Netcapital（NCPL）以85%浮动折价发行有毒可转换票据融资约58万美元，附带最高约500万股储备与违约质押，暴露财报逾期、重述与持续经营风险

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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):
October 14, 2026
NETCAPITAL
INC.
(Exact
name of registrant as specified in its charter)
Utah
001-41443
87-0409951
(State
or other jurisdiction
of
incorporation)
(Commission
File
Number)
(IRS
Employer
Identification
No.)
1
Lincoln Street
,
Boston
,
Massachusetts
02111
(Address
of principal executive offices)
(Zip
Code)
Registrant’s
telephone number, including area code:
(781)
925-1700
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☐
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class
Trading
symbol(s)
Name
of each exchange on which registered
Common
Stock, $0.001 par value per share
NCPL
The
Nasdaq Stock Market LLC
Warrants
exercisable for one share of Common Stock
NCPLW
The
Nasdaq Stock Market LLC
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2
of the Securities Exchange Act of 1934.
Emerging
growth company
☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
1.01 Entry into a Material Definitive Agreement.
On
October 14, 2026, Netcapital Inc. (the “Company”) closed the first tranche of the transactions contemplated by a Securities
Purchase Agreement (the “Purchase Agreement”), dated as of October 13, 2026, with Hinterland Partners LLC, a Delaware limited
liability company (“Hinterland”).
Pursuant
to the Purchase Agreement, the Company issued to Hinterland a promissory note dated October 13, 2026 in the aggregate principal amount
of up to $641,936.66, for an aggregate purchase price of up to $577,743.00, reflecting an original issue discount of up to $64,193.66
(the “Note”), to be funded in up to two tranches. At the closing of the first tranche, Hinterland paid a purchase price of
$402,743.00, and the outstanding principal amount of the Note became $447,492.22 (the “First Tranche”).
If,
within 90 calendar days after the date of the Purchase Agreement, (i) no event of default (or event that with the passage of time would
be an event of default) has occurred under the Note, (ii) the Company has not breached the transaction documents, (iii) the Company’s
common stock remains listed on the Nasdaq Capital Market, and (iv) the Company becomes current in its reporting obligations under the
Securities Exchange Act of 1934, as amended, including by filing its Annual Report on Form 10-K for the fiscal year ended April 30, 2026
and its Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2026 (the “Delinquent Filings”), Hinterland is
required to fund a second tranche with a purchase price of $175,000.00 (the “Second Tranche”) within five business days after
satisfaction of such conditions. Upon the closing of the Second Tranche, the principal amount of the Note will increase by $194,444.44
and accrued interest will increase by $23,333.33.
The
Note bears a one-time interest charge of 12% on the principal amount of each tranche (up to $77,032.39 in the aggregate), of which $53,699.06
is attributable to the First Tranche. Each tranche matures 12 months after the date on which such tranche is funded. The Note is secured
by a pledge of 3,209,685 shares of Class A common stock of KingsCrowd, Inc. held by the Company, pursuant to a Pledge Agreement, dated
as of October 13, 2026, among the Company, Hinterland and KingsCrowd, Inc. (the “Pledge Agreement”).
Upon
an event of default under the Note, in addition to its other remedies, Hinterland will be entitled to exercise the voting rights with
respect to the pledged shares and will have a continuing option to transfer ownership of up to all of the pledged shares to itself, in
which case the outstanding balance of the Note will be reduced by $0.18 for each pledged share transferred.
At
any time on or prior to the 180th calendar day after the funding date of each tranche, the Company has a one-time right, upon five trading
days’ prior written notice, to prepay such tranche by paying 99% of the outstanding principal amount and 100% of the accrued and
unpaid interest of such tranche, plus $750.00 for administrative fees. Hinterland may convert all or any portion of such amount during
the notice period.
If
the Company or any of its subsidiaries receives cash proceeds from any source while the Note is outstanding, including from customer
payments, equity or debt issuances or asset sales, the Company must notify Hinterland or publicly disclose such receipt within one business
day, and Hinterland may require the Company to apply up to 30% of such proceeds to repay the Note.
Amounts
not paid when due bear default interest at the lesser of 18% per annum and the maximum amount permitted by law.
The
Note is convertible at Hinterland’s option at any time on or after the issue date into shares of the Company’s common stock,
par value $0.001 per share (“Common Stock”). Hinterland may deduct $1,950.00 from the conversion amount of each conversion
to cover its fees.
The
conversion price is 85% of the lowest traded price of the Common Stock on the principal market during the seven trading days immediately
preceding the applicable conversion date, subject to adjustment. If the conversion price would be less than the par value of the Common
Stock, Hinterland may elect to convert at par value with a corresponding increase to the conversion amount. The conversion price is also
subject to reduction, at Hinterland’s option, to the effective price of any subsequent issuance of Common Stock or Common Stock
equivalents at a lower price, subject to limited exceptions.
The
Note contains a 4.99% beneficial ownership limitation. The Company is required to reserve for issuance upon conversion of the Note the
greater of 5,000,000 shares of Common Stock and four times the number of shares issuable upon full conversion of the Note at the then-applicable
conversion price.
As
additional consideration for each tranche, the Company is required to issue to Hinterland, on the funding date of such tranche, a number
of shares of Common Stock (the “Commitment Shares”) equal to 20% of the principal amount of such tranche divided by the closing
price of the Common Stock on the trading day immediately preceding such funding date. In connection with the First Tranche, the Company
issued 64,387 Commitment Shares to Hinterland.
If
the issuance of Commitment Shares for any tranche would cause Hinterland’s beneficial ownership to exceed the 4.99% beneficial
ownership limitation, the Company will instead issue to Hinterland a common stock purchase warrant to purchase an equal number of shares
of Common Stock at an initial exercise price of $0.01 per share (the “Warrants,” and together with the Note, the Commitment
Shares, the shares issuable upon conversion of the Note and the shares issuable upon exercise of the Warrants, the “Securities”).
Under
the Purchase Agreement, the aggregate number of shares of Common Stock that may be issued to Hinterland under the transaction documents
is limited to 1,603,685 shares (the “Exchange Cap”) unless shareholder approval is obtained in accordance with Nasdaq Rule
5635(d), subject to adjustment. The Purchase Agreement requires the Company to hold a special meeting of shareholders on or before the
date that is 180 calendar days after the date of the Purchase Agreement for the purpose of obtaining such shareholder approval.
The
Purchase Agreement provides that the Company will use the proceeds for business development and general working capital, subject to specified
restrictions.
The
Purchase Agreement and the Note contain customary and transaction-specific covenants, including transfer agent instructions, legal counsel
opinion provisions, public information covenants (including cash payments equal to 3% of the purchase price for public information failures,
subject to an exception for the Delinquent Filings if filed within 90 calendar days after the date of the Purchase Agreement), piggy-back
registration rights, a right of participation in subsequent financings and a prohibition on variable rate transactions, in each case
for the later of 18 months after the date of the Purchase Agreement and the date the Note is extinguished, a most favored nation provision,
a requirement to purchase directors’ and officers’ insurance within 60 calendar days after closing, and restrictions on capital
stock distributions, stock repurchases and debt repayments, asset sales, affiliate loans, Section 3(a)(9) and 3(a)(10) transactions,
and merchant cash advance and similar transactions.
The
Note contains events of default including, without limitation, payment defaults, failure to deliver conversion shares or maintain the
required share reserve, breach of covenants, breach of representations and warranties, receivership, judgments in excess of $100,000,
bankruptcy or insolvency events, failure to comply with Exchange Act reporting requirements at any time after February 9, 2027, liquidation,
cessation of operations, failure to maintain material assets, restatement of financial statements, transfer-agent-related defaults, cross-default,
consummation of a variable rate or prohibited transaction, transmission of material non-public information not cured by a same-day Form
8-K, unavailability of Rule 144 beginning six months after the issue date, trading suspension, halt or delisting, and failure to maintain
a market capitalization of at least $3,000,000.
Upon
an event of default, the Note becomes immediately due and payable in an amount equal to the then-outstanding principal amount plus accrued
interest, including default interest, multiplied by 150%, plus costs of collection. Hinterland may, in its sole discretion, convert all
or any portion of the Note, including the default amount, into Common Stock pursuant to the terms of the Note.
The
foregoing descriptions of the Purchase Agreement, the Note, the Warrants and the Pledge Agreement do not purport to be complete and are
qualified in their entirety by reference to the full text of the Purchase Agreement, the Note, the form of Warrant and the Pledge Agreement,
which are filed as exhibits to this Current Report on Form 8-K and incorporated herein by reference.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The
information set forth in Item 1.01 of this Current Report on Form 8-K is 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 is incorporated herein by reference.
The
Securities were offered and sold in a private placement in reliance upon the exemption from registration provided by Section 4(a)(2)
of the Securities Act of 1933, as amended, and Rule 506(b) promulgated thereunder. Hinterland represented that it is an accredited investor
and acquired the Securities for investment purposes. The Company did not use general solicitation or general advertising in connection
with the offering.
Enclave
Capital LLC acted as placement agent in connection with the transaction, and $17,500 was withheld from the purchase price to cover fees
owed by the Company to the placement agent.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits.
Exhibit
No.
Description
4.1
Promissory Note, dated October 13, 2026, issued by Netcapital Inc. to Hinterland Partners LLC
4.2
Form of Common Stock Purchase Warrant issued by Netcapital Inc. to Hinterland Partners LLC
10.1
Securities Purchase Agreement, dated as of October 13, 2026, by and between Netcapital Inc. and Hinterland Partners LLC
10.2
Pledge Agreement, dated as of October 13, 2026, by and among Netcapital Inc., Hinterland Partners LLC and KingsCrowd, Inc.
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.
NETCAPITAL
INC.
(Registrant)
Dated:
October 20, 2026
By:
/s/
Todd Violette
Name:
Todd
Violette
Title:
Chief
Executive Officer

----- ex10-1.htm -----
EX-10.1
4
ex10-1.htm
EX-10.1
Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
This
SECURITIES PURCHASE AGREEMENT
(the “Agreement”), dated as of October 13, 2026, by and between
NETCAPITAL INC.
,
a Utah corporation, with headquarters located at State Street Financial Center, 1 Lincoln Street, Boston, MA 02111 (the “Company”),
and
HINTERLAND PARTNERS LLC
, a Delaware limited liability company, with its address at 800 N King St., Suite 304-2803, Wilmington,
DE 19801 (the “Buyer”).
WHEREAS
:
A.
The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”) and Rule 506(b) promulgated by the United States
Securities and Exchange Commission (the “SEC”) under the 1933 Act;
B.
Company is issuing to the Buyer, upon the terms and conditions set forth in this Agreement, a promissory note of the Company, in the
aggregate principal amount of up to $641,936.66 (as the principal amount thereof may be increased pursuant to the terms thereof, and
together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with
the terms thereof, in the form attached hereto as
Exhibit A
, the “Note”), with a purchase price of up to $577,743.00,
which is convertible into shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”), upon the
terms and subject to the limitations and conditions set forth in such Note; and
C.
Buyer desires to purchase from the Company, and the Company desires to issue and sell to the Buyer, upon the terms and conditions set
forth in the Transaction Documents (as defined in this Agreement), the First Tranche (as defined in the Note) (the “First Tranche”)
under the Note (which consists of the principal amount of $447,492.22 and purchase price of $402,743.00).
D.
On the Funding Date (as defined in the Note) (each a “Funding Date”) of each Tranche (as defined in the Note) (each a “Tranche”)
under the Note, the Company shall issue the Pro Rata Commitment Share Amount (as defined in this Agreement) to the Buyer as additional
consideration for the purchase of such Tranche under the Note, which all shall be earned in full as of the closing of such Tranche, as
further provided herein.
NOW
THEREFORE
, in consideration of the foregoing and of the agreements and covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Buyer hereby agree as follows:
1.
Purchase and Sale.
a.
First Tranche.
On the Closing Date (as defined below), the Company shall issue and sell to the Buyer, and the Buyer agrees to
purchase from the Company, the First Tranche, as further provided herein. As used in this Agreement, the term “business day”
shall mean any day other than a Saturday, Sunday, or a day on which commercial banks in the city of New York, New York are authorized
or required by law or executive order to remain closed. On the Closing Date, the Company and Buyer shall enter into that certain pledge
agreement with respect to the Company’s pledge of 3,209,685 shares of Class A common stock of KingsCrowd, Inc. to Buyer as security
under the Note (in the form attached hereto as Exhibit E, the “Pledge Agreement”).
b.
Form of Payment.
On the Closing Date: (i) the Buyer shall pay the purchase price of $402,743.00 (the “Purchase Price”)
for the First Tranche of the Note, to be issued and sold to it at the Closing (as defined below), by wire transfer of immediately available
funds to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Note, and the Company
shall deliver to Buyer such duly executed Note on behalf of the Company against delivery of such Purchase Price. “Pro Rata Commitment
Share Amount” shall mean 20% of the principal amount of the respective Tranche divided by the closing price of the Common Stock
on the Trading Day (as defined in this Agreement) immediately preceding the Funding Date (as defined in the Note) (each a “Funding
Date”) of the respective Tranche. On the Funding Date of the First Tranche, the Company shall issue to Buyer the portion of the
Commitment Shares (as defined in this Agreement) equal to the respective Pro Rata Commitment Share Amount with respect to the First Tranche
(the “First Commitment Shares”). On the Closing Date of the First Tranche, the Buyer shall withhold (i) $6,000.00 from the
Purchase Price to cover the Buyer’s legal fees in connection with the transactions contemplated by this Agreement, and (ii) $5,000.00
from the Purchase Price to be paid to Darkriver Management LLC to cover the Holder’s due diligence costs in connection with the
transactions contemplated by this Agreement.
1
c.
Closing Date.
Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below,
the date and time of the issuance and sale of the First Tranche of the Note pursuant to this Agreement (the “Closing Date”)
shall be on the date that the Purchase Price for the First Tranche of the Note is paid by Buyer pursuant to terms of this Agreement.
d.
Closing
. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing
Date at such location as may be agreed to by the parties (including via exchange of electronic signatures).
e.
Second Tranche
. If, within ninety (90) calendar days after the date of this Agreement (the “Second Tranche Condition Period”),
(i) an Event of Default (as defined in the Note) (an “Event of Default”) has not occurred under the Note, (ii) no event has
occurred that, with the passage of time, would be an Event of Default under the Note, (iii)
the
Company has not breached any
covenant, agreement, or other term or condition contained in the Transaction Documents (as defined
in this Agreement), (iv) the Common Stock remains listed for trading on the Nasdaq Capital Market, and (v) the Company becomes current
in its filing obligations with the SEC under the Securities Exchange Act of 1934, as amended (the “1934 Act”), including
by filing the Delinquent Filings (as defined in Section 3(h)) (all of the aforementioned conditions in (i) through (v) of this sentence
are referred to herein as the “Second Tranche Funding Conditions”), then, the Buyer shall fund the purchase price of an additional
$175,000.00 (the “Second Tranche Purchase Price”) under the Note (the “Second Tranche”) to the Company within
five (5) business days after the Company’s satisfaction of the Second Tranche Funding Conditions (the “Second Tranche Funding
Period”). For the avoidance of doubt, all of the Second Tranche Funding Conditions must be satisfied during the Second Tranche
Funding Period unless expressly waived in writing by the Buyer, and the Company’s failure to have filed the Delinquent Filings
prior to the satisfaction of condition (v) shall not, by itself, be deemed to cause a failure of the conditions in clauses (i) through
(iii). On the Funding Date of the Second Tranche, the Company shall issue to Buyer the portion of the Commitment Shares equal to the
respective Pro Rata Commitment Share Amount with respect to the Second Tranche (the “Second Commitment Shares”, and collectively
with the First Commitment Shares, the “Commitment Shares”). At the closing of the Second Tranche, the principal amount of
the Note shall increase by $194,444.44, which includes the prorated portion of the OID (as defined in the Note), and the accrued interest
shall increase by $23,333.33, which is the prorated amount of the Interest Charge (as defined in the Note). At the closing of the Second
Tranche, the Buyer shall withhold (i) $3,500.00 from the Second Tranche Purchase Price to cover the Buyer’s legal fees in connection
with the transactions contemplated by this Agreement, and (ii) $3,500.00 from the Second Tranche Purchase Price to be paid to Darkriver
Management LLC to cover the Holder’s due diligence costs in connection with the transactions contemplated by this Agreement.
f.
Warrants
. If the issuance of the Pro Rata Commitment Share Amount for any Tranche would cause the Buyer’s beneficial ownership
of Common Stock to exceed the Beneficial Ownership Limitation (as defined in the Note), then instead of issuing the Pro Rata Commitment
Share Amount for such Tranche, the Company shall instead issue a common stock purchase warrant to purchase a number of Common S tock
equal to the Pro Rata Commitment Share Amount for such Tranche at an initial exercise price per share equal to $0.01 (in the form attached
hereto as Exhibit D, the “Warrants”).
2.
Buyer’s Representations and Warranties.
The Buyer represents and warrants to the Company as of the Closing Date that:
a.
Investment Purpose.
As of the Closing Date, the Buyer is purchasing the First Tranche under the Note (the Note, Warrants, Commitment
Shares, shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (the “Conversion Shares”), and
shares of Common Stock issuable upon exercise of or otherwise pursuant to the Warrants (the “Exercise Shares”) shall collectively
be referred to herein as the “Securities”) for its own account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under the 1933 Act;
provided
,
however
, that
by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption
under the 1933 Act.
b.
Accredited Investor Status.
The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation
D (an “Accredited Investor”).
2
c.
Reliance on Exemptions.
The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth
and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings
of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the
Securities.
d.
Information.
The Buyer and its advisors, if any, have been, and for so long as the Note remains outstanding will continue to be,
furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and
sale of the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for
so long as the Note remains outstanding will continue to be, afforded the opportunity to ask questions of the Company regarding its business
and affairs. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic information regarding the
Company or otherwise and will not disclose such information unless such information is disclosed to the public prior to or promptly following
such disclosure to the Buyer. Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors
or representatives shall modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties contained
in Section 3 below.
e.
Governmental Review.
The Buyer understands that no United States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the Securities.
f.
Transfer or Re-sale.
The Buyer understands that (i) the sale or resale of the Securities has not been and is not being registered
under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities are sold
pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to the Company, at the cost of
the Company, an opinion of counsel (which may be the Legal Counsel Opinion (as defined below)) that shall be in form, substance and scope
customary for opinions of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold
or transferred pursuant to an exemption from such registration, which opinion shall be accepted by the Company, (c) the Securities are
sold or transferred to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule
144”)) of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is
an Accredited Investor, (d) the Securities are sold pursuant to Rule 144 or other applicable exemption, or (e) the Securities are sold
pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have delivered to
the Company, at the cost of the Company, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel
in corporate transactions, which opinion shall be accepted by the Company; (ii) any sale of such Securities made in reliance on Rule
144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities
under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act
or any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the
foregoing or anything else contained herein to the contrary, the Securities may be pledged in connection with a
bona fide
margin
account or other lending arrangement secured by the Securities, and such pledge of Securities shall not be deemed to be a transfer, sale
or assignment of the Securities hereunder, and the Buyer in effecting such pledge of Securities shall not be required to provide the
Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or otherwise
3
g.
Legends.
The Buyer understands that until such time as the Note, Warrants, Commitment Shares, Conversion Shares, and/or Exercise
Shares, as applicable, have been registered under the 1933 Act or may be sold pursuant to Rule 144, Rule 144A under the 1933 Act, Regulation
S, or other applicable exemption without any restriction as to the number of securities as of a particular date that can then be immediately
sold, the Securities may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against
transfer of such Securities):
“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE/EXERCISABLE]
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (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, RULE 144A, REGULATION S, OR OTHER APPLICABLE
EXEMPTION 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.”
The
legend set forth above shall be removed and the Company shall issue a certificate or book entry statement for the applicable shares of
Common Stock without such legend to the holder of any Security upon which it is stamped or (as requested by such holder) issue the applicable
shares of Common Stock to such holder by electronic delivery by crediting the account of such holder’s broker with The Depository
Trust Company (“
DTC
”), if, unless otherwise required by applicable state securities laws, (a) such Security is registered
for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144, Rule 144A,
Regulation S, or other applicable exemption without any restriction as to the number of securities as of a particular date that can then
be immediately sold, or (b) the Company or the Buyer provides the Legal Counsel Opinion (as contemplated by and in accordance with Section
4(l) hereof) to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which
opinion shall be accepted by the Company so that the sale or transfer is effected. The Company shall be responsible for the fees of its
transfer agent and all DTC fees associated with any such issuance. The Buyer agrees to sell all Securities, including those represented
by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any. In
the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant
to an exemption from registration, such as Rule 144, Rule 144A, Regulation S, or other applicable exemption at the Deadline (as defined
in the Note), it will be considered an Event of Default pursuant to Section 3.2 of the Note.
Authorization;
Enforcement.
This Agreement has been duly and validly authorized by the Buyer and has been duly executed and delivered on behalf
of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’
rights generally and except as may be limited by the exercise of judicial discretion in applying principles of equity.
3.
Representations and Warranties of the Company.
The Company represents and warrants to the Buyer as of the Closing Date that:
a.
Organization and Qualification.
The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in which it is incorporated or formed, with full power and authority
(corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used,
operated and conducted. The SEC Documents set forth a list of all of the Subsidiaries of the Company and the jurisdiction in which each
is incorporated. The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such qualification
necessary except where the failure to be so qualified or in good standing would not have a Material Adverse Effect. “Material Adverse
Effect” means any material adverse effect on the business, operations, assets, financial condition or prospects of the Company
or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered
into in connection herewith. “Subsidiaries” means any corporation or other organization, whether incorporated or unincorporated,
in which the Company owns, directly or indirectly, any equity or other ownership interest.
4
b.
Authorization; Enforcement.
The Company has all requisite corporate power and authority to enter into and perform the Transaction
Documents and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms
hereof and thereof. The Company represents and warrants that (i) the execution and delivery of the Transaction Documents, the Warrants,
the Note, Commitment Shares, Conversion Shares, and the Exercise Shares by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including without limitation, the issuance of the Note, Warrants, and Commitment Shares, as well as
the issuance and reservation for issuance of the Conversion Shares, Commitment Shares, and Exercise Shares issuable upon conversion of
the Note and/or exercise of the Warrants) have been duly authorized by the Company’s Board of Directors and no further consent
or authorization of the Company, its Board of Directors, its shareholders, or its debt holders is required, (i) the Transaction Documents
(together with any other instruments executed in connection herewith or therewith) have been duly executed and delivered by the Company
by its authorized representatives, and such authorized representatives are the true and official representative with authority to sign
the Transaction Documents and the other instruments documents executed in connection herewith or therewith and bind the Company accordingly,
and (iii) the Transaction Documents constitute, and upon execution and delivery by the Company of the Note, each of such instruments
will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their terms.
c.
Capitalization; Governing Documents.
As of October 13, 2026, the authorized capital stock of the Company consists of: 900,000,000
authorized shares of Common Stock, of which 8,018,428 shares were issued and outstanding, and 10,000,000 authorized shares of preferred
stock, of which
0 shares of preferred stock
were issued and outstanding. All of such outstanding
shares of capital stock of the Company, the Conversion Shares, and the Exercise Shares are, or upon issuance will be, duly authorized,
validly issued, fully paid and non-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other
similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company.
As of the effective date of this Agreement, other than as publicly announced prior to such date and reflected in the SEC Documents of
the Company (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements,
understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into
or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any
of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii)
there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of
its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security
issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of any of the
Securities. The Company has furnished to the Buyer true and correct copies of the Company’s Certificate of Incorporation as in
effect on the date hereof (“Certificate of Incorporation”), the Company’s By-laws, as in effect on the date hereof
(the “By-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the
material rights of the holders thereof in respect thereto.
d.
Issuance of Conversion Shares, Commitment Shares, and Exercise Shares.
The Conversion Shares, Commitment Shares, and Exercise
Shares are duly authorized and reserved for issuance and, upon conversion of the Note and/or exercise of the Warrants in accordance with
its terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect
to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will not
impose personal liability upon the holder thereof.
e.
Issuance of Commitment Shares
. The issuance of the Commitment Shares and Warrants, as applicable, is duly authorized and will
be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof
and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability
upon the holder thereof.
f.
Acknowledgment of Dilution.
The Company understands and acknowledges the potentially dilutive effect of the Conversion Shares,
Commitment Shares, and Exercise Shares to the Common Stock. The Company further acknowledges that its obligation to issue the Commitment
Shares and, upon conversion of the Note and/or exercise of the Warrants, the Conversion Shares and/or Exercise Shares, are absolute and
unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
5
g.
No Conflicts.
The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance
of the Conversion Shares, Commitment Shares, and Exercise Shares) will not (i) conflict with or result in a violation of any provision
of the Certificate of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute
a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, note, evidence of indebtedness, indenture, patent, patent license or instrument
to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment
or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which
the Company or its securities is subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect), or (iv) trigger any anti-dilution
and/or ratchet provision contained in any other contract in which the Company is a party thereto or any security issued by the Company.
Neither the Company nor any of its Subsidiaries is in violation of its Certificate of Incorporation, By-laws or other organizational
documents and neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with notice or lapse of
time or both could put the Company or any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries
has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets
of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not, individually or in the aggregate,
have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be
conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity.
Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental
agency, regulatory agency, self-regulatory organization or stock market or any third party in order for it to execute, deliver or perform
any of its obligations under this Agreement and the Note in accordance with the terms hereof or thereof, issue the Commitment Shares,
or to issue and sell the Note in accordance with the terms hereof and, upon conversion of the Note and/or exercise of the Warrants, issue
Conversion Shares and/or Exercise Shares as applicable. All consents, authorizations, orders, filings and registrations which the Company
is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. Other than the
Company’s noncompliance with Nasdaq Listing Rule 5250(c)(1) resulting from the Delinquent Filings, as disclosed in the SEC Documents,
the Company is not in violation of the listing requirements of the Principal Market (as defined herein) and does not reasonably anticipate
that the Common Stock will be delisted by the Principal Market in the foreseeable future. The Company and its Subsidiaries are unaware
of any facts or circumstances which might give rise to any of the foregoing. The “Principal Market” shall mean the principal
securities exchange or trading market where such Common Stock is listed or traded, including but not limited to any tier of the OTC Markets,
any tier of the NASDAQ Stock Market (including NASDAQ Capital Market), or the NYSE American, or any successor to such markets.
h.
SEC Documents; Financial Statements.
Except for the Company’s failure to timely file its Annual Report on Form 10-K for
the fiscal year ended April 30, 2026 and its Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2026 (collectively,
the “Delinquent Filings”), which failure has been disclosed in the SEC Documents (including the Company’s Notification(s)
of Late Filing on Form 12b-25 and any related Current Report(s) on Form 8-K), the Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing
filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other
than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “SEC Documents”).
As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules
and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were
filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None
of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for
such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with
United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material
respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments). Notwithstanding the foregoing, the representations in this Section 3(h) are qualified in their entirety by, and shall
not be breached by reason of, the Company’s previously disclosed determination that certain of its previously issued financial
statements should no longer be relied upon, as disclosed in the SEC Documents (the “Non-Reliance Disclosure”), and any matters
related thereto, including any change in the Company’s independent registered public accounting firm and any re-audit or restatement
of such financial statements. Except as set forth in the financial statements of the Company included in the SEC Documents, the Company
has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to March
31, 2026, and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in such financial statements, which, individually or in the aggregate, are not material
to the financial condition or operating results of the Company. The Company is subject to the reporting requirements of the 1934 Act.
6
i.
Absence of Certain Changes
. Since March 31, 2026, there has been no material adverse change and no material adverse development
in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting
status of the Company or any of its Subsidiaries, other than the Delinquent Filings and the Non-Reliance Disclosure, in each case as
disclosed in the SEC Documents.
j.
Absence of Litigation.
There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened
against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could have
a Material Adverse Effect. The SEC Documents contain a complete list and summary description of any pending or, to the knowledge of the
Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard to whether it would have a
Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the
foregoing.
k.
Intellectual Property.
The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all
patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks,
service names, trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its business as now
operated (and, as presently contemplated to be operated in the future); there is no claim or action by any person pertaining to, or proceeding
pending, or to the Company’s knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect to
any Intellectual Property necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated
in the future); to the best of the Company’s knowledge, the Company’s or its Subsidiaries’ current and intended products,
services and processes do not infringe on any Intellectual Property or other rights held by any person; and the Company is unaware of
any facts or circumstances which might give rise to any of the foregoing. The Company and each of its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of their Intellectual Property.
l.
No Materially Adverse Contracts, Etc.
Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has
or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract
or agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse Effect.
m.
Tax Status.
The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax
returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company
and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes)
and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim. The Company has not executed a waiver with respect to the statute of limitations relating to the assessment
or collection of any foreign, federal, state or local tax. None of the Company’s tax returns is presently being audited by any
taxing authority.
7
n.
Transactions with Affiliates.
Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries
makes payments in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain
from third parties and other than the grant of stock options described in the SEC Documents, none of the officers, directors, or employees
of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee
or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or partner.
o.
Disclosure.
All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided
to the Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct
in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements made herein
or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or exists
with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial conditions,
which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed (assuming for this purpose that the Company’s reports filed under the 1934 Act are being incorporated
into an effective registration statement filed by the Company under the 1933 Act).
p.
Acknowledgment Regarding Buyer’s Purchase of Securities.
The Company acknowledges and agrees that the Buyer is acting solely
in the capacity of arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company
further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement and the transactions contemplated hereby and any statement made by the Buyer or any of its respective representatives
or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation and is merely
incidental to the Buyer’s purchase of the Securities. The Company further represents to the Buyer that the Company’s decision
to enter into this Agreement has been based solely on the independent evaluation of the Company and its representatives.
q.
No Integrated Offering.
Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly
or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require
registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the Buyer will not
be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholder approval
provisions applicable to the Company or its securities.
r.
No Brokers; No Solicitation.
The Company has taken no action which would give rise to any claim by any person for brokerage commissions,
transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby. The Company represents and warrants
that neither the Buyer nor its employee(s), member(s), beneficial owner(s), or partner(s) solicited the Company to enter into this Agreement
and consummate the transactions described in this Agreement. The Company represents and warrants that neither the Buyer nor its employee(s),
member(s), beneficial owner(s), or partner(s) is required to be registered as a broker-dealer under the Securities Exchange Act of 1934
in order to (i) enter into or consummate the transactions encompassed by this Agreement, the Note, Warrants, Pledge Agreement, and the
related transaction documents entered into in connection herewith (the “Transaction Documents”), (ii) fulfill the Buyer’s
obligations under the Transaction Documents, or (iii) exercise any of the Buyer’s rights under the Transaction Documents (including
but not limited to the sale of the Securities).
s.
Permits; Compliance.
The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties
and to carry on its business as it is now being conducted (collectively, the “Company Permits”), and there is no action pending
or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits, except for any such conflicts,
defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. Since
March 31, 2026, neither the Company nor any of its Subsidiaries has received any notification with respect to possible conflicts, defaults
or violations of applicable laws, except for notices relating to possible conflicts, defaults or violations, which conflicts, defaults
or violations would not have a Material Adverse Effect.
8
t.
Environmental Matters.
(i)
There are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company,
no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities,
circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability
or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state, local
or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing, nor
is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing. The term “Environmental
Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws
relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances
or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes,
decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations
issued, entered, promulgated or approved thereunder.
(ii)
Other than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained
on or about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials were
released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the period the
property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company’s or any
of its Subsidiaries’ business.
(iii)
There are no underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries
that are not in compliance with applicable law.
u.
Title to Property.
The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good
and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in
each case free and clear of all liens, encumbrances and defects except such as would not have a Material Adverse Effect. Any real property
and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with
such exceptions as would not have a Material Adverse Effect.
v.
Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the
Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material Adverse Effect. Upon written request the Company will
provide to the Buyer true and correct copies of all policies relating to directors’ and officers’ liability coverage, errors
and omissions coverage, and commercial general liability coverage.
w.
Internal Accounting Controls.
The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient,
in the judgment of the Company’s board of directors, to provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is
permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
9
x.
Foreign Corrupt Practices.
Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other
person acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Company, used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic government official or employee.
y.
Solvency.
The Company (after giving effect to the transactions contemplated by this Agreement) is solvent
(i.e.,
its assets
have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute
and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not, after
giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take any action that would
impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature. The Company’s financial
statements for its most recent fiscal year end and interim financial statements have been prepared assuming the Company will continue
as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
z.
No Investment Company.
The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement
will not be an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment
Company”). The Company is not controlled by an Investment Company.
aa.
No Off Balance Sheet Arrangements
. There is no transaction, arrangement, or other relationship between the Company or any of its
Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act
filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.
bb.
No Disqualification Events
. None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer,
other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933
Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any
of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification
Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to
determine whether any Issuer Covered Person is subject to a Disqualification Event.
cc.
Manipulation of Price
. The Company has not, and to its knowledge no one acting on its behalf has: (i) taken, directly or indirectly,
any action designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased,
or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Company.
dd.
Bank Holding Company Act
. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956,
as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).
Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent (5%) or more of
the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity
that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or affiliates exercises
a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the
Federal Reserve.
ee.
Illegal or Unauthorized Payments; Political Contributions
. Neither the Company nor any of its Subsidiaries nor, to the Company’s
knowledge, any of the officers, directors, employees, agents or other representatives of the Company or any of its Subsidiaries or any
other business entity or enterprise with which the Company or any Subsidiary is or has been affiliated or associated, has, directly or
indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of
applicable law, (i) as a kickback or bribe to any person or (ii) to any political organization, or the holder of or any aspirant to any
elective or appointive public office except for personal political contributions not involving the direct or indirect use of funds of
the Company or any of its Subsidiaries.
10
ff.
Breach of Representations and Warranties by the Company.
The Company agrees that if the Company breaches any of the representations
or warranties set forth in this Section 3 and in addition to any other remedies available to the Buyer pursuant to this Agreement, it
will be considered an Event of Default under Section 3.4 of the Note.
4.
ADDITIONAL COVENANTS, AGREEMENTS AND ACKNOWLEDGEMENTS
.
a.
Best Efforts.
The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6 and 7 of
this Agreement.
b.
Form D; Blue Sky Laws
. The Company agrees to file a Form D with respect to the Securities if required under Regulation D and to
provide a copy thereof to the Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as
the Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable closing pursuant
to this Agreement under applicable securities or “blue sky” laws of the states of the United States (or to obtain an exemption
from such qualification), and shall provide evidence of any such action so taken to the Buyer on or prior to the Closing Date.
c.
Use of Proceeds.
The Company shall use the Purchase Price for business development and general working capital, and not for any
other purpose, including but not limited to (i) the repayment of any indebtedness owed to officers, directors or employees of the Company
or their affiliates, (ii) the repayment of any debt issued in corporate finance transactions (including but not limited to promissory
notes that have the ability to be converted into Common Stock), (iii) any loan to or investment in any other corporation, partnership,
enterprise or other person (except in connection with the Company’s currently existing operations), (iv) any loan, credit, or advance
to any officers, directors, employees, or affiliates of the Company, or (v) in violation or contravention of any applicable law, rule
or regulation.
d.
Right of Participation
.
(i)
Other than arrangements that are in place or disclosed in
SEC Documents
prior
to the date of this Agreement and any Exempt Transactions (as defined in this Agreement), from the date of this Agreement until the later
of (i) eighteen (18) calendar months after the date of this Agreement or (ii) the date that the Note is extinguished in its entirety,
the Company will not, (i) directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any
offer, sale, grant or any option to purchase or other disposition of) any of its or its Subsidiaries’ debt, equity, or equity equivalent
securities, including without limitation any debt, preferred shares or other instrument or security that is, at any time during its life
and/or under any circumstances, convertible into, exchangeable, or exercisable for Common Stock (any such offer, sale, grant, disposition
or announcement being referred to as a “Subsequent Placement”) or (ii) enter into any definitive agreement with regard to
the foregoing, in each case unless the Company shall have first complied with this Section 4(d).
(ii)
The Company shall deliver to the Buyer an irrevocable written notice (the “Offer Notice”)
of any proposed or intended Subsequent Placement, which shall (w) identify and describe the Subsequent Placement, (x) describe the price
and other terms upon which they are to be issued, sold or exchanged, and the number or amount of the securities in the Subsequent Placement
to be issued, sold, or exchanged and (y) offer to issue and sell to or exchange with the Buyer an amount of the securities in the Subsequent
Placement equal to the total outstanding balance of the Note as of the date of the Offer Notice (in each case, an “Offer”).
(iii)
To accept an Offer, in whole or in part, the Buyer must deliver a written notice (the “Notice
of Acceptance”) to the Company prior to the end of the fifth (5
th
) Trading Day (as defined in the Note) (“Trading
Day”) after the Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the amount that the Buyer
elects to purchase (the “Subscription Amount”). The Company shall complete the Subsequent Placement and issue and sell the
Subscription Amount to the Buyer upon terms and conditions (including, without limitation, unit prices and interest rates) set forth
in the Offer Notice, unless a change to such terms and conditions is agreed to in writing between the Company and Buyer. The Buyer may
elect to exchange any amounts owed under the Note in lieu of cash consideration with respect to all or any portion of the Subscription
Amount.
11
(iv)
Notwithstanding anything to the contrary contained herein, if the Company desires to modify or
amend the terms or conditions of a Subsequent Placement at any time after the Offer Notice is given to Buyer (provided, however, that
such modification or amendment to the terms or conditions cannot occur during any Offer Period), the Company shall deliver to the Buyer
a new Offer Notice and the Offer Period of such new Offer shall expire at the end of the fifth (5
th
) Trading Day after the
Buyer’s receipt of such new Offer Notice.
e.
Usury
. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever
claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at
any time hereafter in force, in connection with any action or proceeding that may be brought by the Buyer in order to enforce any right
or remedy under this Agreement, the Note and any document, agreement or instrument contemplated thereby. Notwithstanding any provision
to the contrary contained in this Agreement, the Note and any document, agreement or instrument contemplated thereby, it is expressly
agreed and provided that the total liability of the Company under this Agreement, the Note or any document, agreement or instrument contemplated
thereby for payments which under applicable law are 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 which under applicable law in the nature of interest that the Company
may be obligated to pay under this Agreement, the Note and any document, agreement or instrument contemplated thereby exceed such Maximum
Rate. It is agreed that if the maximum contract rate of interest allowed by law applicable to this Agreement, the Note and any document,
agreement or instrument contemplated thereby 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 this Agreement, the Note
and any document, agreement or instrument contemplated thereby from the effective date thereof forward, unless such application is precluded
by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to the Buyer
with respect to indebtedness evidenced by this Agreement, the Note and any document, agreement or instrument contemplated thereby, such
excess shall be applied by the Buyer to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner
of handling such excess to be at the Buyer’s election.
f.
Restriction on Activities
. Beginning on the date of this Agreement and continuing until the Note is repaid or converted in full,
the Company shall not, directly or indirectly, without the Buyer’s prior written consent, which consent shall not be unreasonably
withheld: (a) change the nature of its business; or (b) sell, divest, acquire, change the structure of any material assets other than
in the ordinary course of business.
g.
Listing.
The Company will, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock
on the Principal Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws
or rules of the Financial Industry Regulatory Authority (“FINRA”) and such exchanges, as applicable. The Company shall promptly
provide to the Buyer copies of any notices it receives from the Principal Market and any other exchanges or electronic quotation systems
on which the Common Stock is then traded regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation
systems.
h.
Corporate Existence.
The Company will, so long as the Buyer beneficially owns any of the Securities, maintain its corporate existence
and shall not sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation with the
written consent of the Buyer or sale of all or substantially all of the Company’s assets with the written consent of the Buyer,
where the surviving or successor entity in such transaction (i) assumes the Company’s obligations hereunder and under the agreements
and instruments entered into in connection herewith and (ii) is a publicly traded corporation whose Common Stock is listed for trading
or quotation on the Principal Market, any tier of the NASDAQ Stock Market, the New York Stock Exchange or the NYSE American.
i.
No Integration.
The Company shall not make any offers or sales of any security (other than the Securities) under circumstances
that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of the Securities
to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval provision applicable
to the Company or its securities.
12
j.
Compliance with 1934 Act; Public Information Failures.
For so long as the Buyer beneficially owns the Note, any Conversion Shares,
any Commitment Shares, or any Exercise Shares, the Company shall comply with the reporting requirements of the 1934 Act; and the Company
shall continue to be subject to the reporting requirements of the 1934 Act; provided, however, that the Company shall not be deemed to
be in breach of this Section 4(j) as a result of the Delinquent Filings so long as the Company files the Delinquent Filings with the
SEC on or before the date that is ninety (90) calendar days after the date of this Agreement (the “Delinquent Filing Deadline”),
and the Company shall use its commercially reasonable efforts to file the Delinquent Filings as promptly as practicable. During the period
that the Buyer beneficially owns the Note or any Conversion Shares, if the Company shall (i) fail for any reason to satisfy the requirements
of Rule 144(c)(1), including, without limitation, the failure to satisfy the current public information requirements under Rule 144(c)
or (ii) if the Company has ever been an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company
shall fail to satisfy any condition set forth in Rule 144(i)(2) (each, a “Public Information Failure”) then, as partial relief
for the damages to the Buyer by reason of any such delay in or reduction of its ability to sell the Securities (which remedy shall not
be exclusive of any other remedies available pursuant to this Agreement, the Note, or at law or in equity), the Company shall pay to
the Buyer an amount in cash equal to three percent (3%) of the Purchase Price on each of the day of a Public Information Failure and
on every thirtieth day (pro rated for periods totaling less than thirty days) thereafter until the date such Public Information Failure
is cured; provided, however, that no Public Information Failure shall be deemed to occur, and no Public Information Failure Payments
shall accrue, solely as a result of the Delinquent Filings prior to the Delinquent Filing Deadline. The payments to which a holder shall
be entitled pursuant to this Section 4(j) 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 (iii) the third business day after the event or failure giving rise to the Public Information Failure Payments
is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure
Payments shall bear interest at the rate of 5% per month (prorated for partial months) until paid in full.
k.
Legal Counsel Opinions
. Upon the request of the Buyer from to time to time, the Company shall be responsible (at its cost) for
promptly supplying to the Company’s transfer agent and the Buyer a customary legal opinion letter of its counsel (the “Legal
Counsel Opinion”) to the effect that the resale of the Conversion Shares, Commitment Shares, and/or Exercise Shares by the Buyer
or its affiliates, successors and assigns is exempt from the registration requirements of the 1933 Act pursuant to Rule 144 (provided
the requirements of Rule 144 are satisfied and provided the Conversion Shares, Commitment Shares, and/or Exercise Shares are not then
registered under the 1933 Act for resale pursuant to an effective registration statement) or other applicable exemption (provided the
requirements of such other applicable exemption are satisfied). In addition, the Buyer may (at the Company’s cost) at any time
secure its own legal counsel to issue the Legal Counsel Opinion, and the Company will instruct its transfer agent to accept such opinion.
l.
Piggy-Back Registration Rights
. The Company hereby grants to the Buyer the piggy-back registration rights set forth in
Exhibit
B
hereto.
m.
Most Favored Nation
. While the Note or any principal amount, interest or fees or expenses due thereunder remain outstanding and
unpaid, the Company shall not enter into any public or private offering of its securities (including securities convertible into shares
of Common Stock) with any individual or entity (an “Other Investor”) that has the effect of establishing rights or otherwise
benefiting such Other Investor in a manner more favorable in any material respect to such Other Investor (even if the Other Investor
does not receive the benefit of such more favorable term until a default occurs under such other security) than the rights and benefits
established in favor of the Buyer by this Agreement or the Note unless, in any such case, the Buyer has been provided with such rights
and benefits pursuant to a definitive written agreement or agreements between the Company and the Buyer.
n.
Subsequent Variable Rate Transactions
. From the date of this Agreement until the later of (i) the date that is eighteen (18) calendar
months after the date of this Agreement or (ii) the date that the Note is fully converted or fully repaid, the Company shall be prohibited
from effecting or entering into an agreement involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction
in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or
include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or
other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after
the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being
reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement,
including, but not limited to, an Equity Line of Credit (as defined in the Note), whereby the Company may issue securities at a future
determined price. The Buyer shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy
shall be in addition to any right to collect damages. Notwithstanding the foregoing, a Variable Rate Transaction shall not include any
transaction between the Company and Hudson Global Ventures LLC or Dune Equity Holdings LLC (collectively, the “Exempt Transactions”).
13
o.
Non-Public Information
. The Company covenants and agrees that neither it, nor any other person acting on its behalf will provide
the Buyer or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public
information, unless prior thereto the Buyer shall have consented to the receipt of such information and agreed with the Company to keep
such information confidential. The Company understands and confirms that the Buyer shall be relying on the foregoing covenant in effecting
transactions in securities of the Company. To the extent that the Company delivers any material, non-public information to the Buyer
without such Buyer’s consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality
to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or affiliates, not to trade
on the basis of, such material, non- public information, provided that the Buyer shall remain subject to applicable law. To the extent
that any notice provided, information provided, or any other communications made by the Company, to the Buyer, constitutes or contains
material non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice or other
material information with the SEC pursuant to a Current Report on Form 8-K. In addition to any other remedies provided by this Agreement
or the related transaction documents, if the Company provides any material non-public information to the Buyer without their prior written
consent, and it fails to immediately (no later than that business day) file a Form 8-K disclosing this material non-public information,
it shall pay the Buyer as partial liquidated damages and not as a penalty a sum equal to $3,000 per day beginning with the day the information
is disclosed to the Buyer and ending and including the day the Form 8-K disclosing this information is filed.
p.
D&O Insurance
. Within 60 calendar days of the Closing, the Company shall purchase director and officer insurance on behalf
of the Company’s (including its subsidiary) officers and directors for a period of 18 months after the Closing with respect to
any losses, claims, damages, liabilities, costs and expense in connection with any actual or threatened claim or proceeding that is based
on, or arises out of their status as a director or officer of the Company. The insurance policy shall provide for two years of tail coverage.
q.
No Broker-Dealer Acknowledgement
. Absent a final adjudication from a court of competent jurisdiction stating otherwise, the Company
shall not to any person, institution, governmental or other entity, state, claim, allege, or in any way assert, that Buyer is currently,
or ever has been, a broker-dealer under the Securities Exchange Act of 1934.
r.
Shareholder Approval.
“Shareholder Approval” means the approval of a sufficient amount of holders of the Company’s
Common Stock to satisfy the shareholder approval requirements for such action as provided in Nasdaq Rule 5635(d), to effectuate the transactions
contemplated by the Transaction Documents (including but not limited to the issuance of all of the Securities, which includes all of
the Common Stock in excess of 1,603,685 shares of Common Stock (the “Exchange Cap”), subject to appropriate adjustment for
any stock dividend, stock split, stock combination, rights offerings, reclassification or similar transaction that proportionately decreases
or increases the Common Stock). The Company shall not use the Exchange Cap for any purpose other than for the issuance of Common Stock
to the Buyer pursuant to the Transaction Documents. The Company shall hold a special meeting of shareholders on or before the Mandatory
Date (as defined herein) for the purpose of obtaining Shareholder Approval, with the recommendation of the Company’s Board of Directors
that such proposal be approved, and the Company shall solicit proxies from its shareholders in connection therewith in the same manner
as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor
of such proposal. The “Mandatory Date” shall mean the date that is one hundred eighty (180) calendar days after the date
of this Agreement. The Company shall use its commercially reasonable efforts to obtain such Shareholder Approval as soon as possible
on and after the Mandatory Date. If the Company does not obtain Shareholder Approval at the first meeting, the Company shall call a meeting
as often as possible thereafter to seek Shareholder Approval until the Shareholder Approval is obtained.
Until
the Shareholder Approval becomes effective pursuant to the rules promulgated under the 1934 Act, the Company shall not hold any meeting
of its shareholders unless the Company also includes a proposal for obtaining the Shareholder Approval in such meeting. Until the Shareholder
Approval becomes effective pursuant to the rules promulgated under the 1934 Act, the Buyer shall not be issued in the aggregate, pursuant
to this Purchase Agreement or upon conversion of the Note or exercise of the Warrants, shares of Common Stock in an amount greater than
the Exchange Cap, unless the Common Stock is no longer listed for trading on the Nasdaq Capital Market. In the event that the Buyer shall
sell or otherwise transfer any of such Buyer’s Note, the transferee shall be allocated a pro rata portion of such transferor Buyer’s
Exchange Cap, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap
allocated to such transferee.
14
s.
Breach of Covenants.
The Company acknowledges and agrees that if the Company breaches any of the covenants set forth in this Section
4, in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an Event of Default under
Section 3.3 of the Note.
5.
Transfer Agent Instructions.
The Company shall issue irrevocable instructions to the Company’s transfer agent to issue certificates
and/or issue shares electronically at the Buyer’s option, registered in the name of the Buyer or its nominee, upon conversion of
the Note and/or exercise of the Warrants, the Conversion Shares, Commitment Shares, and Exercise Shares, in such amounts as specified
from time to time by the Buyer to the Company in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”).
In the event that the Company proposes to replace its transfer agent, the Company shall provide, prior to the effective date of such
replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to this Agreement (including
but not limited to the provision to irrevocably reserved shares of Common Stock in the Reserved Amount (as defined in the Note)) signed
by the successor transfer agent to the Company and the Company. Prior to registration of the Conversion Shares, Commitment Shares, and/or
Exercise Shares under the 1933 Act or the date on which the Conversion Shares, Commitment Shares, and/or Exercise Shares may be sold
pursuant to Rule 144, Rule 144A, Regulation S, or other applicable exemption without any restriction as to the number of Securities as
of a particular date that can then be immediately sold, all such certificates or book entry shares shall bear the restrictive legend
specified in Section 2(g) of this Agreement. The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5 will be given by the Company to its transfer agent and that the Securities shall otherwise
be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Note; (ii) it
will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing)(electronically
or in certificated form) any certificate for Securities to be issued to the Buyer upon conversion of or otherwise pursuant to the Note
and/or upon exercise of or otherwise pursuant to the Warrants as and when required by the Note and this Agreement; (iii) it will not
fail to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any
restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Securities issued to
the Buyer upon conversion of or otherwise pursuant to the Note and/or upon exercise of or otherwise pursuant to the Warrants as and when
required by the Note, Warrants, and/or this Agreement and (iv) it will provide any required corporate resolutions and issuance approvals
to its transfer agent within 6 hours of each conversion of the Note and/or exercise of the Warrants. Nothing in this Section shall affect
in any way the Buyer’s obligations and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery
requirements, if any, upon re-sale of the Securities. If the Buyer provides the Company, at the cost of the Company, with (i) an opinion
of counsel in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer
of such Securities may be made without registration under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides
reasonable assurances that the Securities can be sold pursuant to 144, Rule 144A, Regulation S, or other applicable exemption, the Company
shall permit the transfer, and, in the case of the Securities, promptly instruct its transfer agent to issue one or more certificates,
free from restrictive legend, in such name and in such denominations as specified by the Buyer. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions
contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section
5 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that
the Buyer shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate
transfer, without the necessity of showing economic loss and without any bond or other security being required.
15
6.
Conditions to the Company’s Obligation to Sell.
The obligation of the Company hereunder to issue and sell the First Tranche
under the Note to the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions
thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its
sole discretion:
a.
The Buyer shall have executed the Transaction Documents and delivered the same to the Company.
b.
The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.
c.
The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of
the Closing Date, as though made at that time (except for representations and warranties that speak as of a specific date), and the Buyer
shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date.
d.
No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.
7.
Conditions to The Buyer’s Obligation to Purchase.
The obligation of the Buyer hereunder to purchase the First Tranche under
the Note, on the Closing Date, is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided
that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:
a.
The Company shall have executed the Transaction Documents and delivered the same to the Buyer.
b.
The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to the Buyer, shall have been delivered to and acknowledged
in writing by the Company’s Transfer Agent.
c.
The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as
of Closing Date, as though made at such time (except for representations and warranties that speak as of a specific date) and the Company
shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.
d.
No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.
e.
No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company, including but not limited
to a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act reporting obligations(other
than the Delinquent Filings as disclosed in the SEC Documents).
f.
Trading in the Common Stock on the Principal Market shall not have been suspended by the SEC, FINRA or the Principal Market.
g.
The Company shall have delivered to the Buyer (i) a certificate evidencing the formation and good standing of the Company and each of
its Subsidiaries in such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction,
as of a date within ten (10) days of the Closing Date and (ii) resolutions adopted by the Company’s Board of Directors at a duly
called meeting or by unanimous written consent authorizing this Agreement and all other documents, instruments and transactions contemplated
hereby.
16
8.
Governing Law; Miscellaneous.
a.
Arbitration of Claims; Governing Law; Venue
. The Company and Buyer shall submit all Claims (as defined in Exhibit C of this Purchase
Agreement) (the “Claims”) arising under this Agreement or any other agreement between the Company and Buyer or their respective
affiliates (including but not limited to the Transaction Documents) or any Claim relating to the relationship of the Company and Buyer
or their respective affiliates to binding arbitration pursuant to the arbitration provisions set forth in Exhibit C of the Purchase Agreement
(the “Arbitration Provisions”). The Company and Buyer hereby acknowledge and agree that the Arbitration Provisions are unconditionally
binding on the Company and Buyer hereto and are severable from all other provisions of this Agreement. By executing this Agreement, Company
represents, warrants and covenants that Company has reviewed the Arbitration Provisions carefully, consulted with legal counsel about
such provisions (or waived its right to do so), understands that the Arbitration Provisions are intended to allow for the expeditious
and efficient resolution of any dispute hereunder, agrees to the terms and limitations set forth in the Arbitration Provisions, and that
Company will not take a position contrary to the foregoing representations. Company acknowledges and agrees that Buyer may rely upon
the foregoing representations and covenants of Company regarding the Arbitration Provisions. This Agreement shall be construed and enforced
in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be
governed by, the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other
than the State of Delaware. The Company and Buyer consent to and expressly agree that the exclusive venue for arbitration of any Claims
arising under this Agreement or any other agreement between the Company and Buyer or their respective affiliates (including but not limited
to the Transaction Documents) or any Claim relating to the relationship of the Company and Buyer or their respective affiliates shall
be in the State of Delaware. Without modifying the Company’s and Buyer’s mandatory obligations to resolve disputes hereunder
pursuant to the Arbitration Provisions, for any litigation arising in connection with any of the Transaction Documents (and notwithstanding
the terms (specifically including any governing law and venue terms) of any transfer agent services agreement or other agreement between
the Company’s transfer agent and the Company, such litigation specifically includes, without limitation any action between or involving
Company and the Company’s transfer agent under the Irrevocable Transfer Agent Instructions or otherwise related to Buyer in any
way (specifically including, without limitation, any action where Company seeks to obtain an injunction, temporary restraining order,
or otherwise prohibit the Company’s transfer agent from issuing shares of Common Stock to Buyer for any reason)), each party hereto
hereby (i) consents to and expressly submits to the exclusive personal jurisdiction of any state or federal court sitting in the State
of Delaware, (ii) expressly submits to the exclusive venue of any such court for the purposes hereof, (iii) agrees to not bring any such
action (specifically including, without limitation, any action where Company seeks to obtain an injunction, temporary restraining order,
or otherwise prohibit the Company’s transfer agent from issuing shares of Common Stock to Buyer for any reason) outside of any
state or federal court sitting in the State of Delaware, and (iv) waives any claim of improper venue and any claim or objection that
such courts are an inconvenient forum or any other claim, defense or objection to the bringing of any such proceeding in such jurisdiction
or to any claim that such venue of the suit, action or proceeding is improper. Notwithstanding anything in the foregoing to the contrary,
nothing herein shall limit, or shall be deemed or construed to limit, the ability of the Buyer to realize on any collateral or any other
security, or to enforce a judgment or other court ruling in favor of the Buyer, including through a legal action in any court of competent
jurisdiction. The Company hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any objection to jurisdiction
and venue of any action instituted hereunder, any claim that it is not personally subject to the jurisdiction of any such court, and
any claim that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding
is improper (including but not limited to based upon
forum non conveniens
).
THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY
. The Company irrevocably waives personal service of process and consents
to process being served in any suit, action or proceeding in connection with this Agreement or any other agreement, certificate, instrument
or document contemplated hereby or thereby by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to Company at the address in effect for notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to
serve process in any other manner permitted by law. The prevailing party in any action or dispute brought in connection with this Agreement
or any other agreement, certificate, instrument or document contemplated hereby or thereby shall be entitled to recover from the other
party its reasonable attorney’s fees and costs. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction
or the validity or enforceability of any provision of this Agreement in any other jurisdiction.
17
b.
Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered
to the other party. A facsimile or .pdf signature shall be considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile or .pdf signature. Delivery of a counterpart signature
hereto by facsimile or email/.pdf transmission shall be deemed validly delivery thereof.
c.
Construction; Headings.
This Agreement shall be deemed to be jointly drafted by the Company and the Buyer and shall not be construed
against any person as the drafter hereof. The headings of this Agreement are for convenience of reference only and shall not form part
of, or affect the interpretation of, this Agreement.
d.
Severability.
In the event that any provision of this Agreement, the Note, or any other agreement or instrument delivered in connection
herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to
the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision
which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this
Agreement, the Note, or any other agreement, certificate, instrument or document contemplated hereby or thereby.
e.
Entire Agreement; Amendments.
This Agreement, the Note, and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither
the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this
Agreement or any agreement or instrument contemplated hereby may be waived or amended other than by an instrument in writing signed by
the Buyer.
f.
Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be
in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified,
return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective
(a) upon hand delivery or delivery by e-mail or facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received),
or the first business day following such delivery (if delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications
shall be:
If
to the Company, to:
NETCAPITAL
INC.
State
Street Financial Center, 1 Lincoln Street
Boston,
MA 02111
Attention:
Todd Violette
e-mail:
todd.violette@netcapital.com
If
to the Buyer:
HINTERLAND
PARTNERS LLC
800
N King St., Suite 304-2803
Wilmington,
DE 19801
e-mail:
deals@hinterlandllc.com
g.
Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the parties and their successors and
assigns. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the
Buyer. The Buyer may assign its rights hereunder to any “accredited investor” (as defined in Rule 501(a) of the 1933 Act)
in a private transaction from the Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, without
the consent of the Company.
18
h.
Third Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.
i.
Survival.
The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall
survive the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The Company agrees
to indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage arising as a result
of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in this
Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.
j.
Publicity.
The Company, and the Buyer shall have the right to review a reasonable period of time before issuance of any press
releases, SEC, Principal Market or FINRA filings, or any other public statements with respect to the transactions contemplated hereby;
provided
,
however
, that the Company shall be entitled, without the prior approval of the Buyer, to make any press release
or SEC, Principal Market (or other applicable trading market) or FINRA filings with respect to such transactions as is required by applicable
law and regulations (although the Buyer shall be consulted by the Company in connection with any such press release prior to its release
and shall be provided with a copy thereof and be given an opportunity to comment thereon).
k.
Further Assurances.
Each party shall do and perform, or cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.
l.
No Strict Construction.
The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.
m.
Indemnification
. In consideration of the Buyer’s execution and delivery of this Agreement and acquiring the Securities hereunder,
and in addition to all of the Company’s other obligations under this Agreement or the Note, the Company shall defend, protect,
indemnify and hold harmless the Buyer and its stockholders, partners, members, officers, directors, employees and direct or indirect
investors and any of the foregoing persons’ agents or other representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions,
causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective
of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in this Agreement, the Note or
any other agreement, certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement, the Note or any other agreement, certificate, instrument or document contemplated
hereby or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these
purposes a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance
or enforcement of this Agreement, the Note or any other agreement, certificate, instrument or document contemplated hereby or thereby,
(ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the
Securities, or (iii) the status of the Buyer or holder of the Securities as an investor in the Company pursuant to the transactions contemplated
by this Agreement. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall
make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable
law.
n.
Remedies.
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by
vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law
for a breach of its obligations under this Agreement, the Note, the Warrants, or any other agreement, certificate, instrument or document
contemplated hereby or thereby will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions
of this Agreement, the Note, the Warrants, or any other agreement, certificate, instrument or document contemplated hereby or thereby,
that the Buyer shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable
herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement, the Note, the Warrants, or any
other agreement, certificate, instrument or document contemplated hereby or thereby, and to enforce specifically the terms and provisions
hereof and thereof, without the necessity of showing economic loss and without any bond or other security being required.
19
o.
Payment Set Aside
. To the extent that the (i) Company makes a payment or payments to the Buyer hereunder, pursuant to the Note,
pursuant to the Warrants, or pursuant to any other agreement, certificate, instrument or document contemplated hereby or thereby, or
(ii) the Buyer enforces or exercises its rights hereunder, pursuant to the Note, pursuant to the Warrants, or pursuant to any other agreement,
certificate, instrument or document contemplated hereby or thereby, and such payment or payments or the proceeds of such enforcement
or exercise or any part thereof (including but not limited to the sale of the Securities) are for any reason (i) subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, or disgorged by the Buyer, or (ii) are required to be refunded,
repaid or otherwise restored to the Company, a trustee, receiver, government entity, or any other person or entity under any law (including,
without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then (i) to the extent
of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff had not occurred and (ii) the Company shall immediately
pay to the Buyer a dollar amount equal to the amount that was for any reason (i) subsequently invalidated, declared to be fraudulent
or preferential, set aside, recovered from, or disgorged by the Buyer, or (ii) required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver, government entity, or any other person or entity under any law (including, without limitation, any
bankruptcy law, foreign, state or federal law, common law or equitable cause of action).
p.
Failure or Indulgence Not Waiver.
No failure or delay on the part of the Buyer in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privileges. All rights and remedies of the Buyer existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise available.
q.
Electronic Signature
. This Agreement may be executed and delivered in one or more counterparts (including by facsimile or electronic
mail or in .pdf or any other form of electronic delivery (including any electronic signature complying with U.S. federal ESIGN Act of
2000)) and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document.
All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement.
[Signature
Page Follows]
20
IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.
NETCAPITAL
INC.
By:
Name:
TODD
VIOLETTE
Title:
CHIEF
EXECUTIVE OFFICER
HINTERLAND
PARTNERS LLC
By:
Name:
PATRICK
HASSANI
Title:
CHIEF
INVESTMENT OFFICER
21
EXHIBIT
A
FORM
OF NOTE
[attached
hereto]
22
EXHIBIT
B
PIGGY-BACK
REGISTRATION RIGHTS
All
of the Conversion Shares, Commitment Shares, and Exercise Shares shall be deemed “Registrable Securities” subject to the
provisions of this Exhibit B. All capitalized terms used but not defined in this Exhibit B shall have the meanings ascribed to such terms
in the Securities Purchase Agreement to which this Exhibit is attached.
1.
Piggy-Back Registration
.
1.1
Piggy-Back Rights
. If at any time on or after the date of the Closing the Company proposes to file any Registration Statement
under the 1933 Act (a “Registration Statement”) with respect to any offering of equity securities, or securities or other
obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for shareholders
of the Company for their account (or by the Company and by shareholders of the Company), other than a Registration Statement (i) filed
in connection with any employee stock option or other benefit plan on Form S-8, (ii) for a dividend reinvestment plan or (iii) in connection
with a merger or acquisition, then the Company shall (x) give written notice of such proposed filing to the holders of Registrable Securities
appearing on the books and records of the Company as such a holder as soon as practicable but in no event less than ten (10) days before
the anticipated filing date of the Registration Statement, which notice shall describe the amount and type of securities to be included
in such Registration Statement, the intended method(s) of distribution, and the name of the proposed managing underwriter or underwriters,
if any, of the offering, and (y) offer to the holders of Registrable Securities in such notice the opportunity to register the sale of
such number of Registrable Securities as such holders may request in writing within three (3) days following receipt of such notice (a
“Piggy-Back Registration”). The Company shall cause such Registrable Securities to be included in such registration and shall
cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable Securities requested to
be included in a Piggy-Back Registration on the same terms and conditions as any similar securities of the Company and to permit the
sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof (with the
understanding that the Company shall file the initial prospectus covering the Buyer’s sale of the Registrable Securities at prevailing
market prices on the same date that the Registration Statement is declared effective by the SEC).
1.2
Withdrawal
. Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable
Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness
of the Registration Statement. The Company (whether on its own determination or as the result of a withdrawal by persons making a demand
pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness of such Registration
Statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders of Registrable Securities
in connection with such Piggy-Back Registration as provided in Section 1.5 below.
1.3
The Company shall notify the holders of Registrable Securities at any time when a prospectus relating to such holder’s Registrable
Securities is required to be delivered under the 1933 Act, upon discovery that, or upon the happening of any event as a result of which,
the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances
then existing. At the request of such holder, the Company shall also prepare, file and furnish to such holder a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of
the Registrable Securities, 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 not misleading in light of the circumstances then existing.
The holders of Registrable Securities shall not to offer or sell any Registrable Securities covered by the Registration Statement after
receipt of such notification until the receipt of such supplement or amendment.
23
1.4
The Company may request a holder of Registrable Securities to furnish the Company such information with respect to such holder and such
holder’s proposed distribution of the Registrable Securities pursuant to the Registration Statement as the Company may from time
to time reasonably request in writing or as shall be required by law or by the SEC in connection therewith, and such holders shall furnish
the Company with such information.
1.5
All fees and expenses incident to the performance of or compliance with this Exhibit B by the Company shall be borne by the Company whether
or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence
shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the Company’s
counsel and independent registered public accountants) (A) with respect to filings made with the SEC, (B) with respect to filings required
to be made with any trading market on which the Common Stock is then listed for trading, (C) in compliance with applicable state securities
or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for
the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities) and (D) with respect to any filing
that may be required to be made by any broker through which a holder of Registrable Securities intends to make sales of Registrable Securities
with the FINRA, (ii) printing expenses, (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for
the Company, (v) 1933 Act liability insurance, if the Company so desires such insurance, (vi) fees and expenses of all other persons
or entities retained by the Company in connection with the consummation of the transactions contemplated by this Exhibit B and (vii)
reasonable fees and disbursements of a single special counsel for the holders of Registrable Securities (selected by holders of the majority
of the Registrable Securities requesting such registration). In addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall
the Company be responsible for any broker or similar commissions of any holder of Registrable Securities.
1.6
The Company and its successors and assigns shall indemnify and hold harmless the Buyer, each holder of Registrable Securities, the officers,
directors, members, partners, agents and employees (and any other individuals or entities with a functionally equivalent role of a person
holding such titles, notwithstanding a lack of such title or any other title) of each of them, each individual or entity who controls
the Buyer or any such holder of Registrable Securities (within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act)
and the officers, directors, members, stockholders, partners, agents and employees (and any other individuals or entities 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 individual
or entity (each, an “Indemnified Party”), to the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (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 related 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 such 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 1933 Act, the 1934 Act or
any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Exhibit
B, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based upon information regarding the
Buyer or such holder of Registrable Securities furnished to the Company by such party for use therein. The Company shall notify the Buyer
and each holder of Registrable Securities promptly of the institution, threat or assertion of any proceeding arising from or in connection
with the transactions contemplated by this Exhibit B of which the Company is aware.
1.7
If the indemnification under Section 1.6 is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless
for any Losses, then the Company shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate
to reflect the relative fault of the Company and Indemnified Party in connection with the actions, statements or omissions that resulted
in such Losses as well as any other relevant equitable considerations. The relative fault of the Company and Indemnified Party shall
be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of
a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by,
the Company or the Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct
or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include
any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any proceeding to the extent such
party would have been indemnified for such fees or expenses if the indemnification provided for in Section 1.6 was available to such
party in accordance with its terms. It is agreed that it would not be just and equitable if contribution pursuant to this Section 1.7
were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations
referred to in the immediately preceding sentence. Notwithstanding the provisions of this Section 1.7, neither the Buyer nor any holder
of Registrable Securities shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds
actually received by such party from the sale of all of their Registrable Securities pursuant to such Registration Statement or related
prospectus exceeds the amount of any damages that such party has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
[End
of Exhibit B
]
24
EXHIBIT
C
ARBITRATION
PROVISIONS
1.
Dispute Resolution
. Each party consents to and expressly agrees that the exclusive venue for arbitration of any dispute arising
out of or relating to any of the Transaction Documents or the relationship of the parties or their affiliates shall be in the State of
Delaware. For purposes of this Exhibit C, the term “
Claims
” means any disputes, claims, demands, causes of action,
requests for injunctive relief, requests for specific performance, questions regarding severability of any provisions of the Transaction
Documents, liabilities, damages, losses, or controversies whatsoever arising from, related to, or connected with the transactions contemplated
in the Transaction Documents and any communications between the parties related thereto, including without limitation any claims of mutual
mistake, mistake, fraud, misrepresentation, failure of formation, failure of consideration, promissory estoppel, unconscionability, failure
of condition precedent, rescission, and any statutory claims, tort claims, contract claims, or claims to void, invalidate or terminate
the Agreement (or these Arbitration Provisions (defined below)) or any of the other Transaction Documents. The term “Claims”
specifically excludes a dispute over the Warrant Calculations (as defined in the Warrants) and Note Calculations (as defined in the Note),
and the parties hereby acknowledge and agree that a dispute over any Warrant Calculations (as defined in the Warrants) or Note Calculations
(as defined in the Note) shall be resolved by the parties as expressly provided for in the Warrants and Note respectively. The parties
to this Agreement (the “
parties
”) hereby agree that the Claims may be arbitrated in one or more Arbitrations pursuant
to these Arbitration Provisions (one for an injunction or injunctions and a separate one for all other Claims). The parties hereby agree
that the arbitration provisions set forth in this Exhibit C (“
Arbitration Provisions
”) are binding on each of them.
As a result, any attempt to rescind the Agreement (or these Arbitration Provisions) or any other Transaction Document) or declare the
Agreement (or these Arbitration Provisions) or any other Transaction Document invalid or unenforceable pursuant to Section 29 of the
1934 Act or for any other reason is subject to these Arbitration Provisions. These Arbitration Provisions shall also survive any termination
or expiration of the Agreement. Any capitalized term not defined in these Arbitration Provisions shall have the meaning set forth in
the Agreement.
2.
Arbitration
. Except as otherwise provided herein, all Claims must be submitted to arbitration (“
Arbitration
”)
to be conducted exclusively in the State of Delaware and pursuant to the terms set forth in these Arbitration Provisions. Subject to
the arbitration appeal right provided for in Paragraph 5 below (the “
Appeal Right
”), the parties agree that the award
of the arbitrator rendered pursuant to Paragraph 4 below (the “
Arbitration Award
”) shall be (a) final and binding
upon the parties, (b) the sole and exclusive remedy between them regarding any Claims, counterclaims, issues, or accountings presented
or pleaded to the arbitrator, and (c) promptly payable in United States dollars free of any tax, deduction or offset (with respect to
monetary awards). Subject to the Appeal Right, any costs or fees, including without limitation attorneys’ fees, incurred in connection
with or incident to enforcing the Arbitration Award shall, to the maximum extent permitted by law, be charged against the party resisting
such enforcement. The Arbitration Award shall include Default Interest (as defined or otherwise provided for in the Note, “
Default
Interest
”) (with respect to monetary awards) at the rate specified in the Note for Default Interest both before and after the
Arbitration Award. Judgment upon the Arbitration Award will be entered and enforced by any state or federal court sitting in the State
of Delaware.
3.
The Arbitration Act
. The parties hereby incorporate herein the provisions and procedures set forth in the Delaware Uniform Arbitration
Act, Title 10 Chapter 57 (as amended or superseded from time to time, the “
Arbitration Act
”). Notwithstanding the
foregoing, pursuant to, and to the maximum extent permitted by, the Arbitration Act, in the event of conflict or variation between the
terms of these Arbitration Provisions and the provisions of the Arbitration Act, the terms of these Arbitration Provisions shall control
and the parties hereby waive or otherwise agree to vary the effect of all requirements of the Arbitration Act that may conflict with
or vary from these Arbitration Provisions.
4.
Arbitration Proceedings
. Arbitration between the parties will be subject to the following:
4.1
Initiation of Arbitration
. Pursuant to the Arbitration Act, the parties agree that a party may initiate Arbitration by giving
written notice to the other party (“
Arbitration Notice
”) in the same manner that notice is permitted under Section
8(f) of the Agreement;
provided, however
, that the Arbitration Notice may not be given by email or fax. Arbitration will be deemed
initiated as of the date that the Arbitration Notice is deemed physically delivered to such other party under Section 8(f) of the Agreement
(the “
Service Date
”). After the Service Date, information may be delivered, and notices may be given, by email or
fax pursuant to Section 8(f) of the Agreement or any other method permitted thereunder. The Arbitration Notice must describe the nature
of the controversy, the remedies sought, and the election to commence Arbitration proceedings. All Claims in the Arbitration Notice must
be pleaded consistent with the Delaware Rules of Civil Procedure.
25
4.2
Selection and Payment of Arbitrator
.
(a)
Within ten (10) calendar days after the Service Date, Buyer shall select and submit to Company the names of three (3) arbitrators that
are designated as “neutrals” or qualified arbitrators by American Arbitration Association (“AAA”) (https://www.adr.org/)
or other arbitration service provider agreed upon by the parties (such three (3) designated persons hereunder are referred to herein
as the “
Proposed Arbitrators
”). For the avoidance of doubt, each Proposed Arbitrator must be qualified as a “neutral”
with AAA or other arbitration service provider agreed upon by the parties. Within five (5) calendar days after Buyer has submitted to
Company the names of the Proposed Arbitrators, Company must select, by written notice to Buyer, one (1) of the Proposed Arbitrators to
act as the arbitrator for the parties under these Arbitration Provisions. If Company fails to select one of the Proposed Arbitrators
in writing within such 5-day period, then Buyer may select the arbitrator from the Proposed Arbitrators by providing written notice of
such selection to Company.
(b)
If Buyer fails to submit to Company the Proposed Arbitrators within ten (10) calendar days after the Service Date pursuant to subparagraph
(a) above, then Company may at any time prior to Buyer so designating the Proposed Arbitrators, identify the names of three (3) arbitrators
that are designated as “neutrals” or qualified arbitrators by AAA or other arbitration service provider agreed upon by the
parties by written notice to Buyer. Buyer may then, within five (5) calendar days after Company has submitted notice of its Proposed
Arbitrators to Buyer, select, by written notice to Company, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties
under these Arbitration Provisions. If Buyer fails to select in writing and within such 5-day period one (1) of the three (3) Proposed
Arbitrators selected by Company, then Company may select the arbitrator from its three (3) previously selected Proposed Arbitrators by
providing written notice of such selection to Buyer.
(c)
If a Proposed Arbitrator chosen to serve as arbitrator declines or is otherwise unable to serve as arbitrator, then the party that selected
such Proposed Arbitrator may select one (1) of the other three (3) Proposed Arbitrators within three (3) calendar days of the date the
chosen Proposed Arbitrator declines or notifies the parties he or she is unable to serve as arbitrator. If all three (3) Proposed Arbitrators
decline or are otherwise unable to serve as arbitrator, then the arbitrator selection process shall begin again in accordance with this
Paragraph 4.2.
(d)
The date that the Proposed Arbitrator selected pursuant to this Paragraph 4.2 agrees in writing (including via email) delivered to both
parties to serve as the arbitrator hereunder is referred to herein as the “
Arbitration Commencement Date
”. If an arbitrator
resigns or is unable to act during the Arbitration, a replacement arbitrator shall be chosen in accordance with this Paragraph 4.2 to
continue the Arbitration. If AAA or other arbitration service provider agreed upon by the parties ceases to exist or to provide a list
of neutrals and there is no successor thereto, then the arbitrator shall be selected under the then prevailing rules of the American
Arbitration Association.
(e)
Subject to Paragraph 4.10 below, the cost of the arbitrator must be paid equally by both parties. Subject to Paragraph 4.10 below, if
one party refuses or fails to pay its portion of the arbitrator fee, then the other party can advance such unpaid amount (subject to
the accrual of Default Interest thereupon), with such amount being added to or subtracted from, as applicable, the Arbitration Award.
4.3
Applicability of Certain Delaware Rules
. The parties agree that the Arbitration shall be conducted generally in accordance with
the Delaware Rules of Civil Procedure and the Delaware Rules of Evidence. More specifically, the Delaware Rules of Civil Procedure shall
apply, without limitation, to the filing of any pleadings, motions or memoranda, the conducting of discovery, and the taking of any depositions.
The Delaware Rules of Evidence shall apply to any hearings, whether telephonic or in person, held by the arbitrator. Notwithstanding
the foregoing, it is the parties’ intent that the incorporation of such rules will in no event supersede these Arbitration Provisions.
In the event of any conflict between the Delaware Rules of Civil Procedure or the Delaware Rules of Evidence and these Arbitration Provisions,
these Arbitration Provisions shall control.
4.4
Answer and Default
. An answer and any counterclaims to the Arbitration Notice shall be required to be delivered to the party initiating
the Arbitration within twenty (20) calendar days after the Arbitration Commencement Date. If an answer is not delivered by the required
deadline, the arbitrator must provide written notice to the defaulting party stating that the arbitrator will enter a default award against
such party if such party does not file an answer within five (5) calendar days of receipt of such notice. If an answer is not filed within
the five (5) day extension period, the arbitrator must render a default award, consistent with the relief requested in the Arbitration
Notice, against a party that fails to submit an answer within such time period.
4.5
[Intentionally Omitted].
4.6
Discovery
. The parties agree that discovery shall be conducted as follows:
(a)
Written discovery will only be allowed if the likely benefits of the proposed written discovery outweigh the burden or expense thereof,
and the written discovery sought is likely to reveal information that will satisfy a specific element of a claim or defense already pleaded
in the Arbitration. The party seeking written discovery shall always have the burden of showing that all of the standards and limitations
set forth in these Arbitration Provisions are satisfied. The scope of discovery in the Arbitration proceedings shall also be limited
as follows:
(i)
To facts directly connected with the transactions contemplated by the Agreement.
(ii)
To facts and information that cannot be obtained from another source or in another manner that is more convenient, less burdensome or
less expensive than in the manner requested.
26
(b)
No party shall be allowed (i) more than fifteen (15) interrogatories (including discrete subparts), (ii) more than fifteen (15) requests
for admission (including discrete subparts), (iii) more than ten (10) document requests (including discrete subparts), or (iv) more than
three (3) depositions (excluding expert depositions) for a maximum of seven (7) hours per deposition. The costs associated with depositions
will be borne by the party taking the deposition. The party defending the deposition will submit a notice to the party taking the deposition
of the estimated attorneys’ fees that such party expects to incur in connection with defending the deposition. If the party defending
the deposition fails to submit an estimate of attorneys’ fees within five (5) calendar days of its receipt of a deposition notice,
then such party shall be deemed to have waived its right to the estimated attorneys’ fees. The party taking the deposition must
pay the party defending the deposition the estimated attorneys’ fees prior to taking the deposition, unless such obligation is
deemed to be waived as set forth in the immediately preceding sentence. If the party taking the deposition believes that the estimated
attorneys’ fees are unreasonable, such party may submit the issue to the arbitrator for a decision.
(c)
All discovery requests (including document production requests included in deposition notices) must be submitted in writing to the arbitrator
and the other party. The party submitting the written discovery requests must include with such discovery requests a detailed explanation
of how the proposed discovery requests satisfy the requirements of these Arbitration Provisions and the Delaware Rules of Civil Procedure.
The receiving party will then be allowed, within five (5) calendar days of receiving the proposed discovery requests, to submit to the
arbitrator an estimate of the attorneys’ fees and costs associated with responding to such written discovery requests and a written
challenge to each applicable discovery request. After receipt of an estimate of attorneys’ fees and costs and/or challenge(s) to
one or more discovery requests, consistent with subparagraph (c) above, the arbitrator will within three (3) calendar days make a finding
as to the likely attorneys’ fees and costs associated with responding to the discovery requests and issue an order that (i) requires
the requesting party to prepay the attorneys’ fees and costs associated with responding to the discovery requests, and (ii) requires
the responding party to respond to the discovery requests as limited by the arbitrator within twenty-five (25) calendar days of the arbitrator’s
finding with respect to such discovery requests. If a party entitled to submit an estimate of attorneys’ fees and costs and/or
a challenge to discovery requests fails to do so within such 5-day period, the arbitrator will make a finding that (A) there are no attorneys’
fees or costs associated with responding to such discovery requests, and (B) the responding party must respond to such discovery requests
(as may be limited by the arbitrator) within twenty-five (25) calendar days of the arbitrator’s finding with respect to such discovery
requests. Any party submitting any written discovery requests, including without limitation interrogatories, requests for production
subpoenas to a party or a third party, or requests for admissions, must prepay the estimated attorneys’ fees and costs, before
the responding party has any obligation to produce or respond to the same, unless such obligation is deemed waived as set forth above.
(d)
In order to allow a written discovery request, the arbitrator must find that the discovery request satisfies the standards set forth
in these Arbitration Provisions and the Delaware Rules of Civil Procedure. The arbitrator must strictly enforce these standards. If a
discovery request does not satisfy any of the standards set forth in these Arbitration Provisions or the Delaware Rules of Civil Procedure,
the arbitrator may modify such discovery request to satisfy the applicable standards, or strike such discovery request in whole or in
part.
(e)
Each party may submit expert reports (and rebuttals thereto), provided that such reports must be submitted within sixty (60) days of
the Arbitration Commencement Date. Each party will be allowed a maximum of two (2) experts. Expert reports must contain the following:
(i) a complete statement of all opinions the expert will offer at trial and the basis and reasons for them; (ii) the expert’s name
and qualifications, including a list of all the expert’s publications within the preceding ten (10) years, and a list of any other
cases in which the expert has testified at trial or in a deposition or prepared a report within the preceding ten (10) years; and (iii)
the compensation to be paid for the expert’s report and testimony. The parties are entitled to depose any other party’s expert
witness one (1) time for no more than four (4) hours. An expert may not testify in a party’s case-in-chief concerning any matter
not fairly disclosed in the expert report.
4.6
Dispositive Motions
. Each party shall have the right to submit dispositive motions pursuant to the Delaware Rules of Civil Procedure
(a “
Dispositive Motion
”). The party submitting the Dispositive Motion may, but is not required to, deliver to the
arbitrator and to the other party a memorandum in support (the “
Memorandum in Support
”) of the Dispositive Motion.
Within seven (7) calendar days of delivery of the Memorandum in Support, the other party shall deliver to the arbitrator and to the other
party a memorandum in opposition to the Memorandum in Support (the “
Memorandum in Opposition
”). Within seven (7) calendar
days of delivery of the Memorandum in Opposition, as applicable, the party that submitted the Memorandum in Support shall deliver to
the arbitrator and to the other party a reply memorandum to the Memorandum in Opposition (“
Reply Memorandum
”). If
the applicable party shall fail to deliver the Memorandum in Opposition as required above, or if the other party fails to deliver the
Reply Memorandum as required above, then the applicable party shall lose its right to so deliver the same, and the Dispositive Motion
shall proceed regardless.
27
4.7
Confidentiality
. All information disclosed by either party (or such party’s agents) during the Arbitration process (including
without limitation information disclosed during the discovery process or any Appeal (defined below)) shall be considered confidential
in nature. Each party agrees not to disclose any confidential information received from the other party (or its agents) during the Arbitration
process (including without limitation during the discovery process or any Appeal) unless (a) prior to or after the time of disclosure
such information becomes public knowledge or part of the public domain, not as a result of any inaction or action of the receiving party
or its agents, (b) such information is required by a court order, subpoena or similar legal duress to be disclosed if such receiving
party has notified the other party thereof in writing and given it a reasonable opportunity to obtain a protective order from a court
of competent jurisdiction prior to disclosure, or (c) such information is disclosed to the receiving party’s agents, representatives
and legal counsel on a need to know basis who each agree in writing not to disclose such information to any third party. The arbitrator
is hereby authorized and directed to issue a protective order to prevent the disclosure of privileged information and confidential information
upon the written request of either party.
4.8
Authorization; Timing; Scheduling Order
. Subject to all other portions of these Arbitration Provisions, the parties hereby authorize
and direct the arbitrator to take such actions and make such rulings as may be necessary to carry out the parties’ intent for the
Arbitration proceedings to be efficient and expeditious. The parties hereby agree that an Arbitration Award must be made within one hundred
twenty (120) calendar days after the Arbitration Commencement Date. The arbitrator is hereby authorized and directed to hold a scheduling
conference within ten (10) calendar days after the Arbitration Commencement Date in order to establish a scheduling order with various
binding deadlines for discovery, expert testimony, and the submission of documents by the parties to enable the arbitrator to render
a decision prior to the end of such 120-day period.
4.9
Relief
. The arbitrator shall have the right to award or include in the Arbitration Award (or in a preliminary ruling) any relief
which the arbitrator deems proper under the circumstances, including, without limitation, specific performance and injunctive relief,
provided that the arbitrator may not award exemplary or punitive damages.
4.10
Fees and Costs
. As part of the Arbitration Award, the arbitrator is hereby directed to require the losing party (the party being
awarded the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any statutory
fines, penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration,
and (b) reimburse the prevailing party for all reasonable attorneys’ fees, arbitrator costs and fees, deposition costs, other discovery
costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration.
5.
Arbitration Appeal
.
5.1
Initiation of Appeal.
Following the entry of the Arbitration Award, either party (the “
Appellant
”) shall have
a period of thirty (30) calendar days in which to notify the other party (the “
Appellee
”), in writing, that the Appellant
elects to appeal (the “
Appeal
”) the Arbitration Award (such notice, an “
Appeal Notice
”) to a panel
of arbitrators as provided in Paragraph 5.2 below. The date the Appellant delivers an Appeal Notice to the Appellee is referred to herein
as the “
Appeal Date
”. The Appeal Notice must be delivered to the Appellee in accordance with the provisions of Paragraph
4.1 above with respect to delivery of an Arbitration Notice. In addition, together with delivery of the Appeal Notice to the Appellee,
the Appellant must also pay for (and provide proof of such payment to the Appellee together with delivery of the Appeal Notice) a bond
in the amount of 110% of the sum the Appellant owes to the Appellee as a result of the Arbitration Award the Appellant is appealing.
In the event an Appellant delivers an Appeal Notice to the Appellee (together with proof of payment of the applicable bond) in compliance
with the provisions of this Paragraph 5.1, the Appeal will occur as a matter of right and, except as specifically set forth herein, will
not be further conditioned. In the event a party does not deliver an Appeal Notice (along with proof of payment of the applicable bond)
to the other party within the deadline prescribed in this Paragraph 5.1, such party shall lose its right to appeal the Arbitration Award.
If no party delivers an Appeal Notice (along with proof of payment of the applicable bond) to the other party within the deadline described
in this Paragraph 5.1, the Arbitration Award shall be final. The parties acknowledge and agree that any Appeal shall be deemed part of
the parties’ agreement to arbitrate for purposes of these Arbitration Provisions and the Arbitration Act.
5.2
Selection and Payment of Appeal Panel.
In the event an Appellant delivers an Appeal Notice to the Appellee (together with proof
of payment of the applicable bond) in compliance with the provisions of Paragraph 5.1 above, the Appeal will be heard by a three (3)
person arbitration panel (the “
Appeal Panel
”).
(a)
Within ten (10) calendar days after the Appeal Date, the Appellee shall select and submit to the Appellant the names of five (5) arbitrators
that are designated as “neutrals” or qualified arbitrators by AAA (https://www.adr.org/) or other arbitration service provider
agreed upon by the parties (such five (5) designated persons hereunder are referred to herein as the “
Proposed Appeal Arbitrators
”).
For the avoidance of doubt, each Proposed Appeal Arbitrator must be qualified as a “neutral” with AAA or other arbitration
service provider agreed upon by the parties, and shall not be the arbitrator who rendered the Arbitration Award being appealed (the “
Original
Arbitrator
”). Within five (5) calendar days after the Appellee has submitted to the Appellant the names of the Proposed Appeal
Arbitrators, the Appellant must select, by written notice to the Appellee, three (3) of the Proposed Appeal Arbitrators to act as the
members of the Appeal Panel. If the Appellant fails to select three (3) of the Proposed Appeal Arbitrators in writing within such 5-day
period, then the Appellee may select such three (3) arbitrators from the Proposed Appeal Arbitrators by providing written notice of such
selection to the Appellant.
28
(b)
If the Appellee fails to submit to the Appellant the names of the Proposed Appeal Arbitrators within ten (10) calendar days after the
Appeal Date pursuant to subparagraph (a) above, then the Appellant may at any time prior to the Appellee so designating the Proposed
Appeal Arbitrators, identify the names of five (5) arbitrators that are designated as “neutrals” or qualified arbitrators
by AAA or other arbitration service provider agreed upon by the parties (none of whom may be the Original Arbitrator) by written notice
to the Appellee. The Appellee may then, within five (5) calendar days after the Appellant has submitted notice of its selected arbitrators
to the Appellee, select, by written notice to the Appellant, three (3) of such selected arbitrators to serve on the Appeal Panel. If
the Appellee fails to select in writing within such 5-day period three (3) of the arbitrators selected by the Appellant to serve as the
members of the Appeal Panel, then the Appellant may select the three (3) members of the Appeal Panel from the Appellant’s list
of five (5) arbitrators by providing written notice of such selection to the Appellee.
(c)
If a selected Proposed Appeal Arbitrator declines or is otherwise unable to serve, then the party that selected such Proposed Appeal
Arbitrator may select one (1) of the other five (5) designated Proposed Appeal Arbitrators within three (3) calendar days of the date
a chosen Proposed Appeal Arbitrator declines or notifies the parties he or she is unable to serve as an arbitrator. If at least three
(3) of the five (5) designated Proposed Appeal Arbitrators decline or are otherwise unable to serve, then the Proposed Appeal Arbitrator
selection process shall begin again in accordance with this Paragraph 5.2;
provided, however
, that any Proposed Appeal Arbitrators
who have already agreed to serve shall remain on the Appeal Panel.
(d)
The date that all three (3) Proposed Appeal Arbitrators selected pursuant to this Paragraph 5.2 agree in writing (including via email)
delivered to both the Appellant and the Appellee to serve as members of the Appeal Panel hereunder is referred to herein as the “
Appeal
Commencement Date
”. No later than five (5) calendar days after the Appeal Commencement Date, the Appellee shall designate in
writing (including via email) to the Appellant and the Appeal Panel the name of one (1) of the three (3) members of the Appeal Panel
to serve as the lead arbitrator in the Appeal proceedings. Each member of the Appeal Panel shall be deemed an arbitrator for purposes
of these Arbitration Provisions and the Arbitration Act, provided that, in conducting the Appeal, the Appeal Panel may only act or make
determinations upon the approval or vote of no less than the majority vote of its members, as announced or communicated by the lead arbitrator
on the Appeal Panel.
If an arbitrator on the Appeal Panel ceases or is unable to act during the
Appeal proceedings, a replacement arbitrator shall be chosen in accordance with Paragraph 5.2 above to continue the Appeal as a member
of the Appeal Panel.
If AAA or other arbitration service provider agreed upon by the parties ceases to exist or to provide a list
of neutrals, then the arbitrators for the Appeal Panel shall be selected under the then prevailing rules of the American Arbitration
Association.
(d)
Subject to Paragraph 5.7 below, the cost of the Appeal Panel must be paid entirely by the Appellant.
5.3
Appeal Procedure.
The Appeal will be deemed an appeal of the entire Arbitration Award. In conducting the Appeal, the Appeal Panel
shall conduct a de novo review of all Claims described or otherwise set forth in the Arbitration Notice. Subject to the foregoing and
all other provisions of this Paragraph 5, the Appeal Panel shall conduct the Appeal in a manner the Appeal Panel considers appropriate
for a fair and expeditious disposition of the Appeal, may hold one or more hearings and permit oral argument, and may review all previous
evidence and discovery, together with all briefs, pleadings and other documents filed with the Original Arbitrator (as well as any documents
filed with the Appeal Panel pursuant to Paragraph 5.4(a) below). Notwithstanding the foregoing, in connection with the Appeal, the Appeal
Panel shall not permit the parties to conduct any additional discovery or raise any new Claims to be arbitrated, shall not permit new
witnesses or affidavits, and shall not base any of its findings or determinations on the Original Arbitrator’s findings or the
Arbitration Award.
5.4
Timing.
(a)
Within seven (7) calendar days of the Appeal Commencement Date, the Appellant (i) shall deliver or cause to be delivered to the Appeal
Panel copies of the Appeal Notice, all discovery conducted in connection with the Arbitration, and all briefs, pleadings and other documents
filed with the Original Arbitrator (which material Appellee shall have the right to review and supplement if necessary), and (ii) may,
but is not required to, deliver to the Appeal Panel and to the Appellee a Memorandum in Support of the Appellant’s arguments concerning
or position with respect to all Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration. Within seven (7)
calendar days of the Appellant’s delivery of the Memorandum in Support, as applicable, the Appellee shall deliver to the Appeal
Panel and to the Appellant a Memorandum in Opposition to the Memorandum in Support. Within seven (7) calendar days of the Appellee’s
delivery of the Memorandum in Opposition, as applicable, the Appellant shall deliver to the Appeal Panel and to the Appellee a Reply
Memorandum to the Memorandum in Opposition. If the Appellant shall fail to substantially comply with the requirements of clause (i) of
this subparagraph (a), the Appellant shall lose its right to appeal the Arbitration Award, and the Arbitration Award shall be final.
If the Appellee shall fail to deliver the Memorandum in Opposition as required above, or if the Appellant shall fail to deliver the Reply
Memorandum as required above, then the Appellee or the Appellant, as the case may be, shall lose its right to so deliver the same, and
the Appeal shall proceed regardless.
29
(b)
Subject to subparagraph (a) above, the parties hereby agree that the Appeal must be heard by the Appeal Panel within thirty (30) calendar
days of the Appeal Commencement Date, and that the Appeal Panel must render its decision within thirty (30) calendar days after the Appeal
is heard (and in no event later than sixty (60) calendar days after the Appeal Commencement Date).
5.5
Appeal Panel Award.
The Appeal Panel shall issue its decision (the “
Appeal Panel Award
”) through the lead arbitrator
on the Appeal Panel. Notwithstanding any other provision contained herein, the Appeal Panel Award shall (a) supersede in its entirety
and make of no further force or effect the Arbitration Award (provided that any protective orders issued by the Original Arbitrator shall
remain in full force and effect), (b) be final and binding upon the parties, with no further rights of appeal, (c) be the sole and exclusive
remedy between the parties regarding any Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration, and (d)
be promptly payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Any costs or fees,
including without limitation attorneys’ fees, incurred in connection with or incident to enforcing the Appeal Panel Award shall,
to the maximum extent permitted by law, be charged against the party resisting such enforcement. The Appeal Panel Award shall include
Default Interest (with respect to monetary awards) at the rate specified in the Note for Default Interest both before and after the Arbitration
Award. Judgment upon the Appeal Panel Award will be entered and enforced by a state or federal court sitting in the State of Delaware.
5.6
Relief.
The Appeal Panel shall have the right to award or include in the Appeal Panel Award any relief which the Appeal Panel
deems proper under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the Appeal
Panel may not award exemplary or punitive damages.
5.7
Fees and Costs.
As part of the Appeal Panel Award, the Appeal Panel is hereby directed to require the losing party (the party
being awarded the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any
statutory fines, penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the
Arbitration and the Appeal Panel, and (b) reimburse the prevailing party (the party being awarded the most amount of money by the Appeal
Panel, which, for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges
awarded to any part) the reasonable attorneys’ fees, arbitrator and Appeal Panel costs and fees, deposition costs, other discovery
costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration (including
without limitation in connection with the Appeal).
6.
Miscellaneous
.
6.1
Severability.
If any part of these Arbitration Provisions is found to violate or be illegal under applicable law, then such provision
shall be modified to the minimum extent necessary to make such provision enforceable under applicable law, and the remainder of the Arbitration
Provisions shall remain unaffected and in full force and effect.
6.2
Governing Law
. These Arbitration Provisions shall be governed by the laws of the State of Delaware without regard to the conflict
of laws principles therein.
6.3
Interpretation
. The headings of these Arbitration Provisions are for convenience of reference only and shall not form part of,
or affect the interpretation of, these Arbitration Provisions.
6.4
Waiver
. No waiver of any provision of these Arbitration Provisions shall be effective unless it is in the form of a writing signed
by the party granting the waiver.
6.5
Time is of the Essence
. Time is expressly made of the essence with respect to each and every provision of these Arbitration Provisions.
[
Remainder
of page intentionally left blank
]
30
EXHIBIT
D
FORM
OF WARRANTS
[attached
hereto]
31
EXHIBIT
E
FORM
OF PLEDGE AGREEMENT
[attached
hereto]
32

----- ex10-2.htm -----
EX-10.2
5
ex10-2.htm
EX-10.2
Exhibit
10.2
PLEDGE
AGREEMENT
This
PLEDGE AGREEMENT
(this “Agreement”), dated as of October 13, 2026 (the “Effective Date”), made by and
between Netcapital Inc., a Utah corporation (the “Pledgor”), Hinterland Partners LLC, a Delaware limited liability company
(together with its successors and assigns, the “Pledgees”), and KingsCrowd, Inc., a [____] corporation (the “Equity
Entity”).
WHEREAS:
A.
In order to induce the Pledgees to enter into that certain securities purchase agreement with the Pledgor on or around October 13, 2026
(the “Purchase Agreement”), pursuant to which the Pledgor will issue to Pledgee that certain promissory note in the original
principal amount of up to $641,936.66on or around October 13, 2026 (the “Note”), the Pledgor has agreed to execute and deliver
to the Pledgees this Agreement providing for the pledge to the Pledgees of, and the grant to the Pledgees of a security interest in,
of 3,209,685 shares of Class A common stock of the Equity Entity (the “Pledged Shares”), par value $[__] per share, owned
by Pledgor, pursuant to the terms of this Agreement; and
B.
Pledgor will materially benefit from the transactions involving the Note.
NOW,
THEREFORE, in consideration of the premises and the agreements herein contained and in order to induce the Pledgees to enter into the
Purchase Agreement, Pledgor hereby agrees with the Pledgees, as follows, which shall be effective as of the Effective Date:
SECTION
1.
Definitions.
All undefined terms used in this Agreement shall have the same
meaning provided for in the Note.
SECTION
2.
Pledge and Grant of Security Interest.
As collateral security for all of the
Obligations (as defined in this Agreement), Pledgor hereby pledges and assigns to Pledgees, and grant to Pledgees a continuing security
interest in, such Pledgor’s right, title and interest in and to the Pledged Shares, the Pledged Shares, all options and other rights,
contractual or otherwise, in respect thereof and all dividends, distributions, cash, instruments, investment property and other property
(including but not limited to, any stock dividend and any distribution in connection with a stock split) from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares (collectively, the “Pledged
Collateral”).
SECTION
3.
Security for Obligations.
The security interest created hereby in the Pledged
Collateral constitutes continuing collateral security for all of the following obligations, whether now existing or hereafter incurred
(the “Obligations”): the prompt payment to Pledgees, as and when due and payable (by scheduled maturity, required prepayment,
acceleration, demand or otherwise), of all amounts from time to time owing by it in respect of any interest, principal and other penalties,
damages, costs, fees, expenses or charges of, or arising under, the Note and the other transaction documents entered in connection with
the Note (including, without limitation, all interest that accrues after the commencement of any case, proceeding or other action relating
to bankruptcy, insolvency or reorganization of Pledgor whether or not the payment of such interest is unenforceable or is not allowable
due to the existence of such case, proceeding or other action), all fees, commissions, expense reimbursements, indemnifications and all
other amounts due or to become due to Pledgees under the Note and the other transaction documents entered into in connection with the
Note.
Page
1
of 7
SECTION
4.
Delivery of the Pledged Collateral.
(a)
Pledgees as collateral agent (the “Collateral Agent”) shall hold the Pledged Shares for the benefit of itself and Pledgees
and Pledgor further agree to execute such other documents and to take such other actions as the Collateral Agent deems reasonably necessary
or desirable to create and perfect the security interests intended to be created hereunder, including, without limitation, duly executed
undated stock powers endorsed in blank, with medallion guarantee(s), to effect the foregoing and to permit Pledgees to exercise any of
their rights and remedies hereunder.
(b)
If Pledgor shall receive, by virtue of its being or having been an owner of any Pledged Collateral, any (i) stock certificate (including,
without limitation, any certificate representing a stock dividend or distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares, stock split, spin-off or split-oft), promissory note
or other instrument, (ii) option or right, whether as an addition to, substitution for, or in exchange for, any Pledged Collateral, or
otherwise, (iii) dividends or interest payable in cash or in securities or other property, (iv) dividends, interest and other distributions
paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in
respect of or in exchange for, any Pledged Collateral, (v) dividends or other distributions in connection with a partial or total liquidation
or dissolution or in connection with a reduction of capital, capital surplus or paid-in surplus, or (vi) cash paid, payable or otherwise
distributed in redemption of, or in exchange for, any Pledged Collateral, such stock certificate, promissory note, instrument, option,
right, property, payment or distribution constituting Pledged Collateral shall be, and shall forthwith be delivered to Collateral Agent
to hold as, Pledged Collateral and shall be received in trust for the benefit of the Pledgees, shall be segregated from Pledgor’s
other property and shall be delivered forthwith to Collateral Agent in the exact form received, with any necessary endorsement and/or
appropriate stock powers duly executed in blank, to be held by the Collateral Agent as Pledged Collateral and as further collateral security
for the Obligations.
SECTION
5.
Representations and Warranties.
Pledgor represents and warrants as
(a)
The execution, delivery, and performance by the Pledgor of this Agreement and the exercise by any Pledgees of any of its rights and remedies
in accordance with the terms of this Agreement and applicable securities law will not contravene any law or any contractual restriction
binding on or affecting the Pledgor or any of its properties and do not and will not result in or require the creation of any lien upon
or with respect to any of its properties other than pursuant to this Agreement.
(b)
The Pledgor is and will be at all times the beneficial owner of the Pledged Collateral free and clear of any lien or option, except as
provided by this Agreement.
(c)
No authorization or approval or other action by, and no notice to or filing with, any governmental authority or other regulatory body
is required for the grant by the Pledgor, or the perfection, of the security interest purported to be created hereby in the Pledged Collateral
or the exercise by any Pledgees of any of its rights and remedies hereunder, except as may be required in connection with any sale of
any Pledged Collateral by laws affecting the offering and sale of securities generally, including the foreclosure procedures sanctioned
under the interpretations of the securities laws.
(d)
This Agreement creates a valid security interest in favor of the Pledgees in the Pledged Collateral, as security for the Obligations.
Such security interest is, or in the case of Pledged Collateral in which the Pledgor obtain rights after the date hereof, will be, a
perfected, first priority security interest. All action necessary to perfect and protect such security interest has been duly taken,
except for Pledgees’ having possession of security certificates constituting Pledged Collateral after the date hereof and obtaining
control of uncertificated securities and security entitlements constituting Pledged Collateral after the date hereof.
Page
2
of 7
SECTION
6.
Covenants as to the Pledged Collateral.
So long as any of the Obligations shall
remain outstanding, each Pledgor will:
(a)
keep adequate records concerning the Pledged Collateral and permit Collateral Agent or any agents or representatives of Collateral Agent
at any reasonable time and from time to time to examine and make copies of and abstracts from such records;
(b)
at its expense, promptly deliver to Collateral Agent a copy of each notice or other communication received by it in respect of the Pledged
Collateral;
(c)
at its expense, defend Pledgees’ right, title and security interest in and to the Pledged Collateral against the claims of any
person or entity;
(d)
at its expense, at any time and from time to time, promptly execute and deliver all further instruments and documents and take all further
action that may be necessary or desirable or that Collateral Agent may reasonably request in order to (i) perfect and protect the security
interest purported to be created hereby, or (ii) enable Collateral Agent to exercise and enforce the Pledgees’ rights and remedies
hereunder in respect of the Pledged Collateral;
(e)
not sell, assign (by operation of law or otherwise), transfer, exchange or otherwise dispose of any Pledged Collateral or any interest
therein;
(f)
not create or suffer to exist any lien upon or with respect to any Pledged Collateral except for the security interest created hereby;
(g)
not make or consent to any amendment or other modification or waiver with respect to any Pledged Collateral or enter into any agreement
or permit to exist any restriction with respect to any Pledged Collateral other than pursuant hereto; and
(h)
not take or fail to take any action which would in any manner impair the value or enforceability of Pledgees’ security interest
in any Pledged Collateral.
SECTION
7.
Voting Rights, Etc. in Respect of the Pledged Collateral.
(a)
So long as no Event of Default (as defined in the Note) has occurred under the Note (each an “Event of Default”) or event
which, with the giving of notice or lapse of time or both, would constitute an Event of Default, shall have occurred, Pledgor may exercise
any and all voting and other consensual rights pertaining to any Pledged Collateral for any purpose not inconsistent with the terms of
the Note; and
(b)
Upon the occurrence of an Event of Default or an event which, with the giving of notice or the lapse of time or both, would constitute
an Event of Default:
(i)
all rights of Pledgor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to
Section 7(a) hereof shall cease, and all such rights shall thereupon become vested in the Pledgees, which shall thereupon have the sole
right to exercise such voting and other consensual rights; and
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(ii)
without limiting the generality of the foregoing, Pledgees may, exercise any and all rights of conversion, exchange, subscription or
any other rights, privileges or options pertaining to any Pledged Collateral as if it were the absolute owner thereof, including, without
limitation, the right to sell or dispose of the Pledged Collateral in Pledgees’ sole discretion, or exchange, in Pledgees’
sole discretion, any and all of such Pledged Collateral upon the merger, consolidation, reorganization, recapitalization or other adjustment
of the Equity Entity, or upon the exercise of any right, privilege or option pertaining to any Pledged Collateral, and, in connection
therewith, to deposit and deliver any and all of the Pledged Collateral with any committee, depository, transfer agent, registrar or
other designated agent upon such terms and conditions as it may determine, subject to the beneficial ownership limitations contained
herein; and
(iii)
notwithstanding anything to the contrary in this Agreement, during the period beginning upon the date that an Event of Default occurs
and continuing until the Note is extinguished in the entirety, Pledgees shall have a continuing option, which is exercisable at any time
and from time to time by delivering written notice of each transfer to Pledgor, to effectuate the transfer of ownership of up to all
of the Pledged Shares from Pledgor to Pledgees, provided, however, that the outstanding balance of the Note shall be reduced by $0.18
for each of the Pledged Shares transferred.
SECTION
8.
Additional Provisions Concerning the Pledged Collateral.
(a)
Pledgor hereby authorizes Collateral Agent to file, without the signature of Pledgor where permitted by law, one or more financing or
continuation statements, and amendments thereto, relating to the Pledged Collateral.
(b)
Pledgor hereby irrevocably appoints Collateral Agent as such Pledgor’s attorney-in-fact and proxy, with full authority, exercisable
only during the existence of an Event of Default, in the place and stead of such Pledgor and in the name of such Pledgor or otherwise,
from time to time in Collateral Agent’s discretion, to take any action and to execute any instrument which Collateral Agent may
deem necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of such Pledgor under Section 7(a) hereof),
including, without limitation, to receive, endorse and collect all instruments made payable to Pledgor representing any dividend or other
distribution in respect of any of the Pledged Collateral and to give full discharge for the same. This power is coupled with an interest
and is irrevocable until all of the Obligations are satisfied in full.
(c)
If Pledgor fails to perform any agreement or obligation contained herein, Collateral Agent itself may perform, or cause performance of,
such agreement or obligation with respect to Pledged Collateral, and the expenses of Collateral Agent incurred in connection therewith
shall be payable by Pledgor pursuant to Section 10 hereof and shall be secured by the Pledged Collateral.
SECTION
9. Intentionally omitted.
SECTION
10.
Indemnity and Expenses
. Pledgor agrees to indemnify and hold harmless each
of the Pledgees and all of its stockholders, partners, members, officers, directors, employees and direct or indirect investors and any
of the foregoing persons’ agents or other representatives (including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) from and against any and all third-party claims, damages, losses, liabilities, obligations,
penalties, costs and expenses (including, without limitation, reasonable attorney’s fees and disbursements) to the extent that
they arise out of or otherwise result from this Agreement (including, without limitation, enforcement of this Agreement), except, as
to any such indemnified person or entity, claims, losses or liabilities resulting solely and directly from such person or entity’s
gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction and except to the extent
that such claims, losses or liabilities result from failure of such indemnified person or entities to comply with the securities laws.
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SECTION
11.
Notices.
Whenever notice is required to be given under this Agreement, unless
otherwise provided herein, such notice shall be given in accordance with the terms of the Purchase Agreement with respect to the Equity
Entity, and as provided on the signature page hereto with respect to the Pledgor. Any notice or other communication required or permitted
to be given hereunder shall be deemed effective immediately upon delivery by e-mail or the first business day following physical delivery.
SECTION
12.
Security lnterest Absolute.
To the extent permitted by law, all rights of each
of the Pledgees and Pledgor hereunder shall be absolute and unconditional irrespective of: (i) any lack of validity or enforceability
of any ancillary agreement or any other agreement or instrument relating thereto, (ii) any change in the time, manner or place of payment
of, or in any other term in respect of, all or any of the Obligations, or any other amendment or waiver of or consent to any departure
from any guaranty, for all or any of the Obligations, or (iii) any other circumstance which might otherwise constitute a defense available
to, or a discharge of, Pledgor in respect of the Obligations. All authorizations and agencies contained herein with respect to any of
the Pledged Collateral are irrevocable and powers coupled with an interest.
SECTION
13.
Miscellaneous
.
(a)
No amendment of any provision of this Agreement shall be effective unless it is in writing and signed by Pledgor and Collateral Agent,
and no waiver of any provision of this Agreement, and no consent to any departure by Pledgor therefrom, shall be effective unless it
is in writing and signed by Collateral Agent, and then such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
(b)
No failure on the part of Collateral Agent to exercise, and no delay in exercising, any right hereunder or under any ancillary agreement
shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The rights and remedies of the Pledgees provided herein and in the ancillary agreements are
cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the Pledgees under any
ancillary agreement against any party thereto are not conditional or contingent on any attempt by any Pledgees to exercise any of its
rights under any other document against such party or against any other person or entity.
(c)
Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
(d)
This Agreement shall create a continuing security interest in the Pledged Collateral and shall (i) remain in full force and effect until
the satisfaction in full or release of the Obligations and (ii) be binding on Pledgor and its successors and assigns and shall inure,
together with all rights and remedies of Pledgees hereunder, to the benefit of Pledgees and its successors, transferees and assigns;
provided that no such transfer or assignment shall be valid if it is in violation of applicable securities laws. Without limiting the
generality of clause (ii) of the immediately preceding sentence, subject to compliance with the applicable securities laws and applicable
provisions of the ancillary agreements, Pledgees may assign or otherwise transfer all or any portion of the Note, and its rights under
the ancillary agreements, to any other person or entity, and such other person or entity shall thereupon become vested with all of the
benefits in respect thereof granted to Pledgees herein or otherwise unless such benefit is unavailable due to the status of such transferee
or otherwise under applicable law. Upon any such permitted assignment or transfer, all references in this Agreement to Pledgees shall
mean the assignee of any Pledgees. None of the rights or obligations of Pledgor hereunder may be assigned or otherwise transferred without
the prior written consent of Collateral Agent.
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(e)
Upon the satisfaction in full of the Obligations, (i) this Agreement and the security interest created hereby shall terminate and all
rights to the Pledged Collateral, if any shall be remaining, shall revert to the Pledgor, respectively, and (ii) the Collateral Agent
will, upon Pledgor’s request and at Pledgor’s expense, (A) return to Pledgor such of the Pledged Collateral as shall not
have been sold or otherwise disposed of, dealt with or applied pursuant to the terms hereof and of the ancillary agreements and (B) execute
and deliver to Pledgor, without recourse, representation or warranty, such documents as Pledgor shall reasonably request to evidence
such termination.
(f)
All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles of conflicts of law thereof.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of Delaware
for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party
at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either
party shall commence a Proceeding to enforce any provisions of this Agreement, then the prevailing party in such Proceeding shall be
reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such proceeding.
(g)
Representations and Warranties of Equity Entity
. The obligations of the Pledgor under the Note is secured by the Pledged Shares
pursuant to this Agreement. Until the Pledgees provide written notice to the Equity Entity confirming that the Note is repaid and extinguished
in the entirety, the Pledgor shall not be able to transfer or otherwise dispose of any of the Pledged Shares, and the Equity Entity shall
not effectuate any such transfer or disposition.
[SIGNATURE
PAGE FOLLOWS]
Page
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IN
WITNESS WHEREOF, the undersigned have caused this Agreement to be executed and delivered by its officer thereunto duly authorized, as
of the date first above written.
PLEDGOR:
NETCAPITAL INC.
By:
Name:
Todd
Violette
Title:
Chief
Executive Officer
PLEDGEES:
HINTERLAND PARTNERS
LLC
By:
Name:
Patrick
Hassani
Title:
Chief
Investment Officer
Accepted and Agreed
EQUITY ENTITY:
KingsCrowd,
Inc.
By:
Name:
Title:
Physical Address for
Notice:
E-Mail Address for
Notice:
Page
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----- ex4-1.htm -----
EX-4.1
2
ex4-1.htm
EX-4.1
Exhibit
4.1
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (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 MAY BE THE LEGAL COUNSEL OPINION (AS DEFINED IN THE PURCHASE AGREEMENT)),
IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A
OR REGULATION S UNDER SAID ACT OR OTHER APPLICABLE EXEMPTION. 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.
Principal
Amount: Up to $641,936.66
Issue
Date: October 13, 2026
Purchase
Price: Up to $577,743.00
PROMISSORY
NOTE
FOR
VALUE RECEIVED
,
NETCAPITAL INC.
, a Utah corporation (hereinafter called the “Borrower” or the “Company”)
(Trading Symbol: NCPL), hereby promises to pay to the order of
HINTERLAND PARTNERS LLC
, a Delaware limited liability company,
or registered assigns (the “Holder”), in the form of lawful money of the United States of America, the principal sum of up
to $641,936.66 (the “Principal Amount”) (subject to adjustment herein), together with a one-time interest charge on the Principal
Amount hereof with respect to each Tranche (as defined in this Note) at the rate of twelve percent (12%) (the “Interest Rate”)
(up to $77,032.39 (the “Interest Charge”)),when such amounts become due and payable, whether at maturity, upon acceleration,
by prepayment, or otherwise, as further provided herein. The consideration to the Borrower for this Note is up to $577,743.00 (the “Purchase
Price”), and accordingly this Note shall have an original issue discount of up to $64,193.66 (the “OID”). The Holder
shall pay $402,743.00 of the Purchase Price (the “First Tranche Purchase Price”) within a reasonable amount of time of the
full execution of the Transactional Documents (as defined in the Purchase Agreement (as defined in this Note)). Upon the Holder’s
funding of the First Tranche Purchase Price to Borrower pursuant to the Transaction Documents (as defined in the Purchase Agreement),
the outstanding Principal Amount under this Note shall be $447,492.22 (the “First Tranche”), consisting of the First Tranche
plus the prorated portion of the OID, and the outstanding prorated portion of the Interest Charge under this Note shall be $53,699.06
(the “First Tranche Interest”). Each respective Tranche (as defined in the Purchase Agreement) (each a “Tranche”)
funded by the Holder under this Note, as further provided in the Purchase Agreement, shall consist of the portion of the Purchase Price
paid with respect to such Tranche plus the prorated portion of the OID and Interest Charge. The maturity date for each respective Tranche
under this Note shall be twelve (12) months from the date that the portion of the Purchase Price with respect to such Tranche was funded
by the Holder to the Borrower (each a “Funding Date”) in accordance with the written instructions of the Borrower (each a
“Maturity Date”), and is the date upon which the Principal Amount (which includes the OID) and any accrued and unpaid interest
and other fees with respect to such respective Tranche shall be due and payable.
This
Note may not be prepaid or repaid in whole or in part except as otherwise explicitly set forth herein.
Any
Principal Amount or interest on this Note which is not paid when due shall bear interest at the rate of the lesser of (i) eighteen percent
(18%) per annum and (ii) the maximum amount permitted by law from the due date thereof until the same is paid (“Default Interest”).
Interest and Default Interest shall be computed on the basis of a 365-day year and the actual number of days elapsed.
All
payments due hereunder (to the extent not converted into shares of common stock, $0.001 par value per share, of the Borrower (the “Common
Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall
be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of
this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same
shall instead be due on the next succeeding day which is a business day.
1
Each
capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain securities purchase
agreement between Borrower and Holder (the “Purchase Agreement”), dated as of the date of this Note (the “Issue Date”),
pursuant to which this Note was originally issued. As used in this Note, the term “business day” shall mean any day other
than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive
order to remain closed. As used herein, the term “Trading Day” means any day that shares of Common Stock are listed for trading
or quotation on the Principal Market (as defined in the Purchase Agreement) (the “Principal Market”), provided, however,
that if the Common Stock is not then listed or quoted on any Principal Market, then any calendar day.
This
Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.
The
following terms shall also apply to this Note:
ARTICLE
I. CONVERSION RIGHTS
1.1
Conversion Right.
The Holder shall have the right on any calendar day, at any time on or following the Issue Date, to convert
all or any portion of the then outstanding and unpaid Principal Amount and interest (including any Default Interest) of the Note into
fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or
other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified, at the Conversion Price (as
defined below) determined as provided herein (a “Conversion”), by submitting to the Borrower or Borrower’s transfer
agent a Notice of Conversion (as defined in this Note) by facsimile, e-mail or other reasonable means of communication dispatched on
the Conversion Date (as defined in this Note) prior to 11:59 p.m., New York, New York time;
provided, however
, that notwithstanding
anything to the contrary contained herein, the Holder shall not have the right to convert any portion of this Note, pursuant to Section
1 or otherwise, to the extent that after giving effect to such issuance after conversion as set forth on the applicable Notice of Conversion,
the Holder (together with the Holder’s Affiliates (as defined in this Note), and any other Persons (as defined below) acting as
a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares
of Common Stock beneficially owned by the Holder and Attribution Parties shall include the number of shares of Common Stock issuable
upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (i) conversion of the remaining, nonconverted portion of this Note beneficially owned by the Holder
or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other
securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this
Section 1.1, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the “1934 Act”) and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Holder
is solely responsible for any schedules required to be filed in accordance therewith. In addition, a determination as to any group status
as contemplated above shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated
thereunder. For purposes of this Section 1.1, in determining the number of outstanding shares of Common Stock, the Holder may rely on
the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed
with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of
the Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Note, by the Holder or its Affiliates or Attribution Parties since the date
as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be
4.99% of the number of shares of the Common Stock outstanding at the time of the respective calculation hereunder. “Person”
and “Persons” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and any governmental entity or any department or agency thereof. “Affiliate”
and “Affiliates” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled
by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act of 1933,
as amended. The limitations contained in this paragraph shall apply to a successor holder of this Note. The number of Conversion Shares
(as defined in this Note) to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined
below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto
as
Exhibit A
(the “Notice of Conversion”), delivered to the Borrower or Borrower’s transfer agent by the Holder
in accordance with the terms of this Note; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means
resulting in, or reasonably expected to result in, notice) to the Borrower or Borrower’s transfer agent before 11:59 p.m., New
York, New York time on such conversion date (the “Conversion Date”). The term “Conversion Shares” shall mean
all of the Common Stock issuable upon conversion of this Note in the aggregate. The term “Conversion Amount” means, with
respect to any conversion of this Note, the sum of (1) the Principal Amount of this Note to be converted in such conversion
plus
(2) at the Holder’s option, accrued and unpaid interest, if any, on such Principal Amount at the Interest Rate to the Conversion
Date,
plus
(3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding
clauses (1) and/or (2). In addition to the Beneficial Ownership Limitation provided for in this Note, the sum of the number of shares
of Common Stock that may be issued under this Note shall be subject to Section 4(r) of the Purchase Agreement.
2
1.2
Conversion Price.
(a)
Calculation of Conversion Price.
The per share conversion price into which Principal Amount and interest (including any Default
Interest) under this Note shall be convertible into shares of Common Stock hereunder as further described in this Note (the “Conversion
Price”) shall equal the Market Price (as defined in this Note), subject to adjustment as provided in this Note. “Market Price”
shall mean 85% of the lowest traded price of the Common Stock on the Principal Market on any Trading Day during the seven (7) Trading
Days immediately preceding the respective Conversion Date. If at any time the Conversion Price as determined hereunder for any conversion
would be less than the par value of the Common Stock, then at the sole discretion of the Holder, the Conversion Price hereunder may equal
such par value for such conversion and the Conversion Amount for such conversion may be increased to include Additional Principal, where
“Additional Principal” means such additional amount to be added to the Conversion Amount to the extent necessary to cause
the number of conversion shares issuable upon such conversion to equal the same number of conversion shares as would have been issued
had the Conversion Price not been adjusted by the Holder to the par value price. Holder shall be entitled to deduct $1,950.00 from the
conversion amount in each Notice of Conversion to cover Holder’s fees associated with each Notice of Conversion. All such Conversion
Price determinations are to be appropriately adjusted for any stock dividend, stock split, stock combination, rights offerings, reclassification
or similar transaction that proportionately decreases or increases the Common Stock. If the Company, at any time while this Note is outstanding:
(i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock
or any Common Stock Equivalents, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including
by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a
reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding
immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after
such event. Any adjustment made pursuant to the immediately preceding sentence shall become effective immediately after the record date
for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination or re-classification. “Common Stock Equivalents” means any securities
of the Company or the Company’s Subsidiaries (as defined in the Purchase Agreement) (the “Subsidiaries”) which would
entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option,
warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.
(b)
Voluntary Adjustment By Company
. Subject to the rules and regulations of the Principal Market, the Company may at any time while
this Note is outstanding, with the prior written consent of the Holder, reduce the then applicable Conversion Price to any amount and
for any period of time deemed appropriate by the Board of Directors of the Company. For the avoidance of doubt, the Holder shall not
be required to effectuate such conversion in the event of any reduction in Conversion Price by the Company.
1.3
Authorized and Reserved Shares.
The Borrower covenants that at all times until the Note is satisfied in full, the Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the
issuance of a number of Conversion Shares equal to the greater of: (a) 5,000,000 shares of Common Stock or (b) the sum of (i) the number
of Conversion Shares issuable upon the full conversion of this Note (assuming no payment of Principal Amount or interest) at the then
applicable Conversion Price
multiplied by
(ii) four (4) (the “Reserved Amount”). The Borrower represents that upon
issuance, the Conversion Shares will be duly and validly issued, fully paid and non-assessable. The Borrower (i) acknowledges that it
has irrevocably instructed its transfer agent to issue certificates for the Conversion Shares or instructions to have the Conversion
Shares issued as contemplated by Section 1.4(f) hereof, and (ii) agrees that its issuance of this Note shall constitute full authority
to its officers and agents who are charged with the duty of executing stock certificates or cause the Company to electronically issue
shares of Common Stock to execute and issue the necessary certificates for the Conversion Shares or cause the Conversion Shares to be
issued as contemplated by Section 1.4(f) hereof in accordance with the terms and conditions of this Note.
3
If,
at any time after the Issue Date, the Borrower does not maintain the Reserved Amount, it will be considered an Event of Default (as defined
in this Note) under this Note.
1.4
Method of Conversion.
(a)
[Intentionally Omitted]
.
(b)
Surrender of Note Upon Conversion.
Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in
accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire
unpaid Principal Amount is so converted. The Holder and the Borrower shall maintain records showing the Principal Amount so converted
and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to
require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Holder
shall,
prima facie,
be controlling and determinative in the absence of manifest error.
(c)
Payment of Taxes
. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in
the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that
of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities or
property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are to be held
for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have
established to the satisfaction of the Borrower that such tax has been paid.
(d)
Delivery of Common Stock Upon Conversion
. Upon receipt by the Borrower or Borrower’s transfer agent from the Holder of a
facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for
conversion as provided in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order
of the Holder certificates for the Conversion Shares (or cause the electronic delivery of the Conversion Shares as contemplated by Section
1.4(f) hereof) within one (1) Trading Day after such receipt (the “Deadline”) (and, solely in the case of conversion of the
entire unpaid Principal Amount and interest (including any Default Interest) under this Note, surrender of this Note). If the Company
shall fail for any reason or for no reason to issue to the Holder on or prior to the Deadline a certificate for the number of Conversion
Shares or to which the Holder is entitled hereunder and register such Conversion Shares on the Company’s share register or to credit
the Holder’s balance account with DTC (as defined below) for such number of Conversion Shares to which the Holder is entitled upon
the Holder’s conversion of this Note (a “Conversion Failure”), then, in addition to all other remedies available to
the Holder, (i) the Company shall pay in cash to the Holder on each day after the Deadline and during such Conversion Failure an amount
equal to 2.0% of the product of (A) the sum of the number of Conversion Shares not issued to the Holder on or prior to the Deadline and
to which the Holder is entitled and (B) the closing sale price of the Common Stock on the Trading Day immediately preceding the last
possible date which the Company could have issued such Conversion Shares to the Holder without violating this Section 1.4(d); and (ii)
the Holder, upon written notice to the Company, may void all or any portion of such Notice of Conversion; provided that the voiding of
all or any portion of a Notice of Conversion shall not affect the Company’s obligations to make any payments which have accrued
prior to the date of such notice. In addition to the foregoing, if on or prior to the Deadline the Company shall fail to issue and deliver
a certificate to the Holder and register such Conversion Shares on the Company’s share register or credit the Holder’s balance
account with DTC for the number of Conversion Shares to which the Holder is entitled upon the Holder’s exercise hereunder or pursuant
to the Company’s obligation pursuant to clause (ii) below, and if on or after such Trading Day the Holder purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock
issuable upon such exercise that the Holder anticipated receiving from the Company, then the Company shall, within two (2) Trading Days
after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s
total purchase price (including brokerage commissions and other reasonable and customary out-of-pocket expenses, if any) for the shares
of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate
(and to issue such Conversion Shares) or credit such Holder’s balance account with DTC for such Conversion Shares shall terminate,
or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Conversion Shares or credit
such Holder’s balance account with DTC and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price
over the product of (A) such number of shares of Common Stock, times (B) the closing sales price of the Common Stock on the date of exercise.
Nothing shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including,
without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver
certificates representing the Conversion Shares (or to electronically deliver such Conversion Shares) upon the conversion of this Note
as required pursuant to the terms hereof.
4
(e)
Obligation of Borrower to Deliver Common Stock.
At the time that the Holder submits the Notice of Conversion to the Borrower or
Borrower’s transfer agent, the Holder shall be deemed to be the holder of record of the Conversion Shares issuable upon such conversion,
the outstanding Principal Amount and the amount of accrued and unpaid interest (including any Default Interest) under this Note shall
be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights with respect
to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities,
cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein,
the Borrower’s obligation to issue and deliver the certificates for the Conversion Shares (or cause the electronic delivery of
the Conversion Shares as contemplated by Section 1.4(f) hereof) shall be absolute and unconditional, irrespective of the absence of any
action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against
any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the
holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of
any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower
to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date
so long as the Notice of Conversion is sent to the Borrower or Borrower’s transfer agent before 11:59 p.m., New York, New York
time, on such date.
(f)
Delivery of Conversion Shares by Electronic Transfer
. In lieu of delivering physical certificates representing the Conversion
Shares issuable upon conversion hereof, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast
Automated Securities Transfer or Deposit/Withdrawal at Custodian programs, upon request of the Holder and its compliance with the provisions
contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically
transmit the Conversion Shares issuable upon conversion hereof to the Holder by crediting the account of Holder’s Prime Broker
with DTC through its Deposit Withdrawal Agent Commission system.
1.5
Concerning the Shares
. The Conversion Shares issuable upon conversion of this Note may not be sold or transferred unless (i) such
shares are sold pursuant to an effective registration statement under the 1933 Act or (ii) the Borrower or its transfer agent shall have
been furnished with an opinion of counsel of Borrower or Holder to the effect that the shares to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144, Rule 144A,
Regulation S, or other applicable exemption, or (iv) such shares are transferred to an “affiliate” (as defined in Rule 144)
of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited
Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions
set forth below), until such time as the Conversion Shares have been registered under the 1933 Act or otherwise may be sold pursuant
to Rule 144, Rule 144A, Regulation S, or other applicable exemption without any restriction as to the number of securities as of a particular
date that can then be immediately sold, each certificate for the Conversion Shares that has not been so included in an effective registration
statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend,
shall bear a legend substantially in the following form, as appropriate:
“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (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 MAY BE THE LEGAL COUNSEL OPINION (AS DEFINED IN THE PURCHASE AGREEMENT)),
IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A,
REGULATION S UNDER SAID ACT, OR OTHER APPLICABLE EXEMPTION. 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.”
5
The
legend set forth above shall be removed and the Company shall issue to the Holder a certificate for the applicable Conversion Shares
without such legend upon which it is stamped or (as requested by the Holder) issue the applicable Conversion Shares by electronic delivery
by crediting the account of such holder’s broker with DTC, if, unless otherwise required by applicable state securities laws: (a)
such Conversion Shares are registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be
sold pursuant to Rule 144, Rule 144A, Regulation S, or other applicable exemption without any restriction as to the number of securities
as of a particular date that can then be immediately sold, or (b) the Company or the Holder provides the Legal Counsel Opinion (as contemplated
by and in accordance with Section 4(k) of the Purchase Agreement) to the effect that a public sale or transfer of such Conversion Shares
may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected.
The Company shall be responsible for the fees of its transfer agent and all DTC fees associated with any such issuance. The Holder agrees
to sell all Conversion Shares, including those represented by a certificate(s) from which the legend has been removed, in compliance
with applicable prospectus delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided
by the Holder with respect to the transfer of Conversion Shares pursuant to an exemption from registration, such as Rule 144, Rule 144A,
Regulation S, or other applicable exemption, at the Deadline, notwithstanding that the conditions of Rule 144, Rule 144A, Regulation
S, or other applicable exemption, as applicable, have been met, it will be considered an Event of Default under this Note.
1.6
Effect of Certain Events.
(a)
Effect of Merger, Consolidation, Etc
. The Borrower shall not effectuate any Fundamental Transaction (as defined in this Note)
or enter into any transaction documents for the effectuation of any Fundamental Transaction unless Borrower first obtains written consent
from the Holder. “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust
or other entity or organization. “Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including
through subsidiaries or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all
of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation
S-X) to one or more Persons, or (iii) make, or allow one or more Persons to make, or allow the Company to be subject to or have its Common
Stock be subject to or party to one or more Persons making a purchase, tender, or exchange offer that is accepted by the holders of at
least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all Persons making or party to, or affiliated with any such Persons making or party to, such purchase,
tender, or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Persons making or party to,
or affiliated with any Persons making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners
(as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or
share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with one or more Persons whereby all such Persons, individually or in the aggregate, acquire, either (x) at least
50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares
of Common Stock held by all the Persons making or party to, or affiliated with any entity making or party to, such stock purchase agreement
or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Persons become collectively
the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v)
reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, allow any Person or Persons in the aggregate to be or become the “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment,
conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination,
reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise
in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common
Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such
Persons as of the Issue Date calculated as if any shares of Common Stock held by all such Persons were not outstanding, or (z) a percentage
of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the
Company sufficient to allow such Persons to effect a statutory short form merger or other transaction requiring other shareholders of
the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly,
including through subsidiaries, affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any
other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case
this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition
to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the
intended treatment of such instrument or transaction.
6
(b)
Adjustment Due to Merger, Consolidation, Etc
. In addition to all other rights under this Note, if, at any time when this Note
is issued and outstanding, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar
event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares of
another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially
all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this
Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which
the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction
(without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect
to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions
for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable,
as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower
shall not effectuate any transaction described in this Section 1.6(b) unless Borrower first obtains written consent from the Holder and
the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Note. The above
provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.
(c)
Adjustment Due to Distribution.
If the Borrower shall declare or make any distribution of its assets (or rights to acquire its
assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend
or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary
(i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this Note
after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would
have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder
of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.
(d)
Purchase Rights.
If, at any time when all or any portion of this Note is issued and outstanding, the Borrower issues any convertible
securities or rights to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record
holders of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock
acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately before
the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken, the date
as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
7
(e)
Dilutive Issuance
. If the Borrower, at any time while this Note or any amounts due hereunder are outstanding, issues, sells or
grants (or has issued, sold or granted as of the Issue Date, as the case may be) any option to purchase, or sells or grants any right
to reprice, or otherwise disposes of, or issues (or has sold or issued, as the case may be, or announces any sale, grant or any option
to purchase or other disposition), any Common Stock or other securities convertible into, exercisable for, or otherwise entitle any person
or entity the right to acquire, shares of Common Stock (including, without limitation, upon conversion of this Note, and any convertible
notes or warrants outstanding as of or following the Issue Date), in each or any case at an effective price per share that is lower than
the then Conversion Price (such lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive
Issuance”) (it being agreed that if the holder of the Common Stock or other securities so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants,
options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective
price per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion
Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced, at the option of the Holder, to a price equal
to the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or other securities are issued. By way of example,
and for the avoidance of doubt, if the Company issues a convertible promissory note (including but not limited to a Variable Rate Transaction
(as defined in the Purchase Agreement) (a “Variable Rate Transaction”)), and the holder of such convertible promissory note
has the right to convert it into Common Stock at an effective price per share that is lower than the then Conversion Price (including
but not limited to a conversion price with a discount that varies with the trading prices of or quotations for the Common Stock), then
the Holder has the right to reduce the Conversion Price to such Base Conversion Price (including but not limited to a conversion price
with a discount that varies with the trading prices of or quotations for the Common Stock) in perpetuity regardless of whether the holder
of such convertible promissory note ever effectuated a conversion at the Base Conversion Price. The Buyer shall be entitled to obtain
injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
In the event of an issuance of securities involving multiple tranches or closings, any adjustment pursuant to this Section 1.6(e) shall
be calculated as if all such securities were issued at the initial closing. Notwithstanding anything herein to the contrary, this Section
1.6(e) shall not apply to the issuance of any Common Stock upon the conversion or exercise of any Common Stock Equivalents issued by
the Company prior to the Issue Date.
(f)
Notice of Adjustments.
Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events
described in Section 1.6 of this Note, the Borrower shall, at its expense and within one (1) calendar day after the occurrence of each
respective adjustment or readjustment of the Conversion Price, compute such adjustment or readjustment and prepare and furnish to the
Holder a certificate setting forth (i) the Conversion Price in effect at such time based upon the Dilutive Issuance, (ii) the number
of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion
of the Note, (iii) the detailed facts upon which such adjustment or readjustment is based, and (iv) copies of the documentation (including
but not limited to relevant transaction documents) that evidences the adjustment or readjustment. In addition, the Borrower shall, within
one (1) calendar day after each written request from the Holder, furnish to such Holder a like certificate setting forth (i) the Conversion
Price in effect at such time based upon the Dilutive Issuance, (ii) the number of shares of Common Stock and the amount, if any, of other
securities or property which at the time would be received upon conversion of the Note, (iii) the detailed facts upon which such adjustment
or readjustment is based, and (iv) copies of the documentation (including but not limited to relevant transaction documents) that evidences
the adjustment or readjustment. For the avoidance of doubt, each adjustment or readjustment of the Conversion Price as a result of the
events described in Section 1.6 of this Note shall occur without any action by the Holder and regardless of whether the Borrower complied
with the notification provisions in Section 1.6 of this Note.
1.7
Status as Shareholder.
Upon submission of a Notice of Conversion by the Holder, (i) the Conversion Shares covered thereby shall
be deemed converted into shares of Common Stock and (ii) the Holder’s rights as the Holder of such converted portion of this Note
shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided
herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the terms of this
Note. Notwithstanding the foregoing, if the Holder has not received certificates for all shares of Common Stock prior to the tenth (10th)
business day after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless
the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the
rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable,
return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion
of this Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies for the Borrower’s failure
to convert this Note.
8
1.8
Prepayment.
At any time on or prior to the date that is one hundred eighty (180) calendar days after the Funding Date of each
respective Tranche under this Note, the Borrower shall have a one-time right with respect to such Tranche, the Borrower shall have a
one-time right with respect to each Tranche, exercisable on five (5) Trading Days prior written notice to the Holder of the Note, to
prepay the Prepayable Portion (as defined in this Note) of such Tranche in accordance with this Section 1.8 of this Note. The “Prepayable
Portion” of each Tranche shall mean 99% of the outstanding Principal Amount then due under such respective Tranche and 100% of
the accrued and unpaid interest then due under such respective Tranche under this Note. Any notice of prepayment hereunder (each an “Optional
Prepayment Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower
is exercising its right to prepay the Prepayable Portion of the respective Tranche of this Note, and (2) the date of the respective prepayment,
which shall be five (5) Trading Days from the date of the respective Optional Prepayment Notice (each an “Optional Prepayment Date”).
In addition to all other rights under this Note, the Holder shall have the right, during the period beginning on the date of Holder’s
receipt of the respective Optional Prepayment Notice and until the Holder’s actual receipt of the full prepayment amount for such
Tranche as provided in this Section 1.8 on the respective Optional Prepayment Date, to instead convert all or any portion of the Prepayable
Portion of such Tranche pursuant to the terms of this Note. On the respective Optional Prepayment Date, the Borrower shall pay to the
Holder an amount in cash equal to the prepayment percentage set forth in the table immediately following this paragraph for the applicable
prepayment period set forth in the table immediately following this paragraph (“Prepayment Percentage”) multiplied by the
Prepayable Portion then outstanding of the respective Tranche
plus
(y) $750.00 to reimburse Holder for administrative fees.
Prepayment
Period
Prepayment
Percentage
1.
For each Tranche, the period beginning on the Funding Date of the respective Tranche and ending one hundred eighty (180) calendar
days thereafter.
100%
If
the Borrower delivers an Optional Prepayment Notice with respect to any Tranche and fails to pay the applicable Prepayable Portion of
such Tranche due to the Holder of the Note as provided in this Section 1.8, then the Borrower shall forever forfeit its right to prepay
any part of this Note pursuant to this Section 1.8.
1.9
Repayment from Proceeds
. If, at any time prior to the full repayment or full conversion of all amounts owed under this Note, the
Company or any of the Company’s Subsidiaries receives cash proceeds from any source or series of related or unrelated sources on
or after the Issue Date, including but not limited to, from payments from customers, the issuance of equity or debt, the incurrence of
Indebtedness (as defined in this Note), a merchant cash advance, sale of receivables or similar transaction, the conversion of outstanding
warrants of the Company or any of the Company’s Subsidiaries, the issuance of securities pursuant to an Equity Line of Credit (as
defined in this Note) of the Company or the sale of assets (including but not limited to real property) by the Company or any of the
Company’s Subsidiaries, the Company shall, within one (1) business day of Company’s or the Subsidiaries’ receipt of
such proceeds, inform the Holder of or publicly disclose such receipt, following which the Holder shall have the right in its sole discretion
to require the Company or the Subsidiaries to immediately apply up to 30% of such proceeds to repay all or any portion of the outstanding
Principal Amount and interest (including any Default Interest) then due under this Note. Failure of the Company to comply with this provision
shall constitute an Event of Default. “Equity Line of Credit” shall mean any transaction involving a written agreement between
the Company and an investor or underwriter whereby the Company has the right to “put” its Common Stock to the investor or
underwriter over an agreed period of time and at an agreed price or price formula (such Common Stock must be registered pursuant to a
registration statement of the Company for the investor’s or underwriter’s resale).
ARTICLE
II. RANKING AND CERTAIN COVENANTS
2.1
Ranking
. This Note shall be unsecured Indebtedness of the Borrower. “Indebtedness” shall mean all indebtedness, including
but not limited to (a) all indebtedness of the Borrower or Subsidiaries for the deferred purchase price of property or services, including
any type of letters of credit, (b) all liabilities, obligations and indebtedness for borrowed money including, but not limited to, all
obligations of the Borrower or Subsidiaries evidenced by notes, bonds, debentures or other similar instruments, (c) purchase money indebtedness
hereafter incurred by the Borrower or Subsidiaries to finance the purchase of fixed or capital assets, including all capital lease obligations
of the Borrower which do not exceed the purchase price of the assets funded, (d) all guaranties, endorsements and other contingent obligations
in respect of indebtedness of Borrower, Subsidiaries or others, whether or not the same are or should be reflected in the Borrower’s
or Subsidiaries’ consolidated balance sheet (or the notes thereto), (e) all guarantee obligations of the Borrower or Subsidiaries
in respect of obligations of the kind referred to in clauses (a) through (d) above that the Borrower or Subsidiaries would not be permitted
to incur or enter into, and (f) all obligations of the kind referred to in clauses (a) through (e) above that the Borrower or Subsidiaries
is not permitted to incur or enter into that are secured and/or unsecured by (or for which the holder of such obligation has an existing
right, contingent or otherwise, to be secured and/or unsecured by) any lien or encumbrance on property (including accounts and contract
rights) owned by the Borrower or Subsidiaries, whether or not the Borrower or Subsidiaries has assumed or become liable for the payment
of such obligation.
9
2.2
Distributions on Capital Stock.
So long as the Borrower shall have any obligation under this Note, the Borrower shall not without
the Holder’s written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash,
property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional
shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its
capital stock except for distributions pursuant to any shareholders’ rights plan which is approved by a majority of the Borrower’s
disinterested directors.
2.3
Restriction on Stock Repurchases and Debt Repayments.
So long as the Borrower shall have any obligation under this Note, the Borrower
shall not without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property
or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower
or any warrants, rights or options to purchase or acquire any such shares, or repay any pari passu or subordinated Indebtedness of Borrower.
2.4
Sale of Assets.
So long as the Borrower shall have any obligation under this Note, neither the Borrower nor any of the Borrower’s
Subsidiaries shall, without the Holder’s written consent, sell, lease or otherwise dispose of any significant portion of its assets
outside the ordinary course of business. Any consent by the Holder to the disposition of any assets may be conditioned on a specified
use of the proceeds of disposition.
2.5
Advances and Loans; Affiliate Transactions.
So long as the Borrower shall have any obligation under this Note, the Borrower shall
not, without the Holder’s written consent, lend money, give credit, make advances to or enter into any similar transaction with
any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates
of the Borrower, except loans, credits or advances (a) in existence or committed on the Issue Date and which the Borrower has informed
Holder in writing prior to the Issue Date, (b) in regard to transactions with unaffiliated third parties, made in the ordinary course
of business or (c) in regard to transactions with unaffiliated third parties, not in excess of $100,000. So long as the Borrower shall
have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, repay any affiliate (as defined
in Rule 144) of the Borrower in connection with any indebtedness or accrued amounts owed to any such party.
2.6
Section 3(a)(9) or 3(a)(10) Transaction
. So long as this Note is outstanding, the Borrower shall not enter into any transaction
or arrangement structured in accordance with, based upon, or related or pursuant to, in whole or in part, either Section 3(a)(9) of the
Securities Act (a “3(a)(9) Transaction”) or Section 3(a)(10) of the Securities Act (a “3(a)(10) Transaction”).
In the event that the Borrower does enter into, or makes any issuance of Common Stock related to a 3(a)(9) Transaction or a 3(a)(10)
Transaction while this note is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this Note, but
not less than $25,000, will be assessed and will become immediately due and payable to the Holder at its election in the form of a cash
payment or added to the balance of this Note (under Holder’s and Borrower’s expectation that this amount will tack back to
the Issue Date), in addition to all other available remedies at law or in equity.
2.7
Preservation of Business and Existence, etc
. Beginning on the Issue Date and continuing for so long as the Borrower shall have
any obligation under this Note, in addition to all other obligations under this Note, the Borrower shall not, without the Holder’s
written consent, (a) change the nature of its business; (b) sell, divest, change the structure of any material assets other than in the
ordinary course of business; (c) enter into a Variable Rate Transaction; or (d) enter into any Prohibited Transaction (as defined in
this Note). “Prohibited Transaction” shall mean any merchant cash advance transaction, sale of receivables transaction, or
any other similar transaction. In addition, so long as the Borrower shall have any obligation under this Note, the Borrower shall maintain
and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain,
and cause each of its Subsidiaries (other than dormant Subsidiaries that have no or minimum assets) to become or remain, duly qualified
and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary.
10
2.8
Noncircumvention
. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate or Articles
of Incorporation or Bylaws, 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 Note, and will at all times in good faith carry out all the provisions of this Note and take all action as may be required to
protect the rights of the Holder.
2.9
Lost, Stolen or Mutilated Note
. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder
to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute
and deliver to the Holder a new Note.
ARTICLE
III. EVENTS OF DEFAULT
It
shall be considered an event of default if any of the following events listed in this Article III (each, an “Event of Default”)
shall occur on or after the Issue Date:
3.1
Failure to Pay Principal or Interest.
The Borrower fails to pay the Principal Amount hereof or interest thereon when due on this
Note, whether at maturity, upon acceleration or otherwise.
3.2
Conversion and the Shares.
The Borrower (i) fails to issue Conversion Shares to the Holder (or announces or threatens in writing
that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with
the terms of this Note, (ii) fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form)
any certificate for the Conversion Shares issuable to the Holder upon conversion of or otherwise pursuant to this Note as and when required
by this Note, (iii) fails to reserve the Reserved Amount at all times, (iv) the Borrower directs its transfer agent not to transfer or
delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate
for the Conversion Shares issuable to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note,
or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing)
any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares
issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement,
statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue
uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for two (2)
Trading Days after the Holder shall have delivered a Notice of Conversion, and/or (v) fails to remain current in its obligations to its
transfer agent (including but not limited to payment obligations to its transfer agent). It shall be an Event of Default of this Note,
if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the
option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order to process a conversion, such advanced
funds shall be added to the principal balance of the Note.
3.3
Breach of Agreements and Covenants.
The Borrower breaches any covenant, agreement, or other term or condition contained in the
Purchase Agreement, this Note, Irrevocable Transfer Agent Instructions (as defined in the Purchase Agreement) (the “Irrevocable
Transfer Agent Instructions “), the Warrants (as defined in the Purchase Agreement) (the “Warrants”), Pledge Agreement,
or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith or therewith.
3.4
Breach of Representations and Warranties.
Any representation or warranty of the Borrower made in the Purchase Agreement, this
Note, Irrevocable Transfer Agent Instructions, Warrants, or in any agreement, statement or certificate given in writing pursuant hereto
or in connection herewith or therewith shall be false or misleading in any material respect when made.
3.5
Receiver or Trustee.
The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or
apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such
a receiver or trustee shall otherwise be appointed.
3.6
Judgments.
Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the
Borrower or any of its property or other assets for more than $100,000, and shall remain unvacated, unbonded or unstayed for a period
of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.
11
3.7
Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary,
for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary
of the Borrower.
3.8
Failure to Comply with the 1934 Act.
If, at any time after February 9, 2027, the Borrower shall fail to comply with the reporting
requirements of the 1934 Act and/or the Borrower shall cease to be subject to the reporting requirements of the 1934 Act.
3.9
Liquidation.
Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10
Cessation of Operations.
Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its
debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going
concern” shall not be an admission that the Borrower cannot pay its debts as they become due.
3.11
Maintenance of Assets.
The failure by Borrower to maintain any material intellectual property rights, personal, real property
or other assets which are necessary to conduct its business (whether now or in the future).
3.12
Financial Statement Restatement.
The restatement of any financial statements filed by the Borrower with the SEC for any date or
period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding.
3.13
Replacement of Transfer Agent.
In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide,
prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered
to Holder on or around the Issue Date (including but not limited to the provision to irrevocably reserve shares of Common Stock in the
Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.
3.14
Cross-Default
. The declaration of an event of default by any lender or other extender of credit to the Company under any notes,
loans, agreements or other instruments of the Company evidencing any Indebtedness of the Company (including those filed as exhibits to
or described in the Company’s filings with the SEC), after the passage of all applicable notice and cure or grace periods.
3.15
Variable Rate and Prohibited Transactions
. The Borrower consummates a Variable Rate Transaction or Prohibited Transaction at any
time on or after the Issue Date.
3.16
Inside Information
. Any attempt by the Borrower or its officers, directors, and/or affiliates to transmit, convey, disclose, or
any actual transmittal, conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of, material non-public
information concerning the Borrower, to the Holder or its successors and assigns, which is not immediately cured by Borrower’s
filing of a Form 8-K pursuant to Regulation FD on that same date.
3.17
Unavailability of Rule 144
. If, at any time on or after the date that is six (6) calendar months after the Issue Date, the Holder
is unable to (i) obtain a standard “144 legal opinion letter” from an attorney reasonably acceptable to the Holder, the Holder’s
brokerage firm (and respective clearing firm), and the Borrower’s transfer agent in order to facilitate the Holder’s conversion
of any portion of the Note into free trading shares of the Borrower’s Common Stock pursuant to Rule 144, and/or (ii) thereupon
deposit such shares into the Holder’s brokerage account.
3.18
Delisting, Suspension, or Quotation of Trading of Common Stock
. If, at any time on or after the Issue Date, the Borrower’s
Common Stock (i) is suspended from trading, (ii) halted from trading, and/or (iii) fails to be quoted or listed on a Principal Market.
3.19
Market Capitalization
. The Borrower fails to maintain a market capitalization of at least $3,000,000 on any Trading Day, which
shall be calculated by multiplying (i) the closing price of the Borrower’s Common Stock on the Trading Day immediately preceding
the respective date of calculation by (ii) the total shares of the Borrower’s Common Stock issued and outstanding on the Trading
Day immediately preceding the respective date of calculation.
12
3.20
Rights and Remedies Upon an Event of Default
. Upon the occurrence of any Event of Default specified in this Article III, this
Note shall become immediately due and payable, and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder,
an amount equal to the Principal Amount then outstanding plus accrued interest (including any Default Interest) through the date of full
repayment multiplied by 150% (collectively the “Default Amount”), as well as all costs, including, without limitation, legal
fees and expenses, of collection, all without demand, presentment or notice, all of which hereby are expressly waived by the Borrower.
Holder may, in Holder’s sole discretion, convert all or any portion of this Note (including the Default Amount) into Common Stock
pursuant to the terms of this Note (for the avoidance of doubt, this shall apply even if such conversion occurs after the Maturity Date).
The Holder shall be entitled to exercise all other rights and remedies available at law or in equity.
ARTICLE
IV. MISCELLANEOUS
4.1
Failure or Indulgence Not Waiver.
No failure or delay on the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privileges. All rights and remedies of the Holder existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise available.
4.2
Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be
in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified,
return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective
(a) upon hand delivery or delivery by e-mail or facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received),
or the first business day following such delivery (if delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications
shall be:
If
to the Borrower, to:
NETCAPITAL
INC.
State
Street Financial Center, 1 Lincoln Street
Boston,
MA 02111
Attention:
Todd Violette
e-mail:
todd.violette@netcapital.com
If
to the Holder:
HINTERLAND
PARTNERS LLC
800
N King St., Suite 304-2803
Wilmington,
DE 19801
e-mail:
deals@hinterlandllc.com
4.3
Amendments.
This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the
Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or supplemented.
13
4.4
Assignability.
This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit
of the Holder and its successors and assigns. The Borrower shall not assign this Note or any rights or obligations hereunder without
the prior written consent of the Holder. The Holder may assign its rights hereunder to any “accredited investor” (as defined
in Rule 501(a) of the 1933 Act) in a private transaction from the Holder or to any of its “affiliates”, as that term is defined
under the 1934 Act, without the consent of the Borrower. Notwithstanding anything in this Note to the contrary, this Note may be pledged
as collateral in connection with a bona fide margin account or other lending arrangement. The Holder and any assignee, by acceptance
of this Note, acknowledge and agree that following conversion of a portion of this Note, the unpaid and unconverted principal amount
of this Note represented by this Note may be less than the amount stated on the face hereof.
4.5
Cost of Collection.
If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection,
including reasonable attorneys’ fees.
4.6
Arbitration of Claims; Governing Law; Venue; Attorney’s Fees.
The Company and Holder shall submit all Claims (as defined
in Exhibit C of the Purchase Agreement) (the “Claims”) arising under this Note or any other agreement between the parties
and their affiliates or any Claim relating to the relationship of the parties to binding arbitration pursuant to the arbitration provisions
set forth in Exhibit C of the Purchase Agreement (the “Arbitration Provisions”). The Company and Holder hereby acknowledge
and agree that the Arbitration Provisions are unconditionally binding on the Company and Holder hereto and are severable from all other
provisions of this Note. By executing this Note, Company represents, warrants and covenants that Company has reviewed the Arbitration
Provisions carefully, consulted with legal counsel about such provisions (or waived its right to do so), understands that the Arbitration
Provisions are intended to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations
set forth in the Arbitration Provisions, and that Company will not take a position contrary to the foregoing representations. The Company
acknowledges and agrees that Holder may rely upon the foregoing representations and covenants of the Company regarding the Arbitration
Provisions. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation
and performance of this Note shall be governed by, the internal laws of the State of Delaware, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of Delaware. The Company and Holder consent to and expressly agree that the exclusive
venue for arbitration of any Claims arising under this Note or any other agreement between the Company and Holder or their respective
affiliates (including but not limited to the Transaction Documents) or any Claim relating to the relationship of the Company and Holder
or their respective affiliates shall be in the State of Delaware. Without modifying the Company’s and Holder’s obligations
to resolve disputes hereunder pursuant to the Arbitration Provisions, for any litigation arising in connection with any of the Transaction
Documents (and notwithstanding the terms (specifically including any governing law and venue terms) of any transfer agent services agreement
or other agreement between the Company’s transfer agent and the Company, such litigation specifically includes, without limitation
any action between or involving Company and the Company’s transfer agent or otherwise related to Holder in any way (specifically
including, without limitation, any action where Company seeks to obtain an injunction, temporary restraining order, or otherwise prohibit
the Company’s transfer agent from issuing shares of Common Stock to Holder for any reason)), each party hereto hereby (i) consents
to and expressly submits to the exclusive personal jurisdiction of any state or federal court sitting in the State of Delaware, (ii)
expressly submits to the exclusive venue of any such court for the purposes hereof, (iii) agrees to not bring any such action (specifically
including, without limitation, any action where Company seeks to obtain an injunction, temporary restraining order, or otherwise prohibit
the Company’s transfer agent from issuing shares of Common Stock to Holder for any reason) outside of any state or federal court
sitting in the State of Delaware, and (iv) waives any claim of improper venue and any claim or objection that such courts are an inconvenient
forum or any other claim, defense or objection to the bringing of any such proceeding in such jurisdiction or to any claim that such
venue of the suit, action or proceeding is improper. Notwithstanding anything in the foregoing to the contrary, nothing herein (i) shall
limit, or shall be deemed or construed to limit, the ability of the Holder to realize on any collateral or any other security, or to
enforce a judgment or other court ruling in favor of the Holder, including through a legal action in any court of competent jurisdiction,
or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 4.13 of this Note. The Company hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any objection to jurisdiction and venue of any action instituted
hereunder, any claim that it is not personally subject to the jurisdiction of any such court, and any claim that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper (including but not limited
to based upon
forum non conveniens
).
THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST,
A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTIONS CONTEMPLATED
HEREBY
. The Company irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding
in connection with this Note or any other agreement, certificate, instrument or document contemplated hereby or thereby by mailing a
copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to Company at the address in effect for
notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. The prevailing
party in any action or dispute brought in connection with this Note or any other agreement, certificate, instrument or document contemplated
hereby or thereby shall be entitled to recover from the other party its reasonable attorney’s fees and costs. If any provision
of this Note shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Note in that jurisdiction or the validity or enforceability of any provision of this Note
in any other jurisdiction.
14
4.7
Certain Amounts.
Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding Principal
Amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest,
the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult
to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate
the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired
upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder
hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt
of a cash payment without the opportunity to convert this Note into shares of Common Stock.
4.8
Remedies.
The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder,
by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at
law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the
Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in
equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach
of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without
any bond or other security being required.
4.9
Construction; Headings
. This Note shall be deemed to be jointly drafted by the Company and all the Holder and shall not be construed
against any person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect
the interpretation of, this Note.
4.10
Usury
. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever
claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at
any time hereafter in force, in connection with any action or proceeding that may be brought by the Holder in order to enforce any right
or remedy under this Note. Notwithstanding any provision to the contrary contained in this Note, it is expressly agreed and provided
that the total liability of the Company under this Note for payments which under the applicable law are 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 which under the applicable
law in the nature of interest that the Company may be obligated to pay under this Note exceed such Maximum Rate. It is agreed that if
the maximum contract rate of interest allowed by applicable law and applicable to this Note is increased or decreased by statute or any
official governmental action subsequent to the Issue Date, the new maximum contract rate of interest allowed by law will be the Maximum
Rate applicable to this Note from the effective date thereof forward, unless such application is precluded by applicable law. If under
any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to the Holder with respect to indebtedness
evidenced by this the Note, such excess shall be applied by the Holder to the unpaid principal balance of any such indebtedness or be
refunded to the Company, the manner of handling such excess to be at the Holder’s election.
4.11
Severability.
In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of
law (including any judicial ruling), then such provision shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision of this Note.
15
4.12
Terms of Future Financings.
So long as this Note is outstanding, upon any issuance by the Borrower or any of its Subsidiaries
of any security, or amendment to a security that was originally issued before the Issue Date, with any term that the Holder reasonably
believes is more favorable to the holder of such security or with a term in favor of the holder of such security that the Holder reasonably
believes was not similarly provided to the Holder in this Note (even if the holder of such other security does not receive the benefit
of such more favorable term until a default occurs under such other security), then (i) the Borrower shall notify the Holder of such
additional or more favorable term within one (1) business day of the issuance and/or amendment (as applicable) of the respective security,
and (ii) such term, at Holder’s option, shall become a part of the transaction documents with the Holder (regardless of whether
the Borrower complied with the notification provision of this Section 4.12). The types of terms contained in another security that may
be more favorable to the holder of such security include, but are not limited to, terms addressing prepayment rate, interest rates, conversion
price, and original issue discounts.
4.13
Dispute Resolution
.
(a)
In the case of a dispute relating to the Conversion Price, Conversion Amount, any prepayment amount or Default Amount, Issue Date, Closing
Date, Maturity Date, or fair market value (as the case may be) (including, without limitation, a dispute relating to the determination
of any of the foregoing) (the “Note Calculations”), the Company or the Holder (as the case may be) shall submit the dispute
to the other party via electronic mail (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 agree upon such determination or calculation within two (2) Trading Days following such initial
notice by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the
Holder may, at its sole option, submit the dispute to an independent, reputable investment bank or independent, outside accountant selected
by the Holder (the “Independent Third Party”), and the Company shall pay all expenses of such Independent Third Party.
(b)
The Holder and the Company shall each deliver to such Independent Third Party (A) a copy of the initial dispute submission so delivered
in accordance with the first sentence of this Section 4.13(a) and (B) written documentation supporting its position with respect to such
dispute, in each case, no later than 5:00 p.m. (New York time) by second (2nd) Business Day immediately following the date on which the
Holder selected such Independent Third Party (the “Dispute Submission Deadline”) (the documents referred to in the immediately
preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood
and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission
Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby
waives its right to) deliver or submit any written documentation or other support to such Independent Third Party with respect to such
dispute and such Independent Third Party shall resolve such dispute based solely on the Required Dispute Documentation that was delivered
to such Independent Third Party prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company
and the Holder or otherwise requested by such Independent Third Party, neither the Company nor the Holder shall be entitled to deliver
or submit any written documentation or other support to such Independent Third Party in connection with such dispute, other than the
Required Dispute Documentation.
(c)
The Company and the Holder shall cause such Independent Third Party to determine the resolution of such dispute and notify the Company
and the Holder of such resolution no later than five (5) Business Days immediately following the Dispute Submission Deadline. The fees
and expenses of such Independent Third Party shall be borne solely by the Company, and such Independent Third Party’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 4.13 constitutes an agreement to arbitrate between the Company and
the Holder (and constitutes an arbitration agreement) under the rules then in effect under the Delaware Rules of Civil Procedure (“DRCP”)
and that the Holder is authorized to apply for an order to compel arbitration pursuant to the DRCP in order to compel compliance with
this Section 4.13, (ii) a dispute relating to the Note Calculations includes, without limitation, disputes as to (A) whether an issuance
or sale or deemed issuance or sale of Common Stock occurred under Section 1.6 of this Note, (B) the consideration per share at which
an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock
was an issuance or sale or deemed issuance or sale, (D) whether an agreement, instrument, security or the like constitutes a Common Stock
Equivalent and (E) whether a Dilutive Issuance occurred, (iii) the terms of this Note and each other applicable Transaction Document
shall serve as the basis for the selected Independent Third Party’s resolution of the applicable dispute, such Independent Third
Party shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such Independent
Third Party determines are required to be made by such Independent Third Party in connection with its resolution of such dispute (including,
without limitation, determining (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 1.6
of this Note, (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance
or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale, (D) whether an agreement, instrument,
security or the like constitutes a Common Stock Equivalent and (E) whether a Dilutive Issuance occurred) and in resolving such dispute
such Independent Third Party shall apply such findings, determinations and the like to the terms of this Note and any other applicable
Transaction Documents, and (iv) nothing in this Section 4.13 shall limit the Holder from obtaining any injunctive relief or other equitable
remedies (including, without limitation, with respect to any matters described in this Section 4.13).
[signature
page follows]
16
IN
WITNESS WHEREOF
, Borrower has caused this Note to be signed in its name by its duly authorized officer on October 13, 2026.
NETCAPITAL INC.
By:
Name:
Todd
Violette
Title:
Chief
Executive Officer
17
EXHIBIT
A — NOTICE OF CONVERSION
The
undersigned hereby elects to convert $__________principal amount of the Note (defined below) into that number of shares of Common Stock
to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of
NETCAPITAL INC.
, a Utah
corporation (the “Borrower”), according to the conditions of the promissory note of the Borrower dated as of October 13,
2026 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer
taxes, if any.
Box
Checked as to applicable instructions:
☐
The
Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned
or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).
Name
of DTC Prime Broker:
Account
Number:
☐
The
undersigned hereby requests that the Borrower issue a certificate or certificates for the
number of shares of Common Stock set forth below (which numbers are based on the Holder’s
calculation
attached
hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:
Date
of Conversion:
Applicable
Conversion Price:
$
Number
of Shares of Common Stock to be Issued Pursuant to Conversion of the Note:
Amount
of Principal Balance Due remaining Under the Note after this conversion:
By:
Name:
Title:
Date:

----- ex4-2.htm -----
EX-4.2
3
ex4-2.htm
EX-4.2
Exhibit
4.2
NEITHER
THIS SECURITY NOR THE SECURITIES AS TO WHICH THIS SECURITY MAY BE EXERCISED HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON
STOCK PURCHASE WARRANT
NETCAPITAL
INC.
Warrant
Shares: [___________]
Date
of Issuance: [___________], 2026 (“
Issuance Date
”)
This
COMMON STOCK PURCHASE WARRANT (the “
Warrant
”) certifies that, for value received, Hinterland Partners LLC, a Delaware
limited liability company (including any permitted and registered assigns, the “
Holder
”), is entitled, upon the terms
and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof,
to purchase from NETCAPITAL INC., a Utah corporation (the “
Company
”), [___________] shares of Common Stock (the “
Warrant
Shares
”) (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant) at the
Exercise Price per share then in effect. This Warrant is issued by the Company to the Holder pursuant to the securities purchase agreement
entered into on or around the Issuance Date by and among the Company and the Holder (the “
Purchase Agreement
”).
Capitalized
terms used in this Warrant shall have the meanings set forth in the Purchase Agreement unless otherwise defined in the body of this Warrant
or in Section 16 below. For purposes of this Warrant, the term “Exercise Price” shall mean $0.01, subject to adjustment as
provided herein (including but not limited to cashless exercise). “Exercise Period” shall mean the period commencing on the
Issuance Date and ending on 5:00 p.m. eastern standard time on the date that is five (5) years after the Issuance Date.
1.
EXERCISE OF WARRANT
.
(a)
Mechanics of Exercise
. Subject to the terms and conditions hereof, the rights represented by this Warrant may be exercised in
whole or in part at any time or times during the Exercise Period by delivery of a written notice, in the form attached hereto as
Exhibit
A
(the “
Exercise Notice
”), of the Holder’s election to exercise this Warrant. The Holder shall not be required
to deliver the original Warrant in order to effect an exercise hereunder. Partial exercises of this Warrant resulting in purchases of
a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant
Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. On or before the second Trading
Day (the “
Warrant Share Delivery Date
”) following the date on which the Holder sent the Exercise Notice to the Company
or the Company’s transfer agent, and upon receipt by the Company of payment to the Company of an amount equal to the applicable
Exercise Price multiplied by the number of Warrant Shares as to which all or a portion of this Warrant is being exercised (the “
Aggregate
Exercise Price
” and together with the Exercise Notice, the “
Exercise Delivery Documents
”) in cash or by
wire transfer of immediately available funds (or by cashless exercise, in which case there shall be no Aggregate Exercise Price provided),
the Company shall (or direct its transfer agent to) issue and deliver by overnight courier to the address as specified in the Exercise
Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of
shares of Common Stock to which the Holder is entitled pursuant to such exercise (or deliver such shares of Common Stock in electronic
format if requested by the Holder). Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes
to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the
date of delivery of the certificates evidencing such Warrant Shares. If this Warrant is submitted in connection with any exercise and
the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired
upon an exercise, then the Company shall as soon as practicable and in no event later than three Business Days after any exercise and
at its own expense, issue a new Warrant (in accordance with Section 7) representing the right to purchase the number of Warrant Shares
purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant
is exercised.
1
If
the Company fails to cause its transfer agent to issue to the Holder the respective shares of Common Stock by the respective Warrant
Share Delivery Date, then the Holder will have the right to rescind such exercise in Holder’s sole discretion in addition to all
other rights and remedies at law, under this Warrant, or otherwise, and such failure shall also be deemed an Event of Default (as defined
in the Note) (an “Event of Default”) under the Note, a material breach under this Warrant, and a material breach under the
Purchase Agreement.
If
the Market Price of one share of Common Stock is greater than the Exercise Price, then the Holder may elect to receive Warrant Shares
pursuant to a cashless exercise, in lieu of a cash exercise, equal to the value of this Warrant determined in the manner described below
(or of any portion thereof remaining unexercised) by delivery of an Exercise Notice, in which event the Company shall issue to Holder
a number of Common Stock computed using the following formula:
X
=
Y
(A-B)
A
Where
X
=
the
number of Shares to be issued to Holder.
Y
=
the
number of Warrant Shares that the Holder elects to purchase under this Warrant (at the date
of such calculation).
A
=
the
Market Price (at the date of such calculation).
B
=
Exercise
Price (as adjusted to the date of such calculation).
(b)
No Fractional Shares
. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment
pursuant hereto. All Warrant Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining
whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance
of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction
a sum in cash equal to the product resulting from multiplying the then-current fair market value of a Warrant Share by such fraction.
(c)
Holder’s Exercise Limitations; Exchange Cap
. Notwithstanding anything to the contrary contained herein, the Company shall
not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section
1 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Exercise Notice,
the Holder (together with the Holder’s Affiliates), and any other Persons acting as a group together with the Holder or any of
the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned
by the Holder and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon
(i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution
Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including,
without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding
sentence, for purposes of this Section 1(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Holder is solely responsible for
any schedules required to be filed in accordance therewith. 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 1(c), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the
case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Company’s
transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company
shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities
of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number
of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of
shares of the Common Stock outstanding at the time of the respective calculation hereunder. In addition to the Beneficial Ownership Limitation
provided for in this Warrant, the sum of the number of shares of Common Stock that may be issued under this Warrant shall be subject
to Section 4(r) of the Purchase Agreement. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
2
(d)
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise
. In addition to any other rights available to
the Holder, if the Company fails to cause the Company’s transfer agent to deliver to the Holder the Warrant Shares in accordance
with the provisions of this Warrant (including but not limited to Section 1(a) above pursuant to an exercise on or before the respective
Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or
otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall
(A) pay in cash to the Holder, within one (1) Business Day of Holder’s request, the amount, if any, by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the product of
(1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times
(2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either
reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such
exercise shall be deemed rescinded) or deliver to the Holder within one (1) Business Day of Holder’s request the number of shares
of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For
example, if the Holder purchases, or effectuates a cashless exercise hereunder for, Common Stock having a total purchase price of $11,000
to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000.
The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request
of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available
to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect
to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms
hereof.
2.
ADJUSTMENTS
. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment
from time to time as set forth in this Section 2.
(a)
Stock Dividends and Splits
. Without limiting any provision of Section 2(b), Section 3 or Section 4, if the Company, at any time
on or after the Issuance Date, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock or otherwise
makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its then outstanding shares of Common Stock into a larger number of shares
or (iii) combines (by combination, reverse stock split or otherwise) one or more classes of its then outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of
shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of
such subdivision or combination. If any event requiring an adjustment under this paragraph occurs during the period that an Exercise
Price is calculated hereunder, then the calculation of such Exercise Price shall be adjusted appropriately to reflect such event.
(b)
Adjustment Upon Issuance of Shares of Common Stock
. If and whenever on or after the Issuance Date, the Company grants, issues
or sells (or enters into any agreement to grant, issue or sell), or in accordance with this Section 2 is deemed to have granted, issued
or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of
the Company) for a consideration per share (the “New Issuance Price”) less than a price equal to the Exercise Price in effect
immediately prior to such granting, issuance or sale or deemed granting, issuance or sale (such Exercise Price then in effect is referred
to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive
Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of the foregoing
(including, without limitation, determining the adjusted Exercise Price and the New Issuance Price under this Section 2(b)), the following
shall be applicable:
(i)
Issuance of Options
. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell)
any Options and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such
Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise
pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and
to have been issued and sold by the Company at the time of the granting, issuance or sale (or the time of execution of such agreement
to grant, issue or sell, as applicable) of such Option for such price per share. For purposes of this Section 2(b)(i), the “lowest
price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Options or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof”
shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company
with respect to any one share of Common Stock upon the granting, issuance or sale (or pursuant to the agreement to grant, issue or sell,
as applicable) of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable
upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for
which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon the exercise of any
such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise
pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon
the granting, issuance or sale (or the agreement to grant, issue or sell, as applicable) of such Option, upon exercise of such Option
and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to
the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option
(or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance
of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the terms
of or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.
3
(ii)
Issuance of Convertible Securities
. If the Company in any manner issues or sells (or enters into any agreement to issue or sell)
any Convertible Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion,
exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common
Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale (or the time
of execution of such agreement to issue or sell, as applicable) of such Convertible Securities for such price per share. For the purposes
of this Section 2(b)(ii), the “lowest price per share for which one share of Common Stock is at any time issuable upon the conversion,
exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the
lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance
or sale (or pursuant to the agreement to issue or sell, as applicable) of the Convertible Security and upon conversion, exercise or exchange
of such Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible
Security for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon conversion,
exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder
of such Convertible Security (or any other Person) upon the issuance or sale (or the agreement to issue or sell, as applicable) of such
Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such
Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon
the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities or otherwise
pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for
which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 2(b), except as contemplated
below, no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.
(iii)
Change in Option Price or Rate of Conversion
. If the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than
proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 2(a)), the Exercise
Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such
time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or
increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section
2(b)(iii), if the terms of any Option or Convertible Security (including, without limitation, any Option or Convertible Security that
was outstanding as of the Issuance Date) are increased or decreased in the manner described in the immediately preceding sentence, then
such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall
be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 2(b) shall be made
if such adjustment would result in an increase of the Exercise Price then in effect.
(iv)
[Intentionally Omitted]
.
(v)
Record Date
. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive
a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase
shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale
of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase (as the case may be).
4
(c)
[Intentionally Omitted]
.
(d)
[Intentionally Omitted]
.
(e)
[Intentionally Omitted]
.
(f)
Calculations
. All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100
th
of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held
by or for the account of the Company, and the disposition of any such shares shall be considered an issuance or sale of Common Stock
(g)
Voluntary Adjustment By Company
. Subject to the rules and regulations of the Principal Market, the Company may at any time during
the term of this Warrant, with the prior written consent of the Holder, reduce the then current Exercise Price to any amount and for
any period of time deemed appropriate by the board of directors of the Company.
(h)
Number of Warrant Shares
. Simultaneously with any adjustment to the Exercise Price pursuant to Section 2(a) of this Warrant, the
number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that
after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the
aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise contained herein).
For the avoidance of doubt, the aggregate Exercise Price payable prior to such adjustment is calculated as follows: the total number
of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment (without regard to the Beneficial Ownership
Limitation) multiplied by the Exercise Price in effect immediately prior to such adjustment. By way of example, if E is the total number
of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment pursuant to Section 2(a) of this Warrant
(without regard to the Beneficial Ownership Limitation), F is the Exercise Price in effect immediately prior to such adjustment, and
G is the Exercise Price in effect immediately after such adjustment, the adjustment to the number of Warrant Shares can be expressed
in the following formula: Total number of Warrant Shares after such adjustment = the number obtained from dividing [E x F] by G.
(i)
Notice
. In addition to all other notice(s) required under this Section 2, the Company shall also notify the Holder in writing,
no later than the Trading Day following any adjustment to the Warrant under this Section 2, indicating therein the occurrence of such
applicable exercise price and warrant share adjustment (such notice the “Adjustment Notice”). For purposes of clarification,
regardless of whether (i) the Company provides an Adjustment Notice pursuant to this Section 2 or (ii) the Holder accurately refers to
the number of Warrant Shares or Exercise Price in the Exercise Notice, the Holder is entitled to receive the adjustments to the number
of Warrant Shares and Exercise Price at all times on and after the date of such adjustment event.
5
3.
RIGHTS UPON DISTRIBUTION OF ASSETS
. In addition to any adjustments pursuant to Section 2 above or Section 4(a) below, if the Company
shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common
Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities,
property, options, evidence of indebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then,
in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated
therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations or restrictions on exercise of this Warrant, including without limitation, the Beneficial Ownership Limitation) immediately
before 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 shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that
the Holder’s right to participate in any such Distribution would result in the Holder and the other Attribution Parties exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to the extent of the Beneficial
Ownership Limitation (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution
(and beneficial ownership) to the extent of any such excess) and the portion of such Distribution shall be held in abeyance for the benefit
of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties
exceeding the Beneficial Ownership Limitation, at which time or times the Holder shall be granted such Distribution (and any Distributions
declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if
there had been no such limitation).
4.
PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS
.
(a)
[RESERVED]
(b)
Fundamental Transactions
. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity
assumes in writing all of the obligations of the Company under this Warrant and the other Transaction Documents (as defined in the Purchase
Agreement) in accordance with the provisions of this Section 4(b) pursuant to written agreements in form and substance satisfactory to
the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to the Holder in exchange
for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to
this Warrant, including, without limitation, which is exercisable for a corresponding number of shares of capital stock equivalent to
the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise
of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such
shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction
and the value of such shares of capital stock, such adjustments to the number of shares of capital stock and such exercise price being
for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction).
Upon the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and
after the date of the applicable Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring
to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and
shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if
such Successor Entity had been named as the Company herein. Upon consummation of each Fundamental Transaction, the Successor Entity shall
deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the consummation of the
applicable 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 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise
of this Warrant prior to the applicable Fundamental Transaction, such shares of publicly traded common stock (or its equivalent) of the
Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of the applicable
Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to
any limitations on the exercise of this Warrant), as adjusted in accordance with the provisions of this Warrant. Notwithstanding the
foregoing, and without limiting Section 1(c) hereof, the Holder may elect, at its sole option, by delivery of written notice to the Company
to waive this Section 4(b) to permit the Fundamental Transaction without the assumption of this Warrant. In addition to and not in substitution
for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant to which holders of shares of Common
Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate
Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon
an exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction but prior to the Expiration
Date, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property (except such items still issuable
under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to
such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or
other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental
Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations
on the exercise of this Warrant) (the “Corporate Event Consideration”). Provision made pursuant to the preceding sentence
shall be in a form and substance reasonably satisfactory to the Holder.
6
(c)
[Reserved.]
(d)
Application
. The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and Corporate
Events and shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without regard to any limitations
on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit of the Beneficial Ownership Limitation,
applied however with respect to shares of capital stock registered under the 1934 Act and thereafter receivable upon exercise of this
Warrant (or any such other warrant)).
5.
NON-CIRCUMVENTION
. The Company covenants and agrees that it will not, by amendment of its articles of incorporation, bylaws 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 Warrant, and will at
all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of
the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common
Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) 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 exercise of this Warrant, and (iii) shall, for so long as this Warrant is outstanding, have authorized and reserved, free from
preemptive rights, one (1) times the number of shares of Common Stock into which the Warrants are then exercisable into to provide for
the exercise of the rights represented by this Warrant (without regard to any limitations on exercise).
6.
WARRANT HOLDER NOT DEEMED A STOCKHOLDER
. Except as otherwise specifically provided herein, the Holder, solely in its capacity
as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company
for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its capacity as the Holder
of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action
(whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice
of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which
it is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed
as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder
of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6,
the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally,
contemporaneously with the giving thereof to the stockholders.
7.
REISSUANCE
.
(a)
Lost, Stolen or Mutilated Warrant
. If this Warrant is lost, stolen, mutilated or destroyed, the Company will, on such terms as
to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof),
issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.
(b)
Issuance of New Warrants
. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such
new Warrant shall be of like tenor with this Warrant, and shall have an issuance date, as indicated on the face of such new Warrant which
is the same as the Issuance Date.
7
8.
TRANSFER
. This Warrant shall be binding upon the Company and its successors and assigns, and shall inure to be the benefit of
the Holder and its successors and assigns. Notwithstanding anything to the contrary herein, the rights, interests or obligations of the
Company hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior signed
written consent of the Holder, which consent may be withheld at the sole discretion of the Holder (any such assignment or transfer shall
be null and void if the Company does not obtain the prior signed written consent of the Holder). This Warrant or any of the severable
rights and obligations inuring to the benefit of or to be performed by Holder hereunder may be assigned by Holder to a third party, in
whole or in part, without the need to obtain the Company’s consent thereto.
9.
NOTICES
. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given
in accordance with the notice provisions contained in the Purchase Agreement. The Company shall provide the Holder with prompt written
notice (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, the calculation of such adjustment
and (ii) at least 20 days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend
or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any stock or other securities
directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock or other property, pro rata to the
holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation,
provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided
to the Holder.
10.
DISCLOSURE
. Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice in accordance
with the terms of this Warrant, unless the Company has in good faith determined that the matters relating to such notice do not constitute
material, non-public information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 am, New York
city time on the Business Day immediately following such notice delivery date, 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 the Company or any of its Subsidiaries, the Company so shall indicate to the Holder explicitly in writing in such notice
(or immediately upon receipt of notice from the Holder, as applicable), and in the absence of any such written indication in such notice
(or notification from the Company immediately upon receipt of notice from the Holder), the Holder shall be entitled to presume that information
contained in the notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing
contained in this Section 10 shall limit any obligations of the Company, or any rights of the Holder, under the Purchase Agreement.
11.
ABSENCE OF TRADING AND DISCLOSURE RESTRICTIONS
. The Company acknowledges and agrees that the Holder is not a fiduciary or agent
of the Company and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company
or (b) refrain from trading any securities while in possession of such information in the absence of a written non-disclosure agreement
signed by an officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such
an executed, written non-disclosure agreement and subject to compliance with any applicable securities laws, the Company acknowledges
that the Holder may freely trade in any securities issued by the Company, may possess and use any information provided by the Company
in connection with such trading activity, and may disclose any such information to any third party.
12.
AMENDMENT AND WAIVER
. The terms of this Warrant may be amended or waived (either generally or in a particular instance and either
retroactively or prospectively) only with the signed written consent of the Company and the Holder.
8
13.
ARBITRATION OF CLAIMS; GOVERNING LAW; AND VENUE
. The Company and Holder shall submit all Claims (as defined in Exhibit C of the
Purchase Agreement) (the “Claims”) arising under this Warrant or any other agreement between the parties and their affiliates
or any Claim relating to the relationship of the parties to binding arbitration pursuant to the arbitration provisions set forth in Exhibit
C of the Purchase Agreement (the “Arbitration Provisions”). The Company and Holder hereby acknowledge and agree that the
Arbitration Provisions are unconditionally binding on the Company and Holder hereto and are severable from all other provisions of this
Warrant. By executing this Warrant, Company represents, warrants and covenants that Company has reviewed the Arbitration Provisions carefully,
consulted with legal counsel about such provisions (or waived its right to do so), understands that the Arbitration Provisions are intended
to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations set forth in the
Arbitration Provisions, and that Company will not take a position contrary to the foregoing representations. The Company acknowledges
and agrees that Holder may rely upon the foregoing representations and covenants of the Company regarding the Arbitration Provisions.
This Warrant shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation
and performance of this Warrant shall be governed by, the internal laws of the State of Delaware, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of Delaware. The Company and Holder consent to and expressly agree that the exclusive
venue for arbitration of any Claims arising under this Warrant or any other agreement between the Company and Holder or their respective
affiliates (including but not limited to the Transaction Documents) or any Claim relating to the relationship of the Company and Holder
or their respective affiliates shall be in the State of Delaware. Without modifying the Company’s and Holder’s obligations
to resolve disputes hereunder pursuant to the Arbitration Provisions, for any litigation arising in connection with any of the Transaction
Documents (and notwithstanding the terms (specifically including any governing law and venue terms) of any transfer agent services agreement
or other agreement between the Company’s transfer agent and the Company, such litigation specifically includes, without limitation
any action between or involving Company and the Company’s transfer agent under the Transfer Agent Instruction Letter (as defined
in the Purchase Agreement) or otherwise related to Holder in any way (specifically including, without limitation, any action where Company
seeks to obtain an injunction, temporary restraining order, or otherwise prohibit the Company’s transfer agent from issuing shares
of Common Stock to Holder for any reason)), each party hereto hereby (i) consents to and expressly submits to the exclusive personal
jurisdiction of any state or federal court sitting in the State of Delaware, (ii) expressly submits to the exclusive venue of any such
court for the purposes hereof, (iii) agrees to not bring any such action (specifically including, without limitation, any action where
Company seeks to obtain an injunction, temporary restraining order, or otherwise prohibit the Company’s transfer agent from issuing
shares of Common Stock to Holder for any reason) outside of any state or federal court sitting in the State of Delaware, and (iv) waives
any claim of improper venue and any claim or objection that such courts are an inconvenient forum or any other claim, defense or objection
to the bringing of any such proceeding in such jurisdiction or to any claim that such venue of the suit, action or proceeding is improper.
Notwithstanding anything in the foregoing to the contrary, nothing herein (i) shall limit, or shall be deemed or construed to limit,
the ability of the Holder to realize on any collateral or any other security, or to enforce a judgment or other court ruling in favor
of the Holder, including through a legal action in any court of competent jurisdiction, or (ii) shall limit, or shall be deemed or construed
to limit, any provision of Section 15 of this Warrant. The Company hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any objection to jurisdiction and venue of any action instituted hereunder, any claim that it is not personally subject
to the jurisdiction of any such court, and any claim that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper (including but not limited to based upon
forum non conveniens)
.
THE
COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTIONS CONTEMPLATED HEREBY.
The Company irrevocably waives
personal service of process and consents to process being served in any suit, action or proceeding in connection with this Warrant or
any other agreement, certificate, instrument or document contemplated hereby or thereby by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to the Company at the address in effect for notices to it under this Warrant and
agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any other manner permitted by law. The prevailing party in any action or dispute
brought in connection with this Warrant or any other agreement, certificate, instrument or document contemplated hereby or thereby shall
be entitled to recover from the other party its reasonable attorney’s fees and costs. If any provision of this Warrant shall be
invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of
the remainder of this Warrant in that jurisdiction or the validity or enforceability of any provision of this Warrant in any other jurisdiction.
9
14.
ACCEPTANCE
. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions
contained herein.
15.
DISPUTE RESOLUTION
.
(a)
Submission to Dispute Resolution
.
(i)
Notwithstanding anything to the contrary in this Warrant, in the case of a dispute relating to the Exercise Price, the Closing Sale Price,
the Closing Bid Price, or fair market value or the arithmetic calculation of the number of Warrant Shares (as the case may be) (including,
without limitation, a dispute relating to the determination of any of the foregoing) (the “Warrant Calculations”), the Company
or the Holder (as the case may be) shall submit the dispute to the other party via electronic mail (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 agree upon such determination
or calculation within two (2) Trading Days following such initial notice by the Company or the Holder (as the case may be) of such dispute
to the Company or the Holder (as the case may be), then the Holder may, at its sole option, submit the dispute to an independent, reputable
investment bank or independent, outside accountant selected by the Holder (the “Independent Third Party”), and the Company
shall pay all expenses of such Independent Third Party.
(ii)
The Holder and the Company shall each deliver to such Independent Third Party (A) a copy of the initial dispute submission so delivered
in accordance with the first sentence of this Section 15(a) and (B) written documentation supporting its position with respect to such
dispute, in each case, no later than 5:00 p.m. (New York time) by second (2nd) Business Day immediately following the date on which the
Holder selected such Independent Third Party (the “Dispute Submission Deadline”) (the documents referred to in the immediately
preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood
and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission
Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby
waives its right to) deliver or submit any written documentation or other support to such Independent Third Party with respect to such
dispute and such Independent Third Party shall resolve such dispute based solely on the Required Dispute Documentation that was delivered
to such Independent Third Party prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company
and the Holder or otherwise requested by such Independent Third Party, neither the Company nor the Holder shall be entitled to deliver
or submit any written documentation or other support to such Independent Third Party in connection with such dispute, other than the
Required Dispute Documentation.
(iii)
The Company and the Holder shall cause such Independent Third Party to determine the resolution of such dispute and notify the Company
and the Holder of such resolution no later than five (5) Business Days immediately following the Dispute Submission Deadline. The fees
and expenses of such Independent Third Party shall be borne solely by the Company, and such Independent Third Party’s resolution
of such dispute shall be final and binding upon all parties absent manifest error.
10
(b)
Miscellaneous
. The Company expressly acknowledges and agrees that (i) this Section 15 constitutes an agreement to arbitrate between
the Company and the Holder (and constitutes an arbitration agreement) under the rules then in effect under the Delaware Rules of Civil
Procedure (“DRCP”) and that the Holder is authorized to apply for an order to compel arbitration pursuant to the DRCP in
order to compel compliance with this Section 15, (ii) a dispute relating to the Warrant Calculations includes, without limitation, disputes
as to (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 2 of this Warrant, (B) the consideration
per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale
of Common Stock was an issuance or sale or deemed issuance or sale, (D) whether an agreement, instrument, security or the like constitutes
an Option or Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the terms of this Warrant and each other applicable
Transaction Document shall serve as the basis for the selected Independent Third Party’s resolution of the applicable dispute,
such Independent Third Party shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like
that such Independent Third Party determines are required to be made by such Independent Third Party in connection with its resolution
of such dispute (including, without limitation, determining (A) whether an issuance or sale or deemed issuance or sale of Common Stock
occurred under Section 2 of this Warrant, (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred,
(C) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale, (D) whether
an agreement, instrument, security or the like constitutes an Option or Convertible Security and (E) whether a Dilutive Issuance occurred)
and in resolving such dispute such Independent Third Party shall apply such findings, determinations and the like to the terms of this
Warrant and any other applicable Transaction Documents, (iv) the Holder (and only the Holder), in its sole discretion, shall have the
right to submit any dispute described in this Section 15 to any other jurisdiction provided for in Section 13 of this Warrant in lieu
of utilizing the procedures set forth in this Section 15, and (v) nothing in this Section 15 shall limit the Holder from obtaining any
injunctive relief or other equitable remedies (including, without limitation, with respect to any matters described in this Section 15).
16.
CERTAIN DEFINITIONS
. For purposes of this Warrant, the following terms shall have the following meanings:
(a)
“
Affiliate
” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled
by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a
Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of
directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
(b)
“
Bloomberg
” means Bloomberg, L.P.
(c)
“
Business Day
” means any day other than Saturday, Sunday or other day on which commercial banks in the State of Delaware
are authorized or required by law to remain closed;
provided
,
however
, for clarification,
commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”,
“non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the
direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial
banks in the State of Delaware generally are open for use by customers on such day.
(d)
“
Change of Control
” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct
or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification
of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization
or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and,
directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities with the
authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity
or entities) after such reorganization, recapitalization or reclassification, (iii) pursuant to a migratory merger effected solely for
the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries or (iv) bone fide arm’s length
acquisitions by the Company with one or more third parties as long as holders of the Company’s voting power as of the Issuance
Date continue after such acquisition to hold publicly traded securities and, directly or indirectly, are, in all material respects, the
holders of at least 51% of the voting power of the surviving entity (or entities with the authority or voting power to elect the members
of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such acquisition.
11
(e)
“
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 Market, as reported by Quotestream or
other similar quotation service provider designated by the Holder, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00 p.m., New York time, as
reported by Quotestream or other similar quotation service provider designated by the Holder, or (ii) if the foregoing does not apply,
the last trade price of such security in the over-the-counter market for such security as reported by Quotestream or other similar quotation
service provider designated by the Holder, or (iii) if no last trade price is reported for such security by Quotestream or other similar
quotation service provider designated by the Holder, the average of the bid and ask prices of any market makers for such security as
reported by Quotestream or other similar quotation service provider designated by the Holder. If the Closing Sale Price cannot be calculated
for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the
fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 15. All such determinations
to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable
calculation period.
(f)
“
Common Stock
” means the common stock of the Company, $0.001 par value per share, and any other class of securities
into which such securities may hereafter be reclassified or changed.
(g)
“
Common Stock Equivalents
” means any securities of the Company that would entitle the holder thereof to acquire at
any time Common Stock, including without limitation any debt, preferred stock, rights, options, warrants or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
(h)
“
Convertible Securities
” means any stock or other security (other than Options) that is at any time and under any
circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof
to acquire, any shares of Common Stock.
(i)
“
Eligible Market
” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq
Global Market, Nasdaq Capital Market, or equivalent national securities exchange.
(j)
“
Options
” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities.
(k)
“
Fundamental Transaction
” means (A) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the
surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all
of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation
S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject
to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that
is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of
Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject
Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock
such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or
exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding
shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities,
individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the
outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or
Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding;
or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in
Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify
its Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one
or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment,
conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination,
reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise
in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common
Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such
Subject Entities as of the date of this Warrant calculated as if any shares of Common Stock held by all such Subject Entities were not
outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock
or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other
transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders
of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions,
the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the
intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective
or inconsistent with the intended treatment of such instrument or transaction.
12
(l)
“
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 an Eligible 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 Fundamental Transaction.
(m)
“
Person
” and “
Persons
” means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, any other entity and any governmental entity or any department or agency
thereof.
(n)
“
Principal Market
” shall have the definition set forth in the Purchase Agreement.
(o)
“
Market Price
” means the highest traded price of the Common Stock during the one hundred fifty (150) Trading Days
prior to the date of the respective Exercise Notice.
(p)
“
Note
” shall mean that certain secured promissory note in the principal amount of up to $641,936.66 issued by the
Company to the Holder on or around the Issuance Date.
(q)
“
Successor Entity
” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from
or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental
Transaction shall have been entered into.
(r)
“
Trading Day
” means any day on which the Common Stock is listed or quoted on its Principal Market, provided, however,
that if the Common Stock is not then listed or quoted on any Principal Market, then any calendar day.
*
* * * * * *
13
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the Issuance Date set forth above.
NETCAPITAL
INC.
Name:
Todd
Violette
Title:
Chief
Executive Officer
EXHIBIT
A
EXERCISE
NOTICE
(To
be executed by the registered holder to exercise this Common Stock Purchase Warrant)
THE
UNDERSIGNED holder hereby exercises the right to purchase ________________of the shares of Common Stock (“Warrant Shares”)
of NETCAPITAL INC., a Utah corporation (the “Company”), evidenced by the attached copy of the Common Stock Purchase Warrant
(the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in
the Warrant.
1.
Form
of Exercise Price
. The Holder intends that payment of the Exercise Price shall be made
as (check one):
☐
a
cash exercise with respect to ____________________Warrant Shares; or
☐
by
cashless exercise pursuant to the Warrant.
2.
Payment
of Exercise Price
. If cash exercise is selected above, the holder shall pay the applicable
Aggregate Exercise Price in the sum of $
____________
to the Company in accordance
with the terms of the Warrant.
3.
Delivery
of Warrant Shares
. The Company shall deliver to the holder
______________________
Warrant
Shares in accordance with the terms of the Warrant.
Date:_________________________
(Print
Name of Registered Holder)
By:
Name:
Title: