactions contemplated thereby, in each case after the Initial Closing Date, including
in connection with any subsequent Closing, and the reasonable fees, expenses and disbursements of counsel to such Purchaser Party in
connection with any of the foregoing;
(c)            all
the costs, fees and expenses of preparation, printing and distribution of any SEC Report, registration statement or prospectus for any
Transaction Securities, of any other registration statement or prospectus, of any amendment or supplement to any of the foregoing, or
of the Transfer Agent (including any fees required for same-day processing of any instruction letter delivered by the Company and any
conversion notice, exercise notice or other Transaction Document delivered after the Initial Closing by any Purchaser Party) and all
other costs and expenses (including stamp taxes and other taxes and duties levied) incurred in connection with the delivery to, or exercise
or conversion by, the Purchaser of any Transaction Securities, including the filing of any Form 13D, 13G or any other form with
the SEC in connection with Transaction Securities (or the filing of any other form with any other Governmental Authority required in
connection therewith) and any communication with, or Proceeding before, any Governmental Authority in connection therewith any of the
foregoing;
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-
(d)            all
the actual and reasonable costs, fees and expenses of creating and perfecting Liens in favor of such Purchaser Party, pursuant to any
Transaction Document, including costs associated with any Intellectual Property Security Agreement or Control Agreement, UCC fees, other
filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, title insurance premiums and reasonable fees,
expenses and disbursements of counsel to such Purchaser Party;
(e)            all
the actual and reasonable costs, fees and expenses of administration of the Transaction Documents, including the issuance, delivery,
transfer, exercise or conversion of any Transaction Security and the removal of any legend thereon, the preparation, execution and closing
of any consents, amendments, waivers or other modifications to any Transaction Document or any Transaction Security and the execution
of new Transaction Documents, including in each case the reasonable fees, expenses and disbursements of counsel to such Purchaser Party
in connection therewith and in connection with any other documents or matters requested by such Company Party (including through agents,
contractors, trustees, representatives and advisors) or otherwise prepared or delivered in connection with any Transaction Document;
(f)            all
the actual and reasonable costs, fees and expenses of the inspection, verification, custody or preservation of any Collateral or of the
creation, perfection or preservation of, or the establishment or maintenance of the priority of, any Lien thereon;
(g)            all
the actual and reasonable costs, fees, expenses and disbursements of any auditors, experts, accountants, appraisers, consultants, advisors
or agents used in connection with any of the foregoing or otherwise in connection with any Transaction Document, in each case whether
or not any such person is jointly engaged with any Company Party or any other person; and
(h)            all
costs, fees and expenses (including the fees, expenses and disbursements of any auditors, experts, accountants, appraisers, consultants,
advisors (including legal counsel, including allocated costs of internal counsel, advisors and agents employed or retained by such Purchaser
Party and any investment bank, mediator, arbitrator or other party engaged to resolve any dispute or any other Proceeding, in each case
whether or not any such person is jointly engaged with any Company Party or any other person), incurred by any Purchaser Party in enforcing
any obligation owed hereunder or under the other Transaction Documents. or in collecting any payments due from any Company Party hereunder
or under the other Transaction Documents (including in connection with the sale of, collection from, or other realization upon any Collateral
or the enforcement of any guaranty) or in any other Proceeding hereunder or under any Transaction Document (including costs of settlement)
or in connection with any negotiations, reviews, refinancing or restructuring of the credit arrangements provided hereunder, including
in the nature of a “work out” or pursuant to any insolvency or bankruptcy Proceedings.
The foregoing shall be in addition to,
and shall not be construed to limit, any other provisions of the Transaction Documents regarding indemnification and costs and expenses
to be paid by the Company Parties.
5.3           Modifications
and Signatures
.
(a)
Entire
Agreement.
This Agreement and the other Transaction Documents contain and constitute the entire agreement of the parties with respect
to the subject matter hereof and supersede all prior negotiations, agreements, and understandings, whether written or oral, of the parties
hereto, which the parties acknowledge have been merged into such documents, including any non-disclosure agreements or obligations of
the Purchaser that may exist, all of which are hereby terminated pursuant to
Section 4.4(b)
.
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(b)
Amendments
.
No amendment, modification or termination of any provision of this Agreement or any other Transaction Document shall be effective without
the written consent of the Company and the Purchaser. No waiver or consent shall be effective against any party unless given in writing
by such party and then any such waiver shall then be effective only in the specific instance and for the specific purpose for which it
was given. Any modification effected in accordance with this
Section 5.3(b)
shall be binding upon the Purchaser, each
other holder of Purchased Securities and the Company Parties.
(c)
Beneficiaries;
Successors and Assigns.
Except as otherwise expressly provided in any other Transaction Document with respect to such Transaction
Document, this Agreement and the other Transaction Documents shall bind and inure solely to the benefit of the Company Parties, the Purchaser,
the other Purchaser Parties, and their respective successors and, if permitted, assigns;
provided
, that no Company Party may assign,
Sell, or Sell, issue, negotiate or grant participations in, all or any part of any right, obligation, benefit, title or interest under,
including any remedy under, this Agreement or any other Transaction Document, without the Purchaser’s prior written consent and
any assignment done without such consents shall be void
ab initio
. Unless otherwise expressly provided in any Transaction Document,
the Purchaser may Sell, or Sell, issue, negotiate or grant participations in, all or any part of any right, obligation, benefit, title
or interest under, including any remedy under, any Transaction Security or Transaction Document without the consent of any Company Party;
provided
, that (i) any transferee of Purchased Securities shall agree in a writing for the benefit of the Purchaser and the
Company to be bound, with respect to, and in proportion to, such transferred Purchased Securities, by the provisions of the Transaction
Documents that apply to the Purchaser and, while failure to obtain such agreement shall not affect the underlying transfer of such Purchased
Securities, any such agreement shall be effective, ratably in proportion to such transfer, to make such transferee a party to the Transferred
Documents as the Purchaser and to be bound by, and benefit from, the provisions of such Transaction Documents applying to the Purchaser
and shall, to the extent of such transfer, relieve the Purchaser of all of its obligations hereunder with respect to any event occurring
after the effective date of such agreement and (ii) any transferee of the rights, titles and obligations of the Purchaser under
Transaction Documents shall agree in a writing for the benefit of the Purchaser and the Company to be bound, with respect to, and to
the extent of, such Transaction Documents, by the provisions of the Transaction Documents that apply to the Purchaser and any such agreement
shall be effective, to the extent of such transfer, to make such transferee a party to such Transferred Documents as the Purchaser and
to be bound by, and benefit from, the provisions of such Transaction Documents applying to the Purchaser and shall, to the extent of
such transfer, relieve the Purchaser of all of its obligations hereunder with respect to any event occurring after the effective date
of such agreement;
provided
,
further
, that, upon the effectiveness of any such transfer, the Company shall agree to execute
and deliver to the existing Purchaser and the new Purchasers new Transaction Documents (including this Agreement), each of which shall
be identical to the existing Transaction Documents except that they shall, mutatis mutandis and in proportion to such transfer, reflect
the identity of the new Purchasers after giving effect to, and to the extent of, such assignment (which may include the existing Purchaser)
and, in the case of a partial transfer, their respective allocations of the Purchase Prices, as well as, if requested by the existing
Purchaser or any new Purchaser, appropriate conforming changes to other provisions of any Transaction Documents.
(d)
No
Implied Waivers or Notice Rights
.
No notice to or demand on any Company Party, whether or not in any Proceeding, pursuant
to any Transaction Document shall entitle any Company Party to any other or further notice (except as specifically required hereunder
or under any other Transaction Document) or demand in similar or other circumstances. The failure by any Purchaser Party at any time
or times to require strict performance by any Company Party of any provision of this Agreement or any of the other Transaction Documents
or the granting of any waiver or indulgence shall not waive, affect or otherwise diminish any right of any Purchaser Party thereafter
to demand strict compliance and performance with such provision, shall not affect, or operate a waiver under, any other provision of
any Transaction Document (except as specifically mentioned) and shall not constitute a course of dealing by such Purchaser Party at variance
with the terms of this Agreement or any other Transaction Document (and therefore, among other things, shall not be construed to require
any notice by such Purchaser Party of its intent to require strict adherence to the terms of such Transaction Document in the future).
No waiver of any Default or Event of Default, and no default under, or breach of any provision, condition or requirement of, this Agreement
or any other Transaction Document shall be deemed to be a continuing waiver in the future or a waiver of any other or subsequent Event
of Default, default or breach of, or a waiver of any other provision, condition or requirement of, this Agreement or any other Transaction
Document; nor shall any failure, delay or omission of any party to exercise any right, power or privilege under this Agreement or any
other Transaction Document in any manner impair the exercise of such or any other right, power or privilege under this Agreement or any
other Transaction Document. None of the foregoing actions shall in any way affect the ability of each Purchaser Party, in its discretion,
to exercise any rights available to it under this Agreement, the other Transaction Documents or under applicable Regulations, except
as specifically agreed in any written waiver or other modification made in accordance with this
Section 5.3
.
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(e)
Counterparts
.
This Agreement and each Transaction Document may be executed in counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and both of which, when taken together, shall constitute but
one and the same Agreement. In proving this Agreement in any Proceedings, it shall not be necessary to produce or account for more than
one such counterpart signed by the party against whom such enforcement is sought. Delivery of an executed signature page of this
Agreement and each other Transaction Document by email or other electronic transmission shall be as effective as delivery of a manually
executed counterpart by hand.
(f)
Electronic
Signatures
.
Each party agrees that the electronic signatures, whether digital or encrypted, of the parties included in this
Agreement or in any other Transaction Document are intended to authenticate this writing and to have the same force and effect as manual
signatures. Electronic signature means any electronic sound, symbol, or process attached to or logically associated with a record and
executed and adopted by a party with the intent to sign such record, including emailed electronic signatures. The Company expressly agrees
that this Agreement and all other Transaction Documents are “transferable records” as defined in applicable Regulations relating
to electronic transaction and that it may be created, authenticated, stored, transmitted and transferred in a manner consistent with
and permitted by such applicable Regulations.
5.4            Notices.
(a)            All
notices, requests, demands, and other communications to either party hereto given under this Agreement or any other Transaction Document
shall be in writing (including email) and shall be given to such party at the physical address or send to the email address set forth
in the signature pages hereof or at such other physical address or email address as such party may hereafter specify for the purpose
of notice to the Purchaser and the Company in accordance with the provisions of this
Section 5.4
.
(b)            Each
such notice, request or other communication shall be effective (i) if given by mail, three (3) business days after such communication
is deposited in the U.S. Mail with first class postage pre-paid, addressed to the noticed party at the address specified herein, (ii) if
by nationally recognized overnight courier, when delivered with receipt acknowledged in writing by the noticed party, (iii) if given
by personal delivery, when duly delivered with receipt acknowledged in writing by the noticed party or (iv) if given by email, when
delivered (receipt by the sender of a receipt using the “return receipt” function or receipt of a reply email being presumptive
evidence of receipt thereof);
provided
, that, if the Common Stock is listed on a Trading Market and such email is not sent prior
to the last trading hour of the Principal Trading Market of the Common Stock on a trading day, such email shall be deemed to have been
sent at the opening of trading on the next trading day for such Principal Trading Market. Any notice that must be given
“promptly”
or
“immediately”
shall be given by email. Any written notice, request or demand that is not sent in conformity with
the provisions hereof shall nevertheless be effective on the date that such notice, request or demand is actually received by the individual
to whose attention at the noticed party such notice, request or demand is required to be sent.
5.5           Set-Off
.
In addition to any rights now or hereafter granted under applicable Regulations and not by way of limitation of any such rights, each
Purchaser Party is hereby authorized by the Company Parties at any time or from time to time, without notice or demand to any Company
Party or to any other person, any such notice or demand being hereby expressly waived, to set off and to appropriate and to apply any
and all deposits (general or special, time or demand, provisional or final, including Indebtedness evidenced by certificates of deposit,
whether matured or unmatured, but not including trust accounts) and any other Indebtedness or other amounts at any time held or owing
by such Company Party to or for the credit or the account of any Company Party or any of their Related Parties against and on account
of any amounts due by any Company Party or any of their Related Parties to any Purchaser Party under any Transaction Documents (including
from the purchase price to be disbursed hereunder for the purchase of the Purchased Securities), irrespective of whether or not (a) such
Purchaser Party shall have made any demand hereunder or (b) the principal of or the interest on any Note or any other Obligation
shall have become due and payable and although such obligations and liabilities, or any of them, may be contingent or unmatured. If,
as a result of such set off, appropriate or application, such Purchaser Party receives more than it is owed under any Transaction Document,
it shall hold such amounts in trust for the other Purchaser Parties and transfer such amounts to the other Purchaser Parties ratably
according to the amounts they are owed on the date of receipt.
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5.6           Governing
Law; Courts.
(a)
Except
as otherwise expressly provided in any other Transaction Document, this Agreement, the other Transaction Documents and all claims, disputes,
Proceedings, and matters related hereto or thereto or arising hereunder or thereunder or arising from or relating to the relationship
among any of the parties hereto or thereto, are governed by, and shall be construed, interpreted and enforced exclusively in accordance
with, the laws of the State of Delaware (without giving effect to the conflict of laws provisions thereof to the extent such principles
or rules would require or permit the application of the laws of any jurisdiction other than those of the State of Delaware).
(b)
Any
such Proceeding shall be brought exclusively in the Delaware state courts sitting in Wilmington, DE or the federal courts of the United
States of America for the District of Delaware sitting in Wilmington, DE; provided, that the Purchaser and any Purchaser Party may bring
Proceedings in other jurisdictions to enforce any Transaction Document.
Each Company Party (i) accepts for itself and in respect
of its property, generally and unconditionally, the jurisdiction of such courts, (ii) irrevocably and unconditionally waives any
objection, including any objection to the laying of venue, whether based on the grounds of
forum non conveniens
or on the fact
that such jurisdiction is improper or otherwise, or any other objection that such party is not subject to the jurisdiction of such courts,
that it may now or hereafter have to the bringing of any Proceeding in that jurisdiction, (iii) irrevocably and unconditionally
consents to the service of process of any court referred to above in any Proceeding by the mailing of copies of the process to the parties
hereto as provided in
Section 5.4 (Notices)
and (iv) irrevocably and unconditionally agrees that a final judgment in
any such Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided
by law. Service effected as provided in this manner will become effective ten (10) calendar days after the mailing of the process.
Notwithstanding the foregoing, nothing contained in any Transaction Document shall affect the right of any Purchaser Party to serve process
in any other manner permitted by applicable Regulations or commence Proceedings or otherwise proceed against any Company Party in any
other jurisdiction.
5.7          Severability
.
Any provision of any Transaction Document being held illegal, invalid or unenforceable in any jurisdiction shall not affect any part
of such provision not held illegal, invalid or unenforceable, any other provision of any Transaction Document or any part of such provision
in any other jurisdiction, so long as the economic or legal substance of the transactions contemplated hereby or thereby is not affected
in any manner adverse to any party. In addition, upon any determination that any such term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto will negotiate in good faith to modify the relevant Transaction Document so as to effect
the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby
are fulfilled to the extent possible.
5.8           Rescission
and Withdrawal Right
. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any
of the other Transaction Documents, whenever any Purchaser Party exercises a right, election, demand or option under a Transaction Document
and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser Party 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
, that, in the case of a rescission by the Purchaser
of a conversion or exercise of any Transaction Security, the Purchaser shall return to the Company any Issuable Security subject to such
rescinded conversion or exercise.
5.9           Replacement
of Certificates
. If any certificate or instrument evidencing any Transaction 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 Transaction Securities.
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5.10        Remedies.
(a)            In
addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser 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 of any Company Party 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.
(b)            If
any Company Party shall fail to discharge any covenant, duty or obligation hereunder or under any of the other Transaction Documents,
the Purchaser may, in its discretion at any time, for the account and at the expense of the Company Parties jointly and severally, pay
any amount or do any act required of such Company Party hereunder or under any of the other Transaction Documents or otherwise lawfully
requested by the Purchaser (including buying replacement Securities in the Principal Trading Market of such Securities in case of failure
by the Company to deliver Securities). All fees, costs and expenses incurred by the Purchaser in connection with the taking of any such
action shall be reimbursed to the Purchaser by the Company Parties, jointly and severally, on demand, with interest accruing at the Default
Rate from the date such payment is made or such costs or expenses are incurred to the date of payment thereof. Any payment made or other
action taken by the Purchaser under this
clause (b)
shall be without prejudice to any right to assert, and without waiver
of, any breach of any Transaction Document and without prejudice to any Purchaser Party’s right to proceed thereafter as provided
herein or in any of the other Transaction Documents.
(c)            The
remedies provided in this Agreement and all other Transaction Documents shall be cumulative and in addition to all other remedies available
under any Transaction Document, whether at law or in equity (including a decree of specific performance and/or other injunctive relief).
(d)            Nothing
in any Transaction Document shall limit any Purchaser Party’s rights to pursue actual and consequential damages for any failure
by any Company Party to comply with the terms of this Agreement or any other Transaction Document.
(e)            Each
Company Party acknowledges and agrees that any Event of Default will cause irreparable harm to each Purchaser Party and the remedy at
law for any such breach may be inadequate. Therefore, in the event of any such Event of Default, each such Purchaser Party shall be entitled,
in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the
necessity of showing economic loss and without any bond or other security being required.
5.11        Marshaling;
Payment Set Aside
. No Purchaser Party shall be under any obligation to marshal any property in favor of any Company Party or any
other party or against or in payment of any amount due under any Transaction Document. To the extent that any Company Party makes a payment
or payments to any Purchaser Party pursuant to any Transaction Document or any Purchaser Party 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 any Company Party, a trustee, receiver or any other person under any Regulation (including 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, the Transaction Documents and all Liens, rights and remedies thereunder, 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.
5.12        Usury
.
To the extent it may lawfully do so, each Company Party 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 Proceeding that may be brought by any Purchaser Party 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 each Company Party under the Transaction Documents for payments in the nature of interest
shall not exceed the maximum lawful rate authorized under applicable Regulations (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 any Company Party 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 Regulations. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by any Company
Party to any Purchaser Party with respect to any Obligation, such excess shall be applied to any outstanding Obligation or be refunded
to the Company, the manner of handling such excess to be at the election of the Purchaser.
5.13        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.
5.14        Further
Assurances
. The Company Parties agree to take such further actions as the Purchaser shall reasonably request from time to time in
connection herewith to evidence, give effect to or carry out this Agreement and the other Transaction Documents and any of the transactions
contemplated hereby or thereby.
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5.15        Interpretation
.
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 any Transaction Document. 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. Except as otherwise expressly
provided in any Transaction Document, if the last or appointed day for a payment, the taking of any action or the expiration of any right
required or granted under any Transaction Document shall not be a business day, then such payment may be made, such action may be taken
or such right may be exercised on the next succeeding business day. As used in any Transaction Document, references to the singular will
include the plural and vice versa and references to the masculine gender will include the feminine and neuter genders and vice versa,
as appropriate. When used in any Transaction Document, unless otherwise expressly provided in such Transaction Document, (a) the
words “
hereof
,” “
herein
” and “
hereunder
” and words of similar import refer to
such Transaction Document as a whole and not to any particular provision of such Transaction Document, (b) recital, article, section,
subsection, schedule and exhibit references are references with respect to such Transaction Document unless otherwise specified, (c) any
reference to any agreement shall include a reference to all recitals, appendices, exhibits and schedules to such agreement and, unless
the prior written consent of any party is required hereunder and is not obtained, shall be a reference to such agreement as waived, amended,
restated, supplemented or otherwise modified and (d) any reference to a specific Regulation shall be to such Regulation, as modified
from time to time, together with any successor or replacement Regulation, in each case as in effect at the time of determination. Unless
the context otherwise requires, when used in any Transaction Document, the following terms have the following meaning: (p)
“person”
means an individual, partnership, corporation, incorporated or unincorporated association, limited liability company, limited liability
partnership, joint stock company, land trust, business trust or unincorporated organization, or a government or agency, department or
other subdivision thereof or other entity of any kind, (q) “
asset
” and “
property
” have the
same meaning and mean, “collectively, all rights and interests in tangible and intangible assets and properties, whether real,
personal or mixed and including cash, capital stock, revenues, accounts, leasehold interests, contract rights and other rights under
Permits and Contractual Obligations,” (r) “
documents
” and “
documentation
” have the same
meaning and mean “collectively, all documents, drafts, instruments, agreements, indentures, certificates, forms, opinions, powers
of attorney, notices, summons, reports, financial statements and other writings, however evidenced, whether in physical or electronic
form,” (s) “
execution
,” “
signed
,” “
signature
” and words of like import
shall be deemed to include electronic signatures and the keeping of records in electronic form, each of which shall be of the same legal
effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may
be, to the extent and as provided for in any applicable Regulation, including the Federal Electronic Signatures in Global and National
Commerce Act, the Delaware Uniform Electronic Transactions Act and any other similar state Regulation based on the Uniform Electronic
Transactions Act, (t) “
incur
” means incur, create, make, issue, assume or otherwise become or remain directly
or indirectly liable in respect of or responsible for, in each case whether directly or indirectly, as primary obligor or guarantor or
endorser, and the terms “
incurrence
” and “
incurred
” and similar derivatives shall have correlative
meanings, (u) “
including
” means “including, without limitation,” (v) “
knowledge
”
of the any Company Party means the best knowledge of any officer, director or employee of such Company Party after due inquiry, (w) “
ordinary
course of business
” means in the ordinary course of business, as conducted on the date hereof, consistent with past practices
reflected in written disclosures made on or prior to the date hereof in accordance with this Agreement, together with such changes thereto
as may be approved by the Purchaser in its sole discretion, (x)
“dollar”
and the sign
“$”
each
mean the lawful money of the United States of America, (y)
“business day”
means any day except Saturdays, Sundays,
any day that is a federal holiday in the United States and any day on which the Federal Reserve Bank of New York is not open for business.
The headings in this Agreement are included for convenience of reference only and will not affect in any way the meaning or interpretation
of this Agreement and (z)
“trading day”
means a day on which the Principal Trading Market for the Common Stock
is open for trading;
provided
, that “
trading day
” shall not include, unless the Purchaser otherwise agrees,
any day on which the Common Stock is scheduled to trade thereon for less than four and a half hours or any day that the Common Stock
is suspended from trading during the final hour of trading on such exchange or market (or, if such exchange or market does not designate
in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00 p.m.);
provided
,
further
that, if the Common Stock does not trade on any Trading Market,
“trading day”
shall mean “business day”.
All references in this Agreement or any other Transaction Document to statutes and regulations shall include all amendments of same and
implementing regulations and any successor statutes and regulations; to any instrument or agreement (including any of the Transaction
Documents) shall include any and all modifications and supplements thereto and any and all restatements, extensions or renewals thereof
to the extent such modifications, supplements, restatements, extensions or renewals of any such documents are permitted by the terms
hereof and thereof. An Event of Default shall be deemed to exist at all times during the period commencing on the date that such Event
of Default occurs to the date on which such Event of Default is waived in writing in accordance with the Transaction Documents. Whenever
in any provision of any Transaction Document, the Purchaser is authorized to take or decline to take any action (including making any
determination) in the exercise of its “
discretion
,” such provision shall be understood to mean that the Purchaser
may take or refrain to take such action in its sole discretion. References to times of the day in any Transaction Document shall refer
to Eastern Time. In the computation of periods of time from a specified date to a later specified date, the word “
from
”
means “from and including,” the words “
to
” and “
until
” each mean “to but excluding”
and the word “
through
” means “to and including.” Time is of the essence of this Agreement and the other
Transaction Documents. No provision of this Agreement or any of the other Transaction Documents shall be construed against or interpreted
to the disadvantage of any party hereto by any Governmental Authority by reason of such party having or being deemed to have structured,
drafted or dictated such provision. “
month
” (but not “calendar month”) means each period from a date of
determination to the day in the next calendar month numerically-corresponding to such date (
provided,
that, if such calendar month
does not have any such numerically-corresponding day, such numerically-corresponding day shall be deemed to be the last day of such calendar
month).
“rounding”
means, with respect to shares of Common Stock, rounding according to the Regulations of the Principal
Trading Market or, if not such Regulations exists or if such Regulations shall be ambiguous, perfectly even results shall be rounded
up. The reporting entity relied upon for the determination of trading price and trading volume shall be Bloomberg, L.P.
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5.16         Waiver
of Jury Trial and Certain Other Rights.
(a)            The
parties hereto hereby irrevocably and unconditionally waive, to the fullest extent permitted by applicable Regulations, any right that
they may have to trial by jury of any claim or cause of action or in any Proceeding, directly or indirectly based upon or arising out
of, under or in connection with, this Agreement or any Transaction Document or the transactions contemplated therein or related thereto
(whether founded in contract, tort or any other theory). Each party hereto (a) certifies that no other party, no Purchaser Party
and no Affiliate of any of them and no attorney, agent or other representative of any of the foregoing has represented, expressly or
otherwise, that any person would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that
it and the other parties have been induced to enter into this Agreement and the other Transaction Documents by, among other things, the
mutual waivers and certifications in this section.
(b)            Each
Company Party acknowledges and agrees that the foregoing waivers are a material inducement to the Purchaser to enter into and accept
this Agreement. Each Company Party has reviewed the foregoing waivers with its legal counsel and has knowingly and voluntarily waived
its jury trial rights following consultation with such legal counsel. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court. This Section 5.16 shall not restrict a party from exercising remedies under the UCC or from exercising
pre- or post-judgment remedies under applicable Regulations.
[
Signature
Pages Follow
]
-
25
-
In witness
whereof
, each of the undersigned has duly executed this Agreement as of the date first written
above.
CONNECTM
TECHNOLOGY SOLUTIONS, INC.
Address
for Notices:
2 Mount Royal Avenue, Suite 550
Marlborough, MA 01752
By:
Email:
Name:
Title:
[
Signature
Page for the Purchaser Follows
]
-
26
-
ASCENT PARTNERS FUND LLC,
as Purchaser
By:
Name:
Title:
Address for Notices:
19505 Biscayne Blvd., Suite 2350
Aventura, FL 33180
investments@ascentpartnersllc.com
SECURITIES PURCHASE AGREEMENT
SCHEDULE I
SECURITIES TO
BE PURCHASED AT THE INITIAL CLOSING AND ADDITIONAL CLOSINGS
For the avoidance of doubt, only
Note One listed below is to be purchased at the Initial Closing. Note Two and the Warrants listed below, and any additional Notes or
Warrants agreed upon by the parties, are to be purchased only at Additional Closings.
Initial
Principal Amount
Original
Issue Discount
Purchase
Price
Note One
$
228,571.43
$
28,571.43
$
200,000.00
Note Two
$
2,777,777.78
$
277,777.78
$
2,500,000.00
Note Three
$
2,628,571,142.86
$
328,51.43
$
2,300,000.00
Number
Purchase
Price
Warrants
—
N/A
SECURITIES PURCHASE
AGREEMENT
SCHEDULE II
INDEX OF DEFINED
TERMS
Whenever a term
is defined in the Notes, such term shall be used in the other Transaction Documents to refer to any item that would fit within any such
definition in any Note.
Defined
Term
Location
of Definition
Additional
Closings
Section 1.1(b)
Additional
Closing Dates
Section 1.1(b)
Additional
Notes
Section 1.1(b)
Additional
Purchase Prices
Section 1.1(b)
Additional
Warrants
Section 1.1(b)
Affiliate
Disclosure
Certificate (Schedule 1-A – Corporate Information)
Agreement
Preamble
to this Agreement
Alternate
Consideration
Section 4(e) of
the Notes
AML/CTF
Regulation
Disclosure
Certificate (Schedule 16 – Sanctions and Compliance)
Amortization
Floor Price
Section 1(a) of
the Notes
Amortization
Payment
Section 1(a) of
the Notes
Amortization
Payment Date
Section 1(a) of
the Notes
Amortization
Price
Section 1(a) of
the Notes
Attribution
Parties
Section 2(d) of
the Notes
Base
Share Price
Section 4(c) of
the Notes
Beneficial
Ownership Limitation
Section 2(d) of
the Notes
Buy-In
Section 4(c)(vii) of
the Notes
BHCA
Disclosure
Certificate (Schedule 16 – Sanctions and Compliance)
Capital
Lease
Disclosure
Certificate (Schedule 9 – Indebtedness and Liens)
Capital
Stock
Disclosure
Certificate (Schedule 1-A – Corporate Information)
Cash
Payment Fee
Section 1(g) of
the Notes
Change
of Control
Section 6(a)(xi) of
the Notes
Closing
Section 1.1(b)
Closing
Bid Price
Section 1(a) of
the Notes
Closing
Sale Price
Section 1(a) of
the Notes
SECURITIES PURCHASE AGREEMENT
Closing
Date
Section 1.1(b)
Closing
List
Section 1.2
Closing
Statement
Closing
List
Collateral
Disclosure
Certificate (Schedule 2 – Real Property and Collateral Locations)
Common
Stock
Disclosure
Certificate (Schedule 1-A – Corporate Information)
Common
Stock Equivalent
Disclosure
Certificate (Schedule 1-A – Corporate Information)
Company
Preamble
to this Agreement
Company
Covered Person
Disclosure
Certificate (Schedule 17 – Issuance of Transaction Securities)
Company
Party
Disclosure
Certificate (Lead-In)
Compliance
Certificate
Closing
List
Consent
Disclosure
Certificate (Schedule 10 – Consents)
Contractual
Obligation
Disclosure
Certificate (Schedule 7 – Contractual Obligations and Regulations)
Control
Agreement
Closing
List
Conversion
Section 4
of the Notes
Conversion
Date
Section 2(a) of
the Notes
Conversion
Notice
Section 2(a) of
the Notes
Conversion
Price
Section 2(b) of
the Notes
Conversion
Shares
Section 1(a) of
the Notes
Copyrights
Disclosure
Certificate (Schedule 3 – Intellectual Property)
Customary
Permitted Liens
Disclosure
Certificate (Schedule 9 – Indebtedness and Liens)
Derivative
Disclosure
Certificate (Schedule 9 – Indebtedness and Liens)
Default
Section 5(a) of
the Notes
Default
Rate
Section 1(e) of
the Notes
Dilutive
Issuance
Section 4(d) of
the Notes
Dilutive
Issuance Notice
Section 4(d) of
the Notes
Disclosure
Certificate
Closing
List
Dispute
Submission Deadline
Section 6(d)(i) of
the Notes
Disqualification
Event
Disclosure
Certificate (Schedule 17 – Issuance of Transaction Securities)
DTC
Section 4.5(a)
DWAC
Section 4.5(a)
DWAC
Eligible
Section 4.5(a)
Equity
Line of Credit
Section 3.1(e)
Equity
Payment Condition
Section 1(a) of
the Notes
Evaluation
Date
Disclosure
Certificate (Schedule 15 – Financial Statements)
Event
of Default
Section 5(a) of
the Notes
Exchange
Act
Disclosure
Certificate (Schedule 17 – Issuance of Transaction Securities)
Exchange
Cap
Section 2(e) of
the Notes
Exchange
Cap Shares
Section 2(e) of
the Notes
Exchange
Transaction
Section 3.2(b)
Exempt
Issuance
Section 3.1(e)
Federal
Reserve
Disclosure
Certificate (Schedule 16 – Sanctions and Compliance)
Fundamental
Transaction
Section 3.1(f)
GAAP
Disclosure
Certificate (Schedule 15 – Financial Statements)
Guaranty
Closing
List
Guaranty
Obligation
Disclosure
Certificate (Schedule 9 – Indebtedness and Liens)
SECURITIES PURCHASE
AGREEMENT
Governmental
Authority
Disclosure
Certificate (Schedule 6 – Permits)
Indebtedness
Disclosure
Certificate (Schedule 9 – Indebtedness and Liens)
Initial
Closing
Section 1.1(a)
Initial
Closing Date
Section 1.1(a)
Initial
Note
Section 1.1(a)
Initial
Purchased Securities
Section 1.1(a)
Initial
Purchase Price
Section 1.1(a)
Intellectual
Property
Disclosure
Certificate (Schedule 3 – Intellectual Property)
Intellectual
Property Security Agreement
Closing
List
Internet
Domain Name
Disclosure
Certificate (Schedule 3 – Intellectual Property)
IP
Ancillary Rights
Disclosure
Certificate (Schedule 3 – Intellectual Property)
IP
License
Disclosure
Certificate (Schedule 3 – Intellectual Property)
Issuable
Securities
Section 1.1(c)
Late
Delivery Fee
Section 2(c)(viii) of
the Note
Late
Fee
Section 1(f) of
the Notes
Legend
Removal Date
Section 4.6(c)
Lien
Disclosure
Certificate (Schedule 9 – Indebtedness and Liens)
Listing
Event
Section 4.5(c)
Lock-Up
Agreement
Closing
List
Losses
Section 4.8(b)
Mandatory
Prepayment Amount
Section 1(b) of
the Notes
Material
Adverse Effect
Disclosure
Certificate (Lead-In)
Maximum
Rate
Section 5.12
Minimum
Interest Amount
Section 1(d) of
the Notes
Note
Section 1.1(a)
Note
One
Closing
List
Note
Two
Closing
List
Note
Three
Closing
List
Note
Register
Section 3(c) of
the Notes
Obligation
Section 5(a) of
the Notes
OFAC
Disclosure
Certificate (Schedule 16 – Sanctions and Compliance)
Optional
Prepayment Amount
Section 1(c) of
the Notes
Original
Issue Date
Lead-In
to the Note
Participation
Maximum
Section 4.1(a)
Patents
Disclosure
Certificate (Schedule 3 – Intellectual Property)
Permit
Disclosure
Certificate (Schedule 6 – Permits)
Permitted
Debt
Disclosure
Certificate (Schedule 9 – Indebtedness and Liens)
Permitted
Liens
Disclosure
Certificate (Schedule 9 – Indebtedness and Liens)
Pledged
Certificated Stock
Disclosure
Certificate (Schedule 1-A – Corporate Information)
Pledged
Collateral
Disclosure
Certificate (Schedule 1-A – Corporate Information)
Pledged
Debt Instrument
Disclosure
Certificate (Schedule 1-A – Corporate Information)
Pledged
Uncertificated Stock
Disclosure
Certificate (Schedule 1-A – Corporate Information)
Pre-Notice
Section 4.1(b)
SECURITIES PURCHASE
AGREEMENT
Principal
Trading Market
Disclosure
Certificate (Schedule 17 – Issuance of Transaction Securities)
Proceeding
Disclosure
Certificate (Schedule 11 – Commercial Tort Claims and Other Legal Proceedings)
Public
Information Failure
Section 4.4(g)
Public
Information Failure Payments
Section 4.4(g)
Purchase
Money Lien
Disclosure
Certificate (Schedule 9 – Indebtedness and Liens)
Purchase
Price
Section 1.1(b)
Purchased
Security
Section 1.1(b)
Purchaser
Preamble
to this Agreement
Purchaser
Party
Section 4.8
Registration
Rights Agreement
Closing
List
Regulation
Disclosure
Certificate (Schedule 7 – Contractual Obligations and Regulations)
Related
Party
Disclosure
Certificate (Schedule 1-A – Corporate Information)
Required
Dispute Documentation
Section 6(d)(i) of
the Notes
Required
Filings
Disclosure
Certificate (Schedule 10 – Consents)
Reserve
Amount
Section 4.3(d)
Restricted
Payment
Section 3.1(d)
Rule 144
Section 1.3(b)(viii)
Sale
(or Sell)
Section 3.1(c)
Sanctioned
Jurisdiction
Disclosure
Certificate (Schedule 16 – Sanctions and Compliance)
Sanctioned
Person
Disclosure
Certificate (Schedule 16 – Sanctions and Compliance)
Sanctioned
Laws
Disclosure
Certificate (Schedule 16 – Sanctions and Compliance)
SEC
Section 1.3(b)(viii)
SEC
Reports
Disclosure
Certificate (Schedule 15 – Financial Statements)
Securities
Act
Recitals
to this Agreement
Securities
Disclosure
Certificate (Schedule 1-A – Corporate Information)
Security
Agreement
Closing
List
Series C
Preferred Stock
Disclosure
Certificate (Schedule 1-A – Corporate Information)
Share
Delivery Deadline
Section 2(c)(ii) of
the Notes
Short
Sale
Section 2.2(f)
Software
Disclosure
Certificate (Schedule 3 – Intellectual Property)
Solvent
Disclosure
Certificate (Schedule 17 – Issuance of Transaction Securities)
Standard
Enforceability Exceptions
Disclosure
Certificate (Schedule 10 – Consents)
Stock
Equivalent
Disclosure
Certificate (Schedule 1-A – Corporate Information)
Subsequent
Offering
Section 1(b) of
the Notes
Subsequent
Financing
Section 4.1
Subsidiary
Disclosure
Certificate (Schedule 1-A – Corporate Information)
Subsequent
Financing Notice
Section 4.1(b)
Successor
Entity
Section 4(e) of
the Notes
Tax
Section 4.8(b)
Third
Party Exchange Transfer
Section 3.2(b)
Trademark
Disclosure
Certificate (Schedule 3 – Intellectual Property)
Trade
Secret
Disclosure
Certificate (Schedule 3 – Intellectual Property)
SECURITIES PURCHASE
AGREEMENT
Trading
Market
Disclosure
Certificate (Schedule 17 – Issuance of Transaction Securities)
Transaction
Document
Closing
List
Transaction
Securities
Section 1.1(c)
Transfer
Agent Instruction Letter
Closing
List
UCC
Disclosure
Certificate (Schedule 1-A – Corporate Information)
Variable-Priced
Equity-Linked Instrument
Section 3.2(a)
Voting
Stock
Disclosure
Certificate (Schedule 1-A – Corporate Information)
VWAP
Section 1(a) of
the Notes
SECURITIES PURCHASE
AGREEMENT
SCHEDULE III
CLOSING LIST
SECURITIES PURCHASE
AGREEMENT
EXHIBIT A-1
FORM OF
NOTE ONE
SECURITIES PURCHASE
AGREEMENT
EXHIBIT A-2
FORM OF
NOTE TWO
SECURITIES
PURCHASE AGREEMENT
EXHIBIT A-3
FORM OF
NOTE THREE
SECURITIES PURCHASE
AGREEMENT
EXHIBIT B
FORM OF
WARRANT
SECURITIES
PURCHASE AGREEMENT
EXHIBIT C
FORM OF
GUARANTY
SECURITIES
PURCHASE AGREEMENT
EXHIBIT D
FORM OF
SECURITY AGREEMENT
SECURITIES PURCHASE
AGREEMENT
EXHIBIT E
FORM OF
REGISTRATION RIGHTS AGREEMENT
SECURITIES PURCHASE
AGREEMENT
EXHIBIT F
FORM OF
LOCK-UP AGREEMENT
SECURITIES PURCHASE
AGREEMENT
EXHIBIT G
FORM OF
TRANSFER AGENT INSTRUCTION LETTER
SECURITIES PURCHASE
AGREEMENT
EXHIBIT H
FORM OF
COMPLIANCE CERTIFICATE
SECURITIES PURCHASE
AGREEMENT

----- tm2624767d1_ex10-2.htm -----
EX-10.2
5
tm2624767d1_ex10-2.htm
EXHIBIT 10.2
Exhibit 10.2
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES REGULATIONS
,
AND, ACCORDINGLY, MAY NOT BE SOLD, OFFERED FOR SALE OR PLEDGED AS SECURITY IN THE ABSENCE OF SUCH REGISTRATION WITHOUT RELIANCE
ON AN EXEMPTION UNDER THE SECURITIES ACT AND COMPLIANCE WITH APPLICABLE STATE SECURITIES REGULATIONS
.
THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN FROM AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER
THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
THIS NOTE HAS
BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”). PURSUANT TO TREASURY REGULATION §1.1275-3(b)(1), BHASKAR PANIGRAHI,
A REPRESENTATIVE OF THE COMPANY WILL, BEGINNING TEN DAYS AFTER THE ISSUANCE DATE OF THIS NOTE, PROMPTLY MAKE AVAILABLE TO THE HOLDER
UPON REQUEST THE INFORMATION DESCRIBED IN TREASURY REGULATION §1.1275-3(b)(1)(i). BHASKAR PANIGRAHI MAY BE REACHED AT (617)
395-1333, Bhaskar@connectm.com.
SENIOR
SECURED CONVERTIBLE PROMISSORY NOTE (ONE)
DUE
August
31, 2027
Issued on: August 31, 2026
Principal Amount: $228,571.43
Purchase Price:
$200,000.00
This
Senior
Secured Convertible Promissory Note
is duly authorized and validly issued on the date set forth above (such date, regardless of any
transfers of any Note and regardless of the number of instruments which may be issued to evidence such Note, being the
“Original
Issue Date”
) by ConnectM Technology Solutions, Inc., a Delaware corporation, (together with any successors and, if permitted,
assigns, the “
Company
”), designated as its Senior Secured Convertible Promissory Note due August 31, 2027 (this
“
Note
”), and issued and sold by the Company pursuant to the Securities Purchase Agreement, dated as of August 31,
2026, by and among the Company, the other Company Parties and Ascent Partners Fund LLC (together with its successors and registered assigns,
the “
Holder
”), a Delaware limited liability company (the “
Purchase Agreement
”; capitalized terms
used but not otherwise defined herein are used as defined in the Purchase Agreement on the date hereof, including by reference to definitions
in other Transaction Documents in
Schedule II
thereof, with such amendments as may be acceptable to the Holder in its sole discretion).
This Note is entered into pursuant to the Purchase Agreement and is subject to the terms and conditions thereof.
FOR VALUE RECEIVED
,
the Company promises to pay to the order of the Holder the principal amount first written above on August 31, 2027 (the “
Maturity
Date
”) in full in cash (subject to the conversion provisions hereof) or on such earlier date as this Note is required or permitted
to be repaid as provided hereunder, in each case together with all accrued but unpaid interest thereon and all other Obligations and
otherwise to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note and such other
Obligations in accordance with the provisions hereof. Amounts repaid will not be advanced again. Notwithstanding the foregoing, the Maturity
Date shall automatically be accelerated to the Lock Up Termination Date (as defined below).
“
Lock
Up Termination Date
” means the date the lock up period set forth in Section 2.2 of the Share Swap Agreement (as defined
below) ends in respect of the 160,000,000 equity shares of Blue Cloud Softech Solutions Limited issued to the Company pursuant to the
terms thereof (collectively, the “
Blue Cloud Shares
”).
1
“
Share
Swap Agreement
” means that certain Share Swap Agreement, dated April 6, 2026, between Blue Cloud Softech Solutions Limited,
the Company and AstraBridge Inc.
This
Note is subject to the following additional provisions:
Section 1.       REPAYMENT
a)
Amortization
of Principal
. Commencing on the earlier to occur of (i) April 30, 2027 or (ii) the Listing Event and continuing on
the first day of each calendar month thereafter (each an “
Amortization Payment Date
”), the Company shall pay in full
the portion of the principal amount of this Note set forth on
Schedule 2
opposite such date (each, an “
Amortization Payment
”).
Each Amortization Payment may, at the option of the Company but subject to the satisfaction of the Equity Payment Conditions on the date
of such Amortization Payment (or due waiver by the Holder), be made instead of cash, in Common Stock valued at the Amortization Price
on the date of such payment (together with any other share of Common Stock issued upon any conversion, redemption, or amortization of
this Note, and shares of Common Stock issued and issuable in lieu of the cash payment of interest on this Note in accordance with the
terms of this Note, the
“Conversion Shares
”). In addition, the Company shall pay in full on the Maturity Date all
remaining Obligations then outstanding.
“Amortization Price”
means, as of any date, the lower of (i) the Conversion
Price on such date and (ii) 95% of the lowest VWAP in the ten (10) trading days prior to such date.
“
Equity
Payment Conditions
” means, as of any date, (a) no Default or Event of Default is continuing, (b) the Common Stock
is trading on its Principal Trading Market and all of the Conversion Shares are listed or quoted for trading in such Principal Trading
Market and comply with all of the conditions for such listing or quotations (and the Company reasonably believes that trading of the
Common Stock on such Principal Trading Market will continue uninterrupted, and shall continue to comply with the conditions for listing
or quotation for trading in such Principal Trading Market, for the 180 days following such date), (c) the Company has timely filed
(or obtained extensions in respect thereof and filed within the applicable grace period) all reports required to be filed by the Company
after the date hereof pursuant to the Exchange Act and the Company has met the current public information requirements of clause (c) of
Rule 144 as of the end of the period in question, (d) the average daily dollar trading volume of the Common Stock for the twenty
(20) full trading days preceding such date exceeds at least 10% of the aggregate initial principal amounts of this Note and Note Three,
(e) the Common Stock is DWAC Eligible, (f) the issuance price of the Common Stock exceeds both the Amortization Floor Price
and the lowest floor allowed by such Principal Trading Market, (g) the Common Stock does not constitute “penny stock”
under and as defined in the Exchange Act and the corresponding Regulation, and (h) all Conversion Shares are freely tradeable and
registered under the Securities Act for unrestricted resale.
“Amortization
Floor Price
” means a price of $1.00 per share of Common Stock.
“
VWAP
”
means, for or as of any date for any Security, the following:
(i)             the
dollar volume-weighted average price for such Security on the Principal Trading Market for such Security during the period beginning
at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “VWAP” function;
or
(ii)            if
Bloomberg does not report such a price, the dollar volume-weighted average price of such Security in the over-the-counter market on the
electronic bulletin board for such Security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New
York time, as reported by Bloomberg; or
(iii)           if
no dollar volume-weighted average price is reported for such Security by Bloomberg for such hours, the average of the highest Closing
Bid Price and the lowest Closing Sale Price of any of the market makers for such Security on such date as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC); or
2
(iv)           if
the VWAP cannot be calculated for such Security on such date on any of the foregoing bases, the VWAP of such Security on such date shall
be the fair market value as mutually determined by the Company and the Holder.
“
Closing
Bid Price
” and “
Closing Sale Price
” means, for any Security as of any date:
(a)
the last
closing bid price and last closing trade price, respectively, for such Security on the Principal
Trading Market for such Security, as reported by Bloomberg; or
(b)
if such
Principal Trading Market begins to operate on an extended hours basis and does not designate
the closing bid price or the closing trade price (as the case may be), then the last bid
price or last trade price, respectively, of such Security prior to 4:00:00 p.m., New York
time, as reported by Bloomberg; or
(c)
if such
Security no longer trades on its Principal Trading Market, then the last closing bid price
or last trade price, respectively, of such Security on the principal Trading Market where
such Security is listed or traded as reported by Bloomberg; or
(d)
if such
Security no longer trades on a Trading Market, the last closing bid price or last trade price,
respectively, of such Security in the over-the-counter market on the electronic bulletin
board for such Security as reported by Bloomberg; or
(e)
if no
closing bid price or last trade price, respectively, is reported for such Security by Bloomberg,
the average of the bid prices, or the ask prices, respectively, of any market makers for
such Security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly
Pink Sheets LLC); or
(f)
if the
“Closing Bid Price”
or the
“Closing Sale Price”
cannot
be calculated for a Security on a particular date based on the foregoing, the “
Closing
Bid Price”
and the
“Closing Sale Price”
of such Security on
such date shall be the fair market value as mutually determined by the Company and the Holder;
or
(g)
if the
Company and the Holder are unable to agree upon the fair market value of such Security, then
such dispute shall be resolved, and such fair market value (and therefore the
“Closing
Bid Price”
and
“Closing Sale Price”
) shall be determined, in
accordance with the procedures set forth in
Section 6(d).
All
such determinations shall be appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other
similar transactions during such period.
b)
Mandatory
Prepayments
. On the next business day following any Company Party or any Subsidiary of any Company Party consummating any public
or private offering or any other issuance of any Capital Stock or any other issuance of any Capital Stock (other than any issuance of
Common Stock to the general public), Stock Equivalents or of any other Securities or Indebtedness (including entering into any Equity
Line of Credit or issuing any Variable-Priced Equity-Linked Instrument) or any other debt or equity financing or capital-raising transaction
of any kind, including, without limitation, any sale or disposition of the Blue Cloud Shares (each a “
Subsequent Offering
”)
on any date other than the Maturity Date, the Company shall, subject to the Holder’s conversion rights set forth herein and following
repayment in full of Note One, pay to the Holder in cash an amount equal to 100% of the net proceeds from the sale or other disposition
of the Blue Cloud Shares and 33% of the net proceeds of any such other Subsequent Offering to repay the Obligations (a “
Mandatory
Prepayment Amount
”). The Company shall provide notice to the Holder of the closing of such Subsequent Offering, including the
expected net proceeds thereof, not later than the 10
th
day preceding the date of consummation of such Subsequent Offering,
which notice shall be irrevocable and constitute an agreement to pay the Mandatory Prepayment Amount on the date of consummation of such
Subsequent Offering. The Holder may continue to convert the principal amounts to be prepaid under this Note until the date of consummation
of such Subsequent Offering;
provided,
that, if the Company does not provide such notice, in addition to all other remedies provided
under the Transaction Documents for failure to comply with this Note, the Holder may convert the Note in the amount of such payment and,
in its sole discretion, either return such payment or apply such payment to other outstanding Obligations, if any. In the event that
the terms of the Subsequent Offering do not provide for the repayment in cash in full of all outstanding Obligations, the Holder may
choose, in its sole discretion, to adjust the Conversion Price to match the price of the Common Stock issued or implied by such Subsequent
Offering. This
Section 1(b)
is merely a requirement to redeem this Note and not an authorization to consummate any Subsequent
Offering otherwise prohibited by the Transaction Documents.
3
c)
Voluntary
Prepayments
. So long as no Default or Event of Default exists, at any time upon ten (10) business days’ prior written
notice to the Holder (which notice shall be a Transaction Document and constitute an irrevocable agreement to pay such amount on the
date set forth on such notice) stating the proposed date and proposed principal amount of such prepayment, but subject to the Holder’s
conversion rights set forth herein, the Company may prepay any portion of the principal amount of this Note, any accrued and unpaid interest,
and any other amounts due under this Note. If the Company exercises its right to prepay the Note, instead of such principal amount, the
Company shall pay to the Holder in cash an amount equal to the full Optional Prepayment Amount for such principal amount prepaid. The
Holder may continue to convert the principal amount of the Note to be prepaid after the date notice of the prepayment is given until
the date it receives such Optional Prepayment Amount in full in cash.
“Optional
Prepayment Amount”
means, at any time with respect to any principal amount, the sum of (a) one hundred and ten percent
(110%) of such principal amount and all accrued interest hereon outstanding as of such time (including any Minimum Interest Amount
remaining outstanding on such principal amount as of such time) and (b) all other amounts, costs, fees (including all Late Fees
and Late Delivery Fees), expenses, indemnification and liquidated and other damages and other amounts due to the Holder or any other
Purchaser Party in respect of this Note or any other Transaction Document.
d)
Interest
.
The Company shall pay interest to the Holder on the aggregate then-outstanding principal amount of this Note (and the then-outstanding
principal amount of any other Obligation owing that does not expressly provide for any other rate of interest, including any Obligation
to deliver Securities), which shall accrue daily at the rate of twelve and one half percent (12.5%) per annum from the date this Note
is issued (or in the case of any other Obligation, from the date such obligation becomes due and payable) through the date such principal
amount or other Obligation is paid in full;
provided
, that the Minimum Interest Amount shall be fully earned and accrued on the
Original Issue Date. Accrued interest shall replace and not add to the Minimum Interest Amount and all payments of such accrued interest
shall cause a corresponding reduction in any remaining Minimum Interest Amount. Accrued and unpaid interest shall be due and payable
on the first day of each calendar month, on each Conversion Date and on the Maturity Date, and as otherwise set forth herein. Any interest
accrued and unpaid on any principal amount, and any remaining Minimum Interest Amount on such principal amount, shall be due and payable
upon any repayment of such principal amount under this Note;
provided
, that, if such principal repayment is a regularly scheduled
Amortization Payment set forth on
Schedule 2
, any remaining Minimum Interest Amount shall be due and be payable (until such remaining
Minimum Interest Amount shall be fully paid) in the amounts and on the dates on which accrued interest would have been due if such Amortization
Payments had not been made and interest had accrued on such principal. Subject to satisfaction (or due waiver by the Holder) of the Equity
Payment Conditions on the date of such payment, interest (including any remaining Minimum Interest Amount) may be paid in Common Stock
in the Company’s discretion at the Amortization Price. Upon an Event of Default, the interest rate set forth hereunder shall increase
as provided in
clause (e) below
. The Minimum Interest Amount is intended to compensate the Holder for a lesser profit in
case of early repayment and for the internal and external work and expenditure of time and money involved in the evaluation and preparation
of the Transaction Documents and the consummation of the transactions contemplated thereunder. The Minimum Interest Amount is not to
be construed to cover or be applied against any indemnity or any out-of-pocket fees, costs or expenses incurred in any action to collect
any Obligation or to foreclose any Lien securing the same. This provision shall not affect or limit the Holder’s rights or remedies
with respect to any Event of Default.
“Minimum
Interest Amount
” means 12.5% of the initial principal amount of this Note, which represents a full year of interest payments
hereunder;
provided
, that such amount shall be reduced by the amount of interest accrued hereunder on the principal amount of
this Note.
e)
Default
Rate
. Immediately on and after the occurrence of any Event of Default, without need for notice or demand all of which are waived,
interest on this Note shall, in whole, automatically and without the need for any notice, demand or any other action by the Holder all
of which are hereby waived, accrue and be owed daily at an increased interest rate equal to the lower of twenty-four percent (24%) per
annum or the maximum rate permitted under applicable Regulations (the
“Default Rate
”). If an Event of Default (after
giving effect to notice periods and grace periods) occurs, the Default Rate shall become effective as of the date the Default that because
such Event of Default first occurred, without consideration for any notice provision or grace period.
4
f)
Late
Fee
. The Company shall pay a late fee (each a “
Late Fee
”) on any Obligation, including any Obligation to deliver
any Security, that is not paid when due, in an amount equal to ten percent (10%) of such Obligation (which, in the case an Obligation
to deliver a Security, shall be payable in Securities of the same type), to the person owed such Obligation. This Late Fee shall be due
and payable immediately upon such failure. It is intended to cover the inconvenience and additional internal, administrative and other
fees, costs and expenses involved in processing delinquent payments and is not to be construed to cover or be applied against any indemnity
or any out-of-pocket fees, costs or expenses incurred in any action to collect any Obligation or to foreclose any Lien securing the same.
This provision shall not affect or limit the Holder’s rights or remedies with respect to any Event of Default. This obligation
to pay a Late Fee is a separate obligation and, once it has arisen hereunder, a failure to pay such Late Fee will not be cured implicitly
by any waiver of any Event of Default or similar event that may have caused the payment that gave rise to such Late Fee.
g)
Reserved.
. Th
h)
Calculations
and Payment Provisions
. All payments made to the Holder and the other Purchaser Parties under any Transaction Document, except as
otherwise expressly provided in any Transaction Document, shall be made in cash, which shall mean in immediately available dollars and
without set off or counterclaim. Interest and fees owing to any of them shall be calculated on the basis of a 360-day year consisting
of twelve thirty (30)-day periods, for the actual number of days occurring, in whole or in part, in the applicable period. The Holder
shall have the option to refuse or accept, in their sole discretion, any payment to the Holder or any other Purchaser Party attempted
to be made without a required notice, without a required Optional Prepayment Amount, a Minimum Interest Amount or a required fee. The
Holder may, in its sole discretion, apply or recharacterize any payment made under any Transaction Document to the payment of any outstanding
Obligation, regardless of the intended characterization thereof by any Company Party, including by recharacterizing a payment of principal
as a payment of an Optional Prepayment Amount, a Minimum Interest Amount or a required fee, even if this characterization results in
a smaller payment of principal. The Company hereby irrevocably waives the right to direct the application of any payment (or, after any
Event of Default, any proceeds of Collateral) to any Obligation. Whenever any payment under any Transaction Document shall be stated
to be due on a day other than a business day, such payment shall be due on the next succeeding business day, including for purposes of
the calculation of interest and fees. Any payment of any Obligation to the Holder or any other Purchaser Party, and any delivery of any
Security under any Transaction Document to the Holder or any other Purchaser Party, received after 3 p.m. on any day shall be deemed
received (i) on the next business day, in the case of any such payment and (ii) on the next trading day, in the case of any
such delivery. Each determination by the Holder of an amount of interest or fee due hereunder shall be conclusive and binding for all
purposes, absent manifest error.
Section 2.          Conversion
a)
Voluntary
Conversion
. At any time after the Original Issue Date, all Obligations with respect to this Note shall be convertible, in whole or
in part, into shares of Common Stock at the option of the Holder, in its sole discretion, at any time and from time to time (subject
to the conversion limitations set forth in
Section 2(d) (Beneficial Ownership Limitation)
. The Holder shall effect conversions
by delivering to the Company a conversion notice, the form of which is attached hereto as
Annex A
(each, a “
Conversion
Notice
”), specifying therein the amount of such Obligations to be converted and the date on which such conversion must be effected
(such date, the “
Conversion Date
”). If no Conversion Date is specified in a Conversion Notice, the Conversion Date
shall be the date that such Conversion Notice is deemed delivered hereunder. The form Conversion Notice attached hereto as
Annex A
sets forth the totality of the procedures required of the Holder in order to convert this Note. Without limiting the foregoing, no
ink-original Conversion Notice shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any
Conversion Notice form be required in order to convert this Note. No additional document (including legal opinion), other information
or instructions shall be required of the Holder to convert the Note. The Company shall honor conversions of the Note and shall deliver
the Common Stock on the Conversion Date in accordance with the terms, conditions and time periods set forth in this Note and the other
Transaction Documents. To effect conversions hereunder, the Holder shall not be required to physically surrender this Note to the Company
unless the entire principal amount of this Note, plus all accrued and unpaid interest thereon, has been converted. Conversions hereunder
shall have the effect of lowering the outstanding principal amount of this Note by an amount equal to the applicable conversion. The
Holder and the Company shall maintain a conversion schedule in the form, and containing at a minimum the information shown on,
Schedule
1,
and showing historically, among other things, the principal amounts converted and the date of such conversions. The Company may
deliver an objection to any Conversion Notice within one (1) business day of delivery of such Conversion Notice. In the event of
any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error.
5
b)
Conversion
Price
. The conversion price in effect on any Conversion Date shall be equal to the lowest of (i) $4.10 (ii) if the applicable
Conversion Notice was delivered during the continuation of a Default or Event of Default, 95% of the lowest VWAP of the Common Stock
during the period lasting five (5) consecutive trading days and ending on, and including, the trading day immediately preceding
the date of such delivery (the “
Conversion Price
”). The price set forth in
clause (i)
of the definition
of
“Conversion Price”
, along with the resulting price set forth in
clause (i)
of the definition of
“Amortization
Price”
, will be proportionately adjusted for any stock dividend, stock split, stock combination, reclassification or similar
transaction that decreases or increases the number of shares of Common Stock issued to ensure that, in the case of the Conversion Price,
the percentage of shares of Common Stock received by the Holder upon full conversion at the Conversion Price and, in each case, that
the percentage of the value of the Company allocated to such Common Stock, both remain unchanged by any such transaction. Any reference
herein to an adjustment of the Conversion Price or the Amortization Floor Price shall mean an adjustment to such clauses. Upon such adjustment,
the Conversion Price and the Amortization Floor Price shall be rounded down to the nearest $0.01.
c)
Mechanics
of Conversion
.
i.
Conversion
Shares Issuable Upon Conversion of Principal Amount
. The number of Conversion Shares issuable upon a conversion hereunder shall be
determined by the quotient obtained by dividing (x) the Obligations to be converted by (y) the Conversion Price.
ii.
Delivery
of Certificate Upon Conversion
. Not later than one (1) trading day after each Conversion Date (the “
Share Delivery
Deadline
”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing the
Conversion Shares which, on or after the date on which such Conversion Shares are eligible to be sold under Rule 144 without the
need for current public information and the Company has received an opinion of counsel to such effect, which such opinion must be acceptable
to the Holder in its sole and absolute discretion (which opinion the Company shall be responsible for obtaining at its sole cost and
expense) shall be free of restrictive legends and trading restrictions, representing the number of Conversion Shares being acquired upon
the conversion of this Note. If requested by the Holder in its sole discretion, the Company shall pay any available rush or expedited
delivery fee to ensure faster processing or faster delivery of any such certificate. Each certificate required to be delivered by the
Company under this
Section 2(c)
shall be delivered electronically through DTC or another established clearing corporation
performing similar functions. If the Conversion Date is prior to the date on which such Conversion Shares are eligible to be sold under
Rule 144 without the need for current public information, or there is no registration statement in effect covering the Conversion
Shares, the Conversion Shares shall bear a restrictive legend in the following form, as appropriate:
“THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES REGULATIONS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN
OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
6
Notwithstanding
the foregoing, commencing on such date that the Conversion Shares are eligible for sale under Rule 144 subject to current public
information requirements, the Company, upon request by the Holder and at the sole cost and expense of the Company, shall obtain a legal
opinion that is acceptable to the Holder in its sole and absolute discretion, to allow for such sales under Rule 144.
iii.
Reservation
of Conversion Shares
. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued
shares of Common Stock a number of shares at least equal the Reserve Amount for the sole purpose of issuance of Issuable Securities to
the Holder under and as provided in the Transaction Documents, free from preemptive rights or any other actual contingent purchase rights
of persons other than such Holder and such other holders. The Company covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable. The Company shall calculate and readjust the Reserve
Amount on the first business day of each month so long as any Purchased Security remains outstanding.
iv.
Fractional
Shares
. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As to any
fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its election,
either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price
or round up to the next whole share.
v.
Transfer
Taxes and Expenses
. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without
charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such
certificates,
provided,
that, the Company shall not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note so
converted and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting
the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of any Conversion Notice.
vi.
Failure
to Deliver Certificates
. If, in the case of any Conversion Notice, such certificate or certificates are not delivered to or as directed
by the applicable Holder by the Share Delivery Deadline, the Holder shall be entitled to elect by written notice to the Company at any
time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event the Company shall promptly
return to the Holder any original Note delivered to the Company and the Holder shall promptly return to the Company the Common Stock
certificates issued to the Holder pursuant to the rescinded Conversion Notice.
vii.
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, the existence of any Default or Event of Default, 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 Regulations 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
, 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 or interest amount 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 Regulation,
Contractual Obligation 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. If the injunction is not granted, the Company shall promptly comply with
all conversion obligations herein. If the injunction is obtained, the Company must post a surety bond for the benefit of the Holder in
the amount of one hundred fifty percent (150%) of the outstanding principal amount of this Note, which is subject to the injunction,
which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which
shall be payable to the Holder to the extent it obtains judgment. In the absence of seeking such injunction, the Company shall issue
Conversion Shares (or, where applicable and required hereunder, cash), upon a properly noticed conversion.
7
viii.
Compensation
For Late Delivery.
If the Company fails for any reason to deliver to the Holder such certificate or certificates pursuant to
Section 2(c)(ii)
by
the Share Delivery Deadline, the Company shall pay to the Holder, in cash, as partial damages and not as a penalty, a late delivery fee
(each a
“Late Delivery Fee”)
in an amount equal to $1,000 per trading day for each trading day after such Share Delivery
Deadline until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall limit the Holder’s right
to pursue, in addition to and not in substitution for, actual damages or declare an Event of Default for the Company’s failure
to deliver Conversion Shares within the period specified herein; and the Holder shall have the right to pursue all additional remedies
available to it hereunder, at law or in equity including a decree of specific performance and/or injunctive relief. The exercise of any
such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable
Regulation.
ix.
Buy-In,
Rescission or Late Delivery
. In addition to any other rights available to the Holder, if the Company fails for any reason to deliver
to the Holder a number of shares of Common Stock (or a certificate thereof) by the deadline set forth in, and while strictly complying
with, the terms of this Note and the other Transaction Documents, the Holder may choose, in its sole discretion, on or after such deadline,
in addition to any other available remedy, to do any of the following (or any combination thereof), each of which will, if applicable,
void any related Conversion Notice to the extent thereof: (A) cancel such conversion and retain the unconverted Obligations, (B) purchase,
whether in an open market transaction or otherwise, whether directly or through a broker or other agent (a
“Buy-In”
),
a number of shares of Common Stock not to exceed the number of shares subject to such delivery failure, and, within three (3) business
days after receipt of such Holder’s request therefor and in such Holder’s discretion, the Company shall repay the Obligations
that would, in the absence of such failure to deliver such shares of Common Stock, have been repaid by paying to the Holder in cash an
amount equal to the Holder’s total gross purchase price (including brokerage commissions, fees and other costs, fees and expenses,
if any) for such shares of Common Stock so purchased; (C) accept from the Company late delivery of shares of Common Stock after
such deadline (
provided,
that such acceptance shall not waive any right of the Holder, to damages or otherwise, caused by such
delay); or (D) require that the Company repay in cash all or some of the Obligations that would have been repaid in the absence
of such failure to deliver such shares of Common Stock, in an amount equal to (x) the number of shares of Common Stock that would
have been delivered to the Holder in the absence of such failure times (y) a price per share equal to the Closing Sale Price of
Common Stock on such deadline (or if such deadline is not a trading day, the trading day immediately preceding such day);
provided
,
that, in each case, the voiding of such Conversion Notice shall not affect the Company’s obligations to make any payments which
have accrued prior to the date of such notice pursuant to the terms of this Note or the other Transaction Documents. Nothing herein shall
limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including a decree of specific
performance or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common
Stock on such deadline as required pursuant to the terms of this Note and the other Transaction Documents.
x.
No
Limitation on Damages.
More generally, nothing in this
Section 2,
including the availability of the option to convert
the Note, shall limit the Holder’s right to pursue actual damages or declare an Event of Default pursuant to
Section 5
and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including a decree of specific
performance and/or injunctive relief. The exercise of any rights under this
Section 2
shall not prohibit the Holder from
seeking to enforce damages pursuant to any other Section hereof or under applicable Regulation.
8
d)
Beneficial
Ownership Limitation
. Anything else in the Transaction Documents notwithstanding, the Company shall not at any time effect any conversion
of principal or interest of this Note, and the Holder shall not have the right to convert at any time any principal or interest of this
Note, to the extent, and only to the extent, that after giving effect to the conversion set forth on the applicable Conversion Notice,
the Holder, together with the Holder’s Affiliates and any persons acting as a group together with the Holder or any of the Holder’s
Affiliates (collectively, the “
Attribution Parties
”), would beneficially own Common Stock in excess of 9.99% of the
number of shares of the Common Stock outstanding (as the same may be increased on decreased in accordance with this
Section 2(d)
,
the
“Beneficial Ownership Limitation”
);
provided,
that the Holder may, with prior notice to the Company, decrease
such percentage and, if such percentage was previously decreased, the Holder may, upon not less than sixty-one (61) days’ prior
notice to the Company and effective at the end of such 61-day period, increase such percentage up to, and in any case not exceeding,
9.99%. When calculating the Beneficial Ownership Limitation, the number of shares of Common Stock beneficially owned by the Holder and
its Attribution Parties shall include the number of Conversion Shares issuable upon conversion of this Note with respect to which such
determination is being made, but shall exclude the number of shares of Common Stock issuable upon (i) conversion of the remaining,
unconverted principal amount of this Note beneficially owned by the Holder or any of its Attribution Parties and (ii) exercise or
conversion of the unexercised or unconverted portion of any other Securities of the Company subject to a limitation on conversion or
exercise analogous to the limitation contained herein (including any other Purchased Securities and any other warrants and other convertible
or exchangeable and similar Securities) and beneficially owned by the Holder or any of its Attribution Parties. No prior determination
pursuant to this
Section 2(d)
shall have any effect on the applicability of the provisions of this
Section 2(d)
with
respect to any subsequent determination. Except as set forth above, for purposes of this
Section 2(d)
, beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
To the extent that the limitation contained in this
Section 2(d)
applies, the determination of whether this Note is
convertible (in relation to other Securities owned by the Holder together with any Attribution Parties) and of which principal amount
of this Note is convertible shall be in the sole discretion of the Holder. For purposes of this
Section 2(d)
, in determining
the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in
the most recent of the following: (i) the Company’s most recent periodic or annual report filed with the SEC, as the case
may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written notice by the Company or the
Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the
Holder, the Company shall promptly (and in any event within one (1) trading day) confirm in writing to the Holder the number of
shares of Common Stock then outstanding. Irrespective of such reliance, the Holder shall in its calculation give effect to the conversion
or exercise of Securities of the Company, including this Note, by the Holder or its Attribution Parties since the date as of which such
number of outstanding shares of Common Stock was reported. The provisions of this
Section 2(d)
shall not be strictly
interpreted in accordance with its terms as maybe necessary to correct any portion of this
Section 2(d)
that may be
defective or inconsistent with the intended beneficial ownership limitations contained herein as they relate to applicable Regulations
of the SEC or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained
in this
Section 2(d)
shall apply to a successor Holder of this Note.
e)
Conversion
Into Series C Preferred Stock
. Upon the occurrence of the Listing Event and provided that no Event of Default shall have occurred,
this Note shall automatically convert into shares of Series C Preferred Stock (as defined below). The number of shares of Series C
Preferred Stock to be issued shall be determined by
dividing
(a) the principal amount and all accrued interest hereon outstanding
as of such time (including any Minimum Interest Amount remaining outstanding on such principal amount as of such time) owing on this
Note and (b) all other amounts, costs, fees (including all Late Fees andLate Delivery Fees), expenses, indemnification and liquidated
and other damages and other amounts due to the Holder or any other Purchaser Party in respect of this Note or any other Transaction Document
by
the stated value of a share of Series C Preferred Stock. Upon such conversion, the Company shall, within five (5) Business
Days following the Listing Event, (i) deliver to the Holder (or its designee) a duly executed stock certificate or book-entry statement
evidencing the shares of Series C Preferred Stock issuable upon such conversion, registered in the name of the Holder or its nominee,
(ii) cause such shares of Series C Preferred Stock to be duly authorized, validly issued, fully paid and non-assessable, free
and clear of all liens, encumbrances and preemptive rights, (iii) reserve and at all times keep available out of its authorized
but unissued capital stock a sufficient number of shares to effect the conversion contemplated by this Section 2(f), and (iv) if
applicable, deliver to the Holder a check or wire transfer in immediately available funds representing any fractional share amounts resulting
from such conversion in lieu of issuing fractional shares. This Note shall be deemed converted immediately prior to the close of business
on the date of the Listing Event, and the Holder shall be treated for all purposes as the record holder of such shares of Series C
Preferred Stock as of such date, regardless of the date of delivery of the certificates or book-entry statements evidencing the same.
“
Series C
Preferred Stock
” means the Company’s Series C Convertible Preferred Stock, having the rights, preferences, powers,
qualifications, limitations and restrictions set forth in that certain Certificate of Designation and Preferences relating thereto to
be filed with the Secretary of State of the State of Nevada in accordance with the Purchase Agreement. .
9
Section 3.          Registration
of Transfers and Exchanges
a)
Different
Denominations.
This Note is exchangeable for new notes of different denominations having, in the aggregate, the same principal amount
and otherwise the same terms, as may be requested by the Holder surrendering the same. No service charge or other amount will be payable
for such registration of transfer or exchange.
b)
Investment
Representations.
This Note has been issued subject to certain investment representations of the original Holder and may be transferred
or exchanged only in compliance with applicable federal and state securities Regulations.
c)
Reliance
on Note Register.
The Company shall maintain in its records a list of the Holders and of registration and transfers of the Note (the
“
Note Register
”). The initial Holder is listed herein. Any Holder may later notify in writing the Company of an assignment
or transfer and the Company shall notify such transfer in the Note Register. Failure by the Company to duly notify such transfer in the
Note Register shall not affect the validity of such assignment or transfer. Nevertheless, if the Company has not received notice of any
transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered as the
owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue.
Upon request by the Holder, the Company shall immediately execute and deliver to such Holder replacement Note or Notes, which may involve
executing multiple Notes with split amounts to reflect partial assignments. Promptly upon receipt of such replacement Note or Notes,
such Holder shall deliver the original Note back to the Company or, if the original Note is lost or stolen, provide an affidavit to the
Company to that effect.
Section 4.          RESTRICTED
PAYMENT/EVENTS REQUIRING Adjustments
a)
Restricted
Payments
. While this Note is outstanding, the Company shall not declare or make any Restricted Payment (or rights to receive Restricted
Payments). In the event that the Note is repaid at the time of such Restricted Payment, the Holder shall not be entitled to participate
in such Restricted Payment. If the Holder and the Company mutually agree, and the Note is not repaid at the time of such Restricted Payment,
then the Holder shall be entitled to participate in such Restricted Payment to the same extent that the Holder would have participated
therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Note (without regard to
any limitations on exercise hereof, including the Beneficial Ownership Limitation) immediately before the date of which a record is taken
for such Restricted Payment, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to
be determined for the participation in such Restricted Payment (
provided
, that to the extent that the Holder's right to participate
in any such Restricted Payment would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be
entitled to participate in such Restricted Payment to such extent (or in the beneficial ownership of any shares of Common Stock as a
result of such Restricted Payment to such extent) and the portion of such Restricted Payment 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).
b)
Stock
Dividends and Stock Splits
. If the Company, at any time while any Obligation is outstanding: (i) pays a stock dividend or otherwise
makes a Restricted Payment payable in shares of Common Stock on shares of Common Stock or any Stock Equivalents (which, for avoidance
of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, or payment of interest on, this Note),
(ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse
stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification
of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock (excluding any shares held by the Company or any of its Subsidiaries)
outstanding immediately after such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately
before such event. Any adjustment made pursuant to this
Section 4(b)
shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination or re-classification.
10
c)
Change
in Other Common Stock Equivalents
. If the purchase or exercise price provided for in any Common Stock Equivalents, the additional
consideration, if any, payable pursuant to any Common Stock Equivalents with respect to shares of Common Stock, or the rate at which
Common Stock may be acquired pursuant to any Common Stock Equivalents changes at any time (other than any change to this Note or any
other Purchased Securities), the Conversion Price and the Amortization Floor Price in effect at the time of such increase or decrease
shall be adjusted to account proportionately, for such change. For purposes of this
Section 4(c)
, if the terms of any Common
Stock Equivalents are changed in the manner described in the immediately preceding sentence, then such Common Stock Equivalents and the
shares of Common Stock deemed issuable thereunder shall be deemed to have been issued as of the date of such change. No adjustment pursuant
to this
Section 4(c)
shall be made to the Conversion Price or the Amortization Floor Price if such adjustment would
result in an increase to the Conversion Price or, as the case may be, the Amortization Floor Price then in effect.
d)
Dilutive
Issuances
. If any Company Party or any Subsidiary thereof, at any time while any Obligation is outstanding or the Holder has not
yet received any Conversion Shares in connection with a conversion or is otherwise entitled to receive and has not yet received Common
Stock under any Transaction Document, shall conduct a Subsequent Offering of Common Stock or otherwise offer, issue, Sell or offer or
Sell any option to purchase, or sell or any right to reprice, any shares of Common Stock or any Common Stock Equivalents (or announce
any such offer, Sale or issue), in each case other than as part of an Exempt Issuance, at an effective price per share that, after giving
effect to any other adjustment provided in this Note, is less than the Conversion Price or the Amortization Floor Price then in effect
(such lower price, the
“Base Share Price”
and such issuances collectively, a
“Dilutive Issuance”
)
then, simultaneously with the consummation of each Dilutive Issuance the Conversion Price (or, as the case may be, the Amortization Floor
Price) shall be reduced (and only reduced) to equal the lower of (i) the Base Share Price and (ii) the lowest VWAP of the Common
Stock in the five (5) days immediately following such Dilutive Issuance. Such adjustment shall be made whenever such shares of Common
Stock or Stock Equivalents are issued. For the avoidance of doubt, it is understood and agreed that (i) if a holder of the shares
of Common Stock or Stock Equivalents so issued shall, at any time after the issuance, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which
are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is less
than the Conversion Price or the Amortization Floor Price, such issuance shall be deemed to have occurred for less than the Conversion
Price or the Amortization Floor Price on such date of the Dilutive Issuance at such effective price. Such adjustment shall be made whenever
such shares of Common Stock or Stock Equivalents are issued and (ii) if such transaction shall be a Variable Rate Transaction, it
shall be deemed to have been entered into at the lowest possible conversion or exercise price therefor. The Company shall notify the
Holder, in writing, no later than the trading day following the public disclosure of the issuance or deemed issuance of any shares of
Common Stock or Stock Equivalents subject to this
Section 4(d)
, indicating therein the applicable issuance price, or applicable
reset price, exchange price, conversion price and other pricing terms (such notice, the
“Dilutive Issuance Notice”
).
For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this
Section 4(d)
,
upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Conversion Shares based upon the Base Share
Price regardless of whether the Holder accurately refers to the Base Share Price in the Conversion Notice.
11
e)
Fundamental
Transactions
. Upon the occurrence of any Fundamental Transaction, the Holder, upon any subsequent conversion of this Note, shall
have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence
of such Fundamental Transaction (without regard to any limitation in
Section 2(d)
or
Section 2(e)
on
the conversion of this Note), any consideration receivable as a result of such Fundamental Transaction by a holder of the number of shares
of Common Stock for which this Note is convertible (or holder of any equity Securities of any Company Party) immediately prior to such
Fundamental Transaction (without regard to any limitation in
Section 2(d)
or
Section 2(e)
on the conversion
of this Note) (the “
Alternate Consideration
”), including shares of Common Stock of any successor or acquiring corporation
or of the Company, in the case of a merger where it is the surviving entity. To the extent such Alternate Consideration includes Securities,
the Holder shall have the option to either treat the Note as converted on the date of consummation of such Fundamental Transaction and
obtain such Securities outright or adjust the Conversion Shares to include such additional Securities. For purposes of any such conversion,
the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount
of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company Parties
shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. In a Fundamental Transaction where holders of Common Stock (or, as the case may be, Securities
of any Company Party) are given any choice as to the Alternate Consideration to be received in a Fundamental Transaction, then the Holder
shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental
Transaction. The Company shall cause any acquiring, successor, surviving or replacement entities in any Fundamental Transaction (the
“
Successor Entity
”) to become a Company Party effective immediately upon the consummation of such Fundamental Transaction
and shall become a party to all Transaction Documents in the same capacity and to the same extent as the Company Party involved in such
Fundamental Transaction and, if such Fundamental Transaction involves the Company, from and after the date of such Fundamental Transaction,
the provisions of this Note and the other Transaction Documents referring to the “Company” shall, without any further action,
refer instead to the Successor Entity or to both Companies, as appropriate. In the case of a Fundamental Transaction resulting in the
Company no longer being in existence, the Successor Entity shall succeed to all obligations of the Company and may exercise every right
and power of the Company and shall assume all of the Obligations of the Company with the same effect as if such Successor Entity had
been named as the Company herein. The parties hereto shall (either (x) if the Holder consents to receive, or to the extent possible
without the Holder receiving, material non-public information, prior to the closing of such Fundamental Transaction or (y) otherwise,
within thirty (30) calendar days after such closing) amend all Transaction Documents (or execute new Transaction Documents, including
replacement Notes and an assumption of the Company’s Obligations) to reflect such change;
provided
that the failure to amend
or execute any such Transaction Document shall not render this
clause (e)
ineffective. For the avoidance of doubt, this
clause (e)
is not intended to permit any Fundamental Transaction. If the Holder consents to receive material non-public
information or, if and to the extent possible, without the Holder receiving material non-public information, the Company shall ensure
that the Holder approves all drafts of such amendments and new Transaction Documents prior to the consummation of, and as a condition
to the consummation of, such Fundamental Transaction. Without limitation, if the Fundamental Transaction involves the Company, the definition
of Conversion Shares and Conversion Price hereunder shall be adjusted to include Securities of the Successor Entity and to ensure the
new Notes of the Holder convert into Securities so as to protect the economic value of this Note, taking into account the relative values
of the existing and replacement Conversion Shares, and give the Holder upon conversion of this Note the Conversion Shares equivalent
to the Conversion Shares it would have received upon conversion of this Note prior to such Fundamental Transaction at an equivalent Conversion
Price.
f)
Calculations
.
All calculations under this
Section 4
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 4
, the number of shares of Common Stock deemed to be issued and outstanding as of a given
date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.
g)
Notices
to the Holder
.
i.
Adjustments
to Conversion Price and Amortization Floor Price
. Whenever the Conversion Price or the Amortization Floor Price is adjusted pursuant
to any provision of this
Section 4
, the Company shall ensure that the event requiring such adjustment is publicly disclosed
within the time required by applicable SEC Regulations (and, if no such Regulation applies, before the trading day next following such
event) and, not later than one (1) trading day following such public disclosure, the Company shall deliver to each Holder a notice
setting forth the Conversion Price (or, as the case may be, the Amortization Floor Price) after such adjustment and setting forth a statement
of all of the facts requiring such adjustment and the calculation thereof. Notwithstanding anything in this
Section 4
to
the contrary, no adjustment pursuant to this
Section 4
shall increase the Conversion Price or the Amortization Floor Price
other than proportional increases upon the occurrence of a reverse stock split in accordance with
Section 4(a)
. For the avoidance
of doubt, the Holder will be entitled to each such adjustment on the terms set forth in this Note whether or not the Company provides
such notice, and the calculation set forth in such notice shall not be binding on the Holder.
12
ii.
Notice
to Allow Conversion by Holder
. If (A) the Company shall declare a dividend (or any other distribution or other Restricted Payment
in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of
the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe
for or purchase any shares of Capital Stock of any class or of any rights, (D) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party,
any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other Securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency
maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address as it shall
appear upon the Note Register, after the public disclosure thereof but in any event at least twenty (20) calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the
Common Stock of record to be entitled to such dividend, distribution, Restricted Payment, redemption, rights or warrants are to be determined
or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective
or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares
of the Common Stock for Securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer
or share exchange;
provided,
that the failure to deliver such notice or any defect therein or in the delivery thereof shall not
affect the validity of the corporate action required to be specified in such notice. The Holder shall remain entitled to convert this
Note during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except
as may otherwise be expressly set forth herein.
Section 5.          Events
of Default
a)             “
Event
of Default
” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event
shall be voluntary or involuntary or effected by Regulation or pursuant to any judgment, decree or order of any court, or any order,
rule or Regulation of any Governmental Authority):
i.             any
default in the payment of (A) the principal amount of this Note when due or (B) any interest, fees, liquidated damages or any
other Obligation owing to the Holder or any other Purchaser Party under any Transaction Document, within five (5) business days
after such principal, interest, fee, liquidated damage or other Obligation shall become due and payable, whether on the Maturity Date
or otherwise;
ii.            any
Company Party shall fail for any reason to comply with
Section 1.2 (Deliveries), Article III (Negative Covenants), Section 4.4
(Disclosures)
or
Section 4.6 (Transfer Restrictions)
of the Purchase Agreement or
Section 1(b)
,
Section 1(f)
or
Section 2(c)
(including
Section 2(c)(iii)
) of this Note or any other Section of this Note or any Transaction
Document that provides for an action after a notice period or that provides a specific period of time for the Company Parties to comply
with;
iii.           any
representation or warranty made by any Company Party in this Note, any other Transaction Document, any other Contractual Obligation with,
or any other report, financial statement, document, written statement or certificate made or delivered to, the Holder or any other Holder
Party shall be untrue or incorrect in any material respect as of the date when made or deemed made;
iv.           any
Company Party shall provide at any time notice to the Holder, including by way of public announcement, of such Company Party’s
intention to not honor any provision of this Note or any other Transaction Document (including requests for conversions of this Note
in accordance with the terms hereof);
v.            any
Company Party shall fail to observe or perform any other covenant, provision, or agreement contained in this Note or any other Transaction
Document which failure is not cured, if possible to cure, within the earlier to occur of (A) five (5) trading days after notice
of such failure sent by the Holder or by any other Holder Party to the Company and (B) ten (10) trading days after any Company
Party has become or should have become aware of such failure;
13
vi.           (A) a
breach, default or event of default (without regard for any cure period therefor provided therein) shall have occurred under any Indebtedness
of any Company Party or any Subsidiary of any Company Party having (individually or in the aggregate for all such Indebtedness) an aggregate
maximum principal amount or commitment greater than Two Hundred and Fifty Thousand dollars ($250,000), or (B) any such Indebtedness
shall become or be declared due and payable prior to the date on which it would otherwise become due and payable;
vii.          a
breach, default or event of default (without regard to any grace or cure period provided in the applicable agreement, document or instrument
or any subsequent waiver or other modification thereto) shall have occurred under any other Contractual Obligation to which any Company
Party or any Subsidiary of any Company Party is obligated that, if determined adversely to any Company Party or any Subsidiary of any
Company Party, could reasonably be expected to result in any injunction affecting any Company Party or any Subsidiary of any Company
Party or any Loss to the Company Parties and their Subsidiaries in excess of Two Hundred and Fifty Thousand dollars ($250,000);
viii.         any
monetary judgment, writ or similar final process shall be entered or filed against any Company Party, any Subsidiary of any Company Party
or any of their assets for an injunction or for monetary damages of more than Two Hundred and Fifty Thousand dollars ($250,000), and
such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of forty-five (45) calendar days;
ix.           the
occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any asset of any Company Party or any
Subsidiary of any Company Party having an aggregate fair value or repair cost (as the case may be) in excess of One Hundred and Fifty
Thousand dollars ($250,000) individually or in the aggregate, and any such levy, seizure or attachment shall not be set aside, bonded
or discharged within thirty (30) days after the date thereof;
x.            (A) any
Company Party or any Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) of any Company Party shall commence
a case or other Proceeding under any bankruptcy, reorganization, conservatorship, arrangement, adjustment of debt, relief of debtors,
assignment for the benefit of creditors, moratorium, dissolution, insolvency, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of debts or liquidation or similar Regulation of any jurisdiction relating to the Company or any such Subsidiary
or any Proceeding seeking the entry of an order for relief or the appointment of a custodian, receiver, receiver and manager, trustee,
liquidator or other similar official for it or for any of its assets, (B) any such case or other Proceeding shall be commenced against
any Company Party or any such Subsidiary by any other person and such case or other Proceeding is not dismissed within forty-five (45)
days after commencement, (C) any Company Party or any such Subsidiary shall be adjudicated insolvent or bankrupt or any order of
relief or other order approving any such case or other Proceeding is entered, (D) any Company Party or any such Subsidiary shall
generally not pay its debts as such debts become due, shall admit in writing its inability to pay its debts as they mature or shall make
a general assignment for the benefit of creditors, (E) any Company Party or any such Subsidiary thereof shall call a meeting of
its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (F) any Company Party or any such
Subsidiary, by any act or failure to act, shall expressly indicate its consent to, approval of or acquiescence in any of the foregoing
or takes any corporate or other action (including convening a meeting of the board) to authorize or otherwise for the purpose of effecting
any of the foregoing;
14
xi.           the
occurrence of any Change of Control;
“
Change
of Control
” means the occurrence of any of the following: (1) any person or group of persons (within the meaning of the
Exchange Act) shall have acquired legal or beneficial ownership (within the meaning of Rule 13d-3 of the SEC under the Exchange
Act) of (x) 50% prior to any initial public offering of the Common Stock and (y) 20% thereafter or more of the issued and outstanding
Voting Stock of any Company Party (whether on an as converted, fully diluted basis or without taking into account any potential conversion
or dilution of Stock Equivalents), other than by acquiring such Common Stock directly in an offering made to the general public, (2) during
any period of twelve consecutive calendar months, individuals who, at the beginning of such period, constituted the board of directors
of the Company (together with any new directors whose election by the board of directors of the Company or whose nomination for election
by the stockholders of the Company was approved by a vote of at least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose elections or nomination for election was previously so approved) cease for any reason
other than death or disability to constitute a majority of the directors then in office or (3) the Company shall cease to own and
control all of the economic and voting rights associated with all of the outstanding Capital Stock of the other Company Parties.
xii.           (A) the
Common Stock shall become “penny stock” as defined in Regulations for purposes of 3(a)(51) of the Exchange Act, (B) there
shall be no Trading Market for the Common Stock and the Common Stock shall not be eligible for listing or quotation for trading thereon
and shall not be eligible to resume listing or quotation for trading thereon within five (5) trading days or (C) the transfer
of shares of Common Stock through the DTC system shall become no longer available or shall be “chilled”;
xiii.         the
Company shall not meet the current public information requirements under Rule 144, and such failure is not cured, if it is possible
to cure it, within two (2) trading days
after the expiration of the applicable grace period
permitted under Rule 12b-25 of the Exchange Act
; or
xiv.         the
Company shall fail to deliver Common Stock by the Share Delivery Deadline upon conversion of any portion of this Note.
The clauses in
the definition of
“Event of Default”
above operate independently, so that any action or event that falls within any
such clause shall constitute an Event of Default regardless of, whether because of a grace period or threshold or otherwise, it falls
outside the language of any other clause.
“Default”
means any event which, with the passing of time or the giving of notice or both, would become an Event of Default.
b)
Remedies
Upon Event of Default
. If any Event of Default occurs, then the outstanding principal amount of this Note and all other Obligations
shall become, at the Holder’s election in its sole discretion, in whole or in part (or, in the case of an Event of Default described
in
Section 5(a)(x)
(A) through (C), in whole, automatically and without the need for any notice, demand or any other
action by the Holder all of which are hereby waived), immediately due and payable, in cash (while remaining subject to the Holder’s
conversion option). In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives,
any presentment, demand, protest or other notice of any kind (other than the Holder’s election to declare such acceleration), and
the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all
other remedies available to it under applicable Regulations. Such acceleration may be rescinded and annulled by Holder at any time prior
to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full
payment pursuant to this
Section 5(b)
. No such rescission or annulment shall affect any subsequent Default or Event of Default
or impair any right consequent thereon.
“
Obligations
”
means all amounts, indebtedness, obligations, liabilities, covenants and duties of every type and description owing by any Company Party
from time to time to the Holder or any other Purchaser Party under this Note or any other Transaction Document, whether direct or indirect,
joint or several, absolute or contingent, due or to become due, liquidated or unliquidated, secured or unsecured, now existing or hereafter
arising and however acquired (regardless of whether acquired by assignment), whether or not evidenced by any note or other instrument
or for the payment of money, including, without duplication, (i) the principal amount of the Note owing by the Company or any other
Company Party (including any Mandatory Prepayment Amount, any Optional Prepayment Amount and any Minimum Interest Amount owing hereunder),
(ii) all other amounts, fees (including all Late Fees and Late Delivery Fees), interest (including the Minimum Interest Amount and
interest accruing at the Default Rate), liquidated damages, commissions, charges, costs, expenses, attorneys’ fees and disbursements,
indemnities (including Losses and other amounts for which any Company Party is required to indemnify the Holder, or any other Purchaser
Party under the Purchase Agreement), reimbursement of amounts paid and other sums chargeable to any Company Party under any Transaction
Document or otherwise arising under any Transaction Document and (iii) all interest on any item otherwise qualifying as “Obligation”
hereunder, whether or not accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization
or similar proceeding, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding.
15
Section 6.          Miscellaneous
a)
Notices
.
Any and all notices or other communications or deliveries to be provided hereunder, including any Conversion Notice, shall be in writing
and delivered as set forth in
Section 5.4 (Notices)
of the Purchase Agreement. All notices and other communications delivered
hereunder shall be effective as provided in the Purchase Agreement.
b)
Absolute
Obligation
. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Note, without
set off or counterclaim, at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation
of the Company. This Note ranks at least
pari passu
with all Indebtedness and other obligations of the Company, and is not subordinated
to any such Indebtedness or other obligation.
c)
Lost
or Mutilated Note
. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange
and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note,
a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss,
theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.
d)
Dispute
Resolution
.
i.             In
the case of a dispute between the Company Parties and the Holder relating to or in connection with - or, when an agreement between any
Company Party and the Holder is required hereunder, an inability to agree on - a Conversion Price, an Amortization Floor Price, a Closing
Bid Price, a Closing Sale Price, a VWAP or a fair market value (as the case may be) (including a dispute relating to the determination
of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute to the other party, by notice delivered
as provided in
Section 6(a),
(A) if by the Company, within two (2) trading days after the occurrence of the circumstances
giving rise to such dispute or (B) if by the Holder, at any time after the Holder learned of the circumstances giving rise to such
dispute. If the Holder and the Company are unable to promptly resolve such dispute on or prior to the second (2
nd
) trading
day following such initial notice of such dispute, then, at any time thereafter, the Holder may, at its sole option, select an independent,
reputable investment bank to resolve such dispute.
ii.            The
Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in accordance
with
clause (d)
and (B) written documentation (together with such copy of such submission, the
“Required Dispute
Documentation
”) supporting its position with respect to such dispute, in each case, no later than 5:00 p.m. (New York
time) by the fifth (5
th
) trading day immediately following the date on which such investment bank is selected hereunder (the
“
Dispute Submission Deadline
”). If either party fails to deliver all of the Required Dispute Documentation by the
Dispute Submission Deadline, then such party shall no longer be entitled to (and hereby waives its right to) deliver or submit any document
or other supporting evidence to such investment bank with respect to such dispute and such investment bank shall resolve such dispute
based solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline.
Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither the
Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment bank in connection
with such dispute other than the Required Dispute Documentation.
16
iii.           The
Company and the Holder shall ensure that such investment bank determines the resolution of such dispute and notifies the Company and
the Holder of such resolution no later than ten (10) trading days immediately following the Dispute Submission Deadline. The costs,
fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute
shall be final and binding upon all parties absent manifest error.
iv.           The
Company Parties expressly acknowledge and agree that (A) this
clause (d)
constitutes an agreement to arbitrate between
the Company Parties and the Holder (and constitutes an arbitration agreement) and that the Holder is authorized to apply for an order
to compel arbitration in order to compel compliance with this
clause (d)
, (B) the terms of this Note and each other applicable
Transaction Document shall serve as the basis for the selected investment bank’s resolution of any dispute resolved under this
clause (d)
, such investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations and
the like that such investment bank determines are required to be made by such investment bank in connection with its resolution of such
dispute and in resolving such dispute such investment bank shall apply such findings, determinations and the like to the terms of this
Note and any other applicable Transaction Documents, (C) as described in
Section 6(e) (Governing Law; Courts
),
the Holder (and only the Holder), in its sole discretion, shall have the right to submit any dispute described in this
clause (d)
to
any state or federal court and other Governmental Authorities in lieu of utilizing the procedures set forth in this
clause (d)
and
(D) nothing in this
clause (d)
shall limit the Holder from obtaining any injunctive relief or other equitable remedies
(including with respect to any matters described in this
clause (d)
).
e)
Governing
Law; Courts
.
As provided in Section 5.6 (Governing Law; Courts) of the Purchase Agreement, this Note, and all claims, disputes,
Proceedings (other than as set forth in clause (d) above) and matters related hereto or arising hereunder or arising from or
relating to the relationship among any of the parties hereto, are governed by, and shall be construed, interpreted and enforced exclusively
in accordance with, the laws of the State of Delaware (
without giving effect to the conflict of
laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction
other than those of the State of Delaware
). Any such Proceeding shall be brought exclusively in the Delaware state courts sitting
in Wilmington, DE or the federal courts of the United States of America for the District of Delaware sitting in Wilmington, DE; provided,
that the Holder and the other Purchaser Parties may bring Proceedings in other jurisdictions to enforce this Note.
The parties hereto
have accepted such jurisdiction and waived venue and other objections and have agreed to the means for service of process in such
Section 5.6
.
f)
Characterizations.
The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided
herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of
the Company (or the performance thereof).
g)
Payments
on Next Business Day
. Whenever any payment Obligation shall be due on a day other than a business day, such payment shall be due
instead on the next succeeding business day.
h)
Payment
of Collection, Enforcement and Other Costs
. In addition to, and not in substitution for and not to limit (but without duplication),
any other right to reimbursement under this Note or any other Transaction Document, (i) this Note is placed in the hands of an attorney
for collection or enforcement or is collected or enforced through any Proceeding or the Holder otherwise takes action to collect amounts
due under this Note or to enforce the provisions of this Note or (ii) there occurs any bankruptcy, reorganization, receivership
of the Company or other Proceedings affecting Company creditors' rights and involving a claim under this Note, then the Company shall
pay all out-of-pocket costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other Proceeding, including, but not limited to, attorneys' fees and disbursements.
i)
Security
Interest
. The Obligations of the Company Parties under this Note and the other Transaction Documents are secured by the Security
Agreement and the Intellectual Property Security Agreement, as well as other Transaction Documents.
17
j)
Use
of Proceeds
. All proceeds of the purchase of this Note and the other Purchased Securities shall be used as provided in the Purchase
Agreement.
k)
Interpretation.
This Note is a Transaction Document and as such is subject to various interpretative, amendment and third party beneficiary and other
miscellaneous provisions set forth in the Purchase Agreement that expressly apply to Transaction Documents, located principally in
Article V
(Miscellaneous)
thereof (including
Section 4.4 (Disclosures)
which, among other things, provides that the Holder shall
not receive material non-public information, has no duty of confidentiality with respect to any Company Party and may rely on such provisions
to trade this Note and restrict public disclosures of the name of the Holder,
Section 5.15 (Interpretation)
that provides,
among other things, that payments due on a day that is not a business day may be made on the next business day), as well as, without
limitation, set off provisions in
Section 5.5 (Set Off)
thereof whereby amounts owing hereunder may be set off against amounts
owed by the Holder and certain related entities, indemnification and expense reimbursement provisions in
Sections 4.8 (Indemnification
of Each Purchaser Party)
and
5.2 (Fees and Expenses)
thereof that benefit the Holder, among others. In particular, without
limitation, (i) none of the terms or provisions of this Note may be waived, amended, supplemented or otherwise modified except in
accordance with
Section 5.3(b) (Amendments)
of the Purchase Agreement;
provided
, that this Note is subject to,
and may also be amended as provided in,
Section 4.2 (Most Favorable Terms (MFN))
of the Purchase Agreement and (ii) as
described in
Section 5.3(a) (Entire Agreement)
of the Purchase Agreement, this Note and the other Transaction Documents
contain and constitute the entire agreement of the parties with respect to the subject matter hereof. Any Holder also benefits from various
provisions of the Purchase Agreement applicable to the “Purchaser” (whether by virtue of being the initial “Purchaser”
or any successor in interest thereto) and agrees to be bound by the provisions of the Purchase Agreement applicable to it in such capacity.
Finally, in addition to these provisions, unless otherwise expressly provided in any Transaction Document, “
outstanding
”
when referring in any Transaction Document to the principal amount owing under this Note shall mean “
outstanding and unconverted
.”
l)
Beneficiaries;
Successors and Assigns
. As provided in
Section 5.3(c) (Beneficiaries; Successors and Assigns)
of the Purchase Agreement,
this Note shall be binding upon the successors and assigns of the Company and shall inure solely to the benefit of the Holder, each other
Purchaser Party, each Company Party, and each of their respective successors and, if permitted, assigns;
provided
, that no Company
Party may assign any part of this Note, or any right, obligation, benefit, title or interest hereunder except as authorized in the Purchase
Agreement.
m)
Counterparts
.
As provided in
clauses (e) (Counterparts)
and
(f) (Electronic Signatures) of Section 5.3
of the Purchase
Agreement, this Note may be executed in any number of counterparts, which may be signed and transmitted electronically.
n)
Severability
.
As provided in
Section 5.7 (Severability)
of the Purchase Agreement, any provision of this Note being held illegal, invalid
or unenforceable in any jurisdiction shall not affect any part of such provision not held illegal, invalid or unenforceable, any other
provision of this Note or any part of such provision in any other jurisdiction, so long as the economic or legal substance of the transaction
contemplated hereby is not affected in any manner adverse to any party.
o)
Waiver
of Jury Trial. As provided in Section 5.16 (Waiver of Jury Trial and Certain Other Rights), each party hereto has irrevocably and
unconditionally waived, to the fullest extent permitted by applicable Regulations, trial by jury of any claim or cause of action or in
any Proceeding, directly or indirectly with respect to, or directly or indirectly based upon or arising out of, under or in connection
with this Note or any other Transaction Document or the transactions contemplated therein or related thereto (whether founded in contract,
tort or any other theory).
Each party hereto (A) certifies that no other party, no Purchaser Party and no Affiliate of any of
them and no attorney, agent or other representative of any of the foregoing has represented, expressly or otherwise, that any person
would not, in the event of litigation, seek to enforce the foregoing waiver and (B) acknowledges that it and the other parties hereto
have been induced to enter into this Note by, among other things, the mutual waivers and certifications in this
Section 6(o)
.
[
Signature
Pages Follow
]
18
In
witness whereof
, each of the undersigned has duly executed this Note as of the date first written
above.
ConnectM Technology Solutions, Inc.
By:
Name:
Title:
Accepted and Agreed:
ASCENT PARTNERS
FUND LLC
By:
Name:
Title:
19
20
ANNEX
A
TO
PROMISSORY NOTE
CONVERSION
NOTICE
21
CONVERSION NOTICE
The
undersigned hereby elects to convert principal under the Senior Secured Convertible Promissory Note (as the same may be amended or otherwise
modified from time to time, the “
Note”;
capitalized terms used but not defined herein are used as defined in the Note,
including if defined by reference to other agreements
)
, due August _, 2027, and issued by ConnectM Technology Solutions, Inc,
a Delaware corporation (together with its successors and, if permitted, assigns, the “
Company
”), into shares of common
stock (the “
Common Stock
”), of the Company according to the conditions hereof, as of the date written below. If shares
of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith.
No fee will be charged to the Holder for any conversion, except for such transfer taxes, if any.
By
the delivery of this Conversion Notice the undersigned represents and warrants to the Company that its ownership of the Common Stock
does not exceed the amounts specified under Section 2 of the Note, as determined in accordance with Section 13(d) of the
Exchange Act.
The
undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer
of the aforesaid shares of Common Stock.
Conversion calculations:
Date to Effect Conversion:
Principal Amount of Note to be Converted:
Payment of Interest in Common Stock __ yes __
no
If yes, $_____ of Interest Accrued on Account
of Conversion at Issue.
Number of shares of Common Stock to be issued:
This
Conversion Notice is a Transaction Document and, as such is subject to various provisions of the Purchase Agreement applicable to Transaction
Documents, including, among others, choice of law, forum, and waiver of jury trial.
By:
Name:
Title:
Delivery
Instructions:
22
Schedule
1
CONVERSION SCHEDULE
This Conversion
Schedule is part of, and reflects conversions made under Section 2 of, the Senior Secured Convertible Promissory Note, due on __________
and issued by _________________, a ___________, in the original principal amount of $__________.
Dated:
Date
of Conversion
(or for first entry,
Original Issue Date)
Amount
of Conversion
Aggregate
Principal
Amount Remaining
Subsequent to
Conversion
(or original
Principal Amount)
Company
Attest
23
Schedule
2
Payment
Schedule
Month
Date
Principal
Interest
If
in Stock
If
in Cash
Remaining
Principal
Current
Month
(Stub period)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
24

----- tm2624767d1_ex10-3.htm -----
EX-10.3
6
tm2624767d1_ex10-3.htm
EXHIBIT 10.3
Exhibit 10.3
SECURITY
AGREEMENT
This
Security
Agreement
(
this “
Agreement
”), dated as of August 31, 2026 is
entered into by and among ConnectM Technology Solutions, Inc., a Delaware corporation (the “
Company
”) and each
of the other entities listed on the signature pages hereof or that becomes a party hereto pursuant to
Section
7.5
(together with the Company, the “
Grantors
”) in favor of Ascent Partners Fund LLC, a Delaware limited liability company
(together with its successors and assigns, the
“Purchaser”
), as purchaser of the Purchased Securities sold by the
Company pursuant to the Securities Purchase Agreement, dated as of August 31, 2026, by and between the Company and the Purchaser
(the “
Purchase Agreement
”; capitalized terms used but not defined herein are used as defined in the Purchase Agreement,
including by reference in
Schedule II
thereof to definitions in other Transaction Documents), for itself and as agent for
the other Purchaser Parties, including all holders of Purchased Securities.
Whereas
,
pursuant to the Purchase Agreement, the Purchaser is purchasing the Purchased Securities from the Company upon the terms and subject
to the conditions set forth therein;
Whereas
,
each Grantor has, among other things, guaranteed the Obligations of the Company under the Transaction Documents pursuant to a Guaranty
of even date herewith and will derive substantial direct and indirect benefits from the purchase of the Purchased Securities under the
Purchase Agreement; and
Whereas
,
it is a condition precedent to the obligation of the Purchaser to purchase the Purchased Securities from the Company under the Purchase
Agreement that the Grantors shall have executed this Agreement and delivered it to the Purchaser;
Now,
therefore
,
in consideration of the representations, warranties and covenants
contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the parties hereto agree as follows
:
ARTICLE I
Definitions
1.1
UCC
.
The following terms have the meanings given to them in the UCC and terms used herein without definition that are defined in the UCC have
the meanings given to them in the UCC (such meanings to be equally applicable to both the singular and plural forms of the terms defined),
including the following: “account,” “account debtor,” “as-extracted collateral,” “certificated
security,” “chattel paper,” “commercial tort claim,” “commodity contract,” “deposit account,”
“documents,” “electronic chattel paper,” “equipment,” “farm products,” “fixture,”
“general intangible,” “goods,” “health-care-insurance receivable,” “instruments,” “inventory,”
“investment property,” “letter-of-credit right,” “payment intangible,” “proceeds,” “record,”
“securities account,” “security,” “supporting obligation,” “tangible chattel paper” and
“timber to be cut.”
“
UCC
” means the Uniform
Commercial Code as from time to time in effect in the State of Delaware;
provided
, that, in the event that, by reason of mandatory
provisions of any applicable Regulation, any of the attachment, perfection or priority of any other Purchaser Party’s security
interest in any Collateral is governed by the Uniform Commercial Code or comparable Regulation of a jurisdiction other than the State
of Delaware, “
UCC
” shall mean the Uniform Commercial Code or comparable Regulation as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of the definitions related
to or otherwise used in such provisions.
1.2
Certain
Other Terms
.
Section 5.15
(
Interpretation
) of the Purchase Agreement
is applicable to this Agreement in accordance with its terms, as well as several other provisions of
Article V (Miscellaneous)
of the Purchase Agreement.
“
Blue Cloud Shares
”
means, collectively, all certificated and uncertificated shares of capital stock of Blue Cloud Mineral Technologies, Inc. (or any
successor entity thereto) owned or at any time hereafter acquired by any Grantor, together with all dividends, distributions and other
rights received or receivable with respect thereto.
1.3
“
Uplisting
”
means the initial listing of the Company’s common stock on a national securities exchange (including the NYSE, NYSE American, or
Nasdaq).
ARTICLE II
Grant
of Security Interest
2.1
Collateral
.
(a) Prior to the completion of the Uplisting, for the purposes of this Agreement, all of the following property now owned or at
any time hereafter acquired by a Grantor or in which a Grantor now has or at any time in the future may acquire any right, title or interest
is collectively referred to as the “
Collateral
”:
(a)
all
accounts, as-extracted collateral, chattel paper, deposit accounts, documents, equipment, general intangibles (including all payment
intangibles, Intellectual Property, rights to tax refunds, intercompany notes, rights arising out of leases, licenses, and contracts
which are not accounts, computer software, computer programs, information contained on computer disks or tapes, software, literature,
reports, catalogs, options, warranties, service contracts, program services, rights to refund, reimbursement, indemnification, and subrogation,
goodwill, licenses, royalties, franchises, customer lists, reversions from any retirement plan or arrangement, money, interests in a
partnership or limited liability company which do not constitute a security under Article 8 of the Code), instruments (including
dividends and rights to payment arising out of partnership agreements and management contracts), inventory, investment property (including
any Pledged Collateral and Pledged Investment Property) and any supporting obligations related thereto;
(b)
any
commercial tort claims set forth on the Disclosure Certificate;
(c)
all
books, records, ledgers, files, writings, data bases, plans, drawings, and information relating to any of the foregoing, pertaining to
the other property described in this
Section
2.1
;
(d)
all
property of such Grantor held by any Purchaser Party, including all property of every description, in the custody of or in transit to
such Purchaser Party for any purpose, including safekeeping, collection or pledge, for the account of such Grantor or as to which such
Grantor may have any right or power, including cash;
(e)
all
other goods, fixtures, improvements (not constituting real property), and other personal property of such Grantor, whether tangible or
intangible and wherever located;
(f)
to
the extent not otherwise included, all cryptocurrency and other blockchain assets; and
(g)
to
the extent not otherwise included, all proceeds of the foregoing, including insurance proceeds (including any surrender value therefor,
any right to return, or unearned premiums), causes and rights of action, remedies, privileges, settlements, judicial and arbitration
judgments and awards, indemnities, Liens, warranties, or guaranties payable from time to time with respect to, or Lien or other security
for, any of the foregoing;
provided
, that “
Collateral
”
shall not include any Excluded Property; and
provided
,
further
, that if and when any property shall cease to be Excluded
Property, such property shall be deemed at all times from and after the date hereof to constitute Collateral. Where the context requires,
provisions relating to any Collateral when used in relation to a Grantor shall refer to such Grantor’s Collateral or any relevant
part thereof.
(b) Upon and following the completion
of the Uplisting, notwithstanding anything to the contrary in Section 2.1(a), “
Collateral
” shall mean solely
the
Blue Cloud Shares
and all proceeds thereof (including insurance proceeds, causes and rights of action, remedies, privileges,
settlements, judicial and arbitration judgments and awards, indemnities, Liens, warranties, or guaranties payable from time to time with
respect to, or Lien or other security for, the
Blue Cloud Shares
). For the avoidance of doubt, upon and following the completion
of the Uplisting, (i) the security interest granted pursuant to Section 2.2 shall apply only to the
Blue Cloud Shares
and proceeds thereof, (ii) the Grantors shall have no obligation to maintain, perfect, or deliver any Collateral other than the
Blue Cloud Shares
and proceeds thereof, and (iii) the Purchaser shall, at the request and expense of any Grantor, promptly
execute and deliver UCC-3 termination statements and such other documentation as may be reasonably necessary to release any Liens on
property that no longer constitutes Collateral.
-
2
-
(c) The Company shall provide the
Purchaser with prompt written notice upon the completion of the Uplisting, together with reasonable evidence thereof.
“
Excluded Property
”
means, collectively, (i) any Permit or similar Contractual Obligation listed on the Disclosure Certificate as “
Excluded
Property
” and entered into by any Grantor prior to the date hereof or entered into by any Grantor with the consent of the Purchaser
after the date hereof (A) that prohibits or requires the consent of any person other than the Company, any other Company Party or
any of their respective Affiliates as a condition to the creation by such Grantor of a Lien on any right, title or interest in such Permit
or other agreement or any Capital Stock or Stock Equivalent related thereto, or (B) to the extent that any Regulation applicable
thereto prohibits the creation of a Lien thereon, but only, with respect to the prohibition in (A) and (B), and for as long as,
such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the UCC or any other Regulation, (ii) fixed
or capital assets owned by any Grantor that is subject to a purchase money security interest or a Capital Lease if the documentation
pursuant to which such Lien is granted (or in the documentation providing for such Capital Lease) prohibits or requires the consent of
any person (other than the Company, any other Company Party and their respective Affiliates) as a condition to the creation of any other
Lien on such equipment and (iii) any “intent to use” Trademark applications for which a statement of use has not been
filed (but only until such statement is filed);
provided
, that “
Excluded Property
” shall not include any proceeds,
products, substitutions or replacements of Excluded Property (unless such proceeds, products, substitutions or replacements would otherwise
constitute Excluded Property), all of which shall therefore be included in Collateral as provided hereunder.
2.2
Grant
of Security Interest in Collateral.
Each Grantor, as collateral security for the prompt
and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Obligations of such Grantor
(the “
Secured Obligations
”), hereby mortgages, pledges and hypothecates to the Purchaser, for itself and as agent
for the other Purchaser Parties, and grants to the Purchaser, for itself and as agent for the other Purchaser Parties, a Lien on and
security interest in, all of its rights, title and interests in, to and under the Collateral of such Grantor.
ARTICLE III
Representations
and Warranties
To induce the
Purchaser to enter into the Transaction Documents, each Grantor hereby jointly and severally represents and warrants each of the following
to the Purchaser, for itself and as agent for the other Purchaser Parties:
3.1
Title;
No Other Liens.
Except for the Lien granted to the Purchaser Parties pursuant to this
Agreement and other Permitted Liens under any Transaction Document (including
Section 3.2
), such Grantor owns each item of
the Collateral free and clear of any and all Liens or claims of others. Such Grantor (a) is the record and beneficial owner of the
Collateral pledged by it hereunder constituting instruments or certificates and (b) has rights in or the power to transfer each
other item of Collateral in which a Lien is granted by it hereunder, free and clear of any other Lien.
-
3
-
3.2
Perfection
and Priority.
The security interest granted pursuant to this Agreement constitutes a
valid and continuing perfected security interest in favor of the Purchaser, for itself and as agent for the other Purchaser Parties,
in all Collateral subject, for the following Collateral, to the occurrence of the following: (i) in the case of all Collateral in
which a security interest may be perfected by filing a financing statement under the UCC, the completion of such filings set forth on
the Disclosure Certificate (which have been delivered to the Purchaser in completed and duly authorized form), (ii) with respect
to any deposit account, the execution of Control Agreements, (iii) in the case of all Copyrights, Trademarks, Patents and other
Intellectual Property for which UCC filings are insufficient, the making of all appropriate filings with the United States Copyright
Office or the United States Patent and Trademark Office, as applicable, (iv) in the case of letter-of-credit rights that are not
supporting obligations of Collateral, the execution of an agreement granting control to the Purchaser over such letter-of-credit rights,
(v) in the case of electronic chattel paper, the completion of all steps necessary to grant control to the Purchaser over such electronic
chattel paper and (vi) in the case of Vehicles, the actions required under
Section
4.1(f)
. Such security interest
shall be prior to all other Liens on the Collateral except as permitted by any Transaction Document upon (i) in the case of all
Pledged Investment Property having instruments or certificates, Pledged Certificated Stock and Pledged Debt Instruments, the delivery
thereof to the Purchaser of such Pledged Certificated Stock, Pledged Debt Instruments and Pledged Investment Property, in each case properly
endorsed for transfer to the Purchaser or in blank, (ii) in the case of all Pledged Investment Property not having instruments or
certificates and Pledged Uncertificated Stock, the execution of Control Agreements with respect to such investment property and (iii) in
the case of all other instruments and tangible chattel paper that are not Pledged Collateral or Pledged Investment Property, the delivery
thereof to the Purchaser of such instruments and tangible chattel paper. Except as set forth in this
Section 3.2
, all actions
by each Grantor necessary or desirable to protect and perfect the Lien granted hereunder on the Collateral have been duly taken.
“
Control Agreement
”
means, with respect to any deposit account, any securities account, commodity account, securities entitlement or commodity contract,
an agreement, in form and substance satisfactory to the Purchaser, among the Purchaser, the financial institution or other person at
which such account is maintained or with which such entitlement or contract is carried and the party maintaining such account, to the
extent (a) such financial institution or other person is acceptable to the Purchaser in its sole discretion and (b) such agreement
is effective to grant “control” (as defined under each applicable UCC) over such account, entitlement or contract to the
Purchaser.
“
Pledged Investment Property
”
means any investment property of any Grantor, and any distribution of property made on, in respect of or in exchange for the foregoing
from time to time, other than any Pledged Collateral.
“
Vehicles
” means
all vehicles covered by a certificate of title law of any state.
3.3
Specific
Collateral.
None of the Collateral is, or constitutes proceeds or products of, farm
products, as-extracted collateral, health-care-insurance receivables or timber to be cut.
3.4
Representations
and Warranties under the Purchase Agreement.
The representations and warranties as to
such Grantor and its Subsidiaries made in the Purchase Agreement (including in the Disclosure Certificate) with respect to the Collateral
are true and correct as of the date hereof and on each other date when made.
ARTICLE IV
COVENANTS
Each Grantor agrees with the Purchaser
and the other Purchaser Parties to the following, as long as any Obligation remains outstanding and, in each case, unless the Purchaser
otherwise consents in writing:
4.1
Maintenance
of Perfected Security Interest; Bank Accounts; Further Documentation and Consents.
(a)
Such
Grantor shall (i) not use or permit any Collateral to be used unlawfully or in violation of any provision of any Transaction Document,
any Regulation or any policy of insurance covering the Collateral. (ii) not enter into any agreement, obligation or undertaking
restricting the right or ability of such Grantor or the Purchaser to enter into an Asset Sale, if such restriction would have a Material
Adverse Effect and (iii) not Sell any right, title or interest in, or grant or suffer to exist any Lien on, any part of the Collateral
except for Permitted Liens and except for Sales expressly permitted in any other Transaction Document.
(b)
Such
Grantor shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority
described in
Section 3.2
and shall defend such security interest and such priority against the claims and demands of all
persons (other than the Purchaser Parties).
-
4
-
(c)
Such
Grantor shall furnish to the Purchaser from time to time updates to the Disclosure Certificate and other lists, schedules and other documentation
as may be requested by the Purchaser further identifying and describing the Collateral and such other documentation in connection with
the Collateral as the Purchaser may reasonably request, all in reasonable detail and in form and substance satisfactory to the Purchaser.
(d)
Such
Grantor shall deposit all cash it receives in deposit accounts subject to Control Agreements;
provided,
that such Grantor may
maintain payroll, withholding tax and other fiduciary accounts in deposit accounts not subject to Control Agreements.
(e)
At
any time and from time to time, upon the written request of the Purchaser, such Grantor shall, for the purpose of obtaining or preserving
the full benefits of this Agreement and of the rights and powers herein granted, (i) promptly and duly execute and deliver, and
have recorded, such further documentation, including an authorization to file (or, as applicable, the filing) of any financing statement
or amendment under the UCC (or other filings under similar Regulations) in effect in any jurisdiction with respect to the security interest
created hereby and (ii) take such further action as the Purchaser may reasonably request, including (A) using its best efforts
to secure all approvals necessary or appropriate for the assignment to or for the benefit of the Purchaser of any Permit or other agreement,
including any IP License, held by such Grantor and to enforce the security interests granted hereunder and (B) executing and delivering
any Control Agreements with respect to deposit accounts and securities accounts and ensuring the financial institutions where such deposit
accounts and securities accounts are maintained execute and deliver such Control Agreements to the Purchaser (or, if such institution
does not do so, promptly and in any event within 30 days of such request, close such deposit accounts and security accounts).
(f)
If
requested by the Purchaser, the Grantor shall arrange for the Purchaser’s first priority security interest to be noted on the certificate
of title of each Vehicle and shall file any other necessary documentation in each jurisdiction that the Purchaser shall deem advisable
to perfect its security interests in any Vehicle.
(g)
To
ensure that any of the Excluded Property set forth in
clause (ii)
of the definition of “Excluded Property” becomes
part of the Collateral, such Grantor shall use its best efforts to obtain any required consents from any person (other than the Company,
any Company Party and their respective Affiliates) with respect to any Permit or Contractual Obligation with such person entered into
by such Grantor that requires such consent as a condition to the creation by such Grantor of a Lien on all or part of such Excluded Property.
4.2
Changes
in Locations, Name, Etc.
(a)
Except
upon 30 days’ prior written notice to the Purchaser and delivery to the Purchaser of all documentation reasonably requested by
the Purchaser to maintain the validity, perfection and priority of the security interests granted in the Transaction Documents, such
Grantor shall not do any of the following:
(i)
change
its legal name or location, or, in the case of an entity, jurisdiction of organization or, in the case of an individual, address of legal
residence, in each case from that identified as current as of the date hereof described in the Disclosure Certificate; or
(ii)
in
the case of an entity, change its organizational identification number, if any, or corporation, limited liability company, partnership
or other organizational structure to such an extent that any financing statement filed in connection with this Agreement would become
misleading.
(b)
Such
Grantor shall not permit any inventory or equipment to be kept at a location other than those listed on the Disclosure Certificate, except
for inventory or equipment in transit.
4.3
Pledged
Collateral.
(a)
Delivery.
Such Grantor shall (i) deliver to the Purchaser, in suitable form for transfer and in form and substance satisfactory to the
Purchaser, (A) all of its Pledged Certificated Stock, (B) all of its Pledged Debt Instruments and (C) all certificates
and instruments evidencing its Pledged Investment Property and (ii) maintain all of its Pledged Uncertificated Stock of a type that
can be maintained in a securities account and all other Pledged Investment Property in a securities account subject to a Control Agreement.
All Pledged Collateral (other than Pledged Uncertificated Stock) and all Pledged Investment Property consisting of instruments and certificates
owned by such Grantor as of the date hereof shall have been delivered to the Purchaser as of the date hereof.
-
5
-
(b)
Event
of Default
. During the continuance of an Event of Default, the Purchaser shall have the right, at any time in its discretion and
without notice to any Grantor, to (i) transfer to or to register in its name or in the name of its nominees any Pledged Collateral
or any Pledged Investment Property, (ii) exchange any certificate or instrument representing or evidencing any Pledged Collateral
or any Pledged Investment Property for certificates or instruments of smaller or larger denominations and (iii) exercise all of
the rights of such Grantor in any Pledged Stock, and a transferee or assignee of such Pledged Stock from the Purchaser shall, to the
same extent as such Grantor, become a holder of such Pledged Stock and be entitled to participate in the management of the issuer of
such Pledged Stock and, upon the transfer of the entire interest of such Grantor to such transferee or assignee, such Grantor shall,
by operation of law, cease to be a holder of such Pledged Stock.
(c)
Cash
Distributions with respect to Pledged Collateral
. Except as provided in
Article V,
such Grantor shall be entitled to
receive all cash distributions paid in respect of the Pledged Collateral.
(d)
Voting
Rights
. Except as provided in
Article V,
such Grantor shall be entitled to exercise all voting, consent and corporate,
partnership, limited liability company and similar rights with respect to the Pledged Collateral;
provided
, that no vote shall
be cast, consent given or right exercised or other action taken by such Grantor that would impair the Collateral or be inconsistent with
or result in any violation of any provision of any Transaction Document.
4.4
Accounts.
(a)
Such
Grantor shall not, other than in the ordinary course of business, (i) grant any extension of the time of payment of any account,
(ii) compromise or settle any account for less than the full amount thereof, (iii) release, wholly or partially, any person
liable for the payment of any account, (iv) allow any credit or discount on any account or (v) amend, supplement or modify
any account in any manner that could adversely affect the value thereof.
(b)
Such
Grantor shall (i) instruct each account debtor and each other person obligated to make a payment to it under any account or general
intangible to make payments into deposit accounts subject to a Control Agreement (and ensure that each such account debtor and other
person does so) and (ii) immediately upon receipt, deposit in a deposit account subject to a Control Agreement all proceeds of such
accounts and general intangibles not otherwise deposited directly to such a deposit account.
(c)
The
Purchaser shall have the right to make test verifications of the Accounts in any manner and through any medium that it reasonably considers
advisable, and, subject to the requirements set forth in Section 4.4(a) (No Material Non-Public Information) of the Purchase
Agreement and other provisions of the Transaction Documents containing restrictions on providing material non-public information, such
Grantor shall furnish all such assistance and information as the Purchaser may reasonably require in connection therewith. At any time
and from time to time, upon the Purchaser’s request, subject to the requirements set forth in Section 4.4(a) (No Material
Non-Public Information) of the Purchase Agreement and other provisions of the Transaction Documents containing restrictions on providing
material non-public information, such Grantor shall cause independent public accountants or others satisfactory to the Purchaser to furnish
to the Purchaser reports showing reconciliations, aging and test verifications of, and trial balances for, the accounts.
4.5
Equipment
and Commodity Contracts.
(a)
Such
Grantor will use all equipment constituting Collateral solely in the ordinary course of business, will keep all tangible Collateral in
good order and repair, and will not waste or destroy any part of the Collateral. Grantors will not use any of the Collateral in violation
of any Regulation in any material respect.
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(b)
Except
in the ordinary course of business (to the extent disclosed to the Purchaser prior to the date hereof) and except as expressly permitted
by this Agreement or the Purchase Agreement, the Purchaser does not authorize such Grantor to, and such Grantor will not, without the
Purchaser’s prior written consent, sell, lease, assign, license, transfer, or otherwise dispose of or in any manner alter, modify,
manufacture, process, or assemble the Collateral or any part thereof.
(c)
Such
Grantor may dispose of any equipment constituting Collateral which is worn out, destroyed, or damaged beyond repair; provided, that.
unless such Grantor determines in the ordinary course of business that such equipment is no longer useful in its operations, such Grantor
promptly replaces such disposed of equipment with new equipment, free of any Lien except for Permitted Liens, which has a value or utility
at least equal as of the date of replacement to the value or utility of the replaced equipment as of the date hereof.
(d)
Such
Grantor shall not have any commodity contract other than with a person approved by the Purchaser and subject to a Control Agreement.
4.6
Delivery
of Instruments and Tangible Chattel Paper and Control of Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper.
(a)
If
any amount payable under or in connection with any Collateral owned by such Grantor is or shall be evidenced by an instrument or tangible
chattel paper other than such instrument delivered in accordance with Section 4.3(a) and in the possession of the Purchaser,
such Grantor shall mark all such instruments and tangible chattel paper with the following legend: “This writing and the obligations
evidenced or secured hereby are subject to the security interest ASCENT PARTNERS FUND LLC, for itself and as agent” and, at the
request of the Purchaser, shall immediately deliver such instrument or tangible chattel paper to the Purchaser, duly indorsed in a manner
satisfactory to the Purchaser. No amount payable to such Grantor under or in connection with any account is as of the date hereof evidenced
by any instrument or tangible chattel paper that has not been delivered to the Purchaser on or prior to the date hereof, properly endorsed
for transfer, to the extent delivery is required by this clause(a).
(b)
Such
Grantor shall not grant “control” (within the meaning of such term under Article 9-106 of the UCC) over any investment
property to any person other than the Purchaser.
(c)
If
such Grantor is or becomes the beneficiary of a letter of credit that is not a supporting obligation of any Collateral, such Grantor
shall promptly, and in any event within two (2) business days after becoming a beneficiary, notify the Purchaser thereof and enter
into an agreement with the Purchaser, the issuer of such letter of credit or any nominated person with respect to the letter-of-credit
rights under such letter of credit. Such agreement shall assign such letter-of-credit rights to the Purchaser and such assignment shall
be sufficient to grant control for the purposes of Section 9-107 of the UCC (or any similar section under any equivalent UCC). Such
agreement shall also direct all payments thereunder to an account controlled (as defined in the UCC) by the Purchaser. The provisions
of such agreement shall be in form and substance reasonably satisfactory to the Purchaser.
(d)
If
any amount payable under or in connection with any Collateral owned by such Grantor shall be or become evidenced by electronic chattel
paper, such Grantor shall take all steps necessary to grant the Purchaser control of all such electronic chattel paper for the purposes
of Section 9-105 of the UCC (or any similar section under any equivalent UCC) and all “transferable records” as defined
in each of the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act.
4.7
Intellectual
Property
(a)
Within
60 days after acquisition of any new Intellectual Property (whether by creation, acquisition, transfer or otherwise), such Grantor shall
provide the Purchaser notification thereof and the short-form intellectual property agreements and assignments as described in this Section 4.7
and other documentation that the Purchaser reasonably requests with respect thereto.
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(b)
Such
Grantor shall (and shall cause all its licensees to) (i) (1) continue to use each Trademark included in the Intellectual Property
in order to maintain such Trademark in full force and effect with respect to each class of goods for which such Trademark is currently
used, free from any claim of abandonment for non-use, (2) maintain at least the same standards of quality of products and services
offered under such Trademark as are currently maintained, (3) use such Trademark with the appropriate notice of registration and
all other notices and legends required by applicable Regulations, (4) not adopt or use any other Trademark that is confusingly similar
or a colorable imitation of such Trademark unless the Purchaser shall obtain a perfected security interest in such other Trademark pursuant
to this Agreement and (ii) not do any act or omit to do any act whereby (w) such Trademark (or any goodwill associated therewith)
may become destroyed, invalidated, impaired or harmed in any way, (x) any Patent included in the Intellectual Property may become
forfeited, misused, unenforceable, abandoned or dedicated to the public, (y) any portion of the Copyrights included in the Intellectual
Property may become invalidated, otherwise impaired or fall into the public domain or (z) any Trade Secret that is Intellectual
Property may become publicly available or otherwise unprotectable.
(c)
Such
Grantor shall notify the Purchaser immediately if it knows, or has reason to know, that any application or registration relating to any
Intellectual Property may become forfeited, misused, unenforceable, abandoned or dedicated to the public, or of any adverse determination
or development regarding the validity or enforceability or such Grantor’s ownership of, interest in, right to use, register, own
or maintain any Intellectual Property (including the institution of, or any such determination or development in, any proceeding relating
to the foregoing in any Applicable IP Office (as defined below)). Such Grantor shall take all actions that are necessary or reasonably
requested by the Purchaser to maintain and pursue each application (and to obtain the relevant registration or recordation) and to maintain
each registration and recordation included in the Intellectual Property.
(d)
Such
Grantor shall not knowingly do any act or omit to do any act to infringe, misappropriate, dilute, violate or otherwise impair the Intellectual
Property of any other person. In the event that any Intellectual Property of such Grantor is or has been infringed, misappropriated,
violated, diluted or otherwise impaired by a third party, such Grantor shall take such action as it reasonably deems appropriate under
the circumstances in response thereto, including promptly bringing suit and recovering all damages therefor.
(e)
Such
Grantor shall execute and deliver to the Purchaser in form and substance reasonably acceptable to the Purchaser and suitable for (i) filing
in the Applicable IP Office the short-form intellectual property security agreements in the form attached hereto as Annex 3 for all Copyrights,
Trademarks, Patents and IP Licenses of such Grantor and (ii) recording with the appropriate Internet domain name registrar, a duly
executed form of assignment for all Internet Domain Names of such Grantor (together with appropriate supporting documentation as may
be requested by the Purchaser). “Applicable IP Office” means the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency within or outside the United States.
4.8
Landlord
Waivers. If any Collateral is at any time not in transit and located on any real property not owned and possessed by a Grantor, such
Grantor shall provide prompt written notice to the Purchaser and notify any owner, lessor, licensor of any part of, or any other person
having any right to enter on any part of, such real property of the Purchaser’s security interest in such Collateral. Upon
the Purchaser’s request and option, such Grantor shall (i) instruct each such owner, lessor, licensor and other person to
hold all such Collateral for the Purchaser’s account subject to such Grantor’s instructions, or, if an Event of Default shall
have occurred, subject to the Purchaser’s instructions and (ii) cause each such owner, lessor, licensor and other person to
enter into a landlord waiver in form and substance satisfactory to the Purchaser.
4.9
Third-Party
Possession or Control. If any Collateral is at any time in the possession or control of any warehouseman, bailee, agent or independent
contractor, such Grantor shall provide prompt written notice to the Purchaser and notify such warehouseman, bailee, agent or independent
contractor of the Purchaser’s security interest in such Collateral. Upon the Purchaser’s request and option, such Grantor
shall (i) instruct any such warehouseman, bailee, agent or independent contractor to hold all such Collateral for the Purchaser’s
account subject to such Grantor’s instructions, or, if an Event of Default shall have occurred, subject to the Purchaser’s
instructions and (ii) cause any such warehouseman, bailee, agent or independent contractor to enter into a collateral access agreement
in form and substance satisfactory to the Purchaser.
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4.10
Real
Property. Upon request of the Purchaser, each Grantor shall execute and deliver to the Purchaser a mortgage, as well as assignment of
rents and leases and permits and other documents reasonably appropriate to grant to the Purchaser a Lien over any real property of such
Grantor, using the form generally used by the Purchaser and its affiliates with such changes acceptable to the Purchaser in its sole
discretion necessary to conform to applicable local laws. In addition, in the event any Grantor hereafter acquires any interest in any
real property, such Grantor shall promptly: (a) provide the Purchaser with a description of the location of the applicable real
property; (b) provide the Purchaser with a legal description of such real property sufficient to enable the Purchaser to record
the financing statements in the appropriate real property records and the name of the record owner of the real estate if other than the
Grantor and real estate descriptions; and (c) pay to the Purchaser the related filing fee and any recording or stamp taxes due in
connection with such filings.
4.11
Notices.
Such Grantor shall promptly notify the Purchaser in writing of its acquisition of any interest hereafter in property that is of a type
where a security interest or lien must be or may be registered, recorded or filed under, or notice thereof given under, any federal statute
or regulation. In addition, such Grantor shall promptly notify the Purchaser of each of the following: (a) any material adverse
change in such Grantor’s financial condition or any change that materially affects any of the Collateral or the related security
interest, (b) any claim, action, or proceeding which could materially and adversely affect the value of, or any such Grantor’s
title to, any of the Collateral, or the effectiveness of the security interest, and (c) the occurrence of any Event of Default.
4.12
Notice
of Commercial Tort Claims. Such Grantor agrees that, if it shall acquire any interest in any commercial tort claim (whether from another
person or because such commercial tort claim shall have come into existence), (i) such Grantor shall deliver to the Purchaser within
fifteen (15) calendar days of such acquisition, an update to the Disclosure Certificate that shall include a specific description of
such commercial tort claim and such Grantor shall deliver any information about such commercial tort claim as the Purchaser shall reasonable
request, (ii) Section 2.1 shall apply to such commercial tort claim and (iii) within fifteen (15) calendar days of such
acquisition, such Grantor shall execute and deliver to the Purchaser, in each case in form and substance satisfactory to the Purchaser,
any documentation, and take all other action, deemed by the Purchaser to be reasonably necessary or appropriate for the Purchaser to
obtain, a perfected security interest having at least the priority set forth in Section 3.2 in all such commercial tort claims.
4.13
Compliance
with Purchase Agreement.
Such Grantor hereby makes all representations and warranties,
and agrees to comply with all covenants and other provisions, applicable to it or any of its Subsidiaries under the Purchase Agreement,
including
Section 2.1 (Representations and Warranties of the Company Parties)
(including
Schedule II
thereof
referred to therein),
Article III (Negative Covenants)
,
Article IV (Affirmative Covenants),
which includes indemnification
provisions, and
Section 5.2 (Fees and Expenses)
thereof, and the Transaction Documents and agrees to the same submission
to jurisdiction as that agreed to by the Company in the Purchase Agreement. Any update to the Disclosure Certificate delivered in accordance
with the Transaction Documents shall, after the receipt thereof by the Purchaser, become part of the Disclosure Certificate for all purposes
hereunder other than in respect of representations and warranties made prior to the date of such receipt.
ARTICLE V
remedies
5.1
UCC
and Other Remedies.
(a)
UCC
Remedies
. During the continuance of an Event of Default, the Purchaser may exercise, in addition to all other rights and remedies
granted to it in this Agreement or any other Transaction Document and in any other instrument or agreement securing, evidencing or relating
to any Secured Obligation, all rights and remedies of a secured party under the UCC or any other applicable law.
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(b)
Disposition
of Collateral.
Without limiting the generality of the foregoing, the Purchaser may, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor
or any other person (all and each of which demands, defenses, advertisements and notices are hereby waived), during the continuance of
any Event of Default (personally or through its agents or attorneys), (i) enter upon the premises where any Collateral is located,
without any obligation to pay rent, through self-help, without judicial process, without first obtaining a final judgment or giving any
Grantor or any other person notice or opportunity for a hearing on the Purchaser’s claim or action, (ii) collect, receive,
appropriate and realize upon any Collateral, (iii) deliver notices under Control Agreements over deposit accounts and securities
accounts to block the access of the Grantors and exercise control over such deposit accounts and securities accounts and transfer the
content of such accounts, and direct other payments to be made to, to the Purchaser or other persons (and each Grantor hereby irrevocably
waives the right to direct, during the continuance of an Event of Default, the application of all funds and securities in any deposit
account or securities account subject to a Control Agreement, and (iv) as further set forth herein, enter into transfers, sales,
or other dispositions of, grant option or options to purchase and deliver, any Collateral (enter into any Contractual Obligation to do
any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of
any Purchaser Party or elsewhere upon such terms and conditions and times and locations as it may deem advisable and at such prices as
it may deem best, for cash or on credit or for future delivery without assumption of any credit risk.
(c)
Regulated
Sales
. To the extent, and only to the extent, required by Regulation and prohibited by Regulation to be waived by the applicable
Grantors (which the Grantors hereby expressly waive to the fullest extent permitted by Regulation), the Grantors agree that ten (10) days’
written notice is reasonable notice within the meaning of Section 9-611 of the UCC or its equivalent in other jurisdictions of the
Purchaser’s intention to make any transfer, sale or other dispositions of any Collateral. Any such public sale shall be held at
such time or times within ordinary business hours and at such place or places as the Purchaser may fix and state in the notice (if any)
of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels,
as the Purchaser may determine in its sole and absolute discretion. The Purchaser shall not be obligated to sell any Collateral if it
shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Purchaser 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 sale, and such sale may, without further notice, be made at the time and place to which the same was
so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold
may be retained by the Purchaser until the sale price is paid by the purchaser or purchasers thereof, but none of the Purchaser or the
other Purchaser Parties shall incur any Loss in case any such purchaser or purchasers shall fail to take up and pay for the Collateral
so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted
by Regulations, private) sale made in accordance with the Transaction Documents, the Purchaser and any other Purchaser Party may bid
for or purchase, free (to the extent permitted by Regulation) from any right or equity of redemption, stay, valuation or appraisal on
the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by law), the Collateral or any
part thereof offered for sale and may make payment on account thereof by using any Obligation then due and payable to any Purchaser Party
(in the case of the Purchaser or, otherwise, to such other Purchaser Party) from any Grantor as a credit against the purchase price,
and the Purchaser (or, as the case may be, such other Purchaser Party) may, upon compliance with the terms of sale, hold, retain and
dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase
the Collateral or any portion thereof shall be treated as a sale thereof; the Purchaser shall be free to carry out such sale pursuant
to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding
the fact that after the Purchaser shall have entered into such an agreement, all Events of Default shall have been remedied and no Obligation
shall remain outstanding. As an alternative to exercising the power of sale herein conferred upon it, the Purchaser may proceed by a
suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment
or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant
to the provisions of this
Section 5.1
shall be deemed to conform to the commercially reasonable standards as provided in
Section 9-610(b) of the UCC or its equivalent in other jurisdictions.
(d)
Management
of the Collateral.
Each Grantor further agrees, that, during the continuance of any Event of Default, (i) at the Purchaser’s
request, it shall assemble the Collateral and make it available to the Purchaser at places that the Purchaser shall reasonably select,
whether at such Grantor’s premises or elsewhere, (ii) without limiting the foregoing, the Purchaser also has the right to
require that each Grantor store and keep any Collateral pending further action by the Purchaser and, while any such Collateral is so
stored or kept, provide such guards and maintenance services as shall be necessary to protect the same and to preserve and maintain such
Collateral in good condition, (iii) until the Purchaser is able to enter into an asset sale with respect to any Collateral, the
Purchaser shall have the right to hold or use such Collateral to the extent that it deems appropriate for the purpose of preserving the
Collateral or its value or for any other purpose deemed appropriate by the Purchaser and (iv) the Purchaser may, if it so elects,
seek the appointment of a receiver or keeper to take possession of any Collateral and to enforce any of the Purchaser‘s remedies
(for the benefit of the Purchaser Parties), with respect to such appointment without prior notice or hearing as to such appointment.
The Purchaser shall not have any obligation to any Grantor to maintain or preserve the rights of any Grantor as against third parties
with respect to any Collateral while such Collateral is in the possession of the Purchaser.
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(e)
Application
of Proceeds.
The Purchaser shall apply the cash proceeds of any action taken by it pursuant to this
Section 5.1
, after
deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of
any Collateral or in any way relating to the Collateral or the rights of the Purchaser and any other Purchaser Party hereunder, including
reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Obligations, as set forth in the Purchase
Agreement, and only after such application and after the payment by the Purchaser of any other amount required by any Regulation, need
the Purchaser account for the surplus, if any, to any Grantor.
(f)
Direct
Obligation
. None of the Purchaser or any other Purchaser Party shall be required to make any demand upon, or pursue or exhaust any
right or remedy against, any Grantor, any other Purchaser Party or any other person with respect to the payment of the Obligations or
to pursue or exhaust any right or remedy with respect to any Collateral therefor or any direct or indirect guaranty thereof. All of the
rights and remedies of the Purchaser and any other Purchaser Party under any Transaction Document shall be cumulative, may be exercised
individually or concurrently and not exclusive of any other rights or remedies provided by any Regulation. To the extent it may lawfully
do so, each Grantor absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert against
the Purchaser or any other Purchaser Party, any valuation, stay, appraisement, extension, redemption or similar laws and any and all
rights or defenses it may have as a surety, now or hereafter existing, arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of any Collateral shall be required by law, such notice shall be deemed reasonable
and proper if given at least 10 days before such sale or other disposition.
(g)
Commercially
Reasonable
. To the extent that applicable Regulations impose duties on the Purchaser to exercise remedies in a commercially reasonable
manner, each Grantor acknowledges and agrees that it is not commercially unreasonable for the Purchaser to do any of the following:
(i)
fail
to incur significant costs, expenses or other Losses reasonably deemed as such by the Purchaser to prepare any Collateral for disposition;
(ii)
fail
to obtain Permits, or other consents, for access to any Collateral to dispose of, or for the collection of, any Collateral, or, if not
required by applicable Regulations, fail to obtain Permits or other consents for the collection or disposition of any Collateral;
(iii)
fail
to exercise remedies against any person obligated on any Collateral or to remove Liens on any Collateral or to remove any adverse claims
against any Collateral;
(iv)
advertise
dispositions of any Collateral through publications or media of general circulation, whether or not such Collateral is of a specialized
nature or to contact other persons, whether or not in the same business as any Grantor, for expressions of interest in acquiring any
such Collateral;
(v)
exercise
collection remedies against account debtors and other persons obligated on any Collateral, directly or through the use of collection
agencies or other collection specialists, hire one or more professional auctioneers to assist in the disposition of any Collateral, whether
or not such Collateral is of a specialized nature or, to the extent deemed appropriate by the Purchaser, obtain the services of other
brokers, investment bankers, consultants and other professionals to assist the Purchaser in the collection or disposition of any Collateral,
or utilize Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable
capacity of doing so, or that match buyers and sellers of assets to dispose of any Collateral;
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(vi)
dispose
of assets in private sales instead of, or through exchange or wholesale rather than, retail markets;
(vii)
disclaim
disposition warranties, including title, possession or quiet enjoyment; or
(viii)
purchase
insurance or credit enhancements to insure the Purchaser against risks of loss, collection or disposition of any Collateral or to provide
to the Purchaser a guaranteed return from the collection or disposition of any Collateral.
Each Grantor acknowledges that the purpose
of this
Section 5.1
is to provide a non-exhaustive list of actions or omissions that are commercially reasonable when exercising
remedies against any Collateral and that other actions or omissions by the Purchaser Parties shall not be deemed commercially unreasonable
solely on account of not being indicated in this
Section 5.1.
Without limitation upon the foregoing, nothing contained in
this
Section 5.1
shall be construed to grant any rights to any Grantor or to impose any duties on the Purchaser that would
not have been granted or imposed by this Agreement or by applicable Regulations in the absence of this
Section 5.1
.
(h)
IP
Licenses
. For the purpose of enabling the Purchaser to exercise rights and remedies under this
Section 5.1
(including
in order to take possession of, collect, receive, assemble, process, appropriate, remove, realize upon, enter into an asset sale with
respect to, or grant options to purchase any Collateral) at such time as the Purchaser shall be lawfully entitled to exercise such rights
and remedies, each Grantor hereby grants to the Purchaser, for the benefit of the Purchaser Parties, (i) an irrevocable, nonexclusive,
worldwide license (exercisable without payment of royalty or other compensation to such Grantor), including in such license the right
to sublicense, use and practice any Intellectual Property now owned or hereafter acquired by such Grantor and access to all media in
which any of the licensed items may be recorded or stored and to all Software and programs used for the compilation or printout thereof
and (ii) an irrevocable license (without payment of rent or other compensation to such Grantor) to use, operate and occupy all real
property owned, operated, leased, subleased or otherwise occupied by such Grantor.
(i)
Performance
by the Purchaser
. The Purchaser may, but is not obligated to, perform or attempt to perform any Contractual Obligation of any Grantor
contained herein with or without prior written notice to such Grantor. If any material part of the Collateral becomes the subject of
any Proceeding and any such Grantor fails to defend fully such Proceeding and to protect such Grantor’s and Purchaser Parties’
rights in such Collateral in good faith, the Purchaser may, at its option but at Grantors’ cost, elect to defend and control the
defense of such litigation or other proceeding, and may (i) select and retain counsel, (ii) determine whether settlement shall
be offered or accepted, and (iii) determine and negotiate all settlement terms.
5.2
Accounts
and Payments in Respect of General Intangibles.
(a)
In
addition to, and not in substitution for, any similar requirement in the Purchase Agreement, if required by the Purchaser at any time
during the continuance of an Event of Default, any payment of accounts or payment in respect of general intangibles, when collected by
any Grantor, shall be promptly (and, in any event, within two (2) business days) deposited by such Grantor in the exact form received,
duly indorsed by such Grantor to the Purchaser, in a deposit account subject to a Control Agreement, subject to withdrawal by the Purchaser
as provided in
Section 5.4
. Until so turned over, such payment shall be held by such Grantor in trust for the Purchaser,
segregated from other funds of such Grantor. Each such deposit of proceeds of accounts and payments in respect of general intangibles
shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit.
(b)
At
any time during the continuance of an Event of Default:
(i)
each
Grantor shall, upon the Purchaser’s request, deliver to the Purchaser all original and other documentation evidencing, and relating
to, the agreements, arrangements and transactions that gave rise to any account or any payment in respect of general intangibles, including
all original orders, invoices and shipping receipts and notify account debtors that the accounts or general intangibles have been collaterally
assigned to the Purchaser and that payments in respect thereof shall be made directly to the Purchaser;
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(ii)
the
Purchaser may, without notice, at any time during the continuance of an Event of Default, limit or terminate the authority of a Grantor
to collect its accounts or amounts due under general intangibles or any thereof and, in its own name or in the name of others, communicate
with account debtors to verify with them to the Purchaser’s satisfaction the existence, amount and terms of any account or amounts
due under any general intangible. In addition, the Purchaser may at any time enforce such Grantor’s rights against such account
debtors and obligors of general intangibles; and
(iii)
each
Grantor shall take all actions, deliver all documentation and provide all information necessary or reasonably requested by the Purchaser
to ensure any Internet Domain Name is registered.
(c)
Anything
herein to the contrary notwithstanding, each Grantor shall remain liable under each account and each payment in respect of general intangibles
to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms
of any agreement giving rise thereto. No Purchaser Party shall have any obligation or liability under any agreement giving rise to an
account or a payment in respect of a general intangible by reason of or arising out of any Transaction Document or the receipt by any
Purchaser Party of any payment relating thereto, nor shall any Purchaser Party be obligated in any manner to perform any obligation of
any Grantor under or pursuant to any agreement giving rise to an account or a payment in respect of a general intangible, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance
by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any
amounts that may have been assigned to it or to which it may be entitled at any time or times.
5.3
Pledged
Collateral.
(a)
Voting
Rights
. During the continuance of an Event of Default, upon notice by the Purchaser to the relevant Grantor or Grantors, the
Purchaser or its nominee may exercise (A) any voting, consent, corporate and other right pertaining to the Pledged Collateral at
any meeting of shareholders, partners or members, as the case may be, of the relevant issuer or issuers of Pledged Collateral or otherwise
and (B) any right of conversion, exchange and subscription and any other right, privilege or option pertaining to the Pledged Collateral
as if it were the absolute owner thereof (including the right to exchange at its discretion any Pledged Collateral upon the merger, amalgamation,
consolidation, reorganization, recapitalization or other fundamental change in the corporate or equivalent structure of any issuer of
Pledged Collateral, the right to deposit and deliver any Pledged Collateral with any committee, depositary, transfer agent, registrar
or other designated agency upon such terms and conditions as the Purchaser may determine), all without liability except to account for
property actually received by it;
provided
, that the Purchaser shall have no duty to any Grantor to exercise any such right, privilege
or option and shall not be responsible for any failure to do so or delay in so doing.
(b)
Proxies
.
In order to permit the Purchaser to exercise the voting and other consensual rights that it may be entitled to exercise pursuant hereto
and to receive all dividends and other distributions that it may be entitled to receive hereunder, (i) each Grantor shall promptly
execute and deliver (or cause to be executed and delivered) to the Purchaser all such proxies, dividend payment orders and other instruments
as the Purchaser may from time to time reasonably request and (ii) without limiting the effect of
clause (i)
above,
such Grantor hereby grants to the Purchaser an irrevocable proxy to vote all or any part of the Pledged Collateral and to exercise all
other rights, powers, privileges and remedies to which a holder of the Pledged Collateral would be entitled (including giving or withholding
written consents of shareholders, partners or members, as the case may be, calling special meetings of shareholders, partners or members,
as the case may be, and voting at such meetings), which proxy shall be effective, automatically and without the necessity of any action
(including any transfer of any Pledged Collateral on the record books of the issuer thereof) by any other person (including the issuer
of such Pledged Collateral or any officer or agent thereof) during the continuance of an Event of Default and which proxy shall remain
in place as long as any Obligation shall remain outstanding.
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(c)
Authorization
of Issuers
. Each Grantor hereby expressly irrevocably authorizes and instructs, without any further instructions from such Grantor,
each issuer of any Pledged Collateral pledged hereunder by such Grantor to (i) comply with any instruction received by it from the
Purchaser in writing that states that an Event of Default is continuing and is otherwise in accordance with the terms of this Agreement
and each Grantor agrees that such issuer shall be fully protected from Losses to such Grantor in so complying and (ii) unless otherwise
expressly permitted hereby, pay any dividend or make any other payment with respect to the Pledged Collateral directly to the Purchaser.
5.4
Proceeds
to be Turned Over to and Held by Purchaser.
Unless otherwise expressly provided in the
Purchase Agreement or this Agreement, after (i) acceleration of any part of the Secured Obligations of any Grantor or (ii) upon
notice by the Purchaser to any Grantor during the continuation of an Event of Default, all proceeds of any Collateral received by such
Grantor hereunder in Cash, certificates of deposit, bankers’ acceptances, time and demand deposits and other similar cash equivalents
shall be held by such Grantor in trust for the Purchaser and the other Purchaser Parties, segregated from other funds of such Grantor,
and shall, promptly upon receipt by any Grantor, be turned over to the Purchaser in the exact form received (with any necessary endorsement).
All such proceeds and other proceeds being held by the Purchaser (or by such Grantor in trust for the Purchaser) shall continue to be
held as collateral security for the Secured Obligations and shall not constitute payment thereof until applied as provided in the Purchase
Agreement.
5.5
Registration
Rights and Private Sales.
(a)
If,
in the opinion of the Purchaser, it is necessary or advisable to transfer any portion of the Pledged Collateral by registering such Pledged
Collateral under the provisions of the Securities Act of 1933 (the “
Securities Act
”) and such Pledged Collateral is
not otherwise covered by more specific registration rights obligations of a relevant Grantor in any other Transaction Document, each
such relevant Grantor shall cause the issuer thereof to do or cause to be done all acts as may be, in the opinion of the Purchaser, necessary
or advisable to register such Pledged Collateral or that portion thereof to be transferred under the provisions of the Securities Act,
all as directed by the Purchaser in conformity with the requirements of the Securities Act and the rules and regulations of the
SEC applicable thereto and in compliance with the securities or “
Blue Sky
” laws of any jurisdiction that the Purchaser
shall designate.
(b)
Each
Grantor recognizes that the Purchaser may be unable to effect a public sale of any Pledged Collateral by reason of certain prohibitions
contained in the Securities Act and applicable state or foreign securities laws or otherwise or may determine that a public sale is impracticable,
not desirable or not commercially reasonable and, accordingly, may resort to one or more private sales thereof to a restricted group
of purchasers that shall 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. Each Grantor acknowledges and agrees that any such private sale may result in
prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable manner. The Purchaser shall be under no obligation to delay
a sale of any Pledged Collateral for the period of time necessary to permit the issuer thereof to register such securities for public
sale under the Securities Act or under applicable state securities laws even if such issuer would agree to do so.
(c)
Each
Grantor agrees to use its best efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of
any portion of the Pledged Collateral pursuant to this
Section 5.5
valid and binding and in compliance with all applicable
Regulations. Each Grantor further agrees that a breach of any covenant contained in this
Section 5.5
will cause irreparable
injury to the Purchaser and other Purchaser Parties, that the Purchaser and the other Purchaser Parties have no adequate remedy at law
in respect of such breach and, as a consequence, that each and every covenant contained in this
Section 5.5
shall be specifically
enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defense against an action for specific
performance of such covenants except for a defense that no Event of Default has occurred under the Purchase Agreement.
5.6
Deficiency.
Each Grantor shall remain jointly and severally liable for any deficiency if the proceeds
of any sale or other disposition of any Collateral are insufficient to pay the Secured Obligations and the fees and disbursements of
any attorney or agent employed by the Purchaser or any other Purchaser Party to collect such deficiency.
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ARTICLE VI
ADDITIONAL
rights of the Purchaser
6.1
The
Purchaser’s Appointment as Attorney-in-Fact
(a)
Each
Grantor hereby irrevocably constitutes and appoints the Purchaser thereof, 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 Grantor and in the name of such Grantor or in its own name,
for the purpose of carrying out the terms of the Transaction Documents, to take any appropriate action and to execute any documentation
or instrument that may be necessary or desirable to accomplish the purposes of the Transaction Documents, and, without limiting the generality
of the foregoing, each Grantor hereby gives the Purchaser the power and right, on behalf of such Grantor, without notice to or assent
by such Grantor, to do any of the following when an Event of Default shall be continuing:
(i)
in
the name of such Grantor, in its own name or otherwise, take possession of and indorse and collect any check, draft, note, acceptance
or other instrument for the payment of moneys due under any account or general intangible or with respect to any other Collateral and
file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Purchaser
for the purpose of collecting any such moneys due under any account or general intangible or with respect to any other Collateral whenever
payable;
(ii)
in
the case of any Intellectual Property owned by or licensed to the Grantors, execute, deliver and have recorded any documentation that
the Purchaser may request to evidence, effect, publicize or record the Purchaser’s security interest in such Intellectual Property
and the goodwill and general intangibles of such Grantor relating thereto or represented thereby;
(iii)
pay
or discharge taxes and Liens levied or placed on or threatened against any Collateral, effect any repair or pay any insurance called
for by the terms of the Purchase Agreement (including all or any part of the premiums therefor and the costs thereof);
(iv)
execute,
in connection with any sale provided for in this Agreement or any other Transfer Document, any documentation to effect or otherwise necessary
or appropriate in relation to evidence the transfer of any Collateral; or
(v)
(A) direct
any party liable for any payment under any Collateral to make payment of any moneys due or to become due thereunder directly to the Purchaser
or as the Purchaser shall direct, (B) ask or demand for, and collect and receive payment of and receipt for, any moneys, claims
and other amounts due or to become due at any time in respect of or arising out of any Collateral, (C) sign and indorse any invoice,
freight or express bill, bill of lading, storage or warehouse receipt, draft against debtors, assignment, verification, notice and other
documentation in connection with any Collateral, (D) commence and prosecute any suit, action or proceeding at law or in equity in
any court of competent jurisdiction to collect any Collateral and to enforce any other right in respect of any Collateral, (E) defend
any actions, suits, proceedings, audits, claims, demands, orders or disputes brought against such Grantor with respect to any Collateral,
(F) settle, compromise or adjust any such actions, suits, proceedings, audits, claims, demands, orders or disputes and, in connection
therewith, give such discharges or releases as the Purchaser may deem appropriate, (G) assign any Intellectual Property owned by
the Grantors or any IP Licenses of the Grantors throughout the world on such terms and conditions and in such manner as the Purchaser
shall in its sole discretion determine, including the execution and filing of any documentation necessary to effectuate or record such
assignment, (H) deliver notices under Control Agreements over deposit accounts and securities accounts to present the access of
the Grantors and exercise control over such deposit accounts and securities accounts and transfer the content of such accounts to, and
direct other payments to be made to, the Purchaser or other persons and (I) generally, enter into an Asset Sale with respect to,
grant a Lien on, enter into any agreement or other obligation with respect to and otherwise deal with, any Collateral as fully and completely
as though the Purchaser were the absolute owner thereof for all purposes and do, at the Purchaser’s option, at any time or from
time to time, all acts and things that the Purchaser deems necessary to protect, preserve or realize upon any Collateral and the Purchaser
Parties’ security interests therein and to effect the intent of the Transaction Documents, all as fully and effectively as such
Grantor might do.
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(b)
If
any Grantor fails to perform or comply with any obligation contained herein, the Purchaser, at its option, but without any obligation
so to do, may perform or comply, or otherwise cause performance or compliance, with such obligation.
(c)
The
expenses of the Purchaser incurred in connection with actions undertaken as provided in this
Section 6.1
, together with interest
thereon at the highest interest rate applicable to the principal amount of the Obligations, as set forth in the Transaction Documents,
from the date of payment by the Purchaser to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Purchaser
on demand.
(d)
Each
Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue of this
Section 6.1
. All
powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement
is terminated and the security interests created hereby are released.
6.2
Authorization
to File Financing Statements.
Each Grantor authorizes the Purchaser, its Affiliates
and their Related Parties, contractors and agents, at any time and from time to time, to file or record financing statements, amendments
thereto, and other filing or recording documentation or instruments with respect to any Collateral in such form and in such offices as
the Purchaser reasonably determines appropriate to perfect the security interests of the Purchaser under this Agreement, and such financing
statements and amendments may describe the Collateral covered thereby as “all assets of the 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 applicable UCC,
and contain any other information required pursuant to the UCC for the sufficiency or filing office acceptance of any financing statement
or amendment, including, in the case of financing statements filed as fixture filings or indicating Collateral as as-extracted collateral
or as otherwise required by applicable Regulation, a sufficient description of the real property related to the applicable Collateral.
A photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording documentation
or instrument for filing or recording in any jurisdiction. Such Grantor also hereby ratifies its authorization for the Purchaser to have
filed any initial financing statement or amendment thereto under the UCC (or other similar laws) in effect in any jurisdiction if filed
prior to the date hereof.
6.3
Authority
of the Purchaser.
Each Grantor acknowledges that the rights and responsibilities of
the Purchaser under this Agreement with respect to any action taken by the Purchaser or the exercise or non-exercise by the Purchaser
of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement
shall, as between the Purchaser and the other Purchaser Parties, be governed by the Purchase Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the Purchaser and the Grantors, the Purchaser shall be conclusively
presumed to be acting as agent for the Purchaser Parties with full and valid authority so to act or refrain from acting, and no Grantor
shall be under any obligation or entitlement to make any inquiry respecting such authority.
6.4
Duty;
Obligations and Losses.
The Purchaser’s sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession shall be to deal with it in the same manner as the Purchaser
deals with similar property for its own account. The powers conferred on the Purchaser hereunder are solely to protect the Purchaser’s
interest in the Collateral and shall not impose any duty upon the Purchaser to exercise any such powers. The Purchaser shall be accountable
only for amounts that it receives as a result of the exercise of such powers, and neither it nor any of its Affiliates shall be responsible
to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct as finally determined
by a court of competent jurisdiction. In addition, the Purchaser shall not be liable or responsible for any loss or damage to any Collateral,
or for any diminution in the value thereof, and shall not suffer any other Loss by reason of the act or omission of any warehousemen,
carrier, forwarding agency, consignee or other bailee if such person has been selected by the Purchaser in good faith.
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6.5
Obligations
and Losses with respect to the Collateral.
No Purchaser Party and no Affiliate thereof
shall be liable or otherwise incur any Loss for failure to demand, collect or realize upon any Collateral or for any delay in doing so
or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other person or
to take any other action whatsoever with regard to any Collateral. The powers conferred on the Purchaser hereunder shall not impose any
duty upon any other Purchaser Party to exercise any such powers. The other Purchaser Parties shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers, and neither they nor any of their respective officers, directors, employees
or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
ARTICLE VII
miscellaneous
7.1
Reinstatement.
Each Grantor agrees that, if any payment made by any Purchaser Party or other person
and applied to the Secured Obligations is at any time annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent
or preferential or otherwise required to be refunded or repaid, or the proceeds of any Collateral are required to be returned by any
Purchaser Party to such Grantor, its estate, trustee, receiver or any other party, including as part of any bankruptcy or insolvency
proceeding or any bankruptcy, state or federal law, common law or equitable cause or other Regulation, then, to the extent of such payment
or repayment, any Lien or other Collateral securing the Secured Obligations that had originally been repaid shall be and remain in full
force and effect, as fully as if such payment had never been made. If, prior to any of the foregoing, any Lien or other Collateral securing
such Secured Obligations hereunder shall have been released or terminated by virtue of the foregoing or (b) any other provision
of this Agreement shall have been terminated, cancelled or surrendered, such Lien, other Collateral or provision shall be reinstated
in full force and effect and such prior release, termination, cancellation or surrender shall not diminish, release, discharge, impair
or otherwise affect the obligations of any such Grantor in respect of any Lien or other Collateral securing such obligation or the amount
of such payment.
7.2
Independent
Obligations.
The obligations of each Grantor hereunder are independent of and separate
from the Secured Obligations. If any Secured Obligation is not paid when due, or upon any Event of Default, the Purchaser may, at its
sole election, proceed directly and at once, without notice, against any Grantor and any Collateral to collect and recover the full amount
of any Secured Obligation then due, without first proceeding against any other Grantor, any other Company Party or any other Collateral
and without first joining any other Grantor or any other Company Party in any proceeding.
7.3
No
Waiver by Course of Conduct.
No Purchaser Party shall by any act (except by a written
instrument pursuant to
Section 7.4
), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part
of any Purchaser Party, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any
right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by any Purchaser Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy that such Purchaser Party would otherwise have on any future occasion.
7.4
Amendments
in Writing; Entire Agreement.
None of the terms or provisions of this Agreement may
be waived, amended, supplemented or otherwise modified except in accordance with
Section 5.3(b)
of the Purchase Agreement;
provided
, that annexes to this Agreement may be supplemented (but no existing provisions may be modified and no Collateral may
be released) through Pledge Amendments and Joinder Agreements (each as defined below), in substantially the form of
Annex 1
and
Annex 2
, respectively, in each case duly executed by the Purchaser and each Grantor directly affected thereby. Furthermore, as
described in
Section 5.3(a) (Entire Agreement)
of the Purchase Agreement, this Agreement and the other Transaction Documents
contain and constitute the entire agreement of the parties with respect to the subject matter hereof.
7.5
Additional
Grantors; Additional Pledged Collateral.
(a)
Joinder
Agreements
. The Company shall cause any Subsidiary that is not a Grantor to become a Grantor hereunder. Each such Subsidiary shall
execute and deliver to the Purchaser a Joinder Agreement substantially in the form of
Annex 2
(each a “
Joinder Agreement
”)
and shall thereafter for all purposes be a party hereto and have the same rights, benefits and obligations as a Grantor party hereto
on the date hereof.
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(b)
Pledge
Amendments
. To the extent any Pledged Collateral has not been delivered as of the date hereof, such Grantor shall deliver a pledge
amendment duly executed by the Grantor in substantially the form of
Annex 1
(each, a “
Pledge Amendment
”). Such
Grantor authorizes the Purchaser to attach each Pledge Amendment to this Agreement.
7.6
Notices.
All notices, requests and demands to or upon the Purchaser or any Grantor hereunder
shall be effected in the manner provided for in
Section 5.4 (Notices)
of the Purchase Agreement;
provided
, that any
such notice, request or demand to or upon any Grantor shall be addressed to the Company’s notice address set forth in such
Section 5.4
.
7.7
Successors
and Assigns.
This Agreement shall be binding upon the successors and assigns of each
Grantor and shall inure to the benefit of each Purchaser Party and their successors and assigns;
provided
, that no Grantor may
assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Purchaser
(and any attempt to effect such assignment, transfer or delegation without such consent shall be null and void at the outset), unless
expressly authorized by the Purchase Agreement.
7.8
Amendments;
Counterparts; Electronic Signatures.
None of the terms or provisions of this Agreement
may be waived, amended, supplemented or otherwise modified except in accordance with
Section 5.3(b) (Amendments)
of
the Purchase Agreement. This Agreement may be executed in counterparts as provided in
Section 5.3(e) (Counterparts)
of the Purchase Agreement and, as provided in
Section 5.3(f) (Electronic Signatures)
of the Purchase Agreement, electronic
signatures have the same force and effect as manual signatures.
7.9
Survival.
All representations and warranties made by the Grantors in the Transaction Documents
(including any such representation or warranty made in or in connection with any amendment thereto) shall constitute representations
and warranties made under this Agreement. All representations and warranties made by the Grantors under this Agreement (including those
representations and warranties set forth in the immediately preceding sentence) shall be made or deemed to be made at and as of the date
hereof (except those that are expressly made as of a specific date), shall survive after the date hereof and shall not be waived by the
execution and delivery of this Agreement, any investigation made by or on behalf of the Purchaser or the purchase of any Purchased Securities
under the Purchase Agreement. Notwithstanding any termination of this Agreement, the indemnities to which the Purchaser Parties are entitled
under the provisions of this Agreement or any other Transaction Document shall continue in full force and effect and shall protect the
Purchaser Parties against events arising after such termination as well as before. This Agreement shall be reinstated at any time any
payment of any Secured Obligation, in whole or in part, is rescinded or must otherwise be returned by the Purchaser upon the insolvency,
bankruptcy or reorganization of any Grantor or other Company Party or otherwise, all as though such payment had not been made.
7.10
Security
Interest Absolute.
All rights of the Purchaser hereunder, the grant of the security
interest in the Collateral, and all obligations of each Grantor hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of any Transaction Document or any agreement with respect to any of the Secured Obligations or any
other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the
Transaction Documents or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral,
or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the
Secured Obligations or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any
Grantor in respect of the Secured Obligations or this Agreement (other than payment of the outstanding Secured Obligations).
7.11
Governing
Law
. Each Grantor agrees to
Section 5.6 (Governing Law; Courts)
of the Purchase
Agreement, including that (a) this Agreement and all claims, disputes, Proceedings, and matters related hereto or thereto or arising
hereunder or thereunder or arising from or relating to the relationship among any of the parties hereto or thereto, are governed by,
and shall be construed, interpreted and enforced exclusively in accordance with, the laws of the State of Delaware (without giving effect
to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the
laws of any jurisdiction other than those of the State of Delaware) and (b) any such Proceeding shall be brought exclusively in
the Delaware state courts sitting in Wilmington, DE or the federal courts of the United States of America for the District of Delaware
sitting in Wilmington, DE; provided, that the Purchaser and any Purchaser Party may bring Proceedings in other jurisdictions to enforce
any Transaction Document.
Each Company Party hereby accepts such jurisdiction, waives any objections to venue, and agrees that a final
judgment in any such Proceeding shall be conclusive and enforceable in other jurisdictions, all as provided in the Purchase Agreement
and accepts that service of process may be made in the way set forth in the Purchase Agreement
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7.12
W
aiver
of Jury Trial and Certain Other Rights.
Each party hereto hereby agree
to
Section 5.16 (Waiver of Jury Trial and Certain Other Rights)
of the Purchase Agreement whereby, among other things, it
irrevocably waives trial by jury in any Proceeding with respect to, or directly or indirectly arising out of, relating to or in connection
with, this Agreement or any other Transaction Document or the transactions contemplated therein or related thereto (whether founded in
contract, tort or any other theory). Each party hereto (a) certifies that no representative, agent or attorney of any other party
or beneficiary hereof has represented, expressly or otherwise, that such other parties would not, in the event of litigation, seek to
enforce the foregoing waiver and (b) acknowledges that it and the other parties have been induced to enter into this Agreement and
the other Transaction Documents by, among other things, the mutual waivers and certifications in this section.
7.13
Interpretation.
This Agreement is a Transaction Document and as such is subject to various interpretative,
amendment and third party beneficiary and other miscellaneous provisions set forth in the Purchase Agreement that expressly apply to
Transaction Documents, located principally in
Article V
thereof, including
Sections 5.3(d) (No Implied Waivers or
Notice Rights), 5.5 (Set off), 5.7 (Severability)
and
5.11 (Marshaling, Payments Set Aside)
thereof.
[
Signature
Pages Follow
]
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In witness
whereof
, each of the undersigned has duly executed this Agreement as of the date first written
above.
ConnectM Technology Solutions, Inc.
as Company and Grantor
By:
Name:
Title:
Signed on:
[
Grantors
]
as Grantor
By:
Name:
Title:
Accepted and Agreed
as of the date first written above:
ASCENT PARTNERS FUND LLC
as Purchaser
By:
Name:
Title: Authorized Signatory
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20
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ANNEX
1
FORM OF
PLEDGE AMENDMENT
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21
-
Pledge
Amendment
This
Pledge Amendment
,
dated as of __________ __, 20__, is delivered pursuant to
Section 7.5(b)
of the Security Agreement, dated as of
__________ __, 20__, by ________________ (the “
Company
”), the undersigned Grantors and the other Company Parties
and Affiliates of the Company from time to time party thereto as Grantors in favor of ASCENT PARTNERS FUND LLC, for itself and as agent
for the other Purchaser Parties referred to therein (the “
Security Agreement
”). Capitalized terms used herein without
definition are used as defined in the Security Agreement.
The undersigned
hereby agrees that (a) this Pledge Amendment may be attached to, and become part of, the Security Agreement, (b) the information
set forth in
Annex 1-A
to this Pledge Amendment shall be added to the information set forth in [
Section 14 (Pledged Collateral)
of
Schedule 1-A (Corporate Information)
] [
Section 4 (Pledged Collateral)
of
Schedule 1-B (Information About Individual
Company Parties)
] to the Disclosure Certificate (without modifying any representation or warranty made prior to the date hereof)
and (c) the Pledged Collateral listed on
Annex 1-A
to this Pledge Amendment shall be and become part of the Collateral
referred to in the Security Agreement and shall secure all Secured Obligations of the undersigned.
The undersigned
hereby represents and warrants that each of the representations and warranties contained in
Article III (Representations and
Warranties)
of the Security Agreement (including by reference to the Disclosure Certificate or the Purchase Agreement) is true and
correct and as of the date hereof as if made on and as of such date.
[
Grantor
]
By:
Name:
Title:
ACKNOWLEDGED AND AGREED
as of the date first written above:
ASCENT PARTNERS
FUND LLC,
as Purchaser
By:
Name:
Title: Authorized Signatory
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annex
1-a
TO
Pledge Amendment
CERTIFICATED BLUE CLOUD SHARES
Issuer
Class
Certificate
No(s).
Par Value
Number
of Shares
UNCERTIFICATED
BLUE CLOUD SHARES
Issuer
Class
Account or
Reference
No(s).
Par Value
Number
of
Shares
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23
-
ANNEX
2
FORM OF
JOINDER AGREEMENT
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24
-
Joinder
Agreement
This
Joinder
Agreement
, dated as of _________ __, 20__, is delivered pursuant to
Section 7.5(a)
of the Security Agreement, dated
as of __________ __, 20__, by and among _______________ (together with its successors and, if permitted, assigns the “
Company
”)
and the Affiliates of the Company from time to time party thereto as Grantors in favor of Ascent Partners Fund LLC, a Delaware limited
liability company, for itself and as agent for the other Purchaser Parties referred to therein (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “
Security Agreement
”). Capitalized terms used but not defined
herein are used as defined in the Security Agreement.
By executing and
delivering this Joinder Agreement, the undersigned, as provided in
Section 7.5(a)
of the Security Agreement, hereby
becomes a party to the Security Agreement as a Grantor thereunder with the same force and effect as if originally named as a Grantor
therein and, without limiting the generality of the foregoing, as collateral security for the prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations of the undersigned, hereby mortgages,
pledges and hypothecates to the Purchaser for the benefit of the Purchaser Parties, and grants to the Purchaser for the benefit of the
Purchaser Parties a lien on and security interest in, all of its rights, title and interests in, to and under the Collateral of the undersigned
and expressly assumes all obligations and liabilities of a Grantor thereunder. The undersigned hereby agrees to be bound as a Grantor
for the purposes of the Security Agreement.
The information
set forth in
Annex 1
hereto is hereby added to the information set forth in the Disclosure Certificate (without modifying
any representation or warranty made prior to the date hereof). By acknowledging and agreeing to this Joinder Agreement, the undersigned
hereby agree that this Joinder Agreement may be attached to the Purchase Agreement and that the Pledged Collateral listed on
Annex 1
to this Joinder Amendment shall be and become part of the Collateral referred to in the Security Agreement and shall secure all Secured
Obligations of the undersigned.
The undersigned
hereby represents and warrants that each of the representations and warranties contained in
Article III
of the Security Agreement
(including by reference to the Disclosure Certificate or the Purchase Agreement) applicable to it and its Subsidiaries is true and correct
on and as the date hereof as if made on and as of such date.
In
witness whereof
, each of the undersigned has duly executed this Joinder Agreement as of the
date first written above.
[ADDITIONAL GRANTOR]
By:
Name:
Title:
-
25
-
ACKNOWLEDGED AND AGREED
as of the date first written above:
[EACH GRANTOR PLEDGING
ADDITIONAL COLLATERAL]
By:
Name:
Title:
ASCENT PARTNERS FUND LLC,
as Purchaser
By:
Name:
Title: Authorized Signatory
-
26
-
ANNEX
1
TO
THE JOINDER AGREEMENT
[Insert
all information to be added to the Disclosure Statement.]
-
27
-
ANNEX
3
FORM OF
INTELLECTUAL PROPERTY SECURITY AGREEMENT
-
28
-
INTELLECTUAL
PROPERTY SECURITY AGREEMENT
This
[Copyright]
[Patent] [Trademark] Security Agreement
,
dated as of _________ __, 20__, is made by
each of the entities listed on the signature pages hereof (each, together with their successors and, if permitted, assigns, a “
Grantor
”
and, collectively, the “
Grantors
”), in favor of _________________________, for itself and as agent for certain other
Purchaser Parties (as defined in the Purchase Agreement) (together with its successors and permitted assigns, the “
Purchaser
”).
W
I T N E S S E T H:
Whereas
,
pursuant to the Purchase Agreement, dated as of __________ __, 20__ (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the “
Purchase Agreement
”), between the Company and the Purchaser, the Purchaser has agreed
to purchase securities from the Company upon the terms and subject to the conditions set forth therein; and
Whereas
,
each Grantor (other than the Company) has guaranteed the Obligations (as defined in the Purchase Agreement) of the Company and other
Company Parties (as defined in the Purchase Agreement) and all of the Grantors are party to a Security Agreement of even date herewith
with the Purchaser (the “
Security Agreement
”) pursuant to which the Grantors are required to execute and deliver this
[Copyright] [Patent] [Trademark] Security Agreement.
Now,
Therefore
,
in consideration of the premises and
to induce the Purchaser to enter into the Purchase Agreement and to induce the Purchaser to purchase securities from the Company thereunder,
each Grantor hereby agrees with the Purchaser as follows:
Section 1.           Defined
Terms
. Capitalized terms used herein without definition have the meanings ascribed to such terms in the Security Agreement.
Section 2.           Grant
of Security Interest in [Copyright] [Trademark] [Patent] Collateral
. Each Grantor, as collateral security for the prompt and complete
payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations of such Grantor,
hereby mortgages, pledges and hypothecates to the Purchaser for the benefit of the Purchaser Parties, and grants to the Purchaser for
the benefit of the Purchaser Parties a Lien on and security interest in, all of its rights, title and interests in, to and under the
following Collateral of such Grantor (the “
[Copyright] [Patent] [Trademark] Collateral
”):
(a)           [all
of its Copyrights and all IP Licenses providing for the grant by or to such Grantor of any right under any Copyright, including, without
limitation, those referred to on
Schedule 1
hereto;
(b)           all
renewals, reversions and extensions of the foregoing; and
(c)           all
income, royalties, proceeds and Losses at any time due or payable or asserted under and with respect to any of the foregoing, including,
without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation,
dilution, violation or other impairment thereof.]
or
(a)           [all
of its Patents and all IP Licenses providing for the grant by or to such Grantor of any right under any Patent, including, without limitation,
those referred to on
Schedule 1
hereto;
(b)           all
reissues, reexaminations, continuations, continuations-in-part, divisionals, renewals and extensions of the foregoing; and
(c)           all
income, royalties, proceeds and Losses at any time due or payable or asserted under and with respect to any of the foregoing, including,
without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation,
dilution, violation or other impairment thereof.]
-
29
-
or
(a)           [all
of its Trademarks and all IP Licenses providing for the grant by or to such Grantor of any right under any Trademark, including, without
limitation, those referred to on
Schedule 1
hereto;
(b)           all
renewals and extensions of the foregoing;
(c)           all
goodwill of the business connected with the use of, and symbolized by, each such Trademark; and
(d)           all
income, royalties, proceeds and Losses at any time due or payable or asserted under and with respect to any of the foregoing, including,
without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation,
dilution, violation or other impairment thereof.]
Section 3.              Security
Agreement
. The security interest granted pursuant to this [Copyright] [Patent] [Trademark] Security Agreement is granted in conjunction
with the security interest granted to the Purchaser pursuant to the Security Agreement and each Grantor hereby acknowledges and agrees
that the rights and remedies of the Purchaser with respect to the security interest in the [Copyright] [Patent] [Trademark] Collateral
made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.
Section 4.              Grantor
Remains Liable
. Each Grantor hereby agrees that, anything herein to the contrary notwithstanding, such Grantor shall assume full
and complete responsibility for the prosecution, defense, enforcement or any other necessary or desirable actions in connection with
their [Copyrights] [Patents] [Trademarks] and IP Licenses subject to a security interest hereunder.
Section 5.              Counterparts
.
This [Copyright] [Patent] [Trademark] Security Agreement may be executed in any number of counterparts and by different parties in separate
counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart.
Section 6.              Governing
Law
. This [Copyright] [Patent] [Trademark] Security Agreement and the rights and obligations of the parties hereto shall be governed
by, and construed and interpreted in accordance with, the law of the State of Delaware.
[
Signature
Pages Follow
]
-
30
-
In witness
whereof
, each Grantor has caused this [Copyright] [Patent] [Trademark] Security Agreement to
be executed and delivered by its duly authorized officer as of the date first set forth above.
Very truly yours,
[GRANTOR]
as Grantor
By:
Name:
Title:
Acknowledgment
of Grantor
State of
)
)           ss.
County of
)
On this ___ day
of ________, 20__ before me personally appeared ______________________, proved to me on the basis of satisfactory evidence to be the
person who executed the foregoing instrument on behalf of ________________, who being by me duly sworn did depose and say that he is
an authorized officer of said [corporation][limited liability company], that the said instrument was signed on behalf of said [corporation][limited
liability company] as authorized by its [Board of Directors][Board of Managers] and that he acknowledged said instrument to be the free
act and deed of said [corporation][limited liability company].
____________________________
Notary Public
-
31
-
Schedule 1
to
[Copyright] [Patent] [Trademark] Security Agreement
[Copyright]
[Patent] [Trademark] Registrations
A.            REGISTERED
[COPYRIGHTS] [PATENTS] [TRADEMARKS]
[Include
Registration Number and Date]
B.            [COPYRIGHT]
[PATENT] [TRADEMARK] APPLICATIONS
[Include
Application Number and Date]
C.            IP
LICENSES
[Include
complete legal description of agreement (name of agreement, parties and date)]
-
32
-

----- tm2624767d1_ex10-4.htm -----
EX-10.4
7
tm2624767d1_ex10-4.htm
EXHIBIT 10.4
Exhibit
10.4
REGISTRATION
RIGHTS AGREEMENT
This
Registration Rights Agreement
(this “
Agreement
”), dated as of September __, 2026, is entered into by and
among ConnectM Technology Solutions, Inc., a Delaware corporation (together with its successors and, if permitted, assigns, the
“
Company
”), and Ascent Partners Fund LLC (together with its successors and, if permitted, assigns, and together with
each other holder of Registrable Securities from time to time, the “
Holder
”).
WHEREAS,
pursuant to the Securities Purchase Agreement, dated
as of the date hereof, between the Company and the Holder (the “
Purchase Agreement
”; capitalized terms used but not
defined herein are used as defined in the Purchase Agreement, including by reference in
Schedule II
thereof to definitions in
other Transaction Documents), the Holder shall acquire certain Purchased Securities (as defined therein), including Note One, Note Two
and Note Three, which may result in the Holder holding Registrable Securities (as defined below); and
WHEREAS,
the Company has agreed to register the Registrable Securities;
Now,
therefore
,
in consideration
of the representations, warranties and covenants contained in this Agreement, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as follows
:
1.
Registration.
(a)
Registration
Statements.
(i)
Initial.
No later than the applicable Filing Date, the Company shall file with the SEC the Initial Registration Statement relating to the
resale by the Holder of all (or, if lower, the highest number as the SEC will permit) of the Registrable Securities
.
“
Initial
Registration Statement
” means a Registration Statement on Form S-1 or Form S-3 or on such other form promulgated
by the SEC for which the Company then qualifies and which counsel for the Company shall deem appropriate, and which form shall be available
for the registration of the resale by the Holder of the Registrable Securities under the Securities Act, which Registration Statement
provides for the resale from time to time of the Registrable Securities as provided herein.
“
Filing
Date
” means, (i) with respect to the Initial Registration Statement, the 60th, 2026, calendar day after the date hereof,
(ii) with respect to any additional Registration Statements which may be required pursuant to
clauses (ii) (Registration
Statements; Additional)
or
(iii) (Registration Statements; Piggyback Registrations) below
, the earliest practical date
on which the Company is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities
and (iii) with respect to any Registration Statement to be filed pursuant to
clause (iv) (Registration Statements;
Demand) below,
the later of (A) the
“Filing Date”
for the Initial Registration Statement and (B) if
applicable, the earlier of (1) thirty (30) days after the filing of a registration statement covered by
clause (ii) (Registration
Statements; Additional) below
that relates to an underwritten primary offering of Securities of the Company or (2) the date
such offering has been withdrawn.
“
Registration
Statement
” means any registration statement required to be filed hereunder pursuant to this
clause (a) (Registration
Statements; Initial)
or otherwise filed with respect to any Registrable Security, including (in each case) the Prospectus, amendments
and supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.
“
Registrable
Securities
”
1
means, as of any date of determination, all shares of Common Stock then issued or issuable to the
Holder under or in connection with any Note, any share of Series C Preferred Stock or any Warrant, including (a) all shares
of Common Stock then issued and issuable upon conversion in full of any Note (assuming on such date such Note is converted in full without
regard to any conversion limitations therein), including all shares of Common Stock issued or issuable as interest, principal, amortization
payments or other payments in shares of Common Stock under any Note, assuming that all payments that can be made in shares of Common
Stock thereunder are so made and that such Note is held until maturity, (b) all shares of Common Stock then issued and issuable
upon conversion in full of any share of Series C Preferred Stock, including any such share issued or issuable upon conversion of
any Note, including Note Two (assuming on such date such share of Series C Preferred Stock is converted in full without regard to
any conversion limitations therein), (c) all shares of Common Stock then issued and issuable upon exercise in full of any Warrant
(assuming on such date such Warrant is exercised in full without regard to any exercise limitations therein), (d) all shares of
Common Stock then issued and issuable in connection with any anti-dilution or remedies provisions under any Note or Warrant (without
giving effect to any limitations on conversion or exercise therein), and (e) any shares of Common Stock issued or then issuable
upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; for the avoidance
of doubt, for purposes of this definition, “Issuable Securities” refers only to the shares of Common Stock described in clauses
(a) through (e), including Common Stock issuable upon conversion of any Note, conversion of any share of Series C Preferred
Stock, or exercise of any Warrant, and no share of Series C Preferred Stock itself is a Registrable Security or shall be registered
under this Agreement;
provided,
that
“Registrable Securities”
shall cease to include (and the Company shall
not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) any Securities
with respect to which, and for so long as, the following is true: (x) a Registration Statement with respect to the sale of such
Securities is declared effective by the SEC under the Securities Act and such Securities have been disposed of by the Holder in accordance
with such effective Registration Statement, (y) such Securities have been previously sold in accordance with Rule 144, or (z) such
Securities become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to
Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer Agent and
the Holder (assuming that such Securities and any Securities issuable upon exercise, conversion or exchange of which, or as a dividend
upon which, such Securities were issued or are issuable, were at no time held by any Affiliate of the Company), as reasonably determined
by the Company, upon the advice of counsel to the Company.
“
SEC
Guidance
” means (i) any publicly-available written or oral guidance of the SEC staff, or any comments, requirements or
requests of the SEC staff and (ii) the Securities Act and related Regulations.
(ii)
Additional.
(1)            If
the Company has filed a Registration Statement and the SEC informs the Company that all of the Registrable Securities listed in such
Registration Statement cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a
single registration statement, the Company agrees to promptly inform the Holder and shall, as soon as practicable but not later than
the applicable Filing Date, use its efforts to file amendments to such Registration Statement as required by the SEC, covering the maximum
number of Registrable Securities permitted to be registered by the SEC (on Form S-3, F-3 or such other form available to register
for resale the Registrable Securities as a secondary offering), (x) with respect to filing on Form S-3, F-3 or other appropriate
form, subject to the provisions of
Section 1(f) (No Holder Named as Underwriter)
and (y) with respect to the payment
of liquidated damages, subject to the provisions of
Section 1(e) (Partial Liquidated Damages)
;
provided
, that
prior to filing such amendment, the Company shall be obligated to use diligent efforts to advocate with the SEC for the registration
of all of the Registrable Securities in accordance with the SEC Guidance, including Compliance and Disclosure Interpretation 612.09.
-
2
-
“
Rule 415
”
means Rule 415 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.
(2)            Otherwise,
if, at any time during the Effectiveness Period, the number of Registrable Securities exceeds 100% of the number of shares of Common
Stock then registered in a Registration Statement, then the Company shall file, as soon as practicable but not later than the applicable
Filing Date, an additional Registration Statement covering the resale by the Holder of not less than the number of such Registrable Securities.
(iii)
Piggyback
Registrations
. If, at any time during the Effectiveness Period, no effective Registration Statement covers all of the Registrable
Securities and the Company intends to prepare and file with the SEC a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity Securities (other than on Form S-4 or Form S-8 (each
as promulgated under the Securities Act) or their then equivalents relating to equity Securities to be issued solely in connection with
any acquisition of any entity or business or equity Securities issuable in connection with the Company’s stock option or other
employee benefit plans), then the Company shall deliver to the Holder a written notice of such determination and, if within fifteen (15)
days after the date of the delivery of such notice the Holder shall so request in writing, the Company shall, as soon as practicable
but not later than the applicable Filing Date, include in such registration statement all or any part of such Registrable Securities
the Holder requests to be registered;
provided
, that the Company shall not be required to register any Registrable Securities
pursuant to this
clause (iii)
that are eligible for resale pursuant to Rule 144 (without volume restrictions or
current public information requirements) promulgated by the SEC pursuant to the Securities Act or that are the subject of a then effective
Registration Statement.
(iv)
Demand.
As soon as practicable but nevertheless on or prior to the applicable Filing Date, the Company shall, upon written demand
of the Holder, register, on at most two (2) occasions, all or any portion of the Registrable Securities of the Holder;
provided,
that the Company shall not be required to file such a Registration Statement with respect to Registrable Securities already covered
under another previously-filed Registration Statement or that the Holder has requested to be included in another registration statement
pursuant to
clause (iii) (Piggyback Registrations) above
. Within thirty (30) days after effective delivery of such written
demand by the Holder, the Company shall file a registration statement with the SEC covering the portion of the Registrable Securities
identified in such Demand Notice.
(b)
Form Used.
The Company shall use its best efforts to maintain eligibility for use of Form S-1 (or any successor form thereto) for the registration
of the resale of Registrable Securities. If Form S-1 is not available for the registration of the resale of Registrable Securities
pursuant to
clauses (a)(i) (Registration Statements; Initial), (a)(ii)(Registration Statements; Additional)
or
(a)(iv)(Registration
Statements; Demand)
of
Section 1(Registration Statements)
, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form and (ii) undertake to register the Registrable Securities on Form S-1 as soon as such
form is available;
provided,
that the Company shall maintain the effectiveness of the Registration Statement then in effect until
such time as a Registration Statement on Form S-1 covering the Registrable Securities has been declared effective by the SEC.
(c)
Effectiveness
Period.
Subject to the terms of this Agreement,
the Company shall use its best efforts to cause a Registration Statement filed
under this Agreement (including under
clause
(
a)(ii) (Registration Statements; Additional) above
) to be declared
effective under the Securities Act within sixty (60) days after the filing thereof, but in any event no later than the applicable Effectiveness
Deadline, and shall use its best efforts to keep all Registration Statements covering Registrable Securities continuously effective under
the Securities Act until all Registrable Securities covered by such Registration Statement have been sold (the period between the date
such Registration Statement is effective and the date on which all such Registrable Securities have been sold being the “
Effectiveness
Period
”). The Company shall telephonically request effectiveness of a Registration Statement as of 5:00 p.m. on a trading
day. The Company shall immediately notify the Holder of the effectiveness of a Registration Statement on the same trading day that the
Company telephonically confirms effectiveness with the SEC, which shall be the date requested for effectiveness of such Registration
Statement. The Company shall, by 9:30 a.m. on the trading day after the effective date of such Registration Statement, file a final
Prospectus with the SEC as required by Rule 424. Failure to so notify the Holder within one (1) trading day of such notification
of effectiveness or failure to file a final Prospectus as foresaid shall be deemed an Event under
Section 1(e) (Partial
Liquidated Damages)
.
-
3
-
“
Effectiveness
Deadline
” means, with respect to the Initial Registration Statement required to be filed hereunder, the 90th, 2026 calendar
day following the Filing Date;
provided,
that, in the event the Company is notified by the SEC that the Registration Statement
will be subject to a full review, the Effectiveness Deadline as to such Registration Statement shall be extended to the 60th calendar
day after the date otherwise required above;
provided, further,
that, in the event the Company is notified by the SEC that the
Registration Statement will not be reviewed or is no longer subject to further review and comments, the Effectiveness Deadline as to
such Registration Statement shall be the fifth (5th) trading day following the date on which the Company is so notified if such date
precedes the dates otherwise required above,
provided, further
, that, if such Effectiveness Deadline falls on a day that is not
a trading day, then the Effectiveness Deadline shall be the next succeeding trading day.
“
Prospectus
”
means any prospectus included in any Registration Statement (including a prospectus that includes any information previously omitted
from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the SEC pursuant
to the Securities Act), as amended or supplemented by any prospectus supplement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
“
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.
(d)
Reduced
Coverage.
Notwithstanding any other provision of this Agreement and subject to the payment of liquidated damages pursuant to
Section 1(e) (Partial
Liquidated Damages)
if the SEC or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be
registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts
to advocate with the SEC for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing
by the Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement
will be reduced as follows:
(i)
first,
the Company shall reduce or eliminate any Securities to be included by any person other than the Holder;
(ii)
second,
the Company shall, unless the Holder instruct the Company to treat the shares of Common Stock that may be purchased upon exercise of
any Warrant like regular shares of Common Stock under this
clause (d)
(in which case the Company shall do so), reduce or
eliminate any Registrable Securities consisting of such shares of Common Stock; and
(iii)
third,
the Company shall, unless the Holder instruct the Company to treat the shares of Common Stock that may be purchased upon conversion
of any Note like regular shares of Common Stock under this
clause (d)
(in which case the Company shall do so), reduce or
eliminate any Registrable Securities consisting of such shares of Common Stock;
provided
,
that, in the case of
clauses (ii)
and
(iii) above
, the Holder shall have the right to designate which of its
Registrable Securities shall be omitted from such Registration Statement.
-
4
-
In
the event of a cutback hereunder, the Company shall give the Holder at least five (5) trading days prior written notice thereof.
In the event the Company amends the Initial Registration Statement in accordance with the foregoing, the Company will use its best efforts
to file with the SEC, as promptly as allowed by SEC or SEC Guidance provided to the Company or to registrants of Securities in general,
one or more registration statements on Form S-3 or such other form available to register for resale those Registrable Securities
that were not registered for resale on the Initial Registration Statement, as amended.
(e)
Partial
Liquidated Damages.
Provided that no Default or Event of Default exists, if (i) a Registration Statement required to be filed
hereunder is not filed on or prior to its Filing Date or if the Company files such Registration Statement without providing the Holder
the opportunity to review and comment on the same as required by
Section 2(a) (Review of Document)
, (ii) the Company
fails to file with the SEC a request for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the
SEC pursuant to the Securities Act, within five (5) trading days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the SEC that such Registration Statement will not be “reviewed” or will not be subject to further
review, (iii) prior to the effective date of a Registration Statement, the Company fails to file a pre-effective amendment and otherwise
respond in writing to comments made by the SEC in respect of such Registration Statement within ten (10) calendar days after the
receipt of comments by or notice from the SEC that such amendment is required in order for such Registration Statement to be declared
effective, (iv) a Registration Statement registering for resale all of the Registrable Securities is not declared effective by the
SEC by the Effectiveness Deadline, or (v) during the Effectiveness Period of a Registration Statement, after such Registration Statement
has become effective, (A) a Discontinuation Event arises or such Registration Statement otherwise ceases for any other reason to
remain continuously effective as to all Registrable Securities included in such Registration Statement, or (B) a Black Out Period
arises or the Holder is otherwise not permitted to utilize the Prospectus therein to resell such Registrable Securities and, in each
case
clause (A)
and
(B) above
, occurs for more than ten (10) consecutive calendar days or more than
an aggregate of fifteen (15) calendar days (which need not be consecutive calendar days) during any 12-month period (any such failure
or breach, an “
Event
” and the expiration of the grace period for such Event specified above, the “
Event Date
”),
then, in addition to any other rights the Holder may have hereunder or under applicable Regulation, on each such Event Date and on each
monthly anniversary of each such Event Date thereafter (if the applicable Event shall not have been cured by such date), until (and including)
the applicable Event is cured or sixty (60) calendar days after the applicable Event Date, whichever occurs first (and on such date,
a pro rata amount thereof shall be paid), the Company shall pay to the Holder an amount in cash, as partial liquidated damages and not
as a penalty, equal to the product of two percent (2.0%) multiplied by the Purchase Price paid by the Holder for the Purchased Securities
pursuant to the Purchase Agreement (such amount to accrue daily based on a 30 day-month);
provided,
that the maximum amount payable
thereunder shall not exceed 4% of such Purchase Price paid by the Holder. If the Company fails to pay any partial liquidated damages
to the Holder pursuant to this
Section 1(e)
in full within seven (7) days after the date payable, the Company will
pay interest thereon at a rate equal to the Default Rate (or such lesser maximum amount that is permitted to be paid by applicable Regulation)
to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full.
(f)
No
Holder Named as Underwriter.
Notwithstanding anything to the contrary contained herein but subject to comments by the SEC, in no
event shall the Company be permitted to name the Holder or affiliate of the Holder as an underwriter without the prior written consent
of the Holder.
2.
Registration Procedures.
(a)
Review
of Document.
Not less than three (3) trading days prior to the filing of each Registration Statement and not less than one (1) trading
day prior to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated
or deemed to be incorporated therein by reference), the Company shall (i) furnish to the Holder copies of all such documents proposed
to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review
of the Holder, and (ii) cause its officers, directors, managers, staff, counsel and independent registered public accountants to
respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to the Holder, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not file a Registration Statement or any such Prospectus or
any amendments or supplements thereto to which the Holder shall reasonably object,
provided,
that, the Company is notified of
such objection in writing no later than five (5) trading days after the Holder has been so furnished copies of a Registration Statement
or one (1) trading day after the Holder has been furnished copies of any related Prospectus or amendments or supplements thereto.
The Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex A (a “
Selling
Stockholder Questionnaire
”) on a date that is not less than two (2) trading days prior to the Filing Date or by the end
of the fourth (4
th
) trading day following the date on which the Holder receives draft materials in accordance with this
Section 2(a)
.
The Company shall not distribute any offering material in connection with any offering or sale that includes any Registrable Securities
except for Registration Statements (including Prospectuses) approved by the Holder.
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5
-
(b)
Compliance
with Regulations and SEC Requests.
The Company shall (i) comply with all applicable Regulations applicable to Registration Statements,
as well as all requests by the SEC and other Governmental Authorities, and the offer and sale of Securities thereunder (including Sales
done, subject to this Agreement, using the intended methods of disposition by the Holder), including ensuring that all such Registration
Statements, offers and sales conform to the requirements of, and comply with the Exchange Act, the Securities Act and all other applicable
Regulations, including meeting the requirements of Rule 415, (ii) prepare and file with the SEC such amendments, including
post-effective amendments, to Registration Statements (including Prospectuses) as may be necessary to comply with applicable Regulations
or otherwise to keep such Registration Statements continuously effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the SEC such additional Registration Statements in order to register for resale under the Securities
Act all of the Registrable Securities, (iii) cause the related Prospectus to be amended or supplemented by any Prospectus supplement,
as may be required by Regulations and the SEC (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed
pursuant to Rule 424, (iv) respond as promptly as reasonably practicable to any comments received from the SEC with respect
to a Registration Statement or any amendment thereto and provide promptly to the Holder, without charge, true and complete copies of
all correspondence from and to the SEC relating to a Registration Statement (
provided
, that the Company shall redact any information
contained therein which would constitute material non-public information regarding the Company or any of its Subsidiaries), (v) use
its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (A) any order stopping or suspending the effectiveness
of a Registration Statement, or (B) any suspension of the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment and (vi) deliver or make available to the Investor through
the SEC’s website (
www.sec.gov
), true and complete copies of all Registration Statements, including Prospectuses and amendments
and supplements, and all other SEC Reports.
(c)
Notices
to Holder; Discontinuation Events.
The Company shall notify the Holder as promptly as possible (and, in the case of (i)(A) below,
not less than one (1) trading day prior to such filing and, if requested by the Holder, confirm such notice in writing no later
than one (1) trading day following the day of such filing) of all of the following: (i)(A) any proposal to file any Prospectus
or any Prospectus supplement or post-effective amendment to a Registration Statement, (B) any notice by the SEC to the Company on
whether there will be a “review” of such Registration Statement and any written comment on such Registration Statement received
by the Company from the SEC, and (C) the effectiveness of any Registration Statement or any post-effective amendment, (ii) any
request by the SEC or any other Governmental Authority for amendments or supplements to a Registration Statement or Prospectus or for
additional information, (iii) the issuance by the SEC or any other Governmental Authority of any stop order or other Regulation
suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings
for that purpose, (iv) the receipt by the Company of any notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding
for such purpose and (v) the occurrence of any event (including the passage of time) that makes the financial statements included
in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration
Statement, Prospectus or other document to ensure that such Registration Statement, Prospectus or other document will not contain any
untrue statement of a material fact and will not omit to state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading (any event described in
clauses (iii)
through
(v)
above a “
Discontinuation Event”
and any notice given hereunder pursuant to any such clauses, a
“Discontinuation
Notice
”
)
,
provided,
that any Discontinuation Notice shall be accompanied by an instruction to suspend the use
of the Prospectus until the requisite changes have been made; and,
provided, further,
that, in no event shall any notice sent
pursuant to this
clause (c)
contain any information which would constitute material, non-public information regarding the
Company or any of its Subsidiaries. By its acquisition of Registrable Securities, the Holder agrees that, upon receipt of any Discontinuation
Notice, the Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised
in writing (the “
Advice
”) by the Company that the use of the applicable Prospectus (as it may have been supplemented
or amended) may be resumed. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly
as is practicable.
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(d)
Amendments
After Discontinuation Events.
Promptly upon the occurrence of any event contemplated pursuant to
subclause (ii)
of
clause
(c)) (Notices to Holders; Discontinuation Events) above
or a Discontinuation Event contemplated by
clause (c) (Notices to
Holders; Discontinuation Events) above
, the Company shall prepare a supplement or amendment, including a post-effective amendment,
to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein
by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were made, not misleading. If the Company sends a Discontinuation
Notice under
clause (c) (Notices to Holders; Discontinuation Events) above
to suspend the use of any Prospectus until the
requisite changes to such Prospectus have been made, then the Holder shall suspend use of such Prospectus. The Company will use its best
efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise
its right under this
clause (d)
to suspend the availability of a Registration Statement and Prospectus, subject to the payment
of partial liquidated damages otherwise required pursuant to
Section 1(e)
(Partial
Liquidated
Damages)
, for a period not to exceed sixty (60) calendar days (which need not be consecutive days) in any 12-month
period.
(e)
Black
Out Periods.
The Company may, from time to time by notice to the Holder, suspend the use of the Registration Statement during certain
periods (each a
“Black Out Period”
) in the event that the Company determines in its sole discretion in good faith
that such suspension is necessary during such Black Out Period to (i) delay the disclosure of material non-public information concerning
the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company
or (ii) amend or supplement the Registration Statement or any related Prospectus so that the Registration Statement or such Prospectus
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, in light of the circumstances under which they were made, not misleading
; provided
, that (w) no
such Black Out Period shall be longer than 90 days, (x) the Black Out Periods established during any calendar year shall not have
more than 120 days in the aggregate, (y) no Black Out Period shall be more restrictive or longer than any comparable restriction
imposed on Sales of equity Securities by the Company’s board of directors and senior officers and (z) each Black Out Period
shall immediately end upon public disclosure of the material non-public information that caused such Black Out Period to be established.
The Holder agrees that, during such Black Out Periods, they shall not sell any Registrable Securities of the Company pursuant to the
Registration Statement;
provided
, that, for the avoidance of doubt, the Holder may Sell such Registrable Securities pursuant to
any available exemption from registration, subject to compliance with applicable Regulations.
(f)
Confirmed
Copy.
The Company shall furnish to the Holder, without charge, at least one conformed copy of each such Registration Statement (including
amendments and supplements), including Prospectuses, financial statements and schedules, all documents incorporated or deemed to be incorporated
therein by reference to the extent requested by such person, and all exhibits to the extent requested by such person (including those
previously furnished or incorporated by reference) promptly after the filing of such documents with the SEC;
provided,
that any
such item which is available on the EDGAR system (or successor thereto) need not be furnished in physical form. Subject to the terms
of this Agreement, the Company hereby consents to the use of each Registration Statement (including Prospectuses and all amendments and
supplements thereto) by the Holder in connection with the offering and sale of the Registrable Securities covered by such Registration
Statement, except after the giving of any Discontinuation Notice pursuant to
clause (c) (Notices to Holders; Discontinuation
Events) above
and during a Black Out Period.
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-
(g)
Resales.
The Company shall cooperate with any broker-dealer through which the Holder proposes to resell its Registrable Securities in effecting
a filing with the FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as requested by the Holder, and the Company
shall pay the filing fee required by such filing within two (2) business days of receipt of a request therefor. Prior to any resale
of Registrable Securities by the Holder, the Company shall use its best efforts to register or qualify or cooperate with the Holder in
connection with the registration or qualification (or exemption from the Registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or Blue Sky Regulations of such jurisdictions within the United States as the Holder
reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by each Registration Statement;
provided,
that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction
where it is not then so subject or file a general consent to service of process in any such jurisdiction. If requested by the Holder,
the Company shall cooperate with the Holder to facilitate the timely preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted
by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered
in such names as any the Holder may request. The Company may require from the Holder a certified statement as to the number of shares
of Common Stock beneficially owned by the Holder and the names of the natural persons thereof that have voting and dispositive control
over such Common Stock as well as the Issuable Securities. During any periods that the Company is unable to meet its obligations hereunder
with respect to the registration of the Registrable Securities solely because the Holder fails to furnish such information within three
(3) trading days of the Company’s request, any liquidated damages that are accruing at such time as to the Holder only shall
be tolled and any Event that may otherwise occur solely because of such delay shall be suspended until such information is delivered
to the Company.
3.     Registration
Expenses.
In addition to, and not in substitution for, any other provision in any Transaction Document requiring any Company Party
to reimburse expenses, the Company shall pay (or, if applicable, reimburse the Holder and its Related Parties for) all costs, fees and
expenses incident to the performance of or compliance with, this Agreement by the Company, whether or not any Registrable Securities
are sold pursuant to a Registration Statement, including (a) all registration, filing and other fees, costs and expenses (including
fees, costs and expenses of counsel to the Company and of the independent registered public accountants of the Company) in connection
with this Agreement or the transactions contemplated herein, including (i) filing SEC Reports and other filings with Governmental
Authorities, (ii) filings required to be made with any Trading Market on which the Common Stock is then listed for trading, (iii) compliance
with applicable state or other securities Regulations, including Blue Sky Regulations and (iv) filings that may be required to be
made by any broker through which the Holder intends to Sell Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long
as the broker is receiving no more than a customary brokerage commission in connection with such sale, (b) printing fees, costs
and expenses (including fees, costs and expenses of printing Registration Statements, Prospectuses and certificates for Registrable Securities),
(c) messenger, telephone and delivery fees, costs and expenses, (d) internal expenses of the Company incurred in connection
with this Agreement or any transaction contemplated herewith (including all salaries and expenses of its officers, managers, directors
and staff performing legal or accounting duties), (e) fees, costs and expenses in corrected in connection with any annual audit,
(f) fees, costs and expenses incurred in connection with the listing of the Registrable Securities on any Trading Market or other
securities exchange, (g) fees, costs and expenses of counsel for the Company, including in connection with Blue Sky qualifications
or exemptions of the Registrable Securities, (h) Securities Act and similar liability insurance for the Company and (i) fees,
costs and expenses of all other persons retained by the Company in connection with the consummation of the transactions contemplated
by this Agreement. In no event shall the Company be responsible for any broker or similar commissions of the Holder, except as otherwise
provided in any other Transaction Document.
4.     Indemnification.
The Company shall, notwithstanding any termination of this Agreement, in addition to and not in substitution or limitation for, any
other indemnification provision by the Company, indemnify and hold harmless the Holder, each person who controls the Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, managers, managing
members, members, stockholders, staff members (whether or not classified as employees or independent contractors), partners, advisors,
agents (and any other persons with a functionally equivalent role of a person holding such titles, notwithstanding a lack of such title
or any other title) of each such controlling person, to the fullest extent permitted by applicable Regulation, from and against any and
all losses, claims, damages, liabilities, costs (including attorneys’ fees) and expenses (collectively, “
Losses”
),
as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration
Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising
out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading
or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any other securities Regulation,
or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the
extent, but only to the extent, that (x) such untrue statements or omissions are based solely upon information regarding the Holder
furnished in writing to the Company by the Holder expressly for use therein, or to the extent that such information relates to the Holder
or the Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by
the Holder expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto or (y) in the
case of an occurrence of a Discontinuation Event, the use by the Holder of an outdated, defective or otherwise unavailable Prospectus
after the Company has notified the Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by the
Holder and prior to the receipt by the Holder of the Advice contemplated in
Section 2(c) (Notices to Holder; Discontinuation
Events)
, but only if and to the extent that following the receipt of the Advice the misstatement or omission giving rise to such
Loss would have been corrected. The Company shall notify the Holder promptly of the institution, threat or assertion of any Proceeding
arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. Such indemnity is in
addition and not in substitution for any other indemnification provision in any Transaction Document and shall remain in full force and
effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of any Registrable
Securities by the Holder.
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-
5.
Miscellaneous.
(a)
Remedies.
In the event of a breach by the Company or by the Holder of any of their respective obligations under this Agreement, the Holder or the
Company, as the case may be, in addition to being entitled to exercise all rights granted by Regulation and under this Agreement, including
recovery of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company and the Holder
agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach,
it shall not assert or shall waive the defense that a remedy at law would be adequate.
(b)
No
Other Registration Statements.
The Company shall not file any other registration statements until all Registrable Securities are
registered pursuant to a Registration Statement that is declared effective by the SEC;
provided
that (i) the Company may
file amendments to registration statements filed prior to the date of this Agreement and (ii) the Company may file registration
statements with respect to any offering of Securities marketed to the general public.
(c)
Compliance.
The Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to
it (unless an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to a Registration Statement.
(d)
Notices.
All notices, requests and demands to or upon the Holder or the Company hereunder shall be effected in the manner provided for in
Section 5.4 (Notices)
of the Purchase Agreement.
(e)
Successors
and Assigns.
This Agreement shall be binding upon, and inure to the benefit of, the Company, the Holder and their successors and
assigns;
provided
, that the Company may not assign, transfer or delegate any of its rights or obligations under this Agreement
without the prior written consent of the Holder (and any attempt to effect such assignment, transfer or delegation without such consent
shall be null and void at the outset). The Holder may assign this Agreement in whole or in part to the extent permitted by
Section 5.3(c) (Beneficiaries,
Successors and Assigns)
of the Purchase Agreement, as well as applicable securities Regulations and in connection with the assignment
of any Registrable Securities.
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9
-
(f)
Amendments
.
No amendment, modification or termination of any provision of this Agreement shall be effective without the written consent of the Company
and the Holder. In addition, as provided by
Section 5.3(b) (Amendments)
of the Purchase Agreement, no waiver or consent
shall be effective against any party unless given in writing by such party and then any such waiver shall then be effective only in the
specific instance and for the specific purpose for which it was given.
(g)
Entire
Agreement; Counterparts; Electronic Signatures
. As described in
Section 5.3(a) (Entire Agreement)
of the Purchase
Agreement, this Agreement and the other Transaction Documents contain and constitute the entire agreement of the parties with respect
to the subject matter hereof. This Agreement may be executed in counterparts as provided in
Section 5.3(e) (Counterparts)
of the Purchase Agreement and, as provided in
Section 5.3(f) (Electronic Signatures)
of the Purchase Agreement, electronic
signatures have the same force and effect as manual signatures.
(h)
No
Inconsistent Agreements.
Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company
or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its Securities, that would
have the effect of impairing the rights granted to the Holder in this Agreement or otherwise conflicts with the provisions hereof.
(i)
Further Assurances.
The Company hereby agrees to take, promptly after the Holder’s request, such further
actions, including executing or causing to be executed and delivering to the Holder such further documents, as the Holder shall
reasonably request from time to time in connection herewith to evidence, give effect to or carry out the intent of this Agreement
and the transactions contemplated hereby.
(j)
Cumulative Remedies.
The remedies provided herein are cumulative and not exclusive of any other
remedies provided by Regulation.
(k)
Governing
Law
. Each party hereto hereby agrees to the provisions of
Section 5.6 (Governing Law; Courts)
of the Purchase Agreement,
including that (a) this Agreement and all claims, disputes, Proceedings, and matters related hereto or thereto or arising hereunder
or thereunder or arising from or relating to the relationship among any of the parties hereto or thereto, are governed by, and shall
be construed, interpreted and enforced exclusively in accordance with, the laws of the State of Delaware
(
without
giving effect to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application
of the laws of any jurisdiction other than those of the State of Delaware
) and (b) any such Proceeding shall be brought exclusively
in the Delaware state courts sitting in Wilmington, DE or the federal courts of the United States of America for the District of Delaware
sitting in Wilmington, DE;
provided
, that the Holder may bring Proceedings in other jurisdictions to enforce any Transaction Document.
Each such party hereby accepts such jurisdiction, waives any objections to venue, and agrees that a final judgment in any such Proceeding
shall be conclusive and enforceable in other jurisdictions, all as provided in the Purchase Agreement and accepts that service of process
may be made in the way set forth in the Purchase Agreement.
(l)
Waiver
of Jury Trial
.
Each party hereto hereby agree to Section 5.16 (Waiver of Jury Trial and Certain Other Rights) of the
Purchase Agreement whereby, among other things, it irrevocably waives trial by jury in any Proceeding with respect to, or directly or
indirectly arising out of, relating to or in connection with, this Agreement or any other Transaction Document or the transactions contemplated
therein or related thereto (whether founded in contract, tort or any other theory). Each party hereto (a) certifies that no representative,
agent or attorney of any other party or beneficiary hereof has represented, expressly or otherwise, that such other parties would not,
in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties have been induced
to enter into this Agreement and the other Transaction Documents by, among other things, the mutual waivers and certifications in this
section.
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-
(m)
Interpretation.
This Agreement is a Transaction Document and as such is subject to various interpretative, amendment and third party beneficiary and
other miscellaneous provisions set forth in the Purchase Agreement that expressly apply to Transaction Documents, located principally
in
Article V (Miscellaneous)
thereof, including
Sections 5.3(d) (No Implied Waivers or Notice Rights), 5.5 (Set-Off),
5.7 (Severability)
and
5.11 (Marshaling; Payment Set Aside)
but also
Article III (Negative Covenants)
and
Article IV
(Affirmative Covenants)
thereof, which contains indemnification obligations, and
Sections 2.1 (Representations and Warranties
of the Company Parties)
and
5.2 (Fees and Expenses)
thereof
,
which the Company, in the case of representations and
warranties, expressly makes herein for the benefit of the Holder whenever those are made under the Purchase Agreement, and, for other
provisions, agrees to comply therewith.
[Signature
Pages Follow]
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-
In
witness whereof
, each of the undersigned has duly
executed this Agreement as of the date first written above.
ConnectM Technology Solutions, Inc.
By:
Name:
Title:
Date signed:
Ascent Partners Fund LLC,
as the
H
older
By:
Name:
Title:
Authorized Signatory
Date signed:
REGISTRATION
RIGHTS AGREEMENT
ANNEX
A
ConnectM
Technology Solutions, Inc.
Selling
Stockholder Notice and Questionnaire
The
undersigned beneficial owner of shares of Common Stock (the “
Registrable Securities
”) of
ConnectM
Technology Solutions, Inc.
(the “
Company
”) understands that the Company has filed or intends to file with
the Securities and Exchange Commission (the “
SEC
”) a registration statement (the “
Registration Statement
”)
for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “
Securities Act
”),
of the Registrable Securities in accordance with the terms of the Registration Rights Agreement (the “
Registration Rights Agreement
”)
by and between the Company and the undersigned, dated as of September __, 2026. A copy of the Registration Rights Agreement is available
from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein has the meanings ascribed
thereto in the Registration Rights Agreement.
Certain
legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly,
holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.
NOTICE
The
undersigned beneficial owner (the “
Selling Stockholder
”) of Registrable Securities hereby elects to include the Registrable
Securities owned by it in the Registration Statement.
The
undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:
QUESTIONNAIRE
1.
Name.
(a)
Full
Legal Name of Selling Stockholder
(b)
Full
Legal Name of Registered Holder (if not the same as (a) above) through which Registrable
Securities are held:
(c)
Full
Legal Name of Natural Control Person (which means a natural person who directly or indirectly
alone or with others has power to vote or dispose of the Securities covered by this Questionnaire):
2.
Address for Notices to Selling Stockholder:
Telephone:
__________________
Email:
______________________
Contact
Person: _______________
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2
-
3.
Broker-Dealer Status:
(a)
Are
you a broker-dealer?
Yes
¨
No
¨
(b)
If
“yes” to Section 3(a), did you receive your Registrable Securities as compensation
for investment banking services to the Company?
Yes
¨
No
¨
Note:
If
“no” to Section 3(b), the SEC’s staff has indicated that you should
be identified as an underwriter in the Registration Statement.
(c)
Are
you an affiliate of a broker-dealer?
Yes
¨
No
¨
(d)
If
you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable
Securities in the ordinary course of business, and at the time of the purchase of the Registrable
Securities to be resold, you had no agreements or understandings, directly or indirectly,
with any person to distribute the Registrable Securities?
Yes
¨
No
¨
Note:
If
“no” to Section 3(d), the SEC’s staff has indicated that you should
be identified as an underwriter in the Registration Statement.
4.
Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.
Except
as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any Securities of the Company other than
the Registrable Securities and the Transaction Securities pursuant to the Purchase Agreement.
(a)
Type
and Amount of other Securities beneficially owned by the Selling Stockholder:
-
3
-
5.
Relationships with the Company:
Except
as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5%
of more of the equity Securities of the undersigned) has held any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three years.
State
any exceptions here:
The
undersigned agrees to promptly notify the Company of any material inaccuracies or changes in the information provided herein that may
occur subsequent to the date hereof at any time while the Registration Statement remains effective;
provided,
that the undersigned
shall not be required to notify the Company of any changes to the number of Securities held or owned by the undersigned or its affiliates.
By
signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and
the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto.
The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment
of the Registration Statement and the related prospectus and any amendments or supplements thereto.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either
in person or by its duly authorized agent.
Date:
Beneficial Owner:
By:
Name:
Title:
PLEASE
EMAIL A .PDF COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO:
[______________________]
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EX-3.1
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tm2624767d1_ex3-1.htm
EXHIBIT 3.1
Exhibit 3.1
CERTIFICATE OF
DESIGNATION AND PREFERENCES
OF THE SERIES C CONVERTIBLE PREFERRED STOCK OF
ConnectM Technology Solutions, Inc.
I,
Bhaskar Panigrahi, hereby certify that I am the Chief Executive Officer of ConnectM Technology Solutions, Inc. (the “
Company
”),
a corporation incorporated and existing under the Delaware General Corporation Law (the “
DGCL
”) and further do hereby
certify, in accordance with Section 103 of the DGCL to the following:
(a)            the
Second Amended and Restated Certificate of Incorporation of the Company, as amended (the
“Certificate of Incorporation
”),
authorizes the issuance of 260,000,000 shares of capital stock, consisting of 250,000,000 shares of common stock, par value $0.0001 per
share (together with any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification
of such common stock, the
“Common Stock”
) and 10,000,000 shares of preferred stock, par value $0.0001 per share (the
“Preferred Stock”
);
(b)            Pursuant
to the Certificate of Incorporation, the board of directors of the Company (the
“Board”
) is authorized to fix by resolution
or resolutions such voting powers and such designation, preferences and relative participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, of any series of Preferred Stock, and to fix the number of shares constituting any
such series; and
(c)            Pursuant
to the Certificate of Incorporation, the Board adopted on August 31, 2026 the following resolution designating a new series of Preferred
Stock as “Series C Convertible Preferred Stock,” none of which have been issued:
RESOLVED
,
that, pursuant to the authority vested in the Board in accordance with the provisions of Section 4.2 of the Certificate of Incorporation
and Section 151 of the DGCL, the Board authorizes a new series of Preferred Stock of the Company, designates such series as “Series
C Convertible Preferred Stock” and the number of shares to be included in such series, as well as the powers (including voting
powers), designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations
and restrictions of the shares of Preferred Stock of such series shall be as follows:
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TERMS, PREFERENCES,
RIGHTS AND LIMITATIONS
OF THE SERIES C CONVERTIBLE PREFERRED STOCK OF
ConnectM Technology Solutions, Inc.
The relative rights,
preferences, powers, qualifications, limitations and restrictions granted to or imposed upon the Series C Convertible Preferred Stock
or the holders thereof, shall be as follows as set forth in this certificate of designation (this
“Certificate of Designation
”):
1.
Designation
and Number of Shares
. There shall hereby be created and established a series of preferred stock of the Company designated as “Series
C Convertible Preferred Stock” (the “
Convertible Preferred Stock
”). The authorized number of shares of Convertible
Preferred Stock (the
“Preferred Shares”)
shall be 4,000 shares. Each Preferred Share shall have a par value equal
to $0.0001 per share and a stated value equal to the Stated Value.
“
Stated
Value
” shall mean $1,000.00 per share, subject to adjustment for stock splits, stock dividends, recapitalizations, reorganizations,
reclassifications, combinations, subdivisions or other similar events occurring after the Initial Issuance Date with respect to the Preferred
Shares.
2.
Ranking
.
Except to the extent that the holders of Preferred Shares having a Stated Value exceeding 50% of the Stated Value of all of the outstanding
Preferred Shares (the “
Required Holders
”) expressly consent to the creation of Parity Stock or Senior Preferred Stock
in accordance with
Section 13 (Voting),
all shares of capital stock of the Company shall be junior in rank to all Preferred
Shares with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of
the Company and claims on the assets of the Company in a bankruptcy, reorganization or liquidation (such junior stock is referred to
herein collectively as “
Junior Stock
”). The rights of all such shares of capital stock of the Company shall be subject
to the rights, powers, preferences and privileges of the Preferred Shares. Without limiting any other provision of this Certificate of
Designation, without the prior express consent of the Required Holders, voting separate as a single class, the Company shall not hereafter
authorize or issue any additional or other shares of capital stock that is (i) of senior rank to the Preferred Shares in respect of the
preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company and claims on
the assets of the Company in a bankruptcy, liquidation or reorganization (collectively, the “
Senior Preferred Stock
”),
(ii) of pari passu rank to the Preferred Shares in respect of the preferences as to dividends, distributions and payments upon the liquidation,
dissolution and winding up of the Company and claims on the assets of the Company in a bankruptcy, liquidation or reorganization (collectively,
the “
Parity Stock
”) or (iii) any Junior Stock having a maturity date (or any other date requiring redemption or repayment
of such shares of Junior Stock) that is prior to the Optional Redemption Date. In the event of the merger or consolidation of the Company
with or into another corporation, the Preferred Shares shall maintain their relative rights, powers, designations, privileges and preferences
provided for herein and no such merger or consolidation shall result inconsistent therewith.
3.
Dividends
.
(a)
From and after the first date of issuance of any Preferred Share (the “
Initial Issuance Date
”), each holder of such
Preferred Share (each, a
“Holder”
and collectively, the “
Holders
”) shall be entitled to receive
preferential dividends (the “
Dividends
”), which Dividends shall be paid by the Company out of funds legally available
therefor, payable, subject to the conditions and other terms hereof, on the Stated Value of such Preferred Share at a rate equal to 10%
per annum (as the same may be adjusted as provided herein, the
“Dividend Rate”
);
provided
, that, during the
continuance of any Negative Event (as defined below), the Dividend Rate shall automatically be increased to twenty-four percent (24.0%)
per annum and, in the event that such Negative Event is subsequently cured, the adjustment referred to in the preceding sentence shall
cease to be effective as of the calendar day immediately following the date of such cure with respect to the future accrual of Dividends.
Dividends are cumulative and shall continue to accrue and compound while such Preferred Share is outstanding, whether or not declared
and whether or not payable in any fiscal year, including whether or not there shall be net profits or surplus available for the payment
of dividends in such fiscal year.
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(b)           Dividends
shall accrue daily on the Initial Issuance Date and shall be computed on the basis of a 360-day year and twelve 30-day months. Accrued
and unpaid Dividends shall be payable monthly on the first business day of each calendar month either (i) in cash or (ii) with respect
to such Dividends attributable to Preferred Shares subject to conversion hereunder, by increasing the Conversion Amount by the amount
of such Dividends.
(c)           No
dividend shall be paid on any other capital stock of the Company (other than Senior Preferred Stock) no shares of such other capital
stock may be purchased, redeemed or acquired by the Company, and no funds shall be paid into or set aside or made available for a sinking
fund for, the purchase, redemption or acquisition of any such other capital stock, in each case, unless all accrued and unpaid Dividends
and Late Charges (as defined below) have been paid or are being paid simultaneously with such payment of dividend on other capital stock.
4.
Liquidation
Preference
. In the event of a distribution upon a liquidation, dissolution or winding up of the Company (or of subsidiaries of the
Company the assets of which constitute all or substantially all of the assets or business of the Company and its Subsidiaries, taken
as a whole), whether in a single transaction or series of transactions, and whether voluntary or involuntary (a
“Liquidation
Event”
), each Holder of Preferred Shares then outstanding shall be entitled to be paid out of the assets of the Company available
for distribution to its stockholders, whether such assets are capital, surplus or earnings, (x) before any payment or declaration and
setting apart for payment of any amount shall be made in respect of any shares of Common Stock, or any share of any other class or series
of the Company’s preferred stock or other capital stock (other than Senior Preferred Stock and Parity Stock) and (y) simultaneously
with any such payment that shall be made to the holders of any Parity Stock, an amount equal to the liquidation preference of such Preferred
Shares, which shall be the greater of (a) 110% of the Stated Value of such Preferred Shares plus all declared or accrued and unpaid Dividends
and Late Charges (the
“Liquidation Amount”
) and (b) the amount such Holder would otherwise receive if such Holder
had converted such Preferred Shares into Common Stock immediately prior to the date of such payment. Should available funds be insufficient
to make such payment, all such payments to Holders and other holders of Parity Stock shall be reduced ratably according to the amount
of the payment to which such Holders and holders are entitled. To the extent necessary, the Company shall cause such actions to be taken
by each of its Subsidiaries so as to enable, to the maximum extent permitted by law, the proceeds of a Listing Event to be distributed
to the Holders in accordance with this
Section 4
.
5.
Redemptions
.
(a)
Disclosures
of Redemption Trigger Events.
The Company shall disclose publicly each Change of Control, Fundamental Transaction, Subsequent Offering
or Negative Event (each a
“Redemption Trigger Event”
) (and, if such notice is not in a filing with the SEC on Form
8-K or 1-U, as applicable, simultaneously provide notice to each Holder) not later than the trading day following the closing of such
Fundamental Transaction or Subsequent Offering or the date such Negative Event occurs. In the case of a Subsequent Offering, the Company
shall provide, simultaneously with such closing, a notice to each Holder indicating the net cash proceeds thereof available to redeem
the Preferred Shares.
(b)
Redemptions
Upon Redemption Trigger Events
. At any time on or after the occurrence of a Redemption Trigger Event, each Holder may, in its sole
discretion during the Redemption Window, submit a notice to the Company to redeem all or part of its Preferred Shares at the Redemption
Price (each a
“Redemption Notice”
). The Company shall then deliver the Redemption Price in cash on the Redemption
Date, on which date the Preferred Shares shall be redeemed. Redemptions required by this
Section 6
shall have priority to
payments to all other stockholders of the Company in connection with such Change of Control. To the extent redemptions required by this
Section 6(b)
are deemed or determined by a court of competent jurisdiction to be prepayments of the Preferred Shares by the
Company, such redemptions shall be deemed to be voluntary prepayments. Should the aggregate Redemption Price for all Preferred Shares
requested to be redeemed in any seven-day period (the first such period beginning on the date the Company receives the initial Redemption
Notice for such Redemption Trigger Event) because of any Redemption Trigger Event exceed the amount required by the Company to be paid
for such redemption hereunder, the Preferred Shares requested by the Holders to be redeemed shall be redeemed ratably according to their
Redemption Prices.
(c)
Redemption
at the Company’s Option.
The Company may redeem any Preferred Shares, at its option, at the Redemption Price, with not less
than thirty (30) days’ prior written notice to the Holders, which notice shall be irrevocable and shall be subject to each Holder’s
conversion right;
provided,
that, in the case of a partial redemption, the Company shall give Holders the option to opt out of
such redemption and shall first redeem the Preferred Shares of the Holders that have not opted out of such redemption, ratably according
to their Redemption Price, and then shall redeem the Preferred Shares of the remaining Holders ratably according to their Redemption
Price. The Company shall pay the Redemption Price in cash to the Holders so redeemed on the 31
st
calendar day following effective
delivery of such notice.
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(d)           Following
the Listing Event, the Company shall use thirty-three percent (33%) of the net proceeds of each new public or private debt or equity
issuance (including proceeds from any Sale of the Blue Cloud Shares, after the repayment of all sums due under Note Two) to redeem the
outstanding Preferred Shares at the Redemption Price. Such redemption shall be applied ratably among all Holders based on the outstanding
Stated Value of Preferred Shares held by each such Holder; provided however, that following any such issuance, the Holder shall have
72 hours to submit a Conversion Notice prior to any such redemption being consummated
“Redemption
Date”
(i) in the case of a Redemption Notice based on the occurrence of a Negative Event, within five (5) business days’
of the receipt of such Redemption Notice, (ii) in the case of redemption at the Company’s option in accordance with Section 5(b),
the date set forth in the Company’s written notice, and (iii) in the case of a Redemption Notice based on a Change of Control,
Fundamental Transaction or Subsequent Offering, if such Redemption Notice is effectively delivered at least one business day prior to
the closing of such Change of Control, Fundamental Transaction or Subsequent Offering (such Change of Control, Fundamental Transaction
or Subsequent Offering having been previously publicly announced), concurrently with such closing of such Fundamental Transaction or
Subsequent Offering and otherwise, within one business day after such consummation.
“Redemption
Window
” means (i) in the case of the occurrence of a Negative Event, at any time while such Negative Event is continuing and
(ii) in the case of the occurrence of a Change of Control, or Fundamental Transaction or a Subsequent Offering, on or prior to the date
that is 20 trading days after the initial consummation of such Change of Control, or Fundamental Transaction or Subsequent Offering.
“Redemption
Price”
means, with respect to Preferred Shares, (i) in the case of a Subsequent Offering, the Liquidation Amount and (ii) otherwise,
110% of the Liquidation Amount.
(e)
Mechanics
.
In the event of a redemption of less than all of the Preferred Shares, the Company shall promptly cause to be issued and delivered to
such Holder a new Preferred Certificate (in accordance with
Section 15 (Preferred Share Certificates)
) representing the number
of Preferred Shares which have not been redeemed. All Holders shall continue to be able to convert their Preferred Shares by sending
a Conversion Notice at any time prior to the day when the Company is required to deliver the Redemption Price, in which case, delivery
of such a Conversion Notice for any Preferred Shares shall immediately cancel (or, at the applicable Holder’s option by notice
to the Company, suspend as long as such conversion is effective) any redemption thereof and such Preferred Shares shall instead be converted
in accordance with this Certificate of Designation. In the event of the Company’s redemption of any of the Preferred Shares under
this
Section 6
, such Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability
to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for a Holder.
Accordingly, any redemption premium due under this
Section 6
is intended by the parties to be, and shall be deemed, a reasonable
estimate of such Holder’s actual loss of its investment opportunity and not as a penalty.
(f)
Return
Upon Non-Payment.
In the event that the Company does not pay the applicable Redemption Price to a Holder within the time period required
for any reason (except if such payment is prohibited pursuant to the DGCL), at any time thereafter and until the Company pays such unpaid
Redemption Price in full, such Holder shall have the option, in lieu of redemption, to require the Company to promptly return to such
Holder all or any of the Preferred Shares that were submitted for redemption and for which the applicable Redemption Price (together
with any Late Charges thereon) has not been paid. Upon the Company’s receipt of such notice by such Holder, (i) the corresponding
Redemption Notice shall be null and void with respect to the Preferred Shares mentioned in such notice by such Holder, (ii) the
Company shall immediately return the original certificates representing such Preferred Shares (the “
Preferred Share Certificates
”)
or issue a new Preferred Share Certificate (in accordance with
Section 15 (Preferred Share Certificates)
), to such Holder,
and in each case the Conversion Price of such Preferred Shares shall be automatically adjusted with respect to each conversion effected
thereafter by such Holder to the lowest of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice
is voided, (B) 75% of the lowest Closing Bid Price of the Common Stock during the period beginning on and including the date on which
the applicable Redemption Notice is delivered to the Company and ending on and including the date on which the applicable Redemption
Notice is voided and (D) 75% of lowest VWAP of the Common Stock on the trading day immediately preceding the applicable Conversion Date.
A Holder’s delivery of a notice voiding a Redemption Notice and exercise of its rights following such notice shall not affect the
Company’s obligations to make any payments of Late Charges which have accrued prior to the date of such notice with respect to
the Preferred Shares subject to such notice.
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6.
Conversion.
(a)
Voluntary
Conversion.
At any time following the date that is six months following the date of the Listing Event, each Preferred Share shall
be convertible, in whole or in part, at the applicable Holder’s sole discretion, at any time and from time to time, at the Conversion
Rate into validly issued, fully paid and non-assessable shares of Common Stock (as defined below), on the terms and conditions set forth
in this
Section 7
and subject to the provisions of
Section 8 (Limitations on Receiving Common Stock)
. Subject
to the provisions of
Section 8 (Limitations on Receiving Common Stock)
, at any time or times on or after the date that is
six months following the date of the Listing Event, each Holder shall be entitled to convert, in whole or in part, any Preferred Share
held by such Holder into validly issued, fully paid and non-assessable shares of Common Stock in accordance with
Section 7(c)
(Mechanics of Conversion)
at the Conversion Rate (as defined below). The Conversion Price shall be proportionally adjusted to account
for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases
the number of shares of Common Stock issued to ensure that the percentage of shares of Common Stock received by any Holder upon full
conversion at the Conversion Price, as well as the percentage of the value of the Company allocated to such Common Stock, both remain
unchanged by any such transaction. Upon such adjustment, the Conversion Price shall be rounded down to the nearest $0.01.
“
Conversion
Amount
” means, with respect to all or part of a Preferred Share to be converted, as of the applicable date of determination,
the sum of (without duplication) (i) the Stated Value of such Preferred Share to be converted, plus (ii) all declared and unpaid Dividends
thereon, plus (iii) any accrued and unpaid Late Charges as of such date of determination allocated ratably to such Stated Value.
“
Conversion
Price
” means, as of any Conversion Date or other date of determination, the lower of (i) the Listing Event Price, (ii) $4.10
or (iii) if the applicable Conversion Notice was delivered during the continuation of a Negative Event, 95% of the lowest VWAP of
the Common Stock during the period lasting five (5) consecutive trading days and ending on, and including, the trading day immediately
preceding the date of such delivery.
“Conversion
Rate”
means the number of shares of Common Stock issuable upon the conversion of any part of a Preferred Share, which shall
be calculated by dividing the Conversion Amount by the Conversion Price.
“
VWAP
”
means, for or as of any date for any Security, the following: (i) the dollar volume-weighted average price for such Security on the Principal
Trading Market for such Security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time,
as reported by Bloomberg through its “VWAP” function; or (ii) if Bloomberg does not report such a price, the dollar volume-weighted
average price of such Security in the over-the-counter market on the electronic bulletin board for such Security during the period beginning
at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg; or (iii) if no dollar volume-weighted
average price is reported for such Security by Bloomberg for such hours, the average of the highest Closing Bid Price and the lowest
Closing Sale Price of any of the market makers for such Security on such date as reported in the “pink sheets” by OTC Markets
Group Inc. (formerly Pink Sheets LLC); or (iv) if the VWAP cannot be calculated for such Security on such date on any of the foregoing
bases, the VWAP of such Security on such date shall be the fair market value as mutually determined by the Company and the applicable
Holder.
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“
Closing
Bid Price
” and “
Closing Sale Price
” means, for any Security as of any date: (i) the last closing bid price
and last closing trade price, respectively, for such Security on the Principal Trading Market for such Security, as reported by Bloomberg;
or (ii) if such Principal Trading Market begins to operate on an extended hours basis and does not designate the closing bid price or
the closing trade price (as the case may be), then the last bid price or last trade price, respectively, of such Security prior to 4:00:00
p.m., New York time, as reported by Bloomberg; or (iii) if such Security no longer trades on its Principal Trading Market, then the last
closing bid price or last trade price, respectively, of such Security on the principal Trading Market where such Security is listed or
traded as reported by Bloomberg; or (iv) if such Security no longer trades on a Trading Market, the last closing bid price or last trade
price, respectively, of such Security in the over-the-counter market on the electronic bulletin board for such Security as reported by
Bloomberg; or (v) if no closing bid price or last trade price, respectively, is reported for such Security by Bloomberg, the average
of the bid prices, or the ask prices, respectively, of any market makers for such Security as reported in the “pink sheets”
by OTC Markets Group Inc. (formerly Pink Sheets LLC); or (vi) if the
“Closing Bid Price”
or the
“Closing
Sale Price”
cannot be calculated for a Security on a particular date based on the foregoing, the “
Closing Bid Price”
and the
“Closing Sale Price”
of such Security on such date shall be the fair market value as mutually determined by
the Company and the applicable Holder; or (vii) if the Company and the applicable Holder are unable to agree upon the fair market value
of such Security, then such dispute shall be resolved, and such fair market value (and therefore the
“Closing Bid Price”
and
“Closing Sale Price”
) shall be determined, in accordance with the procedures set forth in
Section 19 (Dispute
Resolution).
All such determinations shall be appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations
or other similar transactions during such period.
(b)
Mechanics
of Conversion.
The conversion of each Preferred Share shall be conducted in the following manner:
(i)
Notice
.
Each Holder shall effect conversions by delivering to the Company a conversion notice, the form of which is attached hereto as
Annex
A
(each a
“Conversion Notice”
), specifying therein the Preferred Shares and the Stated Value thereof to be converted
and the date on which such conversion must be effected (the
“Conversion Date”
). If no Conversion Date is specified
in a Conversion Notice, the Conversion Date shall be the date that such notice is deemed delivered hereunder. The form Conversion Notice
attached hereto as
Annex A
set forth the totality of the procedures required of any Holder in order to convert the Preferred Shares.
Without limiting the foregoing, no ink-original Conversion Notice shall be required, nor shall any medallion guarantee (or other type
of guarantee or notarization) of any Conversion Notice form be required in order to convert the Preferred Shares. No additional document
(including legal opinion), other information or instructions shall be required of any Holder to convert the Preferred Shares. The Company
may deliver an objection to any Conversion Notice within one (1) business day of delivery of such Conversion Notice. In the event of
any dispute or discrepancy, the records of the applicable Holder shall be controlling and determinative in the absence of manifest error.
(ii)
Delivery
of Common Stock.
The Company shall honor conversions of the Preferred Shares and shall deliver the corresponding shares of Common
Stock not later than on the Conversion Date in accordance with the terms, conditions and time periods set forth in this Certificate of
Designation. Not later than the trading day following the Conversion Date, the Company shall deliver, or cause to be delivered, to the
applicable Holder a certificate or certificates representing the shares of Common Stock so delivered which, on or after the date on which
such Conversion Shares are eligible to be sold under Rule 144 without the need for current public information and the Company has received
an opinion of counsel to such effect (which opinion must be acceptable to such Holder in its sole and absolute discretion and which opinion
the Company shall be responsible for obtaining at its sole cost and expense), shall be free of restrictive legends and trading restrictions,
representing the number of Conversion Shares being acquired upon the conversion of the Preferred Shares. Each certificate required to
be delivered by the Company under this Certificate of Designation shall be delivered electronically through the Depository Trust Company
or another established clearing corporation performing similar functions. If the Conversion Date is prior to the date on which the shares
of Common Stock so delivered are eligible to be sold under Rule 144 without the need for current public information, or there is no registration
statement in effect covering such shares, such shares shall bear a restrictive legend in the following form, as appropriate:
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“THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES REGULATIONS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL
(WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
Notwithstanding
the foregoing, commencing on such date that such shares become eligible for sale under Rule 144 subject to current public information
requirements, the Company, upon request by any Holder thereof and at the sole cost and expense of the Company, shall obtain a legal opinion
that is acceptable to such Holder in its sole and absolute discretion, to allow for such sales under Rule 144.
(iii)
Delivery
of Preferred Share Certificate
. Following any conversion, if required by
Section 7(c)(iii) (Registration; Book Entry)
,
within three (3) trading days following a conversion of any such Preferred Shares as aforesaid, such Holder, if such Holder is holding
a physical Preferred Share Certificate, shall surrender such certificate to a nationally recognized overnight delivery service for delivery
to the Company the Preferred Share Certificate so converted as aforesaid (or an indemnification undertaking with respect to the Preferred
Shares in the case of its loss, theft or destruction as contemplated by
Section 15(b) (Lost, Stolen or Mutilated Preferred Share Certificates)).
If the number or Stated Value of Preferred Shares represented by the Preferred Share Certificates submitted for conversion pursuant
to
Section 7(c)(iii) (Registration; Book Entry)
is greater than the number or Stated Value of Preferred Shares being converted,
then the Company shall, as soon as practicable and in no event later than one (1) trading day after receipt of the Preferred Share Certificates
and at its own expense, issue and deliver to such Holder (or its designee) a new Preferred Share Certificate (in accordance with
Section 15
(Preferred Share Certificates)
) representing the number and Stated Values of the Preferred Shares not converted. The persons entitled
to receive the shares of Common Stock issuable upon a conversion of Preferred Shares shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on the Conversion Date.
(iv)
Company’s
Failure to Issue Common Stock
. The Company shall use all efforts to deliver Common Stock on the date requested hereunder. If requested
by a Holder in its sole discretion, the Company shall pay any available rush or expedited delivery fee to ensure faster processing or
faster delivery of any such Securities and certificate. If the Company shall fail, for any reason or for no reason, prior to the deadline
set forth herein (the
“Share Delivery Deadline”
) to deliver to any Holder shares of Common Stock in accordance herewith
or a certificate therefor, to register such shares of Common Stock on the Company’s share register or to credit such Holder’s
or its designee’s balance account with DTC for such number of shares of Common Stock to which such Holder is entitled upon such
Holder’s conversion of any Preferred Shares (as the case may be) (each, a “
Delivery Failure
”), then, in addition
to all other remedies available to such Holder:
(A)          unless
such Delivery Failure is caused solely by
Section 8 (Limitations on Receiving Common Stock)
, the Company shall pay in cash to
such Holder on each day after the Share Delivery Deadline that the issuance of such shares of Common Stock is not timely effected an
amount equal to 2% of the product of (A) the aggregate number of shares of Common Stock not issued to such Holder on a timely basis and
to which such Holder is entitled and (B) the Closing Sale Price of the Common Stock on the trading day immediately preceding the last
possible date on which the Company could have issued such shares of Common Stock to such Holder without violating
Section 7(c)
(Mechanics of Conversion)
; and
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(B)           such
Holder may choose, upon notice to the Company and in its sole discretion, on or after such Share Delivery Deadline, in addition to any
other available remedy, to do any of the following (or any combination thereof), each of which will void, if applicable, any related
Conversion Notice to the extent thereof:
(1)            retain
or have returned (as the case may be) any Preferred Shares that have not been converted pursuant to such Holder’s Conversion Notice;
(2)            purchase,
whether in an open market transaction or otherwise, whether directly or through a broker or other agent (a
“Buy-In”
),
a number of shares of Common Stock not to exceed the number of shares subject to such Delivery Failure, and, within three (3) business
days after receipt of such Holder’s request therefor and in such Holder’s discretion, the Company shall redeem the Preferred
Shares that would, without such Delivery Failure, have been converted into such shares of Common Stock by paying to such Holder in cash
an amount equal to such Holder’s total gross purchase price (including brokerage commissions, fees and other costs, fees and expenses,
if any) for such shares of Common Stock so purchased;
(3)            accept
from the Company late delivery of shares of Common Stock after the Share Delivery Deadline;
provided
, that such acceptance shall
not waive any rights of such Holder, to damages or otherwise, caused by such delay; or
(4)            require
that the Company redeem in cash all or some of the Preferred Shares subject to such Delivery Failure for an amount equal to (x) the number
of shares of Common Stock that would have been delivered to such Holder in exchange for such Preferred Shares without such Delivery Failure
times (y) a price per share equal to the Closing Sale Price on the Share Delivery Deadline (or, if such Share Delivery Deadline is not
a trading day, on the trading day immediately preceding such day);
provided
,
that, in each case, voiding such Conversion Notice shall not affect the Company’s obligations to make any payments which have accrued
prior to the date of such notice pursuant to the terms of this Certificate of Designation or otherwise. Nothing herein shall limit such
Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including a decree of specific performance
or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock on
the Share Delivery Deadline pursuant to the terms hereof.
(v)
Fractional
Shares.
No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Preferred Shares.
As to any fraction of a share which any Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its
election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion
Price or round up to the next whole share.
(vi)
Taxes.
The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, all costs, fees and expenses
of the Company’s transfer agent (as defined below) and all other out-of-pocket costs, fees and expenses, whether of the Company,
the applicable Holder or otherwise) that may be payable with respect to the issuance and delivery of Common Stock upon conversion of
any Conversion Amount.
(vii)
Pro
Rata Conversion; Disputes.
In the event that the Company receives a Conversion Notice from more than one Holder for the same Conversion
Date and the Company can convert some, but not all, of such Preferred Shares submitted for conversion, the Company shall convert from
each Holder electing to have Preferred Shares converted on such date a pro rata amount of such Holder’s Preferred Shares submitted
for conversion on such date based on the number of Preferred Shares submitted for conversion on such date by such Holder relative to
the aggregate number of Preferred Shares submitted for conversion on such date. In the event of a dispute as to the number of shares
of Common Stock issuable to a Holder in connection with a conversion of Preferred Shares, the Company shall issue to such Holder the
number of shares of Common Stock not in dispute and resolve such dispute in accordance with
Section 19 (Dispute Resolution)
.
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7.
DWAC
Eligible, Freely Tradeable and Listed
.
(a)
DWAC
Eligible.
The Company shall ensure that (i) its shares of Common Stock are and remain eligible at the Depository Trust Company (
“DTC
”)
for full services pursuant to DTC’s operational arrangements, including transfer through DTC’s Deposits/Withdrawal at Custodian
(
“DWAC”
) system, and not subject to any restriction or limitation imposed by or on behalf of the Deposit Trust Corporation
on any of its services or any other restriction or limitation on the use of the services provided by the Deposit Trust Corporation (i.e.,
a “DTC chill”), (ii) the Company has been approved (without revocation) by the DTC’s underwriting department, (iii) the
Company’s transfer agent is approved as an agent in the DTC’s Fast Automated Securities Transfer Program, (iv) the Conversion
Shares are otherwise eligible for delivery via DWAC, and (v) the Company’s transfer agent does not have a policy prohibiting or
limiting delivery of the Conversion Shares via DWAC (
“DWAC Eligible
”).
(b)
Freely
Tradeable.
Subject to the terms and conditions of the Registration Rights Agreement, following the Liquidity Event, the Company shall
ensure that all shares of Common Stock issued or issuable pursuant to the Transaction Documents (including the Closing Shares and the
Issuable Securities) are freely tradeable. For the purposes of this
Section 8(b)
, such shares shall be deemed “
freely
tradeable
” if such shares are eligible for resale pursuant to (i) Rule 144 (provided the Company is compliant with its current
public information requirements) promulgated by the SEC pursuant to the Securities Act or such shares are the subject of a then effective
registration statement or (ii) an effective “shelf” or resale registration statement under the Securities Act, in customary
form, is effective under the Securities Act, registering the resale of such Securities by such security holder and names such holder
as a selling security holder thereunder, and such registration statement is reasonably acceptable to such holder.
(c)
Listed
on Trading Markets.
The shares of Common Stock are trading, and the Company believes in good faith that they shall continue to trade
uninterrupted, on the Principal Trading Market and all other Trading Markets for such Common Stock. All of the shares of Common Stock
issued or issuable pursuant to the Transaction Documents (including the Closing Shares and the Issuable Securities) are listed or quoted
for trading, and the Company shall use its best efforts to ensure that such shares continue to be listed or quoted for trading uninterrupted,
on the Principal Trading Market and each such other Trading Market.
8.
Limitations
on Receiving Capital Stock.
Notwithstanding anything to the contrary contained in this Certificate of Designation, the Company shall
not at any time effect any conversion of any Preferred Shares held by a Holder, and such Preferred Shares held by such Holder shall not
be convertible at any time by such Holder, to the extent, and only to the extent, that, after giving effect to the conversion set forth
in the application Conversion Notice, such Holder, together with such Holder’s Affiliates and any other persons acting as a group
together with such Holder or any of such Holder’s Affiliates (collectively, the “
Attribution Parties
”), would
beneficially own Common Stock in excess of 9.99% of the number of shares of the Common Stock outstanding at such time (as the same may
be increased or decreased in accordance with this
Section 8(b)
, the “
Beneficial Ownership Limitation”
);
provided
, that any Holder may, with prior notice to the Company, decrease such percentage with respect to such Holder and, if
such percentage was previously decreased, such Holder may, upon not less than sixty-one (61) days’ prior notice to the Company
and effective at the end of such 61-day period, increase such percentage for such Holder up to, and in any case not exceeding, 9.99%.
When calculating the Beneficial Ownership Limitation, the number of shares of Common Stock beneficially owned by such Holder and its
Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of the Preferred Shares with respect
to which such determination is being made, but shall exclude the number of shares of Common Stock issuable upon (i) conversion of the
remaining, unconverted principal amount of the Preferred Shares beneficially owned by such Holder and its Attribution Parties and (ii)
exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion
or exercise analogous to the limitation contained herein (including, if applicable, the Warrant) beneficially owned by such Holder and
its Attribution Parties. No prior inability of a Holder to convert Preferred Shares or otherwise convert or exercise any Transaction
Document, or of the Company to issue shares of Common Stock to such Holder, pursuant to this
Section 8(a)
shall have any
effect on the applicability of the provisions of this
Section 8(a)
with respect to any subsequent determination of convertibility
or issuance (as the case may be). Except as set forth above, for purposes of this
Section 8(a)
, beneficial ownership and
all determinations and calculations (including with respect to calculations of percentage ownership) shall be determined in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained
in this
Section 8(a)
applies, the determination of whether the Preferred Shares of any Holder are convertible (in relation
to other Securities owned by such Holder together with its Attribution Parties) and of which Stated Value is convertible shall be in
the sole discretion of such Holder. For purposes of this
Section 8(a)
, in determining the number of outstanding shares of
Common Stock, each Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following:
(i) the Company’s most recent periodic or annual report filed with the SEC, as the case may be, (ii) a more recent public announcement
by the Company, or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral request of any such Holder, the Company shall promptly (and in any event
within one (1) trading day) confirm in writing to such Holder the number of shares of Common Stock then outstanding. Irrespective of
such reliance, such Holder shall in its calculation give effect to the conversion or exercise of Securities of the Company, including
the Preferred Shares or the Warrant, by such Holder or its Attribution Parties since the date as of which such number of outstanding
shares of Common Stock was reported. The provisions of this
Section 2(d)
shall not be strictly interpreted in accordance with
its terms as maybe necessary to correct any portion of this
Section 2(d)
that may be defective or inconsistent with the intended
beneficial ownership limitations contained herein as they relate to applicable laws and regulations of the SEC or to make changes or
supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this
Section 2(d)
shall apply to all Holders of Preferred Shares.
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9.
Authorized
Shares
.
(a)
Reserve
Amount.
So long as any Preferred Shares are outstanding, the Company shall take all actions necessary or appropriate to reserve and
keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Preferred Shares,
a number of shares of Common Stock, as of any date of determination, at least equal to 250% of the number of shares of Common Stock as
shall from time to time be necessary to effect the conversion of all of the Preferred Shares then outstanding (without regard to any
limitations on conversions) (the “
Reserve Amount
”). The Reserve Amount (including each increase in the number of shares
so reserved) shall be allocated ratably among the Holders based on the Conversion Amounts of the Preferred Shares held by each such Holder
on the date of determination.
(b)
Insufficient
Authorized Shares.
If, notwithstanding
Section 11(a) (Reserve Amount)
and not in limitation thereof, while any Preferred
Share remains outstanding, the Company shall fail to have a number of authorized and unreserved (other than reserved for issuance pursuant
to a conversion of Preferred Shares) shares of Common Stock available to issue upon conversion of the Preferred Shares that (i) at least
equals the Reserve Amount and (ii) is sufficient to honor the immediate conversion of all Preferred Shares then outstanding, then the
Company shall immediately take all actions necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient
to remedy such failure. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence
of such failure, but in no event later than seventy five (75) days thereafter, the Company shall hold a meeting of its stockholders for
the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide
each stockholder with a proxy statement and shall use its reasonable best efforts to solicit its stockholders’ approval of such
increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve
such proposal. In the event that the Company is prohibited from issuing shares of Common Stock to any Holder upon any conversion due
to the failure by the Company to have sufficient shares of Common Stock available out of the authorized but unissued shares of Common
Stock, such Holder may, at its option and without limiting the availability of any other remedy, avail itself of the remedies set forth
in
Section 7(b)(iv) (Company’s Failure to Timely Convert)
.
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-
10.
Rights
Upon Issuance of Purchase Rights, Dilutive Issuances and Other Corporate Events
. From and after the date hereof and until such time
as less than 5% of the Preferred Shares remain outstanding and, to the extent applicable, except with respect to an Exempt Issuance:
(a)
Stock
Dividends and Other Distributions
. If the Company shall declare or make any dividend or other distributions of its assets (or rights
to acquire its assets) or Securities to any or all holders of shares of Common Stock, by way of return of capital or otherwise (including
any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction), including any right to receive Securities or other assets as part
of a Fundamental Transaction (the “
Distributions
”), then each Holder, as holders of Preferred Shares, will be entitled
to such Distributions as if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of the Preferred
Shares (without taking into account any limitations or restrictions on the convertibility of the Preferred Shares) immediately prior
to the date on 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 such Distributions;
provided
, that, to the extent that such Holder’s right to participate
in any such Distribution is not permitted by
Section 8 (Limitations on Receiving Capital Stock)
, then such Holder shall not
be entitled to participate in such Distribution to such extent (and shall not be entitled to beneficial ownership of such shares of Common
Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for such Holder
until such time or times as its right thereto would no longer be prohibited by
Section 8 (Limitations on Receiving Capital Stock)
,
at which time or times, if any, such Holder shall be granted such rights (and any Dividends and other rights under this
Section 10
on such initial rights or on any subsequent such rights to be held similarly in abeyance) to the same extent as if there had been no
such limitation. Notwithstanding the foregoing, in the case of a Distribution of Capital Stock, the Holder may, at its option choose
to adjust the price set forth in
clause (i)
of the definition of Conversion Price by multiplying such price by a fraction, the
numerator of which shall be the number of shares of Common Stock (excluding any shares held by the Company or any of its Subsidiaries)
outstanding immediately after such event, and the denominator of which shall be the number of shares of Common Stock outstanding immediately
before such event (the
“Dilution Factor”
).
(b)
Stock
Splits
. If the Company, at any time while any Preferred Shares are outstanding (i) subdivides outstanding shares of Common Stock
into a larger number of shares, (ii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller
number of shares or (iii) issues, in the event of a reclassification of shares of the Common Stock, any shares of Capital stock of the
Company, then the Conversion Price shall be multiplied by the Dilution Factor for such Event. Any adjustment made pursuant to this
clause
(b)
or
clause (a)
above shall become effective immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution at such event and shall become effective immediately after the effective date in the case of
a subdivision, combination or re classification.
(c)
Change
in Other Common Stock Equivalents
. If the purchase or exercise price provided for in any Common Stock Equivalents, the additional
consideration, if any, payable pursuant to any Common Stock Equivalents with respect to shares of Common Stock, or the rate at which
Common Stock may be acquired pursuant to any Common Stock Equivalents changes at any time (other than any change to this Certificate
of Designation or any other Purchased Securities), the Conversion Price in effect at the time of such increase or decrease shall be adjusted
to account proportionately, for such change. For purposes of this
Section 10(c)
, if the terms of any Common Stock Equivalents
are changed in the manner described in the immediately preceding sentence, then such Common Stock Equivalents and the shares of Common
Stock deemed issuable thereunder shall be deemed to have been issued as of the date of such change. No adjustment pursuant to this
Section 10(c)
shall be made to the Conversion Price if such adjustment would result in an increase to the Conversion Price then in effect.
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(d)
Dilutive
Issuance
. The Company shall not, directly or through any Company Group Member or any of their Subsidiaries, at any time when Preferred
Shares are outstanding or a Delivery Failure is continuing, conduct a Subsequent Offering of Common stock or issue or otherwise Sell
shares of Common Stock or Common Stock Equivalents (including under the Purchase Agreement) at a price lower than the Conversion Price
(as adjusted for stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions following the sale
of the Preferred Shares) (subject to adjustment in accordance with
Section 10(f) (Purchase Rights)
), in each case other than
Exempt Issuances, without the prior written consent of the Required Holders. Subject to the foregoing, if, at any time while any Preferred
Share is outstanding or a Delivery Failure is continuing, any Company Group Member or any Subsidiary of any Company Group Member shall
conduct a Subsequent Offering of Common Stock or otherwise offer, issue, Sell, or offer or Sell any option to purchase or any right to
reprice, any shares of Common Stock or any Common Stock Equivalents (or announce any such offer, Sale or issue), in each case other than
as part of an Exempt Issuance, at an effective price per share that, after giving effect to any other adjustments hereunder, is less
than the Conversion Price then in effect (such lower price, the “
Base Share Price
” and such issuances collectively,
a “
Dilutive Issuance
”), then, simultaneously with the consummation of each such Dilutive Issuance, the Conversion
Price shall be reduced (and only reduced) to equal the lower of (i) the Base Share Price and (ii) the lowest VWAP of the Common Stock
in the five (5) days immediately following such Dilutive Issuance. Such adjustment shall be made whenever such shares of Common Stock
or Common Stock Equivalents are issued. For the avoidance of doubt, it is understood and agreed that (i) if a holder of the shares of
Common Stock or Stock Equivalents so issued shall, at any time after the issuance, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which
are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is less
than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive
Issuance at such effective price and (ii) if such issuance shall be a variable-rate transaction, it shall be deemed to have been entered
into at the lowest possible conversion or exercise price therefor. The Company shall notify the Holders, in writing, no later than the
trading day following the issuance or deemed issuance of any shares of Common Stock or Common Stock Equivalents subject to this
Section
10(d)
,
indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms
(such notice, the “
Dilutive Issuance Notice
”). For purposes of clarification, whether or not the Company provides
a Dilutive Issuance Notice pursuant to this
Section
10(d)
, upon the occurrence of any Dilutive Issuance, each Holder
is entitled to receive a number of Conversion Shares based upon the Base Share Price regardless of whether such Holder accurately refers
to the Base Share Price in the Notice of Conversion.
(e)
Assumption
Rights Upon Fundamental Transactions.
The Company shall use its commercially reasonable efforts to not enter into or be party to
a Fundamental Transaction unless (i) the Successor Entity assumes in writing all of the obligations of the Company under this Certificate
of Designation and the other Transaction Documents in accordance with the provisions of this
Section 10(e)
pursuant to written
agreements in form and substance satisfactory to the Required Holders and approved by the Required Holders prior to such Fundamental
Transaction, including agreements to deliver to each holder of Preferred Shares in exchange for such Preferred Shares an equivalent Security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Certificate of Designation,
including having a par value, stated value (and liquidation preference), conversion price and dividend rate equal to the par value, Stated
Value, Conversion Price (which shall be adjusted so as to protect the economic value of the Preferred Shares, taking into account the
relative values of the Common Stock and the common stock of the Successor entity, and to ensure the Holder receives shares of common
stock of the Successor Entity at least equivalent to the shares of Common Stock obtainable upon conversion of the Preferred Shares) and
Dividend Rate of the Preferred Shares held by the Holders and having the same ranking as the Preferred Shares, and satisfactory to the
Required Holders and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose shares of common
stock are quoted on or listed for trading on a Trading Market. 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 Certificate
of Designation 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 Certificate of
Designation and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein
and therein. For the avoidance of doubt, this
clause (e)
is not intended to permit any Fundamental Transaction. In addition
to the foregoing, upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to each Holder confirmation that
there shall be issued upon conversion or redemption of the Preferred Shares at any time after the consummation of such Fundamental Transaction,
in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under
Sections 3
(Dividends), 4 (Liquidation Preference), 10(a) (Stock Dividends; and Other Distributions), 10(b) (Stock Splits) or 10(f) (Purchase Rights))
,
which shall continue to be receivable thereafter)) issuable upon the conversion or redemption of the Preferred Shares prior to such Fundamental
Transaction, such shares of the publicly traded common stock (or their equivalent) of the Successor Entity (including its Parent Entity)
to which each Holder would have been entitled to receive upon the happening of such Fundamental Transaction had all the Preferred Shares
held by each Holder been converted immediately prior to such Fundamental Transaction (without regard to any limitations on the conversion
of the Preferred Shares contained in this Certificate of Designation), as adjusted in accordance with the provisions of this Certificate
of Designation. Notwithstanding the foregoing, such Holder may elect, at its sole option, by delivery of written notice to the Company
to waive this
clause (e)
to permit the Fundamental Transaction without the assumption of the Preferred Shares. The provisions
of this
clause (e)
shall apply similarly and equally to successive Fundamental Transactions and shall be applied without
regard to any limitations on the conversion or redemption of the Preferred Shares.
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12
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(f)
Purchase
Rights.
If at any time the Company offers, issues or Sells any Capital Stock or Common Stock Equivalents, to holders of Common Stock,
whether or not as part of a Fundamental Transaction (the
“Purchase Rights”
), then each Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights that such Holder could have acquired if such
Holder had held the number of shares of Common Stock acquirable upon complete conversion of all the Preferred Shares (without taking
into account any limitations or restrictions on the convertibility of the Preferred Shares) held by such Holder 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
,
that, to the extent that such Holder’s exercise of such Purchase Right is not permitted by
Section 8 (Limitations on Receiving
Capital Stock)
, then such Holder shall not be entitled to exercise such Purchase Right to such extent (and shall not be entitled
to beneficial ownership of such shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for such Holder until such time or times as its right thereto would no longer be prohibited by
Section 8
(Limitations on Receiving Capital Stock)
, at which time or times, if any, such Holder shall be granted such rights (and any Dividends
and other rights under this
Section 10
on such initial rights or on any subsequent such rights to be held similarly in abeyance)
to the same extent as if there had been no such limitation. Notwithstanding the foregoing, in the case of an offer, issuance or Sale
of Capital Stock, the Holder may, at its option choose to adjust the price set forth in
clause (i)
of the definition of Conversion
Price by multiplying such price by the Dilution Factor.
11.
Other
Covenants; Information
. The Company shall comply with the various covenants set forth in the Purchase Agreement (all of which are
herein incorporated by reference). Without limiting the foregoing, the Company shall (i) provide all information and documentation
to a Holder that is reasonably requested by such Holder to enable such Holder to confirm the Company’s compliance with the terms
and conditions of this Certificate of Designation, (ii) give prompt notice to each Holder of all actions taken pursuant to the terms
of this Certificate of Designation, including in reasonable detail a description of such action and the reason therefor, including any
adjustment of the Conversion Price or Redemption Price and (iii) give notice to any Holder, at least fifteen (15) days prior thereto,
of any date on which the Company closes its books or takes a record (1) with respect to any dividend or distribution upon the Common
Stock, (2) with respect to any grant, issuances, or sales of any Securities or Stock Equivalents or (3) for determining rights to vote
with respect to any Redemption Trigger Event, Listing Event, Dividend, dissolution or liquidation;
provided
, that it is understood
and agreed neither the Company, any of its Affiliates, nor any of their respective officers, directors, agents, members, stockholders,
managers, and staff members, nor any other person acting on their behalf, will provide the Holder, its Affiliates or their respective
agents or counsel with any information that any of the Company or its Affiliates believes could constitute material non-public information,
unless prior thereto such information is disclosed to the public, or such Holder shall have entered, after the date hereof (any such
agreement executed on or prior to the date hereof being void and of no further force and effect) into a written agreement with the Company
regarding the confidentiality and use of such information. Nothing in this Certificate of Designation is intended for the Company of
any of its Affiliates, nor any of their respective officers, directors, agents, members, stockholders, managers, and staff members, nor
any other person acting on their behalf, to provide, and no such person has provided to any Holder any such material non-public information
without such disclosure or such written agreement. In the absence of any such agreement, no Holder has any duty of confidentiality (and
no duty not to trade on the basis of material non-public information) to the Company or any of its Subsidiaries, Affiliates, or any of
their respective officers, directors, agents, members, stockholders, managers, and staff members, or any other person acting on their
behalf, and the Holder is governed only by applicable law. The Company understands and confirms that each Holder is and shall be relying
on the foregoing representations, warranties and covenants in effecting transactions in Securities of the Company.
12.
Registration;
Book-Entry
. The Company shall maintain a register (the “
Register
”) for the recordation of the names and addresses
of the Holders of each Preferred Share and the Stated Value of the Preferred Shares. The entries in the Register shall be conclusive
and binding for all purposes absent manifest error. The Company and each Holder of the Preferred Shares shall treat each person whose
name is recorded in the Register as the owner of a Preferred Share for all purposes (including the right to receive payments and Dividends
hereunder) notwithstanding notice to the contrary. A Preferred Share may be assigned, transferred or sold only by registration of such
assignment or sale on the Register. Upon its receipt of a written request to assign, transfer or sell one or more Preferred Shares by
such Holder thereof, the Company shall record the information contained therein in the Register and issue one or more new Preferred Shares
in the same aggregate Stated Value as the Stated Value of the surrendered Preferred Shares to the designated assignee or transferee pursuant
to
Section 15 (Preferred Share Certificates)
;
provided
, that, if the Company does not so record an assignment, transfer
or sale (as the case may be) of such Preferred Shares within two (2) business days of such a request, then the Register shall be automatically
deemed updated to reflect such assignment, transfer or sale (as the case may be). Notwithstanding anything to the contrary set forth
in this
Section 12
, following conversion of any Preferred Shares in accordance with the terms hereof, the applicable Holder
shall not be required to physically surrender such Preferred Shares to the Company unless (a) the full or remaining number of Preferred
Shares represented by the applicable Preferred Share Certificate are being converted (in which event such certificate(s) shall be delivered
to the Company as contemplated by this
Section 11
) or (b) such Holder has provided the Company with prior written notice
(which notice may be included in a Conversion Notice) requesting reissuance of Preferred Shares upon physical surrender of the applicable
Preferred Share Certificate. Each Holder and the Company shall maintain records showing the Stated Value, Dividends and Late Charges
converted or paid (as the case may be) and the dates of such conversions or payments (as the case may be) or shall use such other method,
reasonably satisfactory to such Holder and the Company, so as not to require physical surrender of a Preferred Share Certificate upon
conversion. If the Company does not update the Register to record such Stated Value, Dividends and Late Charges converted or paid (as
the case may be and the dates of such conversions and/or payments (as the case may be) within two (2) business days of such occurrence,
then the Register shall be automatically deemed updated to reflect such occurrence. In the event of any dispute or discrepancy, such
records of such Holder establishing the number of Preferred Shares to which the record holder is entitled shall be controlling and determinative
in the absence of manifest error. A Holder and any transferee or assignee, by acceptance of a certificate, acknowledge and agree that,
by reason of the provisions of this paragraph, following conversion of any Preferred Shares, the number of Preferred Shares represented
by such certificate may be less than the number of Preferred Shares stated on the face thereof.
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13.
Transfer
of Preferred Shares
. A Holder may transfer, or otherwise Sell, issue, negotiate or grant participations in, all or any part of any
right, title or interest in some or all of its Preferred Shares without the consent of the Company or any other Company Group Member;
provided
, that this Certificate of Designation shall apply to all successor Holders of Preferred Shares.
14.
Preferred
Share Certificates
.
(a)
Original
Issuance and Transfer
. Each Preferred Share shall be represented by an original Preferred Share Certificate, issuable to the Holder
thereof immediately upon demand upon the issuance of such Preferred Share. If any Preferred Shares are transferred, the applicable Holder
shall surrender the applicable Preferred Share Certificate to the Company, whereupon the Company will forthwith issue and deliver upon
the order of such Holder a new Preferred Share Certificate (in accordance with
Section 15(d) (Issuance Mechanics; Legend)
),
registered as such Holder may request, representing the outstanding number of Preferred Shares being transferred by such Holder and,
if less than the entire outstanding number of Preferred Shares is being transferred, a new Preferred Share Certificate (in accordance
with
Section 15(d) (Issuance Mechanics; Legend)
) to such Holder representing the outstanding number of Preferred Shares not
being transferred. Such new Holder and any assignee, by acceptance of the Preferred Share Certificate, acknowledges and agrees that,
following conversion or redemption of any portion of the Preferred Shares, the outstanding number of Preferred Shares represented by
the Preferred Shares may be less than the number of Preferred Shares stated on the face of the Preferred Shares.
(b)
Lost,
Stolen or Mutilated Preferred Share Certificates
. Upon receipt by the Company of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of a Preferred Share Certificate (as to which a written certification and the indemnification
contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking
by the applicable Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation
of such Preferred Share Certificate, the Company shall execute and deliver to such Holder a new Preferred Share Certificate (in accordance
with
Section 15(d) (Issuance Mechanics; Legend)
) representing the applicable outstanding number of Preferred Shares.
(c)
Preferred
Share Certificate Exchangeable for Different Denominations
. Each Preferred Share Certificate is exchangeable, upon the surrender
hereof by the applicable Holder at the principal office of the Company, for new Preferred Share Certificates (in accordance with
Section 15(d)
(Issuance Mechanics; Legend)
) representing individually a different number of Preferred Shares and in the aggregate the outstanding
number of the Preferred Shares in the original Preferred Share Certificate, and each such new Preferred Share Certificate will represent
such portion of such outstanding number of Preferred Shares from the original Preferred Share Certificate as is designated by such Holder
at the time of such surrender.
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(d)
Issuance
Mechanics; Legend
. Whenever the Company is required to issue new Preferred Share Certificates pursuant to the terms of this Certificate
of Designation, such new Preferred Share Certificates (i) shall represent, as indicated on the face of such Preferred Share Certificate,
the number of Preferred Shares remaining outstanding (or in the case of a new Preferred Share Certificate being issued pursuant to
Section 15(a)
(Original Issuance and Transfer)
or
Section 15(c) (Preferred Share Certificates Exchangeable for Different Denominations)
,
the number of Preferred Shares designated by such Holder which, when added to the number of Preferred Shares represented on other Preferred
Share Certificates held by such Holder, does not represent, in the aggregate, more than the number of Preferred Shares held by such Holder),
and (ii) shall have an issuance date, as indicated on the face of such new Preferred Share Certificate, which, in the case of a replacement
certificate, shall be the same as the issuance date of the original Preferred Share Certificate
.
Finally, except as provided in
Section 13(e) (Legend Removal)
, each Preferred Share Certificate shall bear the following legend:
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES REGULATIONS, AND, ACCORDINGLY, MAY NOT BE SOLD, OFFERED FOR SALE OR
PLEDGED AS SECURITY IN THE ABSENCE OF SUCH REGISTRATION WITHOUT RELIANCE ON AN EXEMPTION UNDER THE SECURITIES ACT AND COMPLIANCE WITH
APPLICABLE STATE SECURITIES REGULATIONS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN FROM AN “ACCREDITED INVESTOR” AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
ANY
TRANSFEREE OR ASSIGNEE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE TERMS OF THE CORPORATION’S CERTIFICATE OF DESIGNATION RELATING
TO THE SHARES OF SERIES C CONVERTIBLE PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE, INCLUDING
Section 15
THEREOF. THE NUMBER OF SHARES OF SERIES C CONVERTIBLE PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE NUMBER OF
SHARES OF SERIES C CONVERTIBLE PREFERRED STOCK STATED ON THE FACE HEREOF PURSUANT TO
Section 15
OF THE CERTIFICATE OF DESIGNATION RELATING TO THE SHARES OF SERIES C CONVERTIBLE PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE.
(e)
Legend
Removal.
No certificate evidencing any Preferred Share shall contain the first paragraph of the legend set forth in
Section 12(d)
(Issuance Mechanics; Legend)
, and no certificate evidencing any Common Stock shall bear any legend, in the following cases: (i) while
a registration statement covering the resale of such Security is effective under the Securities Act; (ii) following any sale of
such Security pursuant to Rule 144; (iii) if such Security is eligible for sale under Rule 144; or (iv) 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). The Company shall upon request of any Holder and at the Company’s sole expense cause its counsel (or at such Holder’s
option, exercised in its sole discretion, counsel selected by such Holder) to issue a legal opinion to the Company’s transfer agent
promptly after any of the events described in (i)-(iv) in the preceding sentence to effect the removal of any legend (including that
described in set forth in
Section 12(d) (Issuance Mechanics; Legend)
), with a copy to such Holder and its broker. If all or any
portion of any Preferred Share is converted or exercised, respectively, at a time when there is an effective registration statement to
cover the resale of the Common Stock, or if any Preferred Share may be sold under Rule 144 or if such legend is not otherwise required
under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the
SEC) then such Common Stock or Preferred Share Certificate shall be issued free of all legends. The Company agrees that following such
time as such legend is no longer required under
Section 12(d) (Issuance Mechanics; Legend)
, it will, no later than two (2) trading
days following the delivery by any Holder to the Company or the Company’s transfer agent of a Preferred Share Certificate or a
certificate representing Common Stock issued with a restrictive legend (such second (2
nd
) trading day being referred to as
the “
Legend Removal Date
” therefor), issue or instruct the Company’s transfer agent to deliver or cause to be
delivered to such Holder a certificate representing such shares that is free from all restrictive and other legends. The Company may
not make any notation on its records or give instructions to the Company’s transfer agent that enlarge the restrictions on transfer
set forth in this Certificate of Designation. Certificates for the Securities subject to legend removal hereunder shall be transmitted
by the Company’s transfer agent to such Holder by crediting the account of such Holder’s prime broker with the Depository
Trust Company System as directed by such Holder.
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(f)
Penalties.
In addition to each Holder’s other available remedies, the Company shall pay to any Holder, in cash, as partial liquidated
damages and not as a penalty, $1,000 per trading day for each trading day after the Legend Removal Date for Securities of such Holder
until a certificate therefor is delivered without a legend. Nothing herein shall limit such right to pursue actual damages for the Company’s
failure to deliver certificates representing any Preferred Stock or Common Stock as required by this Certificate of Designation or the
Transaction Documents, and each Holder shall have, severally and not jointly, the right to pursue all remedies available to it at law
or in equity including a decree of specific performance and/or injunctive relief.
(g)
Retirement
.
Any Preferred Shares that are converted, repurchased or redeemed shall be automatically and immediately retired and shall not be reissued,
sold or transferred.
15.
Voting
.
Holders of Preferred Shares shall have no voting rights, except as required by applicable law (including the DGCL) and as expressly provided
in this Certificate of Designation. In addition to any other rights provided by law, except where the vote or written consent of the
holders of a greater number of shares is required by law or by another provision of the Certificate of Incorporation, without first obtaining
either the affirmative vote of the Required Holders at a meeting duly called for such purpose or the written consent without a meeting
of the Required Holders, in each case voting together as a single class, the Company shall not: (a) amend or repeal any provision of,
or add any provision to, this Certificate of Designation, or its Certificate of Incorporation or its Bylaws, or file any Certificate
of Designation or articles of amendment of any series of shares of Capital Stock, or otherwise take any other action, regardless of whether
any such action shall be by means of amendment to the Certificate of Incorporation or by merger, consolidation or otherwise, in each
case if any such actions would, in the reasonable opinion of any Holder, adversely alter or change in any respect the preferences, rights,
privileges or powers, or restrictions provided for the benefit, of the Preferred Shares; (b) change (other than by conversion) the authorized
number of Preferred Shares; (c) without limiting any provision of
Section
2 (Ranking)
, create or authorize (by
reclassification or otherwise) any new class or series of shares of Senior Preferred Stock or Parity Stock; (d) purchase, repurchase
or redeem any shares of Junior Stock of the Company (other than pursuant to equity incentive agreements (that have in good faith been
approved by the Board) with employees giving the Company the right to repurchase shares upon the termination of services); (e) without
limiting any provision of
Section
2 (Ranking)
, pay dividends or make any other distribution on any shares of Junior
Stock or pay dividends or make any other distributions on Parity Stock without making the corresponding Dividend required hereunder;
(f) issue any Preferred Shares other than pursuant to the Purchase Agreement or issue any other Securities that would cause a breach
or default under this Certificate of Designation or any Transaction Document; or (g) without limiting any provision of
Section 6(c)
(Redemption at the Company’s Option)
, whether or not prohibited by the terms of the Preferred Shares, circumvent a right of
the Preferred Shares.
16.
Fees
and Expenses
. The Company shall pay to each Holder all fees, costs and expenses required by
Section 5.2 (Fees and Expenses)
of
the Purchase Agreement to be paid by the Company, including fees costs and expenses of attorneys, experts, auditors, accountants, consultants
and appraisers, agents and other representatives and including the following:
(a)           all
fees, costs and expenses incurred in connection with any consent, waiver, amendment or other modification to this Certificate of Designation
or the Preferred Shares;
(b)           all
fees, costs and expenses of collection or enforcement or any other action, investigation or proceeding; and
(c)           all
fees, costs and expenses in connection with any Negative Event, including any bankruptcy, reorganization, receivership of any Company
Group Member or other proceedings affecting creditors’ rights and involving a claim under this Certificate of Designation.
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17.
Notices;
Currency; Payments
.
(a)
Notices
.
Whenever notice is required to be given to any person under this Certificate of Designation, unless otherwise provided herein, such notice
must be in writing, may be given to the physical address or by email or other electronic means, shall be given to the address specified
by such person therefor in accordance with the Purchase Agreement and shall be effective as provided in the Purchase Agreement, in each
case except as otherwise required by law.
(b)
Currency
.
All dollar amounts referred to in this Certificate of Designation are in United States Dollars (“
U.S. Dollars
”), and
all amounts owing under this Certificate of Designation shall be paid in U.S. Dollars. All amounts denominated in other currencies (if
any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “
Exchange
Rate
” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Certificate of Designation,
the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed
that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such
period of time).
(c)
Payments
.
Whenever any payment of cash is to be made by the Company to any Holder pursuant to this Certificate of Designation, unless otherwise
expressly set forth herein, such payment shall be made in cash, which shall mean in immediately available dollars by wire transfer (net
of any wire transfer fees, which shall be paid by the Company) at the account provided by such Holder to the Company. Whenever any amount
expressed to be due by the terms of this Certificate of Designation is due on any day which is not a business day, the same shall instead
be due on the next succeeding business day. Any obligation to pay any amount or deliver any Security to any Holder that is not fulfilled
when due shall result in (i) a one-time late charge being owed and payable by the Company in an amount equal to ten percent (10%)
of such obligation and (ii) interest being charged on such obligation (in the case of any Security, payable as additional Securities
of the same type) at a rate equal to twenty-four percent (24%) per annum from the date such obligation is due to the date it is fulfilled
(
“Late Charges”
), calculated on the basis of a 360-day year consisting of twelve thirty (30)-day periods, for the
actual number of days occurring, in whole or in part, in such period. Any payment of any amount to the Holder, and any delivery of any
Security to the Holder, received after 3 p.m. on any day shall be deemed received (i) on the next business day, in the case of any such
payment and (ii) on the next trading day, in the case of any such delivery. Each determination by the Holder of an amount of interest
or fee due hereunder shall be conclusive and binding for all purposes, absent manifest error.
18.
Waiver
of Notice
. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other
demands and notices (other than notice expressly provided hereunder) in connection with the delivery, acceptance, performance, breach,
default or enforcement of this Certificate of Designation and the Transaction Documents.
19.
No
Implied Waiver or Notice Rights
. No notice to or demand on any Company Group Member, whether or not in any legal proceeding, shall
entitle any Company Group Member to any other or further notice (except as specifically required by this Certificate of Designation)
or demand in similar circumstances. The failure by any Holder at any time or times to require strict performance by any Company Group
Member of any provision of this Certificate of Designation or the granting of any waiver or indulgence shall not waive, affect or otherwise
diminish any right of any Holder thereafter to demand strict compliance and performance with such provision, shall not affect, or operate
a waiver under, any other provision of this Certificate of Designation (except as specifically mentioned) and shall not constitute a
course of dealing by such Holder at variance with the terms of this Certificate of Designation (and therefore, among other things, shall
not be construed to require any notice by such Holder of its intent to require strict adherence to the terms of this Certificate of Designation
in the future). No waiver of any Redemption Trigger Event or waiver of any default or breach of any provision, condition or requirement
of, this Certificate of Designation shall be deemed a continuing waiver in the future of a waiver of any other or subsequent Redemption
Trigger Event, default or breach of, or a waiver of any other provision, condition requirement of, this Certificate of Designation; nor
shall any failure, delay or omission of any party to exercise any right, power, or privilege under this Certificate of Designation waive,
or otherwise impair in any manner, the exercise of, such or any other right, power or privilege under this Certificate of Designation.
None of the foregoing actions shall in any way affect the ability of each Holder, in its discretion, to exercise any rights available
to it under this Certificate of Designation or under applicable law, except as specifically agreed in any written waiver or other modification
made in accordance with this
Section 20
.
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20.
Stockholder
Matters; Amendments
.
(a)
Stockholder
Matters
. Any stockholder action, approval or consent required, desired or otherwise sought by the Company pursuant to the DGCL, the
Certificate of Incorporation, this Certificate of Designation or otherwise with respect to the issuance of Preferred Shares may be effected
by written consent of the Company’s stockholders or at a duly called meeting of the Company’s stockholders, all in accordance
with the applicable rules and regulations of the DGCL. This provision is intended to comply with the applicable sections of the DGCL
permitting stockholder action, approval and consent affected by written consent in lieu of a meeting.
(b)
Amendments
and Waivers
. This Certificate of Designation or any provision hereof may be amended by obtaining the affirmative vote at a meeting
duly called for such purpose, or written consent without a meeting in accordance with the DGCL, of the Required Holders, voting separate
as a single class, and with such other stockholder approval, if any, as may then be required pursuant to the DGCL and the Certificate
of Incorporation. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
Notwithstanding the foregoing, nothing contained in this
Section
21
shall permit any waiver (instead of an amendment)
of any provision of
Section 8 (Limitations on Receiving Common Stock)
.
21.
Set
Off
. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, each
Holder is hereby authorized by the Company at any time or from time to time, without notice or demand to any Company or to any other
person, any such notice or demand being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general
or special, time or demand, provisional or final, including indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other indebtedness or other amounts at any time held or owing by any Company Group Member to
or for the credit or the account of any Company Group Member or any of their Affiliates against and on account of any amounts due by
the Company to any Holder hereunder (including from any payment to be made hereunder for Securities), irrespective of whether or not
(a) such Holder shall have made any demand hereunder or (b) any amount owing by any Company Group Member shall have become due and payable
and although such obligations and liabilities, or any of them, may be contingent or unmatured. If, as a result of such set off, appropriate
or application, such Holder receives more than it is owed hereunder, it shall hold such amounts in trust for the other Holders and transfer
such amounts to the other Holders ratably according to the amounts they are owed on the date of receipt. 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 any
Holder and shall not, except as expressly provided herein, be subject to set off or counterclaim or to any other obligation of the Company
(or the performance thereof).
22.
Dispute
Resolution
.
(a)            In
the case of a dispute between any Company Group Member and any Holder relating to or in connection with - or when an agreement between
any Company Group Member and any Holder is required hereunder, an inability to agree on - a Closing Bid Price, a Closing Sale Price,
a Conversion Price, a VWAP or a fair market value or the arithmetic calculation of a Conversion Rate, or the applicable Redemption Price
(as the case may be) (including a dispute relating to the determination of any of the foregoing), the Company or the applicable Holder
(as the case may be) shall submit the dispute to the other party, by notice delivered as provided in
Section 18(a) (Notices)
,
(i) if by the Company, within two (2) trading days after the occurrence of the circumstances giving rise to such dispute or (ii) if by
any Holder, at any time after such Holder learned of the circumstances giving rise to such dispute. If such Holder and the Company are
unable to promptly resolve such dispute on or prior to the second (2nd) trading day following such initial notice, then, at any time
thereafter, such Holder may, at its sole option, select an independent, reputable investment bank to resolve such dispute.
(b)            Such
Holder and the Company shall each deliver to such investment bank (i) a copy of the initial dispute submission so delivered in accordance
with the first sentence of this
Section
22
and (ii) written documentation (together with such copy of such submission,
the
“Required Dispute Documentation”
) supporting its position with respect to such dispute, in each case, no later
than 5:00 p.m. (New York time) by the fifth (5th) trading day immediately following the date on which such investment bank is selected
hereunder (the
“Dispute Submission Deadline”
). If either party fails to deliver all of the Required Dispute Documentation
by the Dispute Submission Deadline, then such party shall no longer be entitled to (and hereby waives its right to) deliver or submit
any written documentation or other support to such investment bank with respect to such dispute and such investment bank shall resolve
such dispute based solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission
Deadline. Unless otherwise agreed to in writing by both the Company and such Holder or otherwise requested by such investment bank, neither
the Company nor such Holder shall be entitled to deliver or submit any written documentation or other support to such investment bank
in connection with such dispute other than the Required Dispute Documentation.
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(c)            The
Company and such Holder shall ensure that such investment bank determines the resolution of such dispute and notify the Company and such
Holder of such resolution no later than ten (10) trading days immediately following the Dispute Submission Deadline. The costs, fees
and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute
shall be final and binding upon all parties absent manifest error.
(d)            The
Company expressly acknowledges and agrees that (i) this
Section
19
constitutes an agreement to arbitrate between the
Company and each Holder (and constitutes an arbitration agreement) and that any Holder is authorized to apply for an order to compel
arbitration in order to compel compliance with this
Section
19
, (ii) the terms of this Certificate of Designation
and each other applicable Transaction Document shall serve as the basis for the selected investment bank’s resolution of any dispute
resolved under this
Section
19
, such investment bank shall be entitled (and is hereby expressly authorized) to make
all findings, determinations and the like that such investment bank determines are required to be made by such investment bank in connection
with its resolution of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations and
the like to the terms of this Certificate of Designation and any other applicable Transaction Documents, (iii) as described in
Section 22
,
the applicable Holder (and only such Holder with respect to disputes solely relating to such Holder), in its sole discretion, shall have
the right to submit any dispute described in this
Section
19
to any state or federal court in lieu of utilizing the
procedures set forth in this
Section
19
and (iv) nothing in this
Section
19
shall limit such Holder
from obtaining any injunctive relief or other equitable remedies (including with respect to any matters described in this
Section
19
).
23.
Governing
Law
.
(a)
This
Certificate of Designation, and all claims, disputes, actions, investigations and proceedings, and matters related hereto or thereto
or arising hereunder or thereunder or arising from or relating to the relationship among any of the parties hereto or thereto, are governed
by, and shall be construed, interpreted and enforced exclusively in accordance with, the laws of the State of Delaware (without giving
effect to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the
laws of any jurisdiction other than those of the State of Delaware).
(b)
Except
for disputes resolved pursuant to Section 21 (Dispute Resolution), any such action or proceeding shall be brought exclusively in
the Delaware state courts sitting in Wilmington, DE or the federal courts of the United States of America for the District of Delaware
sitting in Wilmington, DE; provided, that any Holder may bring actions or proceedings in other jurisdictions to enforce this Certificate
of Designation.
The Company (i) accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction
of such courts, (ii) irrevocably and unconditionally waives any objection, including any objection to the laying of venue, whether based
on the grounds of
forum non conveniens
or on the fact that such jurisdiction is improper or otherwise, or any other objection
that such party is not subject to the jurisdiction of such courts, that it may now or hereafter have to the bringing of any action or
proceeding in that jurisdiction, (iii) irrevocably and unconditionally consents to the service of process of any court referred
to above in any action or proceeding by the mailing of copies of the process to the parties hereto as provided in
Section 17(a)
(Notices)
and (iv) irrevocably and unconditionally agrees that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Service effected as provided
in this manner will become effective ten (10) calendar days after the mailing of the process. Notwithstanding the foregoing, nothing
contained in this Certificate of Designation shall affect the right of any Holder to serve process in any other manner permitted by applicable
law or commence actions or proceedings or otherwise proceed against any Company Group Member in any other jurisdiction.
(c)
The
parties hereto hereby irrevocably and unconditionally waive, to the fullest extent permitted by applicable law, any right that they may
have to trial by jury of any claim or cause of action or in any action or proceeding, directly or indirectly based upon or arising out
of, under or in connection with, this Certificate of Designation or the transactions contemplated therein or related thereto (whether
founded in contract, tort or any other theory). Each party hereto (i) certifies that no other party and no Affiliate of any party and
no attorney, agent or other representative of any of the foregoing has represented, expressly or otherwise, that any person would not,
in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other parties have been induced
to acquire Preferred Shares by, among other things, the mutual waivers and certifications in this clause (c).
The Company acknowledges
and agrees that the foregoing waivers are a material inducement to the Holders to acquire Preferred Shares. The Company has reviewed
the foregoing waivers with its legal counsel and has knowingly and voluntarily waived its jury trial rights following consultation with
such legal counsel. In the event of litigation, this Certificate of Designation may be filed as a written consent to a trial by the court.
This
Section 22
shall not restrict a party from exercising pre- or post-judgment remedies under applicable Regulations
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19
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24.
Severability
.
Any provision of this Certificate of Designation being held illegal, invalid or unenforceable in any jurisdiction shall not affect any
part of such provision not held illegal, invalid or unenforceable, any other provision of this Certificate of Designation or any part
of such provision in any other jurisdiction, so long as the economic or legal substance of the transactions contemplated hereby or thereby
is not affected in any manner adverse to any party. In addition, upon any determination that any such term or other provision is invalid,
illegal or incapable of being enforced, the Company and the Required Holders will negotiate in good faith to amend this Certificate of
Designation so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
25.
Recission
and Withdrawal Rights
. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) this
Certificate of Designation, whenever any Holder exercises a right, election, demand or option under this Certificate of Designation and
the Company does not timely perform its related obligations within the periods therein provided, then such Holder 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, that, in the case of a rescission by any Holder of a conversion of any
Preferred Shares, such Holder shall return to the Company any Security received and subject to such rescinded conversion.
26.
Remedies.
(a)            In
addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Holders will
be entitled to specific performance under this Certificate of Designation. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations of the Company contained in this Certificate of Designation
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.
(b)
If
the Company shall fail to discharge any covenant, duty or obligation hereunder, any Holder may, in its discretion at any time, for the
account and at the expense of the Company pay any amount or do any act required of the Company hereunder or otherwise lawfully requested
by the Holder (including buying replacement Securities in the Principal Trading Market of such Securities in case of failure by the Company
to deliver Securities to such Holder). All fees, costs and expenses incurred by any such Holder in connection with the taking of any
such action shall be reimbursed to such Holder by the Company, on demand, with Late Charges accruing thereon. Any payment made or other
action taken by the Purchaser under this
clause (b)
shall be without prejudice to any right to assert, and without waiver
of, any breach of this Certificate of Designation and without prejudice to any Holder’s right to proceed thereafter as provided
herein.
(c)
The
remedies provided in this Certificate of Designation shall be cumulative and in addition to all other remedies available hereunder, whether
at law or in equity (including a decree of specific performance and/or other injunctive relief).
(d)
Nothing
in this Certificate of Designation shall limit any Purchaser Party’s rights to pursue actual and consequential damages for any
failure by the Company to comply with the terms of this Certificate of Designation.
(e)
The
Company acknowledges and agrees that any breach of this Certificate of Designation could cause irreparable harm to each Holder and the
remedy at law for any such breach may be inadequate. Therefore, in the event of any such breach, each such Holder shall be entitled,
in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the
necessity of showing economic loss and without any bond or other security being required.
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27.
Marshaling;
Payment Set Aside.
No Holder shall be under any obligation to marshal any property in favor of the Company or any other party or
against or in payment of any amount due under this Certificate of Designation. To the extent that the Company makes a payment or payments
to any Holder pursuant to this Certificate of Designation or any Holder 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 any Company
Group Member, a trustee, receiver or any other person under any applicable law (including 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, and all rights and remedies related thereto under this Certificate of Designation, 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.
28.
Maximum
Rate
. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim,
and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time
hereafter in force, in connection with any action or proceeding that may be brought by any Holder in order to enforce any right or remedy
hereunder. Notwithstanding any provision to the contrary contained in this Certificate of Designation, it is expressly agreed and provided
that the total liability of the Company hereunder 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 hereunder exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable hereto
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 hereto from the effective date thereof forward, unless such application
is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company
to any Holder with respect to any obligation owing hereunder, such excess shall be applied to any other outstanding obligation hereunder
or be refunded to the Company, the manner of handling such excess to be at the election of the applicable Holder.
29.
Liquidated
Damages.
The Company’s obligations to pay any partial liquidated damages or other amounts owing hereunder 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.
30.
Further
Assurances; Noncircumvention
. The Company will not, by amendment of its Certificate of Incorporation (as defined in the Purchase
Agreement), Bylaws (as defined in the Purchase Agreement) or through any reorganization, transfer of assets, consolidation, merger, scheme
of arrangement, 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 Certificate of Designation, and will at all times in good faith carry out all the provisions of this Certificate
of Designation and take all action as may be required to protect the rights of the Holders. Without limiting the generality of the foregoing
or any other provision of this Certificate of Designation or the other Transaction Documents, the Company (a) shall not increase the
par value of any shares of Common Stock receivable upon the conversion of any Preferred Shares above the Conversion Price then in effect,
(b) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid
and non-assessable shares of Common Stock upon the conversion of Preferred Shares and (c) shall, so long as any Preferred Shares are
outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely
for the purpose of effecting the conversion of the Preferred Shares, the maximum number of shares of Common Stock as shall from time
to time be necessary to effect the conversion of the Preferred Shares then outstanding (without regard to any limitations on conversion
contained herein). Notwithstanding anything herein to the contrary, if after the seventy-five (75) calendar day anniversary of the Initial
Issuance Date, each Holder is not permitted to convert such Holder’s Preferred Shares in full for any reason (other than pursuant
to restrictions set forth in
Section 8(a) (Beneficial Ownership Limitation)
), the Company shall use its best efforts to promptly
remedy such failure, including obtaining such consents or approvals as necessary to effect such conversion into shares of Common Stock.
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31.
Certain
Defined Terms
. For purposes of this Certificate of Designation, the following terms shall the following meanings:
“Affiliate”
means each person that controls, is controlled by or is under common control with such person or any Affiliate of such person. For purpose
of this definition, “control” and related words are used as such terms are used in and construed under Rule 405 under the
Securities Act. Notwithstanding the foregoing, the Holders and their Subsidiaries, on the one hand, and the Company Group Members and
their Subsidiaries, on the other hand, shall not be considered “Affiliates” of each other.
“
Bloomberg
”
means Bloomberg, L.P.
“Board”
means the board of directors of the Company.
“Bylaws”
means the bylaws of the Company, as in effect on the date of determination.
“Capital
Stock”
means all shares, participation or other equivalent (however designated) of capital stock (whether denominated as common
stock or preferred stock), and all other equity interests, including all beneficial, partnership or membership interests, joint venture
interests, participations or other ownership or profit interests in or equivalents (regardless of how designated) of or in a person (other
than an individual), whether voting or non-voting.
“Certificate
of Incorporation”
means the Certificate of Incorporation of the Company, as in effect on the date of determination.
“
Change
of Control
” means the occurrence of any of the following: (i) any person or group of persons (within the meaning of the
Exchange Act) shall have acquired legal or beneficial ownership (within the meaning of Rule 13d-3 of the SEC under the Exchange Act)
of (x) 50% prior to any initial public offering of the Common Stock and (y) 20% thereafter or more of the issued and outstanding
Voting Stock of any Company Group Member (whether on an as converted, fully diluted basis or without taking into account any
potential conversion or dilution of Stock Equivalents), other than by acquiring such Common Stock directly in an offering made to
the general public, (ii) during any period of twelve consecutive calendar months, individuals who, at the beginning of such period,
constituted the board of directors of the Company (together with any new directors whose election by the board of directors of the
Company or whose nomination for election by the stockholders of the Company was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of such period or whose elections or nomination for
election was previously so approved) cease for any reason other than death or disability to constitute a majority of the directors
then in office or (3) the Company shall cease to own and control all of the economic and voting rights associated with all of the
outstanding Capital Stock of the persons who are Company Group Members on the date hereof.
“Common
Stock”
means the common stock of the Company, par value $0.0001 per share, together with any capital stock into which such
common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
“Common
Stock Equivalents”
means all Securities and Indebtedness convertible into or exchangeable for Common Stock or any other Common
Stock Equivalent and all warrants, options,
scrip rights,
calls
or commitments of any character whatsoever, and all other rights or options or other arrangements (including through a conversion or
exchange of any other property) to purchase, subscribe for or acquire, any Common Stock or any other Common Stock Equivalent, whether
or not presently convertible, exchangeable or exercisable.
“Company”
means ConnectM Technology Solutions, Inc., a corporation incorporated under the laws of the State of Delaware.
“Company
Group Member”
means any of the Company and its Subsidiaries.
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“Derivative”
means (a) any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement
or other similar agreement or arrangement, (b) any foreign exchange contract, currency swap agreement, futures contract, option contract,
synthetic cap or other similar agreement or arrangement (including with respect to cryptocurrencies), (c) any futures or forward contract,
spot transaction, commodity swap, purchase or option agreement, other commodity price hedging arrangement, cap, floor or collar transaction,
any credit default or total return swap, and (d) any other derivative instrument, any other similar speculative transaction and any other
similar agreement or arrangement designed to alter the risks of any person arising from fluctuations in any underlying variable, including
interest rates, currency values, insurance, catastrophic losses, climatic or geological conditions or the price or value of any other
derivative instrument. For the purposes of this definition, “derivative instrument” means “any derivative instrument”
as defined in Statement of Financial Accounting Standards No. 133 (Accounting for Derivative Instruments and Hedging Activities) of the
United States Financial Accounting Standards Board, and any defined with a term similar effect in any successor statement or any supplement
to, or replacement of, any such statement.
“DGCL”
means the Delaware General Corporations Law.
“
Exchange
Act
” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
“
Exempt
Issuance
” has the definition set forth in the Purchase Agreement.
“Fundamental
Transaction”
means any of the following transactions, whether effected directly or indirectly or through on or a series of
related transactions: (i) any merger or consolidation of the Company; (ii) any Sale or license of any right, title or interest in the
assets of any Company Group Member, other than to a Company Group Member and other than transactions in the ordinary course of business
and transactions that, individually or in the aggregate, affect less than 10% of the market value of the consolidated assets of the Company
Group Members, (iii) the completion of any purchase offer, tender offer or exchange offer (whether by the Company or another person)
pursuant to which holders of Common Stock Sell, tender or exchange their shares for other Securities, cash or property, and (iv) any
other corporate reorganization, Securities purchase or other business combination involving the Company or, if all surviving entities
are not a Company Group Member, any other Company Group Member, including any spin-off or scheme of arrangement of any Company Group
Member, any reorganization, recapitalization or reclassification of the Common Stock, any compulsory share exchange pursuant to which
the Common Stock is effectively converted into or exchanged for other Securities, cash or other assets.
“
Listing
Event
” means a public offering pursuant to an effective registration statement under the Securities Act and, in connection
with such offering, the shares of Common Stock being listed for trading on the NYSE American, the Nasdaq Capital Market, the Nasdaq Global
Market, the Nasdaq Global Select Market or the New York Stock Exchange.
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“
Listing
Event Price
” shall mean the price per share of Common Stock (or unit, if units are offered in the Listing Event) at which the
Listing Event is consummated.
“
Material
Adverse Effect
” means any event that the Company would be required to disclose in an SEC Report, whether by filing a Form 8-K
or otherwise, that could have an adverse effect on, or change in,
(a) the legality, validity
or enforceability of any portion of any Transaction Document or any transaction contemplated therein, (b) the operations, assets,
business, prospects or condition (financial or otherwise) of any Company Group Member or (c) the ability of any Company Group Member
to perform on a timely basis its obligations under any Transaction Document for any reason whatsoever.
“
Negative
Event
” means each of the following event:
(i)             the
Board fails to declare any Dividend to be paid on the applicable Dividend Date in accordance with
Section 3 (Dividends)
or
to authorize any other action required hereunder that shall require an authorization of the Board;
(ii)            the
Company fails to pay to any Holder any Dividend (whether or not declared by the Board of Directors), Redemption Price, other distribution,
Late Charges or any other amount when and as due under this Certificate of Designation (including the Company’s failure to pay
any redemption payments or amounts hereunder), the Purchase Agreement or any other Transaction Document or any other agreement, document,
certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby (in each case, as permitted
pursuant to the DGCL), except, in the case of a failure to pay Dividends and Late Charges when and as due, in each such case only if
such failure remains uncured for a period of at least three (3) business days;
(iii)           any
of the Preferred Shares or shares of Common Stock issuable upon conversion of the Preferred Shares are not freely tradable without restriction
by any of the Holders due to an uncured breach of an obligation by the Company to any Holder or under any applicable law after the applicable
grace period has run;
(iv)           the
suspension from trading or listing or failure of the Common Stock to be trading or listed (as applicable) on an Trading Market for a
period of more than two (2) consecutive trading days or such suspension being threatened (with a reasonable prospect of delisting occurring
after giving affect to all applicable notice, appeal, compliance and hearing periods) or reasonably likely to occur as evidenced by a
writing from any Trading Market or the “Company failing to meet the minimum listing maintenance requirements (after giving effect
to any applicable cure period) of any Trading Market where the Common Stock is listed or designated for quotation;
(v)            the
Company shall fail to have (A) a sufficient number of authorized and otherwise unreserved shares of Common Stock to satisfy its obligations
under this Certificate of Designation to reserve for issuance upon conversion of the Preferred Shares or (B) shall fail to reserve for
issuance of such Common Stock a number of shares of Common Stock at least equal to the Reserve Amount;
(vi)           the
Company (A) fails to delivery the required number of shares of Common Stock as and when required under this Certificate of Designation
or any Transaction Document and such failure is not cured within two (2) trading days, (B) fails to remove any restrictive legend on
any certificate or any shares of Common Stock issued to such Holder as and when required by this Certificate of Designation or any Transaction
Document, unless otherwise then prohibited by applicable law, and any such failure remains uncured for at least two (2) trading days,
(C) provides a written notice, including by way of public announcement or through any of its agents or other representatives, at any
time, of its intention not to comply, as required, with a request for delivery of shares of Common Stock that is made in accordance with
this Certificate or any Transaction Document, including a request for conversion of any Preferred Shares, other than pursuant to
Section 8
(Limitations on Receiving Common Stock)
or any similar provision in any other Transaction Document or (D) fails to have any registration
statement covering any Securities of the Company held by any Holder become effective as and when required under any Transaction Document;
(vii)          the
Common Stock cannot be issued and transferred electronically to third parties via DTC through its Deposit/Withdrawal at Custodian system
or (B) the Company has received notice from DTC to the effect that a suspension of, or restriction on, accepting additional deposits
of the Common Stock, electronic trading or book-entry services by DTC with respect to the Common Stock is being imposed or is contemplated;
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(viii)        bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against
any Company Group Member or any Subsidiary of any Company Group Member and, if instituted by a third party, shall not be dismissed within
thirty (30) days of their initiation;
(ix)           the
commencement by any Company Group Member or any Subsidiary of any Company Group Member of a voluntary case or proceeding under any applicable
federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated
a bankrupt or insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document in respect of any Company
Group Member or any Subsidiary of any Company Group Member in an involuntary case or proceeding under any applicable federal, state or
foreign bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding
against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal, state
or foreign law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of any Company Group Member or any Subsidiary of any Company Group
Member or of any substantial part of any of their property, or the making by it of an assignment for the benefit of creditors, or the
execution of a composition of debts, or the occurrence of any other similar federal, state or foreign proceeding, or the admission by
it in writing of its inability to pay its debts generally as they become due, the taking of corporate action by any Company Group Member
or any Subsidiary of any Company Group Member in furtherance of any such action or the taking of any action by any person to commence
a Uniform Commercial Code foreclosure sale or any other similar action under any other law;
(x)            the
entry by a court of (i) a decree, order, judgment or other similar document in respect of any Company Group Member or any Subsidiary
of any Company Group Member of a voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy,
insolvency, reorganization or other similar law or (ii) a decree, order, judgment or other similar document adjudging any Company Group
Member or any Subsidiary of any Company Group Member as bankrupt or insolvent, or approving as properly filed a petition seeking liquidation,
reorganization, arrangement, adjustment or composition of or in respect of any Company Group Member or any Subsidiary of any Company
Group Member under any applicable law or (iii) a decree, order, judgment or other similar document appointing a custodian, receiver,
receiver and manager, liquidator, assignee, trustee, sequestrator or other similar official of any Company Group Member or any Subsidiary
of any Company Group Member or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and
the continuance of any such decree, order, judgment or other similar document or any such other decree, order, judgment or other similar
document unstayed and in effect for a period of thirty (30) consecutive days;
(xi)           the
occurrence of any default under, redemption of or acceleration prior to maturity of at least an aggregate of $250,000 of indebtedness
or other obligation of any Company Group Member or any Subsidiary thereof;
(xii)          a
final judgment or judgments for the payment of money aggregating in excess of $250,000 are rendered against any Company Group Member
or any Subsidiary of any Company Group Member and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged,
settled or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay;
provided
, that
any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $250,000
amount set forth above so long as the Company provides each Holder a written statement from such insurer or indemnity provider (which
written statement shall be reasonably satisfactory to each Holder) to the effect that such judgment is covered by insurance or an indemnity
and such Company Group Member (or, as the case may be, such Subsidiary) will receive the proceeds of such insurance or indemnity within
thirty (30) days of the issuance of such judgment;
(xiii)         any
Company Group Member or any Subsidiary thereof, individually or in the aggregate fails to pay, when due, or within any applicable grace
period, any obligation in excess of $250,000 due to any third party (other than, with respect to unsecured Indebtedness only, payments
contested by such Company Group Member or, as the case may be, such Subsidiary in good faith by proper proceedings and with respect to
which adequate reserves have been set aside for the payment thereof) or is otherwise in breach or violation of any agreement for monies
owed or owing in an amount in excess of $250,000, which breach or violation causes the other party thereto to declare a default or otherwise
accelerate amounts due thereunder;
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(xiv)         other
than as specifically set forth in another clause of this definition, any Company Group Member or any Subsidiary thereof breaches any
representation or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality,
which may not be breached in any respect) made to any Holder, whether in this Certificate of Designation, any Transaction Document or
any other document, or the Company breaches any covenant, provision or other term or condition of this Certificate of Designation, any
Transaction Document or any other agreement with any Holder, except, in the case of a breach of a covenant or other term or condition
that is curable, only if such breach remains uncured for a period of five (5) consecutive trading days;
(xv)          the
occurrence of any Material Adverse Effect; or
(xvi)         a
Fundamental Transaction or Subsequent Issuance being abandoned or otherwise canceled or withdrawn at any time after a public announcement
thereof; or
(xvii)        any
Holder obtaining material non-public information, directly or indirectly, from or on behalf of any member of the Company Group or any
of their managers, officers, directors, managing members, staff members, representatives or agents.
“
Parent
Entity
” of a person means an entity that, directly or indirectly, controls the applicable person and whose common stock or
equivalent equity security is quoted or listed on a Trading Market, or, if there is more than one such person or Parent Entity, the person
or Parent Entity with the largest public market capitalization as of the date of consummation of the Change of Control.
“Principal
Trading Market”
for any Security, means the principal Trading Market for such Security, as listed in the applicable offering
documents for such Security. The “Principal Trading Market” for the Common Stock as of the filing date of this Certificate
of Designation with the Delaware Secretary of State is the OTC Markets OTCQX.
“
Purchase
Agreement
” means that certain securities purchase agreement by and among the Company and the initial Holder of Preferred Shares,
dated as of August __ 2026, as may be amended from time in accordance with the terms thereof.
“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.
“Sale”
means a sale, lease or sublease (as lessor or sublessor), sale and leaseback, conveyance, transfer, assignment or other disposition to,
or any exchange of property (other than cash and cash equivalents) with, any person of, or any other transaction permitting any person
to acquire, in one transaction or a series of transactions, any right, title or interest in, all or any part of a business or any property
of any kind (other than cash and cash equivalents) including a sale, factoring at maturity, collection of or other disposal, with or
without recourse, of any notes or accounts receivable and including acquiring or Selling any Derivative intended to transfer, or having
the effect of transferring, any risk relating to any such right, title or interest in such business or property, including any risk of
Loss relating to holding any such right, title or interest. To
“Sell”
shall have a correlative meaning.
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26
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“
SEC
”
means the Securities and Exchange Commission or the successor thereto.
“
Securities
”
means any Capital Stock, voting trust certificates, certificates of interest or participation in any profit sharing Contractual Obligation
(as defined in the Purchase Agreement) or arrangement, loans, bonds, debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, any other item commonly known as “security,” any other item treated as
“security” under the Securities Act, the Investment Company Act of 1940, the Investment Advisers Act of 1940 or any other
law of the United States, any State, province or any political subdivision of either of them and any certificate of interest, share or
participation in temporary or interim certificates for the purchase or acquisition of, or any option, warrant, right to subscribe to,
purchase or acquire, or any Derivative valued by reference to, any item otherwise qualifying as Security hereunder.
“
Securities
Act
” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
“Stock
Equivalents”
means all Securities and Indebtedness convertible into or exchangeable for Capital Stock or any other Stock Equivalent
and all warrants, options,
scrip rights,
calls or commitments
of any character whatsoever, and all other rights or options or other arrangements (including through a conversion or exchange of any
other property) to purchase, subscribe for or acquire, any Capital Stock or any other Stock Equivalent, whether or not presently convertible,
exchangeable or exercisable.
“Subsequent
Offering”
means any public or private offering or any other issuance of any Capital Stock or any other issuance of any Capital
Stock (other than any issuance of Common Stock to the general public), Stock Equivalents or of any other Securities or Indebtedness (including
entering into any Equity Line of Credit or issuing any Variable-Priced Equity-Linked Instrument, each as defined in the Purchase Agreement)
or any other debt or equity financing or capital-raising transaction of any kind other than an Exempt Issuance.
“Subsidiary”
means, with respect to any person, (a) if such person is the Company, any subsidiary of the Company as set forth in, or otherwise required
to be set forth in, filings with the Securities and Exchange Commission, whether before, on or after the date hereof, and (b) in any
case, any other person (other than natural persons) the management of which is, directly or indirectly, controlled by, or of which an
aggregate of fifty percent (50%) or more of the outstanding Voting Stock is, at the time, owned or controlled, directly or indirectly,
by such person or one or more Subsidiaries of such person.
“
Successor
Entity
” means the person (or, if so elected by the Required Holders, the Parent Entity) formed by, resulting from or surviving
any Change of Control or the person (or, if so elected by the Required Holders, the Parent Entity) with which such Change of Control
shall have been entered into.
“
Trading
Market
” means, for any Security, any of the following markets or exchanges on which such Security is listed, designated or
quoted for trading on the date in question: the NYSE American; the Nasdaq Capital Market; the Nasdaq Global Market; the Nasdaq Global
Select Market; the New York Stock Exchange; OTC Markets or the OTC Bulletin Board (and any successors to any of the foregoing).
“Transaction
Documents”
means the Purchase Agreement, and the Warrant and registration rights agreement signed in connection therewith,
and each other agreement, notice and other document executed in connection with the transactions contemplated hereunder, including the
“Transaction Documents” as defined in the Purchase Agreement.
“
Voting
Stock
” of a person means Capital Stock of such person of the class or classes pursuant to which the holders thereof have the
general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers, trustees or
other similar governing body of such person (irrespective of whether or not at the time capital stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
“Warrant”
means the warrant for the purchase of Common Stock executed and delivered by the Company to the initial Holder pursuant to the Purchase
Agreement, together with any amendments and replacements thereof.
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32.
Construction.
This Certificate of Designation shall be deemed to be jointly drafted by the Company and the Holders and shall not be construed against
any such person as the drafter hereof. The Company covenants to each Holder that there shall be no characterization concerning this instrument
other than as expressly provided herein. Except as otherwise expressly provided herein, if the last or appointed day for a payment, the
taking of any action or the expiration of any right required or granted hereunder shall not be a business day, then such payment may
be made, such action may be taken or such right may be exercised on the next succeeding business day. As used herein, references to the
singular will include the plural and vice versa and references to the masculine gender will include the feminine and neuter genders and
vice versa, as appropriate. When used herein, unless otherwise expressly provided herein, (a) the words
“hereof,”
“herein”
and
“hereunder”
and words of similar import refer to this Certificate of Designation as a
whole and not to any particular provision hereof, (b) recital, article, section, subsection, schedule and exhibit references are references
with respect to this Certificate of Designation unless otherwise specified, (c) any reference to this Certificate of Designation shall
include a reference to all recitals, appendices, exhibits and schedules to this Certificate of Designation and, unless the prior written
consent of any party is required hereunder and is not obtained, shall be a reference to this Certificate of Designation as waived, amended,
restated, supplemented or otherwise modified and (d) any reference to a specific statute shall be to such statute, as modified from
time to time, together with any successor or replacement statute, in each case as in effect at the time of determination. Unless the
context otherwise requires, when used in this Certificate of Designation, the following terms have the following meaning: (r)
“person”
means an individual, partnership, corporation, incorporated or unincorporated association, limited liability company, limited liability
partnership, joint stock company, land trust, business trust or unincorporated organization, or a government or agency, department or
other subdivision thereof or other entity of any kind, (s)
“execution,” “signed,”
“
signature”
and words of like import shall be deemed to include electronic signatures and the keeping of records in electronic form, each of which
shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping
system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global
and National Commerce Act, the Delaware Uniform Electronic Transactions Act and any other similar state law based on the Uniform Electronic
Transactions Act, (t)
“rounding”
means, with respect to shares of Common Stock, rounding according to the regulations
of the Principal Trading Market or, if not such regulations exists or if such regulations shall be ambiguous, perfectly even results
shall be rounded up, (u)
“including”
means “including, without limitation,” (v) the
“consummation”
or “
closing”
of a Fundamental Transaction or Subsequent Offering that consists of several distinct closings shall
be deemed occur on the first such closings, (w)
“dollar”
and the sign
“$”
each mean the lawful
money of the United States of America, (x)
“business day”
means any day except Saturdays, Sundays, any day that
is a federal holiday in the United States and any day on which the Federal Reserve Bank of New York is not open for business. The headings
in this Agreement are included for convenience of reference only and will not affect in any way the meaning or interpretation of this
Agreement and (y)
“trading day
” means a day on which the Principal Trading Market for the Common Stock is open for
trading;
provided
, that “
trading day”
shall not include, unless the Required Holders otherwise agree, any day
on which the Common Stock is scheduled to trade thereon for less than four and a half hours or any day that the Common Stock is suspended
from trading during the final hour of trading on such exchange or market (or, if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour ending at 4:00 p.m.); provided, further that, if the Common
Stock does not trade on any Trading Market,
“trading day”
shall mean “business day”. All references in
this Certificate of Designation to statutes and regulations shall include all amendments of same and implementing regulations and any
successor statutes and regulations; to any instrument or agreement shall include any and all modifications and supplements thereto and
any and all restatements, extensions or renewals thereof to the extent such modifications, supplements, restatements, extensions or renewals
of any such documents are permitted by the terms hereof and thereof. A Negative Event shall be deemed to exist at all times during the
period commencing on the date that such Negative Event occurs to the date on which such Negative Event is waived in writing in accordance
with this Certificate of Designation. Whenever in any provision of this Certificate of Designation, any Holder is authorized to take
or decline to take any action (including making any determination) in the exercise of its
“discretion,”
such provision
shall be understood to mean that such Holder may take or refrain to take such action in its sole discretion. References to times of the
day herein shall refer to Eastern Time. In the computation of periods of time from a specified date to a later specified date, the word
“from”
means “from and including,” the words
“to”
and
“until”
each
mean “to but excluding” and the word “through” means “to and including.” Time is of the essence of
this Certificate of Designation. No provision of this Certificate of Designation shall be construed against or interpreted to the disadvantage
of any party hereto by any Governmental Authority by reason of such party having or being deemed to have structured, drafted or dictated
such provision. The reporting entity relied upon for the determination of trading price and trading volume shall be Bloomberg, L.P.
-
28
-
33.
Disclosure.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Certificate of Designation, unless the Company
has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to
any Company Group Member or any Subsidiary of any Company Group Member, the Company shall, except as otherwise agreed by the Required
Holders, within four (4) business days after any such receipt or delivery publicly disclose such material, non-public information on
a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information
relating to any Company Group Member or any Subsidiary of any Company Group Member, the Company so shall indicate to such Holder contemporaneously
with delivery of such notice, and in the absence of any such indication, such Holder shall be allowed to presume that all matters relating
to such notice do not constitute material, non-public information relating to any Company Group Member or any Subsidiary of any Company
Group Member. The rights of the Holders under this
Section 33
shall be in addition to, and not as a limit or in substitution for,
any rights Nothing contained in this
Section
30
shall limit any obligations of the Company, or any rights of any Holder,
under
Section 4.4 (Disclosures)
of the Purchase Agreement and
Section 11 (Other Covenants; Information)
and nothing
in such provision shall limit the rights of any Holder under this
Section 33
.
* * * * *
-
29
-
IN
WITNESS WHEREOF
, the Company has caused this Certificate of Designation of Series C Convertible Preferred Stock of ConnectM Technology
Solutions, Inc. to be signed by its Chief Executive Officer on this 4
th
day of September, 2026.
ConnectM Technology Solutions, Inc.
By:
Name:
Bhaskar Panigrahi
Title:
Chief Executive Officer
-
30
-
ANNEX A
CONNECTM TECHNOLOGY
SOLUTIONS, INC.
CONVERSION NOTICE
Reference
is made to the Certificate of Designation, Preferences and Rights of the Series C Convertible Preferred Stock of ConnectM Technology
Solutions, Inc. (the “
Certificate of Designation
”). In accordance with and pursuant to the Certificate of Designation,
the undersigned hereby elects to convert the number of shares of Series C Convertible Preferred Stock, $0.0001 par value per share (the
“
Preferred Shares
”), of ConnectM Technology Solutions, Inc., a Delaware corporation (the “
Company
”),
indicated below into shares of common stock, $0.0001 par value per share (the “
Common Stock
”), of the Company, as
of the date specified below.
Date of Conversion:
Aggregate number of Preferred Shares to be converted:
Aggregate Stated Value of such Preferred Shares to be converted:
Aggregate accrued and unpaid Dividends and accrued and unpaid Late Charges with respect to such Preferred Shares and such Aggregate Dividends to be converted:
AGGREGATE
CONVERSION AMOUNT TO BE CONVERTED:
Please confirm the following information:
Conversion Price:
Number of shares of Common Stock to be issued:
-
31
-
Please issue the Common Stock into which the applicable Preferred Shares are being converted to Holder, or for its benefit, as follows:
¨
Check
here if requesting delivery as a certificate to the following name and to the following address:
Issue to:
¨
Check
here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
DTC Participant:
DTC Number:
Account Number:
Date: _____________
__,
Name of Registered
Holder
By:
Name:
Title:
Tax ID:
_____________________
Facsimile:
___________________
E-mail Address:
-
32
-

----- tm2624767d1_ex4-1.htm -----
EX-4.1
3
tm2624767d1_ex4-1.htm
EXHIBIT 4.1
Exhibit 4.1
WARRANT NO. __
Date: September __, 2026
THIS
WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “
SECURITIES ACT
”),
OR APPLICABLE STATE SECURITIES REGULATIONS AND, ACCORDINGLY, MAY NOT BE SOLD, OFFERED FOR SALE OR PLEDGED AS SECURITY IN THE ABSENCE OF
SUCH REGISTRATION WITHOUT RELIANCE ON AN EXEMPTION UNDER THE SECURITIES ACT AND COMPLIANCE WITH APPLICABLE STATE SECURITIES REGULATIONS.
THIS WARRANT MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER-DEALER OR OTHER LOAN FROM AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN
SECURED BY SUCH SECURITIES.
WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF
ConnectM Technology Solutions, Inc.
FOR
VALUE RECEIVED
, Ascent Partners Fund LLC or its successors and permitted assigns (collectively, the
“Holder”
)
is hereby irrevocably granted the option and right, subject to the terms and conditions set forth herein, to purchase from ConnectM Technology
Solutions, Inc., a Delaware corporation (the
“Company”
), 1,428,571.43 shares (the
“Warrant Securities”)
of Common Stock of the Company, $0.001 par value per share (together with any other type or class of Security that may be purchased with
this Warrant pursuant to
Section 5,
the
“Underlying Securities”
), as constituted on the date hereof (the
“Issue Date”
), upon surrender hereof, at the principal office of the Company referred to below, with the notice of
exercise attached hereto as
Exhibit A
duly executed by the Holder (the
“Exercise Notice
), and simultaneous delivery
of payment for the Warrant Securities in U.S. dollars, the lawful currency of the United States (
“$”
or
“dollars”
)
or otherwise as hereinafter provided, at the exercise price as set forth in Section 2 below (the
“Exercise Price”
).
The number, character and Exercise Price of the Underlying Securities is subject to adjustment as provided below. The term
“Warrant”
as used herein shall include this Warrant, as the same may be modified from time to time, and any warrants delivered in substitution or
exchange therefor as provided herein.
This Warrant is issued pursuant
to
Section 1.1(a) (Closings; Initial Closing)
of that certain Securities Purchase Agreement, dated as of August 31, 2026, by and
between the Company and the Holder as purchaser (as modified from time to time, the
“Purchase Agreement
”; capitalized
terms used but not defined herein are used as defined in the Purchase Agreement, including by reference in
Schedule II
thereof
to definitions in other Transaction Documents).
1.
Term
. This Warrant (and the purchase rights granted hereunder) shall terminate at 5:00 p.m. (Eastern
Standard Time) on the fifth anniversary of the date hereof (the
“Expiration Date”
). Any rights granted hereunder that
have not been exercised on or before the Expiration Date shall then expire and be void and without further force or effect.
2.
Price
. The purchase price at which this Warrant may be exercised shall be $___ per share of Warrant
Securities, as adjusted from time to time pursuant to
Section 5
(as so adjusted, the “
Exercise Price
”).
3.
Exercise
.
(a)
Cash Purchase.
In order to exercise this Warrant and the rights granted hereunder, in whole or in part, the Holder shall
complete, duly execute and deliver to the Company (or to the Company’s transfer agent for the Underlying Securities (the
“Transfer
Agent
”)) all of the following: (i) the Exercise Notice, (ii) a copy of this Warrant and (iii) payment of the Exercise
Price in cash by wire transfer of immediately available dollars to an account designated by the Company or by certified check or official
bank check. Any share of Underlying Securities purchased in cash under this Warrant shall reduce the remaining number of Warrant Securities
subject to this Warrant.
(b)
Cashless Exercise
. If, at any time after the Issue Date, there is no effective registration statement covering, or
no current prospectus available for, the free resale of the Warrant Securities by the Holder, then, in lieu of exercising this Warrant
by delivery of the Exercise Price pursuant to
clause (a)
above, the Holder may elect to receive the number of Warrant Securities
determined according to the following formula (in which case the remaining shares of Warrant Securities shall be reduced by the number
of Warrant Securities for which this Warrant is being exercised):
X
=
Y(A-B)
A
Where,
X
=
The number of Warrant Securities to be issued to the Holder;
Y
=
The number of Warrant Securities for which this Warrant is being exercised;
A
=
The fair market value of one share of Warrant Security; and
B
=
The Exercise Price.
For
purposes of this
clause
(b)
, the
“fair market value”
of a Security is defined as follows:
(i)
if such Security is traded on a Trading Market, the closing price thereof on the Principal Trading Market where such Security is
traded on the last Trading Day prior to the date the applicable Exercise Notice was delivered to the Company; or
(ii)
if there is no active trading on any Trading Market, the fair market value, as determined in good faith by the Company’s
board of directors, consistent with any other determination of value made by the board of directors for any other purpose.
“Principal
Trading Market”
for any Security, means the principal Trading Market for such Security,
as listed in the applicable offering documents for such Security. The
“Principal Trading Market”
for the Common Stock
is OTC Markets.
“
Trading
Day
” means a day on which all Principal Trading Markets for the Underlying Securities are open for trading.
“
Trading
Market
” means, for any Security, any of the following markets or exchanges on which such Security is listed or quoted for trading
on the date in question: the NYSE American; the Nasdaq Capital Market; the Nasdaq Global Market; the Nasdaq Global Select Market; the
New York Stock Exchange; OTC Markets or the OTC Bulletin Board (and any successors to any of the foregoing).
4.
Treatment of Consideration in Fundamental Transactions
.
(a)
In-The-Money Cash Transactions
. If the Company consummates a Fundamental Transaction for which (i) the consideration
that would be received by the Holder (assuming the Holder exercised this Warrant in full prior to the consummation thereof) consists solely
of cash and Marketable Securities (as hereinafter defined), (ii) the consideration received by holders of Underlying Securities,
as determined in accordance with
Section 5(b)(iii)
, would be greater than the Exercise Price in effect as of immediately prior
to the consummation of such Fundamental Transaction, and (iii) the Holder has not previously exercised this Warrant in full, then,
in lieu of the Holder’s exercise of the unexercised portion of this Warrant, this Warrant shall, as of immediately prior to the
closing of such Fundamental Transaction (but subject to the occurrence thereof) automatically cease to represent the right to purchase
Underlying Securities and shall, from and after such closing, represent solely the right to receive the aggregate consideration that would
have been payable in such Fundamental Transaction on and, in respect of all Warrant Securities which could have been purchased with this
Warrant immediately prior to the closing thereof, net of the aggregate Exercise Price therefor, as if such Warrant Securities had been
issued and outstanding to the Holder as of immediately prior to such closing, as and when such consideration is paid to the holders of
the outstanding Warrant Securities.
(b)
Non-Cash and Out-of-the Money Warrants
. Upon the closing of any other Fundamental Transaction, the acquiring, surviving,
replacement or successor entities shall assume this Warrant and the Company’s obligations hereunder, and this Warrant shall thereafter
be exercisable for the same Warrant Securities and/or other property as would have been paid for the Warrant Securities issuable upon
exercise of the unexercised portion of this Warrant as if such Warrant Securities were outstanding on and as of the closing of such Fundamental
Transaction, at an aggregate Exercise Price equal to the aggregate Exercise Price in effect as of immediately prior to such closing, all
subject to further adjustment from time to time thereafter in accordance with the provisions of this Warrant, including
Section 5
.
(c)
Definition.
For purposes of this
Section 4, “Marketable Securities”
means Securities meeting all
of the following requirements (determined as of immediately prior to the closing of the Fundamental Transaction): (i) the issuer of such
Securities is subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, and is then current in its filing
of all required reports and other information under the Act and the Exchange Act; (ii) such Securities are traded in a Trading Market
and (iii) assuming that the Holder was a holder of such Securities, the Holder would not be restricted from publicly re-selling all
of such Securities, except to the extent that any such restriction (x) arises solely under securities Regulations and (y) does not extend
beyond six (6) months following the date of the consummation of such Fundamental Transaction. Notwithstanding the foregoing, Securities
held in escrow or subject to holdback to cover indemnification-related claims shall be deemed to be Marketable Securities if they would
otherwise be Marketable Securities but for the fact that they are held in escrow or subject to holdback to cover indemnification-related
claims.
5.
Other Adjustments.
Both the Exercise Price and the number of Warrant Securities purchasable upon
the exercise of each Warrant are subject to adjustment from time to time as follows:
(a)
Stock Dividends, Stock Splits and Fundamental Transactions.
If the Company shall, at any time after the date hereof, (i)
declare a dividend on Warrant Securities payable in other Securities or Indebtedness of the Company or any other person (
“New
Investments
”), (ii) split or subdivide the outstanding Warrant Securities, (iii) combine the outstanding Warrant Securities
into a smaller number of shares, (iv) issue by reclassification of its Warrant Securities any New Investment of the Company, (v)
complete any capital reorganization of the Company, whether or not such reclassification directly or indirectly affects the Underlying
Securities or results in New Investments being issued to holders of Underlying Securities, (vi) complete any reclassification of the Underlying
Securities (other than a reclassification referred to in
clause (iv)
above), (vii) complete a business combination of the
Company or any other Fundamental Transaction, whether by consolidation, merger or transfer of substantially all assets of the Company
or otherwise, and whether or not such combination result in holders of Underlying Securities receiving New Investments then, for each
such event, the Exercise Price then in effect, as well as, where applicable, the type and number of Warrant Securities issuable hereunder,
shall be adjusted so as to ensure that the Holder shall remain entitled, at the Exercise Price applicable prior to such adjustment, to
receive the kind and number of Warrant Securities and all such New Investments of the Company which the Holder would have been entitled
to receive after any such event had such Warrant been exercised in full immediately prior to any such event (or, if applicable, any record
date with respect thereto). Each such adjustment shall become effective immediately after the effective date of the event, retroactive
to the record date, if any, for such event. The Company shall not engage in any such transaction resulting in the holders of Underlying
Securities receiving New Investments issued by any person other than the Company unless, prior to or simultaneously with the consummation
thereof, such other assumes, by written instrument, the obligations of the Company hereunder (jointly and severally with the Company if
the Company survives such event). The provisions of this
clause (a)
shall continue to apply to successive events covered hereby.
At any time after which, as a result of an adjustment made pursuant to this
Section 5
, the Holder becomes entitled to receive
any New Investments that are not Underlying Securities, the term
“Warrant Securities”
hereunder shall be deemed include
such New Investments, and the exercise price and number of such New Investments receivable hereunder shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the original Warrant Securities
contained in this
Section 5
, and all other provisions of this Warrant that apply to the Warrant Securities shall apply on
like terms to such New Investments. Similarly, the term “
Underlying Securities”
hereunder shall be deemed to include
all Securities and Indebtedness of the type of such New Investments.
(b)
Issuance at Less than Exercise Price
(i)
Issuance of Underlying Securities.
If and whenever on or after the Issue Date, the Company grants, issues or sells, or in
accordance with this
Section 5
is deemed to have granted, issued or sold, (A) any Underlying Securities (including the issuance
or sale of shares of Underlying Securities owned or held by or for the account of the Company, but excluding any Exempt Issuance) for
a consideration per share that is less than the Exercise Price in effect immediately prior to such grant, issuance or sale or deemed grant,
issuance or sale or (B) (1) any Stock Equivalents of Underlying Securities or (2) any options to purchase (or any other Contractual Obligation
of the Company to grant, issue or sell) Underlying Securities or Stock Equivalents thereof (
“Acquisition Rights
”),
in each case for which, at the time of such grant, issuance or sale, the lowest possible consideration per share required to be paid by
the holder thereof to acquire one share of Underlying Securities pursuant to such Acquisition Rights (net of any payment made by any Company
or any Company Party to the holder of such Acquisition Rights or to any other person pursuant to such Acquisition Rights) is less than
the Exercise Price in effect immediately prior to such grant, issuance or sale or deemed grant, issuance or sale (all of the foregoing
a “
Dilutive Issuance
”), then immediately after such Dilutive Issuance, the Exercise Price then in effect for such Warrant
Securities shall be reduced to an amount equal to such consideration. Except as expressly stated in this
clause (b)
, no further
adjustment to the Exercise Price shall be made upon the issuance of such Underlying Securities, the exercise of such options or otherwise
pursuant to the terms of, or upon the issuance of, such shares of Common Stock upon conversion, exercise or exchange of such Stock Equivalents.
If the Company takes a record of Underlying Securities for the purpose of entitling the holder thereof (x) to receive a dividend
or other distribution payable in Underlying Securities, other Securities, Indebtedness or Acquisition Rights or (y) to subscribe
for or purchase shares of Underlying Securities, other Securities, Indebtedness of Acquisition rights, then such record date will, for
the purposes of this Warrant, 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 subscription
right.
(ii)
Change in Price, Term or Rate of Conversion
. If there is any change at any time in the term or in the consideration required
to be paid by any holder of Acquisition Rights to acquire Underlying Securities or in the rate at which any Acquisition Rights are convertible
into or exercisable or exchangeable into Underlying Securities (other than proportional changes in conversion or exercise prices, as applicable,
in connection with any Fundamental Transaction), the Exercise Price in effect at the time of such increase or decrease shall be adjusted
at the time of such change as if such Acquisition Rights had been issued, granted or sold at the time of such change, with such change
deemed to be effective. No adjustment pursuant to this
clause (b)
shall be made if such adjustment would result in an increase
of the Exercise Price then in effect.
(iii)
Calculation of Consideration Received
. If any Acquisition Right is granted, issued or sold in connection with the issuance
or sale or deemed issuance or sale of any other Securities or Indebtedness of the Company (as determined by the Holder, the “
Primary
Security
”, and together with such Acquisition Rights, each a “
Unit
”), in one integrated transaction, the
aggregate consideration per share of Underlying Security with respect to such Unit issuance, grant or sale shall be deemed to be the lower
of (x) the purchase price of such Unit, (y) the lowest possible consideration per share required to be paid by the holder thereof
to acquire one share of Underlying Securities in connection with the Acquisition Rights that are part of such Unit (net of any payment
made by any Company or any Company Party to the holder of such Acquisition Rights or to any other person pursuant to such Acquisition
Rights) and (z) the lowest VWAP (as defined below) of the shares of Underlying Securities on any Trading Day during the five (5) Trading
Day period (the “
Adjustment Period
”) immediately following the public announcement of such grant, issue or sale (for
the avoidance of doubt, if such public announcement is released prior to the opening of a Trading Market on a Trading Day, such Trading
Day shall be the first Trading Day in such five Trading Day period and if this Warrant is exercised, on any given date of exercise of
this Warrant during any such Adjustment Period, solely with respect to such portion of this Warrant exercised on such applicable date
of exercise, such applicable Adjustment Period shall be deemed to have ended on, and included, the Trading Day immediately prior to such
date of exercise). If part of the consideration for the issuance, grant or sale of any Underlying Security or any Acquisition Rights is
not cash, the amount of such non-cash consideration received by the Company Parties and their Subsidiaries shall be the fair value of
such consideration;
provided,
that the fair value of any publicly-traded Securities included in such consideration shall be deemed
to be, for purposes of this
clause (b)
, the arithmetic average of the VWAPs of such security for each of the five (5) Trading
Days immediately preceding the date of receipt of such securities by such Company Parties or such Subsidiaries. If any Underlying Securities
or Acquisition Rights are issued to the owners of a non-surviving entity in connection with any merger with the Company in which the Company
is the surviving entity, the consideration therefor will be deemed to be the fair value of the net assets and business of the non-surviving
entity. The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and
the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the
“
Valuation Event
”), the fair value of such consideration will be determined within five (5) Trading Days after the
tenth (10
th
) 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.
(iv)
“
VWAP
” means, for or as of any date for any Security, the following:
(1)
the dollar volume-weighted average price for such Security on the Principal Trading Market for such Security during the period
beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP”
function (set to weighted average); or
(2)
if Bloomberg does not report such a price, the dollar volume-weighted average price of such Security in the over-the-counter market
on the electronic bulletin board for such Security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m.,
New York time, as reported by Bloomberg; or
(3)
if no dollar volume-weighted average price is reported for such Security by Bloomberg for such hours, the average of the highest
closing bid price and the lowest closing ask price of any of the market makers for such Security on such date as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC); or
(4)
if the VWAP cannot be calculated for such Security on such date on any of the foregoing bases, the VWAP of such Security on such
date shall be the fair market value as mutually determined by the Company and the Holder.
All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period.
(c)
If necessary, the provisions set forth in this
Section 5
with respect to the rights thereafter of the holders of the
Warrants shall be appropriately adjusted so as to be applicable, as nearly as they may reasonably be, to any other Securities, Indebtedness
and other assets thereafter deliverable on the exercise of the Warrants.
(d)
No adjustment in the number of Warrant Securities shall be required under this
Section 5
unless such adjustment would
require an increase or decrease of at least 0.1% in the aggregate number of Warrant Securities purchasable hereunder;
provided
that any adjustments which by reason of this
clause (d)
are not required to be made shall be carried forward and taken into account
in any subsequent adjustment;
provided
, that notwithstanding the foregoing, all adjustments so carried-forward shall be made no
later than three (3) years from the date of the first event that would have required an adjustment but for this paragraph. All calculations
under this
Section 5
shall be made to the nearest cent or to the nearest hundredth of a share, as the case may be.
(e)
In case any event shall occur as to which the other provisions of this
Section 5
are not strictly applicable or the
failure to make any adjustment would result in an unfair enlargement or dilution of the purchase rights represented by the Warrants in
accordance with the essential intent and principles hereof, then, in each such case, the independent auditors of the Company shall give
its opinion as to the adjustment, if any, on a basis consistent with the essential intent and principles established in this
Section 5
,
necessary to preserve, without enlargement or dilution, the purchase rights presented by the Warrants. Upon receipt of such opinion, the
Company shall promptly mail a copy thereof to the registered holders of the Warrants and shall make the adjustment described therein.
6.
Notices of Adjustments and other Significant Corporate Events
.
(a)
Whenever the Exercise Price or number of shares purchasable hereunder shall be adjusted pursuant to
Sections 4
or
5
,
the Company shall issue a certificate signed by its Chief Financial Officer or President, setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Exercise Price and
number of shares purchasable hereunder after giving effect to such adjustment, and shall cause a copy of such certificate to be delivered
to the Holder of this Warrant.
(b)
The Company shall deliver to the Holder a notice of the following events (immediately upon discovery or, if the Company is initiating
such event, at least 15 days prior to the earlier of the consummation of such event or any record date, deadline or other significant
date applicable to the holders of Underlying Securities with respect thereto), which notice shall specify any such record date, deadline
or other significant date and contained an otherwise reasonably detailed summary of such event:
(i)
the Company obtaining corporate approval for, taking a record of the holders of its Underlying Securities for the purpose of effecting,
or taking any other material steps towards completing, any of the events that could result in any adjustment of this Warrant;
(ii)
(A) the Company commencing a case or other action or proceeding under any bankruptcy, reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency, winding up, reorganization, arrangement, adjustment, protection, relief or composition
of debts or liquidation or similar Regulations of any jurisdiction relating to the Company or any action or proceeding seeking the entry
of an order for relief or the appointment of a custodian, receiver, trustee, liquidator or other similar official for it or for any of
its assets, (B) any such case or other action or proceeding being commenced against the Company by any other person, (C) the Company being
adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or other Proceeding is entered, (D) the
Company generally not paying its debts as such debts become due, admitting in writing its inability to pay its debts as they mature or
making a general assignment for the benefit of creditors, (E) the Company calling a meeting of its creditors with a view to arranging
a composition, adjustment or restructuring of its debts or (F) the Company, by any act or failure to act, expressly indicating its consent
to, approval of or acquiescence in any of the foregoing or taking any corporate or other action (including convening a meeting of the
board) to authorize or otherwise for the purpose of effecting any of the foregoing; or
(iii)
any other corporate or similar event with respect to the Company materially affecting the nature of the Holder’s interest
or the nature of the Underlying Securities or the Warrant Securities hereunder.
7.
Additional Covenants with respect to Underlying Securities.
(a)
No Rights of Holder of Underlying Securities
. Except as otherwise provided herein, this Warrant, by itself and prior to
exercise, shall not entitle the Holder to any of the rights of a holder of Underlying Securities in the Company.
(b)
No Fractional Shares or Scrip.
No fractional shares of Warrant Securities and no scrip representing any such fractional
shares shall be issued upon the exercise of this Warrant. In lieu of any fraction of a share of a Warrant Security to which the Holder
would otherwise be entitled, the Company shall make a cash payment equal to the Exercise Price multiplied by such fraction.
(c)
Reservation of Underlying Securities.
The Company shall comply with
Section 4.3 (Reservation and Listing)
of the
Purchase Agreement which provides for reservation of shares for the issuance of Underlying Securities hereunder and for any applicable
application for listing thereof, in each case as adjusted ratably to account for any changes to the Warrant Securities caused by
Section 5
or any other provisions of this Warrant.
(d)
Issuance.
The Company covenants that all Warrant Securities that may be issued upon the exercise of rights represented by
this Warrant and payment of the Exercise Price, all as set forth herein, will be free from all taxes, Liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein). The Company
agrees that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for Warrant Securities upon the exercise of this Warrant, and that such certificates
shall be issued in the names of, or in such names as may be directed by, the Holder.
(e)
Delivery of Certificates Upon Exercise.
(i)
Not later than one (1) trading day after each date of exercise of this Warrant (the “
Share Delivery Deadline
”),
the Company shall deliver, or cause to be delivered, to the Holder the Warrant Securities (and a certificate or certificates representing
such Warrant Securities) to be issued to the Holder upon such exercise which, on or after the date on which such Warrant Securities are
eligible to be sold under Rule 144 without the need for current public information and the Company has received an opinion of counsel
to such effect, which such opinion must be acceptable to the Holder in its sole and absolute discretion (which opinion the Company shall
be responsible for obtaining at its sole cost and expense) shall be free of restrictive legends and trading restrictions, representing
the number of Warrant Securities being acquired through such exercise. If requested by the Holder in its sole discretion, the Company
shall pay any available rush or expedited delivery fee to ensure faster processing or faster delivery of any such Warrant Securities and
certificate. Notwithstanding the foregoing, commencing on such date that the Warrant Securities are eligible for sale under Rule 144 subject
to current public information requirements, the Company, upon request by the Holder and at the sole cost and expense of the Company, shall
obtain a legal opinion that is acceptable to the Holder in its sole and absolute discretion, to allow for such sales under Rule 144.
(ii)
Compensation For Late Delivery.
If the Company fails for any reason to deliver to the Holder such Warrant Securities, certificate
or certificates pursuant to
clause ( i)
by the Share Delivery Deadline, the Company shall pay to the Holder, in cash, as partial
damages and not as a penalty, a late delivery fee (each a
“Late Delivery Fee”)
in an amount equal to $1,000 per trading
day for each trading day after such Share Delivery Deadline until such Warrant Securities and such certificates are delivered or Holder
rescinds such exercise. Nothing herein shall limit the Holder’s right to pursue, in addition to and not in substitution for, actual
damages or declare a breach of the obligations of the Company under this Warrant for the Company’s failure to deliver Warrant Securities
and their certificates within the period specified herein; and the Holder shall have the right to pursue all additional remedies available
to it hereunder, at law or in equity including a decree of specific performance and/or injunctive relief. The exercise of any such rights
shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable Regulation.
(iii)
Buy-In, Recission or Late Delivery
. In addition to any other rights available to the Holder, if the Company fails for any
reason to deliver to the Holder a number of shares of Warrant Securities and a certificate thereof by the deadline set forth in, and while
strictly complying with, the terms of this Warrant and the other Transaction Documents, the Holder may choose, in its sole discretion,
on or after such deadline, in addition to any other available remedy, to do any of the following (or any combination thereof), each of
which will, if applicable, void any related Exercise Notice to the extent thereof: (A) cancel such exercise and retain this Warrant, (B)
purchase, whether in an open market transaction or otherwise, whether directly or through a broker or other agent (a
“Buy-In”
),
a number of shares of Warrant Securities not to exceed the number of shares subject to such delivery failure, and, within three (3) business
days after receipt of such Holder’s request therefor and in such Holder’s discretion, the Company shall pay to the Holder
in cash an amount equal to the Holder’s total gross purchase price (including brokerage commissions, fees and other costs, fees
and expenses, if any) for such shares of Warrant Securities so purchased (less any portion of the Exercise Price for such Warrant Securities
not already paid by the Holder) or (C) accept from the Company late delivery of shares of Warrant Securities after such deadline (
provided,
that such acceptance shall not waive any right of the Holder, to damages or otherwise, caused by such delay). Nothing herein shall
limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including a decree of specific
performance or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Warrant
Securities on such deadline as required pursuant to the terms of this Warrant and the other Transaction Documents.
(iv)
No Limitation on Damages.
More generally, nothing in this
Section 7(e),
including the availability of the option
to exercise this Warrant, shall limit the Holder’s right to pursue actual damages or pursue a breach of the obligations of the Company
under this Warrant and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including
a decree of specific performance and/or injunctive relief. The exercise of any rights under this
clause (e)
shall not prohibit
the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable Regulation.
(f)
Reinstatement.
If any transfer of Underlying Securities made in the exercise of this Warrant is at any time annulled, avoided,
set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be unwound, this Warrant shall be
reinstated as to such Underlying Securities as if it had not been exercised.
(g)
Holder’s Exercise Limitations
. The Company shall not issue any Warrant Securities, and the Holder shall not have the
right to purchase any Warrant Securities hereunder, to the extent that after giving effect to such issuance, the Holder (together with
the Holder’s Affiliates, and any persons acting as a group together with the Holder or any of the Holder’s Affiliates, the
“
Attribution Parties
”) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).
For purposes of determining the Beneficial Ownership Limitation for the foregoing sentence, the number of shares of Underlying Securities
beneficially owned by the Holder and its Attribution Parties shall include the number of Warrant Securities issuable upon exercise of
this Warrant with respect to which such determination is being made, but shall exclude the number of Underlying Securities issuable upon
(i) exercise of the unexercised portion of this Warrant and (ii) exercise or conversion of the unexercised or unconverted portion
of any other Securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein
(including any other Purchased Securities and any other warrants and other convertible, exchangeable or similar Securities) beneficially
owned by the Holder or any of its Attribution Parties. Except as set forth in the preceding sentence, for purposes of this
Section
7 (f)
, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. To the extent that the limitation contained in this
Section  7 (f)
applies, the determination of whether
this Warrant is exercisable (in relation to other Securities owned by the Holder together with any Attribution Parties) and of which portion
of this Warrant is exercisable shall be in the sole discretion of the Holder, and the attempt by the Holder to exercise this Warrant shall
be deemed to be the Holder’s determination of whether this Warrant may be exercised (in relation to other Securities owned by the
Holder together with any Attribution Parties) and which portion of this Warrant may be exercised, in each case subject to the Beneficial
Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers
an Exercise Notice that such Exercise Notice has not violated the restrictions set forth in this paragraph and the Company shall have
no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For
purposes of this
Section  7 (f)
, in determining the number of outstanding shares of Underlying Securities, the Holder may
rely on the number of outstanding shares of Underlying Securities as stated in the most recent of the following: (i) the Company’s
most recent periodic or annual report filed with the SEC, as the case may be, (ii) a more recent public announcement by the Company, or
(iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Underlying
Securities outstanding. Upon the written or oral request of the Holder, the Company shall within two (2) Trading Days confirm orally and
in writing to the Holder the number of shares of Underlying Securities then outstanding. In any case, the number of outstanding shares
of Underlying Securities shall be determined after giving effect to the conversion or exercise of Securities of the Company, including
this Warrant, by the Holder or its Attribution Parties since the date as of which such number of outstanding shares of Underlying Securities
was reported. The “
Beneficial Ownership Limitation
” shall be 4.99% of the number of shares of the Underlying Securities
outstanding immediately after giving effect to the issuance of all Underlying Securities to be held by the Holder;
provided,
that
the Holder may, with prior notice to the Company, decrease such percentage and, if such percentage was previously decreased, the Holder
may, upon not less than sixty-one (61) days’ prior notice to the Company and effective at the end of such 61-day period, increase
such percentage up to, and in any case not exceeding, 4.99%. The Beneficial Ownership Limitation provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with the terms of this
Section  7 (f)
to correct
this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained
herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained
in this paragraph shall apply to a successor Holder of this Warrant.
8.
Miscellaneous.
(a)
Notices.
All notices, requests and demands to or upon the Holder or the Company hereunder shall be effected in the manner
provided for in
Section 5.4 (Notices)
of the Purchase Agreement.
(b)
Successors and Assigns.
This Warrant shall be binding upon, and inure to the benefit of, the Company, the Holder and their
successors and assigns;
provided
, that the Company may not assign, transfer or delegate any of its rights or obligations under
this Warrant without the prior written consent of the Holder (and any attempt to effect such assignment, transfer or delegation without
such consent shall be null and void at the outset). The Holder may assign this Warrant in whole or in part to the extent permitted by
applicable securities Regulations. Upon delivery of evidence of such assignment and delivery of this Warrant, the Company shall at its
own expense execute and deliver, in lieu of this Warrant, new warrants to the new Holders after giving effect to such assignment, each
of like tenor and in the respective amount and for the number of shares as are owned by such new Holders after giving effect to such assignment.
(c)
Amendments; Entire Agreement; Counterparts; Electronic Signatures
. None of the terms or provisions of this Warrant may be
waived, amended, supplemented or otherwise modified except with the written consent of the Holder and the Company and in accordance with
Section 5.3(b) (Amendments)
of the Purchase Agreement
; provided
, that this Warrant is subject to, and may also be amended
as provided in,
Section 4.2 (Most Favorable Terms (MFN))
of the Purchase Agreement. As described in
Section 5.3(a) (Entire Agreement)
of the Purchase Agreement, this Warrant and the other Transaction Documents contain and constitute the entire agreement of the parties
with respect to the subject matter hereof. This Warrant may be executed in counterparts as provided in
Section 5.3(e) (Counterparts)
of the Purchase Agreement and, as provided in
Section 5.3(f) (Electronic Signatures)
of the Purchase Agreement, electronic signatures
have the same force and effect as manual signatures.
(d)
Replacement of Warrant
. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory
in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company shall,
at its own expense, execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.
(e)
Further Assurances.
The Company hereby agrees to take, promptly after the Holder’s request, such further actions,
including executing or causing to be executed and delivering to the Holder such further documents, as the Holder shall request from time
to time in connection herewith to evidence, give effect to or carry out the intent of this Warrant, the transfer of the Warrant Securities
upon exercise and the other provisions hereof and the other transactions contemplated hereby.
(f)
Independent Obligations.
The obligations of the Company set forth herein are independent from the other obligations set
forth in the Transaction Documents and shall survive the repayment in full of the Obligations owing under other Transaction Documents.
(g)
Dispute Resolution
.
(i)
In the case of a dispute relating to, or any inability of the Company and the Holder to agree on, a VWAP or a fair market value
(as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company or
the Holder (as the case may be) shall submit the dispute to the other party via facsimile or electronic transmission (A) if by the Company,
within two (2) Trading Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder at any time
after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to promptly resolve
such dispute, at any time after the second Trading Day following such initial notice, then the Holder may, at its sole option, select
an independent, reputable investment bank to resolve such dispute.
(ii)
The Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered
in accordance with
clause (g)
and (B) written documentation (together with such copy of such submission, the
“Required
Dispute Documentation
”) supporting its position with respect to such dispute, in each case, no later than 5:00 p.m. (New York
time) by the fifth Trading Day immediately following the date on which the Holder selected such investment bank (the “
Dispute
Submission Deadline
”) . If either party fails to so deliver all of the Required Dispute Documentation by the Dispute Submission
Deadline, then such party shall no longer be entitled to (and hereby waives its right to) deliver or submit any document or other supporting
evidence to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based solely on the
Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline. Unless otherwise agreed
to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither the Company nor the Holder shall
be entitled to deliver or submit any written documentation or other support to such investment bank in connection with such dispute other
than the Required Dispute Documentation.
(iii)
The Company and the Holder shall ensure that such investment bank determines the resolution of such dispute and notify the Company
and the Holder of such resolution no later than ten (10) Trading Days immediately following the Dispute Submission Deadline. The fees
and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute
shall be final and binding upon all parties absent manifest error.
(h)
Governing Law
. Each party hereto hereby agrees to the provisions of
Section 5.6 (Governing Law; Courts)
of the Purchase
Agreement, including that (a) this Warrant and all claims, disputes, Proceedings, and matters related hereto or thereto or arising hereunder
or thereunder or arising from or relating to the relationship among any of the parties hereto or thereto, are governed by, and shall be
construed, interpreted and enforced exclusively in accordance with, the laws of the State of Delaware (without giving effect to the conflict
of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction
other than those of the State of Delaware) and (b) any such Proceeding shall be brought exclusively in the Delaware state courts sitting
in Wilmington, DE or the federal courts of the United States of America for the District of Delaware sitting in Wilmington, DE;
provided
,
that the Holder may bring Proceedings in other jurisdictions to enforce any Transaction Document.
Each such party hereby accepts such
jurisdiction, waives any objections to venue, and agrees that a final judgment in any such Proceeding shall be conclusive and enforceable
in other jurisdictions, all as provided in the Purchase Agreement and accepts that service of process may be made in the way set forth
in the Purchase Agreement.
(i)
Waiver of Jury Trial
.
Each party hereto hereby agree to Section 5.16 (Waiver
of Jury Trial and Certain Other Rights) of the Purchase Agreement whereby, among other things, it irrevocably waives trial by jury in
any Proceeding with respect to, or directly or indirectly arising out of, relating to or in connection with, this Warrant or any other
Transaction Document or the transactions contemplated therein or related thereto (whether founded in contract, tort or any other theory).
Each party hereto (a) certifies that no representative, agent or attorney of any other party or beneficiary hereof has represented, expressly
or otherwise, that such other parties would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
that it and the other parties have been induced to enter into this Warrant and the other Transaction Documents by, among other things,
the mutual waivers and certifications in this section.
(j)
Interpretation.
This Warrant is a Transaction Document and as such is subject to various interpretative, amendment and third
party beneficiary and other miscellaneous provisions set forth in the Purchase Agreement that expressly apply to Transaction Documents,
located principally in
Article V (Miscellaneous)
thereof, including
Sections 5.3(d) (No Implied Waivers or Notice Rights),
5.5 (Set off), 5.7 (Severability)
and
5.11 (Marshaling, Payments Set Aside)
but also
Sections 2.1 (Representations and Warranties
of the Company Parties), 4.8 (Indemnification of Each Purchaser Party
) and
5.2 (Fees and Expenses)
thereof
,
which the
Company, in the case of representations and warranties, expressly makes herein for the benefit of the Holder whenever those are made under
the Purchase Agreement, and, for other provisions, agrees to comply therewith.
[Signature Pages Follow]
IN
WITNESS WHEREOF
, the undersigned has caused this Warrant to be executed as of the date first written above by its officers
thereunto duly authorized.
ConnectM
Technology Solutions, Inc.
By:
Name:
Title:
Date
signed:
Accepted
and agreed
as
of the date first written above:
ASCENT
PARTNERS FUND LLC
By:
Name:
Title:
Date
signed:
EXHIBIT
A
NOTICE
OF EXERCISE
To:        ConnectM
Technology Solutions, Inc.
(1)
The undersigned hereby elects to purchase _________ shares of Warrant Securities 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):
1.
[ ] in lawful money of the United States; or
2.
[ ] if permitted the cancellation of such number of Warrant Securities as is necessary, in accordance with the formula set forth in subsection
3.2, to exercise this Warrant with respect to the maximum number of Warrant Securities purchasable pursuant to the cashless exercise
procedure set forth in subsection 3.2.
(3)
Please issue said Warrant Securities in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Securities shall be delivered to the
following DWAC Account Number:
_______________________________
_______________________________
_______________________________
(4)
Accredited Investor
. The undersigned is an “accredited investor” as defined in regulations promulgated under
the Securities Act of 1933, as amended.
______________________________________
By:
Name:
Title:
Date
signed: