UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A Information
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
| ☒ |
Preliminary Proxy Statement |
| ☐ |
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☐ |
Definitive Proxy Statement |
| ☐ |
Definitive Additional Materials |
| ☐ |
Soliciting Material Pursuant to §240.14a-12 |
SIGNING
DAY SPORTS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other
Than the Registrant)
Payment of Filing Fee (Check all
boxes that apply):
| ☐ | Fee paid previously with preliminary materials |
| ☐ | Fee computed on table in exhibit required by Item 25(b) per
Exchange Act Rules 14a-6(i)(1) and 0-11. |
SIGNING DAY SPORTS, INC.
8355 East Hartford Rd., Suite 100
Scottsdale, AZ 85255
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on September 18, 2024
TO THE STOCKHOLDERS OF SIGNING DAY SPORTS,
INC.:
Dear Stockholder:
We are pleased to invite you
to attend the annual meeting of stockholders (the “Annual Meeting”) of Signing Day Sports, Inc. (the “Company”,
“we”, “us”, or “our”), which will be held on Wednesday, September 18, 2024 at 10:00 a.m., Pacific
Daylight Time, at our principal executive offices at 8355 East Hartford Rd., Suite 100, Scottsdale, Arizona 85255, for the following purposes:
(1) To elect the five (5) nominees named
in the accompanying proxy statement to the Company’s board of directors (the “Board of Directors” or the “Board”)
to hold office until the annual meeting of stockholders to be held in 2025 (the “2025 Annual Meeting”, and such proposal,
“Proposal No. 1”);
(2) To ratify the appointment of BARTON
CPA as the Company’s independent registered public accounting firm for the Company’s fiscal year ending December 31, 2024
(“Proposal No. 2”);
(3) To approve the issuance of all of
the shares of the Company’s common stock, par value $0.0001 per share (“common stock”), issued or issuable pursuant
to the Securities Purchase Agreement, dated as of May 16, 2024, between the Company and FirstFire Global Opportunities Fund, LLC (“FirstFire”),
as amended (the “May 2024 FF Purchase Agreement”), the Securities Purchase Agreement, dated as of June 18, 2024, between the
Company and FirstFire (the “June 2024 FF Purchase Agreement”), and the letter agreement, dated August 9, 2021, between the
Company and Boustead Securities, LLC (“Boustead”), as amended (as amended, the “Boustead Engagement Letter”),
in connection with the May 2024 FF Purchase Agreement and the June 2024 FF Purchase Agreement, in accordance with Section 713(a) of
the NYSE American LLC Company Guide (the “NYSE American Company Guide”, and such proposal, “Proposal No. 3”);
and
(4) To approve the Signing Day Sports,
Inc. Amended and Restated 2022 Equity Incentive Plan (the “Amended and Restated Plan”, and such proposal, “Proposal
No. 4”).
The foregoing items of business
are more fully described in the proxy statement accompanying this notice or made available over the Internet. We are not aware of any
other business to come before the Annual Meeting.
Your attention is directed
to the attached proxy statement accompanying this Notice for a more complete statement of matters to be considered at the Annual Meeting.
The Board of Directors has
fixed the close of business on July 22, 2024 as the record date (the “Record Date”) for a determination of stockholders entitled
to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof. Only stockholders of record at the close
of business on July 22, 2024 are entitled to notice and to vote at the Annual Meeting and any adjournment or postponement thereof.
It is important that your
shares are represented at the Annual Meeting. We urge you to review the attached proxy statement and, whether or not you plan to attend
the Annual Meeting, please vote your shares promptly by casting your vote via the Internet or any other provided voting option, or, if
you receive a full set of proxy materials by mail or request one be mailed to you, and prefer to mail your proxy, please complete, sign,
date, and return your proxy in the pre-addressed envelope provided, which requires no additional postage if mailed in the United States.
You may revoke your vote by submitting a subsequent vote over the Internet, by mail or by any other option provided for voting before
the Annual Meeting, or by voting in person at the Annual Meeting.
If you plan to attend the
Annual Meeting, please notify us of your intentions. This will assist us with meeting preparations. If your shares are not registered
in your own name and you would like to attend the Annual Meeting, please follow the instructions contained in the Notice of Internet Availability
of Proxy Materials that has been mailed to you, the attached proxy statement, and any other information forwarded to you by your broker,
trust, bank, or other holder of record to obtain a valid proxy from it. Your proxy will be needed to gain admission to the Annual Meeting
and vote in person.
We look forward to seeing
you at the Annual Meeting.
| |
By Order of the Board of Directors, |
| |
|
| |
/s/ Daniel Nelson |
| |
Daniel Nelson |
| |
Chairman and Chief Executive Officer |
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|
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Scottsdale, AZ
Dated: August 9, 2024 |
|
Important Notice Regarding
the Availability of Proxy Materials for the Annual Meeting to Be Held on September 18, 2024: Our proxy statement and annual report
to security holders for the year ended December 31, 2023 are available at https://www.iproxydirect.com/SGN.
SIGNING DAY SPORTS, INC.
8355 East Hartford Rd., Suite 100
Scottsdale, AZ 85255
PROXY STATEMENT
for
2024 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON September 18, 2024
This proxy statement and the
accompanying proxy are being furnished with respect to the solicitation of proxies by the Board of Directors for the Annual Meeting. The
Annual Meeting is to be held at 10:00 a.m., Pacific Daylight Time, on Wednesday, September 18, 2024, and at any adjournment(s) or postponement(s)
thereof, at the principal executive offices of the Company, located at 8355 East Hartford Rd., Suite 100, Scottsdale, Arizona 85255.
The approximate date
on which this proxy statement and the accompanying notice and form of proxy are intended to be sent or made available to stockholders
is on or about August 9, 2024. A proxy is your legal designation of another person to vote the stock you own. That designee is referred
to as a proxy holder. Designation of a particular proxy holder can be effected by completion of a written proxy, or by voting via the
Internet or by another provided voting option. If you return a proxy or vote by the Internet or other provided voting option, Daniel Nelson,
our Chief Executive Officer, Chairman and director, and Craig Smith, our Chief Operating Officer, will act as your designated proxy holders
for the Annual Meeting and will vote your shares at the Annual Meeting as you have instructed them on the proxy. This way, your shares
will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, we urge you to vote in one
of the ways described below so that your vote will be counted even if you are unable or decide not to attend the Annual Meeting.
IMPORTANT: Please mark,
date, and sign the enclosed proxy card and promptly return it in the accompanying postage-paid envelope or vote by fax, telephone or the
Internet to assure that your shares are represented at the Annual Meeting.
TABLE OF CONTENTS
| QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING |
|
1 |
| PROPOSAL NO. 1 - ELECTION OF DIRECTORS |
|
8 |
| Information with Respect to Director Nominees |
|
8 |
| Arrangements Between Officers and Directors |
|
9 |
| Family Relationships |
|
10 |
| Involvement in Certain Legal Proceedings |
|
10 |
| Vote Required |
|
10 |
| Board Recommendation |
|
10 |
| PROPOSAL NO. 2 - RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR ENDING DECEMBER 31, 2024 |
|
10 |
| Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |
|
10 |
| Principal Accountant Fees and Services |
|
11 |
| Pre-Approval Policies and Procedures |
|
12 |
| Vote Required |
|
12 |
| Board Recommendation |
|
12 |
| AUDIT COMMITTEE REPORT |
|
13 |
| SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
|
14 |
| Securities Ownership of Certain Beneficial Owners and Management |
|
14 |
| Changes in Control |
|
15 |
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
|
16 |
| Our Independent Directors |
|
16 |
| Governance Structure |
|
16 |
| Board Committees |
|
17 |
| Director Nominations |
|
19 |
| Stockholder Recommendations |
|
20 |
| Communications with the Board of Directors |
|
20 |
| Code of Ethics and Business Conduct |
|
21 |
| Hedging and Pledging Prohibition |
|
21 |
| Director Compensation |
|
21 |
| Directors and Officers Liability Insurance |
|
23 |
| EXECUTIVE OFFICERS OF THE COMPANY |
|
24 |
| EXECUTIVE COMPENSATION |
|
24 |
| Summary Compensation Table – Years Ended December 31, 2023 and 2022 |
|
24 |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
25 |
| Executive Officer Employment and Consulting Agreements |
|
29 |
| Additional Narrative to Named Executive Officer Compensation |
|
34 |
| Outstanding Equity Awards at Fiscal Year-End |
|
35 |
| Signing Day Sports, Inc. 2022 Equity Incentive Plan |
|
36 |
| Clawback Policy |
|
37 |
| Director Compensation |
|
37 |
| CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS |
|
37 |
| DELINQUENT SECTION 16(a) REPORTS |
|
47 |
| PROPOSAL NO. 3 - APPROVAL OF THE ISSUANCE OF ALL OF THE SHARES OF THE COMPANY’S COMMON STOCK ISSUED OR ISSUABLE PURSUANT TO THE SECURITIES PURCHASE AGREEMENT, DATED AS OF MAY 16, 2024, BETWEEN THE COMPANY AND FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC (“FIRSTFIRE”), AS AMENDED (THE “MAY 2024 FF PURCHASE AGREEMENT”), THE SECURITIES PURCHASE AGREEMENT, DATED AS OF JUNE 18, 2024, BETWEEN THE COMPANY AND FIRSTFIRE (THE “JUNE 2024 FF PURCHASE AGREEMENT”), AND THE LETTER AGREEMENT, DATED AUGUST 9, 2021, BETWEEN THE COMPANY AND BOUSTEAD SECURITIES, LLC, AS AMENDED, IN CONNECTION WITH THE MAY 2024 FF PURCHASE AGREEMENT AND THE JUNE 2024 FF PURCHASE AGREEMENT, IN ACCORDANCE WITH SECTION 713(a) OF THE NYSE AMERICAN LLC COMPANY GUIDE |
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47 |
| ANNEX A – |
Securities Purchase Agreement, dated as of May 16, 2024, between Signing Day Sports, Inc. and FirstFire Global Opportunities Fund, LLC |
|
A-1 |
| ANNEX B – |
Security Agreement, dated as of May 16, 2024, between Signing Day Sports, Inc. and FirstFire Global Opportunities Fund, LLC |
|
B-1 |
| ANNEX C – |
Registration Rights Agreement, dated as of May 16, 2024, between Signing Day Sports, Inc. and FirstFire Global Opportunities Fund, LLC |
|
C-1 |
| ANNEX D – |
Amendment to Senior Secured Promissory Note and Warrants, dated as of May 20, 2024, between Signing Day Sports, Inc. and FirstFire Global Opportunities Fund, LLC |
|
D-1 |
| ANNEX E – |
Form of Senior Secured Promissory Note issued on May 16, 2024 to FirstFire Global Opportunities Fund, LLC |
|
E-1 |
| ANNEX F – |
Form of Common Stock Purchase Warrant issued on May 16, 2024 to FirstFire Global Opportunities Fund, LLC |
|
F-1 |
| ANNEX G – |
Form of Common Stock Purchase Warrant issued on May 16, 2024 to FirstFire Global Opportunities Fund, LLC |
|
G-1 |
| ANNEX H – |
Form of Warrant to Purchase Common Stock issued to Boustead Securities, LLC, dated as of May 20, 2024 |
|
H-1 |
| ANNEX I – |
Amendment to the Transaction Documents, dated
as of June 18, 2024, between Signing Day Sports, Inc. and FirstFire Global Opportunities Fund, LLC |
|
I-1 |
| ANNEX J – |
Securities Purchase Agreement, dated as of June 18, 2024, between Signing Day Sports, Inc. and FirstFire Global Opportunities Fund, LLC |
|
J-1 |
| ANNEX K – |
Security Agreement, dated as of June 18, 2024, between Signing Day Sports, Inc. and FirstFire Global Opportunities Fund, LLC |
|
K-1 |
| ANNEX L – |
Registration Rights Agreement, dated as of June 18, 2024, between Signing Day Sports, Inc. and FirstFire Global Opportunities Fund, LLC |
|
L-1 |
| ANNEX M – |
Senior Secured Promissory Note issued on June 18, 2024 by Signing Day Sports, Inc. to FirstFire Global Opportunities Fund, LLC |
|
M-1 |
| ANNEX N – |
Common Stock Purchase Warrant issued on June 18, 2024 by Signing Day Sports, Inc. to FirstFire Global Opportunities Fund, LLC |
|
N-1 |
| ANNEX O – |
Common Stock Purchase Warrant issued on June 18, 2024 by Signing Day Sports, Inc. to FirstFire Global Opportunities Fund, LLC |
|
O-1 |
| ANNEX P – |
Form of Signing Day Sports, Inc. Amended and Restated 2022 Equity Incentive Plan |
|
P-1 |
QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL
AND VOTING
What is a proxy statement?
A proxy statement is a document
that we are required by regulations of the Securities and Exchange Commission (the “SEC”) to give you when we ask you to provide
a proxy to vote your shares at the Annual Meeting. Among other things, this proxy statement describes the proposals on which stockholders
will be voting and provides information about us.
We are soliciting your proxy
to vote at the Annual Meeting and at any adjournment or postponement of the Annual Meeting. We will use the proxies received in connection
with proposals to:
| 1. | Elect the five (5) nominees named in this proxy statement to the Board of Directors to hold office until
the 2025 Annual Meeting; |
| 2. | Ratify the appointment of BARTON CPA as the Company’s independent registered public accounting firm
for the Company’s fiscal year ending December 31, 2024; |
| 3. | Approve the issuance of all of the shares of common stock issued or issuable pursuant to the May 2024
FF Purchase Agreement, the June 2024 FF Purchase Agreement, and the Boustead Engagement Letter in connection with the May 2024 FF Purchase
Agreement and the June 2024 FF Purchase Agreement, in accordance with Section 713(a) of the NYSE American Company Guide; and |
| 4. | Approve the Amended and Restated Plan. |
As a stockholder, you are
invited to attend the Annual Meeting, and are requested to vote on the proposals described in this proxy statement. This proxy statement
includes information that we are required to provide to you under SEC rules and is designed to assist you in voting your shares.
How do I attend the Annual Meeting?
The meeting will be held at
the principal executive offices of the Company, located at 8355 East Hartford Rd., Suite 100, Scottsdale, Arizona 85255. If you plan to
attend the Annual Meeting, please notify us of your intentions. This will assist us with meeting preparations.
In order to enter and attend
the Annual Meeting and vote in person, you will be required to bring your legal proxy and government-issued photo identification. If your
shares are registered in your own name, bring the proxy card delivered to you or request your proxy card in advance of the Annual Meeting
by following the instructions contained in the Notice of Internet Availability of Proxy Materials that was delivered to you. If your shares
are not registered in your own name and you would like to attend the Annual Meeting, please follow the instructions contained in the Notice
of Internet Availability of Proxy Materials that was delivered to you and any other information forwarded to you by your broker, trust,
bank, or other holder of record to obtain a valid proxy from it.
Who may attend the Annual Meeting?
Only record holders and beneficial
owners of our common stock who owned our common stock on the Record Date are entitled to vote at the Annual Meeting, or their duly authorized
proxies, may attend the Annual Meeting.
When did the Company effect
a reverse stock split of its common stock?
The Company effected a one-for-five
(1-for-5) reverse stock split (the “Reverse Stock Split”) of its outstanding common stock on April 14, 2023. Unless otherwise
noted, the share and per share information in this proxy statement have been adjusted to give effect to the Reverse Stock Split.
Who is entitled to vote?
The Board has fixed the close
of business on July 22, 2024 as the Record Date for the determination of stockholders entitled to notice of, and to vote at, the Annual
Meeting or any adjournment or postponement thereof. Only stockholders who owned our common stock on the Record Date are entitled to vote
at the Annual Meeting. Each stockholder who owned our common stock on the Record Date is entitled to one vote per share owned on that
date. On the Record Date, there were 16,097,086 shares of our common stock outstanding, and which were entitled to a total of 16,097,086
votes.
What is the difference between holding shares
as a record holder and as a beneficial owner (holding shares in street name)?
If your shares are registered
in your name with our transfer agent, Securities Transfer Corporation, you are the “record holder” of those shares. If you
are a record holder, these proxy materials have been or may be provided directly to you by the Company or its proxy delivery service.
If your shares are held in
a stock brokerage account, a bank or other holder of record, you are considered the “beneficial owner” of those shares in
“street name.” If your shares are held in street name, these proxy materials have been or may be forwarded to you by that
organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual
Meeting. As the beneficial owner, you have the right to instruct this organization on how to vote your shares. The majority of our stockholders
hold their shares in street name.
What am I voting on?
There are four (4) matters
scheduled for a vote:
| 1. | To elect the five (5) nominees named in this proxy statement to the Board of Directors to hold office
until the 2025 Annual Meeting; |
| 2. | To ratify the appointment of BARTON CPA as the Company’s independent registered public accounting
firm for the Company’s fiscal year ending December 31, 2024; |
| 3. | To approve the issuance of all of the shares of common stock issued or issuable pursuant to the May 2024
FF Purchase Agreement, the June 2024 FF Purchase Agreement, and the Boustead Engagement Letter in connection with the May 2024 FF Purchase
Agreement and the June 2024 FF Purchase Agreement, in accordance with Section 713(a) of the NYSE American Company Guide; and |
| 4. | To approve the Amended and Restated Plan. |
What if another matter is properly brought
before the Annual Meeting?
The Board knows of no other
matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting,
your proxy gives authority to the designated proxy holders to vote on such matters according to their best judgment.
How do I vote?
Stockholders of Record
Record holders of our common
stock have four methods of voting:
| 1. | Vote by Internet. You may vote by using the Internet in accordance with the instructions provided
on your Notice of Internet Availability of Proxy Materials or proxy card. |
| 2. | Vote by Mail. To vote by mail, please mark, date, sign and promptly mail your proxy card (a postage-paid
envelope is provided for mailing in the United States). If you only received a Notice of Internet Availability of Proxy Materials, you
may request a proxy card by following the instructions provided. |
| 3. | Vote by Phone. The telephone number for voting by phone is on your proxy card that you received
or may request by following the instructions provided in your Notice of Internet Availability of Proxy Materials. |
| 4. | Vote by Fax. The fax number for voting by fax is on your proxy card that you received or may request
by following the instructions provided in your Notice of Internet Availability of Proxy Materials. |
Beneficial Owners of Shares Held in Street
Name
Beneficial owners of our common
stock also have four methods of voting:
| 1. | Vote by Internet. You may vote by using the Internet in accordance with the instructions provided
on your Notice of Internet Availability of Proxy Materials or vote instruction form. |
| 2. | Vote by Mail. Mark, date, sign and promptly mail your vote instruction form (a postage-paid envelope
is provided for mailing in the United States). If you only received a Notice of Internet Availability of Proxy Materials, you may request
a vote instruction form by following the instructions provided in your Notice of Internet Availability of Proxy Materials. |
| 3. | Vote by Phone. The telephone number for voting by phone is on your vote instruction form that you
received or may request by following the instructions provided in your Notice of Internet Availability of Proxy Materials. |
| 4. | Vote by Fax. The fax number for voting by fax is on your vote instruction form that you received
or may request by following the instructions provided in your Notice of Internet Availability of Proxy Materials. |
When must my votes be received by?
All shares entitled to vote
and represented by a properly completed and executed proxy received before the Annual Meeting and not revoked will be voted at the Annual
Meeting as instructed in a proxy delivered before the Annual Meeting. If you do not indicate how your shares should be voted on a matter,
the shares represented by your properly completed and executed proxy will be voted as the Board recommends on each of the enumerated proposals,
with regard to any other matters that may be properly presented at the Annual Meeting and on all matters incident to the conduct of the
Annual Meeting. If you wish to vote at the Annual Meeting, see “How do I attend the Annual Meeting?” above. All votes will
be tabulated by the inspector of election appointed for the Annual Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes.
We are providing Internet
as well as telephone and fax proxy voting options to all stockholders. However, please be aware that you must bear any third-party costs,
such as usage charges from Internet access providers and telephone companies.
How many votes do I have?
Each share of our common stock
that you own as of the Record Date entitles you to one vote.
Is my vote confidential?
Yes, your vote is confidential.
Only the proxy tabulator, inspector of election, designated proxies, and other persons who need access for legal reasons will have access
to your vote. This information will not be disclosed, except as required by law.
How will my shares be voted if I give no specific
instruction?
We must vote your shares as
you have instructed. If there is a matter on which a stockholder of record has given no specific instruction but has authorized us generally
to vote the shares, they will be voted as follows:
| 1. | “FOR” the election of each of the five (5) nominees named in this proxy statement to the Board
of Directors to hold office until the 2025 Annual Meeting; |
| 2. | “FOR” the ratification of the appointment of BARTON CPA as the Company’s independent
registered public accounting firm for the Company’s fiscal year ending December 31, 2024; |
| 3. | “FOR” the approval of the issuance of all of the shares of common stock issued or issuable
pursuant to the May 2024 FF Purchase Agreement, the June 2024 FF Purchase Agreement, and the Boustead Engagement Letter in connection
with the May 2024 FF Purchase Agreement and the June 2024 FF Purchase Agreement, in accordance with Section 713(a) of the NYSE
American Company Guide; and |
| 4. | “FOR” the approval of the Amended and Restated Plan. |
This authorization would exist,
for example, if a stockholder of record merely signs, dates and returns their proxy card but does not indicate how its shares are to be
voted on one or more proposals. If other matters properly come before the Annual Meeting and you do not provide specific voting instructions,
your shares will be voted at the discretion of the proxies.
How are votes counted?
Votes will be counted by the
inspector of election appointed for the Annual Meeting, who will separately count, for Proposal No. 1, votes “FOR,” “WITHHOLD”
and broker non-votes; with respect to Proposal No. 2, votes “FOR,” “AGAINST,” and “ABSTAIN”; for Proposal
No. 3, votes “FOR,” “AGAINST,” “ABSTAIN,” and broker non-votes; and for Proposal No. 4, votes “FOR,”
“AGAINST,” “ABSTAIN,” and broker non-votes.
What is the effect of a withhold vote?
Withhold votes will have no
legal effect on the election of directors because such elections are by a plurality. Withhold votes will be counted as shares present
and entitled to vote for purposes of determining a quorum.
What is a broker non-vote?
If you are a beneficial owner
of shares held by a broker, bank, trust or other nominee and you do not provide your broker, bank, trustee or other nominee with voting
instructions, your shares may constitute “broker non-votes”. Broker non-votes occur on a matter when the broker, bank, trustee
or other nominee is not permitted under applicable stock exchange rules to vote on that matter without instructions from the beneficial
owner and instructions are not given. These matters are referred to as “non-routine” matters.
Proposal No. 1, Proposal No.
3, and Proposal No. 4 are considered “non-routine” matters, while Proposal No. 2 is considered a “routine” matter.
Therefore, if you are a beneficial owner of shares held in street name and do not provide voting instructions, your shares will not be
voted on Proposal No. 1, Proposal No. 3, or Proposal No. 4, and a broker non-vote will occur on this matter. In tabulating the voting
result for any particular proposal, shares that constitute broker non-votes are not considered present and entitled to vote on such matter
with respect to that proposal. Thus, broker non-votes will not affect the outcome of any matter being voted on at the Annual Meeting,
assuming that a quorum is obtained. Because Proposal No. 2 is a “routine” matter, a broker, bank, trustee or other nominee
may be permitted to exercise its discretion on this proposal, which means there may be no broker non-votes on this matter. Broker non-votes
will be counted as shares present for purposes of determining a quorum to the extent that the brokers, banks, trustees or other nominees
may use their discretionary authority to vote such shares on Proposal No. 2.
What is an abstention?
An abstention is a stockholder’s
affirmative choice to decline to vote on a proposal. Abstentions will be counted as shares present and entitled to vote at the Annual
Meeting, and therefore will be counted for purposes of determining a quorum. Generally, unless provided otherwise by applicable law, the
Second Amended and Restated Bylaws, as amended, of Signing Day Sports, Inc. (the “Bylaws”), provide that an action of our
stockholders (other than the election of directors) is approved if a majority of the number of shares of stock entitled to vote thereon
and present (either in person or by proxy) vote in favor of such action. Under the rules of the NYSE American, a majority of votes cast
voting in favor is required for Proposal No. 3 and Proposal No. 4 to be passed. Since only shares of common stock have voting rights at
this meeting, and each share of common stock gives the holder the right to one vote, each of the requirements in the Bylaws and the NYSE
American rules are equal in effect. Therefore, votes marked as “ABSTAIN” will have the same effect as an “AGAINST”
vote on Proposal No. 2, Proposal No. 3, and Proposal No. 4.
How many shares must be present or represented
to conduct business at the Annual Meeting?
A “quorum” is
necessary to conduct business at the Annual Meeting. A quorum is established if there is the presence in person or by proxy of the holders
of one-third of the shares outstanding and entitled to vote at the Annual Meeting. Shares owned by the Company are not considered outstanding
or considered to be present at the Annual Meeting. Abstentions will be counted as present for purposes of determining a quorum at the
Annual Meeting. Similarly, broker non-votes will be counted as present for purposes of determining a quorum at the Annual Meeting to the
extent that the brokers, banks, trustees or other nominees use their discretionary authority to vote such shares on Proposal No. 2. If
a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained.
How many votes are needed for each proposal
to pass?
| Proposal |
|
Vote Required |
| No. 1 – Election of each of the five (5) nominees named in this proxy statement to the Board of Directors to hold office until the 2025 Annual Meeting. |
|
Plurality of the votes cast (the five directors receiving the most “FOR” votes) by stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote. |
| |
|
|
| No. 2 – Ratification of the appointment of BARTON CPA as the Company’s independent registered public accounting firm for the Company’s fiscal year ending December 31, 2024. |
|
The affirmative vote of a majority of stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote. |
| |
|
|
| No. 3 – Approval of the issuance of all of the shares of common stock issued or issuable pursuant to the May 2024 FF Purchase Agreement, the June 2024 FF Purchase Agreement, and the Boustead Engagement Letter in connection with the May 2024 FF Purchase Agreement and the June 2024 FF Purchase Agreement, in accordance with Section 713(a) of the NYSE American Company Guide. |
|
The affirmative vote of a majority of stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote, and a majority of votes cast voting in favor. |
| |
|
|
| No. 4 – Approval of the Signing Day Sports, Inc. Amended and Restated 2022 Plan. |
|
The affirmative vote of a majority of stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote, and a majority of votes cast voting in favor. |
What are the voting procedures?
In voting by proxy with regard
to the election of directors, you may vote in favor of all nominees, withhold your votes as to all nominees, or vote in favor of specific
nominees and withhold your votes as to specific nominees. With regard to other proposals, you may vote in favor of or against the proposal,
or you may abstain from voting on the proposal. You should specify your respective choices on the proxy card or vote instruction form
that was delivered to you or that you may request by following the information in your Notice of Internet Availability of Proxy Materials.
Can I change my vote or revoke my proxy?
If you are a stockholder of
record, you may revoke your proxy at any time prior to the vote at the Annual Meeting. If you submitted your proxy by mail, you must file
with our Secretary a written notice of revocation or deliver, prior to the vote at the Annual Meeting, a valid, later-dated proxy. If
you submitted your proxy by the Internet, you may revoke your proxy with a later Internet proxy. Attendance at the Annual Meeting will
not have the effect of revoking a proxy unless you give written notice of revocation to the Company’s Secretary before the proxy
is exercised or you vote in person at the Annual Meeting. If you are a beneficial owner, you may vote by submitting new voting instructions
to your broker, bank or nominee, or, if you have obtained a legal proxy from your broker, bank or nominee giving you the right to vote
your shares, by attending the meeting and voting in person.
Who is paying for the expenses involved in
preparing and mailing this proxy statement?
All of the expenses involved
in preparing, assembling and mailing these proxy materials and all costs of soliciting proxies will be paid by us. In addition to the
solicitation by mail, proxies may be solicited by our officers and other employees by telephone or in person. Such persons will receive
no compensation for their services other than their regular salaries. Arrangements will also be made with brokerage houses and other custodians,
nominees and fiduciaries to forward solicitation materials to the beneficial owners of the shares held of record by such persons, and
we may reimburse such persons for reasonable out of pocket expenses incurred by them in forwarding solicitation materials.
How can I find out the results of the voting
at the Annual Meeting?
Preliminary voting results
will be announced at the Annual Meeting. In addition, final voting results will be disclosed in a Current Report on Form 8-K that we expect
to file with the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to file
a Form 8-K with the SEC within four business days after the Annual Meeting, we intend to file a Form 8-K to publish preliminary results
and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.
Do the Company’s officers and directors
have an interest in any of the matters to be acted upon at the Annual Meeting?
Members of the Board have
an interest in Proposal No. 1, the election to the Board of the five (5) nominees set forth herein, as all of the nominees are currently
members of the Board. Members of the Board and executive officers of the Company do not have any interest in Proposal No. 2 or Proposal
No. 3. Members of the Board and executive officers of the Company may be the recipients of future awards under the Amended and Restated
Plan and therefore may have an interest in Proposal No. 4.
I am a stockholder, and I only received a copy
of the Notice of Internet Availability of Proxy Materials in the mail. How may I obtain a full set of the proxy materials?
In accordance with the “notice
and access” rules of the SEC, we may furnish proxy materials, including this proxy statement, to our stockholders of record and
beneficial owners of shares by providing access to such documents on the Internet instead of mailing printed copies. Stockholders will
not receive printed copies of the proxy materials unless they request them. Instead, the Notice of Internet Availability of Proxy Materials
contains instructions on accessing and reviewing all of the proxy materials on the Internet. If you would like to receive a paper or electronic
copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice of Internet Availability of
Proxy Materials.
I share an address with another stockholder,
and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?
The Company has adopted a
procedure called “householding,” which the SEC has approved. Under this procedure, if requested to deliver proxy materials,
we deliver a single copy of the proxy materials to multiple stockholders who share the same address unless we have received contrary instructions
from one or more of the stockholders. This procedure reduces our printing and mailing costs, and the environmental impact of our stockholder
meetings. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written
or oral request, we will deliver promptly a separate copy of the proxy materials to any stockholder at a shared address to which we delivered
a single copy of any of these documents.
To receive a separate copy
of the proxy statement and proxy card, you may contact us at the following address and phone number:
Office of the Secretary
Signing Day Sports, Inc.
8355 East Hartford Rd., Suite 100
Scottsdale, AZ 85255
Telephone: (480) 220-6814
Stockholders sharing an address
can also request delivery of a single copy of the proxy materials if they are receiving multiple copies by contacting the address or telephone
number above.
Stockholders who hold shares
in “street name” (as described below) may also contact their brokerage firm, bank, broker-dealer or other similar organization
to request information about householding.
Whom should I contact with other questions?
If you are a holder of the
Company’s shares and have any questions about how to vote or direct a vote in respect of your securities, you may call our proxy
service, Issuer Direct Corporation, by telephone at 919-481-4000 or email at proxy@issuerdirect.com.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Annual Meeting, the
stockholders will elect five (5) directors to hold office until the 2025 Annual Meeting. Directors are elected by a plurality of votes
cast by stockholders. In the event the nominees are unable or unwilling to serve as directors at the time of the Annual Meeting, the proxies
will be voted for any substitute nominees designated by the present Board or the proxy holders to fill such vacancy, or for the balance
of the nominees named without nomination of a substitute, or the size of the Board will be reduced in accordance with the Bylaws of the
Company. The Board has no reason to believe that the persons named below will be unable or unwilling to serve as nominees or as directors
if elected.
Assuming a quorum is present,
the five (5) nominees receiving the highest number of affirmative votes of shares entitled to be voted for such persons will be elected
as directors of the Company to serve for a one-year term. Unless marked otherwise, proxies received will be voted “FOR” the
election of the nominees named below. In the event that additional persons are nominated for election as directors, the proxy holders
intend to vote all proxies received by them in such a manner as will ensure the election of the nominees listed below, and, in such event,
the specific nominees to be voted for will be determined by the proxy holders.
Information with Respect to Director Nominees
Listed below are the current
directors who are nominated to hold office until the 2025 Annual Meeting, and their ages as of the date of this proxy statement:
| Name | |
Age |
| Daniel Nelson | |
61 |
| Jeffry Hecklinski | |
50 |
| Roger Mason Jr. | |
43 |
| Greg Economou | |
59 |
| Peter Borish | |
64 |
The names of the nominees
and certain biographical information about each current director standing for election at the Annual Meeting, including a description
of his or her business experience, qualifications, education and skills that led the Board to conclude that such individual should serve
as a member of the Board, are set forth below:
Daniel
Nelson. Mr. Nelson has been a member of the Board of Directors since July 2022, was our President from August 2022 to November
2022, has been our Chief Executive Officer since November 2022, and has been our Chairman since March 2023. Mr. Nelson began working in
the financial services industry in 1986. In 1997, Mr. Nelson formed, and has since served as chief executive officer of, Nelson Financial
Services Inc. (“Nelson Financial Services”), which focuses on the employee benefits market. For more than 30 years, Mr. Nelson
has acquired extensive knowledge and experience in the financial services arena. Mr. Nelson also formed Nelson Financial Services to provide
financial guidance for all individuals.
We
believe that Mr. Nelson is qualified to serve on the Board due to his experience in finance, particularly with respect to the sports management
division of Nelson Financial Services.
Jeffry
Hecklinski. Mr. Hecklinski has served as our President and a member of the Board of Directors since April 2024, and was our General
Manager from March 2023 to April 2024. From November 2022 to February 2023, Mr. Hecklinski acted as a consultant in the college sports
industry. From January 2022 to October 2022, Mr. Hecklinski was Assistant Football Coach at San Diego State University. From December
2018 to December 2019, Mr. Hecklinski was Assistant Football Coach at University of Kansas. From December 2016 to December 2018, Mr. Hecklinski
was Assistant Football Coach at Indiana State University. Mr. Hecklinski was also Assistant Football Coach at University of Illinois Urbana-Champaign
in 2016, the Colorado State University Pueblo in 2015, and the University of Michigan from 2011 to 2014. Mr. Hecklinski holds a bachelor’s
degree in Communications from Western Illinois University.
We
believe that Mr. Hecklinski is qualified to serve on the Board due to his extensive experience in coaching and recruiting college student-athletes.
Roger
Mason Jr. Mr. Mason has been a member of the Board of Directors since September 2022. Mr. Mason is a former professional basketball
player for the National Basketball Association, or NBA. Mr. Mason was selected with the 31st overall pick by the Chicago Bulls in the
2002 NBA draft and continued his NBA player career with various NBA teams through January 2014. Mr. Mason also played professional basketball
internationally for Olympiacos of Greece during the 2004–05 season and Hapoel Jerusalem in Israel during the 2005–06 season.
From August 2013 to September 2014, Mr. Mason served as First Vice President of the National Basketball Players Association, or NBPA,
and from November 2014 to December 2016, was the NBPA’s Deputy Executive Director. In March 2018, Mr. Mason co-founded and has since
served as the Chief Executive Officer of Vaunt. Vaunt, based in New York City, creates in-person, once-in-a-lifetime destination programming
and alternative competitions with pro athletes and entertainers. Mr. Mason earned a Bachelor of Science in Architecture/Business from
the University of Virginia in 2002, a Bachelor of Science in Business/Management from Union Institute & University, and an MBA from
Columbia Business School in 2017.
We
believe that Mr. Mason is qualified to serve on the Board due to his business acumen and success in numerous organizations. Additionally,
with Mr. Mason’s knowledge and skills as a former NBA player and Deputy Executive Director of the NBPA, Mr. Mason will be able to
provide insights, leadership, and expertise as it pertains to our technology, recruitment, and marketplace.
Greg Economou. Mr.
Economou has been a member of the Board of Directors since May 2023. Since March 2023, Mr. Economou has been Managing Director of Greg
Economou Consulting. From July 2019 to March 2023, Mr. Economou was co-founder and Chief Executive Officer of game1, LLC. From April 2017
to June 2019, Mr. Economou was Chief Commercial Officer and Head of Sports of Live Nation Entertainment, Inc. Mr. Economou earned a BA
in History and Communications.
We
believe that Mr. Economou is qualified to serve on the Board due to Mr. Economou’s executive-level experience with sports-related
businesses.
Peter
Borish. Mr. Borish has served as a member of the Board of Directors since February 2024. Since January 2015, Mr. Borish has been
the President and Chief Executive Officer of Computer Trading Corporation, an investment and advisory firm. Since December 2021, Mr. Borish
has also been a partner of Torsion Technologies, LLC. In addition, since 2015, Mr. Borish has been an independent trustee of RMB Investors
Trust, a registered management investment company. Since October 2023, Mr. Borish has also served as a director of CIBC Bancorp USA, a
subsidiary of Canadian Imperial Bank of Commerce (TSX: CM; NYSE: CM). Additionally, since September 2013, Mr. Borish has served as the
Board Advisor of ValueStream Labs, an accelerator for financial services technologies. From January 2013 to June 2020, Mr. Borish was
the Chief Strategist of Quad Group LLC, an investment firm. Mr. Borish graduated from the University of Michigan with an A.B. and earned
an M.P.P. in Public Policy from Gerald R. Ford School of Public Policy, University of Michigan.
We
believe that Mr. Borish is qualified to serve on the Board due to his prior experience serving in executive, director or trustee positions
in financial management companies and organizations.
Arrangements Between Officers and Directors
Our
directors currently have terms which will end when the directors of the Company are elected for new terms at the 2025 Annual Meeting,
subject to their prior death, resignation or removal. Officers serve at the discretion of the Board of Directors. There is no arrangement
or understanding between any director or executive officer and any other person pursuant to which he was or is to be selected as a director,
nominee or officer.
The
Nominating and Corporate Governance Committee of the Board (the “Nominating Committee”), the members of which are all non-management
directors, recommended each of the above directors as a nominee for election at the Annual Meeting and inclusion on the
Company’s proxy card.
Family Relationships
There
are no family relationships among any of our officers or directors.
Involvement in Certain Legal Proceedings
To the best of our knowledge,
none of our directors or executive officers have, during the past ten years, been involved in any legal proceedings described in
subparagraph (f) of Item 401 of Regulation S-K. There are no material proceedings to which any director, officer or affiliate
of the Company, any owner of record or beneficially of more than five percent of any class of voting securities of the Company, or any
associate of any such director, officer, affiliate of the Company, or security holder is a party adverse to the Company or has a material
interest adverse to the Company.
Vote Required
Directors are elected by a
plurality of the votes cast by stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote. The
five (5) nominees receiving the most “FOR” votes among votes properly cast in person or by proxy will be elected to the Board
as directors. You may vote “FOR” or “WITHHOLD” on each of the nominees for election as director.
Board Recommendation
THE BOARD RECOMMENDS THAT
YOU VOTE “FOR” EACH OF THE NOMINEES TO THE BOARD SET FORTH IN THIS PROPOSAL NO. 1.
PROPOSAL NO. 2
RATIFICATION OF THE APPOINTMENT OF BARTON
CPA AS THE COMPANY’S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE COMPANY’S FISCAL YEAR ENDING
DECEMBER 31, 2024
The Audit Committee of the
Board of Directors (the “Audit Committee”) has selected BARTON CPA as the Company’s independent registered public accounting
firm and principal accountant, to audit the financial statements of the Company for the fiscal year ending December 31, 2024. A representative
of BARTON CPA will be available at the Annual Meeting and will have the opportunity to make a statement at the Annual Meeting if they
desire to do so. Further, such representative will be available to respond to appropriate questions at the Annual Meeting.
Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure
Marcum LLP audited our consolidated
financial statements for the year ended December 31, 2021. On March 6, 2023, Marcum LLP resigned as the Company’s independent registered
public accounting firm. The audit report issued by Marcum LLP on January 24, 2023, did not contain an adverse opinion or a disclaimer
of opinion and was not qualified or modified as to audit scope or accounting principles, but included an explanatory paragraph that there
was substantial doubt as to the Company’s ability to continue as a going concern. Marcum LLP did not provide an audit report on
our financial statements for any period subsequent to December 31, 2021. Marcum LLP has not provided any audit services to the Company
subsequent to January 24, 2023.
During the year ended December
31, 2021 and subsequently during 2022 and through March 6, 2023, (i) there were no “disagreements” between us and Marcum LLP
(as that term is defined in Item 304(a)(1)(iv) of Regulation S-K promulgated by the SEC (“Regulation S-K”) and the related
instructions to this item) on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Marcum LLP, would have caused them to make reference to the subject matter
of the disagreements in connection with their report on the financial statements for such period, and (ii) there were no “reportable
events” as such term is defined in Item 304(a)(1)(v) of Regulation S-K, other than as described below.
During the year ended December
31, 2021, in connection with the audit of our financial statements as of and for the year ended December 31, 2021, several material weaknesses
in our internal control over financial reporting were identified. The material weaknesses related to the following: a) Ineffective controls
over period end financial disclosures and reporting process: Due to resource constraints, we have not formally defined internal controls
over the period end financial disclosure and reporting process, including the identification of subsequent events, which increases susceptibility
to fraud or error, and b) Revenue recognition – customer contracts: In connection with Marcum LLP’s testing of revenue, several
test selections did not have documentation such as a corresponding contract or third party written documentation of the customer’s
order.
We provided Marcum LLP with
a copy of the foregoing disclosures and requested Marcum LLP to furnish us with a letter addressed to the SEC stating whether or not Marcum
LLP agrees with the above disclosures, and we received a letter from Marcum LLP, stating that it agrees with the statements concerning
it in this proxy statement.
On March 1, 2023, we engaged
BARTON CPA as our new independent registered public accounting firm. During the year ended December 31, 2021 and subsequently during 2022
and through March 1, 2023, we (or any person on our behalf) did not consult with BARTON CPA regarding any of the matters described in
Items 304(a)(2)(i) or 304(a)(2)(ii) of Regulation S-K.
Principal Accountant Fees and Services
The aggregate fees billed
to the Company by BARTON CPA for the indicated services for each of the last two fiscal years were as follows:
| | |
Year Ended | |
| | |
December 31, | |
| | |
2023 | | |
2022 | |
| Audit Fees | |
$ | 57,299 | | |
$ | 0 | |
| Audit-Related Fees | |
| — | | |
| — | |
| Tax Fees | |
| — | | |
| — | |
| All Other Fees | |
| — | | |
| — | |
| Total | |
$ | 57,299 | | |
$ | 0 | |
As used in the table above,
the following terms have the meanings set forth below.
Audit Fees
Audit fees consist of aggregate
fees billed for each of the last two fiscal years for professional services performed by the Company’s principal accountant for
the audit of the financial statements included in our Annual Report on Form 10-K and review of the financial statements included in our
quarterly Form 10-Q filings, reviews of registration statements and issuances of consents, and services that are normally provided in
connection with statutory and regulatory filings or engagements for those fiscal years.
Audit-Related Fees
Audit-related fees consist
of aggregate fees billed for each of the last two fiscal years for assurance and related services performed by the Company’s principal
accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported under
the paragraph captioned “Audit Fees” above. We did not engage our principal accountant to provide assurance or related
services during the last two fiscal years.
Tax Fees
Tax fees consist of aggregate
fees billed for each of the last two fiscal years for professional services performed by the Company’s principal accountant with
respect to tax compliance, tax advice, tax consulting and tax planning. We did not engage our principal accountant to provide tax compliance,
tax advice or tax planning services during the last two fiscal years.
All Other Fees
All other fees consist of
aggregate fees billed for each of the last two fiscal years for products and services provided by the Company’s principal accountant,
other than for the services reported under the headings “Audit Fees,” “Audit-Related Fees” and “Tax
Fees” above. We did not engage our principal accountant to render services to us during the last two fiscal years, other than
as reported above.
Pre-Approval Policies and Procedures
The
Audit Committee has reviewed and approved, or the Board of Directors has reviewed and approved by
unanimous written consent, all fees earned in 2023 and 2022 by the Company’s principal accountant, and actively monitored the relationship
between audit and non-audit services provided. The Audit Committee and the Board of Directors have concluded that the fees earned by the
principal accountant were consistent with the maintenance of the principal accountant’s independence in the conduct of its auditing
functions.
The
Company’s principal accountant did not provide, and the Audit Committee and the Board of Directors did not approve, any of the services
described under “—Tax Fees”, “—Audit-Related Fees”, or “—All Other Fees”
above for either of the last two fiscal years.
The
Audit Committee annually considers the provision of audit services. The Audit Committee must pre-approve all services provided and fees
earned by the Company’s principal accountant. The Audit Committee must pre-approve all services provided and fees earned by the
Company’s independent registered public accounting firm. The Audit Committee has established pre-approval policies and procedures
that are detailed as to the particular service, that require that the Audit Committee be informed of each service, and that do not include
delegation of the Audit Committee’s responsibilities under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), to management. The pre-approval policies and procedures provide only for defined audit services and, if any, specified audit-related
fees, tax services, and other services, and may impose specific dollar value limits for the fees for pre-approved services. The Audit
Committee will also consider on a case-by-case basis specific engagements that are not otherwise pre-approved under the pre-approval policies
and procedures or that materially exceed pre-approved fee amounts. On an interim basis, any proposed engagement that does not fit within
the definition of a pre-approved service may be presented to a designated member of the Audit Committee for approval and to the full Audit
Committee at its next regular meeting.
The
percentage of hours expended on the Company’s principal accountant’s engagement to audit the Company’s financial statements
for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time,
permanent employees was not greater than 50%.
Vote Required
Ratification of BARTON CPA
as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024 requires the affirmative
vote of a majority of shares present and entitled to vote (meaning the number of shares of common stock voted “FOR” this proposal
must exceed the number of shares of common stock voted “AGAINST” or “ABSTAIN” as to this proposal). Abstentions
will have the same effect on this proposal as a vote “AGAINST”. There are no broker “non-votes” expected for this
proposal because brokers have discretion to vote the shares held for the beneficial owners without voting instructions.
The selection of the Company’s
independent registered public accounting firm is not required to be submitted to a vote of our stockholders for ratification. However,
we are submitting this matter to the stockholders as a matter of good corporate governance. Even if the appointment is ratified, the Audit
Committee may, in its discretion, appoint a different independent registered public accounting firm at any time during the year if it
determines that such a change would be in the best interests of us and our stockholders. If the appointment is not ratified, the Audit
Committee will reconsider whether or not to retain BARTON CPA.
Board Recommendation
THE BOARD RECOMMENDS A VOTE
“FOR” PROPOSAL NO. 1, RATIFICATION OF THE APPOINTMENT OF BARTON CPA AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2024.
AUDIT COMMITTEE REPORT
The following Audit Committee
Report shall not be deemed to be “soliciting material,” deemed “filed” with the SEC or subject to the liabilities
of Section 18 of the Exchange Act. Notwithstanding anything to the contrary set forth in any of the Company’s previous filings
with the SEC that might incorporate by reference future filings, including this proxy statement, in whole or in part, the following Audit
Committee Report shall not be incorporated by reference into any such filings.
In the performance of its oversight function, the
Audit Committee has:
| ● | reviewed and discussed with management the Company’s
annual audited financial statements for the fiscal year ended December 31, 2023; |
| ● | discussed with BARTON CPA, the Company’s independent
registered public accounting firm, the matters required to be discussed by the applicable requirements of the Public Company Accounting
Oversight Board (“PCAOB”) and the SEC; |
| ● | received from BARTON CPA the written disclosures and the letter
required by applicable requirements of the PCAOB regarding BARTON CPA’s communication with the Audit Committee concerning independence;
and |
| ● | discussed with BARTON CPA its independence. |
Based on the review and discussions
referred to above, the Audit Committee recommended to the Board that the audited financial statements for the fiscal year ended December
31, 2023 be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for filing with the
SEC.
| |
Submitted by the Audit Committee |
| |
Peter Borish, Chairman |
| |
Roger Mason Jr. |
| |
Greg Economou |
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Securities Ownership of Certain Beneficial
Owners and Management
The following table sets forth
certain information with respect to the beneficial ownership of each class of our voting securities as of the Record Date for (i) each
of our named executive officers, other executive officers, directors and director nominees; (ii) all of our executive officers and directors
as a group; and (iii) each other stockholder known by us to be the beneficial owner of more than 5% of our outstanding voting securities.
Beneficial ownership is determined
in accordance with SEC rules and generally includes voting or investment power with respect to securities. For purposes of this table,
a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person or any
member of such group has the right to acquire within sixty (60) days of the Record Date. For purposes of computing the percentage of outstanding
shares of each class of our voting securities held by each person or group of persons named below, any shares that such person or persons
has the right to acquire within sixty (60) days of the Record Date are deemed to be outstanding for such person, but not deemed to be
outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially
owned does not constitute an admission of beneficial ownership by any person.
Unless otherwise indicated,
the address of each beneficial owner listed in the table below is c/o Signing Day Sports, Inc., 8355 East Hartford Rd., Suite 100, Scottsdale,
AZ 85255.
| Title of Class | |
Name of Beneficial Owner | |
Amount and Nature of Beneficial Ownership | | |
Percent of Class (%)(1) | |
| Common Stock | |
Daniel Nelson, Chief Executive Officer, Chairman, and Director | |
| 1,044,851 | (2) | |
| 6.4 | |
| Common Stock | |
Damon Rich, Interim Chief Financial Officer | |
| 20,000 | | |
| 0.1 | |
| Common Stock | |
Jeffry Hecklinski, President and Director | |
| 240,625 | (3) | |
| 1.5 | |
| Common Stock | |
Craig Smith, Chief Operating Officer | |
| 202,500 | (4) | |
| 1.3 | |
| Common Stock | |
Roger Mason Jr., Director | |
| 14,000 | (5) | |
| * | |
| Common Stock | |
Greg Economou, Director | |
| 10,000 | (6) | |
| * | |
| Common Stock | |
Peter Borish, Director | |
| 43,796 | | |
| * | |
| Common Stock | |
All directors and executive officers (7 persons) | |
| 1,775,772 | | |
| 10.9 | % |
| Common Stock | |
Dennis Gile(7) | |
| 2,176,377 | | |
| 13.5 | |
| Common Stock | |
Virginia Byrd(8) | |
| 817,785 | | |
| 5.1 | |
| Common Stock | |
Jodi B. Nelson(9) | |
| 1,044,851 | (9) | |
| 6.4 | |
| Common Stock | |
David O’Hara(10) | |
| 45,000 | | |
| 0.3 | |
| Common Stock | |
Richard Symington(11) | |
| 100,000 | | |
| 0.6 | |
| * | Non-officer director beneficially owning less than 1% of the
shares of the Company’s common stock. |
| (1) | Based on 16,097,086 shares of common stock and no other voting
securities issued and outstanding as of the Record Date. |
| (2) | The shares of common stock beneficially owned consist of (i) 200,000 shares of common stock held by Daniel
Nelson, (ii) 709,851 shares of common stock held by The Nelson Revocable Living Trust, an Arizona
trust provided for by the Nelson Revocable Living Trust Agreement established on March 9, 1999 and amended and restated on November 21,
2005 (the “Nelson Trust”), (iii) 5,000 shares of common stock issuable upon the
exercise of an option held by Daniel Nelson, (iv) 30,000 shares of common stock issuable
upon the exercise of an option held by Daniel Nelson, and (v) 100,000 shares of common stock issuable
upon the exercise of an option held by Daniel Nelson. Daniel Nelson and Jodi B. Nelson, who
is the spouse of Mr. Nelson, are the co-trustees of the Nelson Trust. Mr. Nelson is deemed to beneficially own the shares of common stock
beneficially owned by the Nelson Trust and have shared voting and dispositive power with Ms. Nelson over its shares. Mr. Nelson also has
shared voting and dispositive power with Ms. Nelson over the shares of common stock held by Mr. Nelson and that may be purchased by exercise
of Mr. Nelson’s stock options. |
| (3) | Consists of (i) 220,000 shares of common stock and (ii) 20,625
shares of common stock issuable upon the exercise of an option within 60 days of the Record Date. |
| (4) | Consists of (i) 190,000 shares of common stock and (ii) 12,500
shares of common stock issuable upon the exercise of an option within 60 days of the Record Date. |
| (5) | Consists of 16,000 shares of common stock issuable upon the
exercise of an option within 60 days of the Record Date. |
| (6) | Consists of 10,000 shares of common stock issuable upon the
exercise of an option within 60 days of the Record Date. |
| (7) | Dennis Gile’s last
known address is 4010 E. Leland St., Mesa, AZ 85215. |
| (8) | The shares of common stock beneficially owned consist of 50,000
shares of common stock held by Virginia Byrd Revocable Trust and 767,785 shares of common stock held by Byrd Enterprises of Arizona,
Inc., an Arizona corporation (“Byrd Enterprises”). Virginia Byrd, Byrd Enterprises’ president and sole shareholder,
is deemed to beneficially own the shares of common stock beneficially owned by Byrd Enterprises and has sole voting and dispositive power
over its shares. Virginia Byrd Revocable Trust is an Indiana trust provided for by the Virginia Byrd Revocable Trust Agreement established
on February 6, 2009. Virginia Byrd, trustee of the Virginia Byrd Revocable Trust, is deemed to beneficially own the shares of common
stock beneficially owned by the Virginia Byrd Revocable Trust and have sole voting and dispositive power over its shares. Virginia Byrd’s
last known address is 500 Polk Street, Suite 37, Greenwood, IN 46143. |
| (9) | The shares of common stock beneficially owned consist of (i)
200,000 shares of common stock held by Daniel Nelson, (ii) 709,851 shares of common stock held by the Nelson Trust, (iii) 5,000 shares
of common stock issuable upon the exercise of an option held by Daniel Nelson, (iv)
30,000 shares of common stock issuable upon the exercise of an option held by Daniel Nelson,
and (v) 100,000 shares of common stock issuable upon the exercise of an option held by Daniel
Nelson. Jodi B. Nelson is a co-trustee of the Nelson Trust and is the spouse of Mr. Nelson,
and is deemed to beneficially own the shares of common stock beneficially owned by each of the Nelson Trust and Mr. Nelson and have shared
voting and dispositive power over such shares. Ms. Nelson’s business address is 9820 E Thompson Peak Pkwy, Lot 623, Scottsdale,
AZ 85255. |
| (10) | David O’Hara was Chief Operating Officer of the Company
from July 2022 to March 2024 and is a named executive officer. David O’Hara’s last known address is 15212 38th PL NE, Lake
Forest Park, WA 98155. |
| (11) | Richard Symington was President
and Chief Marketing Officer of the Company from April 2023 to May 2023 and was President and Chief Technology Officer of the Company
from November 2023 to February 2024 and is a named executive officer. Richard Symington’s
last known address is 6100 E Huntress Drive, Paradise Valley, AZ 85253. |
Changes in Control
There are no arrangements
known to us, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change
in control of the Company.
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
During the year ended December
31, 2023, the Board held four meetings. During the year ended December 31, 2023, each incumbent member of the Board attended at least
75% of the aggregate of the total number of meetings of the Board and the total number of meetings held by all committees of the Board
on which he or she served during the periods that he or she served, except for Greg Economou. Mr. Economou attended 67% of the aggregate
of all meetings of the Board and its committees on which he served during 2023. Mr. Economou had an unanticipated conflict with one committee
meeting, reducing his overall level of attendance. We anticipate Mr. Economou’s attendance to be higher in future years.
We do not have a policy requiring
Board members to attend the annual meeting of our stockholders. The Company did not hold an annual meeting of stockholders during 2023.
Our Independent Directors
The rules of the NYSE American
generally require that a majority of an issuer’s board of directors consist of independent directors. The Board of Directors currently
consists of five directors, three of whom, Roger Mason Jr., Greg Economou, and Peter Borish, have each been determined by the Board to
be an “independent director” within the meaning of the NYSE American’s rules, and two of whom, Daniel Nelson and Jeffry
Hecklinski, have not been determined by the Board to be an “independent director” within the meaning of the NYSE American’s
rules. We have entered into an independent director agreement with each of Mr. Mason, Mr. Economou, and Mr. Borish. For discussion of
compensation and indemnification arrangements with our independent directors for services performed as members of the Board, see “Executive
Compensation – Additional Narrative to Director Compensation”, which is incorporated by reference herein.
Governance Structure
Currently, our Chief Executive
Officer is also our Chairman. The Board of Directors believes that, at this time, having a combined Chief Executive Officer and Chairman
is the appropriate leadership structure for the Company. In making this determination, the Board of Directors considered, among other
matters, Mr. Daniel Nelson’s experience and tenure of having been an officer and director of the Company since 2022, and believes
that Mr. Nelson is highly qualified to act as both Chairman and Chief Executive Officer due to his experience, knowledge, and personality.
Among the benefits of a combined Chief Executive Officer/Chairman considered by the Board is that such structure promotes clearer leadership
and direction for the Company and allows for a single, focused chain of command to execute our strategic initiatives and business plans.
The Board’s
Role in Risk Oversight
The
Board and its committees oversee risk management so that the assets of the Company are properly safeguarded, that the appropriate financial
and other controls are maintained, and that our business is conducted wisely and in compliance with applicable laws and regulations and
proper governance. Included in these responsibilities is the Board’s oversight of the various risks facing the Company. In this
regard, the Board seeks to understand and oversee critical business risks. The Board does not view risk in isolation. Risks are considered
in virtually every business decision and as part of our business strategy. The Board recognizes that it is neither possible nor prudent
to eliminate all risk. Indeed, purposeful and appropriate risk-taking is essential for the Company to be competitive on a global basis
and to achieve its objectives.
While
the Board oversees risk management, Company management is charged with managing risk. Management communicates routinely with the Board
and individual directors on the significant risks identified and how they are being managed. Directors are free to, and indeed often do,
communicate directly with senior management.
The
Board administers its risk oversight function as a whole by making risk oversight a matter of collective consideration. Much of this work
has been delegated to committees, which will meet regularly and report back to the full Board. The Audit Committee oversees risks related
to our financial statements, the financial reporting process, accounting and legal matters. The Compensation Committee of the Board (the
“Compensation Committee”) evaluates the risks and rewards associated with our compensation philosophy and programs. The Nominating
Committee evaluates risk associated with management decisions and strategic direction. The Disclosure Controls and Procedures Committee
of the Board (the “Disclosure Controls and Procedures Committee”) assists as needed in assessing risks relevant to achieving
the goal of accurate and timely disclosure, forming a basis for determining how the risks should be managed.
Board Committees
The Board of Directors established
the Audit Committee in accordance with Section 3(a)(58)(A) of the Exchange Act, the Compensation Committee, the Nominating Committee,
and the Disclosure Controls and Procedures Committee. All committees operate under a written charter adopted by the Board, each of which
is available on our Internet website at https://ir.signingdaysports.com.
In addition, the Board of
Directors may, from time to time, designate one or more additional committees, which shall have the duties and powers granted to it by
the Board.
Audit Committee
The Audit Committee is responsible
for, among other things: (i) the integrity of the Company’s financial statements and financial reporting process and the Company’s
systems of internal accounting and financial controls, (ii) the performance of the internal audit services function, (iii) the annual
independent audit of the Company’s financial statements, the engagement of the independent auditors and the evaluation of the independent
auditors’ qualifications, independence and performance, (iv) the compliance by the Company with legal and regulatory requirements,
including the Company’s disclosure of controls and procedures, (v) the approval of related party transactions, (vi) the evaluation
of enterprise risk issues, and (vii) the fulfillment of the other responsibilities set out in its charter.
Roger Mason Jr., Greg Economou,
and Peter Borish, each of whom has been determined by the Board of Directors to meet the “independence” requirements of Rule
10A-3 under the Exchange Act, the definition of an “independent director” under the NYSE American’s rules, and the other
requirements for Audit Committee membership under NYSE American’s rules, serve on the Audit Committee, with Mr. Borish serving as
the chairman. The Board has determined that Mr. Borish qualifies as an “audit committee financial expert” as defined by Item
407(d)(5) of Regulation S-K promulgated by the SEC.
Compensation Committee
The Compensation Committee
is responsible for, among other things: (i) reviewing and approving the remuneration of our executive officers; (ii) evaluating and making
recommendations to the Board regarding the compensation of our independent directors; (iii) evaluating and making recommendations to the
Board regarding equity-based and incentive compensation plans, policies and programs; and (iv) the fulfillment of the other responsibilities
set out in its charter.
The Compensation Committee
has the authority to evaluate the performance of the Chief Executive Officer, or person performing an equivalent function, and, either
as a committee or together with the other independent directors (as directed by the Board), determine and approve the compensation of
the Chief Executive Officer, or person performing an equivalent function, based on this evaluation. The Chief Executive Officer, or person
performing an equivalent function, may not be present during voting or deliberations on his or her compensation. In addition, upon the
engagement of and annually thereafter, the Compensation Committee has the authority to determine and approve the compensation paid to
the Company’s chief financial officer and any other executive officers that serve in executive officer capacities for the Company.
The Compensation Committee must approve all long-term incentive awards for the executive officers of the Company. The Compensation Committee
may make factual determinations concerning any equity incentive plan.
The Compensation Committee
may retain a compensation consultant, independent legal counsel or other adviser. During the fiscal year ended December 31, 2023, the
Compensation Committee did not retain any compensation consultant, independent legal counsel or other adviser.
The Compensation Committee
may grant the right to receive indemnification and right to be paid by the Company the expenses incurred in defending any proceeding in
advance to its disposition, to any employees in their capacity as officer, director, employee or agent of the Company, any of the directors
of the Company and any of the Company’s executive officers to the fullest extent of the provisions of the Bylaws.
In addition, the Compensation
Committee may use reasonable amounts of time of the Company’s independent
accountants, outside lawyers and other internal staff to assist and advise the Committee in connection with its responsibilities. The
Committee must keep the Company’s chief financial officer informed as to the general range of anticipated expenses for outside consultants.
The Compensation Committee
also periodically evaluates and makes recommendations to the Board concerning the total compensation package for directors, including
fees, reimbursable expenses, and equity compensation.
Roger Mason Jr., Greg Economou,
and Peter Borish, each of whom has been determined by the Board of Directors to meet the “independence” requirements of Rule
10C-1 under the Exchange Act and the definition of an “independent director” under the NYSE American’s rules, serve
on the Compensation Committee, with Mr. Mason serving as the chairman. The members of the Compensation Committee are also “non-employee
directors” within the meaning of Section 16 of the Exchange Act. The Compensation Committee assists the Board in reviewing and approving
the compensation structure, including all forms of compensation, relating to our directors and executive officers.
Nominating and Corporate Governance Committee
The Nominating Committee is
responsible for, among other things: (i) identifying and evaluating individuals qualified to become members of the Board of Directors
by reviewing nominees for election to the Board submitted by stockholders and recommending to the Board director nominees for each annual
meeting of stockholders and for election to fill any vacancies on the Board; (ii) advising the Board with respect to Board organization,
desired qualifications of Board members, the membership, function, operation, structure and composition of committees (including any committee
authority to delegate to subcommittees), and self-evaluation and policies; (iii) advising on matters relating to corporate governance
and monitoring developments in the law and practice of corporate governance; and (iv) overseeing compliance with the Company’s Code
of Ethics and Business Conduct (the “Code of Ethics”) and conduct of the Company’s officers and directors.
The Nominating Committee’s
methods for identifying candidates for election to the Board (other than those proposed by our stockholders, as discussed below) will
include the solicitation of ideas for possible candidates from a number of sources, including members of the Board, our executives, individuals
personally known to the members of the Board, and other research. The Nominating Committee may also, from time to time, retain one or
more third-party search firms to identify suitable candidates.
In making director recommendations,
the Nominating Committee may consider some or all of the following factors: (i) the candidate’s judgment, skill, experience with
other organizations of comparable purpose, complexity and size, and subject to similar legal restrictions and oversight; (ii) the interplay
of the candidate’s experience with the experience of other Board members; (iii) the extent to which the candidate would be a desirable
addition to the Board and any committee thereof; (iv) whether or not the person has any relationships that might impair his or her independence;
and (v) the candidate’s ability to contribute to the effective management of the Company, taking into account the needs of the Company
and such factors as the individual’s experience, perspective, skills and knowledge of the industry in which we operate.
Roger Mason Jr., Greg Economou,
and Peter Borish, each of whom has been determined by the Board of Directors to meet the definition of an “independent director”
under the NYSE American’s rules, serve on the Nominating Committee, with Mr. Economou serving as the chairman. The Nominating Committee
assists the Board of Directors in selecting individuals qualified to become our directors and in determining the composition of the Board
and its committees.
Disclosure Controls and Procedures Committee
The Disclosure Controls and
Procedures Committee is responsible for, among other things: (i) the identification and disclosure of material information about the Company;
(ii) the accuracy, completeness and timeliness of the Company’s financial reports under the Exchange Act and the rules of the NYSE
American; (iii) the review and, as necessary, help with the revision of the Company’s disclosure controls and procedures; (iv) the
assistance with documenting, and monitoring the integrity and evaluating the effectiveness of, the Company’s disclosure controls
and procedures; and (v) the review of the Company’s reports filed with the SEC, press releases containing financial information
or other information material to the Company’s security holders.
The members of the Disclosure
Controls and Procedures Committee are the officers and directors of the Company. Craig Smith, Secretary and Chief Operating Officer of
the Company, acts as the chairman of the committee.
Director Nominations
Criteria for Board Membership
The Nominating Committee is
responsible for periodically evaluating the desirability of and recommending to the Board any changes in the size and composition of the
Board or the qualifications for Board membership. In making its recommendations to the Board, the Nominating Committee considers, evaluates
and selects directors, including nominees recommended by stockholders, in accordance with the following general and specific considerations:
| ● | General Considerations. The Nominating Committee must
ensure that the Board is comprised of at least enough independent directors to comply with the requirements of the NYSE American as well
as applicable rules and regulations of the SEC. In making its recommendations, the Committee may consider some or all of the following
factors: (1) The candidate’s judgment, skill, experience with other organizations of comparable purpose, complexity and size, and
subject to similar legal restrictions and oversight; (2) The interplay of the candidate’s experience with the experience of other
Board members; (3) The extent to which the candidate would be a desirable addition to the Board and any committee thereof; (4) Whether
or not the person has any relationships that might impair his or her independence, including, but not limited to, business, financial
or family relationships with the Company’s management; and (5) The candidate’s ability to contribute to the effective management
of the Company, taking into account the needs of the Company and such factors as the individual’s experience, perspective, skills
and knowledge of the industries in which the Company operates. |
| ● | Specific Considerations. In addition to the foregoing
general considerations, the Nominating Committee will develop, reevaluate at least annually and modify as appropriate a set of specific
considerations outlining the skills, experiences (whether in business or in other areas such as public service, academia or scientific
communities), particular areas of expertise, specific backgrounds, and other characteristics for which there is a specific need on the
Board and which would enhance the effectiveness of the Board and its committees given its current composition. |
The Nominating Committee will
evaluate each new director candidate and each incumbent director before recommending that the Board nominate or re-nominate such individual
for election or reelection (or that the Board elect such individual on an interim basis) as a director based upon the extent to which
such individual satisfies the general criteria above and will contribute significantly to satisfying the overall mix of specific criteria
identified above. Each annual decision to re-nominate an incumbent director must be based upon a careful consideration of such individual’s
contributions, including the value of his or her experience as a director of the Company, the availability of new director candidates
who may offer unique contributions and the Company’s changing needs.
The Nominating Committee will
seek to identify potential director candidates who will strengthen the Board and will contribute to the overall mix of considerations
identified above. This process should include establishing procedures for soliciting and reviewing potential nominees from directors and
stockholders and for notifying those who suggest nominees of the outcome of such review. The Nominating Committee will have sole authority
to retain and terminate any search firms to be used to identify director candidates, including sole authority to approve any such search
firm’s fees and other terms of retention.
The Nominating Committee will
submit to the Board the candidates for director to be recommended by the Board for election at each annual meeting of stockholders and
to be added to the Board at any other times due to any expansion of the Board, director resignations or retirements or otherwise. In the
event of a vacancy on the Board, following determination by the Board that such vacancy must be filled, the Nominating Committee will
identify candidates for director qualified to fill such vacancy that satisfies the general criteria above.
The Nominating Committee does
not have a policy with regard to the consideration of any director candidates recommended by stockholders because the committee considers
candidates proposed by stockholders and evaluates them using the same criteria as for other candidates. For additional information regarding
stockholder nominations, see “Stockholder Recommendations” below.
Each of the nominees included
in this proxy statement and the Company’s proxy card for the Annual Meeting was recommended for inclusion by all of the
members of the Board, which consists of our Chief Executive Officer, another executive officer, and three non-management directors.
Board Diversity
The Board and the Nominating
Committee do not have a specific diversity policy, but consider diversity of race, ethnicity, gender, age, cultural background and professional
experiences in evaluating candidates for Board membership. Diversity is important because a variety of points of view contribute to a
more effective decision-making process.
Stockholder Recommendations
The Nominating Committee is
responsible for the consideration of any written stockholder recommendations for candidates for the Board, which recommendations should
be delivered or mailed, postage prepaid, to:
Nominating and Corporate Governance Committee
Signing Day Sports, Inc.
8355 East Hartford Rd., Suite 100
Scottsdale, Arizona 85255
Stockholder recommendations
must include the following information to be considered by the Nominating Committee: (a) all information relating to such recommended
candidate as would be required to be disclosed for a director nominee pursuant to Regulation 14A under the Exchange Act (including such
person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected) and as required
for stockholder nominations of director candidates pursuant to the Company’s Bylaws; (b) the names and addresses of the stockholders
making the recommendation and the number of shares of the Company’s common stock which are owned beneficially and of record by such
stockholders; and (c) other appropriate biographical information and a statement as to the qualification of the nominee. There are no
pre-established qualifications, qualities or skills at this time that any particular director nominee must possess and nominees are not
discriminated against on the basis of race, religion, national origin, sexual orientation, disability or any other basis proscribed by
law.
Any recommendations received
from our security holders will be evaluated in the same manner that potential nominees recommended by Board members, management or other
parties are evaluated.
Communications with the Board of Directors
Stockholders seeking to communicate
with the Board of Directors should submit their written comments to Mr. Daniel Nelson, our Chairman, Chief Executive Officer and a member
of the Board, at Signing Day Sports, Inc., 8355 East Hartford Rd., Suite 100, Scottsdale, Arizona 85255. Mr. Nelson will forward such
communications to each member of the Board; provided that, if in the opinion of Mr. Nelson it would be inappropriate to send a particular
stockholder communication to a specific director, such communication will only be sent to the remaining directors (subject to the remaining
directors concurring with such opinion).
Code of Ethics and Business Conduct
We have adopted the Code of
Ethics, which applies to all of our directors, officers and employees, including our principal executive officer, principal financial
officer and principal accounting officer. The Code of Ethics addresses, among other things, honesty and ethical conduct, conflicts of
interest, compliance with laws, regulations and policies, including insider trading regulations, the Company’s disclosure controls
and procedures and internal control over financial reporting, and reporting of violations of the Code of Ethics.
The full text of the Code
of Ethics is posted on our website at https://www.ir.signingdaysports.com. Any waiver of the Code of Ethics for directors or executive
officers must be approved by the Audit Committee. We will disclose future amendments to the Code of Ethics, or waivers from the Code of
Ethics for our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing
similar functions, on our website within four business days following the date of the amendment or waiver. In addition, we will disclose
any waiver from the Code of Ethics for our other executive officers and our directors on our website. A copy of the Code of Ethics will
also be provided free of charge upon request to: Secretary, Signing Day Sports, Inc., 8355 East Hartford Rd., Suite 100, Scottsdale, Arizona
85255.
Hedging and Pledging Prohibition
Under our Insider Trading
Policy, our directors, officers, and key employees (and each such individual’s family members, household members and entities that
are controlled or influenced by such individual, as described in the policy) are prohibited from engaging in the following transactions
at any time: (i) engaging in short sales of our securities; (ii) trading in put options, call options or other derivative securities on
an exchange or in any other organized market; (iii) engaging in hedging or monetization transactions in our securities, including through
the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds, that hedge or offset, or
are designed to hedge or offset, any decrease in the market value of our equity securities; and (iv) holding our securities in a margin
account or otherwise pledging our securities as collateral for a loan unless the collateral arrangement is specifically approved in advance
by the policy administrator. These prohibitions apply to securities granted to the key employee, officer or director by the Company as
part of the compensation of the employee, officer or director, and securities held by the key employee, officer or director.
Director Compensation
Generally, the Board believes
that the level of director compensation should be based on time spent carrying out Board and committee responsibilities and be competitive
with comparable companies. In addition, the Board believes that a significant portion of director compensation should align director interests
with the long-term interests of stockholders. The Board allows changes in its director compensation practices based on recommendations
and approvals of the Compensation Committee.
Director Compensation Table
The directors of the Company
during the fiscal year ended December 31, 2023 were compensated for services as directors as follows:
| Name | |
Fees
Earned or
Paid in
Cash | | |
Stock
Awards | | |
Option Awards | | |
Non-Equity
Incentive Plan Compensation | | |
Nonqualified
Deferred Compensation Earnings | | |
All Other Compensation | | |
Total | |
| Clayton Adams(1) | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Glen Kim(2) | |
$ | - | | |
$ | - | | |
$ | - | (3) | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Martin Lanphere(4) | |
$ | - | | |
$ | - | | |
$ | 5,520 | (5) | |
$ | - | | |
$ | - | | |
$ | 25,176 | (6) | |
$ | 30,696 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Roger Mason Jr. | |
$ | - | | |
$ | - | | |
$ | - | (7) | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Noah (Jed) Smith(8) | |
$ | - | | |
$ | - | | |
$ | - | (9) | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Richard Symington(10) | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 5,000 | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Greg Economou(11) | |
$ | - | | |
$ | - | | |
$ | 24,480 | (12) | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 24,480 | |
| (1) | Clayton Adams was a director of the Company from July 2022 to
April 2023. |
| (2) | Glen Kim was a director of the Company from July 2022 to February
2024. |
| (3) | Glen Kim was granted an option to purchase 5,000 shares of common
stock on September 28, 2022 with an exercise price of $3.10 per share. The option was outstanding as of December 31, 2023. |
| (4) | Martin Lanphere was a director of the Company from September
2022 to December 2023. |
| (5) | Martin Lanphere was granted an option to purchase 3,000 shares
of common stock on April 11, 2023 with an exercise price of $2.50 per share. The aggregate grant date fair value of this option as set
forth in this table was computed in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”)
Topic 718, Compensation—Stock Compensation (“ASC Topic 718”), based on the assumptions described in “Management’s
Discussion and Analysis of Financial Condition and Results of Operation – Critical Accounting Policies – Stock-Based Compensation”.
Mr. Lanphere was also granted an option to purchase 27,000 shares of common stock on September 28, 2022 with an exercise price of $3.10
per share. The options were outstanding as of December 31, 2023. |
| (6) | Consisted of reimbursement of expenses for service on the board
of directors. |
| (7) | Roger Mason Jr. was granted an option to purchase 24,000 shares
of common stock on September 9, 2022 with an exercise price of $3.10 per share. The option remained subject to vesting as to 14,000 shares
as of December 31, 2023, which vest in 2,000-share increments over three years on each subsequent 9th day of March, June, September,
and December. No other options, shares of stock or equity incentive plan awards subject to vesting were held by Mr. Mason on December
31, 2022. |
| (8) | Noah (Jed) Smith was a director of the Company from July 2022
to April 2023. |
| (9) | Noah (Jed) Smith was granted an option to purchase 5,000 shares
of common stock on September 28, 2022 with an exercise price of $3.10 per share. The option had expired unexercised as of December 31,
2023. |
| (10) | Richard Symington was a director of the Company from April 2023
to May 2023, and from December 2023 to February 2024. |
| (11) | Greg Economou has been a director of the Company since May 2023. |
| (12) | Greg Economou was granted an option to purchase 24,000 shares
of common stock on May 9, 2023 with an exercise price of $2.50 per share. The aggregate grant date fair value of this option was computed
in accordance with ASC Topic 718 based on the assumptions described in “Management’s Discussion and Analysis of Financial
Condition and Results of Operation – Critical Accounting Policies – Stock-Based Compensation”. The option remained
subject to vesting as to 20,000 shares as of December 31, 2023, which vest in 2,000-share increments on each subsequent 9th day of August,
November, February, or May which most closely follows from the vesting start date of May 9, 2023. |
Additional Narrative to Director Compensation
Each of the Company’s
independent directors, Roger Mason Jr., Greg Economou, and Peter Borish, has entered into an independent director agreement. We also entered
into an independent director agreement with former directors Clayton Adams, Glen Kim, Martin Lanphere, and Noah (Jed) Smith. In accordance
with their independent director agreements, we granted equity awards and, subsequent to 2023 as to Mr. Borish, cash fees, to these current
and former directors. Mr. Adams, Mr. Kim, Mr. Lanphere, and Mr. Smith resigned from the board of directors in April 2023, February 2024,
December 2023, and April 2023, respectively, and their independent director agreements expired in accordance with their terms at such
times.
During 2023, an option to
purchase 3,000 shares of common stock was awarded to Mr. Lanphere with an exercise price of $2.50 per share; and an option to purchase
24,000 shares of common stock was awarded to Mr. Economou with an exercise price of $2.50 per share. The option awarded to Mr. Lanphere
expired unexercised. The option awarded to Mr. Economou is subject to vesting conditions.
We will also reimburse each
independent director for pre-approved reasonable business-related expenses incurred in good faith in connection with the performance of
the independent director’s duties for us.
In accordance with our independent
director agreements, we separately entered into an indemnification agreement with each of our current independent directors and Mr. Adams,
Mr. Kim, Mr. Lanphere, and Mr. Smith. Each indemnification agreement provides for indemnification to the fullest extent permitted by law,
including: (i) all expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by a director,
or on their behalf, in connection with any proceeding other than proceedings by or in the right of the Company or any claim, issue or
matter therein, if the director acted in good faith and in a manner the director reasonably believed to be in or not opposed to the best
interests of the Company, and with respect to any criminal proceeding, had no reasonable cause to believe the director’s conduct
was unlawful; (ii) all expenses actually and reasonably incurred by a director, or on their behalf, in connection with a proceedings by
or in the right of the Company if the director acted in good faith and in a manner the director reasonably believed to be in or not opposed
to the best interests of the Company, provided that if applicable law so provides, no indemnification against such expenses shall be made
in respect of any claim, issue or matter in such proceeding as to which the director shall have been adjudged to be liable to the Company
unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made; (iii)
to the extent that a director is, by reason of the director’s director status, a party to and is successful, on the merits or otherwise,
in any proceeding, including by dismissal of such proceeding with or without prejudice, then the director shall be indemnified to the
maximum extent permitted by law, as such may be amended from time to time, against all expenses actually and reasonably incurred by the
director or on the director’s behalf in connection therewith; and (iv) all expenses, judgments, penalties, fines and amounts paid
in settlement actually and reasonably incurred by a director or on a director’s behalf if, by reason of the director’s status
as a director, the director is, or is threatened to be made, a party to or participant in any proceeding (including a proceeding by or
in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing
of the director, except where the payment is finally determined (under the procedures, and subject to the presumptions, set forth in the
indemnification agreements) to be unlawful. The Company shall also advance all such expenses incurred by or on behalf of each director
in connection with any of the above proceedings by reason of the director’s director status within 30 days after the receipt by
the Company of a statement or statements from the director requesting such advance or advances from time to time, whether prior to or
after final disposition of such proceeding. Such statement or statements shall reasonably evidence the expenses incurred by the director
and shall include or be preceded or accompanied by a written undertaking by or on behalf of the director to repay any expenses advanced
if it shall ultimately be determined that the director is not entitled to be indemnified against such expenses. Any advances and undertakings
to repay shall be unsecured and interest-free. The indemnification agreements also provide for payments by the Company for the entire
amount of any judgment or settlement of any action, suit or proceeding in which it is liable or would be liable if joined in such action,
subject to the other terms and provisions of the indemnification agreements, and certain other indemnification and payment obligations.
The indemnification agreements also provide that if we maintain a directors’ and officers’ liability insurance policy, that
each director and executive officer will be covered by the policy to the maximum extent of the coverage available for any of the Company’s
directors or executive officers.
Directors and Officers Liability Insurance
We
have obtained standard policies of insurance under which coverage is provided (a) to our directors and executive officers against loss
rising from claims made by reason of breach of duty or other wrongful act, and (b) to us with respect to payments which we may make to
such executive officers or directors pursuant to the indemnification agreements referred to above, the Company’s Second Amended
and Restated Certificate of Incorporation (the “Certificate of Incorporation”) and
the Bylaws, or otherwise as a matter of law.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is information
regarding our executive officers as of the date of this proxy statement.
| Name |
|
Age |
|
Position |
| Daniel Nelson |
|
61 |
|
Chief Executive Officer, Chairman and Director |
| Damon Rich |
|
55 |
|
Interim Chief Financial Officer |
| Jeffry Hecklinski |
|
50 |
|
President and Director |
| Craig Smith |
|
29 |
|
Chief Operating Officer |
For information regarding
Messrs. Nelson and Hecklinski, please refer to “Proposal No. 1 – Election of Directors – Information with Respect
to Director Nominees,” above.
Damon Rich.
Damon Rich has served as our Interim Chief Financial Officer since April 2023. Since February 2019, Mr. Rich has also been Chief Financial
Officer of Nelson Financial Services. From July 2011 to February 2019, Mr. Rich was Accounting Manager – General Ledger/Financial
Reporting at Safeway, Inc. From July 2005 to July 2011, Mr. Rich was Accounting Manger – Warehouse Payables, at Safeway, Inc.
From May 2001 to July 2005, Mr. Rich was an accountant for Safeway, Inc. From February 1999 to May 2001, Mr. Rich was the Controller of
North Phoenix Baptist Church in Phoenix, Arizona. Mr. Rich holds a Bachelor of Accountancy and a Bachelor of Business Administration from
New Mexico State University, and earned his CPA designation in 1999.
Craig Smith.
Mr. Smith has served as the Company’s Chief Operating Officer since April 2024, and was the Company’s Chief of Development
from February 2023 to April 2024. From January 2022 to February 2023, Mr. Smith was Director of Player Personnel at San Diego State
University, and from January 2020 to December 2021, was San Diego State University’s Assistant Director of Football Operations.
From January 2017 to January 2020, Mr. Smith was Director of Football Operations and Player Personnel at Indiana State University.
Mr. Smith holds a Bachelor of Arts degree in Sports Management from Siena Heights University.
EXECUTIVE COMPENSATION
Summary Compensation Table – Years Ended
December 31, 2023 and 2022
The following table sets forth information concerning
all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the
noted periods. No other executive officers received total compensation in excess of $100,000 during the fiscal year ended December
31, 2023.
| Name and Principal Position | |
Year | | |
Salary ($) | | |
Bonus ($) | | |
Stock
Awards ($) | | |
Option
Awards ($) | | |
All
Other Compensation ($) | | |
Total ($) | |
| Daniel Nelson, Chief Executive Officer | |
| 2023 | | |
| 23,038 | | |
| - | | |
| - | | |
| 114,000 | (1) | |
| - | | |
| 137,038 | |
| | |
| 2022 | | |
| - | | |
| - | | |
| - | | |
| 20,195 | (2) | |
| - | | |
| 20,195 | |
| David O’Hara, former Chief Operating Officer(3) | |
| 2023 | | |
| 192,779 | | |
| 100,000 | | |
| 154,800 | (4) | |
| 114,000 | (5) | |
| - | | |
| 561,579 | |
| | |
| 2022 | | |
| 194,993 | | |
| - | | |
| - | | |
| 34,640 | (6) | |
| - | | |
| 229,633 | |
| Richard Symington, former President, Chief Technology Officer, and Chief Marketing Officer(7) | |
| 2023 | | |
| 67,893 | | |
| - | | |
| - | | |
| 240,000 | (8) | |
| - | | |
| 307,893 | |
| (1) | Daniel Nelson was granted an option to purchase 100,000 shares
of common stock on November 22, 2023. A portion of the option was granted subject to certain vesting conditions. The aggregate grant
date fair value was computed in accordance with ASC Topic 718 based on the assumptions described in “Management’s Discussion
and Analysis of Financial Condition and Results of Operation – Critical Accounting Policies – Stock-Based Compensation”. |
| (2) | Daniel Nelson was granted options to purchase an aggregate of
35,000 shares of common stock on September 28, 2022. The aggregate grant date fair value was computed in accordance with ASC Topic 718
based on the assumptions described in “Management’s Discussion and Analysis of Financial Condition and Results of Operation
– Critical Accounting Policies – Stock-Based Compensation”. |
| (3) | David O’Hara was Chief Operating Officer of the Company
from July 2022 to March 2024. |
| (4) | David O’Hara was granted 90,000 shares of common stock
on March 14, 2023. A portion of the shares was granted subject to certain vesting conditions. The aggregate grant date fair value was
computed in accordance with ASC Topic 718 based on the assumptions described in “Management’s Discussion and Analysis
of Financial Condition and Results of Operation – Critical Accounting Policies – Stock-Based Compensation”. |
| (5) | David O’Hara was granted an option to purchase 100,000
shares of common stock on November 22, 2023. A portion of the option was granted subject to certain vesting conditions. The aggregate
grant date fair value was computed in accordance with ASC Topic 718 based on the assumptions described in “Management’s
Discussion and Analysis of Financial Condition and Results of Operation – Critical Accounting Policies – Stock-Based Compensation”. |
| (6) | David O’Hara was granted an option to purchase 30,000
shares of common stock on each of September 9, 2022 and September 28, 2022. A portion of the options was granted subject to certain vesting
conditions. The aggregate grant date fair value was computed in accordance with ASC Topic 718 based on the assumptions described in “Management’s
Discussion and Analysis of Financial Condition and Results of Operation – Critical Accounting Policies – Stock-Based Compensation”. |
| (7) | Richard Symington was President
and Chief Marketing Officer of the Company from April 2023 to May 2023 and was President and Chief Technology Officer of the Company
from November 2023 to February 2024. Mr. Symington was not a named executive officer
in 2022. |
| (8) | Richard Symington was granted an option to purchase 100,000
shares of common stock on April 5, 2023 and an option to purchase 50,000 shares of common stock on November 22, 2023. The options were
granted subject to certain vesting conditions. The aggregate grant date fair value was computed in accordance with ASC Topic 718 based
on the assumptions described in “Management’s Discussion and Analysis of Financial Condition and Results of Operation
– Critical Accounting Policies – Stock-Based Compensation”. |
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Below is a discussion of certain critical accounting
policies and estimates that relate to the disclosures above under “—Summary Compensation Table - Years Ended December
31, 2023 and 2022” and “Board of Directors and Corporate Governance – Director Compensation – Director
Compensation Table”.
Critical Accounting Policies
Stock-Based Compensation
The Company accounts for stock-based
compensation costs under the provisions of ASC Topic 718, which requires the measurement and recognition of compensation expense related
to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock-based compensation expense recognized
includes the compensation cost for all stock-based payments granted to employees, consultants, officers, and directors based on the grant
date fair value estimated in accordance with the provisions of ASC Topic 718. ASC Topic 718 is also applied to awards modified, repurchased,
or cancelled during the periods reported. Stock-based compensation is recognized as expense over the employee’s requisite vesting
period and over the nonemployee’s period of providing goods or services.
The
Company measures and recognizes compensation expense for the cost of employee services received in exchange for an award of equity instruments
based on the grant date fair value of the award. The fair value of options on the grant date is estimated using the Black-Scholes option-pricing
model, which requires the use of certain subjective assumptions including expected term, volatility, risk-free interest rate and the fair
value of our common stock. These assumptions generally require significant judgment. The resulting costs are recognized over the
period during which an employee is required to provide service in exchange for the award, usually the vesting period. The Company amortizes
the fair value of stock-based compensation on a straight-line basis over the requisite service periods. The Company recognizes forfeitures
as they occur as a reduction to stock-based compensation expense and to additional paid-in-capital.
Expected
term. Using the simplified method, the expected term is estimated as the midpoint of the expected time to vest and the contractual
term, as permitted by the SEC. For out-of-the-money option grants, we estimate the expected lives based on the midpoint of the expected
time to a liquidity event and the contractual term.
Volatility.
With respect to grants of equity awards made prior to the listing of our common stock on the NYSE American on November 14, 2023, given
the absence of an active market for our common stock, the Company’s expected volatility was derived from the historical volatilities
of several unrelated public companies in the digital media and social platform industries because we had little information on the volatility
of the price of our common stock because we had no trading history. When making the selections of our industry peer companies to be used
in the volatility calculation, we consider operational area, size, business model, industry and the business of potential comparable companies.
These historical volatilities are weighted based on certain qualitative factors and combined to produce a single volatility factor. With
respect to grants of equity awards made after the listing, the Company determines the expected volatility by weighing the historical average
volatilities of publicly traded industry peers and its own trading history. The Company intends to continue to consistently apply this
methodology using the same or similar public companies until a sufficient amount of historical information regarding the volatility of
the Company’s own common stock price becomes available, unless circumstances change such that the identified companies are no longer
similar to the Company, in which case more suitable companies whose stock prices are publicly available would be utilized in the calculation.
Risk-free
rate. The risk free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term
of the options for each option group.
Dividend
yield. The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable
future. Consequently, we use an expected dividend yield of zero.
Fair
Value of Common Stock. With respect to equity grants made before the listing of our common stock on the NYSE American on November
14, 2023, given the absence of an active market for our common stock, the estimated fair value of restricted stock grants and common stock
underlying grants of stock options was determined using a modified probability-weighted expected return methodology (“PWERM”).
For valuations after our listing on November 14, 2023,
the fair value of restricted stock grants and common stock underlying grants of stock options is
calculated utilizing the daily closing price as reported by the NYSE American.
If
in the future the Company determines that another method is more reasonable, or if another method for calculating these input assumptions
is prescribed by authoritative guidance, and, therefore, should be used to estimate volatility or expected life, the fair value calculated
for our stock options could change significantly. Higher volatility and longer expected lives result in an increase to stock-based compensation
expense determined at the date of grant. Stock-based compensation expenses affect our general and administrative expenses.
The
following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the
grant-date fair value of stock options granted during the year ended December 31, 2022 and the period from January 1, 2023 to November
13, 2023, the last day prior to the date of the listing of the common stock on the NYSE American on November 14, 2023.
| | |
January 1,
2023 to | | |
Year ended | |
| | |
November 13, | | |
December 31, | |
| | |
2023 | | |
2022 | |
| Risk-free interest rate | |
| 3.78 | % | |
| 3.88 | % |
| Expected term (in years) | |
| 5.42 | | |
| 5.42 | |
| Expected volatility | |
| 50 | % | |
| 50 | % |
| Expected dividend yield | |
$ | - | | |
$ | - | |
The
following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the
grant-date fair value of stock options granted during the period from November 14, 2023, the date of the listing of the common stock on
the NYSE American on November 14, 2023, to December 31, 2023.
| | |
November 14,
2023 to | |
| | |
December 31,
2023 | |
| | |
| |
| Risk-free interest rate | |
| 4.44 | % |
| Expected term (in years) | |
| 5.41 | |
| Expected volatility | |
| 92.16 | % |
| Expected dividend yield | |
$ | - | |
The
following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the
grant-date fair value of stock options granted during the three months ended March 31, 2024 and March 31, 2023:
| | |
Three Months
Ended | | |
Three Months
Ended | |
| | |
March 31,
2024 | | |
March 31,
2023 | |
| Risk-free interest rate | |
| - | | |
| 4.44 | % |
| Expected term (in years) | |
| - | | |
| 5.41 | |
| Expected volatility | |
| - | | |
| 92.16 | % |
| Expected dividend yield | |
$ | - | | |
$ | - | |
The following table summarizes,
by grant date, the number of stock options granted from January 1, 2022 to November 13, 2023, the date of the effectiveness of the
Registration Statement on Form S-1 (File No. 333-271951), as amended, initially filed with the SEC on May 15, 2023, and declared
effective by the SEC on November 13, 2023 (the “IPO Registration Statement”), and the associated per share exercise
price:
| | |
Common shares underlying options granted | | |
Exercise price per share | | |
Fair value per common share as determined by the board of directors at grant date | | |
Fair value per common share for financial reporting purposes at grant date | | |
Intrinsic value per underlying common share | |
| | |
| | |
| | |
| | |
| | |
| |
| September 9, 2022 | |
| 110,000 | | |
$ | 3.10 | | |
$ | 3.10 | | |
$ | 0.577 | | |
$ | 0.00 | |
| September 28, 2022 | |
| 152,000 | | |
| 3.10 | | |
| 3.10 | | |
| 0.577 | | |
| 0.00 | |
| March 14, 2023 | |
| 53,800 | | |
| 3.10 | | |
| 3.10 | | |
| 1.72 | | |
| 0.00 | |
| April 5, 2023 | |
| 100,000 | | |
| 2.50 | | |
| 2.50 | | |
| 1.275 | | |
| 0.00 | |
| April 11, 2023 | |
| 3,000 | | |
| 2.50 | | |
| 2.50 | | |
| 1.84 | | |
| 0.00 | |
| April 19, 2023 | |
| 16,000 | | |
| 2.50 | | |
| 2.50 | | |
| 1.02 | | |
| 0.00 | |
| May 3, 2023 | |
| 100,000 | | |
| 2.50 | | |
| 2.50 | | |
| 1.02 | | |
| 0.00 | |
| May 9, 2023 | |
| 24,000 | | |
| 2.50 | | |
| 2.50 | | |
| 1.02 | | |
| 0.00 | |
The following table summarizes by grant date the
number of restricted stock awards granted from January 1, 2022 to November 13, 2023, the date of the effectiveness of the IPO Registration
Statement:
| | |
RSAs | | |
Fair value per common share as determined by the board of directors at grant date | | |
Fair value per common share for financial reporting purposes at grant date | |
| March 14, 2023 | |
| 90,000 | | |
$ | 3.10 | | |
$ | 1.72 | |
Following May 9, 2023 and
through November 13, 2023, the date of the effectiveness of the IPO Registration Statement, we did not issue any stock compensation or
stock-based compensation.
The following is a discussion
of all options we granted from January 1, 2022 through November 13, 2023, the date of the effectiveness of the IPO Registration Statement,
and the significant factors contributing to the Board of Directors’ determination of the fair value:
On September 9, 2022, stock
options to purchase 110,000 shares of common stock were granted to employees and a newly-appointed independent director. On September
28, 2022, stock options to purchase 152,000 shares of common stock were granted to the Company’s directors and officers as stock-based compensation
for work performed and expected future services. The exercise price of the stock options and the valuation of the shares of common
stock underlying the stock options was modified to $3.10 per share pursuant to resolutions adopted by the Company’s board
of directors on October 18, 2022. The valuation was determined using the optional conversion price of the convertible note
private placement that was being conducted at the time of the stock option grants.
On March 14, 2023, stock options
to purchase 53,800 shares of common stock and 90,000 restricted shares were granted to employees. The valuation of the shares of common
stock underlying the stock options was $3.10 per share. The Company elected to continue to use the same valuation from 2022 while a new
convertible note private placement was being prepared.
On March 14, 2023, the Company’s
board of directors approved a non-convertible note private placement with warrants having a $2.50 exercise price. The Company used the
valuation of this private placement to value all new stock option grants from April 2023 to May 2023. From April 2023 to May 2023, stock
options to purchase 243,000 shares of common stock were granted to employees and a newly-appointed independent director. The valuation
of the shares of common stock underlying the stock options was $2.50 per share pursuant to resolutions adopted by the Company’s
board of directors with respect to April 5, 2023, April 11, 2023, April 19, 2023, May 3, 2023, and May 9, 2023. The valuation was determined
using the private placement warrant exercise price of $2.50 per share.
Independent Third-Party Valuation
A third-party independent
valuation firm’s valuation report concluded that as of August 31, 2022, which the Company considered representative of the fair
value of the underlying common stock of the options granted on September 9, 2022 and September 28, 2022 and modified on October 18, 2022
as described above, the fair value of the Company’s common stock was $1.74 per share. The valuation report as of August 31, 2022
applied a PWERM analysis that reflected a 45% probability that the Company would complete an initial public offering, and a 55% probability
that the Company would continue to operate privately. The Company performed a retrospective analysis based on the valuation on the financial
statements previously issued and determined that any difference to stock compensation expense previously booked is not material to the
financial statements as a whole for the year ended December 31, 2022 and the three-month period ended March 31, 2023. A valuation analysis
as of March 31, 2023, which the Company considered representative of the fair value of the underlying common stock of the options granted
on March 14, 2023, April 5, 2023, April 11, 2023, April 19, 2023, May 3, 2023 and May 9, 2023, concluded that the fair value of the Company’s
common stock was $2.22 per share. The valuation report as of March 31, 2023 applied a PWERM analysis that reflected a 70% probability
that the Company would complete an initial public offering and a 30% probability that the Company would continue to operate privately.
After taking into consideration
each PWERM analysis, the Company calculated the grant date fair value for financial reporting purposes based on additional factors not
taken into account by the valuation reports, including the Company’s ability to continue as a going concern.
Executive Officer Employment and Consulting
Agreements
Employment Agreements with Daniel Nelson
Under
the Executive Employment Agreement, dated as of November 22, 2023, between the Company and Daniel Nelson, the Company’s Chief Executive
Officer, Chairman, and a director (the “Original CEO Employment Agreement”), Mr. Nelson was employed in his current capacity
as the Company’s Chief Executive Officer. Mr. Nelson’s annual base salary was $425,000 from November 22, 2023 to February
29, 2024, subject to modification upon execution of an amendment or addendum to the Original CEO Employment Agreement.
Pursuant
to the Original CEO Employment Agreement, on November 22, 2023, Mr. Nelson was granted a stock option pursuant to the Signing Day Sports,
Inc. 2022 Equity Incentive Plan (the “Plan”), and execution of a Stock Option Agreement. The stock option provides Mr. Nelson
the right to purchase 100,000 shares of common stock of the Company at an exercise price of $2.25 per share. The option was exercisable
as to half the shares immediately upon the date of grant and was subject to vesting as to the remaining half in six equal monthly portions
after the grant date subject to continuous service.
Under
the Amended and Restated Executive Employment Agreement, dated as of March 1, 2024, as amended by Amendment No. 1 to Executive Employment
Agreement, dated as of July 9, 2024 (the “Amendment to CEO Agreement”), between the Company and Mr. Nelson (as amended, the
“Amended and Restated CEO Employment Agreement”), the Original CEO Employment Agreement was amended to reduce Mr. Nelson’s
annual base salary from $425,000 to $200,000, effective March 1, 2024.
The
Company will pay or reimburse Mr. Nelson for all reasonable and necessary expenses actually incurred or paid by Mr. Nelson during his
employment in the performance of his duties. Mr. Nelson will be eligible to participate in comprehensive benefits plans of the
Company, including medical, dental and life insurance options, and will be entitled to paid time off and holiday pay in accordance with
the Company’s policies in effect from time to time.
If
the Company terminates Mr. Nelson without cause, Mr. Nelson will be entitled to severance payments in cash in the amount of base salary
in effect on the date of such termination payable in 12 monthly installments. If the Company terminates Mr. Nelson upon a Change of Control
(as defined in the Amended and Restated CEO Employment Agreement), Mr. Nelson will be entitled to severance payments in cash in the amount
of one-half of base salary in effect on the date of such termination payable in six monthly installments. The payment of severance may
be conditioned on receiving a release of any and all claims that Mr. Nelson may have against the Company.
Consulting Agreement
with Damon Rich
Under
a Consulting Agreement, dated as of June 14, 2024, between the Company and Damon Rich, the Company’s Interim Chief Financial Officer
(the “Rich Consulting Agreement”), Mr. Rich will continue to provide the consulting services to the Company that Mr. Rich
has provided as its Interim Chief Financial Officer since his appointment to this position as of April 19, 2023. Under the Rich Consulting
Agreement, the Company will pay Mr. Rich $120 per hour for up to 120 hours per month of invoiced services. Pursuant to the Rich Consulting
Agreement, on June 14, 2024, Mr. Rich was granted an award of 20,000 shares of restricted common stock under the Plan, which vested upon
grant. The grant is subject to the Company’s standard form of restricted stock award agreement under the Plan. The Company will
reimburse Mr. Rich for all reasonable expenses incurred by Mr. Rich directly related to the performance of services under the Rich Consulting
Agreement. The Rich Consulting Agreement may be terminated by either party upon five days’ written notice.
Employment Agreement
with Jeffry Hecklinski
Under
the employment offer letter, dated March 7, 2023, between Jeffry Hecklinski and the Company (the “Former Hecklinski Employment Agreement”),
Mr. Hecklinski was employed as the General Manager of the Company. Mr. Hecklinski’s annual base salary was $200,000. Pursuant to
the Former Hecklinski Employment Agreement, on March 14, 2023, Mr. Hecklinski was granted a stock option pursuant to the Plan and execution
of a stock option agreement in the Company’s standard form under the Plan. The stock option provides Mr. Hecklinski the right to
purchase 40,000 shares of common stock of the Company at an exercise price of $3.10 per share. The option was vested and exercisable as
to 10,000 shares immediately upon the date of grant, vested as to 7,500 shares on the one-year anniversary of the date of grant, and vests
as to 625 shares at the end of each of the following 36 calendar months. Mr. Hecklinski was eligible to participate in standard benefits
plans of the Company, including medical, dental and life insurance options, and was entitled to ten public holidays, ten vacation days,
and five sick days per year, subject to the Company’s leave policies. Mr. Hecklinski’s employment was at-will.
The
Executive Employment Agreement, dated as of April 9, 2024, as amended by Amendment No. 1 to Executive Employment Agreement, dated as of
July 9, 2024 between the Company and Mr. Hecklinski (as amended, the “Hecklinski Employment Agreement”), amended, restated
and superseded the Former Hecklinski Employment Agreement. Under the Hecklinski Employment Agreement, Mr. Hecklinski was employed as the
Company’s President. Mr. Hecklinski’s annual base salary will remain $200,000. The Company agreed to pay or reimburse Mr.
Hecklinski for all reasonable and necessary expenses actually incurred or paid by Mr. Hecklinski during his employment in the performance
of his duties under the Hecklinski Employment Agreement. Mr. Hecklinski will be eligible to participate in comprehensive benefits plans
of the Company, including medical, dental and life insurance options, and will be entitled to ten public holidays, ten vacation days,
and five sick days per year, subject to the Company’s leave policies.
Mr.
Hecklinski’s employment is at-will, except that if the Company terminates Mr. Hecklinski upon a Change of Control (as defined in
the Hecklinski Employment Agreement), Mr. Hecklinski will be entitled to severance payments in cash in the amount of one-half of base
salary in effect on the date of such termination payable in six monthly installments. The payment of severance may be conditioned on receiving
a release of any and all claims that Mr. Hecklinski may have against the Company.
On
March 12, 2024, the Compensation Committee granted an award of 120,000 shares of restricted common stock to Mr. Hecklinski, which vested
as to 30,000 shares upon grant and vests as to the remaining 90,000 shares in eight equal quarterly increments over the two years following
the grant date. The grant is subject to the Company’s standard form of restricted stock award agreement under the Plan.
On
June 13, 2024, the Compensation Committee granted an award of 100,000 shares of restricted common stock under the Plan to Mr. Nelson.
The restricted shares are subject to the following vesting schedule: 50,000 of the restricted shares will vest on each of September 13,
2024, December 13, 2024, March 13, 2025, and June 13, 2025. The grant is subject to the Company’s standard form of restricted stock
award agreement under the Plan.
Employment
Agreement with Craig Smith
Under
the Executive Employment Agreement, dated as of April 22, 2024, as amended by Amendment No. 1 to Executive Employment Agreement, dated
as of July 9, 2024, between the Company and Craig Smith (as amended, the “Smith Employment Agreement”), Mr. Smith was employed
as the Company’s Chief Operating Officer. Mr. Smith’s annual base salary will be $150,000. The Company agreed to pay or reimburse
Mr. Smith for all reasonable and necessary expenses actually incurred or paid by Mr. Smith during his employment in the performance of
his duties under the Smith Employment Agreement. Mr. Smith will be eligible to participate in comprehensive benefits plans of the Company,
including medical, dental and life insurance options, and will be entitled to ten public holidays, ten vacation days, and five sick days
per year, subject to the Company’s leave policies.
Mr.
Smith’s employment is at-will, except that if the Company terminates Mr. Smith upon a Change of Control (as defined in the Smith
Employment Agreement), Mr. Smith will be entitled to severance payments in cash in the amount of one-half of base salary in effect on
the date of such termination payable in six monthly installments. The payment of severance may be conditioned on receiving a release of
any and all claims that Mr. Smith may have against the Company.
On
March 12, 2024, the Compensation Committee granted an award of 90,000 shares of restricted common stock to Mr. Smith, which vested as
to 22,500 shares upon grant and vests as to the remaining 67,500 shares in eight approximately equal quarterly increments over the two
years following the grant date. The grant is subject to the Company’s standard form of restricted stock award agreement under the
Plan.
On
June 13, 2024, the Compensation Committee granted an award of 100,000 shares of restricted common stock under the Plan to Mr. Smith. The
restricted shares are subject to the following vesting schedule: 50,000 of the restricted shares will vest on each of September 13, 2024,
December 13, 2024, March 13, 2025, and June 13, 2025. The grant is subject to the Company’s standard form of restricted stock award
agreement under the Plan.
Former Employment
Agreement with Trent Whitehead
On
April 22, 2024, the Compensation Committee ratified an employment offer letter, dated March 16, 2023, with Trent Whitehead, the Company’s
former Secretary and Vice President of Human Resources (the “Whitehead Employment Agreement”). Under the Whitehead Employment
Agreement, Mr. Whitehead was employed as the Vice President of Human Resources of the Company. Mr. Whitehead’s annual base salary
is $125,000. Pursuant to the Whitehead Employment Agreement, on April 19, 2023, Mr. Whitehead was granted a stock option pursuant to the
Plan and execution of a stock option agreement in the Company’s standard form under the Plan. The stock option provides Mr. Whitehead
the right to purchase 10,000 shares of common stock of the Company at an exercise price of $2.50 per share. The option is subject to vesting
as to one-third of the underlying shares on each of the six-month anniversary, the 18-month anniversary, and the 30-month anniversary
of the date of the consummation of the Company’s initial public offering (November 16, 2023), provided that Mr. Whitehead remains
in continuous service with the Company. Mr. Whitehead was eligible to participate in the comprehensive benefits plans of the Company,
including medical, dental and life insurance options, and is entitled to ten public holidays, ten vacation days, and five sick days per
year. Mr. Whitehead’s employment was at-will.
On
March 12, 2024, the Compensation Committee granted an award of 25,000 shares of restricted common stock under the Plan to Mr. Whitehead,
which vested as to 6,250 shares upon grant and was subject to vesting as to the remaining 18,750 shares in eight approximately equal quarterly
increments over the two years following the grant date subject to Mr. Whitehead’s continuous service with the Company. The grant
is subject to the Company’s standard form of restricted stock award agreement under the Plan.
On
June 28, 2024, Mr. Whitehead notified the Company of his resignation from his positions as Secretary and Vice President of Human Resources,
effective immediately, and Mr. Whitehead’s employment was terminated on the same date.
Former Employment
Agreements with David O’Hara
Under
the employment contract with David O’Hara, our former Chief Operating Officer and former General Manager, dated March 30, 2021 (the
“Original O’Hara Employment Contract”), Mr. O’Hara was employed as General Manager on an at-will basis beginning
April 5, 2021. Mr. O’Hara’s salary was $200,000 per year. Mr. O’Hara was entitled to available standard employee benefits,
which are subject to change without compensation. Mr. O’Hara was also entitled to a $25,000 bonus dependent upon performance review
once every 90 days. The agreement contained non-competition, non-solicitation, and confidentiality provisions.
Under
the amended and restated employment offer letter agreement with Mr. O’Hara, dated March 14, 2022 (the “Amended O’Hara
Agreement”), Mr. O’Hara agreed to continue to be responsible for duties customary for a Chief Operating Officer. Effective
March 14, 2023, Mr. O’Hara’s salary was changed to $170,000 per year. Under the Amended O’Hara Agreement, upon the consummation
of the Company’s initial public offering, Mr. O’Hara’s salary would be $185,000 per year. Mr. O’Hara would also
receive an initial cash bonus of $35,000. Under the agreement, on March 14, 2023, Mr. O’Hara was granted 90,000 shares of restricted
stock, which vested as to 45,000 shares on March 29, 2023, and was to vest as to 11,250 shares on March 29, 2024, 937 shares at the end
of each of the following 35 calendar months, and 955 shares of common stock at the end of the 36th calendar month following the anniversary
of the grant date, provided that he remained in continuous service with the Company. Mr. O’Hara would be eligible to participate
in standard employee benefits plans. The Amended O’Hara Agreement contains customary confidentiality requirements. Mr. O’Hara
was also required to sign an Employee Confidential Information and Inventions Assignment Agreement, which prohibits unauthorized use or
disclosure of the Company’s proprietary information, contains a general assignment of rights to inventions and intellectual property
rights, non-competition provisions that apply during the term of employment, non-solicitation provisions that apply during the term of
employment and for one year after the term of employment, and non-disparagement provisions that apply during and after the term of employment,
and which was fully executed and dated as of April 3, 2023. The Amended O’Hara Agreement superseded the Original O’Hara Employment
Contract.
On
November 22, 2023, the Compensation Committee approved an Executive Employment Agreement with Mr. O’Hara, which was dated and entered
into by the Company and Mr. O’Hara on the same date (the “Former COO Employment Agreement”). The Former COO Employment
Agreement amended, restated and superseded the Amended O’Hara Agreement. Under the Former COO Employment Agreement, Mr. O’Hara
was employed in his former capacity as the Company’s Chief Operating Officer and Secretary. The following is a summary of the terms
of the Former COO Employment Agreement.
Mr.
O’Hara’s annual base salary was $275,000, subject to modification upon execution of an amendment or addendum to the Former
COO Employment Agreement. Mr. O’Hara was also entitled to a one-time cash bonus payment of $100,000 on the date of the Former COO
Employment Agreement. The Company agreed to pay or reimburse Mr. O’Hara for all reasonable and necessary expenses actually incurred
or paid by Mr. O’Hara during his employment in the performance of his duties under the Former COO Employment Agreement.
Pursuant
to the Former COO Employment Agreement, on November 22, 2023, Mr. O’Hara was granted a stock option pursuant to the Plan and execution
of a stock option agreement in the Company’s standard form under the Plan. The stock option provided Mr. O’Hara the right
to purchase 100,000 shares of common stock of the Company at an exercise price of $2.25 per share. The option was vested and exercisable
as to half the shares immediately upon the date of grant and was subject to vesting as to the remaining half in six equal monthly portions
after the grant date subject to continuous service.
Mr.
O’Hara was eligible to participate in comprehensive benefits plans of the Company, including medical, dental and life insurance
options. The Company agreed to cover 100% of the health insurance premium costs for Mr. O’Hara’s spouse and dependent children.
Mr. O’Hara was also entitled to ten public holidays, ten vacation days, and five sick days per year, subject to the Company’s
leave policies.
Mr.
O’Hara’s employment was at-will. If the Company had terminated Mr. O’Hara without cause, Mr. O’Hara would have
been entitled to the following severance payments: (i) cash in the amount of base salary in effect on the date of such termination payable
in 12 monthly installments; (ii) benefits under group health and life insurance plans in which Mr. O’Hara participated prior to
termination for 12 months following the date of termination; and (iii) all previously earned, accrued, and unpaid benefits from the Company
and its employee benefit plans, including any accrued but unused paid time off. There would be no waiting period for the commencement
of these payments. The payment of severance may be conditioned on receiving a release of any and all claims that Mr. O’Hara may
have against the Company.
On
March 1, 2024, Mr. O’Hara notified the Board of his resignation from his position as Chief Operating Officer, effective immediately.
Mr. O’Hara also notified the Board that the Former COO Employment Agreement was terminated, effective immediately.
Employment
and Former Consulting Agreements with Richard Symington
Under
the Executive Employment Agreement with Richard Symington, dated as of April 5, 2023 (the “Former CMO Employment Agreement”),
the Company agreed to employ Mr. Symington as its President and Chief Marketing Officer. Mr. Symington was also appointed as a director
as of April 5, 2023. Mr. Symington’s base salary was $200,000 per year. The Former CMO Employment Agreement provided that Mr. Symington
may receive any comprehensive benefits plans offered by the Company, including medical, dental and life insurance options. In addition,
pursuant to the Former CMO Employment Agreement, Mr. Symington was granted a stock option to purchase 100,000 shares of common stock
of the Company pursuant to the Plan and execution of a stock option agreement in the Company’s standard form under the Plan. The
option was subject to vesting as to one-third of the underlying shares on each of the six-month anniversary, the 18-month anniversary,
and the 30-month anniversary of the date of the consummation of the Company’s initial public offering (November 16, 2023), provided
that Mr. Symington remained in continuous service with the Company, and had an exercise price of $2.50 per share. The Former CMO Employment
Agreement provided that Mr. Symington’s employment was on an at-will basis. On May 26, 2023, Mr. Symington resigned from his positions
as President and Chief Marketing Officer and a director, and terminated the Former CMO Employment Agreement. Accrued and unpaid compensation
to Mr. Symington as of the date of termination was $5,000.
Under
a Consulting Agreement, dated as of June 7, 2023 (the “Symington Consulting Agreement”), Mr. Symington was engaged to provide
certain services on a consulting basis beginning 14 days after the closing of the Company’s initial public offering. The Symington
Consulting Agreement was terminable at any time before or after that point in time upon five days’ notice. On November 22, 2023,
the Company gave notice of termination of the Symington Consulting Agreement effective November 27, 2023, prior to the beginning of the
service term under the Symington Consulting Agreement, which, under its terms, would have been November 30, 2023. No compensation was
owed under the Symington Consulting Agreement upon termination.
On
November 22, 2023, the Compensation Committee approved an Executive Employment Agreement with Mr. Symington, which was dated and entered
into by the Company and Mr. Symington on the same date (the “Former CTO Employment Agreement”). Under the Former CTO Employment
Agreement, Mr. Symington was employed as the Company’s President and Chief Technology Officer. Mr. Symington was also elected as
a director as of December 19, 2023. The following is a summary of the terms of the Former CTO Employment Agreement.
Mr.
Symington’s annual base salary was $375,000, subject to modification upon execution of an amendment or addendum to the Former Former
CTO Employment Agreement. The Company agreed to pay or reimburse Mr. Symington for all reasonable and necessary expenses actually incurred
or paid by Mr. Symington during his employment in the performance of his duties under the Former CTO Employment Agreement.
Mr.
Symington was eligible to participate in comprehensive benefits plans of the Company, including medical, dental and life insurance options,
and was entitled to ten public holidays, ten vacation days, and five sick days per year, subject to the Company’s leave policies.
Pursuant
to the Former CTO Employment Agreement, on November 22, 2023, Mr. Symington was granted a stock option pursuant to the Plan and execution
of a stock option agreement in the Company’s standard form under the Plan. The stock option provided Mr. Symington the right to
purchase 50,000 shares of common stock of the Company at an exercise price of $2.25 per share. The option was subject to vesting as to
one-third of the underlying shares on each of the six-month anniversary, the 18-month anniversary, and the 30-month anniversary of the
date of the consummation of the Company’s initial public offering (November 16, 2023), provided that Mr. Symington remained in
continuous service with the Company.
Mr.
Symington’s employment was at-will. If the Company had terminated Mr. Symington without cause after one year of employment from
November 22, 2023, Mr. Symington would have been entitled to the following severance payments: (i) cash in the amount of base salary
in effect on the date of such termination payable in 12 monthly installments; and (ii) all previously earned, accrued, and unpaid benefits
from the Company and its employee benefit plans. The payment of severance may be conditioned on receiving a release of any and all claims
that Mr. Symington may have against the Company.
Mr.
Symington was required to sign an Employee Confidential Information and Inventions Assignment Agreement, dated as of November 27, 2023,
which prohibits unauthorized use or disclosure of the Company’s proprietary information, contains a general assignment of rights
to inventions and intellectual property rights, non-competition provisions that apply during the term of employment, non-solicitation
provisions that apply during the term of employment and for one year after the term of employment, and non-disparagement provisions that
apply during and after the term of employment.
On
February 22, 2024, Mr. Symington notified the Board of his resignation from his positions as President, Chief Technology Officer, and
a member of the Board, effective immediately. Mr. Symington also notified the Board that the Former CTO Employment Agreement was terminated,
effective immediately.
Executive
Officer Indemnification Agreements and Insurance
We
have entered into an indemnification agreement with each of our executive officers. Each indemnification agreement provides for indemnification
to the fullest extent permitted by law, including: (i) all expenses, judgments, penalties, fines and amounts paid in settlement actually
and reasonably incurred by an executive officer, or on their behalf, in connection with any proceeding other than proceedings by or in
the right of the Company or any claim, issue or matter therein, if the executive officer acted in good faith and in a manner the executive
officer reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal proceeding,
had no reasonable cause to believe the executive officer’s conduct was unlawful; (ii) all expenses actually and reasonably incurred
by an executive officer, or on their behalf, in connection with a proceedings by or in the right of the Company if the executive officer
acted in good faith and in a manner the executive officer reasonably believed to be in or not opposed to the best interests of the Company,
provided that if applicable law so provides, no indemnification against such expenses shall be made in respect of any claim, issue or
matter in such proceeding as to which the executive officer shall have been adjudged to be liable to the Company unless and to the extent
that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made; (iii) to the extent that an
executive officer is, by reason of the executive officer’s executive officer status, a party to and is successful, on the merits
or otherwise, in any proceeding, including by dismissal of such proceeding with or without prejudice, then the executive officer shall
be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all expenses actually and reasonably
incurred by the executive officer or on the executive officer’s behalf in connection therewith; and (iv) all expenses, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred by an executive officer or on an executive officer’s
behalf if, by reason of the executive officer’s status as an executive officer, the executive officer is, or is threatened to be
made, a party to or participant in any proceeding (including a proceeding by or in the right of the Company), including, without limitation,
all liability arising out of the negligence or active or passive wrongdoing of the executive officer, except where the payment is finally
determined (under the procedures, and subject to the presumptions, set forth in the indemnification agreements) to be unlawful. The Company
shall also advance all such expenses incurred by or on behalf of each executive officer in connection with any of the above proceedings
by reason of the executive officer’s executive officer status within 30 days after the receipt by the Company of a statement or
statements from the executive officer requesting such advance or advances from time to time, whether prior to or after final disposition
of such proceeding. Such statement or statements shall reasonably evidence the expenses incurred by the executive officer and shall include
or be preceded or accompanied by a written undertaking by or on behalf of the executive officer to repay any expenses advanced if it
shall ultimately be determined that the executive officer is not entitled to be indemnified against such expenses. Any advances and undertakings
to repay shall be unsecured and interest-free. The indemnification agreements also provide for payments by the Company for the entire
amount of any judgment or settlement of any action, suit or proceeding in which it is liable or would be liable if joined in such action,
subject to the other terms and provisions of the indemnification agreements, and certain other indemnification and payment obligations.
The indemnification agreements also provide that if we maintain a officers’ liability insurance policy, that each executive officer
will be covered by the policy to the maximum extent of the coverage available for any of the Company’s executive officers.
We
have obtained standard policies of insurance under which coverage is provided (a) to our directors and executive officers against loss
rising from claims made by reason of breach of duty or other wrongful act, and (b) to us with respect to payments which we may make to
such executive officers or directors pursuant to the indemnification agreements referred to above, the Certificate of Incorporation and
the Bylaws, or otherwise as a matter of law.
Management
Confidentiality Agreements
Each
of the current and former executive officers named above was required to sign an Employee Confidential Information and Inventions Assignment
Agreement or similar agreement which prohibits unauthorized use or disclosure of the Company’s proprietary information, contains
a general assignment of rights to inventions and intellectual property rights, non-competition provisions that apply during the term
of employment, non-solicitation provisions that apply during the term of employment and for one year after the term of employment, and
non-disparagement provisions that apply during and after the term of employment.
Additional
Narrative to Named Executive Officer Compensation
Retirement
Benefits
We
have not maintained, and do not currently maintain, a defined benefit pension plan, nonqualified deferred compensation plan or other
retirement benefits.
Potential
Payments Upon Termination or Change in Control
None
of our named executive officers was entitled to severance compensation during the fiscal year ended December 31, 2023, except as described
in “—Management Employment and Consulting Agreements”.
Outstanding
Equity Awards at Fiscal Year-End
The
executive officers named above had the following unexercised options, stock that has not vested or equity incentive plan awards outstanding
as of December 31, 2023.
| | |
Option Awards | | |
Stock Awards | |
| Name | |
Number
of securities underlying unexercised options
(#)
exercisable | | |
Number
of securities
underlying
unexercised
options
(#) unexercisable | | |
Equity
incentive
plan awards: Number of
securities
underlying
unexercised
unearned
options
(#) | | |
Option
exercise price
($) | | |
Option
expiration
date | | |
Number
of shares or units of stock that have not vested
(#) | | |
Market
value of
shares of
units of
stock that
have not
vested
($) | | |
Equity
incentive
plan awards: Number of
unearned
shares, units or other rights that have not vested
(#) | | |
Equity
incentive
plan awards: Market or payout
value of
unearned
shares, units or other rights that have not vested
($) | |
Daniel
Nelson,
Chief Executive Officer | |
| 58,333 | | |
| 41,667 | (1) | |
| - | | |
$ | 2.25 | | |
| November
21, 2033 | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Daniel
Nelson,
Chief Executive Officer | |
| 35,000 | | |
| - | | |
| - | | |
$ | 3.10 | | |
| September
28, 2032 | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
David
O’Hara,
former Chief Operating Officer(2) | |
| 58,333 | | |
| 41,667 | (3) | |
| - | | |
$ | 2.25 | | |
| November
21, 2033 | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
David
O’Hara,
former Chief Operating Officer(2) | |
| 13,750 | | |
| 16,250 | (4) | |
| - | | |
$ | 3.10 | | |
| September
9, 2032 | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
David
O’Hara,
former Chief Operating Officer(2) | |
| 13,750 | | |
| 16,250 | (5) | |
| - | | |
$ | 3.10 | | |
| September
28, 2032 | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
David
O’Hara,
former Chief Operating Officer(2) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 45,000 | (6) | |
| 50,850 | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Richard
Symington, former President, Chief Technology Officer, and Chief Marketing Officer(7) | |
| - | | |
| 100,000 | (8) | |
| - | | |
$ | 2.50 | | |
| April
5, 2033 | | |
| - | | |
| - | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Richard
Symington, former President, Chief Technology Officer, and Chief Marketing Officer(7) | |
| - | | |
| 50,000 | (9) | |
| - | | |
$ | 2.25 | | |
| November
21, 2033 | | |
| - | | |
| - | | |
| - | | |
| - | |
| (1) | As
of December 31, 2023, the unvested shares under the option were subject to vesting in five equal monthly installments of approximately
8,333 shares each. |
| (2) | David
O’Hara was Chief Operating Officer of the Company from July 2022 to March 2024. |
| (3) | As
of December 31, 2023, the unvested shares under the option were subject to vesting in five equal monthly installments of approximately
8,333 shares each. |
| (4) | As
of December 31, 2023, the unvested shares under the option were subject to vesting in 33 equal monthly installments of approximately
417 shares each. |
| (5) | As
of December 31, 2023, the unvested shares under the option were subject to vesting in 33 equal monthly installments of approximately
417 shares each. |
| (6) | As
of December 31, 2023, the unvested shares were subject to vesting as to 11,250 shares on March 14, 2024, as to 937 shares at the end
of each of the following 35 calendar months following March 14, 2024, and as to 955 shares at the end of the 36th calendar month following
March 14, 2024. |
| (7) | Richard
Symington was President and Chief Marketing Officer of the Company from April 2023 to May 2023 and was President and Chief Technology
Officer of the Company from November 2023 to February 2024. |
| (8) | Richard
Symington, while serving as our President and Chief Marketing Officer and a director of the Company, was granted an option to purchase
100,000 shares of common stock on April 5, 2023. The option was subject to vesting as to 33,333 shares of common stock on May 16, 2024,
33,333 shares of common stock on May 16, 2025, and 33,334 shares of common stock on May 16, 2025. Mr. Symington resigned from each of
his positions with the Company on May 26, 2023. Under the Symington Consulting Agreement, in which Mr. Symington agreed to provide certain
services to the Company starting 14 days following the Company’s initial public offering, the Company agreed not to terminate the
option pending the beginning of such services, subject to termination of the consulting agreement at any time. On November 22, 2023,
the Company appointed Mr. Symington President and Chief Technology Officer and terminated the Symington Consulting Agreement prior to
any services provided under the Symington Consulting Agreement. Mr. Symington was appointed as a director of the Company as of December
19, 2023. As of December 31, 2023, the Company considered the stock option to be outstanding and exercisable subject to its vesting conditions. |
| (9) | As
of December 31, 2023, the option was subject to vesting as to 16,667 shares of common stock on May 16, 2024, 16,667 shares of common
stock on May 16, 2025, and 16,666 shares of common stock on May 16, 2025. |
Signing
Day Sports, Inc. 2022 Equity Incentive Plan
On
August 31, 2022, we established the Signing Day Sports, Inc. 2022 Equity Incentive Plan and reserved 750,000 (as adjusted for the Reverse
Stock Split) shares of common stock for issuance under the Plan. On February 27, 2024, the Plan was amended to increase the number of
shares of common stock reserved for issuance under the Plan to 2,250,000 shares. The Plan was established to advance our interests and
the interests of our stockholders by providing an incentive to attract, retain and reward persons performing services for us and by motivating
such persons to contribute to our growth and profitability. Under the Plan, we may grant restricted stock, stock options and other forms
of incentive compensation to our officers, employees, directors and consultants. The maximum number of shares of common stock that may
be issued pursuant to awards granted under the Plan is 2,250,000 shares. Cancelled and forfeited stock options and stock awards may again
become available for grant under the Plan. As of the date of this proxy statement, zero shares remained available for issuance under
the Plan. The Plan and all awards granted under the Plan are intended to comply with Section 409A of the U.S. Internal Revenue Code of
1986, as amended (the “Code”), to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan
and all awards agreements shall be interpreted and administered to be in compliance therewith.
Please
see “Proposal No. 4 – Approval of the Signing Day Sports, Inc. Amended and Restated 2022 Equity Incentive Plan –
Summary of the Plan” for further description of the Plan and a description of the proposed Amended and Restated Plan.
Clawback Policy
On
November 2, 2023, the Board of Directors adopted a Clawback Policy in accordance with applicable NYSE American rules (the “Clawback
Policy”). The Clawback Policy provides that we will recover reasonably promptly the amount of erroneously awarded incentive-based
compensation to any current or former executive officers in the event that the Company is required to prepare an accounting restatement
due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required
accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial
statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in
the current period
Director
Compensation
For
a discussion of compensation to our non-employee directors during the fiscal year ended December 31, 2023, see “Board of Directors
and Corporate Governance – Director Compensation”.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The
following includes a summary of transactions since the beginning of our fiscal year ended December 31, 2022, or any currently proposed
transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent
of the average of our total assets at year-end for the last two completed fiscal years, and in which any related person had or will have
a direct or indirect material interest (other than compensation described under “Executive Compensation” above). We
believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below
were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.
| ● | Under
a Consulting Agreement, dated as of July 23, 2024, between the Company and Clayton Adams, a former director and a former beneficial owner
of more than 5% of the common stock of the Company (the “Adams Consulting Agreement”), Mr. Adams will provide certain consulting
services to the Company on mergers, acquisitions, financing sources, public company and governance matters, building market awareness,
and other duties as may reasonably be requested by the Company. In consideration for these services, the Company agreed to grant Mr.
Adams 127,826 shares of common stock under the Plan. In addition, the Adams Consulting Agreement provided that the Company will grant
Adams 668,841 shares of common stock (the “Adams Deferred Shares”), as a private placement not subject to the terms of the
Plan, under a separate Non-Plan Restricted Stock Award Agreement entered into between the Company and Mr. Adams on July 23, 2024, dated
as of July 23, 2024 (the “Adams Deferred Award Agreement”), within one (1) business day of the date of the later of the authorization
of the grant of the Adams Deferred Shares by (i) the NYSE American and (ii) the Board or the Compensation Committee. Under the
Amendment No. 1 to Consulting Agreement between the Company and Mr. Adams, dated July 25,
2024 (the “Adams Consulting Agreement Amendment”), the Company will grant Birddog Capital, LLC, a Nebraska limited liability
company (“Birddog Capital”), an entity beneficially owned by Mr. Adams, 668,841
shares of common stock (the “Birddog Deferred Shares”), as a private placement not subject to the terms of the Plan, under
a separate Non-Plan Restricted Stock Award Agreement, dated as of July 25, 2024, between the Company and Birddog Capital (the “Birddog
Deferred Award Agreement”), within one (1) business day of the date of the later of the authorization of the grant of the Birddog
Deferred Shares by (i) the NYSE American and (ii) the Board or the Compensation Committee. Pursuant to the terms of the Adams Consulting
Agreement Amendment, the Company will not grant the Adams Deferred Shares. |
| ● | Under
a Subscription Agreement, dated as of July 23, 2024, between the Company and Clayton Adams, a former director and a former beneficial
owner of more than 5% of the common stock of the Company (the “Adams Subscription Agreement”), Mr. Adams paid $100,000 to
the Company and the Company issued a pre-funded warrant to purchase 333,333 shares of common stock of the Company to Mr. Adams at an
exercise price of $0.01 per share (the “Adams Warrant”). The Adams Subscription Agreement also provided certain registration
rights with respect to the shares issuable upon exercise of the Adams Warrant. The Adams Warrant is subject to a limitation on beneficial
ownership to 4.99% of the common stock that would be outstanding immediately after exercise. Any change in this beneficial ownership
limitation will not be effective until the 61st day after such change is agreed to. The Adams Warrant will become exercisable on the
date that the NYSE American authorizes the issuance of shares pursuant to exercise of the Adams Warrant with respect to the number of
shares authorized for such issuance, or the date that the Company is no longer listed on the NYSE American. Pursuant to the Subscription
Agreement, the Company issued the Adams Warrant to Mr. Adams on July 23, 2024. |
| ● | On
April 11, 2024, Daniel Nelson, the Chief Executive Officer, Chairman and a director of the Company, advanced $100,000 to the Company,
without repayment terms. On April 25, 2024, the Company issued a promissory note to Mr. Nelson, dated April 25, 2024, in the base principal
amount of $100,000 (the “April 2024 Note”). The April 2024 Note permits Mr. Nelson to make advances under the April 2024
Note of up to $100,000 in addition to the $100,000 base principal amount. On May 1, 2024, Mr. Nelson advanced $75,000 subject to the
terms of the April 2024 Note. On June 14, 2024, Mr. Nelson advanced $2,500 subject to the terms of the April 2024 Note. The base principal
and all advances under the April 2024 Note will accrue interest at a monthly rate of 3.5%, compounded monthly, while such funds are outstanding,
from the 30th day following the date of issuance of the April 2024 Note to the 150th day following the date of issuance of the April
2024 Note, such that total interest of $3,500 will accrue as of the end of the first month, $3,622.50 as of the end of the second month,
and so on, with respect to the base principal, assuming that it is not prepaid. The base principal, any advances, and accrued interest
become payable on the date that is the earlier of June 25, 2024 or upon the Company receiving any funding of $1,000,000 (the “April
2024 Note Maturity Date”). The Company is required to make full repayment of the balance of the base principal, advances, and accrued
interest within two business days of receiving a written demand from Mr. Nelson on or after the April 2024 Note Maturity Date. The Company
may prepay the base principal, any advances, and any interest then due without penalty. |
| ● | Under
a Business Loan Agreement, dated October 6, 2023 (the “First CBAZ Loan Agreement”), between the Company and Commerce
Bank of Arizona (“CBAZ”), the Company and CBAZ entered into a $350,000 secured revolving
line of credit (the “First CBAZ LOC”). In connection with the First CBAZ LOC, CBAZ issued a promissory note, dated October
6, 2023 (the “First CBAZ Promissory Note”), with an initial principal amount of $350,000. The Company paid loan origination
and other fees totaling $4,124. The principal balance under the First CBAZ Promissory Note bore interest at a variable rate per
annum equal to one percentage point above The Wall Street Journal Prime Rate, initially 9.5% per annum, and was to mature on April 6,
2024. There was no penalty for prepayment of the First CBAZ Promissory Note. The First CBAZ LOC
was required to be guaranteed by Daniel Nelson, Chief Executive Officer, Chairman and a director of the Company, Jodi B. Nelson, who
is Mr. Nelson’s wife, and the Nelson Trust, and secured by the property of the Company, Daniel Nelson, Chief Executive Officer
and Chairman of the Company, Jodi B. Nelson, who is Mr. Nelson’s wife, and the Nelson Trust. The First CBAZ LOC had been further
conditioned on the issuance of Employee Retention Credit payroll tax refunds that the Company expected to be received by April 2024,
and was subject to certain other terms and conditions. The total approximate dollar value of this transaction was $354,124. The
approximate dollar value of the interest of each of Mr. Nelson, Ms. Nelson, and the Nelson Trust in this transaction was $350,000
plus interest. |
| ● | Certain
of our current or former officers, directors, and stockholders who held or beneficially owned more than 5% of the common stock of the
Company at the time of the transaction purchased shares in our initial public offering on November 16, 2023, at the initial public offering
price of $5.00 per share. Virginia Byrd Revocable Trust, of which Virginia Byrd, a beneficial owner of more than 5% of the common stock
of the Company, purchased 50,000 shares of common stock for a purchase price of $250,000; Noah (Jed) Smith, a former director and former
beneficial owner of more than 5% of the common stock of the Company, purchased 50,000 shares of common stock for a purchase price of
$250,000; Clayton Adams, a former director and a former beneficial owner of more than 5% of the common stock of the Company, purchased
50,000 shares of common stock for a purchase price of $250,000; the Nelson Trust, one of whose co-trustees is Daniel Nelson, our Chief
Executive Officer, Chairman, and a director of the Company, purchased 20,000 shares of common stock for a purchase price of $100,000;
John Dorsey, a former Chief Executive Officer and director and a former beneficial owner of more than 5% of the common stock of the Company,
purchased 20,000 shares of common stock for a purchase price of $100,000; Zone Right, a former beneficial owner of more than 5% of the
outstanding common stock of the Company, and the current or former managing member of which, Glen Kim, is a former director and a former
beneficial owner of more than 5% of the outstanding common stock of the Company, purchased 20,000 shares of common stock for a purchase
price of $100,000. |
| ● | On
July 23, 2023, the Company issued a promissory note in the amount of $130,000 to Daniel Nelson. Mr. Nelson is the Chief Executive Officer,
Chairman and director of the Company. The promissory note provided for 6% interest and maturity date of July 23, 2024 subject to acceleration
upon the Company’s first equity financing, or issuance of any debt convertible into equity, following the date of the promissory
note. The amount could be prepaid at any time. As of November 22, 2023, the balance of $130,000 was repaid. Mr. Nelson waived all interest
owed under the promissory note. |
| ● | Under
a Secondary Stock Purchase Agreement, dated June 28, 2023, between Clayton Adams, a former director and a former beneficial owner of
more than 5% of the common stock of the Company, and Matthew Atkinson, a former director and a former beneficial owner of more than 5%
of the issued and outstanding shares of the Company, Mr. Adams agreed to purchase 333,000 shares of common stock from Mr. Atkinson for
$250,000. The Company consented to the sale and waived the application of the Company’s rights of first refusal under the a Shareholder
Agreement among the Company and certain stockholders of the Company, dated as of May 17, 2022 (the “Shareholder Agreement”),
to which Mr. Adams and Mr. Atkinson were parties. |
| ● | Under
the Securities Purchase Agreement, dated June 19, 2023, between Clayton Adams, a former director and a former beneficial owner of more
than 5% of the common stock of the Company, and Kimsey Ventures LLC (“Kimsey Ventures”), Mr. Adams agreed to sell 100,000
shares of common stock to Kimsey Ventures for $250,000. The Company consented to the sale and waived the application of the Company’s
rights of first refusal under the Shareholder Agreement, to which Mr. Adams was a party. Pursuant to the requirements of the Shareholder
Agreement, Kimsey Ventures also agreed to become a party to the Shareholder Agreement. |
| ● | On
April 10, 2023, the Company issued Richard Symington, a former President, Chief Technology Officer, Chief Marketing Officer, and director
of the Company, an 8% unsecured promissory note in the amount of $250,000 and a warrant to purchase 100,000 shares of common stock at
an exercise price of $2.50 per share in a private placement. The promissory note incurred interest at 8% annually and was to mature on
the earlier to occur of March 17, 2025 or a Liquidity Event (defined to include an initial public offering and national stock exchange
listing of the common stock). If a Liquidity Event occurred before March 17, 2025, the warrant would be automatically exercised as to
the unexercised portion of the warrant, the outstanding balance due under the 8% unsecured promissory note would be deemed repaid in
the amount of the unexercised portion of the warrant from the automatic exercise of the unexercised portion of the warrant, and any remaining
balance outstanding under the promissory note must be repaid in cash. If a Liquidity Event had not occurred before March 17, 2025, then
both principal and interest outstanding under the note would be required to be repaid in cash. The warrant was voluntarily exercisable
for cash prior to the maturity date of the promissory note or, as indicated above, would be automatically exercised for shares of common
stock upon the consummation of a Liquidity Event. The warrant had a five-year term. Mr. Symington also entered into a subscription agreement
which provided certain registration rights with respect to the shares underlying the warrant. On November 16, 2023, in connection with
the closing of the Company’s initial public offering and listing of the common stock on the NYSE American, Mr. Symington’s
warrant was automatically exercised to purchase a total of 100,000 shares of common stock for $2.50
per share, and the principal balance under the promissory notes became immediately due and was deemed repaid in the amount of the aggregate
exercise price for the automatic exercise of the unexercised portion of the warrant. The shares of common stock issued upon automatic
exercise of the warrants were registered for resale upon issuance pursuant to the IPO Registration Statement. A total of $11,836 in accrued
unpaid interest was due and payable on the promissory note as of December 31, 2023. During
the fiscal quarter ended March 31, 2024, this total was repaid. |
| ● | Under
the terms of a Repurchase and Resignation Agreement, dated March 21, 2023, between the Company and Dennis Gile, our largest stockholder
and a former Chief Executive Officer, President, Secretary, Chairman, and director of the Company, on March 31, 2023, we paid an aggregate
purchase price of $800,000 for the repurchase (the “Repurchase”) of 600,000 shares of common stock formerly held by Mr. Gile,
at approximately $1.33 per share. Pursuant to the Repurchase Agreement, $695,000 of the $800,000 payment was made to the attorneys for
John Dorsey, a former Chief Executive Officer and director and a former beneficial owner of more than 5% of the common stock of the Company
(the “Dorsey/Gile Settlement Payment”), as part of the settlement of a private lawsuit under a settlement agreement between
Mr. Gile and Mr. Dorsey (the “Dorsey/Gile Lawsuit”) between these individuals and Dorsey LLC, an entity controlled by Mr.
Dorsey (the “Dorsey/Gile Settlement Agreement”). Pursuant to the Repurchase Agreement, the balance of the aggregate purchase
price was paid to the attorneys for Mr. Gile. Pursuant to the Repurchase Agreement, Mr. Gile agreed to resign his position as Chairman
and every other director and officer position he held with the Company effective as of March 21, 2023. Prior to such date, on March 20,
2023, Mr. Gile delivered notice of resignation from such positions, which stated that it was effective March 19, 2023. Pursuant to the
Repurchase Agreement, Mr. Gile will not receive any severance payments in connection with any other agreement with the Company as a result
of his resignation. The Repurchase was also conditioned on the Company’s prior review of and consent to the Dorsey/Gile Settlement
Agreement prior to its execution, and receipt of a certificate from the Chief Financial Officer of the Company that the Repurchase will
not impair the Company’s capital within the meaning of Section 160 of the Delaware General Corporation Law or the Company’s
ability to pay down its debts as they become due (the “CFO Certificate”). Under the Repurchase Agreement, the Dorsey/Gile
Settlement Agreement was required to fully resolve, settle and dismiss the Dorsey/Gile Lawsuit and contain a general release of claims
by all the plaintiffs in the Dorsey/Gile Lawsuit in favor of Mr. Gile, the Company, the Company’s affiliates, stockholders, and
certain other Company releasees. Under the Repurchase Agreement, Mr. Gile agreed to indemnify the Company for claims arising out of or
based upon the Repurchase Agreement. Pursuant to the Repurchase Agreement, a copy of the Dorsey/Gile Settlement Agreement was reviewed
and consented to by the Company and entered into as of March 20, 2023. Under the Dorsey/Gile Settlement Agreement, between Mr. Gile,
Mr. Dorsey, and Dorsey LLC, Mr. Gile agreed to pay the Dorsey/Gile Settlement Payment and transfer 40,000 shares of the Company to Mr.
Dorsey. The Company consented to the transfer and waived the application of the Company’s rights of first refusal under the Shareholder
Agreement, to which Mr. Gile was a party. Pursuant to the requirements of the Shareholder Agreement, Mr. Dorsey also agreed to become
a party to the Shareholder Agreement. Mr. Gile, Mr. Dorsey and Dorsey LLC agreed to mutual releases of all claims relating to the Dorsey/Gile
Lawsuit and to dismiss the Dorsey/Gile Lawsuit. Although the Dorsey/Gile Settlement Agreement did not contain a release of the Company
and did not contain releases by the plaintiffs of Mr. Gile other than with respect to the Dorsey/Gile Lawsuit, the Company waived any
related requirements under the Repurchase Agreement in light of the expected execution of the Mutual Release Agreement (as defined below).
The CFO Certificate was received as of March 21, 2023. The repurchased shares were cancelled as of March 31, 2023. The transfer of 40,000
shares by Mr. Gile to Mr. Dorsey occurred on April 4, 2023, after waiver of the board of directors of the repurchase rights and purchase
rights provided for under the Shareholder Agreement by resolutions adopted on March 24, 2023. |
| ● | Effective
March 29, 2023, a Confidential Mutual General Release and Covenant Not to Sue Agreement was entered into between the Company and John
Dorsey, a former Chief Executive Officer and director and a former beneficial owner of more than 5% of the common stock of the Company
(the “Mutual Release Agreement”). Under the Mutual Release Agreement, Mr. Dorsey agreed to a general release of claims against
and covenant not to sue the Company, the Company’s affiliates, stockholders, and certain other Company releasees, and the Company
agreed to a general release of claims against and covenant not to sue Mr. Dorsey, Mr. Dorsey’s affiliates, and certain other releasees,
subject to payment of the Dorsey/Gile Settlement Payment, which, as indicated above, was made on March 31, 2023. The releases of claims
and covenants not to sue under the Mutual Release Agreement do not apply to breach of the Dorsey/Gile Settlement Agreement or to the
January 2023 Dorsey Settlement Agreement (as defined below). |
| ● | On
March 17, 2023, the Company issued a promissory note in the amount of $10,000 to Daniel Nelson. Daniel Nelson is the Chief Executive
Officer, Chairman and director of the Company. The promissory note provided for 6% interest and maturity date of March 17, 2024 subject
to acceleration upon the Company’s first equity financing, or issuance of any debt convertible into equity, following the date
of the promissory note. The amount was permitted to be prepaid at any time. The approximate dollar value of Mr. Nelson’s interest
in this transaction was approximately $10,000, plus accrued interest. On November 16, 2023, in connection with the closing of the Company’s
initial public offering, the promissory note matured and became due. As of November 16, 2023, the
balance due under the promissory note was $10,263 and was fully repaid as of November 22, 2023. |
| ● | On
March 8, 2023, the Company issued a promissory note in the amount of $95,000 to Nelson Financial Services. Daniel Nelson is the Chief
Executive Officer and sole owner of Nelson Financial Services and the Chief Executive Officer, Chairman and director of the Company.
The promissory note provided for 6% interest and maturity date of March 1, 2024 subject to acceleration upon the Company’s first
equity financing, or issuance of any debt convertible into equity, following the date of the promissory note. The amount was permitted
to be prepaid at any time. As Chief Executive Officer and sole owner of Nelson Financial Services, the approximate dollar value of Mr.
Nelson’s interest in this transaction was approximately $95,000, plus accrued interest. On October 10, 2023, the balance of $97,670
was fully repaid. |
| ● | On
March 1, 2023, the Company issued a promissory note in the amount of $75,000 to Nelson Financial Services Daniel Nelson is the Chief
Executive Officer and sole owner of Nelson Financial Services and the Chief Executive Officer, Chairman and director of the Company.
The promissory note provided for 6% interest and maturity date of March 1, 2024 subject to acceleration upon the Company’s first
equity financing, or issuance of any debt convertible into equity, following the date of the promissory note. At maturity, the balance
due under the note was required to be repaid within ten days. The amount could be prepaid at any time. As Chief Executive Officer and
sole owner of Nelson Financial Services, the approximate dollar value of Mr. Nelson’s interest in this transaction was approximately
$75,000, plus accrued interest. The promissory note was fully repaid on May 18, 2023. |
| ● | On
July 11, 2022, the Company issued a promissory note in the amount of $35,000 to Dennis Gile. Mr. Gile is our largest stockholder and
a former Chief Executive Officer, President, Secretary, Chairman, and director of the Company. The promissory note provides for 6% interest
and maturity date of July 11, 2023 subject to acceleration upon the Company’s first equity financing, or issuance of any debt convertible
into equity, following the date of the promissory note. At maturity, the balance due under the note must be repaid within ten days. The
amount could be prepaid at any time. Due to a subsequent issuance of debt convertible into equity on August 8, 2022, the maturity date
of the promissory note was accelerated to August 8, 2022. Repayment was not made within ten days of that date. The promissory note provides
that default interest under the promissory note accrues at the lesser of 12% or the maximum permitted by law until the default is cured.
The promissory note was repaid on April 6, 2023 with accrued interest not including default interest. Mr. Gile did not demand repayment
or exercise any remedies under the promissory note prior to such repayment and has not indicated any intent to do so. The approximate
dollar value of Mr. Gile’s interest in this transaction was approximately $35,000, plus accrued interest. |
| ● | On
July 11, 2022, the Company issued a promissory note in the amount of $35,000 to Daniel Nelson. Mr. Nelson is Chief Executive Officer,
Chairman and director of the Company. The promissory note provided for 6% interest and maturity date of July 11, 2023 subject to acceleration
upon the Company’s first equity financing, or issuance of any debt convertible into equity, following the date of the promissory
note. At maturity, the balance due under the note was required to be repaid within ten days. The amount was permitted to be prepaid at
any time. Due to a subsequent issuance of debt convertible into equity on August 8, 2022, the maturity date of the promissory note was
accelerated to August 8, 2022. Repayment was not made within ten days of that date. The promissory note provided that default interest
under the promissory note accrues at the lesser of 12% or the maximum permitted by law until the default is cured. Mr. Nelson agreed
to extend the maturity date to the closing of the initial public offering and waive payment of any default interest. The approximate
dollar value of Mr. Nelson’s interest in this transaction was approximately $35,000, plus accrued interest. On October 10, 2023,
the balance of $37,635 was fully repaid. |
| ● | Under
a Settlement Agreement and Release between Signing Day Sports, LLC, an Arizona limited liability company (“SDS LLC – AZ”),
Signing Day Sports Baseball, LLC, an Arizona limited liability company (“SDSB LLC”), Signing Day Sports Football, LLC, an
Arizona limited liability company (“SDSF LLC”), the Company, and Dennis Gile, our largest stockholder and a former Chief
Executive Officer, President, Secretary, Chairman, and director of the Company, dated as of May 12, 2022 (the “2022 Giles Settlement
Agreement”), the parties agreed, among other things, to a general release and discharge of claims against us, our officers and
directors, certain other affiliates and related parties, and our stockholders as listed on an exhibit to the 2022 Giles Settlement Agreement,
including without limitation, claims relating to Mr. Gile’s direct or indirect ownership of shares of the Company’s capital
stock, or Mr. Gile’s direct or indirect ownership of membership interests of SDS LLC – AZ, Signing Day Sports, LLC, a Delaware
limited liability company (“SDS LLC – DE”), SDSF LLC, or SDSB LLC, as applicable, provided, however, that nothing in
the 2022 Giles Settlement Agreement was intended to release any rights that any party or Mr. Gile may have under the terms of a certain
Severance Agreement (“the “Giles Severance Agreement”), including the releases of any and all claims against the Company
and certain related parties as contained therein, Mr. Gile’s agreement to be terminated effective on January 1, 2022 and receive
a severance payment of $53,500 pursuant to Section 1 of the Giles Severance Agreement, paid in March 2022, all of which terms were to
remain in force notwithstanding the provisions of the 2022 Giles Settlement Agreement. Further, Mr. Gile irrevocably, unconditionally,
voluntarily, knowingly, fully, finally, and completely forever released and waived their rights to any claim, distributions, payments,
or other amounts that Mr. Gile believed should have been paid or were owed to Mr. Gile by SDS LLC – AZ, SDS LLC – DE, SDSF
LLC, SDSB LLC, or the Company. Each party also agreed, in order to make sure there was a clear understanding regarding the capitalization
of the Company, irrevocably, unconditionally, voluntarily, knowingly, fully, finally, and completely to forever release and waive any
claims that they may have had with respect to ownership interests in SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or the
Company, whether past, present, future, or contingent, and affirmed that he, she, or it did not own any interests in the Company beyond
that set forth on the capitalization table attached as an exhibit to the 2022 Giles Settlement Agreement. The parties therefore agreed
that Mr. Gile owned 2,816,377 shares of common stock pursuant to the 2022 Giles Settlement Agreement. Mr. Gile also irrevocably covenanted
that he would not sue the Company or the other released parties in respect of any of the matters released and discharged. Notwithstanding
the Giles Severance Agreement above, Mr. Gile has not had a written employment agreement with the Company, has not been terminated, and
has not received a salary since 2021, but has continued to receive standard employee benefits on a monthly basis. |
| ● | Under
a Settlement Agreement and Release between SDS LLC – AZ, SDSB LLC, SDSF LLC, the Company, Dorsey LLC, an entity controlled by John
Dorsey, a former Chief Executive Officer and director and a former beneficial owner of more than 5% of the common stock of the Company,
Mr. Dorsey, in his individual capacity, and his spouse, Elena Dorsey, to the extent of such spouse’s community property interest,
if any (together with John Dorsey, “Dorsey”), dated as of April 25, 2022 (the “2022 Dorsey Settlement Agreement”),
the parties agreed, among other things (1) that Dorsey had held 959,940 shares of the Company’s common stock at that time, (2)
that prior to the anticipated redomestication of SDS LLC – AZ to Delaware as a Delaware limited liability company and conversion
to a Delaware corporation, Dorsey was a member of SDS LLC – AZ and was a party to SDS LLC – AZ’s Fourth Amended Limited
Liability Company Operating Agreement dated July 16, 2021 (the “SDS LLC – AZ Operating Agreement”), (3) that the SDS
LLC – AZ Operating Agreement provided Dorsey, among other things, certain anti-dilution protections whereby SDS LLC – AZ
would have been required to issue additional equity to Dorsey if SDS LLC – AZ were to have issued additional equity which would
have the effect of reducing Dorsey’s ownership below 11% of SDS LLC – AZ’s outstanding equity (the “Dorsey Anti-Dilution
Provision”), (4) that on April 25, 2022, Dorsey LLC would receive a total of 350,000 shares of common stock of the Company in exchange
for Dorsey’s cancellation, waiver, and release of all of Dorsey’s rights under the Dorsey Anti-Dilution Provision in the
SDS LLC – AZ Operating Agreement, (5) to a general release and discharge of claims against us, our officers and directors, certain
other affiliates and related parties, and our stockholders as listed on an exhibit to the 2022 Dorsey Settlement Agreement, including
without limitation, claims relating to the Dorsey Anti-Dilution Provision, Dorsey’s direct or indirect ownership of shares of the
Company’s capital stock, or Dorsey’s direct or indirect ownership of membership interests of SDS LLC – AZ, SDS LLC
– DE, SDSF LLC, or SDSB LLC, as applicable, provided, however, that nothing in the 2022 Dorsey Settlement Agreement was intended
to release any rights that any party or Dorsey may have under the terms of that certain Offer of Employment between John Dorsey and SDS
LLC – AZ, dated January 13, 2022, or that certain Simple Agreement for Future Equity and/or Convertible Note, as applicable. The
Company has no agreements with Dorsey otherwise relating to, and has not issued to Dorsey, any simple agreement for future equity or
convertible note. Further, Dorsey irrevocably, unconditionally, voluntarily, knowingly, fully, finally, and completely forever released
and waived their rights to any claim, distributions, payments, or other amounts that Dorsey believed should have been paid or were owed
to Dorsey by SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or the Company. Each party also agreed, in order to make sure
there was a clear understanding regarding the capitalization of the Company, irrevocably, unconditionally, voluntarily, knowingly, fully,
finally, and completely to forever release and waive any claims that they may have had with respect to ownership interests in SDS LLC
– AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or the Company, whether past, present, future, or contingent, and affirmed that he,
she, or it did not own any interests in the Company beyond that set forth on the capitalization table attached as an exhibit to the Settlement
Agreement. The parties therefore agreed that Dorsey LLC owned 1,309,940 shares of common stock pursuant to the 2022 Dorsey Settlement
Agreement. Dorsey also irrevocably covenanted that they would not sue us or the other released parties in respect of any of the matters
released and discharged. Mr. Dorsey is deemed to beneficially own the shares of common stock owned by Dorsey LLC and has sole voting
and dispositive power over its shares. |
| ● | On
or about November 29, 2022, John Dorsey, a former Chief Executive Officer and director and a former beneficial owner of more than 5%
of the common stock of the Company, through his counsel, sent the Company a letter demanding full payment on a $50,000 loan that Mr.
Dorsey allegedly made to the Company on or about July 21, 2022 while Mr. Dorsey was the Chief Executive Officer of the Company that was
due and payable two weeks thereafter (the “Alleged Loan”) in connection with the Company’s general denial of having
entering into a binding agreement with Mr. Dorsey on those terms and that payment was due and owing (the “Loan Dispute”).
Under the Settlement Agreement, Release of Claims, and Covenant Not To Sue, dated as of January 12, 2023, between the Company and Mr.
Dorsey (the “January 2023 Dorsey Settlement Agreement”), Mr. Dorsey agreed to a discharge of the Alleged Loan and waiver
and release of claims relating to the Alleged Loan and Loan Dispute and covenant not to sue on the basis of such claims or otherwise
commence any action or proceeding that would be inconsistent with the release of such claims. The Company agreed to pay Mr. Dorsey $10,000
and issue a promissory note to Mr. Dorsey in the principal amount of $40,000 payable on the earlier of ten business days following the
successful closing of an initial public offering of the Company’s common stock that generates at least $1 million in net proceeds
to the Company or July 1, 2023. Mr. Dorsey orally waived enforcement of the repayment obligation until the tenth day following the consummation
of the Company’s initial public offering. The net balance of this promissory note was $40,000 as of September 30, 2023. On November
16, 2023, in connection with the closing of the Company’s initial public offering, the balance of $40,000 became due and payable
within ten days. The balance was fully repaid as of November 22, 2023. |
| ● | Under
a Settlement Agreement and Release between SDS LLC – AZ, SDSB LLC, SDSF LLC, the Company, Dorsey LLC, an entity controlled by John
Dorsey, a former Chief Executive Officer and director and a former beneficial owner of more than 5% of the common stock of the Company,
Noah (Jed) Smith, a former director and a former beneficial owner of more than 5% of the outstanding common stock of the Company, and
his spouse, Glory Smith, to the extent of such spouse’s community property interest, if any (together with Noah (Jed) Smith, “Smith”),
dated as of May 13, 2022 (the “2022 Smith Settlement Agreement”), the parties agreed, among other things (1) that Dennis
Gile, the founder of SDS LLC – AZ, our largest stockholder, and a former Chief Executive Officer, President, Secretary, and Chairman
of the Company, agreed and contracted to fulfill certain obligations to Smith, including, but not limited to, granting a profits interest
that was intended to be a membership interest in SDS LLC – AZ as well as a percentage of future profits from the operations or
sale of SDS LLC – AZ, pursuant to that certain Contribution and Profit-Sharing Agreement between Mr. Gile and Smith, dated April
5, 2019, as amended by that certain First Amendment to Contribution and Profit-Sharing Agreement dated December 9, 2019, and that certain
Second Amendment to Contribution and Profit-Sharing Agreement dated August 21, 2020, all attached as an exhibit to the 2022 Smith Settlement
Agreement (collectively, the “Smith Contribution and Profit-Sharing Agreement”), (2) that Mr. Smith held 300,000 shares of
common stock in the Company in exchange for Smith’s previous contributions to SDS LLC – AZ, (3) that on May 13, 2022, Mr.
Smith would receive an additional 100,000 shares of common stock of the Company in exchange for the termination of Smith’s rights
under the Smith Contribution and Profit-Sharing Agreement, (4) that following such receipt of such additional shares, Mr. Smith would
have a total of 400,000 shares of common stock, and (5) to a general release and discharge of claims against us, our officers and directors,
certain other affiliates and related parties, and our stockholders as listed on an exhibit to the 2022 Smith Settlement Agreement, including
without limitation, claims relating to the Smith Contribution and Profit-Sharing Agreement, Smith’s direct or indirect ownership
of shares of the Company’s capital stock, or Smith’s direct or indirect ownership of membership interests of SDS LLC –
AZ, SDS LLC – DE, SDSF LLC, or SDSB LLC, as applicable, provided, however, that nothing in the 2022 Smith Settlement Agreement
was intended to release any rights that any party or Smith may have under that certain Simple Agreement for Future Equity and/or Convertible
Note, as applicable. The Company has no agreements with Smith otherwise relating to, and has not issued to Smith, any simple agreement
for future equity or convertible note. Further, Smith irrevocably, unconditionally, voluntarily, knowingly, fully, finally, and completely
forever released and waived their rights to any claim, distributions, payments, or other amounts that Smith believed should have been
paid or were owed to Smith by SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or the Company. Each party also agreed, in
order to make sure there was a clear understanding regarding the capitalization of the Company, irrevocably, unconditionally, voluntarily,
knowingly, fully, finally, and completely to forever release and waive any claims that they may have had with respect to ownership interests
in SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or the Company, whether past, present, future, or contingent, and affirmed
that he, she, or it did not own any interests in the Company beyond that set forth on the capitalization table attached as an exhibit
to the 2022 Smith Settlement Agreement. The parties therefore agreed that Mr. Smith owned 400,000 shares of common stock pursuant to
the 2022 Smith Settlement Agreement. Smith also irrevocably covenanted that they would not sue us or the other released parties in respect
of any of the matters released and discharged. |
| ● | Under
a Settlement Agreement and Release between SDS LLC – AZ, SDSB LLC, SDSF LLC, the Company, Virginia Byrd, an individual beneficial
owner of more than 5% of the outstanding common stock of the Company, and Byrd Enterprises, a former beneficial owner of more than 5%
of the outstanding common stock of the Company (together with Viginia Byrd, “Byrd”), dated as of May 13, 2022 (the “2022
Byrd Settlement Agreement”), the parties agreed, among other things, to a general release and discharge of claims against us, our
officers and directors, certain other affiliates and related parties, and our stockholders as listed on an exhibit to the 2022 Byrd Settlement
Agreement, including without limitation, claims relating to Byrd’s direct or indirect ownership of shares of the Company’s
capital stock, or Byrd’s direct or indirect ownership of membership interests of SDS LLC – AZ, SDS LLC – DE, SDSF LLC,
or SDSB LLC, as applicable, provided, however, that nothing in the 2022 Byrd Settlement Agreement was intended to release any rights
that any party or Byrd may have under that certain Simple Agreement for Future Equity and/or Convertible Note, as applicable. The Company
has no agreements with Byrd otherwise relating to, and has not issued to Byrd, any simple agreement for future equity or convertible
note. Further, Byrd irrevocably, unconditionally, voluntarily, knowingly, fully, finally, and completely forever released and waived
their rights to any claim, distributions, payments, or other amounts that Byrd believed should have been paid or were owed to Byrd by
SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or the Company. Each party also agreed, in order to make sure there was a
clear understanding regarding the capitalization of the Company, irrevocably, unconditionally, voluntarily, knowingly, fully, finally,
and completely to forever release and waive any claims that they may have had with respect to ownership interests in SDS LLC –
AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or the Company, whether past, present, future, or contingent, and affirmed that he, she,
or it did not own any interests in the Company beyond that set forth on the capitalization table attached as an exhibit to the 2022 Byrd
Settlement Agreement. The parties therefore agreed that Byrd Enterprises owned 767,785 shares of common stock pursuant to the 2022 Byrd
Settlement Agreement. Byrd also irrevocably covenanted that they would not sue us or the other released parties in respect of any of
the matters released and discharged. |
| ● | On
November 15, 2021, the Company issued a 6% convertible unsecured promissory note in the amount of $565,000 to Zone Right, LLC, a California
limited liability company (“Zone Right”), a former beneficial owner of more than 5% of the outstanding common stock of the
Company, in a private placement. Glen Kim, a former director and a former beneficial owner of more than 5% of the outstanding common
stock of the Company, and the current or former managing member of Zone Right, was deemed to beneficially own the shares of common stock
owned by Zone Right and have sole voting and dispositive power over its shares. The convertible note incurred interest at 6% annually
and was to mature on November 15, 2024. The convertible note contained provisions for optional and mandatory conversion and conversion
price adjustments. Upon conversion, any interest accrued under the convertible note was to be waived. On November 13, 2023, the Company
issued a settlement notice to the holders of the 6% convertible unsecured promissory notes undertaking to effect conversions as if 110%
of the principal being converted was being converted. Zone Right also entered into a Subscription Agreement and an Investor Rights and
Lockup Agreement which provided information and inspection rights, registration rights, lock-up provisions, participation rights in subsequent
securities offerings and private placements, and typical “drag along” and “tag along” rights. On
November 16, 2023, the closing of the Company’s initial public offering and the listing of its common stock on the NYSE American
constituted a Liquidity Event with respect to the convertible note. As a result, on November 16, 2023, the principal of $565,000
outstanding under the convertible note automatically converted into a total of 248,600 shares of
common stock, based on the conversion price of 50% of the initial public offering price of $5.00 per share, in accordance with the settlement
notice described above, and the interest under the convertible note was waived in accordance
with its terms. |
| ● | Under
a Settlement Agreement and Release between SDS LLC – AZ, SDSB LLC, SDSF LLC, the Company, Zone Right, a former beneficial owner
of more than 5% of the outstanding common stock of the Company, Glen Kim, a former director and a former beneficial owner of more than
5% of the outstanding common stock of the Company, and his spouse, Jessica Lee, to the extent of such spouse’s community property
interest, if any (together with Zone Right and Glen Kim, the “Zone Right Parties”), dated as of April 26, 2022 (the “2022
Zone Right Settlement Agreement”), the parties agreed, among other things, to a general release and discharge of claims against
us, our officers and directors, certain other affiliates and related parties, and our stockholders as listed on an exhibit to the 2022
Zone Right Settlement Agreement, including without limitation, claims relating to the Zone Right Parties’ direct or indirect ownership
of shares of the Company’s capital stock, or the Zone Right Parties’ direct or indirect ownership of membership interests
of SDS LLC – AZ, SDS LLC – DE, SDSF LLC, or SDSB LLC, as applicable, provided, however, that nothing in the 2022 Zone Right
Settlement Agreement was intended to release any rights that any party or the Zone Right Parties may have under that certain Simple Agreement
for Future Equity and/or Convertible Note, as applicable. Other than as otherwise disclosed in this proxy statement, the Company has
no agreements with the Zone Right Parties otherwise relating to, and has not issued to the Zone Right Parties, any Simple Agreement for
Future Equity or convertible note. Further, the Zone Right Parties irrevocably, unconditionally, voluntarily, knowingly, fully, finally,
and completely forever released and waived their rights to any claim, distributions, payments, or other amounts that the Zone Right Parties
believed should have been paid or were owed to the Zone Right Parties by SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC,
or the Company. Each party also agreed, in order to make sure there was a clear understanding regarding the capitalization of the Company,
irrevocably, unconditionally, voluntarily, knowingly, fully, finally, and completely to forever release and waive any claims that they
may have had with respect to ownership interests in SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or the Company, whether
past, present, future, or contingent, and affirmed that he, she, or it did not own any interests in the Company beyond that set forth
on the capitalization table attached as an exhibit to the 2022 Zone Right Settlement Agreement. The parties therefore agreed that Zone
Right owned 483,833 shares of common stock pursuant to the 2022 Zone Right Settlement Agreement. The Zone Right Parties also irrevocably
covenanted that they would not sue us or the other released parties in respect of any of the matters released and discharged. At all
relevant times, Mr. Kim was deemed to beneficially own the shares of common stock owned by Zone Right and have sole voting and dispositive
power over its shares. |
| ● | Under
a lease agreement dated as of October 7, 2021 and an addendum dated the same date, we leased our former corporate offices consisting
of approximately 7,800 square feet for a term of five years beginning January 1, 2022 and ending December 31, 2026 for a monthly rent
of $20,800 plus tax and certain operating expenses, with an increase of 3% at the beginning of every calendar year following the first
year of the term of the lease agreement through January 2026. The office space was owned by John Dorsey, a former Chief Executive Officer
and director and a former beneficial owner of more than 5% of the common stock of the Company. On August 31, 2022, we entered into a
Lease Termination Agreement in which both parties agreed to terminate the lease and release each other from all future obligations. The
total approximate dollar value of this transaction was $420,992 plus tax and certain operating expenses. The
approximate dollar value of the interest of Mr. Dorsey in this transaction was $420,992. |
| ● | Under
a Settlement Agreement and Release between SDS LLC – AZ, SDSB LLC, SDSF LLC, the Company, and Clayton Adams, a former director
and a former beneficial owner of more than 5% of the common stock of the Company, dated as of May 3, 2022 (the “2022 Adams Settlement
Agreement”), the parties agreed, among other things, to a general release and discharge of claims against us, our officers and
directors, certain other affiliates and related parties, and our stockholders as listed on an exhibit to the 2022 Adams Settlement Agreement,
including without limitation, claims relating to Mr. Adams’ direct or indirect ownership of shares of the Company’s capital
stock, or Mr. Adams’ direct or indirect ownership of membership interests of SDS LLC – AZ, SDS LLC – DE, SDSF LLC,
or SDSB LLC, as applicable, provided, however, that nothing in the 2022 Adams Settlement Agreement was intended to release any rights
that any party or Mr. Adams may have under that certain Simple Agreement for Future Equity and/or Convertible Note, as applicable. The
Company has no agreements with Mr. Adams otherwise relating to, and has not issued to Mr. Adams, any simple agreement for future equity
or convertible note. Further, Mr. Adams irrevocably, unconditionally, voluntarily, knowingly, fully, finally, and completely forever
released and waived their rights to any claim, distributions, payments, or other amounts that Mr. Adams believed should have been paid
or were owed to Mr. Adams by SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or the Company. Each party also agreed, in order
to make sure there was a clear understanding regarding the capitalization of the Company, irrevocably, unconditionally, voluntarily,
knowingly, fully, finally, and completely to forever release and waive any claims that they may have had with respect to ownership interests
in SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or the Company, whether past, present, future, or contingent, and affirmed
that he, she, or it did not own any interests in the Company beyond that set forth on the capitalization table attached as an exhibit
to the 2022 Adams Settlement Agreement. The parties therefore agreed that Mr. Adams owned 363,274 shares of common stock pursuant to
the 2022 Adams Settlement Agreement. Mr. Adams also irrevocably covenanted that they would not sue us or the other released parties in
respect of any of the matters released and discharged. |
| ● | On
July 21, 2022, the date that Clayton Adams, a former director and a former beneficial owner of more than 5% of the common stock of the
Company, was appointed as a member of the Board of Directors, Mr. Adams agreed to provide $100,000 in financing to the Company. On both
August 18, 2023 and September 11, 2023, Mr. Adams was issued a 15% OID promissory note with principal of $58,824 for gross proceeds of
$50,000 each. The principal under the 15% OID promissory notes accrues 5% interest annually, and principal and interest under the notes
were required to be repaid by December 31, 2023. The notes could be prepaid without a premium or penalty. Mr. Adams resigned from his
position on the board of directors effective April 27, 2023. On November 20, 2023, the Company repaid the aggregate balance of $117,648
under the two 15% OID promissory notes. |
| ● | Under
a Settlement Agreement and Release between SDS LLC – AZ, SDSB LLC, SDSF LLC, the Company, Matthew Atkinson, and his spouse, Penny
Atkinson, to the extent of such spouse’s community property interest, if any (together with Matthew Atkinson, “Atkinson”),
dated as of May 13, 2022 (the “2022 Atkinson Settlement Agreement”), the parties agreed, among other things, to a general
release and discharge of claims against us, our officers and directors, certain other affiliates and related parties, and our stockholders
as listed on an exhibit to the 2022 Atkinson Settlement Agreement, including without limitation, claims relating to Atkinson’s
direct or indirect ownership of shares of the Company’s capital stock, or Atkinson’s direct or indirect ownership of membership
interests of SDS LLC – AZ, SDS LLC – DE, SDSF LLC, or SDSB LLC, as applicable, provided, however, that nothing in the 2022
Atkinson Settlement Agreement was intended to release any rights that any party or Atkinson may have under that certain Simple Agreement
for Future Equity and/or Convertible Note, as applicable. The Company has no agreements with Atkinson otherwise relating to, and has
not issued to Atkinson, any simple agreement for future equity or convertible note. Further, Atkinson irrevocably, unconditionally, voluntarily,
knowingly, fully, finally, and completely forever released and waived their rights to any claim, distributions, payments, or other amounts
that Atkinson believed should have been paid or were owed to Atkinson by SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC,
or the Company. Each party also agreed, in order to make sure there was a clear understanding regarding the capitalization of the Company,
irrevocably, unconditionally, voluntarily, knowingly, fully, finally, and completely to forever release and waive any claims that they
may have had with respect to ownership interests in SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or the Company, whether
past, present, future, or contingent, and affirmed that he, she, or it did not own any interests in the Company beyond that set forth
on the capitalization table attached as an exhibit to the 2022 Atkinson Settlement Agreement. The parties therefore agreed that Mr. Atkinson
owned 383,274 shares of common stock pursuant to the 2022 Atkinson Settlement Agreement. Atkinson also irrevocably covenanted that they
would not sue us or the other released parties in respect of any of the matters released and discharged. |
| ● | Under
a Settlement Agreement and Release between SDS LLC – AZ, SDSB LLC, SDSF LLC, the Company, and 35’sNextChapters, LLC (“35’sNextChapters”),
dated as of May 13, 2022 (the “2022 35’sNextChapters Settlement Agreement”), the parties agreed, among other things,
to a general release and discharge of claims against us, our officers and directors, certain other affiliates and related parties, and
our stockholders as listed on an exhibit to the 2022 35’sNextChapters Settlement Agreement, including without limitation, claims
relating to 35’sNextChapters’ direct or indirect ownership of shares of the Company’s capital stock, or 35’sNextChapters’
direct or indirect ownership of membership interests of SDS LLC – AZ, SDS LLC – DE, SDSF LLC, or SDSB LLC, as applicable,
provided, however, that nothing in the 2022 35’sNextChapters Settlement Agreement was intended to release any rights that any party
or 35’sNextChapters may have under the terms of that certain Invitation to Join the Board of Directors between Ronald Saslow and
the Company or that certain Simple Agreement for Future Equity and/or Convertible Note, as applicable. The Company has no agreements
with 35’sNextChapters otherwise relating to, and has not issued to 35’sNextChapters, any convertible note or Invitation to
Join the Board of Directors between Ronald Saslow and the Company. Further, 35’sNextChapters irrevocably, unconditionally, voluntarily,
knowingly, fully, finally, and completely forever released and waived their rights to any claim, distributions, payments, or other amounts
that 35’sNextChapters believed should have been paid or were owed to 35’sNextChapters by SDS LLC – AZ, SDS LLC –
DE, SDSF LLC, SDSB LLC, or the Company. Each party also agreed, in order to make sure there was a clear understanding regarding the capitalization
of the Company, irrevocably, unconditionally, voluntarily, knowingly, fully, finally, and completely to forever release and waive any
claims that they may have had with respect to ownership interests in SDS LLC – AZ, SDS LLC – DE, SDSF LLC, SDSB LLC, or the
Company, whether past, present, future, or contingent, and affirmed that he, she, or it did not own any interests in the Company beyond
that set forth on the capitalization table attached as an exhibit to the 2022 35’sNextChapters Settlement Agreement. The parties
therefore agreed that 35’sNextChapters owned 150,000 shares of common stock pursuant to the 2022 35’sNextChapters Settlement
Agreement. 35’sNextChapters also irrevocably covenanted that they would not sue us or the other released parties in respect of
any of the matters released and discharged. Ronald Saslow, a former director of the Company, as Manager of 35’sNextChapters, is
deemed to beneficially own the shares of common stock owned by 35’sNextChapters and has sole voting and dispositive power over
its shares. |
| ● | In
July 2021, we issued a Simple Agreement for Future Equity (“SAFE”) to 35’sNextChapters, whose Manager, Ronald Saslow,
is a former director of the Company, and is deemed to beneficially own the securities and interests in securities owned by 35’sNextChapters
and has sole voting and dispositive power over its securities, in exchange for a payment of $250,000. In October 2022, we entered into
a Cancellation and Exchange Agreement with 35’sNextChapters in which we agreed to cancel its SAFE in exchange for the issuance
of 74,627 shares of common stock. The number of shares was equal to the purchase amount under the SAFE divided by approximately $3.35,
based on a $25 million valuation for the Company. |
| ● | In
April 2021, we issued a SAFE to the Nelson Trust, one of whose co-trustees is Daniel Nelson, our Chief Executive Officer, Chairman, and
a director of the Company, in exchange for a payment of $100,000. In October 2022, we entered into a Cancellation and Exchange Agreement
with the Nelson Trust in which we agreed to cancel its SAFE in exchange for the issuance of 29,851 shares of common stock. The number
of shares was equal to the purchase amount under the SAFE divided by approximately $3.35, based on a $25 million valuation for the Company. |
| ● | On
October 15, 2021, the Company issued a 6% convertible unsecured promissory note in a private placement in the amount of $1,500,000 to
the Nelson Trust, whose co-trustees are Daniel Nelson, our Chief Executive Officer, Chairman, and a director of the Company, and Jodi
B. Nelson. The convertible note incurred interest at 6% annually and was to mature on October 15, 2024. The convertible note contained
provisions for optional and mandatory conversion and conversion price adjustments. On November 13, 2023, the Company issued a settlement
notice to the holders of the 6% convertible unsecured promissory notes undertaking to effect conversions as if 110% of the principal
being converted was being converted. The Nelson Trust also entered into a Subscription Agreement and an Investor Rights and Lockup Agreement
which provided information and inspection rights, registration rights, lock-up provisions, participation rights in subsequent securities
offerings and private placements, and typical “drag along” and “tag along” rights. On
November 16, 2023, the closing of the Company’s initial public offering and the listing of its common stock on the NYSE American
constituted a Liquidity Event with respect to the convertible note. As a result, on November 16, 2023, the principal of $1,500,000
outstanding under the convertible note automatically converted into a total of 660,000 shares of
common stock, based on the conversion price of 50% of the initial public offering price of $5.00 per share, in accordance with the settlement
notice described above, and the interest under the convertible note was waived in accordance with its terms. |
| ● | In
April 2022, Nelson Financial Services became the insurance agent providing group benefits for the Company. Total dollar benefits provided
to the Company under the group benefits plan in 2022 and 2023 were approximately $48,374 and $138,470, respectively. Total dollar payments
to Nelson Financial Services in 2022 and 2023 under the group benefits plan were approximately $2,790 and $4,771, respectively. As Chief
Executive Officer and sole owner of Nelson Financial Services, the approximate dollar value of Mr. Nelson’s interest in this transaction
was approximately $2,790 and $4,771 in 2022 and 2023, respectively. |
DELINQUENT
SECTION 16(a) REPORTS
Section
16(a) of the Exchange Act requires our directors and executive officers and beneficial owners of more than 10% of our shares of common
stock to file with the SEC initial reports of ownership and reports of changes in ownership of our equity securities. We believe, based
solely on a review of the copies of such reports furnished to us and representations of these persons, that all reports were timely filed
for the year ended December 31, 2023, except that a Form 3 for Dennis Gile, a beneficial owner of more than 10% of our shares of common
stock, was not filed.
PROPOSAL
NO. 3
approval
of the issuance of all of the shares of the Company’s common stock issued or issuable pursuant to the Securities purchase agreement,
dated as of May 16, 2024, between the Company and FirstFire Global Opportunities Fund, LLC (“FIRSTfire”), as amended (the
“May 2024 ff purchase agreement”), the Securities purchase agreement, dated as of June 18, 2024, between the Company and
FirstFire (the “june 2024 ff purchase agreement”), and the letter agreement, dated August 9, 2021, between the Company and
Boustead Securities, LLC, as amended, in connection with the May 2024 ff purchase agreement and the june 2024 ff purchase agreement,
in accordance with Section 713(a)
of the NYSE American LLC Company Guide
Overview
Proposal
No. 3 is to approve the issuance of all of the shares of common stock issued or issuable pursuant to the May 2024 FF Purchase Agreement,
the June 2024 FF Purchase Agreement, and the Boustead Engagement Letter in connection with the May 2024 FF Purchase Agreement and the
June 2024 FF Purchase Agreement, in accordance with Section 713(a) of the NYSE American Company Guide.
Background
Information
May
2024 FirstFire Private Placement
On
May 16, 2024, the Company entered into the May 2024 FF Purchase Agreement between the Company and FirstFire, pursuant to which, as a
private placement transaction, the Company was required to issue FirstFire a senior secured promissory note, as amended by that certain
Amendment to Senior Secured Promissory Note and Warrants, dated as of May 20, 2024, between the Company and FirstFire (the “Amendment
to May 2024 FF Note and May 2024 FF Warrants”), in the principal amount of $412,500 (as amended, the “May 2024 FF Note”);
187,500 shares of common stock (the “May 2024 FF Commitment Shares, as partial consideration for the purchase of the May 2024 FF
Note; a warrant to purchase up to 1,375,000 shares of common stock at an initial exercise price of $0.30 per share, as amended by the
Amendment to May 2024 FF Note and May 2024 FF Warrants (as amended, the “First May 2024 FF Warrant”), as partial consideration
for the purchase of the May 2024 FF Note; and a warrant to purchase up to 250,000 shares of common stock at an initial exercise price
of $0.01 per share exercisable from the date of an “Event of Default” as defined by the May 2024 FF Note (an “FF Notes
Event of Default”) under the May 2024 FF Note, as amended by the Amendment to May 2024 FF Note and May 2024 FF Warrants (as amended,
the “Second May 2024 FF Warrant” and together with the First May 2024 FF Warrant, the “May 2024 FF Warrants”),
as partial consideration for the purchase of the May 2024 FF Note.
The
closing of the initial transaction contemplated by the May 2024 FF Purchase Agreement, including FirstFire’s payment of the purchase
price of $375,000, was subject to certain conditions. On May 20, 2024, such conditions were met. As a result, the May 2024 FF Commitment
Shares, the May 2024 FF Note and the May 2024 FF Warrants were released from escrow and issued as of May 16, 2024, and FirstFire paid
$375,000, of which the Company received $336,500 in net proceeds after deductions of the placement agent’s fee of $26,250 and non-accountable
expense allowance of $3,750, and FirstFire counsel’s fees of $8,500.
May
2024 FF Purchase Agreement
Under
the May 2024 FF Purchase Agreement, until the May 2024 FF Note has been fully converted or repaid, the May 2024 FF Note holder will have
participation rights and rights of first refusal on any offers of the Company’s securities other than offerings previously disclosed
in the Company’s reports filed with the SEC or any Excluded Issuance (as defined in the June 2024 FF Purchase Agreement and the
May 2024 FF Purchase Agreement), and most favored nation rights on any offers of the Company’s securities other than for an Excluded
Issuance. The Company will also be prohibited from effecting or entering into an agreement involving a Variable Rate Transaction (as
defined in the June 2024 FF Purchase Agreement and the May 2024 FF Purchase Agreement) other than pursuant to an “at-the-market”
agreement with a registered broker-dealer, whereby such registered broker-dealer is acting as principal in the purchase of common stock
from the Company or an Equity Line of Credit (as defined in the May 2024 FF Note and the June 2024 FF Note (as defined in “—June
2024 FirstFire Private Placement), without the consent of FirstFire, which may not be unreasonably withheld. In addition, the Company
may not issue or agree, propose, or offer to issue any shares of common stock or securities with underlying common stock prior to the
30th calendar day after the date of the May 2024 FF Purchase Agreement.
The
May 2024 FF Purchase Agreement (as well as the May 2024 FF Note and the May 2024 FF Warrants) provides that the maximum amount of shares
of common stock issuable under the May 2024 FF Note and the May 2024 FF Warrants is limited to the FF Exchange Limitation (as defined
below) until we obtain stockholder approval (the “FF Stockholder Approval”) to issue
shares in excess of 19.99% of the issued and outstanding common stock of the Company as of the date of the May 2024 FF Purchase Agreement,
or 3,074,792 shares of common stock, which number of shares shall be reduced, on a share-for-share basis, by the number of shares of
common stock issued or issuable pursuant to any transaction or series of transactions that may be aggregated with the transactions contemplated
by the May 2024 FF Purchase Agreement under applicable rules of the NYSE American and such limited number of shares, the “FF Exchange
Limitation”). Originally, the FF Exchange Limitation would not apply to any shares
of common stock issuable upon conversion or exercise of the FF Note or the FF Warrants if the applicable conversion price or exercise
price is at least equal to the greater of the Company’s stockholders’ equity per share disclosed in the Company’s most
recent public filing with the SEC or the last closing bid price of the common stock as of the date of conversion or exercise. Pursuant
to the Amendment to May 2024 FF Note and May 2024 FF Warrants, the May 2024 FF Note and
the May 2024 FF Warrants were amended to delete this exception. The Company is required to hold a meeting of stockholders on or
before the date that is six months after the date of the May 2024 FF Purchase Agreement, for the purpose of obtaining the FF Stockholder
Approval, with the recommendation of the Company’s board of directors that such proposal be approved; the Company must solicit
proxies from the Company’s stockholders in connection with the proposal in the same manner as all other management proposals in
such proxy statement; and all management-appointed proxyholders must vote their proxies in favor of such proposal. In addition, all members
of the Company’s board of directors and all of the Company’s executive officers must vote in favor of such proposal, for
purposes of obtaining the FF Stockholder Approval, with respect to all of the Company’s securities then held by such persons, and
the Company must generally use the Company’s commercially reasonable efforts to obtain the FF Stockholder Approval. If the Company
does not obtain the FF Stockholder Approval at the first meeting at which the proposal is voted upon, the Company must call a stockholder
meeting as often as possible thereafter to seek the FF Stockholder Approval until the FF Stockholder Approval is obtained.
As
required by the May 2024 FF Purchase Agreement, the Company entered into a Security Agreement, dated as of May 16, 2024, between the
Company and FirstFire (the “May 2024 FF Security Agreement”), under which the Company agreed to grant FirstFire a security
interest to secure the Company’s obligations under the May 2024 FF Note in all assets of the Company except for a certificate of
deposit account with Commerce Bank of Arizona (“CBAZ”) with an approximate balance of $2,100,000 together with (i) all interest,
whether now accrued or hereafter accruing; (ii) all additional deposits made to such account; (iii) any and all proceeds from such account;
and (iv) all renewals, replacements and substitutions for any of the foregoing (the “CBAZ Collateral”), which is subject
to that certain Assignment of Deposit Account, dated as of December 11, 2023, between the
Company and CBAZ, until the full repayment of that certain promissory note in the original principal amount of $2,000,000 issued by the
Company to CBAZ, dated as of December 11, 2023 and maturing on December 11, 2024 (the “Second
CBAZ Promissory Note”), pursuant to that certain Business Loan Agreement, dated as of December 11, 2023, between the Company
and CBAZ (the “Second CBAZ Loan Agreement”).
As
required by the May 2024 FF Purchase Agreement, the Company also entered into a Registration Rights Agreement, dated as of May 16, 2024,
between the Company and FirstFire (the “May 2024 FF Registration Rights Agreement”), pursuant to which the Company agreed
to register the resale of the May 2024 FF Commitment Shares and the shares of common stock underlying the May 2024 FF Note and the May
2024 FF Warrants under the Securities Act pursuant to a registration statement. The Company agreed to file the registration statement
with the SEC within 90 calendar days from the date of the May 2024 FF Purchase Agreement and have the registration statement declared
effective by the SEC within 120 days from the date of the May 2024 FF Purchase Agreement. The Company also granted FirstFire certain
piggyback registration rights pursuant to the May 2024 FF Purchase Agreement. Pursuant to the May 2024 FF Registration Rights Agreement,
if the total number of shares issuable upon conversion of the May 2024 FF Notes or upon exercise of the May 2024 FF Warrants becomes
greater than the number that may be offered for resale by means of the prospectus that forms a part of the registration statement, then
the Company will be required to register the additional shares of common stock for resale by means of one or more separate prospectuses.
Copies
of the May 2024 FF Purchase Agreement, the May 2024 FF Security Agreement, the May 2024 FF Registration Rights Agreement, and the
Amendment to May 2024 FF Note and May 2024 FF Warrants are attached as Annex A, Annex B, Annex C, and Annex
D, respectively.
May
2024 FF Note
The
principal amount of the May 2024 FF Note is based on an original issue discount of 10% and will bear interest at the rate of 10% per
annum on a 365-day basis. The interest will be guaranteed, which requires that all interest that would accrue through the latest date
of maturity (equal to $41,250) be paid. The May 2024 FF Note will mature on the earlier of the 12-month anniversary date of the issuance
date, or May 16, 2025, and the date of the consummation of a sale, conveyance or disposition of all or substantially all of the assets
of the Company, or the consolidation, merger or other business combination of the Company with or into any other entity when the Company
is not the survivor.
Under
the May 2024 FF Note, the Company is required to make eight monthly amortization payments of $56,715 each, commencing September 16, 2024,
and pay the entire remaining outstanding balance on May 16, 2025. The Company may prepay the May 2024 FF Note any time prior to an FF
Notes Event of Default on 15 trading days’ prior written notice for an amount equal to 110% of the principal amount then outstanding
and 110% of the accrued and unpaid interest outstanding.
Under
the May 2024 FF Note, the holder of the May 2024 FF Note may at any time and from time to time, subject to a limitation on beneficial
ownership to 4.99% of the common stock that would be outstanding immediately after conversion or exercise (the “FF Beneficial Ownership
Limitation”) and the FF Exchange Limitation, convert the outstanding principal amount and accrued interest under the May 2024 FF
Note into shares of common stock at an initial conversion price of $0.30 per share, subject to adjustment, including adjustments under
full-ratchet anti-dilution provisions for any issuances of securities at a lower price per share or per underlying share of common stock
to match the price of such lower-priced securities, other than for an Excluded Issuance (the “FF Notes Fixed Conversion Price”).
If the Company fails to make an amortization payment when due under the May 2024 FF Note, the balance remaining under the May 2024 FF
Note will become convertible, and the conversion price will become the lower of the then-applicable FF Notes Fixed Conversion Price and
80% of the lowest closing price of the common stock during the ten trading days prior to the date of a conversion of the May 2024 FF
Note. If an FF Notes Event of Default occurs, then the balance remaining under the May 2024 FF Note will become convertible at the lower
of the FF Notes Fixed Conversion Price, the closing price of the common stock on the date of the FF Notes Event of Default (or the next
trading day if such date is not on a trading day), and $0.195 per share.
An
FF Notes Event of Default will occur upon the occurrence of any of the following: The failure to pay obligations when due; failure to
issue shares upon conversions as required; a material breach of representations and warranties or covenants; the entry of material judgments
against certain of the Company’s subsidiaries; the initiation of bankruptcy or insolvency proceedings of certain of our subsidiaries;
defaults on other indebtedness; failure to remain subject to and compliant with the Exchange Act; failure to maintain intellectual property
and other necessary assets; the restatement of any financial statements; disclosure or attempted disclosure of material non-public information
to the May 2024 FF Note holder; unavailability of Rule 144 under the Securities Act (“Rule 144”) for resales of the Company’s
securities on or after six months from the issuance date of the May 2024 FF Note; and the delisting or suspension of listing of the Company’s
common stock by the NYSE American. The occurrence of an FF Notes Event of Default will result in a number of additional obligations to
the May 2024 FF Note holder, including acceleration and multiplication by 125% of the May 2024 FF Note balance; default interest at the
rate of the lesser of (i) 15% per annum and (ii) the maximum amount permitted by law from the due date thereof until the same is paid;
and the increase of the principal balance of the May 2024 FF Note by $3,000 each calendar month until the May 2024 FF Note is repaid
in its entirety.
If,
at any time prior to the full repayment or full conversion of all amounts owed under the May 2024 FF Note, the Company receives cash
proceeds from any source or series of related or unrelated sources on or after the date of the May 2024 FF Note, including but not limited
to, from payments from customers, the issuance of equity or debt, the incurrence of Indebtedness (as defined in the May 2024 FF Note
and the June 2024 FF Note), a merchant cash advance, sale of receivables or similar transaction, the exercise of outstanding warrants
of the Company, the issuance of securities pursuant to an Equity Line of Credit of the Company or the Company’s offering of securities
under Regulation A under the Securities Act, or the Company’s sale of assets (including but not limited to real property), the
Company shall, within one business day of the Company’s receipt of such proceeds, inform the holder of the May 2024 FF Note of
or publicly disclose such receipt, following which the holder of the May 2024 FF Note shall have the right in its sole discretion to
require the Company to immediately apply up to 100% of such proceeds to repay all or any portion of the outstanding principal amount
and interest (including any default interest) then due under the May 2024 FF Note. The 110% prepayment premium will apply to any repayment
of the May 2024 FF Note pursuant to this requirement prior to the occurrence of an FF Notes Event of Default.
The
May 2024 FF Note will be a senior secured obligation of the Company, with priority over all existing and future indebtedness of the Company,
except that the May 2024 FF Note will be junior in priority to the Second CBAZ Promissory Note
and, in accordance with the Amendment to May 2024 FF Transaction Documents, pari passu in priority to the June 2024 FF Note. The
Company may not incur any Indebtedness that is senior to or pari passu with the obligations under the May 2024 FF Note. During the period
that any obligation under the May 2024 FF Note remains outstanding, the Company may not, without the May 2024 FF Note holder’s
prior written consent, declare or pay any dividends or other distributions on shares of capital stock except in the form of shares of
common stock or distributions pursuant to a stockholders’ rights plan approved by a majority of the Company’s disinterested
directors. The Company also may not repurchase any capital stock or repay any indebtedness other than the May 2024 FF Note and the Second
CBAZ Promissory Note while the Company has any obligation under the May 2024 FF Note without
FirstFire’s written consent. The Company also may not (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 merchant cash advance transaction, sale of receivables transaction, or any other similar transaction, without the consent of
FirstFire, which may not be unreasonably withheld. The May 2024 FF Note also contains a most favored nations provision with respect to
the issuance of any debt securities of the Company.
The
form of the May 2024 FF Note is attached as Annex E.
May
2024 FF Warrants
First
May 2024 FF Warrant
The
First May 2024 FF Warrant will be exercisable for up to 1,375,000 shares of common stock from the date of issuance until the fifth anniversary
of the date of issuance. The holder may exercise the First May 2024 FF Warrant by a “cashless” exercise if the Market Price
(as defined below) is less than the exercise price then in effect and there is no effective registration statement for the resale of
the shares. The “Market Price” is defined as the highest traded price of the common stock during the 30 trading days before
the date of the cashless exercise. The number of shares issuable upon cashless exercise will equal (i) the product of (a) the number
of shares of common stock that the holder elects to purchase under the First May 2024 FF Warrant, times (b) the Market Price less the
exercise price, divided by (ii) the Market Price.
Under
the First May 2024 FF Warrant, the holder of the First May 2024 FF Warrant may at any time and from time to time, subject to the FF Beneficial
Ownership Limitation and the FF Exchange Limitation, exercise the First May 2024 FF Warrant to purchase shares of common stock at an
initial exercise price of $0.30 per share, subject to adjustment, including adjustments under full-ratchet anti-dilution provisions for
any issuances of securities at a lower price per share or per underlying share of common stock other than for an Excluded Issuance, or
for any issuances of securities at a price which varies or may vary with the market price of the common stock, to match the price of
such lower-priced or variable-priced securities, or for other dilution events. Simultaneous with any adjustment to the exercise price
as a result of an anti-dilution adjustment, the number of shares underlying the First May 2024 FF Warrant will be adjusted proportionately
so that after such adjustment the aggregate exercise price payable under the First May 2024 FF Warrant for the adjusted number of shares
underlying the First May 2024 FF Warrant will be the same as the aggregate exercise price in effect immediately prior to such adjustment
(without regard to any limitations on exercise). The First May 2024 FF Warrant also contains rights to any rights to purchase securities
of the Company distributed pro rata to the stockholders of the Company.
The
form of the First May 2024 FF Warrant is attached as Annex F.
Second
May 2024 FF Warrant
The
Second May 2024 FF Warrant will be exercisable for up to 250,000 shares of common stock at an initial exercise price of $0.01 per share
from the date (the “Second FF Warrants Trigger Date”) of an FF Notes Event of Default until the fifth anniversary of the
Second FF Warrants Trigger Date, subject to the FF Beneficial Ownership Limitation and the FF Exchange Limitation. The Second May 2024
FF Warrant will automatically be canceled if the May 2024 FF Note is fully repaid in cash prior to any FF Notes Event of Default. The
Second May 2024 FF Warrant otherwise has the same terms and conditions as the First May 2024 FF Warrant.
The
form of the Second May 2024 FF Warrant is attached as Annex G.
Placement
Agent Compensation Relating to May 2024 FirstFire Private Placement
Under
the Boustead Engagement Letter, under which Boustead acted as the placement agent in connection with the initial transaction contemplated
by the May 2024 FF Purchase Agreement, the Company paid to Boustead a cash fee of $26,250, equal to 7% of the purchase price of the May
2024 FF Note, and a non-accountable expense allowance of $3,750, equal to 1% of the purchase price of the May 2024 FF Note. The Company
also issued Boustead 13,125 shares of common stock, equal to 7% of the May 2024 FF Commitment Shares. In addition, the Company issued
a placement agent warrant to purchase up to 7% of the shares issuable upon exercise of the First May 2024 FF Warrant, or 96,250 shares,
with an exercise price of $0.30 per share (the “FF Placement Agent Warrant”). The number of shares that may be issued upon
exercise of the FF Placement Agent Warrant is limited by the FF Exchange Limitation until the Company obtains the FF Stockholder Approval.
The FF Placement Agent Warrant will be exercisable for a period of five years from the date of issuance, contains cashless exercise provisions,
and may have certain registration rights.
The
form of the FF Placement Agent Warrant is attached as Annex H.
Under
the Boustead Engagement Letter, the Company also issued to Boustead a placement agent warrant to purchase up to a number of shares equal
to 7% of the shares of common stock issuable upon exercise of the Second May 2024 FF Warrant, or 17,500 shares, at an exercise price
of $0.01 per share (the “Second May 2024 Placement Agent Warrant”), exercisable for five years from the Second FF Warrants
Trigger Date.
On
June 18, 2024, the Company entered into a Warrant Cancellation Agreement, dated as of June 18, 2024, between the Company and Boustead,
which provided that the Second May 2024 Placement Agent Warrant was cancelled and of no further effect, and that no other compensation
will be issued to Boustead by the Company in lieu of the Second May 2024 Placement Agent Warrant. No portion of the Second May 2024 Placement
Agent Warrant had been exercised prior to its cancellation.
June
2024 Amendment to May 2024 Transaction Documents with FirstFire
On
June 18, 2024, the Company entered into the Amendment to May 2024 FF Transaction Documents. The Amendment to May 2024 FF Transaction
Documents contained agreements relating to the May 2024 FF Purchase Agreement and the May 2024 FF Note and an amendment to the original
May 2024 FF Purchase Agreement.
The
Amendment to May 2024 FF Transaction Documents provided that neither the Company’s execution of the June 2024 FF Purchase Agreement
and the related transaction documents, nor the Company’s issuance of securities to FirstFire pursuant to the June 2024 FF Purchase
Agreement and the related transaction documents, will cause a breach of any provision of the May 2024 FF Purchase Agreement or an FF
Notes Event of Default. The Amendment to May 2024 FF Transaction Documents further provided that the issuance of the June 2024 FF Note
was permitted, and that the June 2024 FF Note will be pari passu in priority to the May 2024 FF Note, notwithstanding anything to the
contrary in the May 2024 FF Purchase Agreement or the May 2024 FF Note. In addition, the original May 2024 FF Purchase Agreement was
amended to delete a provision that, upon meeting certain terms and conditions, at the Company’s option, FirstFire would be required
to fund the purchase price of at least an additional $175,000 under the same terms and conditions as the May 2024 FF Purchase Agreement
and related transaction documents.
The
Amendment to May 2024 FF Transaction Documents is attached as Annex I.
June
2024 FirstFire Private Placement
On
June 18, 2024, the Company entered into the June 2024 FF Purchase Agreement between the Company and FirstFire, pursuant to which, as
a private placement transaction, the Company was required to issue FirstFire a senior secured promissory note on June 18, 2024, in the
principal amount of $198,611 (the “June 2024 FF Note” and together with the May 2024 FF Note, the “FF Notes”);
90,277 shares of common stock (the “June 2024 FF Commitment Shares”), as partial consideration for the purchase of the June
2024 FF Note; a warrant at an initial exercise price of $0.30 per share (the “First June 2024 FF Warrant”) for the purchase
of up to 662,036 shares of common stock at an initial exercise price of $0.30 per share, as partial consideration for the purchase of
the June 2024 FF Note; and a warrant (the “Second June 2024 FF Warrant” and together with the First June 2024 FF Warrant,
the “June 2024 FF Warrants” and the June 2024 Warrants, together with the May 2024 FF Warrants, the “FF Warrants”)
for the purchase of up to 120,370 shares of common stock at an initial exercise price of $0.01 per share exercisable from the Second
FF Warrants Trigger Date, that we issued to FirstFire as partial consideration for the purchase of the June 2024 FF Note.
The
closing of the transaction contemplated by the June 2024 FF Purchase Agreement, including FirstFire’s payment of the purchase price
of $175,000, was subject to certain conditions. On June 18, 2024, such conditions were met. As a result, the June 2024 FF Commitment
Shares, the June 2024 FF Note and the June 2024 FF Warrants were issued as of June 18, 2024, and FirstFire paid $175,000, of which the
Company received $154,500 in net proceeds after deductions of the placement agent’s fee of $12,250 and non-accountable expense
allowance of $1,750, and FirstFire counsel’s fees of $6,500.
June
2024 FF Purchase Agreement
Under
the June 2024 FF Purchase Agreement, until the June 2024 FF Note has been fully converted or repaid, the June 2024 FF Note holder will
have participation rights and rights of first refusal on any offers of the Company’s securities other than offerings previously
disclosed in the Company’s reports filed with the SEC or any Excluded Issuance, and most favored nation rights on any offers of
the Company’s securities other than for an Excluded Issuance. The Company will also be prohibited from effecting or entering into
an agreement involving a Variable Rate Transaction other than pursuant to an “at-the-market” agreement with a registered
broker-dealer, whereby such registered broker-dealer is acting as principal in the purchase of common stock from the Company or an Equity
Line of Credit, without the consent of FirstFire, which may not be unreasonably withheld. In addition, the Company may not issue or agree,
propose, or offer to issue any shares of common stock or securities with underlying common stock prior to the 30th calendar
day after the date of the June 2024 FF Purchase Agreement other than an Excluded Issuance.
The
June 2024 FF Purchase Agreement (as well as the June 2024 FF Note and the June 2024 FF Warrants) provides that the maximum amount of
shares of common stock issuable under the June 2024 FF Note and the June 2024 FF Warrants is limited to the FF Exchange Limitation until
the Company obtains the FF Stockholder Approval. The Company is required to hold a meeting
of stockholders on or before the date that is six months after the date of the June 2024 FF Purchase Agreement, for the purpose of obtaining
the FF Stockholder Approval, with the recommendation of the Company’s board of directors that such proposal be approved; the Company
must solicit proxies from the Company’s stockholders in connection with the proposal in the same manner as all other management
proposals in such proxy statement; and all management-appointed proxyholders must vote their proxies in favor of such proposal. In addition,
all members of the Company’s board of directors and all of the Company’s executive officers must vote in favor of such proposal,
for purposes of obtaining the FF Stockholder Approval, with respect to all of the Company’s securities then held by such persons,
and the Company must generally use the Company’s commercially reasonable efforts to obtain the FF Stockholder Approval. If the
Company does not obtain the FF Stockholder Approval at the first meeting at which the proposal is voted upon, the Company must call a
stockholder meeting as often as possible thereafter to seek the FF Stockholder Approval until the FF Stockholder Approval is obtained.
As
required by the June 2024 FF Purchase Agreement, the Company entered into a Security Agreement, dated as of June 18, 2024, between the
Company and FirstFire (the “June 2024 FF Security Agreement”), under which the Company agreed to grant FirstFire a security
interest to secure the Company’s obligations under the June 2024 FF Note in all assets of the Company except for the CBAZ Collateral,
until the full repayment of the Second CBAZ Promissory Note pursuant to the Second CBAZ
Loan Agreement.
As
required by the June 2024 FF Purchase Agreement, the Company also entered into a Registration Rights Agreement, dated as of June 18,
2024, between the Company and FirstFire (the “June 2024 FF Registration Rights Agreement”), pursuant to which the Company
agreed to register the resale of the June 2024 FF Commitment Shares and the shares of common stock underlying the June 2024 FF Note and
the June 2024 FF Warrants under the Securities Act pursuant to a registration statement. The Company agreed to file the registration
statement with the SEC within 90 calendar days from the date of the June 2024 FF Purchase Agreement and to have the registration statement
declared effective by the SEC within 120 days from the date of the June 2024 FF Purchase Agreement. The Company also granted FirstFire
certain piggyback registration rights pursuant to the June 2024 FF Purchase Agreement. Pursuant to the June 2024 FF Registration Rights
Agreement, if the total number of shares issuable upon conversion of the June 2024 FF Note or upon exercise of the June 2024 FF Warrants
becomes greater than the number that may be offered for resale by means of the prospectus that forms a part of the registration statement,
then the Company will be required to register the additional shares of common stock for resale by means of one or more separate prospectuses.
Copies
of the June 2024 FF Purchase Agreement, the June 2024 FF Security Agreement, and the June 2024 FF Registration Rights Agreement are attached
as Annex J, Annex K, and Annex L, respectively.
June
2024 FF Note
The
principal amount of the June 2024 FF Note is based on an original issue discount of 10% and will bear interest at the rate of 10% per
annum on a 365-day basis. The interest will be guaranteed, which requires that all interest that would accrue through the latest date
of maturity (equal to approximately $19,861) be paid. The June 2024 FF Note will mature on the earlier of the 12-month anniversary date
of the issuance date, or June 18, 2025, and the date of the consummation of a sale, conveyance or disposition of all or substantially
all of the assets of the Company, or the consolidation, merger or other business combination of the Company with or into any other entity
when the Company is not the survivor.
Under
the June 2024 FF Note, the Company is required to make eight monthly amortization payments of approximately $27,309 each, commencing
October 18, 2024, and pay the entire remaining outstanding balance on June 18, 2025. The Company may prepay the June 2024 FF Note any
time prior to an FF Notes Event of Default on 15 trading days’ prior written notice for an amount equal to 110% of the principal
amount then outstanding and 110% of the accrued and unpaid interest outstanding.
Under
the June 2024 FF Note, the holder of the June 2024 FF Note may at any time and from time to time, subject to the FF Beneficial Ownership
Limitation and the FF Exchange Limitation, convert the outstanding principal amount and accrued interest under the June 2024 FF Note
into shares of common stock at the initial FF Notes Fixed Conversion Price. If the Company fails to make an amortization payment when
due under the June 2024 FF Note, the balance remaining under the June 2024 FF Note will become convertible, and the conversion price
will become the lower of the then-applicable FF Notes Fixed Conversion Price and 80% of the lowest closing price of the common stock
during the ten trading days prior to the date of a conversion of the June 2024 FF Note. If an FF Notes Event of Default occurs under
the June 2024 FF Note, then the balance remaining under the June 2024 FF Note will become convertible at the lower of the FF Notes Fixed
Conversion Price, the closing price of the common stock on the date of the FF Notes Event of Default (or the next trading day if such
date is not on a trading day), and $0.195 per share.
An
FF Notes Event of Default will occur upon the occurrence of any of the following: The failure to pay obligations when due; failure to
issue shares upon conversions as required; a material breach of representations and warranties or covenants; the entry of material judgments
against certain of the Company’s subsidiaries; the initiation of bankruptcy or insolvency proceedings of certain of the Company’s
subsidiaries; defaults on other indebtedness; failure to remain subject to and compliant with the Exchange Act; failure to maintain intellectual
property and other necessary assets; the restatement of any financial statements; disclosure or attempted disclosure of material non-public
information to the June 2024 FF Note holder; unavailability of Rule 144 for resales of the Company’s securities on or after six
months from the issuance date of the June 2024 FF Note; and the delisting or suspension of listing of the Company’s common stock
by the NYSE American. The occurrence of an FF Notes Event of Default will result in a number of additional obligations to the June 2024
FF Note holder, including acceleration and multiplication by 125% of the June 2024 FF Note balance; default interest at the rate of the
lesser of (i) 15% per annum and (ii) the maximum amount permitted by law from the due date thereof until the same is paid; and the increase
of the principal balance of the June 2024 FF Note by $3,000 each calendar month until the June 2024 FF Note is repaid in its entirety.
If
at any time prior to the full repayment or full conversion of all amounts owed under the June 2024 FF Note the Company receives cash
proceeds from any source or series of related or unrelated sources on or after the date of the June 2024 FF Note, including but not limited
to, payments from customers, the issuance of equity or debt, the incurrence of Indebtedness, a merchant cash advance, sale of receivables
or similar transaction, the exercise of outstanding warrants of the Company, the issuance of securities pursuant to an Equity Line of
Credit of the Company or the Company’s offering of securities under Regulation A under the Securities Act, or the Company’s
sale of assets (including but not limited to real property), the Company shall, within one business day of the Company’s receipt
of such proceeds, inform the holder of the June 2024 FF Note of or publicly disclose such receipt, following which the holder of the
June 2024 FF Note shall have the right in its sole discretion to require the Company to immediately apply up to 100% of such proceeds
to repay all or any portion of the outstanding principal amount and interest (including any default interest) then due under the June
2024 FF Note, not including any such proceeds used to repay the May 2024 FF Note. The 110% prepayment premium will apply to any repayment
of the June 2024 FF Note pursuant to this requirement prior to the occurrence of an FF Notes Event of Default.
The
June 2024 FF Note will be a senior secured obligation of the Company, with priority over all existing and future indebtedness of the
Company, except that the June 2024 FF Note provides that it will be pari passu in priority to the May 2024 FF Note, and junior in priority
to the Second CBAZ Promissory Note. The Company may not incur any Indebtedness that is senior
to or pari passu with the obligations under the June 2024 FF Note. During the period that any obligation under the June 2024 FF Note
remains outstanding, the Company may not, without the June 2024 FF Note holder’s prior written consent, declare or pay any dividends
or other distributions on shares of capital stock except in the form of shares of common stock or distributions pursuant to a stockholders’
rights plan approved by a majority of the Company’s disinterested directors. The Company also may not repurchase any capital stock
or repay any indebtedness other than the May 2024 FF Note and the Second CBAZ Promissory Note while
the Company has any obligation under the June 2024 FF Note without FirstFire’s written consent. The Company also may not
(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 merchant cash advance transaction, sale of receivables
transaction, or any other similar transaction, without the consent of FirstFire, which may not be unreasonably withheld. The June 2024
FF Note also contains a most favored nations provision with respect to the issuance of any debt securities of the Company.
A
copy of the June 2024 FF Note is attached as Annex M.
June
2024 FF Warrants
First
June 2024 FF Warrant
The
First June 2024 FF Warrant will be exercisable for up to 662,036 shares of common stock from the date of issuance until the fifth anniversary
of the date of issuance. The holder may exercise the First June 2024 FF Warrant by a “cashless” exercise if the Market Price
is less than the exercise price then in effect and there is no effective registration statement for the resale of the shares. The number
of shares issuable upon cashless exercise will equal (i) the product of (a) the number of shares of common stock that the holder elects
to purchase under the First June 2024 FF Warrant, times (b) the Market Price less the exercise price, divided by (ii) the Market Price.
Under
the First June 2024 FF Warrant, the holder of the First June 2024 FF Warrant may at any time and from time to time, subject to the FF
Beneficial Ownership Limitation and the FF Exchange Limitation, exercise the First June 2024 FF Warrant to purchase shares of common
stock at an initial exercise price of $0.30 per share, subject to adjustment, including adjustments under full-ratchet anti-dilution
provisions for any issuances of securities at a lower price per share or per underlying share of common stock other than for an Excluded
Issuance, or for any issuances of securities at a price which varies or may vary with the market price of the common stock, to match
the price of such lower-priced or variable-priced securities, or for other dilution events. Simultaneous with any adjustment to the exercise
price as a result of an anti-dilution adjustment, the number of shares underlying the First June 2024 FF Warrant will be adjusted proportionately
so that after such adjustment the aggregate exercise price payable under the First June 2024 FF Warrant for the adjusted number of shares
underlying the First June 2024 FF Warrant will be the same as the aggregate exercise price in effect immediately prior to such adjustment
(without regard to any limitations on exercise). The First June 2024 FF Warrant also contains rights to any rights to purchase securities
of the Company distributed pro rata to the stockholders of the Company.
A
copy of the First June 2024 FF Warrant is attached as Annex N.
Second
June 2024 FF Warrant
The
Second June 2024 FF Warrant will be exercisable for up to 120,370 shares of common stock at an initial exercise price of $0.01 per share
from the Second FF Warrants Trigger Date until the fifth anniversary of the Second FF Warrants Trigger Date, subject to the FF Beneficial
Ownership Limitation and the FF Exchange Limitation. The Second June 2024 FF Warrant will automatically be cancelled if the June 2024
FF Note is fully repaid in cash prior to any FF Notes Event of Default. The Second June 2024 FF Warrant otherwise has the same terms
and conditions as the First June 2024 FF Warrant.
A
copy of the Second June 2024 FF Warrant is attached as Annex O.
Placement
Agent Compensation Relating to June 2024 FirstFire Private Placement
Under
the Boustead Engagement Letter, Boustead acted as placement agent in the transaction described above. Pursuant to the Boustead Engagement
Letter, the Company paid Boustead a commission of $12,250, equal to 7% of the gross proceeds from this transaction, and a non-accountable
expense allowance of $1,750, equal to 1% of the gross proceeds from this transaction. Boustead waived any rights to compensation from
the issuance of warrants to purchase common stock of the Company under the Boustead Engagement Letter with respect to this transaction,
and deferred any rights to compensation from the issuance of shares of common stock under the Boustead Engagement Letter with respect
to this transaction.
Effect
of Approval of Proposal No. 3 on Our Stockholders
Under
the May 2024 FF Note, which has principal of $412,500 and guaranteed interest of $41,250, the Company may be required to issue up to
1,663,750 shares of common stock upon full conversion at the initial FF Notes Fixed Conversion Price of $0.30 per share if the 110% prepayment
premium is applicable. Under the June 2024 FF Note, which has principal of $198,611 and guaranteed interest of $19,861, up to 801,064
shares of common stock will become issuable upon full conversion at the initial FF Notes Fixed Conversion Price of $0.30 per share if
the 110% prepayment premium is applicable. Each of the FF Notes also provides that upon a missed amortization payment the conversion
price will be reduced to the lesser of the then-applicable conversion price and 80% of the lowest closing price of the common stock during
the ten trading days prior to the date of a conversion. Each of the FF Notes also provides that upon an FF Notes Event of Default the
conversion price will be reduced to the lesser of the then-applicable conversion price; $0.195 per share; and the closing price of the
common stock on the date of the FF Notes Event of Default. In addition, the FF Notes and the FF Warrants contain full-ratchet anti-dilution
and related provisions that will reduce the conversion price and exercise price to match the price of such lower-priced securities, other
than for an Excluded Issuance, and proportionately increase the number of shares of common stock issuable under these securities. For
example, an issuance of securities at a price 25% lower than the FF Notes Fixed Conversion Price and the exercise price of the First
June 2024 FF Warrant and the First May 2024 Warrant, or $0.225 per share, would cause each of the FF Notes and the First June 2024 FF
Warrant and the First May 2024 Warrant to become convertible into or exercisable for approximately 33% more shares of common stock than
they were initially convertible into or exercisable to purchase. In addition, if the Second FF Warrants Trigger Date occurs, then the
Second May 2024 FF Warrant and the Second June 2024 FF Warrant will be exercisable for up to 250,000 and 120,370 shares of common stock
at an initial exercise price of $0.01 per share, respectively. We are required to take certain measures and generally use commercially
reasonable efforts to obtain the FF Stockholder Approval to allow issuances greater than the FF Exchange Cap, and file one or more registration
statements to register the resale of these underlying shares pursuant to the FF Registration Rights Agreement, which, once effective,
will allow such shares to be resold immediately into the public market without restriction.
The
unlimited conversion or exercise of our outstanding convertible or exercisable securities and resale of the underlying common stock,
and any other future issuances of our common stock or securities convertible into, or exercisable or exchangeable for, our common stock,
would result in a decrease in the ownership percentage of existing stockholders, i.e., dilution, which may cause the market price of
our common stock to decline. We cannot predict the effect, if any, of future issuances, conversions, or exercises of our securities,
on the price of our common stock. In all events, future issuances of our common stock would result in the dilution of your holdings.
In addition, the perception that new issuances of our securities are likely to occur, or the perception that holders of securities convertible
or exercisable for common stock are likely to sell their securities, could adversely affect the market price of our common stock. A decline
in the market price could also impair our ability to raise funds in additional equity or debt financings.
In
addition to the foregoing, the increase in the number of shares of common stock issued in connection with the conversion of the FF Notes
or the exercise of the FF Warrants or the FF Placement Agent Warrant may have an incidental anti-takeover effect in that the additional
shares of common stock issued could dilute the stock ownership of parties seeking to obtain control of the Company. The increased number
of issued shares could discourage the possibility of, or render more difficult, certain mergers, tender offers, proxy contests or other
change of control or ownership transactions. However, we currently know of no specific effort to accumulate our securities or to gain
control of the Company by means of a merger, tender offer, solicitation in opposition to management or otherwise.
Reasons
for Seeking Stockholder Approval
Our
common stock is listed on the NYSE American, and we are therefore subject to the listing requirements set forth in the NYSE American
Company Guide. The sale, issuance, or potential issuance of securities pursuant to the May 2024 FF Purchase Agreement, the June 2024
FF Purchase Agreement, and the Boustead Engagement Letter in excess of the FF Exchange Limitation will be subject to Section 713 of the
NYSE American Company Guide, which requires stockholder approval as a prerequisite to the approval of an application to list additional
shares in connection with a transaction other than a public offering involving: (1) the sale, issuance, or potential issuance by the
issuer of common stock (or securities convertible into common stock) at a price less than the greater of book or market value which together
with sales by officers, directors or principal stockholders of the issuer equals 20% or more of presently outstanding common stock; or
(2) the sale, issuance, or potential issuance by the issuer of common stock (or securities convertible into common stock) equal to 20%
or more of presently outstanding common stock for less than the greater of book or market value of the stock.
In
addition, as noted above, the May 2024 FF Purchase Agreement, the June 2024 FF Purchase Agreement, the FF Notes, the FF Warrants, and
the FF Placement Agent Warrant include provisions which prohibit the holders of the FF Notes, the FF Warrants, and the FF Placement Agent
Warrant from converting any portion of the FF Notes or exercising any portion of the FF Warrants or the FF Placement Agent Warrant that
would exceed the FF Exchange Limitation until we receive the FF Stockholder Approval. Moreover, pursuant to the May 2024 FF Purchase
Agreement and the June 2024 FF Purchase Agreement, the Company must hold a meeting of stockholders on or before the date that is six
months after the date of each such agreement, for the purpose of obtaining the FF Stockholder Approval, with the recommendation of the
Board of Directors that such proposal be approved; the Company must solicit proxies from its stockholders in connection with the proposal
in the same manner as all other management proposals in such proxy statement; and all management-appointed proxyholders must vote their
proxies in favor of such proposal. In addition, all members of the Board and all of the Company’s executive officers must vote
in favor of such proposal, for purposes of obtaining the FF Stockholder Approval, with respect to all securities of the Company then
held by such persons, and the Company must generally use its commercially reasonable efforts to obtain the FF Stockholder Approval. If
the Company does not obtain the FF Stockholder Approval at the first meeting at which the proposal is voted upon, the Company must call
a stockholder meeting as often as possible thereafter to seek the FF Stockholder Approval until the FF Stockholder Approval is obtained.
Accordingly, we are contractually required to seek approval of Proposal No. 3 at this Annual Meeting.
Moreover,
we believe the benefits of the approval of Proposal No. 3 outweigh the potential dilutive effects and related risks described above.
Our ability to succeed in our business plans and ultimately generate value for our stockholders is dependent on our ability to continue
operations and maximize capital raising opportunities. The May 2024 FF Purchase Agreement and the June 2024 FF Purchase Agreement have
raised net cash proceeds of $491,000 (after deducting the placement agent fees and other expenses). The Company intends to or has used
the net cash proceeds from the May 2024 FF Purchase Agreement and the June 2024 FF Purchase Agreement for working capital and to address
our liquidity needs. After extensive efforts to raise immediate capital on more favorable terms, we believed that the transactions contemplated
by the May 2024 FF Purchase Agreement and the June 2024 FF Purchase Agreement were the only viable financing alternative available to
us at the time. If our stockholders do not approve this proposal, we will not be able to issue any shares of common stock in aggregate
than would exceed the FF Exchange Limitation in connection with the transactions contemplated by the May 2024 FF Purchase Agreement and
the June 2024 FF Purchase Agreement. As a result, we may be unable to issue sufficient shares to allow conversion of the FF Notes or
exercise of the FF Warrants and the FF Placement Agent Warrant. If we are unable to issue sufficient shares of common stock to allow
conversion of the FF Notes, the FF Notes will only be repayable by satisfying such repayment obligations in cash. If we do not have sufficient
cash resources to make these payments, an FF Notes Event of Default may occur, resulting in a number of additional obligations to the
FF Notes holders, including acceleration of the FF Notes’ balance multiplied by 125%; default interest at the rate of the lesser
of (i) 15% per annum and (ii) the maximum amount permitted by law from the due date thereof until the same is paid; and the increase
of the principal balance of each of the FF Notes by $3,000 each calendar month until the respective FF Notes are repaid in their entirety.
In addition, subject to customary cure rights, we may be subject to foreclosure on the collateral subject to the FF Notes, which could
force us into bankruptcy or liquidation.
No
Dissenters’ Rights
Under
Delaware law, the Certificate of Incorporation, and the Bylaws, holders of our common stock are not entitled to dissenter’s rights
of appraisal with respect to the approval of Proposal No. 3.
Vote
Required
In
order for Proposal No. 3 to be approved, holders of a majority of the shares of common stock present or represented by proxy at the Annual
Meeting and entitled to vote, and a majority of votes cast, must vote “FOR” Proposal No. 3. You may vote “FOR”,
“AGAINST” or “ABSTAIN” on Proposal No. 3.
Board
Recommendation
THE
BOARD RECOMMENDS A VOTE “FOR” approval of PROPOSAL No. 3, the issuance of
all of the shares of common stock issued or issuable pursuant to the May 2024 FF Purchase Agreement, the June 2024 FF Purchase Agreement,
and the Boustead Engagement Letter in connection with the May 2024 FF Purchase Agreement and the June 2024 FF Purchase Agreement, in
accordance with Section 713(a) of the NYSE American Company Guide.
PROPOSAL
NO. 4
TO
APPROVE THE SIGNING DAY SPORTS, INC. AMENDED AND RESTATED 2022 EQUITY INCENTIVE PLAN
This
Proposal No. 4 is to consider and vote upon approving the Amended and Restated Plan. The purpose of the Amended and Restated Plan is
to advance our interests and the interests of our stockholders by providing an incentive to attract, retain and reward persons performing
services for us and by motivating such persons to contribute to our growth and profitability.
The
Amended and Restated Plan permits the Board or the Compensation Committee to grant to eligible employees, non-employee directors and
consultants of the Company and its subsidiaries: (a) Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock
Appreciation Rights, (d) Restricted Awards, (e) Performance Share Awards, and (f) Performance Compensation Awards, as
each is defined by the Amended and Restated Plan.
As
of the date hereof, zero shares of common stock remained available for grant under the Plan.
On
July 22, 2024, as recommended by the Compensation Committee, the Board of Directors approved, subject to and contingent on the approval
by the stockholders of the Company, the Amended and Restated Plan, which increases the number of shares of the common stock reserved
for issuance under the Plan by 2,250,000 shares, from 2,250,000 shares of common stock to 4,500,000 shares of common stock. In addition,
the Amended and Restated Plan contains certain corresponding and clarifying changes to the Plan. The form of the Amended and Restated
Plan is attached as Annex P to this Proxy Statement. Annex P is marked to show the proposed changes to the Plan.
The
Board is recommending that our stockholders approve the Amended and Restated Plan.
Reasons
for the Amended and Restated Plan
The
Board recommends that stockholders vote “FOR” the approval of the Amended and Restated Plan. In making such recommendation,
the Board considered a number of factors, including the following:
| ● | Equity-based
compensation awards are a critical element of our overall compensation program. We believe that our long-term incentive compensation
program aligns the interests of management, employees and the stockholders to create long-term stockholder value. The Amended and Restated
Plan will allow us to continue to attract, motivate and retain our officers, key employees, non-employee directors and consultants. |
| ● | We
believe the current amount of shares remaining available for grant under the Plan is not sufficient in light of our compensation structure
and strategy, and that the additional 2,250,000 shares provided for under the Amended and Restated Plan will ensure that we continue
to have a sufficient number of shares authorized and available for future awards issued under the Plan, as so amended. |
Stockholders
are asked to approve the Amended and Restated Plan to satisfy stock exchange requirements relating to stockholder approval of equity
compensation and to qualify certain stock options authorized under the Amended and Restated Plan for treatment as incentive stock options
under Section 422 of the Code.
Summary
of the Amended and Restated Plan
The
following summary briefly describes the principal features of the Amended and Restated Plan and, unless otherwise noted, the current
Plan.
Awards
that may be granted include: (a) Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock Appreciation
Rights, (d) Restricted Awards, (e) Performance Share Awards, and (f) Performance Compensation Awards. These awards offer
our officers, employees, consultants and directors the possibility of future value, depending on the long-term price appreciation
of our common stock and the award holder’s continuing service with the Company.
Stock options give the option
holder the right to acquire from us a designated number of shares of common stock at a purchase price that is fixed upon the grant of
the option. The exercise price generally will not be less than the market price of the common stock on the date of grant. Stock options
granted may be either Incentive Stock Options or Non-qualified Stock Options.
Stock Appreciation Rights,
or SARs, may be granted alone or in tandem with options, and have an economic value similar to that of options. When a SAR for a particular
number of shares is exercised, the holder receives a payment equal to the difference between the fair market value of the shares on the
date of exercise and the exercise price of the shares under the SAR. The exercise price for SARs is normally the market price of the shares
on the date the SAR is granted. Under the Amended and Restated Plan, holders of SARs may receive this payment — the appreciation
value — either in cash or shares of common stock valued at the fair market value on the date of exercise. The form of payment
will be determined by the administrator.
Restricted Awards are awards
of shares of common stock or rights to shares of common stock to participants at no cost. Restricted Stock (as defined by the Amended
and Restated Plan) represents issued and outstanding shares of common stock which may be subject to vesting criteria under the terms of
the award within the discretion of the administrator. Restricted Stock Units (as defined by the Amended and Restated Plan) represent the
right to receive shares of common stock which may be subject to satisfaction of vesting criteria under the terms of the award within the
discretion of the administrator. Restricted Stock and the rights under Restricted Stock Units are forfeitable and non-transferable until
they vest. The vesting date or dates and other conditions for vesting are established when the shares are awarded.
The Amended and Restated Plan
also provides for Performance Compensation Awards, representing the right to receive a payment, which may be in the form of cash, shares
of common stock, or a combination, based on the attainment of pre-established goals.
Principal Features of the Amended and Restated
Plan
Purposes of the
Amended and Restated Plan: The purposes of the Amended and Restated Plan are (a) to enable the Company and any affiliate
company to attract and retain the types of employees, consultants and directors who will contribute to the Company’s long-term
success; (b) provide incentives that align the interests of employees, consultants and directors with those of the stockholders of
the Company; and (c) promote the success of the Company’s business.
Administration of the
Amended and Restated Plan: The Amended and Restated Plan, like the current Plan, will be administered by the Compensation
Committee. In this summary, we refer to the Compensation Committee as the administrator. Among other things, the administrator has the
authority to select persons who will receive awards, determine the types of awards and the number of shares to be covered by awards,
and to establish the terms, conditions, performance criteria, restrictions and other provisions of awards. The administrator has authority
to establish, amend and rescind rules and regulations relating to the Amended and Restated Plan.
Eligible Recipients: Persons
eligible to receive awards under the Amended and Restated Plan are employees (including officers or directors who are also treated as
employees); consultants, i.e., individuals engaged to provide consulting or advisory services to the Company; and directors.
Shares Available Under the Amended and Restated
Plan: The maximum number of shares of our common stock that may be delivered to participants under the
Plan is 2,250,000, subject to adjustment for certain corporate changes affecting the shares, such as stock splits. The maximum number
of shares of our common stock that may be delivered to participants under the Amended and Restated Plan, if approved by the stockholders
at the Annual Meeting, will be 4,500,000, subject to adjustment for certain corporate changes affecting the shares, such as stock splits.
Shares subject to an award under the Amended and Restated Plan which is canceled, forfeited or expires again become available for grants
under the Amended and Restated Plan.
Stock Options:
General. Subject to the provisions
of the Amended and Restated Plan, the administrator has the authority to determine all grants of stock options. That determination will
include: (i) the number of shares subject to any option; (ii) the exercise price per share; (iii) the expiration date of
the option; (iv) the manner, time and date of permitted exercise; (v) other restrictions, if any, on the option or the shares
underlying the option; and (vi) any other terms and conditions as the administrator may determine.
Option Price. The exercise
price for stock options will be determined at the time of grant. Normally, the exercise price will not be less than the fair market value
on the date of grant. As a matter of tax law, the exercise price for any Incentive Stock Option awarded may not be less than the fair
market value of the shares on the date of grant. However, Incentive Stock Option grants to any person owning more than 10% of our voting
stock must have an exercise price of not less than 110% of the fair market value on the grant date.
Exercise of Options. An option may be exercised
only in accordance with the terms and conditions of the option agreement as established by the administrator at the time of the grant.
The option must be exercised by notice to us, accompanied by payment of the exercise price. Payments may be made in cash or, at the option
of the administrator, by actual or constructive delivery of shares of common stock based upon the fair market value of the shares on the
date of exercise.
Expiration or Termination. Options, if
not previously exercised, will expire on the expiration date established by the administrator at the time of grant. In the case of Incentive
Stock Options, such term cannot exceed ten years provided that in the case of holders of more than 10% of our voting stock, such term
cannot exceed five years. Options will terminate before their expiration date if the holder’s service with the Company or an affiliate
company terminates before the expiration date. The option may remain exercisable for specified periods after certain terminations of employment,
including terminations as a result of death, disability or retirement, with the precise period during which the option may be exercised
to be established by the administrator and reflected in the grant evidencing the award.
Incentive Stock Options
and Non-Qualified Stock Options. As described elsewhere in this summary, an Incentive Stock Option is an option that is
intended to qualify under certain provisions of the Code for more favorable tax treatment than applies to Non-qualified Stock Options.
Only employees may be granted Incentive Stock Options. Any option that does not qualify as an Incentive Stock Option will be a Non-qualified
Stock Option. Under the Code, certain restrictions apply to Incentive Stock Options. For example, the exercise price for Incentive Stock
Options may not be less than the fair market value of the shares on the grant date and the term of the option may not exceed ten years.
In addition, an Incentive Stock Option may not be transferred, other than by will or the laws of descent and distribution, and is exercisable
during the holder’s lifetime only by the holder. In addition, no Incentive Stock Option may be granted to a holder that is first
exercisable in a single year if that option, together with all Incentive Stock Options previously granted to the holder that also first
become exercisable in that year, relate to shares having an aggregate market value in excess of $100,000, measured at the grant date.
Stock Appreciation
Rights: Awards of SARs may be granted alone or in tandem with stock options. SARs provide the holder with
the right, upon exercise, to receive a payment, in cash or shares of stock, having a value equal to the excess of the fair market value
on the exercise date of the shares covered by the award over the exercise price of those shares. Essentially, a holder of a SAR benefits
when the market price of the common stock increases, to the same extent that the holder of an option does, but, unlike an option holder,
the SAR holder need not pay an exercise price upon exercise of the award.
Restricted Stock. Restricted Stock
is a grant of shares of common stock. These awards may be subject to such vesting conditions, restrictions and contingencies as the administrator
shall determine at the date of grant. Those may include requirements for continuous service and/or the achievement of specified performance
goals. Restricted Stock is forfeitable and generally non-transferable until it vests. The vesting date or dates and other conditions
for vesting are established when the shares are awarded. The administrator may remove any vesting or other restrictions from Restricted
Stock whenever it may determine that, by reason of changes in applicable laws or other changes in circumstances arising after the date
of grant, such action is appropriate. Holders of Restricted Stock otherwise generally have the rights of stockholders of the Company,
including voting and dividend rights, to the same extent as other stockholders of the Company.
Restricted Stock Units. A Restricted
Stock Unit is a right to receive stock on a future date, at which time the Restricted Stock Unit will be settled and the stock to which
it granted rights will be issued to the Restricted Stock Unit holder. These awards may be subject to such vesting conditions, restrictions
and contingencies as the administrator shall determine at the date of grant. Restricted Stock Units are forfeitable and generally non-transferable until
they vest. The administrator may remove any vesting or other restrictions from a Restricted Stock Unit whenever it may determine that,
by reason of changes in applicable laws or other changes in circumstances arising after the date of grant, such action is appropriate.
A Restricted Stock Unit holder has no rights as a stockholder. The administrator may exercise discretion to credit a Restricted Stock
Unit with cash and stock dividends, with or without interest, and distribute such credited amounts upon settlement of a Restricted Stock
Unit, and if the Restricted Stock Unit is forfeited, such dividend equivalents will also be forfeited.
Performance Share Awards and Performance
Compensation Awards: The administrator may grant Performance Share Awards and Performance Compensation
Awards. A Performance Share Award means the grant of a right to receive a number of actual shares of common stock or share units based
upon the performance of the Company during a performance period, as determined by the administrator. The administrator may determine the
number of shares subject to the Performance Share Award, the performance period, the conditions to be satisfied to earn an award, and
the other terms, conditions and restrictions of the award. No payout of a Performance Share Award will be made except upon written certification
by the administrator that the minimum threshold performance goal(s) have been achieved.
The administrator may also
designate any of the other awards described above as a Performance Compensation Award (other than stock options and SARs granted with
an exercise price equal to or greater than the fair market value per share of common stock on the grant date). In addition, the administrator
shall have the authority to make an award of a cash bonus to any participant and designate such award as a Performance Compensation Award.
The participant must be employed by the Company on the last day of the performance period to be eligible for payment in respect of a Performance
Compensation Award unless otherwise provided in the applicable award agreement. A Performance Compensation Award will be paid only to
the extent that the administrator certifies in writing whether and the extent to which the applicable performance goals for the performance
period have been achieved and the applicable performance formula determines that the Performance Compensation Award has been earned. A
performance formula means, for a performance period, the one or more objective formulas applied against the relevant performance goal
to determine, with regard to the Performance Compensation Award of a particular participant, whether all, some portion but less than all,
or none of the Performance Compensation Award has been earned for the performance period. The administrator will not have the discretion
to grant or provide payment in respect of a Performance Compensation Award for a performance period if the performance goals for such
performance period have not been attained.
The administrator will establish
performance goals for each Performance Compensation Award based upon the performance criteria that it has selected. The performance criteria
shall be based on the attainment of specific levels of performance of the Company and may include the following: (a) net earnings or net
income (before or after taxes); (b) basic or diluted earnings per share (before or after taxes); (c) net revenue or net revenue growth;
(d) gross revenue; (e) gross profit or gross profit growth; (f) net operating profit (before or after taxes); (g) return on assets, capital,
invested capital, equity, or sales; (h) cash flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return
on capital); (i) earnings before or after taxes, interest, depreciation and/or amortization; (j) gross or operating margins; (k) improvements
in capital structure; (l) budget and expense management; (m) productivity ratios; (n) economic value added or other value added measurements;
(o) share price (including, but not limited to, growth measures and total stockholder return); (p) expense targets; (q) margins; (r) operating
efficiency; (s) working capital targets; (t) enterprise value; (u) safety record; (v) completion of acquisitions or business expansion;
(w) achieving research and development goals and milestones; (x) achieving product commercialization goals; and (y) other criteria as
may be set by the administrator from time to time.
The administrator will also
determine the performance period for the achievement of the performance goals under a Performance Compensation Award. At any time during
the first 90 days of a performance period (or such longer or shorter time period as the administrator shall determine) or at any time
thereafter, in its sole and absolute discretion, to adjust or modify the calculation of a performance goal for such performance period
in order to prevent the dilution or enlargement of the rights of participants based on the following events: (a) asset write-downs; (b)
litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles, or other laws or regulatory
rules affecting reported results; (d) any reorganization and restructuring programs; (e) extraordinary nonrecurring items as described
in Accounting Principles Board Opinion No. 30 (or any successor or pronouncement thereto) and/or in management’s discussion and
analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable
year; (f) acquisitions or divestitures; (g) any other specific unusual or nonrecurring events, or objectively determinable category thereof;
(h) foreign exchange gains and losses; and (i) a change in the Company’s fiscal year.
Any one or more of the performance
criteria may be used on an absolute or relative basis to measure the performance of the Company, as the administrator may deem appropriate,
or as compared to the performance of a group of comparable companies, or published or special index that the administrator deems appropriate.
In determining the actual
size of an individual Performance Compensation Award, the administrator may reduce or eliminate the amount of the award through the use
of negative discretion if, in its sole judgment, such reduction or elimination is appropriate. The administrator shall not have the discretion
to (i) grant or provide payment in respect of Performance Compensation Awards if the performance goals have not been attained or
(ii) increase a Performance Compensation Award above the maximum amount payable under the Amended and Restated Plan.
Other Material Provisions: Awards
will be evidenced by a written agreement, in such form as may be approved by the administrator. In the event of various changes to the
capitalization of the Company, such as stock splits, stock dividends and similar re-capitalizations, an appropriate adjustment will be
made by the administrator to the number of shares covered by outstanding awards or to the exercise price of such awards. The administrator
generally has the power to accelerate the exercise or vesting period of an award. The administrator is also permitted to include in the
written agreement provisions that provide for certain changes in the award in the event of a change of control of the Company, including
acceleration of vesting or payment of the value of the award in cash or stock. Except as otherwise determined by the administrator at
the date of grant, awards will generally not be transferable, other than by will or the laws of descent and distribution. Prior to any
award distribution, to the extent provided by the terms of an award agreement and subject to the discretion of the administrator, a participant
may satisfy any employee withholding tax requirements relating to the exercise or acquisition of common stock under an award by tendering
a cash payment authorizing the Company to withhold shares of common stock otherwise issuable to the participant as a result of the exercise
or acquisition of common stock under the award (in addition to the Company’s right to withhold from any compensation paid to the
participant by the Company). The Board of Directors has the authority, at any time, to discontinue the granting of awards. The Board
also has the authority to alter or amend the Amended and Restated Plan or any outstanding award or may terminate the Amended and Restated
Plan as to further grants, provided that no amendment to the Amended and Restated Plan will be made, without the approval of our stockholders,
to the extent that such approval is required by law or the rules of an applicable securities exchange, or such alteration or amendment
would change the number of shares available under the Amended and Restated Plan or change the persons eligible for awards under the Amended
and Restated Plan. No amendment to an outstanding award made under the Amended and Restated Plan that would adversely affect the award
may be made without the consent of the holder of such award.
New Plan Benefits
Future awards, if any, that
will be made to eligible persons under the Amended and Restated Plan are subject to the discretion of the administrator and, therefore,
we cannot currently determine the benefits or number of shares subject to awards that may be granted in the future to our officers, employees,
directors, and consultants under the Amended and Restated Plan.
Interests of Certain Persons in this Proposal
Our executive officers and
members of the Board of Directors have an interest in this proposal by virtue of their being eligible to receive equity awards under the
Amended and Restated Plan.
It is not possible to determine
the benefits that will be received by participants in the Amended and Restated Plan, including our named executive officers and our non-employee
directors, in the future because all grants are made in the discretion of the administrator. The administrator has not approved any awards
that are conditioned upon stockholder approval of the Amended and Restated Plan.
Other than as described herein,
we do not believe that our executive officers or directors have substantial interests in this proposal that are different from or greater
than those of any other of our stockholders.
No Dissenters’ Rights
Under Delaware law, the Certificate
of Incorporation and the Bylaws, holders of our common stock are not entitled to dissenter’s rights of appraisal with respect to
the approval of this Proposal No. 4.
Vote Required
In order for Proposal No.
4 to be approved, holders of a majority of the shares of common stock present or represented by proxy at the Annual Meeting and entitled
to vote, and a majority of votes cast, must vote “FOR” Proposal No. 4. You may vote “FOR”, “AGAINST”
or “ABSTAIN” on Proposal No. 4.
Board Recommendation
THE BOARD RECOMMENDS A VOTE
“FOR” approval of PROPOSAL NO. 4, TO
APPROVE THE SIGNING DAY SPORTS, INC. AMENDED AND RESTATED 2022 EQUITY INCENTIVE PLAN.
OTHER INFORMATION
Important Notice Regarding Delivery of Stockholder
Documents
The SEC’s rules permit
us to deliver a single set of proxy materials to one address shared by two or more of our stockholders. This delivery method is referred
to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered
only one set of proxy materials to multiple stockholders who share an address, unless we received contrary instructions from the impacted
stockholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the proxy materials,
as requested, to any stockholder at the shared address to which a single copy of those documents was delivered. If you prefer to receive
separate copies of the proxy materials, contact: Secretary, Signing Day Sports, Inc., 8355 East Hartford Rd., Suite 100, Scottsdale, AZ
85255, Telephone: (480) 220-6814.
If you are currently a stockholder
sharing an address with another stockholder and wish to receive only one copy of future proxy materials for your household, please contact:
Secretary, Signing Day Sports, Inc., 8355 East Hartford Rd., Suite 100, Scottsdale, AZ 85255, Telephone: (480) 220-6814.
Stockholders who hold shares
through a broker, bank or other nominee may also contact their brokerage firm, bank, broker-dealer or other similar organization to request
information about householding.
Other Matters
As of the date of this proxy
statement, the Board does not intend to present any matters other than those described herein at the Annual Meeting and is unaware of
any matters to be presented by other parties. If other matters are properly brought before the Annual Meeting for action by the stockholders,
proxies will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with
the judgment of the proxy holder, to the extent permitted by Rule 14a-4(c) under the Exchange Act.
Deadlines For Stockholder Proposals and Universal
Proxy Notice for the 2025 Annual Meeting
If you wish to have a proposal
included in our proxy statement for the 2025 Annual Meeting in accordance with Rule 14a-8 under the Exchange Act, your proposal must be
submitted in writing and received by the Company no later than April 11, 2025, unless the 2025 Annual Meeting is held prior to August
19, 2025 or after October 18, 2025, in which case the proposal must be submitted a reasonable time before the Company begins to print
and send its proxy materials for the 2025 Annual Meeting. A proposal which is received after the applicable date or which otherwise fails
to meet the requirements for stockholder proposals established by the SEC will not be included. The submission of a stockholder proposal
does not guarantee that it will be included in the proxy statement. The proposal must also comply with the other requirements for stockholder
proposals under Rule 14a-8 under the Exchange Act in order for it to be required to be included in our proxy statement for the 2025 Annual
Meeting. In addition, if you do not also comply with the requirements of Rule 14a-4(c)(2) under the Exchange Act, the Company
may exercise discretionary voting authority under proxies it solicits to vote in accordance with its best judgment on any such proposal.
If you wish to have a proposal
included in our proxy statement for the 2025 Annual Meeting outside the processes of Rule 14a-8 under the Exchange Act, your proposal
must be submitted in writing, and delivered not earlier than May 21, 2025 and not later than the close of business on June 30, 2025, unless
the 2025 Annual Meeting is held prior to August 19, 2025 or after November 17, 2025, in which case it must be submitted no earlier than
the date that is 120 days prior to the 2025 Annual Meeting date and no later than the later of the close of business on the 90th day prior
to the 2025 Annual Meeting date and the 10th day following the day on which public announcement of the 2025 Annual Meeting date is first
made. A stockholder proposal will need to comply with other requirements of the Bylaws regarding the inclusion of stockholder proposals
in Company-sponsored proxy materials in order to be considered for inclusion under our Bylaws. Although the Board will consider stockholder
proposals, we reserve the right to omit from our proxy statement, or to vote against, stockholder proposals that we are required to include
under the Bylaws. If you do not also comply with the requirements of Rule 14a-4(c)(2) under the Exchange Act, the Company
may exercise discretionary voting authority under proxies it solicits to vote in accordance with its best judgment on any such proposal.
To
comply with the universal proxy rules, a person who intends to solicit proxies in support of director nominees other than the Company’s
nominees must postmark or transmit electronically a notice to the Company in writing,
setting forth the information required by Rule 14a-19(b) under the Exchange
Act, by July 21, 2025, unless the 2025 Annual Meeting is held prior to August 19, 2025 or after October 18, 2025, in which case the notice
must be provided by the later of 60 days prior to the date of the 2025 Annual Meeting or the 10th calendar day following the day on which
public announcement of the date of the 2025 Annual Meeting is first made by the Company in a press release or filing with the SEC, unless
the information required by Rule 14a-19(b) under the Exchange Act has been provided in a preliminary or definitive proxy statement previously
filed by such person. Unless otherwise required by law, if any person provides notice pursuant to Rule 14a-19(b) under the Exchange Act
and subsequently fails to comply with the requirements of Rule 14a-19(a)(2) and Rule 14a-19(a)(3) under the Exchange Act, then the Company
will disregard any proxies or votes solicited for such person’s nominees. Upon request by the Company, if any person provides notice
pursuant to Rule 14a-19(b) under the Exchange Act, such person shall deliver to the Company, no later than five business days prior to
the 2025 Annual Meeting, reasonable evidence that it has met the requirements of Rule 14a-19(a)(3) under the Exchange Act.
Unless the Company makes a
public announcement of a different address to which stockholder proposals or the notice required by Rule 14a-19(b) of the Exchange Act
shall be submitted, any stockholder proposals or notices pursuant to Rule 14a-19(b) must be mailed to Secretary, Signing Day Sports, Inc.,
8355 East Hartford Rd., Suite 100, Scottsdale, AZ 85255 or emailed to support@signingdaysports.com.
ANNUAL REPORT ON FORM 10-K
We will furnish without
charge to each person solicited by this proxy statement, on the written request of such person, a copy of our Annual Report on Form 10-K
with any amendments, including the financial statements and financial statement schedules, as filed with the SEC for our most recent fiscal
year. Such written requests should be directed to the Secretary of the Company, at our address listed on the top of page one of this proxy
statement. A copy of our Annual Report on Form 10-K, with any amendments, is also made available on our website at https://ir.signingdaysports.com
after it is filed with the SEC.
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By Order of the Board of Directors, |
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/s/ Daniel Nelson |
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Daniel Nelson |
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Chairman and Chief Executive Officer |
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Scottsdale, AZ
Dated: August 9, 2024 |
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ANNEX A
SECURITIES
PURCHASE AGREEMENT
This
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of May 16, 2024, by and between SIGNING DAY SPORTS, INC.,
a Delaware corporation, with headquarters located at 8355 East Hartford Dr., Suite 100, Scottsdale, AZ 85255 (the “Company”),
and FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC, a Delaware limited liability company, with its address at 1040 First Avenue, Suite
190, New York, NY 10022 (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.
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 this Agreement, a senior secured promissory note of the Company, in the aggregate principal amount of $412,500.00 (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”), convertible into shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”),
upon the terms and subject to the limitations and conditions set forth in such Note; and
C.
The Company wishes to issue a common stock purchase warrant to purchase 1,375,000 shares of Common Stock (the “First Warrant”),
a common stock purchase warrant to purchase 250,000 shares of Common Stock (the “Second Warrant”, and collectively with the
First Warrant, the “Warrants”), and 187,500 shares of Common Stock (the “Commitment Shares”), to the Buyer as
additional consideration for the purchase of the Note, which all shall be earned in full as of the Closing Date, as further provided
herein; and
D.
In connection with this Agreement, the Company and the Buyer shall enter into a security agreement (the “Security Agreement”),
the form of which is attached hereto as Exhibit C, as well as a registration rights agreement (the “Registration Rights Agreement”),
the form of which is attached hereto as Exhibit D, in each case on the date of this Agreement.
NOW
THEREFORE, in consideration of the foregoing and of the agreements and covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Buyer hereby agree as follows:
1. Purchase
and Sale of Note.
a.
Purchase of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer, and the Buyer agrees
to purchase from the Company, the Note, as further provided herein. As used in this Agreement, the term “business day” shall
mean any day other than a Saturday, Sunday, or a day on which commercial banks in the city of New York, New York are authorized or required
by law or executive order to remain closed.
b.
Form of Payment. On the Closing Date: (i) the Buyer shall pay the purchase price of$ 375,000.00 (the “Purchase Price”)
for 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 (ii) the Company shall deliver
such duly executed Note and the Warrants to the Buyer, against delivery of such Purchase Price. On the Closing Date, the Buyer shall
withhold a non-accountable sum of $8,500.00 from the Purchase Price to cover the Buyer’s legal fees in connection with the transactions
contemplated by this Agreement. On the Closing Date, the Buyer shall also withhold a sum of $30,000.00 from the Purchase Price to cover
the Company’s fees owed to Boustead Securities, LLC, a registered broker-dealer (CRD#: 141391) (“Boustead”), in connection
with the transactions contemplated by this Agreement.
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 Note pursuant to this Agreement(the “Closing Date”) shall be on the date
that the Purchase Price for the Note is paid by Buyer pursuant to the 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).
1A.
Warrants; Commitment Shares. On or before the Closing Date, the Company shall issue the Warrants to the Buyer pursuant to the
terms contained therein as well as the Commitment Shares to the Buyer, each of which shall be earned in full as of the Closing Date.
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 Note, Commitment Shares, and Warrants (the Note, Commitment
Shares, Warrants, 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”).
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 the 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, (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; (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.
g.
Legends. The Buyer understands that until such time as the Note, Warrants, Commitment Shares, Conversion Shares, and/or Exercise
Shares, 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.
h.
Formation. The Buyer represents and warrants that it is a limited liability company duly formed and validly existing under the laws of
the State of Delaware and is in good standing with the relevant authorities.
i.
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, except
as otherwise disclosed in the SEC Documents:
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 (as defined below) 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, the majority of equity or other ownership interest or has a controlling
interest.
b.
Authorization; Enforcement. The Company has all requisite corporate power and authority to enter into and perform this Agreement,
the Note, and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms
hereof and thereof, (ii) the execution and delivery of this Agreement, the Warrants, the Note, the Commitment Shares, the 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 and the Warrants, as well as the issuance and reservation for issuance of the Conversion
Shares and the 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, (iii)
this Agreement and the Note (together with any other instruments executed in connection herewith or therewith) will, upon delivery, have
been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true and
official representative with authority to sign this Agreement, the Note and the other instruments and documents that shall be executed
in connection herewith or therewith and bind the Company accordingly, and (iv) this Agreement constitutes, 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, enforceable against it in accordance with their 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.
c.
Capitalization; Governing Documents. As of May 16, 2024, the authorized capital stock of the Company consists of: 150,000,000
authorized shares of Common Stock, of which 15,381,653 shares were issued and outstanding, and 15,000,000 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, the Exercise Shares, and the Commitment 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
or as listed on Schedule 3(c): (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 Bylaws, as in effect
on the date hereof (the “Bylaws”), 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 and Exercise Shares. The Conversion 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 Warrants and Commitment Shares. The issuance of the Warrants and the
Commitment Shares are 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 and the Exercise Shares to the Common Stock upon the conversion of the Note and/or exercise of the Warrants. The Company further
acknowledges that its obligation to issue, upon conversion of the Note and/or exercise of the Warrants, the Conversion Shares and/or
the 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.
g.
Ranking; No Conflicts. The Note shall be a secured obligation of the Company pursuant to the terms of the Security Agreement.
Except as disclosed on Schedule 3(g), the Company represents and warrants that there are no security interests in, or liens on, the Company’s
assets as of the date of this Agreement except as created in favor of Buyer under the Security Agreement and as further disclosed in
the Security Agreement. The execution, delivery and performance of this Agreement and the Note 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 and Exercise Shares) will not (i) conflict with or result in a violation of any provision of the Certificate
of Incorporation or Bylaws, 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, Bylaws 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 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 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. 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 Group, Inc., any tier of The Nasdaq Stock Market LLC (including Nasdaq Capital Market), or the NYSE American
LLC, or any successor to such markets.
h.
SEC Documents; Financial Statements. 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 Securities Exchange Act of 1934, as amended (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 to 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). 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, 2024, 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. The Company has never been a “shell company” as described in Rule 144(i)(1)(i).
i.
Absence of Certain Changes. Since March 31, 2024, 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.
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, in each such case that could have a Material Adverse Effect.
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 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 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 Company knows 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 taxingauthority.
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 and other transactions with the affiliates of the Company 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. Except with respect to issuances of securities to Boustead
as placement agent compensation in connection with 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. Except with respect to Boustead 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 1934 Act in order to (i) enter into or consummate the transactions encompassed by this Agreement, the Security
Agreement, the Registration Rights Agreement, the Note, the Warrants, 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, in each such case
that could have a Material Adverse Effect.. 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, 2024, 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.
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 applicablelaw.
u.
Title to Property. Except as disclosed in the SEC Documents and Schedule 3(u) hereto, 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.
[Reserved]
x.
Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor, to the Company’s knowledge, 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 nor, to the Company’s knowledge, 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.
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 ClosingDate.
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 and First Refusal.
(i)
Other than arrangements that are in place or disclosed in SEC Documents prior to the date of this Agreement, and other than any Excluded
Issuance (as defined below), from the date of this Agreement until 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). “Excluded Issuance” shall mean an issuance
or sale of any Common Stock or any securities of the Company or its Subsidiaries which entitle the holder thereof to acquire at any time
shares of Common Stock, including, without limitation, shares of Common Stock, any debt, preferred shares, 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, shares of Common Stock (“Common Stock Equivalents”) issued or sold by the Company in connection with: (a) a grant
to any existing or prospective directors, officers or other employees, sales agents, consultants, or service providers of the Company
or any Subsidiary pursuant to a stock incentive plan or similar equity-based plans or other compensation agreement; (b) the conversion
or exchange of any securities of the Company into capital stock, or the exercise of any warrants or other rights to acquire capital stock
issued and outstanding on the date hereof, provided such securities have not been amended since the date hereof to increase the number
of such securities or to decrease the exercise price or exchange price of such securities; (c) any acquisition by the Company or any
Subsidiary of any equity interests, assets, properties, or business of any Person; (d) any strategic license agreements, mergers, consolidations,
business combinations, acquisitions, purchases or leases of assets, partnering arrangements, joint ventures, strategic alliances, investor
relations or public relations agreements, or other commercial relationships (including to persons who are customers and suppliers of
the Company) relating to the operation of the Company’s business, so long as such issuances are not primarily for the purpose of
raising capital or to an entity whose primary business is investing in securities; (e) any subdivision of Common Stock (by a split of
Common Stock or otherwise), payment of stock dividend, reclassification, reorganization, or any similar recapitalization; (f) securities
issued to banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment
leasing or real property leasing transaction, approved by a majority of the independent directors of the Company; (g) securities issued
in connection with the provision of goods or services pursuant to transactions approved by a majority of the independent directors of
the Company; or (i) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested
directors of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144) and
carry no registration rights that require or permit the filing of any registration statement in connection therewith, and provided that
any such issuance shall only be to a person (or to the equityholders of a person) which is, itself or through its subsidiaries, an operating
company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional
benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is investing in securities.
(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 at least $412,500.00 of the securities in the Subsequent Placement (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 (5th) Trading Day (as defined in the Note) 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 (plus the prepayment
premiums provided for in Section 1.9 of the Note if prior to the occurrence of an Event of Default (as defined in the Note) under the
Note) in lieu of cash consideration with respect to all or any portion of the Subscription Amount.
(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 (5th) 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. Commencing as of the date first above written, and until the earlier of payment of the Note in full
or full conversion of the Note, 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, or 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 or any equivalent replacement exchange or electronic quotation system (including but not limited to the Pink
Sheets electronic quotation system) 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, Inc. (“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 LLC Market, the New York Stock Exchange or the NYSE American LLC.
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.
j.
Compliance with 1934 Act; Public Information Failures. For so long as the Buyer beneficially owns the Note, the Commitment Shares,
the Warrants, the Conversion 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.
k.
Acknowledgement Regarding Buyer’s Trading Activity. Until the Note is fully repaid or fully converted, the Buyer shall not
effect any “short sale” (as such term is defined in Rule 200 of Regulation SHO of the 1934 Act) of the Common Stock which
establishes a net short position with respect to the Common Stock.
l.
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 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 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. The Company hereby agrees that it may never
take the position that it is a “shell company” in connection with its obligations under this Agreement or otherwise.
m.
Piggy-Back Registration Rights. The Company hereby grants to the Buyer the piggy- back registration rights set forth in Exhibit
B hereto.
n.
Most Favored Nation. Except as to an Excluded Issuance, 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 theBuyer.
o.
Subsequent Variable Rate Transactions. From the date hereof until such time as the Note is fully converted or fully repaid, the
Company shall not effect or enter into an agreement involving a Variable Rate Transaction without the prior written consent of the Buyer,
which consent shall not be unreasonably withheld, other than an “at-the-market” offering of securities under an effective
shelf registration statement pursuant to a sales agreement with a broker-dealer. “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.
p.
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.
q. D&O
Insurance. The Company shall maintain 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.
r.
Shareholder Approval; Prohibition on Issuance. “Shareholder Approval” means the approval of a sufficient amount of
holders of the Company’s Common Stock to satisfy the shareholder approval requirements to effectuate the transactions contemplated
by the Agreement, including the issuance of all of the Common Stock underlying the Note, Common Stock underlying the Warrants, and Commitment
Shares, in excess of 19.99% of the issued and outstanding Common Stock on the Closing Date (the “Exchange Cap”). The Exchange
Cap is equal to 3,074,792 shares of Common Stock, which number of shares shall be reduced, on a share-for-share basis, by the number
of shares of Common Stock issued or issuable pursuant to any transaction or series of transactions that may be aggregated with the transactions
contemplated by this Agreement under applicable rules of the NYSE American LLC (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 hold a meeting of shareholders on or before the date that is six (6) months after the date of this
Agreement, 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. In addition, all members of the Company’s Board of Directors and all of the Company’s executive officers shall
vote in favor of such proposal, for purposes of obtaining the Shareholder Approval, with respect to all securities of the Company then
held by such persons. The Company shall use its commercially reasonable efforts to obtain such Shareholder Approval. 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 such approval is obtained, the Buyer shall not be issued in the aggregate, pursuant to
the Agreement or upon conversion of the Note or exercise of the Warrants, shares of Common Stock in an amount greater than the Exchange
Cap except as otherwise provided in the Note or the Warrants. In the event that the Buyer shall sell or otherwise transfer any of such
Buyer’s Note or Warrants, the transferee shall be allocated a pro rata portion of such 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.
s.
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.
t.
Subsequent Securities Sales. In addition to all other restrictions on the issuance of securities by the Company as provided in
this Agreement, from the date of this Agreement through the date that is thirty (30) calendar days after the date of this Agreement,
neither the Company nor any Subsidiary shall issue, enter into any agreement to issue, or announce the issuance or proposed issuance
of any shares of Common Stock or Common Stock Equivalents except with respect to the Securities.
u.
Amendment of Prior Transactions. The Company shall not amend or alter the provisions or terms of any debt or Common Stock Equivalents
(including but not limited to any warrants exercisable into Common Stock and promissory notes convertible into Common Stock) of the Company
issued on or prior to the date of this Agreement without the express written consent of the Buyer.
v.
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 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 reserve 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 and/or Exercise Shares
under the 1933 Act or the date on which the Conversion 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 notice prior to 9:30 a.m.
Eastern Time, or one (1) business day of notice after such time, 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.
6.
Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell 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 this Agreement and the Security Agreement, Registration Rights Agreement, 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 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 this Agreement and the Security Agreement, the Registration Rights Agreement, and delivered the same
to the Buyer.
b.
The Company shall have delivered to the Buyer the duly executed Note in such denominations as the Buyer shall request and in accordance
with Section 1(b) above.
c.
The Company shall have delivered to the Buyer the Warrants and the Commitment Shares.
d.
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.
e.
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.
f.
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.
g.
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.
h.
Trading in the Common Stock on the Principal Market shall not have been suspended by the SEC, FINRA or the Principal Market.
i.
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.
j.
The Company shall have delivered to the Buyer a legal opinion from the Company’s counsel covering the transactions contemplated
by the Transaction Documents in a form acceptable to the Buyer.
8.
Governing Law; Miscellaneous.
a.
Arbitration of Claims; Governing Law; Venue. The Company and Buyer shall submit all Claims (as defined in Exhibit E 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 E 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.
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:
SIGNING
DAY SPORTS, INC.
8355
East Hartford Dr., Suite 100
Scottsdale,
AZ 85255 Attention: Daniel Nelson
e-mail:
danny.nelson@signingdaysports.com
If
to the Buyer:
FIRSTFIRE
GLOBAL OPPORTUNITIES FUND, LLC
1040
First Avenue, Suite 190 New York, NY 10022
e-mail:
eli@firstfirecapital.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.
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
or SEC 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 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 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.
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.
r. Additional
Funding. If, within six (6) calendar months after the date of this Agreement (the “Funding Condition Period”), (i)
an Event of Default (as defined in the Note) has not occurred under the Note, (ii) the Common Stock is listed for trading on the
NYSE American, (iii) the Shareholder Approval, as well as shareholder approval for the issuance of all securities (including but not
limited to Common Stock) under the Second Tranche (as defined below), shall have been obtained and be effective, (iv) the initial
Registration Statement (as defined in the Registration Rights Agreement) shall still be effective, and (v) there is an effective
registration statement of the Company covering the Buyer’s resale of all securities (including but not limited to Common
Stock) under the Second Tranche (all of the aforementioned conditions in (i) through (v) of this sentence are referred to herein as
the “Additional Funding Conditions”), then, at the Company’s option, which may be exercised by giving written
notice to the Buyer within the Funding Condition Period so long the Additional Funding Conditions are satisfied (the “Funding
Notice”), the Buyer shall fund the purchase price of at least an additional $175,000.00 (the “Second Tranche) under the
same terms and conditions as the Transaction Documents (the “Second Tranche Transaction Documents”) within ten (10)
calendar days after the Buyer’s receipt of the Funding Notice (the “Second Tranche Funding Period”). For the
avoidance of doubt, the Additional Funding Conditions must continue to be satisfied during the Second Tranche Funding Period. The
closing of the Second Tranche shall remain subject to the satisfaction of all of the other closing conditions and deliverables
contained in each of the Second Tranche Transaction Documents to be delivered to the Buyer with respect to the Second Tranche.
Accordingly, and for the avoidance of doubt, the Company must provide signed copies of all of the applicable Second Tranche
Transaction Documents with respect to the Second Tranche within the Second Tranche Funding Period as a condition of closing of the
Second Tranche.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.
SIGNING
DAY SPORTS, INC.
| By: |
/s/ Daniel Nelson |
|
| |
Name: |
DANIEL NELSON |
|
| |
Title: |
CHIEF EXECUTIVE OFFICER |
|
| |
|
|
|
| FIRSTFIRE
GLOBAL OPPORTUNITIES FUND, LLC |
| |
|
|
|
| By: |
FirstFire Capital Management LLC, its manager |
|
| |
|
|
|
| By: |
/s/
Eli Fireman |
|
| Name: |
ELI FIREMAN |
|
EXHIBIT
A
FORM
OF NOTE
[attached
hereto]
EXHIBIT
B
PIGGY-BACK
REGISTRATION RIGHTS
All
of the Conversion Shares, Exercise Shares, and Commitment 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.
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]
EXHIBIT
C
FORM
OF SECURITY AGREEMENT
[attached
hereto]
EXHIBIT
D
FORM
OF REGISTRATION RIGHTS AGREEMENT
[attached
hereto]
EXHIBIT
E
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 E, 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 E (“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.
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.
(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.
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.
(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.
(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.
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DISCLOSURE
SCHEDULE
RELATING
TO THE SECURITIES PURCHASE
AGREEMENT,
DATED AS OF MAY 16, 2024
BETWEEN
SIGNING
DAY SPORTS, INC.
AND
FIRSTFIRE
GLOBAL OPPORTUNITIES FUND, LLC
This
disclosure schedule is made and given pursuant to Section 3 of the Securities Purchase Agreement, dated as of May 16, 2024 (the “Agreement”),
by and between SIGNING DAY SPORTS, INC., a Delaware corporation (the “Company”), and FIRSTFIRE GLOBAL OPPORTUNITIES
FUND, LLC, a Delaware limited liability company (the “Buyer”). Unless the context otherwise requires, all capitalized
terms are used herein as defined in the Agreement. The numbers below correspond to the section numbers of representations and warranties
in the Agreement most directly modified by the below exceptions.
Section
3(c)
Capitalization;
Governing Documents
N/A
Section
3.1(g)
Ranking;
No Conflicts
Revolving
Lins of Credit with Commerce Bank of Arizona
Under
a Business Loan Agreement, dated December 11, 2023 (the “Second CBAZ Loan Agreement”), between the Company
and Commerce Bank of Arizona (“CBAZ”), the Company and CBAZ entered into a $2,000,000 secured revolving line
of credit (the “Second CBAZ LOC”). In connection with the Second CBAZ LOC, CBAZ issued a promissory note to
the Company, dated December 11, 2023 (the “Second CBAZ Promissory Note”), with principal of $2,000,000. The
Company paid loan origination and other fees totaling $5,500 and CBAZ immediately disbursed $334,624.85 of the funds in connection with
the Second CBAZ LOC for crediting the full prepayment of the balance in that amount outstanding in connection with the First CBAZ LOC.
The principal balance under the Second CBAZ Promissory Note bears interest at a fixed rate per annum of 7.21% per annum, and will mature
on December 11, 2024. There is no penalty for prepayment of the Second CBAZ Promissory Note. The Second CBAZ LOC was required to be secured
by a 12-month CD Account Number 9000070132 (the “Account”) with CBAZ with an
approximate balance of $2,100,000.00 together with (A) all interest, whether now accrued or hereafter accruing; (B) all additional deposits
made to the Account; (C) any and all proceeds from the Account; and (D) all renewals, replacements and substitutions for any of the foregoing
(the “CD Collateral”) under an Assignment of Deposit Account, dated December 11, 2023, between the Company
and CBAZ (the “Assignment of Deposit Account”).
In
connection with the Second CBAZ LOC, the Company agreed to the following negative covenants: (i) incurring any other indebtedness; (ii)
permitting other liens on its property, (iii) selling any of its accounts receivable with recourse to any third party; (iv) engaging
in substantially different business activities; (v) ceasing operations, engaging in certain corporate transactions, or selling the CD
Collateral; or (vi) paying cash dividends on its stock except to pay certain income taxes of stockholders or repurchasing or retiring
any of the Company’s outstanding common stock. The following events will constitute a default under the Second CBAZ LOC: (i) the
Company fails to comply with the negative covenants described above; (ii) any change in ownership of 25% or more of the common stock
of the Company; (iii) a material adverse change in the Company’s financial condition or CBAZ believes the prospect of payment or
performance under any loans under the Second CBAZ LOC is impaired; and (iv) other customary events of default including insolvency, foreclosure
or forfeiture proceedings, and failure to make payment when due. Any late payments due will be charged 5% of the regularly scheduled
payments. Upon an event of default, the interest rate on the Second CBAZ Promissory Note will increase to 13.21%; all indebtedness under
the Second CBAZ Promissory Note will become due at the option of CBAZ, except that if an event of default occurs due to an insolvency
and certain similar events, the indebtedness will become due immediately automatically; all of CBAZ’s obligations under the Second
CBAZ Loan Agreement will terminate; and CBAZ may take any actions permitted under the Assignment of Deposit Account, including application
of account proceeds under the CD Collateral to outstanding indebtedness, and use of all rights and remedies of a secured creditor under
the Arizona Uniform Commercial Code. The Second CBAZ LOC is also subject to certain other terms and conditions. The outstanding balance
under the Second CBAZ LOC was $2,000,000 as of March 31, 2024.
See
Disclosure Schedule Section 3.1(u).
Section
3.1(u)
Titles
to Property
Under
the Assignment of Deposit Account, CBAZ holds a security interest in the Account with an approximate balance of $2,100,000.00 together
with (A) all interest, whether now accrued or hereafter accruing; (B) all additional deposits made to the Account; (C) any and all proceeds
from the Account; and (D) all renewals, replacements and substitutions for any of the foregoing.
ANNEX B
SECURITY
AGREEMENT
This
SECURITY AGREEMENT, dated as of May 16, 2024 (this “Agreement”), is among Signing Day Sports, Inc., a Delaware corporation
(the “Company” or “Debtor”, and collectively with each Additional Debtor (as defined in this Agreement),
the “Debtors”) and FirstFire Global Opportunities Fund, LLC, a Delaware limited liability company (collectively with
its endorsees, transferees and assigns, the “Secured Parties”).
W
I T N E S S E T H:
WHEREAS,
pursuant to the securities purchase agreement entered into by the Company and the Secured Parties on May 16, 2024 (the “Purchase
Agreement”), the Company has agreed to issue that certain 10% senior secured promissory note dated May 16, 2024, in the original
principal amount of $412,500.00 (the “Note”);
WHEREAS,
in order to induce the Secured Parties to enter into the investment evidenced by the Note, each Debtor has agreed to execute and deliver
to the Secured Parties this Agreement and to grant the Secured Parties, a security interest in certain property of such Debtors to secure
the prompt payment, performance and discharge in full of all of the Company’s obligations under the Note.
NOW,
THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
1.
Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms
used but not otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account”, “chattel
paper”, “commercial tort claim”, “deposit account”, “document”, “equipment”, “fixtures”,
“general intangibles”, “goods”, “instruments”, “inventory”, “investment property”,
“letter-of-credit rights”, “proceeds” and “supporting obligations”) shall have the respective meanings
given such terms in Article 9 of the UCC.
(a)
“Collateral” means the collateral in which the Secured Parties are granted a security interest by this Agreement and
which shall include the following personal property of the Debtors, whether presently owned or existing or hereafter acquired or coming
into existence, wherever situated, and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds,
products and accounts thereof, including, without limitation, all proceeds from the sale or transfer of the Collateral and of insurance
covering the same and of any tort claims in connection therewith, and all dividends, interest, cash, notes, securities, equity interest
or other property at any time and from time to time acquired, receivable or otherwise distributed in respect of, or in exchange for,
any or all of the Pledged Securities (as defined below):
(i)
All goods, including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind and nature and wherever
situated, together with all documents of title and documents representing the same, all additions and accessions thereto, replacements
therefor, all parts therefor, and all substitutes for any of the foregoing and all other items used and useful in connection with any
Debtor’s businesses and all improvements thereto; and (B) all inventory;
(ii)
All contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests, stock
or other securities, rights under any of the Organizational Documents, agreements related to the Pledged Securities, licenses, distribution
and other agreements, computer software (whether “off-the-shelf”, licensed from any third party or developed by any Debtor),
computer software development rights, leases, franchises, customer lists, quality control procedures, grants and rights, goodwill, Intellectual
Property, income tax refunds, and employee retention tax credits;
(iii)
All accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising,
goods, equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties with respect
to each account, including any right of stoppage in transit;
(iv)
All documents, letter-of-credit rights, instruments and chattel paper;
(v)
All commercial tort claims;
(vi)
All deposit accounts and all cash (whether or not deposited in such deposit accounts), not including that certain Certificate of Deposit,
Account Number 9000070132 (the “Account”), with Commerce Bank of Arizona (the “Senior Lender”) with an approximate
balance of $2,100,000.00 together with (A) all interest, whether now accrued or hereafter accruing; (B) all additional deposits hereafter
made to the Account; (C) any and all proceeds from the Account; and (D) all renewals, replacements and substitutions for any of the foregoing,
which is subject to that certain Assignment of Deposit Account, dated as of December 13, 2023, between the Company and the Senior Lender,
until the full repayment of that certain Promissory Note in the original principal amount of $2,000,000 issued by the Company to the
Senior Lender on or around December 23, 2023 pursuant to that certain Business Loan Agreement, dated as of December 11, 2023, between
the Company and the Senior Lender (the “Excluded Collateral”);
(vii)
All investment property;
(viii)
All supporting obligations; and
(ix)
All files, records, books of account, business papers, and computer programs; and
(x)
the products and proceeds of all of the foregoing Collateral set forth in clauses (i)-
(ix)
above.
Without
limiting the generality of the foregoing, the “Collateral” shall include all investment property and general intangibles
respecting ownership and/or other equity interests in each Additional Debtor, including, without limitation, the shares of capital stock
and the other equity interests disclosed in the SEC Documents (as defined in the Purchase Agreement), as the same may be modified from
time to time pursuant to the terms hereof, and any other shares of capital stock and/or other equity interests of any other direct or
indirect subsidiary of any Debtor obtained in the future, and, in each case, all certificates representing such shares and/or equity
interests and, in each case, all rights, options, warrants, stock, other securities and/or equity interests that may hereafter be received,
receivable or distributed in respect of, or exchanged for, any of the foregoing and all rights arising under or in connection with the
Pledged Securities, including, but not limited to, all dividends, interest and cash.
Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes
void by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the extent
that such applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law); provided,
however, that, to the extent permitted by applicable law, this Agreement shall create a valid security interest in such asset
and, to the extent permitted by applicable law, this Agreement shall create a valid security interest in the proceeds of such asset.
(b)
“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual
property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights
arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered
and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United States Copyright Office, (ii) all letters patent of
the United States, any other country or any political subdivision thereof, all reissues and extensions thereof, and all applications
for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, (iii)
all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade dress, service marks, logos,
domain names and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired,
all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof,
or otherwise, and all common law rights related thereto, (iv) all trade secrets arising under the laws of the United States, any other
country or any political subdivision thereof, (v) all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all
licenses for any of the foregoing, and (vii) all causes of action for infringement of the foregoing.
(c)
[Intentionally Omitted].
(d)
“Necessary Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment duly
executed and such other instruments or documents as the Secured Parties may reasonably request.
(e)
“Obligations” means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or
several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing to, of any Debtor to the Secured
Parties, including, without limitation, all obligations under this Agreement, the Note, and any other instruments, agreements or other
documents executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether
or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from any of
the Secured Parties as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended
or modified from time to time. Without limiting the generality of the foregoing, the term “Obligations” shall include, without
limitation: (i) principal, interest, and penalties under the Note and all other amounts owed thereunder; (ii) any and all other fees,
indemnities, costs, obligations and liabilities of the Debtors from time to time under or in connection with this Agreement, the Note,
and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii) all
amounts (including but not limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that
the obligations to pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving any Debtor.
(f)
“Organizational Documents” means, with respect to any Debtor, the documents by which such Debtor was organized (such
as a certificate of incorporation, certificate of limited partnership or articles of organization, and including, without limitation,
any certificates of designation for preferred stock or other forms of preferred equity) and which relate to the internal governance of
such Debtor (such as bylaws, a partnership agreement or an operating, limited liability or members agreement).
(g)
“Pledged Interests” shall have the meaning ascribed to such term in Section 4(j).
(h)
“Pledged Securities” shall have the meaning ascribed to such term in Section 4(i).
(i)
“UCC” means the Uniform Commercial Code of the State of Delaware and or any other applicable law of any state or states
which has jurisdiction with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent
of the parties that defined terms in the UCC should be construed in their broadest sense so that the term “Collateral” will
be construed in its broadest sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that broaden the
definitions, they are incorporated herein and if existing definitions in the UCC are broader than the amended definitions, the existing
ones shall be controlling.
2.
Grant of Security Interest in Collateral. As an inducement for the Secured Parties to enter into the investment as evidenced by
the Note and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations,
each Debtor hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Parties a security interest in and
to, a lien upon and a right of set-off against all of their respective right, title and interest of whatsoever kind and nature in and
to, the Collateral (a “Security Interest” and, collectively, the “Security Interests”).
3.
Delivery of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, each Debtor shall deliver or cause to
be delivered to the Secured Parties (a) any and all certificates and other instruments representing or evidencing the Pledged Securities,
and (b) any and all certificates and other instruments or documents representing any of the other Collateral, in each case, together
with all Necessary Endorsements. The Debtors are, contemporaneously with the execution hereof, delivering to Secured Parties, or have
previously delivered to Secured Parties, a true and correct copy of each Organizational Document governing any of the Pledged Securities.
4.
Representations, Warranties, Covenants and Agreements of the Debtors. Except as set forth under the corresponding section of the
disclosure schedules delivered to the Secured Parties concurrently herewith (the “Disclosure Schedules”), which Disclosure
Schedules shall be deemed a part hereof, each Debtor represents and warrants to, and covenants and agrees with, the Secured Parties as
follows:
(a)
Each Debtor has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement
and otherwise to carry out its obligations hereunder. The execution, delivery and performance by each Debtor of this Agreement and the
filings contemplated therein have been duly authorized by all necessary action on the part of such Debtor and no further action is required
by such Debtor. This Agreement has been duly executed by each Debtor. This Agreement constitutes the legal, valid and binding obligation
of each Debtor, enforceable against each Debtor in accordance with its terms except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization and similar laws of general application relating to or affecting the rights and remedies of creditors
and by general principles of equity.
(b)
The Debtors have no place of business or offices where their respective books of account and records are kept (other than temporarily
at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule A
attached hereto. Except as specifically set forth on Schedule A, each Debtor is the record owner of the real property where
such Collateral is located, and there exist no mortgages or other liens on any such real property. Except as disclosed on Schedule
A, none of such Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor.
(c)
Except as set forth in the SEC Documents, the Debtors are the sole owner of the Collateral (except for non-exclusive licenses granted
by any Debtor in the ordinary course of business), free and clear of any liens, security interests, encumbrances, rights or claims. The
Debtors are fully authorized to grant the Security Interests. Except as set forth in the SEC Documents, there is not on file in any governmental
or regulatory authority, agency or recording office an effective financing statement, security agreement, license or transfer or any
notice of any of the foregoing (other than those that will be filed in favor of the Secured Parties pursuant to this Agreement) covering
or affecting any of the Collateral. Except as set forth in the SEC Documents prior to the date of this Agreement and except pursuant
to this Agreement, as long as this Agreement shall be in effect, the Debtors shall not execute and shall not knowingly permit to be on
file in any such office or agency any other financing statement or other document or instrument (except to the extent filed or recorded
in favor of the Secured Parties pursuant to the terms of this Agreement).
(d)
No written claim has been received that any Collateral or any Debtor’s use of any Collateral violates the rights of any third party.
There has been no adverse decision to any Debtor’s claim of ownership rights in or exclusive rights to use the Collateral in any jurisdiction
or to any Debtor’s right to keep and maintain such Collateral in full force and effect, and there is no proceeding involving said rights
pending or, to the best knowledge of any Debtor, threatened before any court, judicial body, administrative or regulatory agency, arbitrator
or other governmental authority.
(e)
Each Debtor shall at all times maintain its books of account and records relating to the Collateral at its principal place of business
and its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account and records
or tangible Collateral unless it delivers to the Secured Parties at least 30 days prior to such relocation (i) written notice of such
relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate financing statements
and other necessary documents have been filed and recorded and other steps have been taken to perfect the Security Interests to create
in favor of the Secured Parties a valid, perfected and continuing perfected lien in the Collateral.
(f)
This Agreement creates in favor of the Secured Parties a valid security interest in the Collateral securing the payment and performance
of the Obligations. Upon making the filings described in the immediately following paragraph, all security interests created hereunder
in any Collateral which may be perfected by filing financing statements shall have been duly perfected. Except for the filing of the
financing statements referred to in the immediately following paragraph, the recordation of this Agreement with respect to copyrights
and copyright applications in the United States Copyright Office referred to in paragraph (m), the execution and delivery of deposit
account control agreements satisfying the jurisdictional requirements with respect to each deposit account of the Debtors, and the delivery
of the certificates and other instruments provided in Section 3, no action is necessary to create, perfect or protect the security interests
created hereunder. Without limiting the generality of the foregoing, except for the filing of said financing statements, the recordation
of this Agreement, and the execution and delivery of said deposit account control agreements, no consent of any third parties and no
authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required
for (i) the execution, delivery and performance of this Agreement, (ii) the creation or perfection of the Security Interests created
hereunder in the Collateral or (iii) the enforcement of the rights of the Secured Parties hereunder.
(g)
Each Debtor hereby authorizes the Secured Parties to file one or more financing statements with respect to the Security Interests, with
the proper filing and recording agencies in any jurisdiction deemed proper by it. The Secured Parties shall have the right (and is hereby
authorized to) to file with the applicable filing office(s) such financing statements, amendments, addenda, continuations, terminations,
assignments and other records (whether or not executed by Debtors) to perfect and to maintain perfected security interests in the Collateral
by the Secured Parties, including but not limited to a financing statement in all other applicable jurisdictions with respect to the
Collateral promptly upon the execution of this Agreement.
(h)
The execution, delivery and performance of this Agreement by the Debtors does not violate any of the provisions of any Organizational
Documents of any Debtor or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law,
rule or regulation applicable to any Debtor, conflict with, or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing any Debtor’s debt or otherwise)
or other understanding to which any Debtor is a party or by which any property or asset of any Debtor is bound or affected. If any, all
required consents (including, without limitation, from stockholders or creditors of any Debtor) necessary for any Debtor to enter into
and perform its obligations hereunder have been obtained.
(i)
The capital stock and other equity interests listed in the SEC Documents (the “Pledged Securities”) represent all
of the capital stock and other equity interests of each Additional Debtor, and represent all capital stock and other equity interests
owned, directly or indirectly, by the Company. All of the Pledged Securities are validly issued, fully paid and nonassessable, and the
Company is the legal and beneficial owner of the Pledged Securities, free and clear of any lien, security interest or other encumbrance
except for the security interests created by this Agreement.
(j)
The ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the “Pledged
Interests”) by their express terms do not provide that they are securities governed by Article 8 of the UCC and are not held
in a securities account or by any financial intermediary.
(k)
Each Debtor shall at all times maintain the liens and Security Interests provided for hereunder as valid and perfected first priority
(subject to Section 19(n) hereof) liens and security interests in the Collateral in favor of the Secured Parties until this Agreement
and the Security Interest hereunder shall be terminated pursuant to Section 14 hereof. Each Debtor hereby agrees to defend the same against
the claims of any and all persons and entities. Each Debtor shall safeguard and protect all Collateral for the account of the Secured
Parties. Each Debtor shall pay the cost of filing the same in all public offices wherever filing is, or is deemed by the Secured Parties
to be, necessary or desirable to effect the rights and obligations provided for herein. Each Debtor shall, upon reasonable request by
the Secured Parties, file with the applicable filing office(s) such financing statements, amendments, addenda, continuations, terminations,
assignments and other records (whether or not executed by Debtor) to perfect and to maintain perfected security interests in the Collateral
by the Secured Parties, including but not limited to (a) promptly upon the execution of this Agreement, a financing statement in all
applicable jurisdictions on behalf of the Secured Parties with respect to the Collateral. The Financing Statement shall designate the
Secured Parties as the secured party and Debtor as the debtor, shall identify the security interest in the Collateral, and contain any
other items required by law. Without limiting the generality of the foregoing, each Debtor shall pay all fees, taxes and other amounts
necessary to maintain the Collateral and the Security Interests hereunder, and each Debtor shall obtain and furnish to the Secured Parties
from time to time, upon demand, such releases and/or subordinations of claims and liens which may be required to maintain the priority
of the Security Interests hereunder.
(l)
No Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except for non-exclusive
licenses granted by a Debtor in its ordinary course of business and sales of inventory by a Debtor in its ordinary course of business)
without the prior written consent of the Secured Parties.
(m)
Each Debtor shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order and shall
not operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.
(n)
Each Debtor shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral
hereafter acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established reputation
having similar properties similarly situated and in such amounts as are customarily carried under similar circumstances by other such
entities and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover the full replacement
cost thereof. Each Debtor shall cause each insurance policy issued in connection herewith to provide, and the insurer issuing such policy
to certify to the Secured Parties, that (a) if such insurance be proposed to be cancelled or materially changed for any reason whatsoever,
such insurer will promptly notify the Secured Parties and such cancellation or change shall not be effective as to the Secured Parties
for at least thirty (30) days after receipt by the Secured Parties of such notice, unless the effect of such change is to extend or increase
coverage under the policy; and (b) the Secured Parties will have the right (but no obligation) at its election to remedy any default
in the payment of premiums within thirty (30) days of notice from the insurer of such default. If no Event of Default (as defined in
the Note) exists and if the proceeds arising out of any claim or series of related claims do not exceed $100,000, loss payments in each
instance will be applied by the applicable Debtor to the repair and/or replacement of property with respect to which the loss was incurred
to the extent reasonably feasible, and any loss payments or the balance thereof remaining, to the extent not so applied, shall be payable
to the applicable Debtor; provided, however, that payments received by any Debtor after an Event of Default occurs and
is continuing or in excess of $100,000 for any occurrence or series of related occurrences shall be paid to the Secured Parties and accordingly,
if received by such Debtor, shall be held in trust for the Secured Parties and immediately paid over to the Secured Parties. Copies of
such policies or the related certificates, in each case, shall be delivered to the Secured Parties at least annually and at the time
any new policy of insurance is issued.
(o)
Each Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Parties promptly, in sufficient detail, of
any material adverse change in the Collateral, and of the occurrence of any event which would have a material adverse effect on the value
of the Collateral or on the Secured Parties’ security interest therein.
(p)
Each Debtor shall promptly execute and deliver to the Secured Parties such further deeds, mortgages, assignments, security agreements,
financing statements or other instruments, documents, certificates and assurances and take such further action as the Secured Parties
may from time to time request and may in its sole discretion deem necessary to perfect, protect or enforce the Secured Parties’
security interest in the Collateral.
(q)
Each Debtor shall permit the Secured Parties and its representatives and agents to inspect the Collateral during normal business hours
and upon reasonable prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the Secured
Parties from time to time.
(r)
Each Debtor shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims,
causes of action and accounts receivable in respect of the Collateral.
(s)
Each Debtor shall promptly notify the Secured Parties in sufficient detail upon becoming aware of any attachment, garnishment, execution
or other legal process levied against any Collateral and of any other information received by such Debtor that may materially affect
the value of the Collateral, the Security Interest or the rights and remedies of the Secured Parties hereunder.
(t)
All information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of any Debtor with respect to the Collateral
is accurate and complete in all material respects as of the date furnished.
(u)
The Debtors shall at all times preserve and keep in full force and effect their respective valid existence and good standing and any
rights and franchises material to its business.
(v)
No Debtor will change its name, type of organization, jurisdiction of organization, organizational identification number (if it has one),
legal or corporate structure, or identity, or add any new fictitious name unless it provides at least 30 days prior written notice to
the Secured Parties of such change and, at the time of such written notification, such Debtor provides any financing statements or fixture
filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
(w)
Except in the ordinary course of business, no Debtor may consign any of its inventory or sell any of its inventory on bill and hold,
sale or return, sale on approval, or other conditional terms of sale without the consent of the Secured Parties which shall not be unreasonably
withheld.
(x)
No Debtor may relocate its chief executive office to a new location without providing 30 days prior written notification thereof to the
Secured Parties and so long as, at the time of such written notification, such Debtor provides any financing statements or fixture filings
necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
(y)
Each Debtor was organized and remains organized solely under the laws of the state set forth next to such Debtor’s name in Schedule
B attached hereto, which Schedule B sets forth each Debtor’s organizational identification number or, if any Debtor
does not have one, states that one does not exist.
(z)
(i) The actual name of each Debtor is the name set forth in Schedule B attached hereto;( ii) no Debtor has any trade names except
as set forth in the SEC Documents; (iii) no Debtor has used any name other than that stated in the preamble hereto or as set forth in
the SEC Documents for the preceding five years; and (iv) no entity has merged into any Debtor or been acquired by any Debtor within the
past five years except as set forth in the SEC Documents.
(aa)
At any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require or
permit possession by the Secured Parties to perfect the security interest created hereby, the applicable Debtor shall deliver such Collateral
to the Secured Parties.
(bb)
Each Debtor, in its capacity as issuer, hereby agrees to comply with any and all orders and instructions of Secured Parties regarding
the Pledged Interests consistent with the terms of this Agreement without the further consent of any Debtor as contemplated by Section
8-106 (or any successor section) of the UCC. Further, each Debtor agrees that it shall not enter into a similar agreement (or one that
would confer “control” within the meaning of Article 8 of the UCC) with any other person or entity.
(cc)
Each Debtor shall cause all tangible chattel paper constituting Collateral to be delivered to the Secured Parties, or, if such delivery
is not possible, then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest created
by this Agreement. To the extent that any Collateral consists of electronic chattel paper, the applicable Debtor shall cause the underlying
chattel paper to be “marked” within the meaning of Section 9-105 of the UCC (or successor section thereto).
(dd)
If there is any investment property or deposit account included as Collateral that can be perfected by “control” through
an account control agreement, the applicable Debtor shall cause such an account control agreement, in form and substance in each case
satisfactory to the Secured Parties, to be entered into and delivered to the Secured Parties.
(ee)
To the extent that any Collateral consists of letter-of-credit rights, the applicable Debtor shall cause the issuer of each underlying
letter of credit to consent to an assignment of the proceeds thereof to the Secured Parties.
(ff)
To the extent that any Collateral is in the possession of any third party, the applicable Debtor shall join with the Secured Parties
in notifying such third party of the Secured Parties’ security interest in such Collateral and shall use its best efforts to obtain
an acknowledgement and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory
to the Secured Parties.
(gg)
If any Debtor shall at any time hold or acquire a commercial tort claim, such Debtor shall promptly notify the Secured Parties in a writing
signed by such Debtor of the particulars thereof and grant to the Secured Parties in such writing a security interest therein and in
the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Secured
Parties.
(hh)
Each Debtor shall immediately provide written notice to the Secured Parties of any and all accounts which arise out of contracts with
any governmental authority and, to the extent necessary to perfect or continue the perfected status of the Security Interests in such
accounts and proceeds thereof, shall execute and deliver to the Secured Parties an assignment of claims for such accounts and cooperate
with the Secured Parties in taking any other steps required, in its judgment, under the Federal Assignment of Claims Act or any similar
federal, state or local statute or rule to perfect or continue the perfected status of the Security Interests in such accounts and proceeds
thereof.
(ii)
Each Debtor shall cause each future subsidiary of such Debtor to immediately become a party hereto (an “Additional Debtor”),
by executing and delivering an Additional Debtor Joinder in substantially the form of Annex A attached hereto and comply with
the provisions hereof applicable to the Debtors. Concurrent therewith, the Additional Debtor shall deliver replacement schedules for,
or supplements to all other Schedules to (or referred to in) this Agreement, as applicable, which replacement schedules shall supersede,
or supplements shall modify, the Schedules then in effect. The Additional Debtor shall also deliver such opinions of counsel, authorizing
resolutions, good standing certificates, incumbency certificates, organizational documents, financing statements and other information
and documentation as the Secured Parties may reasonably request. Upon delivery of the foregoing to the Secured Parties, the Additional
Debtor shall be and become a party to this Agreement with the same rights and obligations as the Debtors, for all purposes hereof as
fully and to the same extent as if it were an original signatory hereto and shall be deemed to have made the representations, warranties
and covenants set forth herein as of the date of execution and delivery of such Additional Debtor Joinder, and all references herein
to the “Debtors” shall be deemed to include each Additional Debtor.
(jj)
Each Debtor shall vote the Pledged Securities to comply with the covenants and agreements set forth herein and in the Note.
(kk)
Each Debtor shall register the pledge of the applicable Pledged Securities on the books of such Debtor. Each Debtor shall notify each
issuer of Pledged Securities to register the pledge of the applicable Pledged Securities in the name of the Secured Parties on the books
of such issuer. Further, except with respect to certificated securities delivered to the Secured Parties, the applicable Debtor shall
deliver to Secured Parties an acknowledgement of pledge (which, where appropriate, shall comply with the requirements of the relevant
jurisdiction with respect to perfection by registration) signed by the issuer of the applicable Pledged Securities, which acknowledgement
shall confirm that: (a) it has registered the pledge on its books and records; and (b) at any time directed by the Secured Parties during
the continuation of an Event of Default, such issuer will transfer the record ownership of such Pledged Securities into the name of the
Secured Parties or any designee of Secured Parties, will take such steps as may be necessary to effect the transfer, and will comply
with all other instructions of Secured Parties regarding such Pledged Securities without the further consent of the applicable Debtor.
(ll)
In the event that, upon an occurrence of an Event of Default, Secured Parties shall sell all or any of the Pledged Securities to another
party or parties (herein called the “Transferee”) or shall purchase or retain all or any of the Pledged Securities,
each Debtor shall, to the extent applicable: (i) deliver to Secured Parties or the Transferee, as the case may be, the articles of incorporation,
bylaws, minute books, stock certificate books, corporate seals, deeds, leases, indentures, agreements, evidences of indebtedness, books
of account, financial records and all other Organizational Documents and records of the Debtors and their direct and indirect subsidiaries;
(ii) use its best efforts to obtain resignations of the persons then serving as officers and directors of the Debtors and their direct
and indirect subsidiaries, if so requested; and (iii) use its best efforts to obtain any approvals that are required by any governmental
or regulatory body in order to permit the sale of the Pledged Securities to the Transferee or the purchase or retention of the Pledged
Securities by Secured Parties and allow the Transferee or Secured Parties to continue the business of the Debtors and their direct and
indirect subsidiaries.
(mm)
Without limiting the generality of the other obligations of the Debtors hereunder, each Debtor shall promptly (i) cause to be registered
at the United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with respect
to all Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office to be duly
recorded at the applicable office, and (iii) give the Secured Parties notice whenever it acquires (whether absolutely or by license)
or creates any additional material Intellectual Property.
(nn)
Each Debtor will from time to time, at the joint and several expense of the Debtors, promptly execute and deliver all such further instruments
and documents, and take all such further action as may be necessary or desirable, or as the Secured Parties may reasonably request, in
order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Secured Parties to exercise
and enforce their rights and remedies hereunder and with respect to any Collateral or to otherwise carry out the purposes of this Agreement.
(oo)
The SEC Documents disclose all of the patents, patent applications, trademarks, trademark applications, registered copyrights, and domain
names owned by any of the Debtors as of the date hereof. The SEC Documents disclose all material licenses in favor of any Debtor for
the use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents and trademarks of the Debtors
have been duly recorded at the United States Patent and Trademark Office and all material copyrights of the Debtors have been duly recorded
at the United States Copyright Office.
(pp)
Except as set forth in the SEC Documents, none of the account debtors or other persons or entities obligated on any of the Collateral
is a governmental authority covered by the Federal Assignment of Claims Act or any similar federal, state or local statute or rule in
respect of such Collateral.
5.
Effect of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting equity or ownership interests
(regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests upon the occurrence
of certain events (including, without limitation, upon the transfer of all or any of the other stock or assets of the issuer), it is
agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement of any of Secured Parties’
rights hereunder shall not be deemed to be the type of event which would trigger such conversion rights notwithstanding any provisions
in the Organizational Documents or agreements to which any Debtor is subject or to which any Debtor is party.
6.
Defaults. The following events shall be “Events of Default”:
(a)
The occurrence of an Event of Default (as defined in the Note) under the Note;
(b)
Any representation or warranty of any Debtor in this Agreement shall prove to have been incorrect in any material respect when made;
(c)
The failure by any Debtor to observe or perform any of its obligations hereunder for five (5) days after delivery to such Debtor of notice
of such failure by or on behalf of the Secured Parties unless such default is capable of cure but cannot be cured within such time frame
and such Debtor is using best efforts to cure same in a timely fashion; or
(d)
If any provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Debtor, or a proceeding shall be commenced by any Debtor, or by any governmental authority having jurisdiction
over any Debtor, seeking to establish the invalidity or unenforceability thereof, or any Debtor shall deny that any Debtor has any liability
or obligation purported to be created under this Agreement.
7.
Duty To Hold In Trust.
(a)
Upon the occurrence of any Event of Default and at any time thereafter, each Debtor shall, upon receipt of any revenue, income, dividend,
interest or other sums subject to the Security Interests, whether payable pursuant to the Note or otherwise, or of any check, draft,
note, trade acceptance or other instrument evidencing an obligation to pay any such sum, hold the same in trust for the Secured Parties
and shall forthwith endorse and transfer any such sums or instruments, or both, to the Secured Parties, pro-rata in proportion to their
respective then-currently outstanding principal amount of Note for application to the satisfaction of the Obligations.
(b)
If any Debtor shall become entitled to receive or shall receive any securities or other property (including, without limitation, shares
of Pledged Securities or instruments representing Pledged Securities acquired after the date hereof, or any options, warrants, rights
or other similar property or certificates representing a dividend, or any distribution in connection with any recapitalization, reclassification
or increase or reduction of capital, or issued in connection with any reorganization of such Debtor or any of its direct or indirect
subsidiaries) in respect of the Pledged Securities (whether as an addition to, in substitution of, or in exchange for, such Pledged Securities
or otherwise), such Debtor agrees to (i) accept the same as the agent of the Secured Parties; (ii) hold the same in trust on behalf of
and for the benefit of the Secured Parties; and (iii) to deliver any and all certificates or instruments evidencing the same to Secured
Parties on or before the close of business on the fifth business day following the receipt thereof by such Debtor, in the exact form
received together with the Necessary Endorsements, to be held by Secured Parties subject to the terms of this Agreement as Collateral.
8.
Rights and Remedies Upon Default.
(a)
Upon the occurrence of any Event of Default and at any time thereafter, the Secured Parties, shall have the right to exercise all of
the remedies conferred hereunder and under the Note, and the Secured Parties shall have all the rights and remedies of a secured party
under the UCC. Without limitation, the Secured Parties shall have the following rights and powers:
(i)
The Secured Parties shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance
of any person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and each Debtor shall
assemble the Collateral and make it available to the Secured Parties at places which the Secured Parties shall reasonably select, whether
at such Debtor’s premises or elsewhere, and make available to the Secured Parties, without rent, all of such Debtor’s respective
premises and facilities for the purpose of the Secured Parties taking possession of, removing or putting the Collateral in saleable or
disposable form.
(ii)
Upon notice to the Debtors by Secured Parties, all rights of each Debtor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise and all rights of each Debtor to receive the dividends and interest which it would otherwise
be authorized to receive and retain, shall cease. Upon such notice, the Secured Parties shall have the right to receive any interest,
cash dividends or other payments on the Collateral and, at the option of Secured Parties, to exercise in such Secured Parties’
discretion all voting rights pertaining thereto. Without limiting the generality of the foregoing, Secured Parties shall have the right
(but not the obligation) to exercise all rights with respect to the Collateral as it were the sole and absolute owner thereof, including,
without limitation, to vote and/or to exchange, at its sole discretion, any or all of the Collateral in connection with a merger, reorganization,
consolidation, recapitalization or other readjustment concerning or involving the Collateral or any Debtor or any of its direct or indirect
subsidiaries.
(iii)
The Secured Parties shall have the right to operate the business of each Debtor using the Collateral and shall have the right to assign,
sell, lease or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with
or without special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at such time
or times and at such place or places, and upon such terms and conditions as the Secured Parties may deem commercially reasonable, all
without (except as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to any Debtor
or right of redemption of a Debtor, which are hereby expressly waived. Upon each such sale, lease, assignment or other transfer of Collateral,
the Secured Parties, may, unless prohibited by applicable law which cannot be waived, purchase all or any part of the Collateral being
sold, free from and discharged of all trusts, claims, right of redemption and equities of any Debtor, which are hereby waived and released.
(iv)
The Secured Parties shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or
accounts to make payments directly to the Secured Parties, on behalf of the Secured Parties, and to enforce the Debtors’ rights
against such account debtors and obligors.
(v)
The Secured Parties may (but are not obligated to) direct any financial intermediary or any other person or entity holding any investment
property to transfer the same to the Secured Parties or its designee.
(vi)
The Secured Parties may (but is not obligated to) transfer any or all Intellectual Property registered in the name of any Debtor at the
United States Patent and Trademark Office and/or Copyright Office into the name of the Secured Parties or any designee or any purchaser
of any Collateral.
(b)
The Secured Parties shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not
be considered adversely to affect the commercial reasonableness of any sale of the Collateral. The Secured Parties may sell the Collateral
without giving any warranties and may specifically disclaim such warranties. If the Secured Parties sell any of the Collateral on credit,
the Debtors will only be credited with payments actually made by the purchaser. In addition, each Debtor waives any and all rights that
it may have to a judicial hearing in advance of the enforcement of any of the Secured Parties’ rights and remedies hereunder, including,
without limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its rights
and remedies with respect thereto.
(c)
For the purpose of enabling the Secured Parties to further exercise rights and remedies under this Section 8 or elsewhere provided by
agreement or applicable law, each Debtor hereby grants to the Secured Parties, for the benefit of the Secured Parties, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other compensation to such Debtor) to use, license or sublicense following
an Event of Default, any Intellectual Property now owned or hereafter acquired by such Debtor, and wherever the same may be located,
and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software
and programs used for the compilation or printout thereof.
9.
Applications of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments
made on account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding,
storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other costs incurred
in connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses incurred by the Secured Parties in enforcing
the Secured Parties’ rights hereunder and in connection with collecting, storing and disposing of the Collateral, and then to satisfaction
of the Obligations pro rata among the Secured Parties (based on then-outstanding principal amounts of Note at the time of any such determination),
and to the payment of any other amounts required by applicable law, after which the Secured Parties shall pay to the applicable Debtor
any surplus proceeds. If, upon the sale, license or other disposition of the Collateral, the proceeds thereof are insufficient to pay
all amounts to which the Secured Parties are legally entitled, the Debtors will be liable for the deficiency, together with interest
thereon, at the rate of the Default Interest (as defined in the Note), and the reasonable fees of any attorneys employed by the Secured
Parties to collect such deficiency. To the extent permitted by applicable law, each Debtor waives all claims, damages and demands against
the Secured Parties arising out of the repossession, removal, retention or sale of the Collateral, unless due solely to the gross negligence
or willful misconduct of the Secured Parties as determined by a final judgment (not subject to further appeal) of a court of competent
jurisdiction.
10.
Securities Law Provision. Each Debtor recognizes that Secured Parties may be limited in its ability to effect a sale to the public of
all or part of the Pledged Securities by reason of certain prohibitions in the Securities Act of 1933, as amended, or other federal or
state securities laws (collectively, the “Securities Laws”), and may be compelled to resort to one or more sales to
a restricted group of purchasers who may be required to agree to acquire the Pledged Securities for their own account, for investment
and not with a view to the distribution or resale thereof. Each Debtor agrees that sales so made may be at prices and on terms less favorable
than if the Pledged Securities were sold to the public, and that Secured Parties have no obligation to delay the sale of any Pledged
Securities for the period of time necessary to register the Pledged Securities for sale to the public under the Securities Laws. Each
Debtor shall cooperate with Secured Parties in its attempt to satisfy any requirements under the Securities Laws (including, without
limitation, registration thereunder if requested by Secured Parties) applicable to the sale of the Pledged Securities by Secured Parties.
11.
Costs and Expenses. Each Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with
any filing required hereunder, including without limitation, any financing statements, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any searches reasonably required by the Secured Parties. The Debtors shall
also pay all other claims and charges which in the reasonable opinion of the Secured Parties is reasonably likely to prejudice, imperil
or otherwise affect the Collateral or the Security Interests therein. The Debtors will also, upon demand, pay to the Secured Parties
the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents,
which the Secured Parties may incur in connection with the creation, perfection, protection, satisfaction, foreclosure, collection or
enforcement of the Security Interest and the preparation, administration, continuance, amendment or enforcement of this Agreement and
pay to the Secured Parties the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and
of any experts and agents, which the Secured Parties may incur in connection with (i) the enforcement of this Agreement, (ii) the custody
or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement
of any of the rights of the Secured Parties under the Note. Until so paid, any fees payable hereunder shall be added to the principal
amount of the Note and shall bear interest at the rate of the Default Interest (as defined in the Note).
12.
Responsibility for Collateral. The Debtors assume all liabilities and responsibility in connection with all Collateral, and the
Obligations shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or
its unavailability for any reason. Without limiting the generality of the foregoing, (a) the Secured Parties do not (i) have any duty
(either before or after an Event of Default) to collect any amounts in respect of the Collateral or to preserve any rights relating to
the Collateral, or (ii) have any obligation to clean-up or otherwise prepare the Collateral for sale, and (b) each Debtor shall remain
obligated and liable under each contract or agreement included in the Collateral to be observed or performed by such Debtor thereunder.
The Secured Parties shall not have any obligation or liability under any such contract or agreement by reason of or arising out of this
Agreement or the receipt by the Secured Parties of any payment relating to any of the Collateral, nor shall the Secured Parties be obligated
in any manner to perform any of the obligations of any Debtor under or pursuant to any such contract or agreement, to make inquiry as
to the nature or sufficiency of any payment received by the Secured Parties in respect of the Collateral or as to the sufficiency of
any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce any performance
or to collect the payment of any amounts which the Secured Parties may be entitled at any time or times.
13.
Security Interests Absolute. All rights of the Secured Parties and all obligations of the Debtors hereunder, shall be absolute
and unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Note or any agreement entered into
in connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance
of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from
the Note or any other agreement entered into in connection with the foregoing; (c) any exchange, release or nonperfection of any of the
Collateral, or any release or amendment or waiver of or consent to departure from any other collateral for, or any guarantee, or any
other security, for all or any of the Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and cancel in its
sole discretion any insurance claims or matters made or arising in connection with the Collateral; or (e) any other circumstance which
might otherwise constitute any legal or equitable defense available to a Debtor, or a discharge of all or any part of the Security Interests
granted hereby. Until the Obligations shall have been paid and performed in full, the rights of the Secured Parties shall continue even
if the Obligations are barred for any reason, including, without limitation, the running of the statute of limitations or bankruptcy.
Each Debtor expressly waives presentment, protest, notice of protest, demand, notice of nonpayment and demand for performance. In the
event that at any time any transfer of any Collateral or any payment received by the Secured Parties hereunder shall be deemed by final
order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency
laws of the United States, or shall be deemed to be otherwise due to any party other than the Secured Parties, then, in any such event,
each Debtor’s obligations hereunder shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any
prior payment thereof and/or cancellation of this Agreement, but shall remain a valid and binding obligation enforceable in accordance
with the terms and provisions hereof. Each Debtor waives all right to require the Secured Parties to proceed against any other person
or entity or to apply any Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other remedy.
Each Debtor waives any defense arising by reason of the application of the statute of limitations to any obligation secured hereby.
14.
Term of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the Note
have been indefeasibly paid in full and all other Obligations have been paid or discharged; provided, however, that all
indemnities of the Debtors contained in this Agreement shall survive and remain operative and in full force and effect regardless of
the termination of this Agreement.
15.
Power of Attorney; Further Assurances.
(a)
Each Debtor authorizes the Secured Parties, and does hereby make, constitute and appoint the Secured Parties and its officers, agents,
successors or assigns with full power of substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in the name
of the Secured Parties or such Debtor, to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note,
checks, drafts, money orders or other instruments of payment (including payments payable under or in respect of any policy of insurance)
in respect of the Collateral that may come into possession of the Secured Parties; (ii) to sign and endorse any financing statement or
any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications
and notices in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv) to demand, collect, receipt
for, compromise, settle and sue for monies due in respect of the Collateral; (v) to transfer any Intellectual Property or provide licenses
respecting any Intellectual Property; and (vi) generally, at the option of the Secured Parties, and at the expense of the Debtors, at
any time, or from time to time, to execute and deliver any and all documents and instruments and to do all acts and things which the
Secured Parties deem necessary to protect, preserve and realize upon the Collateral and the Security Interests granted therein in order
to effect the intent of this Agreement and the Note all as fully and effectually as the Debtors might or could do; and each Debtor hereby
ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest
and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall be outstanding. The designation
set forth herein shall be deemed to amend and supersede any inconsistent provision in the Organizational Documents or other documents
or agreements to which any Debtor is subject or to which any Debtor is a party. Without limiting the generality of the foregoing, after
the occurrence and during the continuance of an Event of Default, the Secured Parties are specifically authorized to execute and file
any applications for or instruments of transfer and assignment of any patents, trademarks, copyrights or other Intellectual Property
with the United States Patent and Trademark Office and the United States Copyright Office.
(b)
On a continuing basis, each Debtor will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper filing
and recording agencies in any jurisdiction, all such instruments, and take all such action as may reasonably be deemed necessary or advisable,
or as reasonably requested by the Secured Parties, to perfect the Security Interests granted hereunder and otherwise to carry out the
intent and purposes of this Agreement, or for assuring and confirming to the Secured Parties the grant or perfection of a perfected security
interest in all the Collateral under the UCC.
(c)
Each Debtor hereby irrevocably appoints the Secured Parties as such Debtor’s attorney-in- fact, with full authority in the place
and instead of such Debtor and in the name of such Debtor, from time to time in the Secured Parties’ discretion, to take any action
and to execute any instrument which the Secured Parties may deem necessary or advisable to accomplish the purposes of this Agreement,
pertaining to the filing, in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative
to any of the Collateral without the signature of such Debtor where permitted by law, which financing statements may (but need not) describe
the Collateral as “all assets” or “all personal property” or words of like import (except as such description
is inconsistent with the Collateral as provided herein), and ratifies all such actions taken by the Secured Parties. This power of attorney
is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations
shall be outstanding.
16.
Notices. All notices, requests, demands and other communications hereunder shall be subject to the notice provision of the Purchase
Agreement (as such term is defined in the Note).
17.
Other Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the
guarantee, endorsement or property of any other person, firm, corporation or other entity, then the Secured Parties shall have the right,
in its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way
modifying or affecting any of the Secured Parties’ rights and remedies hereunder.
18.
[Intentionally Omitted].
19.
Miscellaneous.
(a)
No course of dealing between the Debtors and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on the part
of the Secured Parties, any right, power or privilege hereunder or under the Note shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
(b)
All of the rights and remedies of the Secured Parties with respect to the Collateral, whether established hereby or by the Note or by
any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.
(c)
This Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the
parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this Agreement may be
waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtors and the
Secured Parties holding 67% or more of the principal amount of Note then outstanding, or, in the case of a waiver, by the party against
whom enforcement of any such waived provision is sought.
(d)
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force
and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts
to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(e)
No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall
any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
(f)
This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Debtors
may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Secured Parties (other
than by merger as provided in this Agreement and the Note). The Secured Parties may assign any or all of its rights under this Agreement
to any party to whom such Secured Parties assigns or transfers any Obligations, provided such transferee agrees in writing to be bound,
with respect to the transferred Obligations, by the provisions of this Agreement that apply to the “Secured Parties.”
(g)
Each party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order
to carry out the provisions and purposes of this Agreement.
(h)
The Debtors and Secured Parties shall submit all Claims (as defined in Exhibit E of the Purchase Agreement) (the
“Claims”) arising under this Agreement 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 E of
the Purchase Agreement (the “Arbitration Provisions”). The Debtors and Secured Parties hereby acknowledge and agree that
the Arbitration Provisions are unconditionally binding on the Debtors and Secured Parties hereto and are severable from all other
provisions of this Agreement. By executing this Agreement, Debtors represents, warrants and covenants that Debtors have 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 Debtors will not take a position contrary to the
foregoing representations. Debtors acknowledge and agree that Secured Parties may rely upon the foregoing representations and
covenants of Debtors 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 Debtors and Secured Parties consent to and expressly agree that the exclusive venue for arbitration of any
Claims arising under this Agreement or any other agreement between the Debtors and Secured Parties or their respective affiliates
(including but not limited to the Transaction Documents (as defined in the Purchase Agreement)) or any Claim relating to the
relationship of the Debtors and Secured Parties or their respective affiliates shall be in the State of Delaware. Without modifying
the Debtors’ and Secured Parties’ obligations to resolve disputes hereunder pursuant to the Arbitration Provisions, for
any litigation arising in connection with any of the Transaction Documents, 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 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 Secured Parties
to realize on any collateral or any other security, or to enforce a judgment or other court ruling in favor of the Secured Parties,
including through a legal action in any court of competent jurisdiction. The Debtors hereby irrevocably waive, and agree 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 DEBTORS 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 Debtors irrevocably waive 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
Debtors 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.
(i)
This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all
of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by electronic or facsimile
transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed)
the same with the same force and effect as if such electronic or facsimile signature were the original thereof.
(j)
All Debtors shall jointly and severally be liable for the obligations of each Debtor to the Secured Parties hereunder.
(k)
Each Debtor shall indemnify, reimburse and hold harmless the Secured Parties and their respective partners, members, shareholders, officers,
directors, employees and agents (and any other persons with other titles that have similar functions) (including, without limitation,
those retained in connection with the transactions contemplated by this Agreement) (collectively, “Indemnitees”) from
and against any and all losses, claims, liabilities, damages, penalties, suits, costs and expenses, of any kind or nature (including
fees relating to the cost of investigating and defending any of the foregoing) imposed on, incurred by or asserted against such Indemnitee
in any way related to or arising from or alleged to arise from this Agreement or the Collateral, except any such losses, claims, liabilities,
damages, penalties, suits, costs and expenses which result from the gross negligence or willful misconduct of the Indemnitee as determined
by a final, nonappealable decision of a court of competent jurisdiction. This indemnification provision is in addition to, and not in
limitation of, any other indemnification provision in the Note, the Purchase Agreement (as such term is defined in the Note) or any other
agreement, instrument or other document executed or delivered in connection herewith or therewith.
(l)
Nothing in this Agreement shall be construed to subject the Secured Parties to liability as a partner in any Debtor or any if its direct
or indirect subsidiaries that is a partnership or as a member in any Debtor or any of its direct or indirect subsidiaries that is a limited
liability company, nor shall the Secured Parties be deemed to have assumed any obligations under any partnership agreement or limited
liability company agreement, as applicable, of any such Debtor or any of its direct or indirect subsidiaries or otherwise, unless and
until any such Secured Parties exercise its right to be substituted for such Debtor as a partner or member, as applicable, pursuant hereto.
(m)
To the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent,
approval or action of any partner or member, as applicable, of any Debtor or any direct or indirect subsidiary of any Debtor or compliance
with any provisions of any of the Organizational Documents, the Debtors hereby grant such consent and approval and waive any such noncompliance
with the terms of said documents.
(n)
Notwithstanding anything to the contrary contained in this Agreement, the security interest(s) with respect to the Collateral created
by this Agreement shall be junior in priority to the security interest(s) with respect to the Collateral established for the Prior Secured
Note (as defined in the Note).
[SIGNATURE
PAGE FOLLOW]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the day and year first above written.
| SIGNING DAY SPORTS, INC. |
|
| |
|
|
|
| By: |
/s/
Daniel Nelson |
|
|
Name: |
Daniel Nelson |
|
|
Title: |
Chief Executive Officer |
|
| FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC |
|
| |
|
|
| By: |
FirstFire Capital Management LLC, its manager |
|
| |
|
|
| By: |
/s/
Eli Fireman |
|
| Name: |
Eli Fireman |
|
SCHEDULE
A
Principal
Place of Business of Debtors: 8355 East Hartford Dr., Suite 100, Scottsdale, AZ 85255 Locations Where Collateral is Located or Stored:
8355
East Hartford Dr., Suite 100, Scottsdale, AZ 85255
SCHEDULE
B
Jurisdiction
of Organization
| Debtor |
|
Jurisdiction of Organization |
| Signing Day Sports, Inc. |
|
Delaware |
ANNEX
A
to
SECURITY
AGREEMENT
FORM
OF ADDITIONAL DEBTOR JOINDER
Security
Agreement dated as of May 16, 2024 made by Signing Day Sports, Inc.
and
its subsidiaries party thereto from time to time, as Debtors to and in favor of
the
Secured Parties identified therein (the “Security Agreement”)
Reference
is made to the Security Agreement as defined above; capitalized terms used herein and not otherwise defined herein shall have the meanings
given to such terms in, or by reference in, the Security Agreement.
The
undersigned hereby agrees that upon delivery of this Additional Debtor Joinder to the Secured Parties referred to above, the undersigned
shall (a) be an Additional Debtor under the Security Agreement, (b) have all the rights and obligations of the Debtors under the Security
Agreement as fully and to the same extent as if the undersigned was an original signatory thereto and (c) be deemed to have made the
representations and warranties set forth therein as of the date of execution and delivery of this Additional Debtor Joinder. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL
AS MORE FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS SET FORTH THEREIN.
Attached
hereto are supplemental and/or replacement Schedules to the Security Agreement, as applicable.
An
executed copy of this Joinder shall be delivered to the Secured Parties, and the Secured Parties may rely on the matters set forth herein
on or after the date hereof. This Joinder shall not be modified, amended or terminated without the prior written consent of the Secured
Parties.
IN
WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in the name and on behalf of the undersigned.
| |
[Name of Additional Debtor] |
| |
|
| |
By: |
|
| |
Name: |
| |
Title: |
| |
|
| |
Address: |
Dated:
ANNEX C
REGISTRATION RIGHTS AGREEMENT
REGISTRATION
RIGHTS AGREEMENT (this “Agreement”), dated as of May 16, 2024, by and between SIGNING DAY SPORTS, INC.,
a Delaware corporation (the “Company”), and FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC, a Delaware limited liability
company (together with it permitted assigns, the “Investor”). Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the securities purchase agreement by and between the parties hereto, dated as of
the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”).
WHEREAS:
The Company has
agreed, upon the terms and subject to the conditions of the Purchase Agreement, to sell to the Investor the Securities (as defined in
the Purchase Agreement) and to induce the Investor to enter into the Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively,
the “Securities Act”), and applicable state securities laws.
NOW, THEREFORE,
in consideration of the promises and the mutual covenants contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:
As used in this Agreement, the following terms shall have
the following meanings:
a. “Investor” shall have the meaning set forth above.
b. “Person”
means any individual or entity including but not limited to any corporation, a limited liability company, an association, a partnership,
an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.
c. “Register,”
“registered,” and “registration” refer to a registration effected by preparing and filing one or
more registration statements of the Company in compliance with the Securities Act and/or pursuant to Rule 415 under the Securities Act
or any successor rule providing for offering securities on a continuous basis (“Rule 415”), and the declaration or
ordering of effectiveness of such registration statement(s) by the United States Securities and Exchange Commission (the “SEC”).
d. “Registrable
Securities” means all of the Commitment Shares (as defined in the Purchase Agreement) (the “Commitment Shares”),
Conversion Shares (as defined in the Purchase Agreement) (the “Conversion Shares”) which may, from time to time, be
issued to the Investor under the Note (as defined in the Purchase Agreement) (the “Note”), without regard to any limitation
on beneficial ownership, Exercise Shares (as defined in the Purchase Agreement) (the “Exercise Shares”) which may,
from time to time, be issued to the Investor under the Warrants (as defined in the Purchase Agreement) (the “Warrants”),
without regard to any limitation on beneficial ownership, and shares of Common Stock (as defined in the
Purchase Agreement) (the “Common Stock”) issued to the Investor as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, without regard to any limitation on beneficial ownership in the Purchase Agreement, Note, or Warrants..
As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (i) the SEC has declared a
Registration Statement covering such securities effective and such securities have been disposed of pursuant to such effective Registration
Statement, (ii) such securities are sold under circumstances in which all of the applicable conditions of Rule 144 under the Securities
Act are met, (iii) such securities
become eligible for sale pursuant to Rule 144 without volume or manner-of-sale restrictions and without the requirement for the Company
to be in compliance with the current public information requirement under Rule 144(c)(1), as set forth in a written opinion letter to
such effect, addressed, delivered and reasonably acceptable to the applicable transfer agent and the holders of such securities, or (iv)
such securities have ceased to be outstanding
e. “Registration
Statement” means one or more registration statements of the Company covering only the sale of the Registrable Securities.
a. Mandatory
Registration. The Company shall, within ninety (90) calendar days from the date of this Agreement, file with the SEC an initial Registration
Statement covering the maximum number of Registrable Securities as shall be permitted to be included thereon in accordance with applicable
SEC rules, regulations and interpretations so as to permit the resale of such Registrable Securities by the Investor (in any event, no
less than the number of shares of Common Stock equal to the Exchange Cap (as defined in the Purchase Agreement) for Investor’s resale
of the Registrable Securities), including but not limited to under Rule 415 under the Securities Act at then prevailing market prices
(and not fixed prices), subject to the aggregate number of authorized shares of the Company’s Common Stock then available for issuance
in its Certificate of Incorporation. The initial Registration Statement shall register only the Registrable Securities. The Investor and
its counsel shall have a reasonable opportunity to review and comment upon such Registration Statement and any amendment or supplement
to such Registration Statement and any related prospectus prior to its filing with the SEC, and the Company shall give due consideration
to all reasonable comments. The Investor shall furnish all information reasonably requested by the Company for inclusion therein. The
Company shall have the Registration Statement declared effective by the SEC within one hundred twenty (120) calendar days from the date
hereof (or at the earliest possible date if prior to one hundred twenty (120) calendar days from the date hereof), and any amendment to
the Registration Statement thereafter declared effective by the SEC at the earliest possible date. The Company shall keep the Registration
Statement effective, including but not limited to pursuant to Rule 415 promulgated under the Securities Act and available for the resale
by the Investor of all of the Registrable Securities covered thereby at all times until the date on which the Investor shall have sold
all the Registrable Securities covered thereby (the “Registration Period”). The Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading. In the event that (i) the Registration Statement or New Registration Statement (as defined below)
becomes stale after the initial effectiveness of such Registration Statement or New Registration Statement and (ii) the Investor still
has ownership of any of the Registrable Securities, the Company shall immediately file one or more post-effective amendments to facilitate
the SEC’s declaration of effectiveness with respect to such Registration Statement or New Registration Statement.
b. Rule
424 Prospectus. The Company shall, as required by applicable securities regulations, from time to time file (in each case, at the
earliest possible date) with the SEC, pursuant to Rule 424 promulgated under the Securities Act, the prospectus and prospectus supplements,
if any, to be used in connection with sales of the Registrable Securities under the Registration Statement. The Company shall file such
initial prospectus covering the Investor’s sale of the Registrable Securities at or before 8:30 a.m. (New York time) on the Business
Day following the date that the Registration Statement is declared effective by the SEC. The Investor and its counsel shall have a reasonable
opportunity to review and comment upon such prospectus prior to its filing with the SEC, and the Company shall give due consideration
to all such comments. The Investor shall use its reasonable best efforts to comment upon such prospectus within one (1) Business Day from the date
the Investor receives the final pre-filing version of such prospectus.
c. Sufficient
Number of Shares Registered. In the event the number of shares available under the Registration Statement is insufficient to cover
all of the Registrable Securities, the Company shall amend the Registration Statement or file a new Registration Statement (a “New
Registration Statement”), so as to cover all of such Registrable Securities (subject to the limitations set forth in Section
2(a)) as soon as practicable, but in any event not later than ten (10) Business Days after the necessity therefor arises, subject to any
limits that may be imposed by the SEC pursuant to Rule 415 under the Securities Act. The Company shall use it reasonable best efforts
to cause such amendment and/or New Registration Statement to become effective as soon as practicable following the filing thereof. In
the event that any of the Registrable Securities are not included in the Registration Statement, or have not been included in any New
Registration Statement and the Company files any other registration statement under the Securities Act (other than on Form S-4, Form S-8,
or with respect to other employee related plans or rights offerings) (“Other Registration Statement”) then the Company
shall include such remaining Registrable Securities in such Other Registration Statement. The Company agrees that it shall not file any
such Other Registration Statement unless all of the Registrable Securities have been included in such Other Registration Statement or
otherwise have been registered for resale as described above.
d. Offering.
If the staff of the SEC (the “Staff”) or the SEC seeks to characterize any offering pursuant to a Registration Statement
filed pursuant to this Agreement as constituting an offering of securities that does not permit such Registration Statement to become
effective and be used for resales by the Investor under Rule 415 at then prevailing market prices (and not fixed prices), or if after
the filing of the initial Registration Statement with the SEC pursuant to Section 2(a), the Company is otherwise required by the Staff
or the SEC to reduce the number of Registrable Securities included in such initial Registration Statement, then the Company shall reduce
the number of Registrable Securities to be included in such initial Registration Statement (with the prior consent, which shall not be
unreasonably withheld, of the Investor and its legal counsel as to the specific Registrable Securities to be removed therefrom) until
such time as the Staff and the SEC shall so permit such Registration Statement to become effective and be used as aforesaid. In the event
of any reduction in Registrable Securities pursuant to this paragraph, the Company shall file one or more New Registration Statements
in accordance with Section 2(c) until such time as all Registrable Securities have been included in Registration Statements that have
been declared effective and the prospectus contained therein is available for use by the Investor. Notwithstanding any provision herein
or in the Purchase Agreement to the contrary, the Company’s obligations to register Registrable Securities (and any related conditions
to the Investor’s obligations) shall be qualified as necessary to comport with any requirement of the SEC or the Staff as addressed
in this Section 2(d).
With respect
to the Registration Statement and whenever any Registrable Securities are to be registered pursuant to Section 2 including on any New
Registration Statement, the Company shall use its reasonable best efforts to effect the registration of the Registrable Securities in
accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:
a. The
Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to any registration
statement and the prospectus used in connection with such registration statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the Securities Act, as may be necessary to keep the Registration Statement or any New Registration Statement effective
at all times during the Registration Period, and, during such period, comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities of the Company covered by the Registration Statement or any New Registration Statement until
such time as all of such Registrable Securities shall have been disposed of
in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such registration statement.
b. The
Company shall permit the Investor to review and comment upon the Registration Statement or any New Registration Statement and all amendments
and supplements thereto at least two (2) Business Days prior to their filing with the SEC, and not file any document in a form to which
Investor reasonably objects. The Investor shall use its reasonable best efforts to comment upon the Registration Statement or any New
Registration Statement and any amendments or supplements thereto within two (2) Business Days from the date the Investor receives the
final version thereof. The Company shall furnish to the Investor, without charge any correspondence from the SEC or the staff of the SEC
to the Company or its representatives relating to the Registration Statement or any New Registration Statement.
c. Upon
request of the Investor, the Company shall furnish to the Investor, (i) promptly after the same is prepared and filed with the SEC, at
least one copy of such registration statement and any amendment(s) thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits, (ii) upon the effectiveness of any registration statement, a copy of the prospectus
included in such registration statement and all amendments and supplements thereto (or such other number of copies as the Investor may
reasonably request) and (iii) such other documents, including copies of any preliminary or final prospectus, as the Investor may reasonably
request from time to time in order to facilitate the disposition of the Registrable Securities owned by the Investor. For the avoidance
of doubt, any filing available to the Investor via the SEC’s live EDGAR system shall be deemed “furnished to the Investor”
hereunder.
d.
The Company shall use reasonable best efforts to (i) register and qualify the Registrable Securities covered by a registration
statement under such other securities or “blue sky” laws of such jurisdictions in the United States as the Investor
reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the
Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect
at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify the Investor who holds Registrable Securities of the
receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its
receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
e. As
promptly as practicable after becoming aware of such event or facts, the Company shall notify the Investor in writing of the happening
of any event or existence of such facts as a result of which the prospectus included in any registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading, and promptly prepare a supplement or amendment
to such registration statement and/or take any other necessary steps (which, if in accordance with applicable SEC rules and regulations,
may consist of a document to be filed by the Company with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and
to be incorporated by reference in the prospectus) to correct such untrue statement or omission, and deliver a copy of such supplement
or amendment to the Investor (or such other number of copies as the Investor may reasonably request). The Company
shall also promptly notify the Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has
been filed, and when a registration statement or any post-effective amendment has become effective (notification of such effectiveness
shall be delivered to the Investor by email on the same day of such effectiveness or by overnight mail), (ii) of any request by the SEC
for amendments or supplements to any registration statement or related prospectus or related information, and (iii) of the Company’s
reasonable determination that a post-effective amendment to a registration statement would be appropriate.
f. The
Company shall use its reasonable best efforts to prevent the issuance of any stop order or other suspension of effectiveness of any registration
statement, or the suspension of the qualification of any Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Investor
of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
g. The
Company shall (i) cause all the Registrable Securities to be listed on each securities exchange on which securities of the same class
or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules
of such exchange, or (ii) secure designation and quotation of all the Registrable Securities on the Principal Market (as defined in the
Purchase Agreement). The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section.
h. The
Company shall cooperate with the Investor to facilitate the timely preparation and delivery of the Registrable Securities (not bearing
any restrictive legend) either by DWAC, DRS, or in certificated form if DWAC or DRS is unavailable, to be offered pursuant to any registration
statement and enable such Registrable Securities to be in such denominations or amounts as the Investor may reasonably request and registered
in such names as the Investor may request.
i. The
Company shall at all times provide a transfer agent and registrar with respect to its Common Stock.
j. If
reasonably requested by the Investor, the Company shall (i) immediately incorporate in a prospectus supplement or post-effective amendment
such information as the Investor believes should be included therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of Registrable Securities being sold, the purchase price being paid
therefor and any other terms of the offering of the Registrable Securities; (ii) make all required filings of such prospectus supplement
or post-effective amendment as soon as practicable upon notification of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) supplement or make amendments to any registration statement.
k. The
Company shall use its reasonable best efforts to cause the Registrable Securities covered by any registration statement to be registered
with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable
Securities.
l. Within
two (2) Business Days after any registration statement which includes the Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities
(with copies to the Investor) confirmation that such registration statement has been declared effective by the SEC in the form attached
hereto as Exhibit A. Thereafter, if requested by the Investor at any time, the Company shall require its counsel to deliver to
the Investor a written confirmation whether or not the effectiveness of such registration statement has lapsed
at any time for any reason (including, without limitation, the issuance of a stop order) and whether or not the registration statement
is current and available to the Investor for sale of all of the Registrable Securities.
m. The
Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of Registrable Securities
pursuant to any registration statement.
| 4. | OBLIGATIONS OF THE INVESTOR. |
a. The
Company shall notify the Investor in writing of the information the Company reasonably requires from the Investor in connection with any
registration statement hereunder. The Investor shall furnish to the Company such information regarding itself, the Registrable Securities
held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably
request.
b. The
Investor agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of
any registration statement hereunder.
c.
The Investor agrees that, upon receipt of any notice from the Company of the happening of any event or existence of facts of the
kind described in Section 3(f) or the first sentence of Section 3(e), the Investor will immediately discontinue disposition of
Registrable Securities pursuant to any registration statement(s) covering such Registrable Securities until the Investor’s
receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(f) or the first sentence of Section 3(e).
Notwithstanding anything to the contrary, the Company shall cause its transfer agent to promptly deliver shares of Common Stock
without any restrictive legend in accordance with the terms of the Purchase Agreement, Note, and Warrants as applicable in
connection with any sale of Registrable Securities with respect to which an Investor has entered into a contract for sale prior to
the Investor’s receipt of a notice from the Company of the happening of any event of the kind described in Section 3(f) or the
first sentence of Section 3(e) and for which the Investor has not yet settled.
| 5. | EXPENSES OF REGISTRATION. |
All reasonable
expenses of the Company, other than sales or brokerage commissions, incurred in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting
fees, and fees and disbursements of counsel for the Company, shall be paid by the Company.
a. To
the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Investor, each Person,
if any, who controls the Investor, the members, the directors, officers, partners, employees, agents, representatives of the Investor
and each Person, if any, who controls the Investor within the meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) (each, an “Indemnified Person”), against any third-party losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement (with
the prior written consent of the Company, such consent not to be unreasonably withheld) or expenses, joint or several, (collectively,
“Claims”) reasonably incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body
or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened,
in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in the Registration
Statement, any New Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification
of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered
(“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained
in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances
under which the statements therein were made, not misleading, (iii) any violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating
to the offer or sale of the Registrable Securities pursuant to the Registration Statement or any New Registration Statement or (iv) any
material violation by the Company of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”).
The Company shall reimburse each Indemnified Person promptly as such expenses are incurred and are due and payable, for any reasonable
legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim
by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information about
the Investor furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of the
Registration Statement, any New Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely
made available by the Company pursuant to Section 3(c) or Section 3(e); (ii) with respect to any superseded prospectus, shall not inure
to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject
thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the
superseded prospectus was corrected in the revised prospectus, as then amended or supplemented, if such revised prospectus was timely
made available by the Company pursuant to Section 3(c) or Section 3(e), and the Indemnified Person was promptly advised in writing not
to use the incorrect prospectus prior to the use giving rise to a violation and such Indemnified Person, notwithstanding such advice,
used it; (iii) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered
the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section 3(c) or
Section 3(e); and (iv) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the
Investor pursuant to Section 9.
b.
In connection with the Registration Statement or any New Registration Statement, the Investor agrees to indemnify, hold harmless and
defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each
of its officers who signs the Registration Statement or any New Registration Statement, each Person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act (collectively and together with an Indemnified Person, an
“Indemnified Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with
written information about the Investor set forth on Exhibit B attached hereto and furnished to the Company by the Investor
expressly for use in connection with such registration statement or from the failure of the Investor to deliver or so cause to be
delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section
3(c) or Section 3(e); provided, however, that the indemnity agreement contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Investor, which consent shall not be unreasonably withheld;
provided, further, however, that the Investor shall be liable under this Section 6(b) for only that amount of a Claim or
Indemnified Damages as does not exceed the net proceeds to the Investor as a result of the sale of Registrable Securities pursuant
to such registration statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on
behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investor pursuant to Section
9.
c. Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party
so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually
satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that
an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of
the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified
Party or Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying
party shall be liable for any settlement of any action, claim or proceeding effected without its written consent, provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent
of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person
of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying
party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within
a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified
Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend
such action.
d. The
indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
e. The
indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to applicable
law.
To the extent any
indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however,
that:
(i) no seller of Registrable Securities
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from
any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.
| 8. | REPORTS AND DISCLOSURE UNDER THE SECURITIES ACTS. |
With a view to
making available to the Investor the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation
of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration (“Rule
144”), the Company agrees, at the Company’s sole expense, so long as the Investor owns Registrable Securities, to use
reasonable best efforts to:
a. make
and keep public information available, as those terms are understood and defined in Rule 144;
b. file
with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act
so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable
provisions of Rule 144;
c. furnish
to the Investor so long as the Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting and or disclosure provisions of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration; and
d. take
such additional action as is requested by the Investor to enable the Investor to sell the Registrable Securities pursuant to Rule 144,
including, without limitation, delivering all such legal opinions, consents, certificates, resolutions and instructions to the Company’s
transfer agent as may be requested from time to time by the Investor and otherwise fully cooperate with Investor and Investor’s
broker to effect such sale of securities pursuant to Rule 144.
The Company agrees
that damages may be an inadequate remedy for any breach of the terms and provisions of this Section 8 and that Investor shall, whether
or not it is pursuing any remedies at law, be entitled to equitable relief in the form of a preliminary or permanent injunctions, without
having to post any bond or other security, upon any breach or threatened breach of any such terms or provisions.
| 9. | ASSIGNMENT OF REGISTRATION RIGHTS. |
The Company shall not assign this Agreement
or any rights or obligations hereunder without the prior written consent of the Investor.
| 10. | AMENDMENT OF REGISTRATION RIGHTS. |
No provision of
this Agreement may be amended or waived by the parties from and after the date that is one Business Day immediately preceding the initial
filing of the Registration Statement with the SEC. Subject to the immediately preceding sentence, no provision of this Agreement may be
(i) amended other than by a written instrument signed by both parties hereto or (ii) waived other than in a written instrument signed
by the party against whom enforcement of such waiver is sought. Failure of any party to exercise any right or remedy under this Agreement
or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.
a. A
Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities.
If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities,
the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.
b.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be
in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
email (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or
(iii) one (1) Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to
the party to receive the same. The addresses for such communications shall be:
If to the Company, to:
SIGNING DAY SPORTS, INC.
8355 East Hartford Dr., Suite 100
Scottsdale, AZ 85255
Email: danny.nelson@signingdaysports.com
Attention:
Daniel Nelson
If to the Investor:
FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC
1040 First Avenue, Suite 190 New York, NY 10022
e-mail: eli@firstfirecapital.com
or at such other address, email address,
and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3)
Business Days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by the sender’s email account containing the time, date,
recipient email address, as applicable, and an image of the first page of such transmission or (C) provided by a nationally recognized
overnight delivery service, shall be rebuttable evidence of personal service, receipt by email or receipt from a nationally recognized
overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
c.
The Company and Investor shall submit all Claims (as defined in Exhibit E of the Purchase Agreement) (the “Claims”) arising
under this Agreement 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 E of the Purchase Agreement (the “Arbitration
Provisions”). The Company and Investor hereby acknowledge and agree that the Arbitration Provisions are unconditionally binding
on the Company and Investor 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 Investor 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 Investor 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 Investor or their respective affiliates (including but not
limited to the Transaction Documents (as defined in the Purchase Agreement)) or any Claim relating to the relationship of the Company
and Investor or their respective affiliates shall be in the State of Delaware. Without modifying the Company’s and Investor’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 Irrevocable Transfer Agent
Instructions (as defined in the Purchase Agreement) or otherwise related to Investor 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 Investor 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 Investor 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 Investor to realize on any collateral or any other security, or to enforce a judgment
or other court ruling in favor of the Investor, 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.
d. The
Agreement, Purchase Agreement, Note, Warrants, and ancillary documentation entered into between the Company and Investor therewith constitute
the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and therein. The Agreement, Purchase Agreement, Note, Warrants,
and ancillary documentation entered into between the Company and Investor therewith supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.
e. Subject
to the requirements of Section 9, this Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns
of each of the parties hereto.
f. The
headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
g. This
Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by e-mail in a “.pdf”
format data file of a copy of this Agreement bearing the signature of the party so delivering this Agreement.
h. 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.
i. 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.
j. This
Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
* * * * * *
IN WITNESS WHEREOF, the parties
have caused this Agreement to be duly executed as of day and year first above written.
THE COMPANY:
SIGNING DAY SPORTS, INC.
| By: |
/s/ Daniel Nelson |
|
| |
Name: |
DANIEL NELSON |
|
| |
Title: |
CHIEF EXECUTIVE OFFICER |
|
INVESTOR:
FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC
By: FirstFire Capital Management LLC, its manager
| By: |
/s/ Eli Fireman |
|
| |
Name: |
ELI FIREMAN |
|
[Signature Page to registration rights
agreement]
EXHIBIT A
TO REGISTRATION RIGHTS AGREEMENT
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
________, 2024
____________
____________
____________
Re: Effectiveness of Registration
Statement
Ladies and Gentlemen:
We are counsel
to SIGNING DAY SPORTS, INC., a Delaware corporation (the “Company”), and have represented the Company in connection
with that certain Purchase Agreement, dated as of May 16, 2024 (the “Purchase Agreement”), entered into by and between
the Company and FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC, a Delaware limited liability company (the “Investor”) pursuant
to which the Company has agreed to issue to the Investor shares of Common Stock of the Company, par value $0.0001 per share (the “Common
Stock”), consisting of the Conversion Shares (as defined in the Purchase Agreement), Exercise Shares (as defined in the Purchase
Agreement), and Commitment Shares (as defined in the Purchase Agreement) in accordance with the terms of the Purchase Agreement, the Note
(as defined below), and the Warrants (as defined below). In connection with the transactions contemplated by the Purchase Agreement, the
Company also has entered into a Registration Rights Agreement, of even date with the Purchase Agreement with the Investor (the “Registration
Rights Agreement”) pursuant to which the Company agreed, among other things, to file a Registration Statement (File No. 333-[________])
(the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the registration
for resale under the Securities Act of 1933, as amended (the “Securities Act”), on [____], 2024, of the following shares of Common
Stock:
_______Conversion Shares issued
and/or to be issued to the Investor upon conversion of the Note (as defined in the Purchase Agreement) (the “Note”)
in accordance with the Note; and
_______Exercise
Shares issued and/or to be issued to the Investor upon exercise of the Warrants (as defined in the Purchase Agreement) (the “Warrants”)
in accordance with the Warrants; and
_______Commitment Shares issued to the Investor pursuant to the Agreement.
In connection
with the foregoing, we advise you that a member of the SEC’s staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the Securities Act at [ ] [A.M./P.M.] on [ ], 2024 and we have no knowledge,
after telephonic inquiry of a member of the SEC’s staff, that any stop order suspending its effectiveness has been issued or that
any proceedings for that purpose are pending before, or threatened by, the SEC and the Conversion Shares, Exercise Shares, and Commitment
Shares are available for resale under the Securities Act pursuant to the Registration Statement and may be issued without any restrictive
legend.
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Very truly yours, |
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[Company Counsel] |
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By: |
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cc: FIRSTFIRE GLOBAL OPPORTUNITIES FUND,
LLC
EXHIBIT B
TO REGISTRATION RIGHTS AGREEMENT
Information About the
Investor Furnished to The Company by The Investor
Expressly for Use in Connection with The Registration Statement
Information with Respect to Investor
As of the date of the
Purchase Agreement, __________ beneficially owned [_________] shares of our Common Stock. _______________, are deemed to be
beneficial owners of all of the shares of Common Stock owned by _________. _____________ [has sole] [have shared] voting and
investment power over the shares being offered under the prospectus filed with the SEC in connection with the transactions
contemplated under the Purchase Agreement. ___________ is not a licensed broker dealer or an affiliate of a licensed broker
dealer.
ANNEX D
AMENDMENT TO
SENIOR SECURED PROMISSORY NOTE AND WARRANTS
Amendment
to SENIOR SECURED PROMISSORY NOTE AND WARRANTS (this “Amendment”), dated as of May 20, 2024, by and between
Signing Day Sports, Inc., a Delaware corporation (the “Borrower”), and FirstFire Global Opportunities Fund, LLC, a
Delaware limited liability company (the “Holder”). Each of the Borrower and Holder are
sometimes referred to in this Amendment individually as a “Party” and, collectively, as the “Parties.”
RECITALS
A. On
May 16, 2024, the Borrower agreed to issue a certain Senior Secured Promissory Note to the Holder, a copy of which is attached hereto
as Exhibit A (as amended hereby, the “Note”), a certain Common Stock Purchase Warrant to the Holder, a copy
of which is attached hereto as Exhibit B (as amended hereby, the “First Warrant”), and a certain Common Stock
Purchase Warrant to the Holder, a copy of which is attached hereto as Exhibit C (as amended hereby, the “Second Warrant”
and together with the First Warrant, the “Warrants”), pursuant to that certain Securities Purchase Agreement, dated
as of May 16, 2024, by and between the Borrower and the Holder (the “Securities Purchase Agreement”).
C. The
Borrower and the Holder desire to amend the Note and the Warrants pursuant to Section 4.3 of the Note and Section 12 of each of the Warrants.
AGREEMENT
NOW, THEREFORE, in consideration
of the mutual promises herein contained, the Parties intending to be legally bound, hereby agree as follows.
1. Agreement.
Except as specifically modified by this Amendment, the terms and conditions of the Note and the Warrants shall remain in full force and
effect. In the event of any inconsistency between the terms of this Amendment and the terms of the Note or either of the Warrants, the
terms of this Amendment shall control. Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Note
or the Warrants as the context requires, unless defined otherwise herein.
2. Amendment
to Note. Section 1.1 of the Note is hereby amended to remove the following text: “, except that shares of Common
Stock issuable upon conversion of this Note as to which the Conversion Price is at least equal to the greater of the Company’s stockholders’
equity per share disclosed in the Company’s most recent public filing with the SEC or the last closing bid price of the Common Stock
on the Principal Market as of the Conversion Date shall not be limited hereby”.
3. Amendment
to Warrants. Section 1(c) of each of the Warrants is hereby amended to remove the following text: “, except that
shares of Common Stock issuable upon exercise of this Warrant as to which the Exercise Price is at least equal to the greater of the Company’s
stockholders’ equity per share disclosed in the Company’s most recent public filing with the SEC or the last Closing Bid Price
of the Common Stock as of the Warrant Share Delivery Date shall not be limited hereby”.
4. Representations.
(a) Borrower.
To the extent applicable as of the date first set forth above, the Borrower hereby represents
to the Holder that each of the representations contained in Section 3 of the Securities Purchase Agreement is true and accurate as of
the date of this Amendment.
(b) Holder.
To the extent applicable as of the date first set forth above,
the Holder hereby represents to the Borrower that the representations contained in Section 2 of the Securities Purchase Agreement is true
and accurate as of the date of this Amendment.
5. Effectiveness.
The terms of this Amendment shall be effective as of the date first set forth above.
6. Entire
Agreement. This Amendment constitutes the entire agreement and understanding between the Parties with regard to
the subject matter hereof and supersedes any prior written or oral agreements. Any modifications to this Amendment must be in
writing and signed by the Borrower and the Holder or their lawful successors or assigns.
7. Counterparts.
This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same instrument.
[Signature page follows]
IN WITNESS WHEREOF,
the Parties have caused this Amendment to be duly executed as of the date first set forth above.
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BORROWER: |
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Signing
Day Sports, Inc. |
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By: |
/s/
Daniel D. Nelson |
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Name: |
Daniel D. Nelson |
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Title: |
Chief Executive Officer |
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Address: |
8355 East Hartford Drive, Suite 100, |
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Scottsdale, AZ 8525 |
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HOLDER: |
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FirstFire
Global Opportunities Fund, LLC |
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By: |
FirstFire Capital Management
LLC, its manager |
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By: |
/s/
Eli Fireman |
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Name: |
Eli Fireman |
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Address: |
1040 First Avenue, Suite 190, New York, NY 10022
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EXHIBIT A
Senior Secured Promissory Note
(See Attached)
EXHIBIT B
Common Stock Purchase Warrant
(See Attached)
EXHIBIT C
Common Stock Purchase Warrant
(See Attached)
ANNEX E
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: $412,500.00 |
Issue Date: May 16, 2024 |
| Actual Amount of Purchase Price: $375,000.00 |
|
SENIOR SECURED PROMISSORY
NOTE
FOR VALUE
RECEIVED, SIGNING DAY SPORTS, INC., a Delaware corporation (hereinafter called the “Borrower” or the “Company”)
(Trading Symbol: SGN), hereby promises to pay to the order of FIRSTFIRE GLOBAL OPPORTUNITIES FUND, 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 $412,500.00 (the “Principal Amount”) (subject to adjustment herein), of which $375,000.00 (the “Purchase Price”)
is the actual amount of the purchase price hereof plus an original issue discount in the amount of $37,500.00 (the “OID”),
and to pay interest on the unpaid Principal Amount hereof at the rate of ten percent (10%) (the “Interest Rate”) per annum
from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or
by prepayment or otherwise, as further provided herein, with the understanding that the first twelve months of interest under this Note
(equal to $41,250.00) shall be guaranteed and earned in full as of the Issue Date. The maturity date shall be the sooner of twelve (12)
months from the Issue Date or the date of the consummation of a sale, conveyance or disposition of all or substantially all of the assets
of the Borrower, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined
below) or Persons when the Borrower is not the survivor (the “Maturity Date”), and is the date upon which the Principal Amount
(which includes the OID) and any accrued and unpaid interest and other fees, 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) fifteen percent (15%)
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, par value $0.0001 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.
Each capitalized
term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement, dated
as of the Issue Date, pursuant to which this Note was originally issued (the “Purchase Agreement”). 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),
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) 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 (the “Affiliates”), 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 SEC, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the
Company or the Transfer Agent setting forth the number of 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. The limitations contained
in this paragraph shall apply to a successor holder of this Note. The number of Conversion Shares (as defined in the Purchase Agreement)
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 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 limitations provided in this Note, the sum of the number of shares of Common Stock that may be
issued under this Note shall be limited to the amount described in Section 4(r) of the Purchase Agreement (the “Exchange Cap”),
unless the Shareholder Approval (as defined in the Purchase Agreement) is obtained by the Company, except that shares of Common Stock
issuable upon conversion of this Note as to which the Conversion Price is at least equal to the greater of the Company’s stockholders’
equity per share disclosed in the Company’s most recent public filing with the SEC or the last closing bid price of the Common
Stock on the Principal Market as of the Conversion Date shall not be limited hereby.
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 $0.30, subject to adjustment as provided in this Note. 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. 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) 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) Adjustment
of Conversion Price relating to Amortization Payment. If the Company fails to pay any Amortization Payment (as defined in this
Note) pursuant to the terms of this Note, then, in addition to all other rights under this Note, the Holder shall have the right to
convert any portion of this Note at any time at a price per share equal to the Market Price (as defined in this Note). “Market
Price” shall mean the lesser of (i) the then applicable Conversion Price under the Note or (ii) 80% of the lowest closing
price of the Common Stock on any Trading Day during the ten (10) Trading Days prior to the respective Conversion Date.
(c) Adjustment
of Conversion Price due to Default. If an Event of Default occurs under this Note, then, in addition to all other rights under
this Note, the Holder shall have the right to convert any portion of this Note at any time at a price per share equal to the
Alternate Price (as defined in this Note). “Alternate Price” shall mean the lesser of (i) the then applicable Conversion
Price under the Note, (ii) the closing price of the Common Stock on the date of the Event of Default (provided, however, that if
such date is not a Trading Day, then the next Trading Day after the date of the Event of Default), or (iii) $0.195 (subject to
adjustment as provided in this Note). For the avoidance of doubt, a failure to make an Amortization Payment subject to Section
1.2(b) shall not result in an adjustment subject to this Section 1.2(c).
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) 7,562,500 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
a conversion price equal to the lesser of (i) the then applicable Conversion Price or (ii) the Market Price (even if the Note is not
yet convertible at the Market Price pursuant to the terms of this Note at the time of such calculation) multiplied by (ii)
two (2) (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.
If, at any time,
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 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. Notwithstanding the foregoing, if any portion of
this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to
the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered
as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid
Principal Amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions
of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted Principal Amount of this Note represented
by this Note may be less than the amount stated on the face hereof.
(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 1.0%, increasing to 2.0% on the fifth (5th) Trading Day following the date of such failure if it remains uncured,
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.
(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, and the Conversion Shares may be sold or transferred pursuant to clause (i), clause
(ii), or clause (iii) of the first sentence of Section 1.5 of this Note, 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, (ii) the Borrower or its transfer agent shall
have been furnished with an opinion of counsel (which opinion shall be the Legal Counsel Opinion (as defined in the Purchase Agreement))
to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, (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). 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.”
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(m) 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)
[Reserved]
(b)
Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion
of all of this Note, 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 (a) it first gives, to the extent practicable, at least thirty
(30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special meeting
of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization,
reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b)
the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b).
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.
(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) (other than an Excluded Issuance (as defined in the
Purchase Agreement)) 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)), 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. 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.
(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 (other than an Excluded Issuance), the Borrower shall, at its expense and within two (2)
business days 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 two (2) business days 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 [Intentionally
Omitted].
1.8 Status as Shareholder. Upon submission of a Notice of Conversion by the Holder, (i) the Conversion Shares covered thereby
(other than the Conversion Shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion
of the Reserved Amount, the Beneficial Ownership Limitation, or the Exchange Cap) 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.
1.9
Prepayment. At any time prior to the date that an Event of Default occurs under this Note, the Borrower shall have the right,
exercisable on fifteen (15) Trading Days prior written notice to the Holder of the Note, to prepay the outstanding Principal Amount
and interest then due under this Note in accordance with this Section 1.9. Any notice of prepayment hereunder (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 Note, and (2) the date of prepayment which shall be fifteen (15) Trading Days from
the date of the Optional Prepayment Notice (the “Optional Prepayment Date”). The Holder shall have the right, during the
period beginning on the date of Holder’s receipt of the Optional Prepayment Notice and until the Holder’s actual receipt
of the full prepayment amount on the Optional Prepayment Date, to instead convert all or any portion of the Note pursuant to the
terms of this Note, including the amount of this Note to be prepaid by the Borrower in accordance with this Section 1.9. On the
Optional Prepayment Date, the Borrower shall make payment of the amounts designated below to or upon the order of the Holder as
specified by the Holder in writing to the Borrower. If the Borrower exercises its right to prepay the Note in accordance with this
Section 1.9, the Borrower shall make payment to the Holder of an amount in cash equal to the sum of: (w) 110% multiplied by the
Principal Amount then outstanding plus (x) 110% multiplied by the accrued and unpaid interest on the Principal Amount to the
Optional Prepayment Date.
If the Borrower delivers an
Optional Prepayment Notice and fails to pay the applicable prepayment amount due to the Holder of the Note as provided in this Section
1.9, then the Borrower shall forever forfeit its right to prepay any part of the Note pursuant to this Section 1.9.
1.10
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 exercise 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 Company’s offering of securities under Regulation A, 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 100%
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). For the avoidance of doubt, the 110% repayment premium as further provided for in Section 1.9 of this Note shall apply to any
repayment of the Note under this Section 1.10 prior to the occurrence of an Event of Default.
ARTICLE II. RANKING AND
CERTAIN COVENANTS
2.1
Ranking and Security. This Note shall be a senior secured obligation of the Borrower, with priority over all existing and
future indebtedness of the Borrower, as provided in that certain security agreement entered into between the Borrower and the Holder on
the Issue Date (the “Security Agreement”), provided, however, that the security interests held by the Holder pursuant to the
Security Agreement shall be junior in priority to the Prior Secured Note (as defined in this Note). “Prior Secured Note” shall
mean that certain Promissory Note in the original principal amount of $2,000,000 issued by the Company to Commerce Bank of Arizona (the
“Senior Lender”) on or around December 23, 2023 pursuant to that certain Business Loan Agreement, dated as of December 11,
2023, between the Company and the Senior Lender.
2.2
Other Indebtedness. In addition to all obligations under the Security Agreement, and so long as the Borrower shall have
any obligation under this Note, neither the Borrower nor any of the Borrower’s subsidiaries shall (directly or indirectly) incur
or suffer to exist or guarantee any Indebtedness that is senior to or pari passu with (in priority of payment and performance) the Borrower’s
obligations hereunder (except as provided in Section 2.1 of this Note). “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.
2.3
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 or the Company’s
preferred stock, par value $0.0001 per share, solely in the form of 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.
2.4
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 indebtedness of Borrower other than
this Note and the Prior Secured Note.
2.5
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 except with respect to that certain Certificate of Deposit, Account Number 9000070132 (the “Account”),
with the Senior Lender with an approximate balance of $2,100,000.00 together with (A) all interest, whether now accrued or
hereafter accruing; (B) all additional deposits hereafter made to the Account; (C) any and all proceeds from the Account; and (D) all
renewals, replacements and substitutions for any of the foregoing until the full repayment of the Prior Secured Note, which is subject
to that certain Assignment of Deposit Account, dated as of December 13, 2023, between the Company and the Senior Lender. Any consent by
the Holder to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.
2.6
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 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.
2.7
[Intentionally Omitted].
2.8
Preservation of Business and Existence, etc. So long as the Borrower shall have any obligation under this Note, the Borrower
shall not, without the Holder’s written consent, which consent shall not be unreasonably withheld, (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.
2.9
Noncircumvention. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate 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.
2.10
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 at any time on or after the Issue Date when any portion of this Note remains issued and outstanding:
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, or fails to fully comply with Section 1.10 of this Note, except in
the case of a failure to make an Amortization Payment.
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, Registration Rights Agreement (as defined in the Purchase Agreement), the Security Agreement, this Note, the
Irrevocable Transfer Agent Instructions, the Warrants (as defined in the Purchase 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,
the Registration Rights Agreement, the Security Agreement, this Note, the Irrevocable Transfer Agent Instructions, the 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 $500,000, 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.
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. At any time after the Issue Date, 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 ending on or after the date that the Common Stock was registered under Section 12(b) of the 1934 Act.
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 pursuant to the Purchase Agreement (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
[Intentionally omitted].
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, provided that the Note and any securities issuable upon conversion
of which are at no time held by any affiliate of the Company.
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 listed on the NYSE American LLC.
3.19
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 125% (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.
In addition, the principal balance of the Note shall increase by $3,000.00 on the 1st of each calendar month after the date
of the occurrence of an Event of Default until the Note is repaid in the entirety. 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:
SIGNING DAY SPORTS, INC.
8355 East Hartford Dr., Suite 100
Scottsdale, AZ 85255
Attention: Daniel Nelson
e-mail: danny.nelson@signingdaysports.com
If to the Holder:
FIRSTFIRE GLOBAL OPPORTUNITIES FUND,
LLC
1040 First Avenue, Suite 190
New York, NY 10022
e-mail: eli@firstfirecapital.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.
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 E 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 E 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 under the Irrevocable Transfer Agent Instructions (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 4.15 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.
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 Purchase
Agreement. The Company and the Holder shall be bound by the applicable terms of the Purchase Agreement, the Security Agreement, and
the Transaction Documents entered into in connection herewith and therewith.
4.9
Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder
of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with
prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders).
In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled
to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way
of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive
any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any change in control or any
proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall give a notice to the Holder, at least twenty (20)
days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever
is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event,
and a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such
time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously
with the notification to the Holder in accordance with the terms of this Section 4.9.
4.10
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.
4.11
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.
4.12
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 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.
4.13
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.
4.14
Terms of Future Financings. So long as this Note is outstanding, upon any issuance by the Borrower or any of its Subsidiaries
of any debt security, or amendment to a debt 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 debt security or with a term in favor of the holder of such debt security
that the Holder reasonably believes was not similarly provided to the Holder in this Note (even if the holder of such other debt security
does not receive the benefit of such more favorable term until a default occurs under such other debt 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 debt 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 4.14). The types of terms contained
in another debt security that may be more favorable to the holder of such security include, but are not limited to, terms addressing prepayment
rate, interest rates, and original issue discounts.
4.15
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, the closing bid price, 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 4.15(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.
(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 4.15 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 4.15, (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 4.15 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 4.15).
4.16
Amortization Payments. In addition to all other payment obligations under this Note, Borrower shall also make the following
amortization payments (each an “Amortization Payment”) in cash to the Holder towards the repayment of this Note, as provided
in the following table:
| Payment Date: |
|
Payment Amount: |
| September 16, 2024 |
|
$56,715.00 |
| October 16, 2024 |
|
$56,715.00 |
| November 16, 2024 |
|
$56,715.00 |
| December 16, 2024 |
|
$56,715.00 |
| January 16, 2025 |
|
$56,715.00 |
| February 16, 2025 |
|
$56,715.00 |
| March 16, 2025 |
|
$56,715.00 |
| April 16, 2025 |
|
$56,715.00 |
| May 16, 2025 |
|
The entire remaining outstanding balance of the Note |
For the avoidance of doubt, the 110%
repayment premium as further provided for in Section 1.9 of this Note shall not apply to any repayment of the Note under this Section
4.16.
[signature
page follows]
IN WITNESS WHEREOF, Borrower
has caused this Note to be signed in its name by its duly authorized officer on May 16, 2024.
SIGNING DAY SPORTS, INC.
| By:
| |
|
| |
Name: |
Daniel Nelson |
|
| |
Title: |
Chief Executive Officer |
|
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 SIGNING DAY SPORTS, INC., a
Delaware corporation (the “Borrower”), according to the conditions of the promissory note of the Borrower dated as of May
16, 2024 (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: |
|
ANNEX F
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
SIGNING DAY SPORTS, INC.
Warrant Shares: 1,375,000
Date of Issuance: May 16, 2024 (“Issuance
Date”)
This COMMON STOCK
PURCHASE WARRANT (the “Warrant”) certifies that, for value received (in connection with the issuance of the senior
secured promissory note in the principal amount of $412,500.00 to the Holder (as defined below) of even date) (the “Note”),
FirstFire Global Opportunities Fund, 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 SIGNING DAY SPORTS, INC., a Delaware corporation (the “Company”), 1,375,000
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 as of the
date hereof in connection with that certain securities purchase agreement dated May 16, 2024, 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 $0.30, subject to adjustment as
provided herein (including but not limited to cashless exercise), and the term “Exercise Period” shall mean the period commencing
on the Issuance Date and ending on 5:00 p.m. eastern standard time on the five-year anniversary thereof.
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.
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 a material breach under this Warrant.
If the Market Price
of one share of Common Stock is greater than the Exercise Price, then, unless there is an effective non-stale registration statement of
the Company which contains a prospectus that complies with Section 5(b) and Section 10 of the Securities Act at the time of exercise and
covers the Holder’s immediate resale of all of the Warrant Shares at prevailing market prices (and not fixed prices) without any
limitation, 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 surrender of this Warrant
and an Exercise Notice, in which event the Company shall issue to Holder a number of shares of Common Stock computed using the following
formula:
| 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 or
issue a whole share of Common Stock to the Holder.
(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 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(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 SEC, as the case may be, (B) a more recent public announcement by the Company or
(C) a more recent written notice by the Company or the 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 limitations provided in this Warrant, the sum of the number of shares of Common Stock
that may be issued under this Warrant shall be limited to the amount described in Section 4(r) of the Purchase
Agreement, unless and until the date of effectiveness (the “Ex-Exchange Cap Date”) of the Shareholder Approval (as
defined in the Purchase Agreement), except that shares of Common Stock issuable upon exercise of this Warrant as to which the Exercise
Price is at least equal to the greater of the Company’s stockholders’ equity per share disclosed in the Company’s most
recent public filing with the SEC or the last Closing Bid Price of the Common Stock as of the Warrant Share Delivery Date shall not be
limited hereby. In the event that the Company is prohibited from issuing any shares of Common Stock pursuant to this Warrant due to the
Company’s failure to obtain the Shareholder Approval (such number of shares that are prohibited from being issued are referred to
herein as the “Exchange Cap Shares”), in lieu of issuing and delivering such Exchange Cap Shares to the Holder, the Company
shall pay cash to the Holder in exchange for the cancellation of such portion of this Warrant exercisable into such Exchange Cap Shares
(the “Exchange Cap Payment Amount”) at a price equal to the sum of (x) the product of (A) such number of Exchange Cap Shares
and (B) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder delivers
the applicable Exercise Notice with respect to such Exchange Cap Shares to the Company and ending on the date of the aforementioned payment
under this Section 1(c) and (y) to the extent 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 Exchange Cap Shares, any brokerage commissions and other out-of-pocket expenses,
if any, of the Holder incurred in connection therewith. The limitations contained in this paragraph shall apply to a successor holder
of this Warrant.
(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 transmit 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) (other
than in an Excluded Issuance (as defined in the Purchase Agreement)) 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
(other than in an Excluded Issuance) and the lowest price per share for which one share of Common Stock is at any time issuable
upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of
any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Company at the time of the granting, 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.
(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 (other than in an Excluded Issuance) 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 (excluding with respect to any
Excluded Issuance), 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) Calculation
of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance
or sale or deemed issuance or sale of any other securities of the Company (excluding with respect to any Excluded Issuance) (as determined
jointly by the Holder and the Company), the “Primary Security”, and such Option and/or Convertible Security and/or Adjustment
Right, the “Secondary Securities”), together comprising one integrated transaction, (or one or more transactions if such issuances
or sales or deemed issuances or sales of securities of the Company either (A) have at least one investor or purchaser in common, (B) are
consummated in reasonable proximity to each other and/or (C) are consummated under the same plan of financing) the aggregate consideration
per share of Common Stock with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price
per share for which one share of Common Stock was issued (or was deemed to be issued pursuant to Section 2(b)(i) or 2(b)(ii) above, as
applicable) in such integrated transaction solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities,
the sum of (I) the Black Scholes Consideration Value of each such Option, if any, (II) the fair market value (as reasonably determined
jointly by the Holder and the Company in good faith) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right,
if any, and (III) the fair market value (as reasonably determined jointly by the Holder and the Company) of such Convertible Security,
if any, in each case, as determined on a per share basis in accordance with this Section 2(b)(iv). If any shares of Common Stock, Options
or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for
the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the
calculation of the Black Scholes Consideration Value) will be deemed to be the net amount of consideration received by the Company therefor.
If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of
such consideration received by the Company (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible
Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be the fair value of such consideration,
except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company
for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding
the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity
in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor (for the purpose of determining
the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black
Scholes Consideration Value) will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity
as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration
other than cash or publicly traded securities will be reasonably determined jointly by the Company and the Holder. If such parties are
unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”),
the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such
Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser
shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
(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).
(c) Holder’s
Right of Alternative Exercise Price Following Issuance of Certain Options or Convertible Securities. In addition to and not in limitation
of the other provisions of this Section 2, if the Company in any manner issues or sells or enters into any agreement to issue or
sell, any Common Stock, Options or Convertible Securities (any such securities, “Variable Price Securities”) after the Issuance
Date that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock at a price
which varies or may vary with the market price of the shares of Common Stock, including by way of one or more reset(s) to a fixed price,
but exclusive of such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends
and similar transactions) (each of the formulations for such variable price being herein referred to as, the “Variable Price”),
the Company shall provide written notice thereof via electronic mail and overnight courier to the Holder on the date of such agreement
and the issuance of such Common Stock, Convertible Securities or Options. From and after the date the Company enters into such agreement
or issues any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its sole discretion to substitute
the Variable Price, as calculated pursuant to the agreements governing such Variable Price Securities, for the Exercise Price upon exercise
of this Warrant by designating in the Exercise Notice delivered upon any exercise of this Warrant that solely for purposes of such exercise
the Holder is relying on the Variable Price rather than the Exercise Price then in effect. The Holder’s election to rely on a Variable
Price for a particular exercise of this Warrant shall not obligate the Holder to rely on a Variable Price for any future exercises of
this Warrant.
(d) [Intentionally
omitted].
(e) Other
Events. In the event that the Company (or any Subsidiary (as defined in the Purchase Agreement)) shall take any action to which the
provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from actual dilution or if any
event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s
board of directors shall in good faith determine and implement an appropriate adjustment in the Exercise Price and the number of Warrant
Shares (if applicable) so as to protect the rights of the Holder, provided that no such adjustment pursuant to this Section 2(e) will
increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2, provided further
that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the
Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination shall be final and binding absent manifest error and whose fees and
expenses shall be borne by the Company.
(f) Calculations.
All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th 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, 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 this Section 2, 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 and the Exchange
Cap (as defined in the Purchase Agreement)) 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 (without
regard to the Beneficial Ownership Limitation and the Exchange Cap), 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
second 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.
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 or,
prior to the Ex-Exchange Cap Date, the Exchange Cap) 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 or, prior to the Ex-Exchange Cap
Date, the Exchange Cap, then the Holder shall not be entitled to participate in such Distribution to the extent of the Beneficial Ownership
Limitation or, prior to the Ex-Exchange Cap Date, the Exchange Cap (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 or, prior to the Ex-Exchange Cap Date, the Exchange
Cap, 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) Purchase
Rights. In addition to any adjustments pursuant to Sections 2 or 3 above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class
of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of 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 or, prior to the Ex-Exchange Cap Date, the Exchange Cap) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights (provided,
however, that to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder
and the other Attribution Parties exceeding the Beneficial Ownership Limitation or, prior to the Ex-Exchange Cap Date, the Exchange Cap,
then the Holder shall not be entitled to participate in such Purchase Right to the extent of the Beneficial Ownership Limitation or, prior
to the Ex-Exchange Cap Date, the Exchange Cap (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result
of such Purchase Right (and beneficial ownership) to the extent of any such excess) and such Purchase Right to such extent shall be held
in abeyance 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 or, prior to the Ex-Exchange Cap Date, the Exchange Cap, at which
time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or
on any subsequent Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).
(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.
(c) [Intentionally
omitted].
(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 subject to the Beneficial Ownership Limitation and prior to
the Ex-Exchange Cap Date, the Exchange Cap, 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 certificate 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, two (2) 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.
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.
13. ARBITRATION
OF CLAIMS; GOVERNING LAW; AND VENUE. The Company and Holder shall submit all Claims (as defined in Exhibit E 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 E 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 Irrevocable Transfer Agent Instructions (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 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.
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, Black Scholes Consideration Value, 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.
(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, and (iv) 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) “Black
Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment Right (as the case
may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option or
Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to
the remaining term of such Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance of such Option,
Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv) an expected volatility equal to the
greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization
factor) as of the Trading Day immediately following the date of issuance of such Option, Convertible Security or Adjustment Right (as
the case may be).
(c) “Black
Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s request
pursuant to Section 4(c)(i), which value is calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing Sale Price of the Common
Stock during the period beginning on the Trading Day immediately preceding the announcement of the applicable Change of Control (or the
consummation of the applicable Change of Control, if earlier) and ending on the Trading Day of the Holder’s request pursuant to
Section 4(c)(i) and (2) the sum of the price per share being offered in cash in the applicable Change of Control (if any) plus the value
of the non-cash consideration being offered in the applicable Change of Control (if any), (ii) a strike price equal to the Exercise Price
in effect on the date of the Holder’s request pursuant to Section 4(c)(i), (iii) a risk-free interest rate corresponding to
the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s
request pursuant to Section 4(c)(i) and (2) the remaining term of this Warrant as of the date of consummation of the applicable Change
of Control or as of the date of the Holder’s request pursuant to Section 4(c)(i) if such request is prior to the date of the
consummation of the applicable Change of Control, (iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100%
and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor)
as of the Trading Day immediately following the earliest to occur of (A) the public disclosure of the applicable Change of Control and
(B) the date of the Holder’s request pursuant to Section 4(c)(i).
(d) “Bloomberg”
means Bloomberg, L.P.
(e) “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.
(f) “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.
(g) “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.
(h) “Common
Stock” means the Company’s common stock, par value $0.0001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
(i) “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.
(j) “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.
(k) “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.
(l) [Intentionally
omitted].
(m) [Intentionally
omitted].
(n) [Intentionally
omitted].
(o) “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(p) “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.
(q) “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.
(r) “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.
(s) “Principal
Market” means the principal securities exchange or trading market where such Common Stock is listed or quoted, including but
not limited to any tier of the OTC Markets Group, Inc., any tier of the The Nasdaq Stock Market LLC
(including Nasdaq Capital Market), or the NYSE American LLC, or any successor to such markets.
(t) “Market
Price” means the highest traded price of the Common Stock during the thirty Trading Days prior to the date of the respective
Exercise Notice.
(u) “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.
(v) “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.
(w) “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the
Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market
on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time,
as reported by Quotestream or other similar quotation service provider designated by the Holder through its “VAP” function
(set to 09:30 start time and 16:00 end time) or, if the foregoing does not apply, the dollar volume-weighted average price of such security
in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York time,
and ending at 4:00 p.m., New York time, as reported by Quotestream or other similar quotation service provider designated by the Holder,
or, if no dollar volume-weighted average price is reported for such security by Quotestream or other similar quotation service provider
designated by the Holder for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC) (or a similar
organization or agency succeeding to its functions of reporting prices). If the VWAP cannot be calculated for such security on such date
on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company
and the Holder. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization
or other similar transaction during such period.
* * * * * * *
IN WITNESS WHEREOF, the Company has caused
this Warrant to be duly executed as of the Issuance Date set forth above.
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SIGNING DAY SPORTS, INC. |
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Daniel Nelson |
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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 SIGNING DAY SPORTS, INC., a Delaware 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. |
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EXHIBIT B
ASSIGNMENT OF WARRANT
(To be signed only upon authorized transfer
of the Warrant)
For
Value Received, the undersigned hereby sells,
assigns, and transfers unto
the right to purchase shares of common stock
of SIGNING DAY SPORTS, INC., to which the within Common Stock Purchase Warrant relates and appoints , as attorney-in-fact,
to transfer said right on the books of SIGNING DAY SPORTS, INC. with full power of substitution and re-substitution in the premises. By
accepting such transfer, the transferee has agreed to be bound in all respects by the terms and conditions of the within Warrant.
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(Social Security or Tax Identification No.) |
| * | The signature on this Assignment of Warrant must correspond
to the name as written upon the face of the Common Stock Purchase Warrant in every particular without alteration or enlargement or any
change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and
title(s) with such entity. |
ANNEX G
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
SIGNING DAY SPORTS, INC.
Warrant Shares: 250,000
Date of Issuance: May 16, 2024 (“Issuance
Date”)
This COMMON STOCK PURCHASE
WARRANT (the “Warrant”) certifies that, for value received (in connection with the issuance of the senior secured promissory
note in the principal amount of $412,500.00 to the Holder (as defined below) of even date) (the “Note”), FirstFire Global
Opportunities Fund, 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 SIGNING DAY SPORTS, INC., a Delaware corporation (the “Company”), 250,000
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 as of the
date hereof in connection with that certain securities purchase agreement dated May 16, 2024, 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), and the term “Exercise Period” shall mean the period commencing on the Trigger
Date (as defined in this Warrant) and ending on 5:00 p.m. eastern standard time on the date that is five (5) years after the Trigger 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.
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 a material breach under this Warrant.
If the Market Price of one
share of Common Stock is greater than the Exercise Price, then, unless there is an effective non-stale registration statement of the Company
which contains a prospectus that complies with Section 5(b) and Section 10 of the Securities Act at the time of exercise and covers the
Holder’s immediate resale of all of the Warrant Shares at prevailing market prices (and not fixed prices) without any limitation,
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 surrender of this Warrant and an
Exercise Notice, in which event the Company shall issue to Holder a number of shares 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 or
issue a whole share of Common Stock to the Holder.
(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 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(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 SEC, as the case may be, (B) a more recent public announcement by the Company or
(C) a more recent written notice by the Company or the 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 limitations provided in this Warrant, the sum of the number of shares of Common Stock
that may be issued under this Warrant shall be limited to the amount described in Section 4(r) of the Purchase
Agreement, unless and until the date of effectiveness (the “Ex-Exchange Cap Date”) of the Shareholder Approval (as
defined in the Purchase Agreement), except that shares of Common Stock issuable upon exercise of this Warrant as to which the Exercise
Price is at least equal to the greater of the Company’s stockholders’ equity per share disclosed in the Company’s most
recent public filing with the SEC or the last Closing Bid Price of the Common Stock as of the Warrant Share Delivery Date shall not be
limited hereby. In the event that the Company is prohibited from issuing any shares of Common Stock pursuant to this Warrant due to the
Company’s failure to obtain the Shareholder Approval (such number of shares that are prohibited from being issued are referred to
herein as the “Exchange Cap Shares”), in lieu of issuing and delivering such Exchange Cap Shares to the Holder, the Company
shall pay cash to the Holder in exchange for the cancellation of such portion of this Warrant exercisable into such Exchange Cap Shares
(the “Exchange Cap Payment Amount”) at a price equal to the sum of (x) the product of (A) such number of Exchange Cap Shares
and (B) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder delivers
the applicable Exercise Notice with respect to such Exchange Cap Shares to the Company and ending on the date of the aforementioned payment
under this Section 1(c) and (y) to the extent 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 Exchange Cap Shares, any brokerage commissions and other out-of-pocket expenses,
if any, of the Holder incurred in connection therewith. The limitations contained in this paragraph shall apply to a successor holder
of this Warrant.
(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 transmit 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) (other
than in an Excluded Issuance (as defined in the Purchase Agreement)) 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
(other than in an Excluded Issuance) and the lowest price per share for which one share of Common Stock is at any time issuable
upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of
any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Company at the time of the granting, 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.
(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 (other than in an Excluded Issuance) 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 (excluding with respect to any
Excluded Issuance), 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) Calculation
of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance
or sale or deemed issuance or sale of any other securities of the Company (excluding with respect to any Excluded Issuance) (as determined
jointly by the Holder and the Company), the “Primary Security”, and such Option and/or Convertible Security and/or Adjustment
Right, the “Secondary Securities”), together comprising one integrated transaction, (or one or more transactions if such issuances
or sales or deemed issuances or sales of securities of the Company either (A) have at least one investor or purchaser in common, (B) are
consummated in reasonable proximity to each other and/or (C) are consummated under the same plan of financing) the aggregate consideration
per share of Common Stock with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price
per share for which one share of Common Stock was issued (or was deemed to be issued pursuant to Section 2(b)(i) or 2(b)(ii) above, as
applicable) in such integrated transaction solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities,
the sum of (I) the Black Scholes Consideration Value of each such Option, if any, (II) the fair market value (as reasonably determined
jointly by the Holder and the Company in good faith) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right,
if any, and (III) the fair market value (as reasonably determined jointly by the Holder and the Company) of such Convertible Security,
if any, in each case, as determined on a per share basis in accordance with this Section 2(b)(iv). If any shares of Common Stock, Options
or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for
the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the
calculation of the Black Scholes Consideration Value) will be deemed to be the net amount of consideration received by the Company therefor.
If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of
such consideration received by the Company (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible
Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be the fair value of such consideration,
except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company
for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding
the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity
in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor (for the purpose of determining
the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black
Scholes Consideration Value) will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity
as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration
other than cash or publicly traded securities will be reasonably determined jointly by the Company and the Holder. If such parties are
unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”),
the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such
Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser
shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
(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).
(c) Holder’s
Right of Alternative Exercise Price Following Issuance of Certain Options or Convertible Securities. In addition to and not in limitation
of the other provisions of this Section 2, if the Company in any manner issues or sells or enters into any agreement to issue or
sell, any Common Stock, Options or Convertible Securities (any such securities, “Variable Price Securities”) after the Issuance
Date that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock at a price
which varies or may vary with the market price of the shares of Common Stock, including by way of one or more reset(s) to a fixed price,
but exclusive of such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends
and similar transactions) (each of the formulations for such variable price being herein referred to as, the “Variable Price”),
the Company shall provide written notice thereof via electronic mail and overnight courier to the Holder on the date of such agreement
and the issuance of such Common Stock, Convertible Securities or Options. From and after the date the Company enters into such agreement
or issues any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its sole discretion to substitute
the Variable Price, as calculated pursuant to the agreements governing such Variable Price Securities, for the Exercise Price upon exercise
of this Warrant by designating in the Exercise Notice delivered upon any exercise of this Warrant that solely for purposes of such exercise
the Holder is relying on the Variable Price rather than the Exercise Price then in effect. The Holder’s election to rely on a Variable
Price for a particular exercise of this Warrant shall not obligate the Holder to rely on a Variable Price for any future exercises of
this Warrant.
(d) [Intentionally
omitted].
(e) Other
Events. In the event that the Company (or any Subsidiary (as defined in the Purchase Agreement)) shall take any action to which the
provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from actual dilution or if any
event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s
board of directors shall in good faith determine and implement an appropriate adjustment in the Exercise Price and the number of Warrant
Shares (if applicable) so as to protect the rights of the Holder, provided that no such adjustment pursuant to this Section 2(e) will
increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2, provided further
that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the
Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination shall be final and binding absent manifest error and whose fees and
expenses shall be borne by the Company.
(f) Calculations.
All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th 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, 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 this Section 2, 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 and the Exchange
Cap (as defined in the Purchase Agreement)) 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 (without
regard to the Beneficial Ownership Limitation and the Exchange Cap), 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
second 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.
(j) Returnable
Warrant. This Warrant shall, without any further action by either party hereto, be cancelled and extinguished in its entirety if the Note
is fully repaid in cash prior to the Trigger Date.
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 or,
prior to the Ex-Exchange Cap Date, the Exchange Cap) 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 or, prior to the Ex-Exchange Cap
Date, the Exchange Cap, then the Holder shall not be entitled to participate in such Distribution to the extent of the Beneficial Ownership
Limitation or, prior to the Ex-Exchange Cap Date, the Exchange Cap (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 or, prior to the Ex-Exchange Cap Date, the Exchange
Cap, 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) Purchase
Rights. In addition to any adjustments pursuant to Sections 2 or 3 above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class
of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of 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 or, prior to the Ex-Exchange Cap Date, the Exchange Cap) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights (provided,
however, that to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder
and the other Attribution Parties exceeding the Beneficial Ownership Limitation or, prior to the Ex-Exchange Cap Date, the Exchange Cap,
then the Holder shall not be entitled to participate in such Purchase Right to the extent of the Beneficial Ownership Limitation or, prior
to the Ex-Exchange Cap Date, the Exchange Cap (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result
of such Purchase Right (and beneficial ownership) to the extent of any such excess) and such Purchase Right to such extent shall be held
in abeyance 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 or, prior to the Ex-Exchange Cap Date, the Exchange Cap, at which
time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or
on any subsequent Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).
(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.
(c) [Intentionally
omitted].
(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 subject to the Beneficial Ownership Limitation and prior to
the Ex-Exchange Cap Date, the Exchange Cap, 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 certificate 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, two (2) 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.
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.
13. ARBITRATION
OF CLAIMS; GOVERNING LAW; AND VENUE. The Company and Holder shall submit all Claims (as defined in Exhibit E 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 E 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 Irrevocable Transfer Agent Instructions (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 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.
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, Black Scholes Consideration Value, 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.
(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, and (iv) 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) “Black
Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment Right (as the case
may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option or
Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to
the remaining term of such Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance of such Option,
Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv) an expected volatility equal to the
greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization
factor) as of the Trading Day immediately following the date of issuance of such Option, Convertible Security or Adjustment Right (as
the case may be).
(c) “Black
Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s request
pursuant to Section 4(c)(i), which value is calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing Sale Price of the Common
Stock during the period beginning on the Trading Day immediately preceding the announcement of the applicable Change of Control (or the
consummation of the applicable Change of Control, if earlier) and ending on the Trading Day of the Holder’s request pursuant to
Section 4(c)(i) and (2) the sum of the price per share being offered in cash in the applicable Change of Control (if any) plus the value
of the non-cash consideration being offered in the applicable Change of Control (if any), (ii) a strike price equal to the Exercise Price
in effect on the date of the Holder’s request pursuant to Section 4(c)(i), (iii) a risk-free interest rate corresponding to
the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s
request pursuant to Section 4(c)(i) and (2) the remaining term of this Warrant as of the date of consummation of the applicable Change
of Control or as of the date of the Holder’s request pursuant to Section 4(c)(i) if such request is prior to the date of the
consummation of the applicable Change of Control, (iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100%
and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor)
as of the Trading Day immediately following the earliest to occur of (A) the public disclosure of the applicable Change of Control and
(B) the date of the Holder’s request pursuant to Section 4(c)(i).
(d) “Bloomberg”
means Bloomberg, L.P.
(e) “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.
(f) “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.
(g) “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.
(h) “Common
Stock” means the Company’s common stock, par value $0.0001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
(i) “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.
(j) “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.
(k) “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.
(l) [Intentionally
omitted].
(m) [Intentionally
omitted].
(n) [Intentionally
omitted].
(o) “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(p) “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.
(q) “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.
(r) “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.
(s) “Principal
Market” means the principal securities exchange or trading market where such Common Stock is listed or quoted, including but
not limited to any tier of the OTC Markets Group, Inc., any tier of the The Nasdaq Stock Market LLC
(including Nasdaq Capital Market), or the NYSE American LLC, or any successor to such markets.
(t) “Market
Price” means the highest traded price of the Common Stock during the thirty Trading Days prior to the date of the respective
Exercise Notice.
(u) “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.
(v) “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.
(w) “Trigger
Date” means the date that an Event of Default (as defined in the Note) occurs under the Note.
(x) “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the
Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market
on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time,
as reported by Quotestream or other similar quotation service provider designated by the Holder through its “VAP” function
(set to 09:30 start time and 16:00 end time) or, if the foregoing does not apply, the dollar volume-weighted average price of such security
in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York time,
and ending at 4:00 p.m., New York time, as reported by Quotestream or other similar quotation service provider designated by the Holder,
or, if no dollar volume-weighted average price is reported for such security by Quotestream or other similar quotation service provider
designated by the Holder for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC) (or a similar
organization or agency succeeding to its functions of reporting prices). If the VWAP cannot be calculated for such security on such date
on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company
and the Holder. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization
or other similar transaction during such period.
* * * * * * *
IN WITNESS WHEREOF, the Company has caused this
Warrant to be duly executed as of the Issuance Date set forth above.
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SIGNING DAY SPORTS, INC. |
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Name: |
Daniel Nelson |
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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 SIGNING DAY SPORTS, INC., a Delaware 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: ________________
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(Print Name of Registered Holder) |
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By: |
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Name: |
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Title: |
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EXHIBIT B
ASSIGNMENT OF WARRANT
(To be signed only upon authorized transfer of
the Warrant)
For
Value Received, the undersigned hereby sells,
assigns, and transfers unto _________________________ the right to purchase _____________________ shares of common stock of SIGNING DAY
SPORTS, INC., to which the within Common Stock Purchase Warrant relates and appoints _________, as attorney-in-fact, to transfer said
right on the books of SIGNING DAY SPORTS, INC. with full power of substitution and re-substitution in the premises. By accepting such
transfer, the transferee has agreed to be bound in all respects by the terms and conditions of the within Warrant.
Dated: _______________
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(Signature) * |
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(Name) |
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(Address) |
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(Social Security or Tax Identification No.) |
| * | The signature on this Assignment of Warrant must correspond
to the name as written upon the face of the Common Stock Purchase Warrant in every particular without alteration or enlargement or any
change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and
title(s) with such entity. |
ANNEX H
THESE WARRANTS AND ANY SHARES ACQUIRED UPON
THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE
SECURITIES LAWS. THESE WARRANTS AND SUCH SHARES AND ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS. THESE WARRANTS
AND SUCH SHARES MAY NOT BE EXERCISED OR TRANSFERRED EXCEPT UPON THE CONDITIONS SPECIFIED IN THIS WARRANT CERTIFICATE, AND NO EXERCISE
OR TRANSFER OF THESE WARRANTS OR TRANSFER OF SUCH SHARES SHALL BE VALID OR EFFECTIVE UNLESS AND UNTIL SUCH CONDITIONS SHALL HAVE BEEN
COMPLIED WITH.
Signing
Day Sports, Inc.
Warrant
To Purchase Common Stock
Warrant No.: PA-5
Date of Issuance: May 20, 2024 (“Issuance
Date”)
Signing Day Sports, Inc.,
a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Boustead Securities, LLC, the registered holder hereof or its permitted assigns (the “Holder”),
is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect,
common stock of the Company, par value $0.0001 per share (“Common Stock”) (including any Warrants to purchase shares
issued in exchange, transfer or replacement hereof, the “Warrant”), at any time or times on or after the date hereof,
to the extent permitted by the applicable SEC and FINRA rules, but not after 11:59 p.m., Eastern Time, on the Expiration Date (as defined
below), Ninety-Six Thousand Two Hundred Fifty (96,250) (subject to adjustment as provided herein) fully paid and non-assessable shares
of Common Stock (the “Warrant Shares”). Notwithstanding anything to the contrary contained herein, the sum of the
Warrant Shares as to which this Warrant shall be exercisable shall be limited to the Exchange Cap (as defined in the Securities Purchase
Agreement, dated as of May 16, 2024, between the Company and FirstFire Global Opportunities Fund, LLC, a Delaware limited liability company
(the “Purchase Agreement”)), unless and until the date of effectiveness of the Shareholder Approval (as defined in
the Purchase Agreement).
1. EXERCISE
OF WARRANT.
(a) Mechanics of Exercise.
Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder on any day on or after the date hereof, to the
extent permitted by the applicable SEC and FINRA rules, in whole or in part, by delivery (whether via facsimile, email, or otherwise)
of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s
election to exercise this Warrant, by submitting information including the then-applicable Exercise Price, number of Warrant Shares purchased
equal to or lower than the then-applicable number of Warrant Shares and the FMV (collectively, the “Exercise Information”).
Within one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the Company of an
amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares as to which this
Warrant was so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of immediately available funds
if, subject to the provisions of Section 1(d), the Holder has not notified the Company in such Exercise Notice that such exercise is
made pursuant to a Cashless Exercise (as defined in Section 1(d)) at a time and under circumstances which permit a Cashless Exercise.
The Holder shall not be required to deliver the original of this Warrant in order to effect an exercise hereunder. Execution and delivery
of an Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original
of this Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. Execution and
delivery of an Exercise Notice for all of the then-remaining Warrant Shares shall have the same effect as cancellation of the original
of this Warrant after delivery of the Warrant Shares in accordance with the terms hereof. On or before the first (1st) Trading Day following
the date on which the Company has received an Exercise Notice, upon checking that the Exercise Information supplied by the Holder is
accurate, the Company shall transmit by facsimile or email an acknowledgment of confirmation of receipt of such Exercise Notice, in the
form attached hereto as Exhibit B, to the Holder and the Company’s transfer agent (the “Transfer Agent”).
On or before the third (3rd) Trading Day following the date on which the Company has received such Exercise Notice and, in the event
that the Holder has chosen to exercise in cash, the receipt of the payment of the Aggregate Exercise Price, the Company shall instruct
the Transfer Agent to issue to the Holder the number of Warrant Shares to which the Holder is entitled pursuant to such exercise and
to, at the sole direction of the Holder pursuant to the Exercise Notice, hold such Warrant Shares in electronic form at the Transfer
Agent registered in the Company’s share register in the name of the Holder or its designee (as indicated in the applicable Exercise
Notice), or mail to the Holder or, at the Holder’s instruction pursuant to the Exercise Notice, the Holder’s agent or designee,
in each case, sent by reputable overnight courier to the address as specified in the applicable Exercise Notice, a certificate, registered
in the Company’s share register in the name of the Holder or its designee (as indicated in the applicable Exercise Notice). Upon
delivery of an Exercise Notice and in the event that the Holder has chosen to exercise in cash, the Company’s receipt of the payment
of the Aggregate Exercise Price, 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 (as the case may be). If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the
total number of Warrant Shares represented by this Warrant is greater than the number of Warrant Shares being acquired by the Holder
upon an exercise, then, at the request of the Holder, the Company shall as soon as practicable and in no event later than three (3) Business
Days after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant (in accordance with Section
7(d)) 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. No fractional Warrant Shares are to be issued upon
the exercise of this Warrant, but rather the number of Warrant Shares to be issued shall be rounded up to the nearest whole number. The
Company will from time to time promptly pay all taxes and charges that may be imposed upon the Company in respect of the issuance or
delivery of Warrant Shares upon the exercise of this Warrant, but the Company shall not be obligated to pay any transfer taxes in respect
of this Warrant or such shares.
(b) Exercise Price.
For purposes of this Warrant, “Exercise Price” initially means $0.30, subject to further adjustment as provided herein.
(c) Company’s Failure
to Timely Deliver Securities. If the Company shall fail, for any reason or for no reason, to issue to the Holder within three (3)
Trading Days after receipt of the applicable Exercise Notice, a certificate for the number of Warrant Shares to which the Holder is entitled
(or, at the option of the Holders, a book-entry confirmation of the issuance of such Warrant Shares) and register such Warrant Shares
on the Company’s share register, the Holder will have the right to rescind such exercise. In addition to any other rights available
to the Holder, if the Company shall fail, for any reason or for no reason, to issue to the Holder within three (3) Trading Days after
receipt of the applicable Exercise Notice, a certificate for the number of Warrant Shares to which the Holder is entitled (or, at the
option of the Holders, a book-entry confirmation of the issuance of such Warrant Shares) and register such Warrant Shares on the Company’s
share register and if on or after such third (3rd) Trading Day the Holder (or any other Person in respect, or on behalf, of
the Holder) purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of
all or any portion of the number of Warrant Shares, or a sale of a number of Warrant Shares equal to all or any portion of the number
of Warrant Shares, issuable upon such exercise that the Holder so anticipated receiving from the Company, then, in addition to all other
remedies available to the Holder, the Company shall, within three (3) Business 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 reasonable brokerage
commissions and other reasonable out-of-pocket expenses, if any) for the Warrant Shares so purchased (including, without limitation,
by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s
obligation to so issue and deliver such certificate or credit the Holder’s balance account with DTC for the number of Warrant Shares
to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) (and to issue such Warrant Shares) shall
terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such
Warrant Shares or credit the Holder’s balance account with DTC for the number of Warrant Shares to which the Holder is entitled
upon the Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any)
of the Buy-In Price over the product of (A) such number of Warrant Shares multiplied by (B) the lowest Closing Sale Price of the Common
Stock on any Trading Day during the period commencing on the date of the applicable Exercise Notice and ending on the date of such issuance
and payment under this clause (ii).
(d) Cashless Exercise.
Notwithstanding anything contained herein to the contrary, the Holder may, in its sole discretion, exercise this Warrant in whole or
in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the
Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of Warrant Shares determined according
to the following formula (a “Cashless Exercise”), provided that the Holder may elect to cashless exercise pursuant
to this Section 1(d) only if B as set forth in the following formula is higher than C as set forth in the following formula:
Net Number = (A x B)
- (A x C)
B
For purposes of the foregoing
formula:
A= the total number of shares with respect
to which this Warrant is then being exercised.
B= the FMV
C= the Exercise
Price then in effect for the applicable Warrant Shares at the time of such exercise.
(e) Disputes. In the
case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of Warrant Shares to be issued
pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve
such dispute in accordance with Section 14.
(f) Intentionally Left
Blank.
(g) Insufficient Authorized
Shares. The Company shall at all times keep reserved for issuance under this Warrant a number of shares of Common Stock as shall
be necessary to satisfy the Company’s obligation to issue Warrant Shares hereunder (without regard to any limitation otherwise
contained herein with respect to the number of Warrant Shares that may be acquirable upon exercise of this Warrant). If, notwithstanding
the foregoing, and not in limitation thereof, at any time while the Warrant remains outstanding the Company does not have a sufficient
number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of the Warrant
at least a number of shares of Common Stock equal to the number of shares of Common Stock as shall from time to time be necessary to
effect the exercise of the Warrant then outstanding (the “Required Reserve Amount”) (an “Authorized Share
Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares of
Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Warrant then outstanding. Without
limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of
its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting,
the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval
of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they
approve such proposal.
2. ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. 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 4, if the Company, at any time on or after the date hereof, (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) Intentionally
Left Blank.
(c) Number of
Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to only paragraph (a) of this Section 2, 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).
(d) Other Events.
In the event that the Company (or any subsidiary) shall take any action to which the provisions hereof are not strictly applicable, or,
if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated by the provisions
of this Section 2 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the Company’s board of directors shall in good faith determine
and implement an appropriate adjustment in the Exercise Price and the number of Warrant Shares (if applicable) so as to protect the rights
of the Holder, provided that no such adjustment pursuant to this Section 2(d) will increase the Exercise Price or decrease the number
of Warrant Shares as otherwise determined pursuant to this Section 2, provided further that if the Holder does not accept such adjustments
as appropriately protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder
shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments,
whose determination shall be final and binding and whose fees and expenses shall be borne by the Company.
(e) Calculations.
All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th 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 issue or sale of Common Stock.
3. RIGHTS
UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above, if the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return
of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way
of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable
upon a complete exercise of this Warrant (without regard to any limitations on exercise hereof) 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.
4. PURCHASE
RIGHTS; FUNDAMENTAL TRANSACTIONS.
(a) Purchase Rights.
In addition to any adjustments pursuant to Section 2 above, if at any time while the Warrant remains outstanding and before the Expiration
Date, the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other
property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could
have acquired if the Holder had held the number of shares of Common Stock acquirable upon a complete exercise of this Warrant (without
regard to any limitations on exercise hereof) immediately before the date on which a record is taken for the grant, issuance or sale
of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
(b) Fundamental
Transactions. During the term of this Warrant, 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 in accordance with the provisions of this
Section 4(b) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder prior
to such Fundamental Transaction, such approval not to be unreasonably withheld, conditioned or delayed, 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, 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 Shares (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). Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Holder.
(c) 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.
5. NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its certificate 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 (a) shall not increase the par value of the Common Stock receivable
upon the exercise of this Warrant above the Exercise Price then in effect, (b) shall take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise
of this Warrant, and (c) shall, so long as the Warrant is outstanding, take all action necessary to reserve and keep available out of
its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of the Warrant, the maximum number
of shares of Common Stock as shall from time to time be necessary to effect the exercise of the Warrant then outstanding (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
OF WARRANTS.
(a)
Transfer of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the
Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as
the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less
than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section
7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.
(b)
Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant (as to which a written certification and the indemnification contemplated below shall
suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company
in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute
and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the right to purchase the Warrant Shares then
underlying this Warrant.
(c)
Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office
of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of
such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, no warrants for fractional shares
of Common Stock shall be given.
(d)
Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such
new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right
to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a) or
Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other
new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii)
shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have
the same rights and conditions as this Warrant.
8. NOTICES;PAYMENTS.
(a) The Company
shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description
of such action and the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to the
Holder (i) immediately upon each adjustment of the Exercise Price and the number of Warrant Shares, setting forth in reasonable detail,
and certifying, the calculation of such adjustment(s) and (ii) at least fifteen (15) 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 Options, Convertible Securities or rights to purchase stock, warrants, securities or other property
to 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 and (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental Transaction. To the
extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of
its subsidiaries, the Company shall simultaneously file such notice with the SEC pursuant to a Current Report on Form 8-K. It is expressly
understood and agreed that the time of execution specified by the Holder in each Exercise Notice shall be definitive and may not be disputed
or challenged by the Company.
(b) Payments.
Whenever any payment is to be made by the Company to any Person pursuant to this Warrant, such payment shall be made in lawful money
of the United States of America via wire transfer of U.S. Dollars in immediately available funds in accordance with the Holder’s
wire transfer instructions delivered to the Company on or prior to such payment date or, in the absence of such instructions, by a certified
check drawn on the account of the Company and sent via overnight courier service to such Person at such address as previously provided
to the Company in writing.
9. AMENDMENT
AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent
of the Holder. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
10. SEVERABILITY.
If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest
extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity
of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without material change, the
original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s)
in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization
of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of
the prohibited, invalid or unenforceable provision(s).
11. GOVERNING
LAW. This Warrant shall be governed by and 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 New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdiction other than the State of New York. The Company hereby irrevocably submits to the
exclusive jurisdiction of the federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any 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 brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.
Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained
herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other
jurisdiction to collect on the Company’s obligations to the Holder or to enforce a judgment or other court ruling in favor of the
Holder. If service of process is effected pursuant to the above sentence, such service will be deemed sufficient under New York law and
the Company shall not assert otherwise. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, 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 TRANSACTION CONTEMPLATED HEREBY.
12. Reserved.
13. CONSTRUCTION;
HEADINGS. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any
Person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the
interpretation of, this Warrant. Terms used in this Warrant but defined in the other Transaction Documents shall have the meanings ascribed
to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.
14. DISPUTE
RESOLUTION. In the case of a dispute as to the determination of the Exercise Price or FMV or the arithmetic calculation of the Warrant
Shares (as the case may be), the Company or the Holder (as the case may be) shall submit the disputed determinations or arithmetic calculations
(as the case may be) via facsimile (a) within two (2) Business Days after receipt of the applicable notice giving rise to such dispute
to the Company or the Holder (as the case may be) or (b) if no notice gave rise to such dispute, at any time after the Holder learned
of the circumstances giving rise to such dispute (including, without limitation, as to whether any issuance or sale or deemed issuance
or sale was an issuance or sale or deemed issuance or sale of Excluded Securities). If the Holder and the Company are unable to agree
upon such determination or calculation (as the case may be) of the Exercise Price, or FMV or the number of Warrant Shares (as the case
may be) within three (3) Business Days of such disputed determination or arithmetic calculation being submitted to the Company or the
Holder (as the case may be), then the Company shall, within two (2) Business Days submit via facsimile (i) the disputed determination
of the Exercise Price or FMV (as the case may be) to an independent, reputable investment bank selected by the Holder or (ii) the disputed
arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant. The Company shall cause at its expense
the investment bank or the accountant (as the case may be) to perform the determinations or calculations (as the case may be) and notify
the Company and the Holder of the results no later than ten (10) Business Days from the time it receives such disputed determinations
or calculations (as the case may be). Such investment bank’s or accountant’s determination or calculation (as the case may
be) shall be binding upon all parties absent demonstrable error.
15. REMEDIES,
CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative and
in addition to all other remedies available under this Warrant and the other Transaction Documents, at law or in equity (including a
decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual
damages for any failure by the Company to comply with the terms of this Warrant. The Company covenants to the Holder that there shall
be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with
respect to payments, exercises and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall
not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for
any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder
of this Warrant shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and
documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms
and conditions of this Warrant (including, without limitation, compliance with Section 2 hereof). The issuance of shares and certificates
for shares as contemplated hereby upon the exercise of this Warrant shall be made without charge to the Holder or such shares for any
issuance tax or other costs in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any certificate in a name other than the Holder or its agent on its
behalf.
16. TRANSFER.
This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.
17. CERTAIN
DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:
(a) “Bloomberg” means
Bloomberg, L.P.
(b) “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.
(c) “Closing
Sale Price” means, for any security as of any date, the last closing trade price for such security on the Eligible Market,
as reported by Bloomberg, or, if the Eligible 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 Bloomberg, or, if the Eligible
Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal
securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing does not
apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported
by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the ask prices of any market makers
for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). 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 14. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination
or other similar transaction during such period.
(d) “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.
(e) “Eligible
Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market or
the Nasdaq Capital Market.
(f) “Expiration
Date” means the date that is five years from the Issuance Date, or, if such date falls on a day other than a Business Day or
on which trading does not take place on the Eligible Market (a “Holiday”), the next date that is not a Holiday.
(g) “FINRA”
means the Financial Industry Regulatory Authority, Inc. in the United States.
(h) “Fundamental
Transaction” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related transactions,
(A) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the surviving corporation) any other
Person, or (B) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties
or assets to any other Person, or (C) allow any other Person to make a purchase, tender or exchange offer that is accepted by the holders
of more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company held
by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or
exchange offer), or (D) consummate a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with any other Person whereby such other Person acquires more
than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the
other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or
share purchase agreement or other business combination), or (E) (1) reorganize, recapitalize or reclassify the Common Stock, (2) effect
or consummate a stock combination, reverse stock split or other similar transaction involving the Common Stock or (3) make any public
announcement or disclosure with respect to any stock combination, reverse stock split or other similar transaction involving the Common
Stock (including, without limitation, any public announcement or disclosure of (a) any potential, possible or actual stock combination,
reverse stock split or other similar transaction involving the Common Stock or (b) board or stockholder approval thereof, or the intention
of the Company to seek board or stockholder approval of any stock combination, reverse stock split or other similar transaction involving
the Common Stock), or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and
14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued
and outstanding Voting Stock of the Company.
(i) “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(j) “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.
(k) “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity or a government or any department or agency thereof.
(l) “SEC”
means the United States Securities and Exchange Commission.
(m) “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.
(n) “Trading
Day” means any day on which the Common Stock is traded on the Eligible Market, or, if the Eligible Market is not the principal
trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then
traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange
or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market,
then during the hour ending at 4:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder.
(o) “Voting
Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have the
general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers or trustees of
such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might have voting power
by reason of the happening of any contingency).
(p) “FMV”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Eligible Market, the value shall be deemed to be the highest daily price on any trading day on such Eligible Market on
which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on New York City time) during the twenty trading
days preceding the exercise, (b) if OTCQB or OTCQX is not an Eligible Market, the value shall be deemed to be the highest daily price
on any trading day on the OTCQB or OTCQX on which the Common Stock is then quoted as reported by Bloomberg L.P. (based on New York City
time) during the twenty trading days preceding the exercise, as applicable, (c) if the Common Stock is not then listed or quoted for
trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets
Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the “OTC Markets Group”,
the value shall be deemed to be the highest daily price on any trading day on the Pink Sheets on which the Common Stock is then quoted
as reported by OTC Markets Group (based on New York City time) during the twenty trading days preceding the exercise, or (d) in all other
cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder
and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
[signature page follows]
IN WITNESS WHEREOF,
the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.
| Signing Day Sports, Inc. |
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Daniel D. Nelson |
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Chief Executive Officer and Chairman |
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EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO
EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
SIGNING DAY SPORTS, INC.
The undersigned holder hereby exercises the right
to purchase _________________ Common Stock (“Warrant Shares”) of Signing Day Sports, Inc.,
a Delaware corporation (the “Company”), evidenced by Warrant to Purchase Common Stock No. _______ (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:
| ____________ | a “Cash Exercise”
with respect to _________________ Warrant Shares; and/or |
| ____________ | a “Cashless Exercise”
with respect to _______________ Warrant Shares. |
In the event that the Holder
has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder hereby represents
and warrants that (i) this Exercise Notice was executed by the Holder on the date set forth below and (ii) if applicable, the FMV as
of the date prior to the date of the Exercise Notice was $________.]
1. Form of Exercise Price.
The Holder intends that payment of the Exercise Price shall be made as a “Cash Exercise”.]
2. Payment of Exercise
Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the Holder shall pay the 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 Holder, or its designee or agent as specified below, __________ Warrant Shares
in accordance with the terms of the Warrant. Delivery shall be made to Holder, or for its benefit, as follows:
☐ Check here if requesting delivery as a certificate to the following name and to the following address:
☐ Check here if
requesting delivery by Deposit/Withdrawal at Custodian as follows:
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EXHIBIT B
ACKNOWLEDGMENT
The Company hereby acknowledges
this Exercise Notice and hereby directs ______________ to issue the above indicated number of shares of Common Stock in accordance with
the Transfer Agent Instructions dated _________, 20__, from the Company and acknowledged and agreed to by _______________.
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ANNEX I
AMENDMENT TO
THE TRANSACTION DOCUMENTS
THIS
Amendment to THE Transaction Documents (as defined below) (this “Amendment”), is entered into as of June 18,
2024, by and between Signing Day Sports, Inc., a Delaware corporation (the “Borrower”), and FirstFire Global Opportunities
Fund, LLC, a Delaware limited liability company (the “Holder”). Each of the Borrower
and Holder are sometimes referred to in this Amendment individually as a “Party” and, collectively, as the “Parties.”
RECITALS
A. On
May 16, 2024, the Borrower agreed to issue a certain Senior Secured Promissory Note to the Holder, a copy of which is attached hereto
as Exhibit A (as amended hereby, the “Note”), a certain Common Stock Purchase Warrant to the Holder, a copy
of which is attached hereto as Exhibit B (as amended hereby, the “First Warrant”), and a certain Common Stock
Purchase Warrant to the Holder, a copy of which is attached hereto as Exhibit C (as amended hereby, the “Second Warrant”
and together with the First Warrant, the “Warrants”), pursuant to that certain Securities Purchase Agreement, dated
as of May 16, 2024, by and between the Borrower and the Holder, a copy of which is attached hereto as Exhibit D (the “Securities
Purchase Agreement”) (the Note, Warrants, and Securities Purchase Agreement are collectively referred to herein as the “Transaction
Documents”).
B. The
Parties entered into that certain amendment to the Note and Warrants on or around May 20, 2024.
C. The
Parties desire to further amend the Transaction Documents as provided in this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration
of the mutual promises herein contained, the Parties intending to be legally bound, hereby agree as follows.
1. Agreement.
Except as specifically modified by this Amendment, the terms and conditions of the Transaction Documents shall remain in full force and
effect. In the event of any inconsistency between the terms of this Amendment and the terms of the Transaction Documents, the terms of
this Amendment shall control. Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Note or the
Warrants as the context requires, unless defined otherwise herein.
2. Amendment
to securities purchase agreement. Notwithstanding anything to the contrary in the Transaction Documents, neither the Borrower’s
execution of that certain securities purchase agreement dated on or around June 18, 2024, by and between the Borrower and the Holder,
and the related transaction documents thereto (the “June 2024 Transaction Documents”), nor the Borrower’s issuance of
securities to Holder pursuant to the June 2024 Transaction Documents, shall cause a breach of Section 4(i), Section 4(o) or any other
provision of the Securities Purchase Agreement. Section 8(r) of the Securities Purchase Agreement shall be removed in the entirety upon
the Borrower’s issuance of the Second Note (as defined in this Amendment) to the Holder.
3. Amendment
to Note. Notwithstanding anything to the contrary in the Transaction Documents, neither the Borrower’s execution
of the June 2024 Transaction Documents, nor the Borrower’s issuance of securities to Holder pursuant to the June 2024 Transaction
Documents, shall cause an Event of Default (as defined in the Note) under the Note. Notwithstanding anything to the contrary in the Transaction
Documents, the Parties hereby acknowledge and agree that the Borrower is permitted to issue that certain senior secured promissory note
to the Holder on or around June 18, 2024, in the original principal amount of $198,611.00 (the “Second Note”), and that the
Second Note shall be pari passu in priority to the Note.
4. Effectiveness.
The terms of this Amendment shall be effective as of the date first set forth above.
5. Entire
Agreement. This Amendment constitutes the entire agreement and understanding between the Parties with regard to the
subject matter hereof and supersedes any prior written or oral agreements. Any modifications to this Amendment must be in writing and
signed by the Borrower and the Holder or their lawful successors or assigns.
6. Counterparts.
This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same instrument.
[Signature page follows]
IN WITNESS WHEREOF,
the Parties have caused this Amendment to be duly executed as of the date first set forth above.
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Signing Day Sports, Inc. |
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FirstFire Global Opportunities Fund, LLC |
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/s/ Eli Fireman
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Eli Fireman |
EXHIBIT A
Senior Secured Promissory Note
(See Attached)
EXHIBIT B
Common Stock Purchase Warrant
(See Attached)
EXHIBIT C
Common Stock Purchase Warrant
(See Attached)
EXHIBIT D
Securities Purchase Agreement
(See Attached)
ANNEX J
SECURITIES PURCHASE AGREEMENT
This SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of June 18, 2024, by and between SIGNING DAY SPORTS, INC., a Delaware
corporation, with headquarters located at 8355 East Hartford Dr., Suite 100, Scottsdale, AZ 85255 (the “Company”), and FIRSTFIRE
GLOBAL OPPORTUNITIES FUND, LLC, a Delaware limited liability company, with its address at 1040 First Avenue, Suite 190, New York,
NY 10022 (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. 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 this Agreement, a senior secured promissory note of the Company, in the aggregate principal amount of $198,611.00 (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”),
convertible into shares of common stock, par value $0.0001 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. The
Company wishes to issue a common stock purchase warrant to purchase 662,036 shares of Common Stock (the “First Warrant”),
a common stock purchase warrant to purchase 120,370 shares of Common Stock (the “Second Warrant”, and collectively with the
First Warrant, the “Warrants”), and 90,277 shares of Common Stock (the “Commitment Shares”), to the Buyer as additional
consideration for the purchase of the Note, which all shall be earned in full as of the Closing Date, as further provided herein; and
D. In
connection with this Agreement, the Company and the Buyer shall enter into a security agreement (the “Security Agreement”),
the form of which is attached hereto as Exhibit C, as well as a registration rights agreement (the “Registration Rights Agreement”),
the form of which is attached hereto as Exhibit D, in each case on the date of this Agreement.
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 of Note.
a. Purchase
of Note. 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 Note, 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.
b. Form of Payment. On the Closing
Date: (i) the Buyer shall pay the purchase price of $ 175,000.00 (the “Purchase Price”) for 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 (ii) the Company shall deliver such duly executed
Note and the Warrants to the Buyer, against delivery of such Purchase Price. On the Closing Date, the Buyer shall withhold a
non-accountable sum of $6,500.00 from the Purchase Price to cover the Buyer’s legal fees in connection with the transactions
contemplated by this Agreement. On the Closing Date, the Buyer shall also withhold a sum of $14,000.00 from the Purchase Price to
cover the Company’s fees owed to Boustead Securities, LLC, a registered broker-dealer (CRD#: 141391) (“Boustead”),
in connection with the transactions contemplated by this Agreement.
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 Note pursuant to this Agreement (the “Closing Date”) shall be on the date that the
Purchase Price for the Note is paid by Buyer pursuant to the 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).
1A. Warrants;
Commitment Shares. On or before the Closing Date, the Company shall issue the Warrants to the Buyer pursuant to the terms
contained therein as well as the Commitment Shares to the Buyer, each of which shall be earned in full as of the Closing Date.
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 Note, Commitment Shares, and Warrants (the Note, Commitment Shares, Warrants,
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”).
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 the 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, (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; (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.
g. Legends.
The Buyer understands that until such time as the Note, Warrants, Commitment Shares, Conversion Shares, and/or Exercise Shares, 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.
h. Formation.
The Buyer represents and warrants that it is a limited liability company duly formed and validly existing under the laws of the State
of Delaware and is in good standing with the relevant authorities.
i. 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, except as otherwise disclosed
in the SEC Documents:
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 (as defined below) 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, the majority of equity or other ownership interest or has a controlling interest.
b. Authorization;
Enforcement. The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Note, and to
consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof,
(ii) the execution and delivery of this Agreement, the Warrants, the Note, the Commitment Shares, the 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 and the Warrants, as well as the issuance and reservation for issuance of the Conversion Shares and the 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,
(iii) this Agreement and the Note (together with any other instruments executed in connection herewith or therewith) will, upon delivery,
have been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true
and official representative with authority to sign this Agreement, the Note and the other instruments and documents that shall be executed
in connection herewith or therewith and bind the Company accordingly, and (iv) this Agreement constitutes, 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, enforceable against it in accordance with their 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.
c. Capitalization;
Governing Documents. As of June 18, 2024, the authorized capital stock of the Company consists of: 150,000,000 authorized shares of
Common Stock, of which 16,002,278 shares were issued and outstanding, and 15,000,000 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, the Exercise Shares, and the Commitment 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 or as listed on
Schedule 3(c): (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 Bylaws, as in effect on the date hereof (the “Bylaws”),
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 and Exercise Shares. The Conversion 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 Warrants and Commitment Shares. The issuance of the Warrants and the Commitment Shares are
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 and the Exercise Shares
to the Common Stock upon the conversion of the Note and/or exercise of the Warrants. The Company further acknowledges that its obligation
to issue, upon conversion of the Note and/or exercise of the Warrants, the Conversion Shares and/or the 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.
g. Ranking;
No Conflicts. The Note shall be a secured obligation of the Company pursuant to the terms of the Security Agreement. Except as disclosed
on Schedule 3(g) and with respect to any other security interest granted by the Company to the Buyer, the Company represents and warrants
that there are no security interests in, or liens on, the Company’s assets as of the date of this Agreement except as created in
favor of Buyer under the Security Agreement and as further disclosed in the Security Agreement. The execution, delivery and performance
of this Agreement and the Note 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 and Exercise Shares) will not (i) conflict
with or result in a violation of any provision of the Certificate of Incorporation or Bylaws, 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, Bylaws 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 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 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. 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 Group, Inc., any tier of The Nasdaq Stock Market LLC (including Nasdaq Capital Market), or the NYSE American
LLC, or any successor to such markets.
h. SEC
Documents; Financial Statements. 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 Securities Exchange Act of 1934, as amended (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 to 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). 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, 2024, 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. The Company has never been a “shell company” as described in Rule 144(i)(1)(i).
i. Absence
of Certain Changes. Since March 31, 2024, 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.
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, in each such case that could have a Material Adverse Effect. 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 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 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 Company knows 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.
n. Transactions
with Affiliates. Except as described in the SEC Documents and 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 and other transactions with the affiliates of the
Company described in the SEC Documents, none of the officers, directors, or employees of the Company is presently a party to any material
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. Except with respect to prior issuances of
securities to the Buyer or to prior or contemplated issuances of securities to Boustead as placement agent compensation in
connection with 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. Except with respect to Boustead 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 1934 Act in order to (i) enter into or consummate the transactions encompassed by this Agreement, the Security Agreement, the
Registration Rights Agreement, the Note, the Warrants, 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, in each such case
that could have a Material Adverse Effect.. 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, 2024, 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.
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. Except as disclosed in the SEC Documents and Schedule 3(u) hereto, 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. [Reserved]
x. Foreign
Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor, to the Company’s knowledge, 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 nor, to the Company’s knowledge, 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.
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 and First Refusal.
(i) Other
than arrangements that are in place or disclosed in SEC Documents prior to the date of this
Agreement, and other than any Excluded Issuance (as defined below), from the date of this Agreement until 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). “Excluded
Issuance” shall mean an issuance or sale of any Common Stock or any securities of the Company or its Subsidiaries which entitle
the holder thereof to acquire at any time shares of Common Stock, including, without limitation, shares of Common Stock, any debt, preferred
shares, 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, shares of Common Stock (“Common Stock Equivalents”) issued or sold by the Company
in connection with: (a) a grant to any existing or prospective directors, officers or other employees, sales agents, consultants, or service
providers of the Company or any Subsidiary pursuant to a stock incentive plan or similar equity-based plans or other compensation agreement;
(b) the conversion or exchange of any securities of the Company into capital stock, or the exercise of any warrants or other rights to
acquire capital stock issued and outstanding on the date hereof, provided such securities have not been amended since the date hereof
to increase the number of such securities or to decrease the exercise price or exchange price of such securities; (c) any acquisition
by the Company or any Subsidiary of any equity interests, assets, properties, or business of any Person; (d) any strategic license
agreements, mergers, consolidations, business combinations, acquisitions, purchases or leases of assets, partnering arrangements, joint
ventures, strategic alliances, investor relations or public relations agreements, or other commercial relationships (including to persons
who are customers and suppliers of the Company) relating to the operation of the Company’s business, so long as such issuances are
not primarily for the purpose of raising capital or to an entity whose primary business is investing in securities;
(e) any subdivision of Common Stock (by a split of Common Stock or otherwise), payment of stock dividend, reclassification, reorganization,
or any similar recapitalization; (f) securities issued to banks, equipment lessors or other financial institutions, or to real
property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction, approved by a majority of the
independent directors of the Company; (g) securities issued in connection with the provision
of goods or services pursuant to transactions approved by a majority of the independent directors of the Company; or (i) securities issued
pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that
such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require
or permit the filing of any registration statement in connection therewith, and provided that any such issuance shall only be to a person
(or to the equityholders of a person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a
business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment
of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital
or to an entity whose primary business is investing in securities.
(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 at least $198,611.00 of the securities in the Subsequent Placement (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 (5th) Trading Day (as defined in the Note) 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 (plus the prepayment
premiums provided for in Section 1.9 of the Note if prior to the occurrence of an Event of Default (as defined in the Note) under the
Note) in lieu of cash consideration with respect to all or any portion of the Subscription Amount.
(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 (5th) 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. Commencing as of the date first above written, and until the earlier of payment of the Note in full or full conversion
of the Note, 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, or 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 or any equivalent replacement exchange or electronic quotation system (including but not limited to the Pink Sheets electronic
quotation system) 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, Inc. (“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 LLC Market, the New York Stock Exchange or the NYSE American LLC.
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.
j. Compliance
with 1934 Act; Public Information Failures. For so long as the Buyer beneficially owns the Note, the Commitment Shares, the Warrants,
the Conversion 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.
k. Acknowledgement
Regarding Buyer’s Trading Activity. Until the Note is fully repaid or fully converted, the Buyer shall not effect any “short
sale” (as such term is defined in Rule 200 of Regulation SHO of the 1934 Act) of the Common Stock which establishes a net short
position with respect to the Common Stock.
l. 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 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 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. The Company hereby agrees that it may never take the position
that it is a “shell company” in connection with its obligations under this Agreement or otherwise.
m. Piggy-Back
Registration Rights. The Company hereby grants to the Buyer the piggy-back registration rights set forth in Exhibit B hereto.
n. Most
Favored Nation. Except as to an Excluded Issuance, 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.
o. Subsequent
Variable Rate Transactions. From the date hereof until such time as the Note is fully converted or fully repaid, the Company shall
not effect or enter into an agreement involving a Variable Rate Transaction without the prior written consent of the Buyer, which consent
shall not be unreasonably withheld, other than an “at-the-market” offering of securities under an effective shelf registration
statement pursuant to a sales agreement with a broker-dealer. “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.
p. 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.
q. D&O
Insurance. The Company shall maintain 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.
r. Shareholder
Approval; Prohibition on Issuance. “Shareholder Approval” means the approval of a sufficient amount of holders of the
Company’s Common Stock to satisfy the shareholder approval requirements to effectuate the transactions contemplated by the Agreement,
including the issuance of all of the Common Stock underlying the Note, Common Stock underlying
the Warrants, and Commitment Shares, in excess of 19.99% of the issued and outstanding Common
Stock on the Closing Date (the “Exchange Cap”). The Exchange Cap is equal to 3,074,792 shares of Common Stock, which number
of shares shall be reduced, on a share-for-share basis, by the number of shares of Common Stock issued or issuable pursuant to any transaction
or series of transactions that may be aggregated with the transactions contemplated by this Agreement under applicable rules of the NYSE
American LLC (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 hold a meeting of shareholders
on or before the date that is six (6) months after the date of this Agreement, 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. In addition, all members of the Company’s Board of Directors and
all of the Company’s executive officers shall vote in favor of such proposal, for purposes of obtaining the Shareholder Approval,
with respect to all securities of the Company then held by such persons. The Company shall use its commercially reasonable efforts to
obtain such Shareholder Approval. 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 such approval
is obtained, the Buyer shall not be issued in the aggregate, pursuant to the Agreement or upon conversion of the Note or exercise of the
Warrants, shares of Common Stock in an amount greater than the Exchange Cap except as otherwise provided in the Note or the Warrants. In
the event that the Buyer shall sell or otherwise transfer any of such Buyer's Note or Warrants, the transferee shall be allocated a pro
rata portion of such 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.
s. 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.
t. Subsequent
Securities Sales. In addition to all other restrictions on the issuance of securities by the Company as provided in this Agreement,
from the date of this Agreement through the date that is thirty (30) calendar days after the date of this Agreement, neither the Company
nor any Subsidiary shall issue, enter into any agreement to issue, or announce the issuance or proposed issuance of any shares of Common
Stock or Common Stock Equivalents except with respect to the Securities. This Section 4(t) of this Agreement shall not apply to any Excluded
Issuance.
u. Amendment
of Prior Transactions. The Company shall not amend or alter the provisions or terms of any debt or Common Stock Equivalents (including
but not limited to any warrants exercisable into Common Stock and promissory notes convertible into Common Stock) of the Company issued
on or prior to the date of this Agreement without the express written consent of the Buyer.
v. 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 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 reserve 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 and/or Exercise Shares under the 1933 Act or the
date on which the Conversion 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 notice prior to 9:30 a.m. Eastern Time, or one (1)
business day of notice after such time, 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.
6. Conditions
to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell 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 this Agreement and the Security Agreement, Registration Rights Agreement, 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 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 this Agreement and the Security Agreement, the Registration Rights Agreement, and delivered the same to the
Buyer.
b. The
Company shall have delivered to the Buyer the duly executed Note in such denominations as the Buyer shall request and in accordance with
Section 1(b) above.
c. The Company shall have delivered to the Buyer the Warrants and the Commitment Shares.
d. 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.
e. 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.
f. 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.
g. 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.
h. Trading
in the Common Stock on the Principal Market shall not have been suspended by the SEC, FINRA or the Principal Market.
i. 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.
j. The
Company shall have delivered to the Buyer a legal opinion from the Company’s counsel covering the transactions contemplated by the
Transaction Documents in a form acceptable to the Buyer.
8. Governing Law; Miscellaneous.
a. Arbitration
of Claims; Governing Law; Venue. The Company and Buyer shall submit all Claims (as defined in Exhibit E 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 E 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.
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:
SIGNING DAY SPORTS, INC.
8355 East Hartford Dr., Suite 100
Scottsdale, AZ 85255
Attention: Daniel Nelson
e-mail: danny.nelson@signingdaysports.com
If to the Buyer:
FIRSTFIRE GLOBAL OPPORTUNITIES FUND,
LLC
1040 First Avenue, Suite 190
New York, NY 10022
e-mail: eli@firstfirecapital.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.
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 or SEC 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 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 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.
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]
IN WITNESS WHEREOF, the undersigned
Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.
| SIGNING DAY SPORTS, INC. |
|
| |
|
| By: |
/s/ Daniel Nelson |
|
| |
Name: |
DANIEL NELSON |
|
| |
Title: |
CHIEF EXECUTIVE OFFICER |
|
| |
|
| FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC |
|
| |
|
| By: FirstFire Capital Management LLC, its manager |
|
| |
|
| By: |
/s/ Eli Fireman |
|
| |
Name: |
ELI FIREMAN |
|
EXHIBIT
A
FORM OF NOTE
[attached hereto]
EXHIBIT
B
PIGGY-BACK
REGISTRATION RIGHTS
All of the
Conversion Shares, Exercise Shares, and Commitment 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.
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]
EXHIBIT
C
FORM
OF SECURITY AGREEMENT
[attached hereto]
EXHIBIT
D
FORM
OF REGISTRATION RIGHTS AGREEMENT
[attached hereto]
EXHIBIT
E
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 E, 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 E (“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.
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.
(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.
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.
(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.
(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.
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DISCLOSURE SCHEDULE
RELATING TO THE Securities purchase
agreement, DATED
AS OF June 18, 2024
BETWEEN
SIGNING DAY SPORTS,
INC.
AND
FIRSTFIRE GLOBAL
OPPORTUNITIES FUND, LLC
This
disclosure schedule is made and given pursuant to Section 3 of the Securities Purchase Agreement, dated as of June 18, 2024 (the “Agreement”),
by and between SIGNING DAY SPORTS, INC., a Delaware corporation (the “Company”), and FIRSTFIRE GLOBAL OPPORTUNITIES
FUND, LLC, a Delaware limited liability company (the “Buyer”). Unless the context otherwise requires, all capitalized
terms are used herein as defined in the Agreement. The numbers below correspond to the section numbers of representations and warranties
in the Agreement most directly modified by the below exceptions.
Section 3(c)
Capitalization; Governing
Documents
N/A
Section 3.1(g)
Ranking; No Conflicts
Revolving Lins of
Credit with Commerce Bank of Arizona
Under a Business Loan
Agreement, dated December 11, 2023 (the “Second CBAZ Loan Agreement”), between the Company and Commerce Bank
of Arizona (“CBAZ”), the Company and CBAZ entered into a $2,000,000 secured revolving line of credit (the “Second
CBAZ LOC”). In connection with the Second CBAZ LOC, CBAZ issued a promissory note to the Company, dated December 11, 2023
(the “Second CBAZ Promissory Note”), with principal of $2,000,000. The Company paid loan origination and other
fees totaling $5,500 and CBAZ immediately disbursed $334,624.85 of the funds in connection with the Second CBAZ LOC for crediting the
full prepayment of the balance in that amount outstanding in connection with the First CBAZ LOC. The principal balance under the Second
CBAZ Promissory Note bears interest at a fixed rate per annum of 7.21% per annum, and will mature on December 11, 2024. There
is no penalty for prepayment of the Second CBAZ Promissory Note. The Second CBAZ LOC was required to be secured by a 12-month CD
Account Number 9000070132 (the “Account”) with CBAZ with an approximate balance of $2,100,000.00 together with
(A) all interest, whether now accrued or hereafter accruing; (B) all additional deposits made to the Account; (C) any and all proceeds
from the Account; and (D) all renewals, replacements and substitutions for any of the foregoing (the “CD Collateral”)
under an Assignment of Deposit Account, dated December 11, 2023, between the Company and CBAZ (the “Assignment of Deposit
Account”).
In connection with the
Second CBAZ LOC, the Company agreed to the following negative covenants: (i) incurring any other indebtedness; (ii) permitting other liens
on its property, (iii) selling any of its accounts receivable with recourse to any third party; (iv) engaging in substantially different
business activities; (v) ceasing operations, engaging in certain corporate transactions, or selling the CD Collateral; or (vi) paying
cash dividends on its stock except to pay certain income taxes of stockholders or repurchasing or retiring any of the Company’s
outstanding common stock. The following events will constitute a default under the Second CBAZ LOC: (i) the Company fails to comply with
the negative covenants described above; (ii) any change in ownership of 25% or more of the common stock of the Company; (iii) a material
adverse change in the Company’s financial condition or CBAZ believes the prospect of payment or performance under any loans under
the Second CBAZ LOC is impaired; and (iv) other customary events of default including insolvency, foreclosure or forfeiture proceedings,
and failure to make payment when due. Any late payments due will be charged 5% of the regularly scheduled payments. Upon an event of default,
the interest rate on the Second CBAZ Promissory Note will increase to 13.21%; all indebtedness under the Second CBAZ Promissory Note will
become due at the option of CBAZ, except that if an event of default occurs due to an insolvency and certain similar events, the indebtedness
will become due immediately automatically; all of CBAZ’s obligations under the Second CBAZ Loan Agreement will terminate; and CBAZ
may take any actions permitted under the Assignment of Deposit Account, including application of account proceeds under the CD Collateral
to outstanding indebtedness, and use of all rights and remedies of a secured creditor under the Arizona Uniform Commercial Code. The Second
CBAZ LOC is also subject to certain other terms and conditions. The outstanding balance under the Second CBAZ LOC was $2,000,000 as of
March 31, 2024.
See Disclosure Schedule Section 3.1(u).
Section 3.1(u)
Titles to Property
Under the Assignment
of Deposit Account, CBAZ holds a security interest in the Account with an approximate balance of $2,100,000.00 together with (A) all interest,
whether now accrued or hereafter accruing; (B) all additional deposits made to the Account; (C) any and all proceeds from the Account;
and (D) all renewals, replacements and substitutions for any of the foregoing.
ANNEX K
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated
as of June 18, 2024 (this “Agreement”), is among Signing Day Sports, Inc., a Delaware corporation (the “Company”
or “Debtor”, and collectively with each Additional Debtor (as defined in this Agreement), the “Debtors”)
and FirstFire Global Opportunities Fund, LLC, a Delaware limited liability company (collectively with its endorsees, transferees and assigns,
the “Secured Parties”).
W I T N E S S E T H:
WHEREAS, pursuant to the securities
purchase agreement entered into by the Company and the Secured Parties on June 18, 2024 (the “Purchase Agreement”), the Company
has agreed to issue that certain 10% senior secured promissory note dated June 18, 2024, in the original principal amount of $198,611.00
(the “Note”);
WHEREAS, in order to induce
the Secured Parties to enter into the investment evidenced by the Note, each Debtor has agreed to execute and deliver to the Secured Parties
this Agreement and to grant the Secured Parties, a security interest in certain property of such Debtors to secure the prompt payment,
performance and discharge in full of all of the Company’s obligations under the Note.
NOW, THEREFORE, in consideration
of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:
1. Certain
Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account”, “chattel paper”,
“commercial tort claim”, “deposit account”, “document”, “equipment”, “fixtures”,
“general intangibles”, “goods”, “instruments”, “inventory”, “investment property”,
“letter-of-credit rights”, “proceeds” and “supporting obligations”) shall have the respective meanings
given such terms in Article 9 of the UCC.
(a) “Collateral”
means the collateral in which the Secured Parties are granted a security interest by this Agreement and which shall include the following
personal property of the Debtors, whether presently owned or existing or hereafter acquired or coming into existence, wherever situated,
and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds, products and accounts thereof,
including, without limitation, all proceeds from the sale or transfer of the Collateral and of insurance covering the same and of any
tort claims in connection therewith, and all dividends, interest, cash, notes, securities, equity interest or other property at any time
and from time to time acquired, receivable or otherwise distributed in respect of, or in exchange for, any or all of the Pledged Securities
(as defined below):
(i) All
goods, including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind and nature and wherever
situated, together with all documents of title and documents representing the same, all additions and accessions thereto, replacements
therefor, all parts therefor, and all substitutes for any of the foregoing and all other items used and useful in connection with any
Debtor’s businesses and all improvements thereto; and (B) all inventory;
(ii) All
contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests, stock or
other securities, rights under any of the Organizational Documents, agreements related to the Pledged Securities, licenses, distribution
and other agreements, computer software (whether “off-the-shelf”, licensed from any third party or developed by any Debtor),
computer software development rights, leases, franchises, customer lists, quality control procedures, grants and rights, goodwill, Intellectual
Property, income tax refunds, and employee retention tax credits;
(iii) All
accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising, goods,
equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties with respect to
each account, including any right of stoppage in transit;
(iv) All
documents, letter-of-credit rights, instruments and chattel paper;
(v) All
commercial tort claims;
(vi) All
deposit accounts and all cash (whether or not deposited in such deposit accounts), not including that certain Certificate of Deposit,
Account Number 9000070132 (the “Account”), with Commerce Bank of Arizona (the “Senior Lender”) with an approximate
balance of $2,100,000.00 together with (A) all interest, whether now accrued or hereafter accruing; (B) all additional deposits hereafter
made to the Account; (C) any and all proceeds from the Account; and (D) all renewals, replacements and substitutions for any of the foregoing,
which is subject to that certain Assignment of Deposit Account, dated as of December 13, 2023, between the Company and the Senior Lender,
until the full repayment of that certain Promissory Note in the original principal amount of $2,000,000 issued by the Company to the Senior
Lender on or around December 11, 2023, and maturing on December 11, 2024, pursuant to that certain Business Loan Agreement, dated as of
December 11, 2023, between the Company and the Senior Lender (the “Excluded Collateral”);
(vii) All
investment property;
(viii) All
supporting obligations; and
(ix) All
files, records, books of account, business papers, and computer programs; and
(x) the
products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ix) above.
Without limiting the
generality of the foregoing, the “Collateral” shall include all investment property and general intangibles respecting
ownership and/or other equity interests in each Additional Debtor, including, without limitation, the shares of capital stock and the
other equity interests disclosed in the SEC Documents (as defined in the Purchase Agreement), as the same may be modified from time to
time pursuant to the terms hereof, and any other shares of capital stock and/or other equity interests of any other direct or indirect
subsidiary of any Debtor obtained in the future, and, in each case, all certificates representing such shares and/or equity interests
and, in each case, all rights, options, warrants, stock, other securities and/or equity interests that may hereafter be received, receivable
or distributed in respect of, or exchanged for, any of the foregoing and all rights arising under or in connection with the Pledged Securities,
including, but not limited to, all dividends, interest and cash.
Notwithstanding the
foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes void
by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the extent that such
applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law); provided, however,
that, to the extent permitted by applicable law, this Agreement shall create a valid security interest in such asset and, to the extent
permitted by applicable law, this Agreement shall create a valid security interest in the proceeds of such asset.
(b) “Intellectual
Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights arising under
the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether
published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation,
all registrations, recordings and applications in the United States Copyright Office, (ii) all letters patent of the United States, any
other country or any political subdivision thereof, all reissues and extensions thereof, and all applications for letters patent of the
United States or any other country and all divisions, continuations and continuations-in-part thereof, (iii) all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade dress, service marks, logos, domain names and other source
or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office
or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common
law rights related thereto, (iv) all trade secrets arising under the laws of the United States, any other country or any political subdivision
thereof, (v) all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and
(vii) all causes of action for infringement of the foregoing.
(c) [Intentionally
Omitted].
(d) “Necessary
Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment duly executed and such other
instruments or documents as the Secured Parties may reasonably request.
(e) “Obligations”
means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or
that are now or may be hereafter contracted or acquired, or owing to, of any Debtor to the Secured Parties, including, without limitation,
all obligations under this Agreement, the Note, and any other instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute
or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or indirectly from any of the Secured Parties as a preference,
fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time.
Without limiting the generality of the foregoing, the term “Obligations” shall include, without limitation: (i) principal,
interest, and penalties under the Note and all other amounts owed thereunder; (ii) any and all other fees, indemnities, costs, obligations
and liabilities of the Debtors from time to time under or in connection with this Agreement, the Note, and any other instruments, agreements
or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not limited
to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such amounts
are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving any Debtor.
(f) “Organizational
Documents” means, with respect to any Debtor, the documents by which such Debtor was organized (such as a certificate of incorporation,
certificate of limited partnership or articles of organization, and including, without limitation, any certificates of designation for
preferred stock or other forms of preferred equity) and which relate to the internal governance of such Debtor (such as bylaws, a partnership
agreement or an operating, limited liability or members agreement).
(g) “Pledged
Interests” shall have the meaning ascribed to such term in Section 4(j).
(h) “Pledged
Securities” shall have the meaning ascribed to such term in Section 4(i).
(i) “UCC”
means the Uniform Commercial Code of the State of Delaware and or any other applicable law of any state or states which has jurisdiction
with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent of the parties that defined
terms in the UCC should be construed in their broadest sense so that the term “Collateral” will be construed in its broadest
sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that broaden the definitions, they are incorporated
herein and if existing definitions in the UCC are broader than the amended definitions, the existing ones shall be controlling.
2. Grant
of Security Interest in Collateral. As an inducement for the Secured Parties to enter into the investment as evidenced by the Note
and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, each
Debtor hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Parties a security interest in and to, a
lien upon and a right of set-off against all of their respective right, title and interest of whatsoever kind and nature in and to, the
Collateral (a “Security Interest” and, collectively, the “Security Interests”).
3. Delivery
of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, each Debtor shall deliver or cause to be delivered
to the Secured Parties (a) any and all certificates and other instruments representing or evidencing the Pledged Securities, and (b) any
and all certificates and other instruments or documents representing any of the other Collateral, in each case, together with all Necessary
Endorsements. The Debtors are, contemporaneously with the execution hereof, delivering to Secured Parties, or have previously delivered
to Secured Parties, a true and correct copy of each Organizational Document governing any of the Pledged Securities.
4. Representations,
Warranties, Covenants and Agreements of the Debtors. Except as set forth under the corresponding section of the disclosure schedules
delivered to the Secured Parties concurrently herewith (the “Disclosure Schedules”), which Disclosure Schedules shall
be deemed a part hereof, each Debtor represents and warrants to, and covenants and agrees with, the Secured Parties as follows:
(a) Each
Debtor has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement and
otherwise to carry out its obligations hereunder. The execution, delivery and performance by each Debtor of this Agreement and the filings
contemplated therein have been duly authorized by all necessary action on the part of such Debtor and no further action is required by
such Debtor. This Agreement has been duly executed by each Debtor. This Agreement constitutes the legal, valid and binding obligation
of each Debtor, enforceable against each Debtor in accordance with its terms except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization and similar laws of general application relating to or affecting the rights and remedies of creditors
and by general principles of equity.
(b) The
Debtors have no place of business or offices where their respective books of account and records are kept (other than temporarily at the
offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule A attached
hereto. Except as specifically set forth on Schedule A, each Debtor is the record owner of the real property where such Collateral
is located, and there exist no mortgages or other liens on any such real property. Except as disclosed on Schedule A, none of such
Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor.
(c) Except
as set forth in the SEC Documents, the Debtors are the sole owner of the Collateral (except for non-exclusive licenses granted by any
Debtor in the ordinary course of business), free and clear of any liens, security interests, encumbrances, rights or claims. The Debtors
are fully authorized to grant the Security Interests. Except as set forth in the SEC Documents, there is not on file in any governmental
or regulatory authority, agency or recording office an effective financing statement, security agreement, license or transfer or any notice
of any of the foregoing (other than those that will be filed in favor of the Secured Parties pursuant to this Agreement) covering or affecting
any of the Collateral. Except as set forth in the SEC Documents prior to the date of this Agreement and except pursuant to this Agreement,
as long as this Agreement shall be in effect, the Debtors shall not execute and shall not knowingly permit to be on file in any such office
or agency any other financing statement or other document or instrument (except to the extent filed or recorded in favor of the Secured
Parties pursuant to the terms of this Agreement).
(d) No
written claim has been received that any Collateral or any Debtor’s use of any Collateral violates the rights of any third party. There
has been no adverse decision to any Debtor’s claim of ownership rights in or exclusive rights to use the Collateral in any jurisdiction
or to any Debtor’s right to keep and maintain such Collateral in full force and effect, and there is no proceeding involving said rights
pending or, to the best knowledge of any Debtor, threatened before any court, judicial body, administrative or regulatory agency, arbitrator
or other governmental authority.
(e) Each
Debtor shall at all times maintain its books of account and records relating to the Collateral at its principal place of business and
its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account and records
or tangible Collateral unless it delivers to the Secured Parties at least 30 days prior to such relocation (i) written notice of such
relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate financing statements
and other necessary documents have been filed and recorded and other steps have been taken to perfect the Security Interests to create
in favor of the Secured Parties a valid, perfected and continuing perfected lien in the Collateral.
(f) This
Agreement creates in favor of the Secured Parties a valid security interest in the Collateral securing the payment and performance of
the Obligations. Upon making the filings described in the immediately following paragraph, all security interests created hereunder in
any Collateral which may be perfected by filing financing statements shall have been duly perfected. Except for the filing of the financing
statements referred to in the immediately following paragraph, the recordation of this Agreement with respect to copyrights and copyright
applications in the United States Copyright Office referred to in paragraph (m), the execution and delivery of deposit account control
agreements satisfying the jurisdictional requirements with respect to each deposit account of the Debtors, and the delivery of the certificates
and other instruments provided in Section 3, no action is necessary to create, perfect or protect the security interests created hereunder.
Without limiting the generality of the foregoing, except for the filing of said financing statements, the recordation of this Agreement,
and the execution and delivery of said deposit account control agreements, no consent of any third parties and no authorization, approval
or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for (i) the execution,
delivery and performance of this Agreement, (ii) the creation or perfection of the Security Interests created hereunder in the Collateral
or (iii) the enforcement of the rights of the Secured Parties hereunder.
(g) Each
Debtor hereby authorizes the Secured Parties to file one or more financing statements with respect to the Security Interests, with the
proper filing and recording agencies in any jurisdiction deemed proper by it. The Secured Parties shall have the right (and is hereby
authorized to) to file with the applicable filing office(s) such financing statements, amendments, addenda, continuations, terminations,
assignments and other records (whether or not executed by Debtors) to perfect and to maintain perfected security interests in the Collateral
by the Secured Parties, including but not limited to a financing statement in all other applicable jurisdictions with respect to the Collateral
promptly upon the execution of this Agreement.
(h) The
execution, delivery and performance of this Agreement by the Debtors does not violate any of the provisions of any Organizational Documents
of any Debtor or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law, rule or regulation
applicable to any Debtor, conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of
time or both) of, any agreement, credit facility, debt or other instrument (evidencing any Debtor’s debt or otherwise) or other understanding
to which any Debtor is a party or by which any property or asset of any Debtor is bound or affected. If any, all required consents (including,
without limitation, from stockholders or creditors of any Debtor) necessary for any Debtor to enter into and perform its obligations hereunder
have been obtained.
(i) The
capital stock and other equity interests listed in the SEC Documents (the “Pledged Securities”) represent all of the
capital stock and other equity interests of each Additional Debtor, and represent all capital stock and other equity interests owned,
directly or indirectly, by the Company. All of the Pledged Securities are validly issued, fully paid and nonassessable, and the Company
is the legal and beneficial owner of the Pledged Securities, free and clear of any lien, security interest or other encumbrance except
for the security interests created by this Agreement.
(j) The
ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the “Pledged
Interests”) by their express terms do not provide that they are securities governed by Article 8 of the UCC and are not held
in a securities account or by any financial intermediary.
(k) Each
Debtor shall at all times maintain the liens and Security Interests provided for hereunder as valid and perfected first priority (subject
to Section 19(n) hereof) liens and security interests in the Collateral in favor of the Secured Parties until this Agreement and the Security
Interest hereunder shall be terminated pursuant to Section 14 hereof. Each Debtor hereby agrees to defend the same against the claims
of any and all persons and entities. Each Debtor shall safeguard and protect all Collateral for the account of the Secured Parties. Each
Debtor shall pay the cost of filing the same in all public offices wherever filing is, or is deemed by the Secured Parties to be, necessary
or desirable to effect the rights and obligations provided for herein. Each Debtor shall, upon reasonable request by the Secured Parties,
file with the applicable filing office(s) such financing statements, amendments, addenda, continuations, terminations, assignments and
other records (whether or not executed by Debtor) to perfect and to maintain perfected security interests in the Collateral by the Secured
Parties, including but not limited to (a) promptly upon the execution of this Agreement, a financing statement in all applicable jurisdictions
on behalf of the Secured Parties with respect to the Collateral. The Financing Statement shall designate the Secured Parties as the secured
party and Debtor as the debtor, shall identify the security interest in the Collateral, and contain any other items required by law. Without
limiting the generality of the foregoing, each Debtor shall pay all fees, taxes and other amounts necessary to maintain the Collateral
and the Security Interests hereunder, and each Debtor shall obtain and furnish to the Secured Parties from time to time, upon demand,
such releases and/or subordinations of claims and liens which may be required to maintain the priority of the Security Interests hereunder.
(l) No
Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except for non-exclusive
licenses granted by a Debtor in its ordinary course of business and sales of inventory by a Debtor in its ordinary course of business)
without the prior written consent of the Secured Parties.
(m) Each
Debtor shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order and shall not
operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.
(n) Each
Debtor shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral hereafter
acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established reputation having
similar properties similarly situated and in such amounts as are customarily carried under similar circumstances by other such entities
and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover the full replacement cost
thereof. Each Debtor shall cause each insurance policy issued in connection herewith to provide, and the insurer issuing such policy to
certify to the Secured Parties, that (a) if such insurance be proposed to be cancelled or materially changed for any reason whatsoever,
such insurer will promptly notify the Secured Parties and such cancellation or change shall not be effective as to the Secured Parties
for at least thirty (30) days after receipt by the Secured Parties of such notice, unless the effect of such change is to extend or increase
coverage under the policy; and (b) the Secured Parties will have the right (but no obligation) at its election to remedy any default in
the payment of premiums within thirty (30) days of notice from the insurer of such default. If no Event of Default (as defined in the
Note) exists and if the proceeds arising out of any claim or series of related claims do not exceed $100,000, loss payments in each instance
will be applied by the applicable Debtor to the repair and/or replacement of property with respect to which the loss was incurred to the
extent reasonably feasible, and any loss payments or the balance thereof remaining, to the extent not so applied, shall be payable to
the applicable Debtor; provided, however, that payments received by any Debtor after an Event of Default occurs and is continuing
or in excess of $100,000 for any occurrence or series of related occurrences shall be paid to the Secured Parties and accordingly, if
received by such Debtor, shall be held in trust for the Secured Parties and immediately paid over to the Secured Parties. Copies of such
policies or the related certificates, in each case, shall be delivered to the Secured Parties at least annually and at the time any new
policy of insurance is issued.
(o) Each
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Parties promptly, in sufficient detail, of any material
adverse change in the Collateral, and of the occurrence of any event which would have a material adverse effect on the value of the Collateral
or on the Secured Parties’ security interest therein.
(p) Each
Debtor shall promptly execute and deliver to the Secured Parties such further deeds, mortgages, assignments, security agreements, financing
statements or other instruments, documents, certificates and assurances and take such further action as the Secured Parties may from time
to time request and may in its sole discretion deem necessary to perfect, protect or enforce the Secured Parties’ security interest
in the Collateral.
(q) Each
Debtor shall permit the Secured Parties and its representatives and agents to inspect the Collateral during normal business hours and
upon reasonable prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the Secured
Parties from time to time.
(r) Each
Debtor shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes
of action and accounts receivable in respect of the Collateral.
(s) Each
Debtor shall promptly notify the Secured Parties in sufficient detail upon becoming aware of any attachment, garnishment, execution or
other legal process levied against any Collateral and of any other information received by such Debtor that may materially affect the
value of the Collateral, the Security Interest or the rights and remedies of the Secured Parties hereunder.
(t) All
information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of any Debtor with respect to the Collateral
is accurate and complete in all material respects as of the date furnished.
(u) The
Debtors shall at all times preserve and keep in full force and effect their respective valid existence and good standing and any rights
and franchises material to its business.
(v) No
Debtor will change its name, type of organization, jurisdiction of organization, organizational identification number (if it has one),
legal or corporate structure, or identity, or add any new fictitious name unless it provides at least 30 days prior written notice to
the Secured Parties of such change and, at the time of such written notification, such Debtor provides any financing statements or fixture
filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
(w) Except
in the ordinary course of business, no Debtor may consign any of its inventory or sell any of its inventory on bill and hold, sale or
return, sale on approval, or other conditional terms of sale without the consent of the Secured Parties which shall not be unreasonably
withheld.
(x) No
Debtor may relocate its chief executive office to a new location without providing 30 days prior written notification thereof to the Secured
Parties and so long as, at the time of such written notification, such Debtor provides any financing statements or fixture filings necessary
to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
(y) Each
Debtor was organized and remains organized solely under the laws of the state set forth next to such Debtor’s name in Schedule
B attached hereto, which Schedule B sets forth each Debtor’s organizational identification number or, if any Debtor does
not have one, states that one does not exist.
(z)
(i) The actual name of each Debtor is the name set forth in Schedule B attached hereto; (ii) no Debtor has any trade names except
as set forth in the SEC Documents; (iii) no Debtor has used any name other than that stated in the preamble hereto or as set forth in
the SEC Documents for the preceding five years; and (iv) no entity has merged into any Debtor or been acquired by any Debtor within the
past five years except as set forth in the SEC Documents.
(aa) At
any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require or permit
possession by the Secured Parties to perfect the security interest created hereby, the applicable Debtor shall deliver such Collateral
to the Secured Parties.
(bb) Each
Debtor, in its capacity as issuer, hereby agrees to comply with any and all orders and instructions of Secured Parties regarding the Pledged
Interests consistent with the terms of this Agreement without the further consent of any Debtor as contemplated by Section 8-106 (or any
successor section) of the UCC. Further, each Debtor agrees that it shall not enter into a similar agreement (or one that would confer
“control” within the meaning of Article 8 of the UCC) with any other person or entity.
(cc) Each
Debtor shall cause all tangible chattel paper constituting Collateral to be delivered to the Secured Parties, or, if such delivery is
not possible, then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest created
by this Agreement. To the extent that any Collateral consists of electronic chattel paper, the applicable Debtor shall cause the underlying
chattel paper to be “marked” within the meaning of Section 9-105 of the UCC (or successor section thereto).
(dd) If
there is any investment property or deposit account included as Collateral that can be perfected by “control” through an account
control agreement, the applicable Debtor shall cause such an account control agreement, in form and substance in each case satisfactory
to the Secured Parties, to be entered into and delivered to the Secured Parties.
(ee) To
the extent that any Collateral consists of letter-of-credit rights, the applicable Debtor shall cause the issuer of each underlying letter
of credit to consent to an assignment of the proceeds thereof to the Secured Parties.
(ff) To
the extent that any Collateral is in the possession of any third party, the applicable Debtor shall join with the Secured Parties in notifying
such third party of the Secured Parties’ security interest in such Collateral and shall use its best efforts to obtain an acknowledgement
and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory to the Secured Parties.
(gg) If
any Debtor shall at any time hold or acquire a commercial tort claim, such Debtor shall promptly notify the Secured Parties in a writing
signed by such Debtor of the particulars thereof and grant to the Secured Parties in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Secured Parties.
(hh) Each
Debtor shall immediately provide written notice to the Secured Parties of any and all accounts which arise out of contracts with any governmental
authority and, to the extent necessary to perfect or continue the perfected status of the Security Interests in such accounts and proceeds
thereof, shall execute and deliver to the Secured Parties an assignment of claims for such accounts and cooperate with the Secured Parties
in taking any other steps required, in its judgment, under the Federal Assignment of Claims Act or any similar federal, state or local
statute or rule to perfect or continue the perfected status of the Security Interests in such accounts and proceeds thereof.
(ii) Each
Debtor shall cause each future subsidiary of such Debtor to immediately become a party hereto (an “Additional Debtor”), by
executing and delivering an Additional Debtor Joinder in substantially the form of Annex A attached hereto and comply with the
provisions hereof applicable to the Debtors. Concurrent therewith, the Additional Debtor shall deliver replacement schedules for, or supplements
to all other Schedules to (or referred to in) this Agreement, as applicable, which replacement schedules shall supersede, or supplements
shall modify, the Schedules then in effect. The Additional Debtor shall also deliver such opinions of counsel, authorizing resolutions,
good standing certificates, incumbency certificates, organizational documents, financing statements and other information and documentation
as the Secured Parties may reasonably request. Upon delivery of the foregoing to the Secured Parties, the Additional Debtor shall be and
become a party to this Agreement with the same rights and obligations as the Debtors, for all purposes hereof as fully and to the same
extent as if it were an original signatory hereto and shall be deemed to have made the representations, warranties and covenants set forth
herein as of the date of execution and delivery of such Additional Debtor Joinder, and all references herein to the “Debtors”
shall be deemed to include each Additional Debtor.
(jj) Each Debtor
shall vote the Pledged Securities to comply with the covenants and agreements set forth herein and in the Note.
(kk) Each Debtor
shall register the pledge of the applicable Pledged Securities on the books of such Debtor. Each Debtor shall notify each issuer of Pledged
Securities to register the pledge of the applicable Pledged Securities in the name of the Secured Parties on the books of such issuer.
Further, except with respect to certificated securities delivered to the Secured Parties, the applicable Debtor shall deliver to Secured
Parties an acknowledgement of pledge (which, where appropriate, shall comply with the requirements of the relevant jurisdiction with respect
to perfection by registration) signed by the issuer of the applicable Pledged Securities, which acknowledgement shall confirm that: (a)
it has registered the pledge on its books and records; and (b) at any time directed by the Secured Parties during the continuation of
an Event of Default, such issuer will transfer the record ownership of such Pledged Securities into the name of the Secured Parties or
any designee of Secured Parties, will take such steps as may be necessary to effect the transfer, and will comply with all other instructions
of Secured Parties regarding such Pledged Securities without the further consent of the applicable Debtor.
(ll) In the event
that, upon an occurrence of an Event of Default, Secured Parties shall sell all or any of the Pledged Securities to another party or parties
(herein called the “Transferee”) or shall purchase or retain all or any of the Pledged Securities, each Debtor shall,
to the extent applicable: (i) deliver to Secured Parties or the Transferee, as the case may be, the articles of incorporation, bylaws,
minute books, stock certificate books, corporate seals, deeds, leases, indentures, agreements, evidences of indebtedness, books of account,
financial records and all other Organizational Documents and records of the Debtors and their direct and indirect subsidiaries; (ii) use
its best efforts to obtain resignations of the persons then serving as officers and directors of the Debtors and their direct and indirect
subsidiaries, if so requested; and (iii) use its best efforts to obtain any approvals that are required by any governmental or regulatory
body in order to permit the sale of the Pledged Securities to the Transferee or the purchase or retention of the Pledged Securities by
Secured Parties and allow the Transferee or Secured Parties to continue the business of the Debtors and their direct and indirect subsidiaries.
(mm) Without
limiting the generality of the other obligations of the Debtors hereunder, each Debtor shall promptly (i) cause to be registered at the
United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with respect to all
Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office to be duly recorded
at the applicable office, and (iii) give the Secured Parties notice whenever it acquires (whether absolutely or by license) or creates
any additional material Intellectual Property.
(nn) Each
Debtor will from time to time, at the joint and several expense of the Debtors, promptly execute and deliver all such further instruments
and documents, and take all such further action as may be necessary or desirable, or as the Secured Parties may reasonably request, in
order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Secured Parties to exercise
and enforce their rights and remedies hereunder and with respect to any Collateral or to otherwise carry out the purposes of this Agreement.
(oo) The
SEC Documents disclose all of the patents, patent applications, trademarks, trademark applications, registered copyrights, and domain
names owned by any of the Debtors as of the date hereof. The SEC Documents disclose all material licenses in favor of any Debtor for the
use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents and trademarks of the Debtors
have been duly recorded at the United States Patent and Trademark Office and all material copyrights of the Debtors have been duly recorded
at the United States Copyright Office.
(pp) Except
as set forth in the SEC Documents, none of the account debtors or other persons or entities obligated on any of the Collateral is a governmental
authority covered by the Federal Assignment of Claims Act or any similar federal, state or local statute or rule in respect of such Collateral.
5. Effect
of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting equity or ownership interests (regardless
of class, designation, preference or rights) that may be converted into voting equity or ownership interests upon the occurrence of certain
events (including, without limitation, upon the transfer of all or any of the other stock or assets of the issuer), it is agreed that
the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement of any of Secured Parties’ rights
hereunder shall not be deemed to be the type of event which would trigger such conversion rights notwithstanding any provisions in the
Organizational Documents or agreements to which any Debtor is subject or to which any Debtor is party.
6. Defaults.
The following events shall be “Events of Default”:
(a) The
occurrence of an Event of Default (as defined in the Note) under the Note;
(b) Any
representation or warranty of any Debtor in this Agreement shall prove to have been incorrect in any material respect when made;
(c) The
failure by any Debtor to observe or perform any of its obligations hereunder for five (5) days after delivery to such Debtor of notice
of such failure by or on behalf of the Secured Parties unless such default is capable of cure but cannot be cured within such time frame
and such Debtor is using best efforts to cure same in a timely fashion; or
(d) If
any provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof
shall be contested by any Debtor, or a proceeding shall be commenced by any Debtor, or by any governmental authority having jurisdiction
over any Debtor, seeking to establish the invalidity or unenforceability thereof, or any Debtor shall deny that any Debtor has any liability
or obligation purported to be created under this Agreement.
7. Duty
To Hold In Trust.
(a) Upon
the occurrence of any Event of Default and at any time thereafter, each Debtor shall, upon receipt of any revenue, income, dividend, interest
or other sums subject to the Security Interests, whether payable pursuant to the Note or otherwise, or of any check, draft, note, trade
acceptance or other instrument evidencing an obligation to pay any such sum, hold the same in trust for the Secured Parties and shall
forthwith endorse and transfer any such sums or instruments, or both, to the Secured Parties, pro-rata in proportion to their respective
then-currently outstanding principal amount of Note for application to the satisfaction of the Obligations.
(b) If
any Debtor shall become entitled to receive or shall receive any securities or other property (including, without limitation, shares of
Pledged Securities or instruments representing Pledged Securities acquired after the date hereof, or any options, warrants, rights or
other similar property or certificates representing a dividend, or any distribution in connection with any recapitalization, reclassification
or increase or reduction of capital, or issued in connection with any reorganization of such Debtor or any of its direct or indirect subsidiaries)
in respect of the Pledged Securities (whether as an addition to, in substitution of, or in exchange for, such Pledged Securities or otherwise),
such Debtor agrees to (i) accept the same as the agent of the Secured Parties; (ii) hold the same in trust on behalf of and for the benefit
of the Secured Parties; and (iii) to deliver any and all certificates or instruments evidencing the same to Secured Parties on or before
the close of business on the fifth business day following the receipt thereof by such Debtor, in the exact form received together with
the Necessary Endorsements, to be held by Secured Parties subject to the terms of this Agreement as Collateral.
8. Rights
and Remedies Upon Default.
(a) Upon
the occurrence of any Event of Default and at any time thereafter, the Secured Parties, shall have the right to exercise all of the remedies
conferred hereunder and under the Note, and the Secured Parties shall have all the rights and remedies of a secured party under the UCC.
Without limitation, the Secured Parties shall have the following rights and powers:
(i) The
Secured Parties shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of
any person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and each Debtor shall assemble
the Collateral and make it available to the Secured Parties at places which the Secured Parties shall reasonably select, whether at such
Debtor’s premises or elsewhere, and make available to the Secured Parties, without rent, all of such Debtor’s respective premises
and facilities for the purpose of the Secured Parties taking possession of, removing or putting the Collateral in saleable or disposable
form.
(ii) Upon
notice to the Debtors by Secured Parties, all rights of each Debtor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise and all rights of each Debtor to receive the dividends and interest which it would otherwise be authorized
to receive and retain, shall cease. Upon such notice, the Secured Parties shall have the right to receive any interest, cash dividends
or other payments on the Collateral and, at the option of Secured Parties, to exercise in such Secured Parties’ discretion all voting
rights pertaining thereto. Without limiting the generality of the foregoing, Secured Parties shall have the right (but not the obligation)
to exercise all rights with respect to the Collateral as it were the sole and absolute owner thereof, including, without limitation, to
vote and/or to exchange, at its sole discretion, any or all of the Collateral in connection with a merger, reorganization, consolidation,
recapitalization or other readjustment concerning or involving the Collateral or any Debtor or any of its direct or indirect subsidiaries.
(iii) The Secured
Parties shall have the right to operate the business of each Debtor using the Collateral and shall have the right to assign, sell, lease
or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with or without
special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at such time or times
and at such place or places, and upon such terms and conditions as the Secured Parties may deem commercially reasonable, all without (except
as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to any Debtor or right of redemption
of a Debtor, which are hereby expressly waived. Upon each such sale, lease, assignment or other transfer of Collateral, the Secured Parties,
may, unless prohibited by applicable law which cannot be waived, purchase all or any part of the Collateral being sold, free from and
discharged of all trusts, claims, right of redemption and equities of any Debtor, which are hereby waived and released.
(iv) The
Secured Parties shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or accounts
to make payments directly to the Secured Parties, on behalf of the Secured Parties, and to enforce the Debtors’ rights against such
account debtors and obligors.
(v) The
Secured Parties may (but are not obligated to) direct any financial intermediary or any other person or entity holding any investment
property to transfer the same to the Secured Parties or its designee.
(vi) The
Secured Parties may (but is not obligated to) transfer any or all Intellectual Property registered in the name of any Debtor at the United
States Patent and Trademark Office and/or Copyright Office into the name of the Secured Parties or any designee or any purchaser of any
Collateral.
(b) The
Secured Parties shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral. The Secured Parties may sell the Collateral without giving
any warranties and may specifically disclaim such warranties. If the Secured Parties sell any of the Collateral on credit, the Debtors
will only be credited with payments actually made by the purchaser. In addition, each Debtor waives any and all rights that it may have
to a judicial hearing in advance of the enforcement of any of the Secured Parties’ rights and remedies hereunder, including, without
limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its rights and remedies
with respect thereto.
(c) For
the purpose of enabling the Secured Parties to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement
or applicable law, each Debtor hereby grants to the Secured Parties, for the benefit of the Secured Parties, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to such Debtor) to use, license or sublicense following an Event
of Default, any Intellectual Property now owned or hereafter acquired by such Debtor, and wherever the same may be located, and including
in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs
used for the compilation or printout thereof.
9. Applications
of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on account
of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding, storing,
processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other costs incurred in connection
therewith) of the Collateral, to the reasonable attorneys’ fees and expenses incurred by the Secured Parties in enforcing the Secured
Parties’ rights hereunder and in connection with collecting, storing and disposing of the Collateral, and then to satisfaction of
the Obligations pro rata among the Secured Parties (based on then-outstanding principal amounts of Note at the time of any such determination),
and to the payment of any other amounts required by applicable law, after which the Secured Parties shall pay to the applicable Debtor
any surplus proceeds. If, upon the sale, license or other disposition of the Collateral, the proceeds thereof are insufficient to pay
all amounts to which the Secured Parties are legally entitled, the Debtors will be liable for the deficiency, together with interest thereon,
at the rate of the Default Interest (as defined in the Note), and the reasonable fees of any attorneys employed by the Secured Parties
to collect such deficiency. To the extent permitted by applicable law, each Debtor waives all claims, damages and demands against the
Secured Parties arising out of the repossession, removal, retention or sale of the Collateral, unless due solely to the gross negligence
or willful misconduct of the Secured Parties as determined by a final judgment (not subject to further appeal) of a court of competent
jurisdiction.
10. Securities
Law Provision. Each Debtor recognizes that Secured Parties may be limited in its ability to effect a sale to the public of all or part
of the Pledged Securities by reason of certain prohibitions in the Securities Act of 1933, as amended, or other federal or state securities
laws (collectively, the “Securities Laws”), and may be compelled to resort to one or more sales to a restricted group
of purchasers who may be required to agree to acquire the Pledged Securities for their own account, for investment and not with a view
to the distribution or resale thereof. Each Debtor agrees that sales so made may be at prices and on terms less favorable than if the
Pledged Securities were sold to the public, and that Secured Parties have no obligation to delay the sale of any Pledged Securities for
the period of time necessary to register the Pledged Securities for sale to the public under the Securities Laws. Each Debtor shall cooperate
with Secured Parties in its attempt to satisfy any requirements under the Securities Laws (including, without limitation, registration
thereunder if requested by Secured Parties) applicable to the sale of the Pledged Securities by Secured Parties.
11. Costs
and Expenses. Each Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements, continuation statements, partial releases and/or termination
statements related thereto or any expenses of any searches reasonably required by the Secured Parties. The Debtors shall also pay all
other claims and charges which in the reasonable opinion of the Secured Parties is reasonably likely to prejudice, imperil or otherwise
affect the Collateral or the Security Interests therein. The Debtors will also, upon demand, pay to the Secured Parties the amount of
any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which the Secured
Parties may incur in connection with the creation, perfection, protection, satisfaction, foreclosure, collection or enforcement of the
Security Interest and the preparation, administration, continuance, amendment or enforcement of this Agreement and pay to the Secured
Parties the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and
agents, which the Secured Parties may incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation
of, or the sale of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of
the rights of the Secured Parties under the Note. Until so paid, any fees payable hereunder shall be added to the principal amount of
the Note and shall bear interest at the rate of the Default Interest (as defined in the Note).
12. Responsibility
for Collateral. The Debtors assume all liabilities and responsibility in connection with all Collateral, and the Obligations shall
in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its unavailability
for any reason. Without limiting the generality of the foregoing, (a) the Secured Parties do not (i) have any duty (either before or after
an Event of Default) to collect any amounts in respect of the Collateral or to preserve any rights relating to the Collateral, or (ii)
have any obligation to clean-up or otherwise prepare the Collateral for sale, and (b) each Debtor shall remain obligated and liable under
each contract or agreement included in the Collateral to be observed or performed by such Debtor thereunder. The Secured Parties shall
not have any obligation or liability under any such contract or agreement by reason of or arising out of this Agreement or the receipt
by the Secured Parties of any payment relating to any of the Collateral, nor shall the Secured Parties be obligated in any manner to perform
any of the obligations of any Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency
of any payment received by the Secured Parties in respect of the Collateral or as to the sufficiency of any performance by any party under
any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment
of any amounts which the Secured Parties may be entitled at any time or times.
13. Security
Interests Absolute. All rights of the Secured Parties and all obligations of the Debtors hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement, the Note or any agreement entered into in connection with
the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance of, or in any other
term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Note or any other
agreement entered into in connection with the foregoing; (c) any exchange, release or nonperfection of any of the Collateral, or any release
or amendment or waiver of or consent to departure from any other collateral for, or any guarantee, or any other security, for all or any
of the Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and cancel in its sole discretion any insurance claims
or matters made or arising in connection with the Collateral; or (e) any other circumstance which might otherwise constitute any legal
or equitable defense available to a Debtor, or a discharge of all or any part of the Security Interests granted hereby. Until the Obligations
shall have been paid and performed in full, the rights of the Secured Parties shall continue even if the Obligations are barred for any
reason, including, without limitation, the running of the statute of limitations or bankruptcy. Each Debtor expressly waives presentment,
protest, notice of protest, demand, notice of nonpayment and demand for performance. In the event that at any time any transfer of any
Collateral or any payment received by the Secured Parties hereunder shall be deemed by final order of a court of competent jurisdiction
to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be
deemed to be otherwise due to any party other than the Secured Parties, then, in any such event, each Debtor’s obligations hereunder
shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or cancellation
of this Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof. Each
Debtor waives all right to require the Secured Parties to proceed against any other person or entity or to apply any Collateral which
the Secured Parties may hold at any time, or to marshal assets, or to pursue any other remedy. Each Debtor waives any defense arising
by reason of the application of the statute of limitations to any obligation secured hereby.
14. Term
of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the Note have been
indefeasibly paid in full and all other Obligations have been paid or discharged; provided, however, that all indemnities
of the Debtors contained in this Agreement shall survive and remain operative and in full force and effect regardless of the termination
of this Agreement.
15. Power
of Attorney; Further Assurances.
(a) Each
Debtor authorizes the Secured Parties, and does hereby make, constitute and appoint the Secured Parties and its officers, agents, successors
or assigns with full power of substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in the name of the Secured
Parties or such Debtor, to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note, checks, drafts,
money orders or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect of
the Collateral that may come into possession of the Secured Parties; (ii) to sign and endorse any financing statement or any invoice,
freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices
in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge taxes, liens, security interests
or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv) to demand, collect, receipt for, compromise,
settle and sue for monies due in respect of the Collateral; (v) to transfer any Intellectual Property or provide licenses respecting any
Intellectual Property; and (vi) generally, at the option of the Secured Parties, and at the expense of the Debtors, at any time, or from
time to time, to execute and deliver any and all documents and instruments and to do all acts and things which the Secured Parties deem
necessary to protect, preserve and realize upon the Collateral and the Security Interests granted therein in order to effect the intent
of this Agreement and the Note all as fully and effectually as the Debtors might or could do; and each Debtor hereby ratifies all that
said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be
irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall be outstanding. The designation set
forth herein shall be deemed to amend and supersede any inconsistent provision in the Organizational Documents or other documents or agreements
to which any Debtor is subject or to which any Debtor is a party. Without limiting the generality of the foregoing, after the occurrence
and during the continuance of an Event of Default, the Secured Parties are specifically authorized to execute and file any applications
for or instruments of transfer and assignment of any patents, trademarks, copyrights or other Intellectual Property with the United States
Patent and Trademark Office and the United States Copyright Office.
(b) On
a continuing basis, each Debtor will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper filing
and recording agencies in any jurisdiction, all such instruments, and take all such action as may reasonably be deemed necessary or advisable,
or as reasonably requested by the Secured Parties, to perfect the Security Interests granted hereunder and otherwise to carry out the
intent and purposes of this Agreement, or for assuring and confirming to the Secured Parties the grant or perfection of a perfected security
interest in all the Collateral under the UCC.
(c) Each
Debtor hereby irrevocably appoints the Secured Parties as such Debtor’s attorney-in-fact, with full authority in the place and instead
of such Debtor and in the name of such Debtor, from time to time in the Secured Parties’ discretion, to take any action and to execute
any instrument which the Secured Parties may deem necessary or advisable to accomplish the purposes of this Agreement, pertaining to the
filing, in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral
without the signature of such Debtor where permitted by law, which financing statements may (but need not) describe the Collateral as
“all assets” or “all personal property” or words of like import (except as such description is inconsistent with
the Collateral as provided herein), and ratifies all such actions taken by the Secured Parties. This power of attorney is coupled with
an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall be outstanding.
16. Notices.
All notices, requests, demands and other communications hereunder shall be subject to the notice provision of the Purchase Agreement (as
such term is defined in the Note).
17. Other
Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity, then the Secured Parties shall have the right, in its
sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying
or affecting any of the Secured Parties’ rights and remedies hereunder.
18. [Intentionally
Omitted].
19. Miscellaneous.
(a) No
course of dealing between the Debtors and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on the part of
the Secured Parties, any right, power or privilege hereunder or under the Note shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
(b) All
of the rights and remedies of the Secured Parties with respect to the Collateral, whether established hereby or by the Note or by any
other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.
(c) This
Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtors and the Secured Parties
holding 67% or more of the principal amount of Note then outstanding, or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought.
(d) If
any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void
or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect
and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find
and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant
or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
(e) No
waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver
in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
(f) This
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Debtors may not
assign this Agreement or any rights or obligations hereunder without the prior written consent of the Secured Parties (other than by merger
as provided in this Agreement and the Note). The Secured Parties may assign any or all of its rights under this Agreement to any party
to whom such Secured Parties assigns or transfers any Obligations, provided such transferee agrees in writing to be bound, with respect
to the transferred Obligations, by the provisions of this Agreement that apply to the “Secured Parties.”
(g) Each
party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order to carry
out the provisions and purposes of this Agreement.
(h) The
Debtors and Secured Parties shall submit all Claims (as defined in Exhibit E of the Purchase Agreement) (the “Claims”) arising
under this Agreement 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 E of the Purchase Agreement (the “Arbitration
Provisions”). The Debtors and Secured Parties hereby acknowledge and agree that the Arbitration Provisions are unconditionally binding
on the Debtors and Secured Parties hereto and are severable from all other provisions of this Agreement. By executing this Agreement,
Debtors represents, warrants and covenants that Debtors have 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
Debtors will not take a position contrary to the foregoing representations. Debtors acknowledge and agree that Secured Parties may rely
upon the foregoing representations and covenants of Debtors 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 Debtors and Secured Parties consent to and expressly agree that the exclusive venue for arbitration
of any Claims arising under this Agreement or any other agreement between the Debtors and Secured Parties or their respective affiliates
(including but not limited to the Transaction Documents (as defined in the Purchase Agreement)) or any Claim relating to the relationship
of the Debtors and Secured Parties or their respective affiliates shall be in the State of Delaware. Without modifying the Debtors’
and Secured Parties’ obligations to resolve disputes hereunder pursuant to the Arbitration Provisions, for any litigation arising
in connection with any of the Transaction Documents, 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 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 Secured Parties to realize on any collateral or any other security, or to enforce a judgment or
other court ruling in favor of the Secured Parties, including through a legal action in any court of competent jurisdiction. The Debtors
hereby irrevocably waive, and agree 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 DEBTORS 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 Debtors irrevocably waive 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 Debtors 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.
(i) This
Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of
which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by electronic or facsimile
transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed)
the same with the same force and effect as if such electronic or facsimile signature were the original thereof.
(j) All
Debtors shall jointly and severally be liable for the obligations of each Debtor to the Secured Parties hereunder.
(k) Each
Debtor shall indemnify, reimburse and hold harmless the Secured Parties and their respective partners, members, shareholders, officers,
directors, employees and agents (and any other persons with other titles that have similar functions) (including, without limitation,
those retained in connection with the transactions contemplated by this Agreement) (collectively, “Indemnitees”) from
and against any and all losses, claims, liabilities, damages, penalties, suits, costs and expenses, of any kind or nature (including fees
relating to the cost of investigating and defending any of the foregoing) imposed on, incurred by or asserted against such Indemnitee
in any way related to or arising from or alleged to arise from this Agreement or the Collateral, except any such losses, claims, liabilities,
damages, penalties, suits, costs and expenses which result from the gross negligence or willful misconduct of the Indemnitee as determined
by a final, nonappealable decision of a court of competent jurisdiction. This indemnification provision is in addition to, and not in
limitation of, any other indemnification provision in the Note, the Purchase Agreement (as such term is defined in the Note) or any other
agreement, instrument or other document executed or delivered in connection herewith or therewith.
(l) Nothing
in this Agreement shall be construed to subject the Secured Parties to liability as a partner in any Debtor or any if its direct or indirect
subsidiaries that is a partnership or as a member in any Debtor or any of its direct or indirect subsidiaries that is a limited liability
company, nor shall the Secured Parties be deemed to have assumed any obligations under any partnership agreement or limited liability
company agreement, as applicable, of any such Debtor or any of its direct or indirect subsidiaries or otherwise, unless and until any
such Secured Parties exercise its right to be substituted for such Debtor as a partner or member, as applicable, pursuant hereto.
(m) To
the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent, approval
or action of any partner or member, as applicable, of any Debtor or any direct or indirect subsidiary of any Debtor or compliance with
any provisions of any of the Organizational Documents, the Debtors hereby grant such consent and approval and waive any such noncompliance
with the terms of said documents.
(n) Notwithstanding
anything to the contrary contained in this Agreement, the security interest(s) with respect to the Collateral created by this Agreement
shall be junior in priority to the security interest(s) with respect to the Collateral established for the Prior Secured Note (as defined
in the Note).
(o) Notwithstanding
anything to the contrary contained in this Agreement, the security interest(s) with respect to the Collateral created by this Agreement
shall be pari passu in priority to the security interest(s) with respect to the Collateral established for that certain senior secured
promissory note issued by the Company to the Secured Parties on or around May 16, 2024, in the original principal amount of $412,500.00.
[SIGNATURE PAGE FOLLOW]
IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed on the day and year first above written.
SIGNING DAY SPORTS, INC.
| By: |
/s/ Daniel Nelson |
|
|
Name: |
Daniel Nelson |
|
|
Title: |
Chief Executive Officer |
|
| FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC |
| |
|
|
| By: |
FirstFire Capital Management LLC, its manager |
|
| |
|
|
| By: |
/s/ Eli Fireman |
|
| |
Name: |
Eli Fireman |
|
SCHEDULE A
Principal Place of Business of Debtors: 8355 East Hartford
Dr., Suite 100, Scottsdale, AZ 85255
Locations Where Collateral is Located or Stored:
8355 East Hartford Dr., Suite 100, Scottsdale,
AZ 85255
SCHEDULE B
| Jurisdiction of Organization |
| |
|
|
| Debtor |
|
Jurisdiction of Organization |
| Signing Day Sports, Inc. |
|
Delaware |
ANNEX A
to
SECURITY
AGREEMENT
FORM OF ADDITIONAL
DEBTOR JOINDER
Security Agreement dated as of June 18, 2024 made
by
Signing Day Sports, Inc.
and its subsidiaries party thereto from time to
time, as Debtors
to and in favor of
the Secured Parties identified therein (the “Security
Agreement”)
Reference is made to the Security
Agreement as defined above; capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms
in, or by reference in, the Security Agreement.
The undersigned hereby agrees
that upon delivery of this Additional Debtor Joinder to the Secured Parties referred to above, the undersigned shall (a) be an Additional
Debtor under the Security Agreement, (b) have all the rights and obligations of the Debtors under the Security Agreement as fully and
to the same extent as if the undersigned was an original signatory thereto and (c) be deemed to have made the representations and warranties
set forth therein as of the date of execution and delivery of this Additional Debtor Joinder. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
THE UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL AS MORE FULLY SET FORTH IN THE SECURITY
AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS SET FORTH THEREIN.
Attached hereto are supplemental
and/or replacement Schedules to the Security Agreement, as applicable.
An executed copy of this Joinder
shall be delivered to the Secured Parties, and the Secured Parties may rely on the matters set forth herein on or after the date hereof.
This Joinder shall not be modified, amended or terminated without the prior written consent of the Secured Parties.
IN WITNESS WHEREOF, the undersigned
has caused this Joinder to be executed in the name and on behalf of the undersigned.
| |
[Name of Additional Debtor] |
| |
|
|
| |
By: |
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| |
Address: |
| |
|
|
| Dated: |
|
|
ANNEX L
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
(this “Agreement”), dated as of June 18, 2024, by and between SIGNING DAY SPORTS, INC., a Delaware corporation
(the “Company”), and FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC, a Delaware limited
liability company (together with it permitted assigns, the “Investor”). Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the securities purchase agreement by and between the parties
hereto, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase
Agreement”).
WHEREAS:
The Company has agreed, upon
the terms and subject to the conditions of the Purchase Agreement, to sell to the Investor the Securities (as defined in the Purchase
Agreement) and to induce the Investor to enter into the Purchase Agreement, the Company has agreed to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively,
the “Securities Act”), and applicable state securities laws.
NOW, THEREFORE, in
consideration of the promises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Investor hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the
following terms shall have the following meanings:
a. “Investor”
shall have the meaning set forth above.
b. “Person”
means any individual or entity including but not limited to any corporation, a limited liability company, an association, a partnership,
an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.
c. “Register,”
“registered,” and “registration” refer to a registration effected by preparing and filing one or more
registration statements of the Company in compliance with the Securities Act and/or pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a continuous basis (“Rule 415”), and the declaration or ordering
of effectiveness of such registration statement(s) by the United States Securities and Exchange Commission (the “SEC”).
d. “Registrable
Securities” means all of the Commitment Shares (as defined in the Purchase Agreement) (the “Commitment Shares”),
Conversion Shares (as defined in the Purchase Agreement) (the “Conversion Shares”) which may, from time to time, be
issued to the Investor under the Note (as defined in the Purchase Agreement) (the “Note”), without regard to any limitation
on beneficial ownership, Exercise Shares (as defined in the Purchase Agreement) (the “Exercise Shares”) which may,
from time to time, be issued to the Investor under the Warrants (as defined in the Purchase Agreement) (the “Warrants”),
without regard to any limitation on beneficial ownership, and shares of Common Stock (as defined in the Purchase Agreement) (the “Common
Stock”) issued to the Investor as a result of any stock split, stock dividend, recapitalization, exchange or similar event or
otherwise, without regard to any limitation on beneficial ownership in the Purchase Agreement, Note, or Warrants.. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities when (i) the SEC has declared a Registration Statement
covering such securities effective and such securities have been disposed of pursuant to such effective Registration Statement, (ii) such
securities are sold under circumstances in which all of the applicable conditions of Rule 144 under the Securities Act are met, (iii)
such securities become eligible for sale pursuant to Rule 144 without volume or manner-of-sale restrictions and without the requirement
for the Company to be in compliance with the current public information requirement under Rule 144(c)(1), as set forth in a written opinion
letter to such effect, addressed, delivered and reasonably acceptable to the applicable transfer agent and the holders of such securities,
or (iv) such securities have ceased to be outstanding
e. “Registration
Statement” means one or more registration statements of the Company covering only the sale of the Registrable Securities.
2. REGISTRATION.
a. Mandatory
Registration. The Company shall, within ninety (90) calendar days from the date of this Agreement, file with the SEC an initial Registration
Statement covering the maximum number of Registrable Securities as shall be permitted to be included thereon in accordance with applicable
SEC rules, regulations and interpretations so as to permit the resale of such Registrable Securities by the Investor (in any event, no
less than the number of shares of Common Stock equal to the Exchange Cap (as defined in the Purchase Agreement) for Investor’s resale
of the Registrable Securities), including but not limited to under Rule 415 under the Securities Act at then prevailing market prices
(and not fixed prices), subject to the aggregate number of authorized shares of the Company’s Common Stock then available for issuance
in its Certificate of Incorporation. The initial Registration Statement shall register the Registrable Securities and may also register
any other securities of the Company issued or issuable to the Investor or Boustead Securities, LLC, a registered broker-dealer (CRD#:
141391). The Investor and its counsel shall have a reasonable opportunity to review and comment upon such Registration Statement and any
amendment or supplement to such Registration Statement and any related prospectus prior to its filing with the SEC, and the Company shall
give due consideration to all reasonable comments. The Investor shall furnish all information reasonably requested by the Company for
inclusion therein. The Company shall have the Registration Statement declared effective by the SEC within one hundred twenty (120) calendar
days from the date hereof (or at the earliest possible date if prior to one hundred twenty (120) calendar days from the date hereof),
and any amendment to the Registration Statement thereafter declared effective by the SEC at the earliest possible date. The Company shall
keep the Registration Statement effective, including but not limited to pursuant to Rule 415 promulgated under the Securities Act and
available for the resale by the Investor of all of the Registrable Securities covered thereby at all times until the date on which the
Investor shall have sold all the Registrable Securities covered thereby (the “Registration Period”). The Registration
Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading. In the event that (i) the Registration Statement or New Registration Statement
(as defined below) becomes stale after the initial effectiveness of such Registration Statement or New Registration Statement and (ii)
the Investor still has ownership of any of the Registrable Securities, the Company shall immediately file one or more post-effective amendments
to facilitate the SEC’s declaration of effectiveness with respect to such Registration Statement or New Registration Statement.
b. Rule
424 Prospectus. The Company shall, as required by applicable securities regulations, from time to time file (in each case, at the
earliest possible date) with the SEC, pursuant to Rule 424 promulgated under the Securities Act, the prospectus and prospectus supplements,
if any, to be used in connection with sales of the Registrable Securities under the Registration Statement. The Company shall file such
initial prospectus covering the Investor’s sale of the Registrable Securities at or before 8:30 a.m. (New York time) on the Business
Day following the date that the Registration Statement is declared effective by the SEC. The Investor and its counsel shall have a reasonable
opportunity to review and comment upon such prospectus prior to its filing with the SEC, and the Company shall give due consideration
to all such comments. The Investor shall use its reasonable best efforts to comment upon such prospectus within one (1) Business Day from
the date the Investor receives the final pre-filing version of such prospectus.
c. Sufficient
Number of Shares Registered. In the event the number of shares available under the Registration Statement is insufficient to cover
all of the Registrable Securities, the Company shall amend the Registration Statement or file a new Registration Statement (a “New
Registration Statement”), so as to cover all of such Registrable Securities (subject to the limitations set forth in Section
2(a)) as soon as practicable, but in any event not later than ten (10) Business Days after the necessity therefor arises, subject to any
limits that may be imposed by the SEC pursuant to Rule 415 under the Securities Act. The Company shall use it reasonable best efforts
to cause such amendment and/or New Registration Statement to become effective as soon as practicable following the filing thereof. In
the event that any of the Registrable Securities are not included in the Registration Statement, or have not been included in any New
Registration Statement and the Company files any other registration statement under the Securities Act (other than on Form S-4, Form S-8,
or with respect to other employee related plans or rights offerings) (“Other Registration Statement”) then the Company
shall include such remaining Registrable Securities in such Other Registration Statement. The Company agrees that it shall not file any
such Other Registration Statement unless all of the Registrable Securities have been included in such Other Registration Statement or
otherwise have been registered for resale as described above.
d. Offering. If the staff
of the SEC (the “Staff”) or the SEC seeks to characterize any offering pursuant to a Registration Statement filed pursuant
to this Agreement as constituting an offering of securities that does not permit such Registration Statement to become effective and be
used for resales by the Investor under Rule 415 at then prevailing market prices (and not fixed prices), or if after the filing of the
initial Registration Statement with the SEC pursuant to Section 2(a), the Company is otherwise required by the Staff or the SEC to reduce
the number of Registrable Securities included in such initial Registration Statement, then the Company shall reduce the number of Registrable
Securities to be included in such initial Registration Statement (with the prior consent, which shall not be unreasonably withheld, of
the Investor and its legal counsel as to the specific Registrable Securities to be removed therefrom) until such time as the Staff and
the SEC shall so permit such Registration Statement to become effective and be used as aforesaid. In the event of any reduction in Registrable
Securities pursuant to this paragraph, the Company shall file one or more New Registration Statements in accordance with Section 2(c)
until such time as all Registrable Securities have been included in Registration Statements that have been declared effective and the
prospectus contained therein is available for use by the Investor. Notwithstanding any provision herein or in the Purchase Agreement to
the contrary, the Company’s obligations to register Registrable Securities (and any related conditions to the Investor’s obligations)
shall be qualified as necessary to comport with any requirement of the SEC or the Staff as addressed in this Section 2(d).
3. RELATED
OBLIGATIONS.
With respect to the Registration
Statement and whenever any Registrable Securities are to be registered pursuant to Section 2 including on any New Registration Statement,
the Company shall use its reasonable best efforts to effect the registration of the Registrable Securities in accordance with the intended
method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:
a. The
Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to any registration
statement and the prospectus used in connection with such registration statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the Securities Act, as may be necessary to keep the Registration Statement or any New Registration Statement effective
at all times during the Registration Period, and, during such period, comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities of the Company covered by the Registration Statement or any New Registration Statement until
such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof as set forth in such registration statement.
b. The
Company shall permit the Investor to review and comment upon the Registration Statement or any New Registration Statement and all amendments
and supplements thereto at least two (2) Business Days prior to their filing with the SEC, and not file any document in a form to which
Investor reasonably objects. The Investor shall use its reasonable best efforts to comment upon the Registration Statement or any New
Registration Statement and any amendments or supplements thereto within two (2) Business Days from the date the Investor receives the
final version thereof. The Company shall furnish to the Investor, without charge any correspondence from the SEC or the staff of the SEC
to the Company or its representatives relating to the Registration Statement or any New Registration Statement.
c. Upon
request of the Investor, the Company shall furnish to the Investor, (i) promptly after the same is prepared and filed with the SEC, at
least one copy of such registration statement and any amendment(s) thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits, (ii) upon the effectiveness of any registration statement, a copy of the prospectus
included in such registration statement and all amendments and supplements thereto (or such other number of copies as the Investor may
reasonably request) and (iii) such other documents, including copies of any preliminary or final prospectus, as the Investor may reasonably
request from time to time in order to facilitate the disposition of the Registrable Securities owned by the Investor. For the avoidance
of doubt, any filing available to the Investor via the SEC’s live EDGAR system shall be deemed “furnished to the Investor”
hereunder.
d. The
Company shall use reasonable best efforts to (i) register and qualify the Registrable Securities covered by a registration statement under
such other securities or “blue sky” laws of such jurisdictions in the United States as the Investor reasonably requests, (ii)
prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions
as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general taxation in
any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify
the Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction
in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
e. As
promptly as practicable after becoming aware of such event or facts, the Company shall notify the Investor in writing of the happening
of any event or existence of such facts as a result of which the prospectus included in any registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading, and promptly prepare a supplement or amendment
to such registration statement and/or take any other necessary steps (which, if in accordance with applicable SEC rules and regulations,
may consist of a document to be filed by the Company with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and
to be incorporated by reference in the prospectus) to correct such untrue statement or omission, and deliver a copy of such supplement
or amendment to the Investor (or such other number of copies as the Investor may reasonably request). The Company shall also promptly
notify the Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when
a registration statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to
the Investor by email on the same day of such effectiveness or by overnight mail), (ii) of any request by the SEC for amendments or supplements
to any registration statement or related prospectus or related information, and (iii) of the Company’s reasonable determination that a
post-effective amendment to a registration statement would be appropriate.
f. The
Company shall use its reasonable best efforts to prevent the issuance of any stop order or other suspension of effectiveness of any registration
statement, or the suspension of the qualification of any Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Investor
of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
g. The
Company shall (i) cause all the Registrable Securities to be listed on each securities exchange on which securities of the same class
or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules
of such exchange, or (ii) secure designation and quotation of all the Registrable Securities on the Principal Market (as defined in the
Purchase Agreement). The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section.
h. The
Company shall cooperate with the Investor to facilitate the timely preparation and delivery of the Registrable Securities (not bearing
any restrictive legend) either by DWAC, DRS, or in certificated form if DWAC or DRS is unavailable, to be offered pursuant to any registration
statement and enable such Registrable Securities to be in such denominations or amounts as the Investor may reasonably request and registered
in such names as the Investor may request.
i. The
Company shall at all times provide a transfer agent and registrar with respect to its Common Stock.
j. If
reasonably requested by the Investor, the Company shall (i) immediately incorporate in a prospectus supplement or post-effective amendment
such information as the Investor believes should be included therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of Registrable Securities being sold, the purchase price being paid
therefor and any other terms of the offering of the Registrable Securities; (ii) make all required filings of such prospectus supplement
or post-effective amendment as soon as practicable upon notification of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) supplement or make amendments to any registration statement.
k. The
Company shall use its reasonable best efforts to cause the Registrable Securities covered by any registration statement to be registered
with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable
Securities.
l. Within
two (2) Business Days after any registration statement which includes the Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities
(with copies to the Investor) confirmation that such registration statement has been declared effective by the SEC in the form attached
hereto as Exhibit A. Thereafter, if requested by the Investor at any time, the Company shall require its counsel to deliver to
the Investor a written confirmation whether or not the effectiveness of such registration statement has lapsed at any time for any reason
(including, without limitation, the issuance of a stop order) and whether or not the registration statement is current and available to
the Investor for sale of all of the Registrable Securities.
m. The
Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of Registrable Securities
pursuant to any registration statement.
4. OBLIGATIONS
OF THE INVESTOR.
a. The
Company shall notify the Investor in writing of the information the Company reasonably requires from the Investor in connection with any
registration statement hereunder. The Investor shall furnish to the Company such information regarding itself, the Registrable Securities
held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably
request.
b. The
Investor agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of
any registration statement hereunder.
c. The
Investor agrees that, upon receipt of any notice from the Company of the happening of any event or existence of facts of the kind described
in Section 3(f) or the first sentence of Section 3(e), the Investor will immediately discontinue disposition of Registrable Securities
pursuant to any registration statement(s) covering such Registrable Securities until the Investor’s receipt of the copies of the supplemented
or amended prospectus contemplated by Section 3(f) or the first sentence of Section 3(e). Notwithstanding anything to the contrary, the
Company shall cause its transfer agent to promptly deliver shares of Common Stock without any restrictive legend in accordance with the
terms of the Purchase Agreement, Note, and Warrants as applicable in connection with any sale of Registrable Securities with respect to
which an Investor has entered into a contract for sale prior to the Investor’s receipt of a notice from the Company of the happening of
any event of the kind described in Section 3(f) or the first sentence of Section 3(e) and for which the Investor has not yet settled.
5. EXPENSES
OF REGISTRATION.
All reasonable expenses of the
Company, other than sales or brokerage commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and
disbursements of counsel for the Company, shall be paid by the Company.
6. INDEMNIFICATION.
a. To
the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Investor, each Person,
if any, who controls the Investor, the members, the directors, officers, partners, employees, agents, representatives of the Investor
and each Person, if any, who controls the Investor within the meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) (each, an “Indemnified Person”), against any third-party losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement (with the prior
written consent of the Company, such consent not to be unreasonably withheld) or expenses, joint or several, (collectively, “Claims”)
reasonably incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken
from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending
or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to which any
of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise
out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in the Registration Statement, any New
Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering
under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue
Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final
prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under
which the statements therein were made, not misleading, (iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating
to the offer or sale of the Registrable Securities pursuant to the Registration Statement or any New Registration Statement or (iv) any
material violation by the Company of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”).
The Company shall reimburse each Indemnified Person promptly as such expenses are incurred and are due and payable, for any reasonable
legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim
by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information about
the Investor furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of the
Registration Statement, any New Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely
made available by the Company pursuant to Section 3(c) or Section 3(e); (ii) with respect to any superseded prospectus, shall not inure
to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject
thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the
superseded prospectus was corrected in the revised prospectus, as then amended or supplemented, if such revised prospectus was timely
made available by the Company pursuant to Section 3(c) or Section 3(e), and the Indemnified Person was promptly advised in writing not
to use the incorrect prospectus prior to the use giving rise to a violation and such Indemnified Person, notwithstanding such advice,
used it; (iii) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered
the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section 3(c) or
Section 3(e); and (iv) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the
Investor pursuant to Section 9.
b. In
connection with the Registration Statement or any New Registration Statement, the Investor agrees to indemnify, hold harmless and defend,
to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement or any New Registration Statement, each Person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act (collectively and together with an Indemnified Person, an “Indemnified
Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the Securities Act, the Exchange
Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent,
and only to the extent, that such Violation occurs in reliance upon and in conformity with written information about the Investor set
forth on Exhibit B attached hereto and furnished to the Company by the Investor expressly for use in connection with
such registration statement or from the failure of the Investor to deliver or so cause to be delivered the prospectus made available by
the Company, if such prospectus was timely made available by the Company pursuant to Section 3(c) or Section 3(e); provided,
however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained
in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior
written consent of the Investor, which consent shall not be unreasonably withheld; provided, further, however, that the Investor shall
be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds
to the Investor as a result of the sale of Registrable Securities pursuant to such registration statement. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer
of the Registrable Securities by the Investor pursuant to Section 9.
c. Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party
so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually
satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that
an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of
the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified
Party or Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying
party shall be liable for any settlement of any action, claim or proceeding effected without its written consent, provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent
of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person
of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying
party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within
a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified
Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend
such action.
d. The
indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
e. The
indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to applicable
law.
7. CONTRIBUTION.
To the extent any indemnification
by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and
(ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. REPORTS
AND DISCLOSURE UNDER THE SECURITIES ACTS.
With a view to making available
to the Investor the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that
may at any time permit the Investor to sell securities of the Company to the public without registration (“Rule 144”),
the Company agrees, at the Company’s sole expense, so long as the Investor owns Registrable Securities, to use reasonable best efforts
to:
a. make
and keep public information available, as those terms are understood and defined in Rule 144;
b. file
with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act
so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable
provisions of Rule 144;
c. furnish
to the Investor so long as the Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting and or disclosure provisions of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration; and
d. take
such additional action as is requested by the Investor to enable the Investor to sell the Registrable Securities pursuant to Rule 144,
including, without limitation, delivering all such legal opinions, consents, certificates, resolutions and instructions to the Company’s
transfer agent as may be requested from time to time by the Investor and otherwise fully cooperate with Investor and Investor’s
broker to effect such sale of securities pursuant to Rule 144.
The Company agrees that damages
may be an inadequate remedy for any breach of the terms and provisions of this Section 8 and that Investor shall, whether or not it is
pursuing any remedies at law, be entitled to equitable relief in the form of a preliminary or permanent injunctions, without having to
post any bond or other security, upon any breach or threatened breach of any such terms or provisions.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written consent of the Investor.
10. AMENDMENT
OF REGISTRATION RIGHTS.
No provision of this Agreement
may be amended or waived by the parties from and after the date that is one Business Day immediately preceding the initial filing of the
Registration Statement with the SEC. Subject to the immediately preceding sentence, no provision of this Agreement may be (i) amended
other than by a written instrument signed by both parties hereto or (ii) waived other than in a written instrument signed by the party
against whom enforcement of such waiver is sought. Failure of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.
11. MISCELLANEOUS.
a. A
Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities.
If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities,
the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.
b. Any
notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by email (provided
confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business
Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the
same. The addresses for such communications shall be:
If to the Company, to:
SIGNING DAY SPORTS, INC.
8355 East
Hartford Dr., Suite 100
Scottsdale,
AZ 85255
Email: danny.nelson@signingdaysports.com
Attention: Daniel Nelson
If to the Investor:
FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC
1040 First Avenue, Suite 190
New York, NY 10022
e-mail:
eli@firstfirecapital.com
or at such other address, email address, and/or
to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business
Days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver
or other communication, (B) mechanically or electronically generated by the sender’s email account containing the time, date, recipient
email address, as applicable, and an image of the first page of such transmission or (C) provided by a nationally recognized overnight
delivery service, shall be rebuttable evidence of personal service, receipt by email or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
c. The
Company and Investor shall submit all Claims (as defined in Exhibit E of the Purchase Agreement) (the “Claims”) arising under
this Agreement 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 E of the Purchase Agreement (the “Arbitration
Provisions”). The Company and Investor hereby acknowledge and agree that the Arbitration Provisions are unconditionally binding
on the Company and Investor 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 Investor 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 Investor 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 Investor or their respective affiliates (including but not
limited to the Transaction Documents (as defined in the Purchase Agreement)) or any Claim relating to the relationship of the Company
and Investor or their respective affiliates shall be in the State of Delaware. Without modifying the Company’s and Investor’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 Irrevocable Transfer Agent
Instructions (as defined in the Purchase Agreement) or otherwise related to Investor 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 Investor 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 Investor 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 Investor to realize on any collateral or any other security, or to enforce a judgment or other court ruling
in favor of the Investor, 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.
d. The
Agreement, Purchase Agreement, Note, Warrants, and ancillary documentation entered into between the Company and Investor therewith constitute
the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and therein. The Agreement, Purchase Agreement, Note, Warrants,
and ancillary documentation entered into between the Company and Investor therewith supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.
e. Subject
to the requirements of Section 9, this Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns
of each of the parties hereto.
f. The
headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
g. This
Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by e-mail in a “.pdf”
format data file of a copy of this Agreement bearing the signature of the party so delivering this Agreement.
h. 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.
i. 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.
j. This
Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
* * * * * *
IN WITNESS WHEREOF,
the parties have caused this Agreement to be duly executed as of day and year first above written.
THE COMPANY:
SIGNING DAY SPORTS, INC.
| By: |
/s/ Daniel Nelson |
|
| |
Name: |
DANIEL NELSON |
|
| |
Title: |
CHIEF EXECUTIVE OFFICER |
|
INVESTOR:
FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC
| By: |
FirstFire Capital Management LLC, its manager |
| By: |
/s/ Eli Fireman |
|
|
Name: |
ELI FIREMAN |
|
[Signature Page to registration rights agreement]
EXHIBIT A
TO REGISTRATION RIGHTS AGREEMENT
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
______, 2024
________________
________________
________________
Re: Effectiveness of Registration Statement
Ladies and Gentlemen:
We are counsel to SIGNING
DAY SPORTS, INC., a Delaware corporation (the “Company”), and have represented the Company in connection with that
certain Purchase Agreement, dated as of June 18, 2024 (the “Purchase Agreement”), entered into by and between the Company
and FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC, a Delaware limited liability company (the “Investor”) pursuant to which
the Company has agreed to issue to the Investor shares of Common Stock of the Company, par value $0.0001 per share (the “Common
Stock”), consisting of the Conversion Shares (as defined in the Purchase Agreement), Exercise Shares (as defined in the Purchase
Agreement), and Commitment Shares (as defined in the Purchase Agreement) in accordance with the terms of the Purchase Agreement, the Note
(as defined below), and the Warrants (as defined below). In connection with the transactions contemplated by the Purchase Agreement, the
Company also has entered into a Registration Rights Agreement, of even date with the Purchase Agreement with the Investor (the “Registration
Rights Agreement”) pursuant to which the Company agreed, among other things, to file a Registration Statement (File No. 333-[_________])
(the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the registration
for resale under the Securities Act of 1933, as amended (the “Securities Act”), on [_____], 2024, of the following shares
of Common Stock:
__________ Conversion Shares
issued and/or to be issued to the Investor upon conversion of the Note (as defined in the Purchase Agreement) (the “Note”)
in accordance with the Note; and
__________ Exercise Shares
issued and/or to be issued to the Investor upon exercise of the Warrants (as defined in the Purchase Agreement) (the “Warrants”)
in accordance with the Warrants; and
__________ Commitment Shares
issued to the Investor pursuant to the Agreement.
In connection with the foregoing,
we advise you that a member of the SEC’s staff has advised us by telephone that the SEC has entered an order declaring the Registration
Statement effective under the Securities Act at [_____] [A.M./P.M.] on [__________], 2024 and we have no knowledge, after telephonic inquiry
of a member of the SEC’s staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose
are pending before, or threatened by, the SEC and the Conversion Shares, Exercise Shares, and Commitment Shares are available for resale
under the Securities Act pursuant to the Registration Statement and may be issued without any restrictive legend.
| |
Very truly yours, |
| |
[Company Counsel] |
| |
|
|
| |
By: |
|
| cc: |
FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC |
|
EXHIBIT B
TO REGISTRATION RIGHTS AGREEMENT
Information About the Investor Furnished to
The Company by The Investor
Expressly for Use in Connection with The Registration
Statement
Information with Respect to Investor
As of the date of the Purchase Agreement, ____________________________
beneficially owned [___________] shares of our Common Stock. ______________________________, are deemed to be beneficial owners of all
of the shares of Common Stock owned by _______________________. ________________________[has sole][have shared] voting and investment
power over the shares being offered under the prospectus filed with the SEC in connection with the transactions contemplated under the
Purchase Agreement. __________________ is not a licensed broker dealer or an affiliate of a licensed broker dealer.
ANNEX M
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: $198,611.00 |
Issue
Date: June 18, 2024 |
| Actual
Amount of Purchase Price: $175,000.00 |
|
SENIOR
SECURED PROMISSORY NOTE
FOR
VALUE RECEIVED, SIGNING DAY SPORTS, INC., a Delaware corporation (hereinafter called the “Borrower” or the “Company”)
(Trading Symbol: SGN), hereby promises to pay to the order of FIRSTFIRE GLOBAL OPPORTUNITIES FUND, 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 $198,611.00 (the “Principal Amount”) (subject to adjustment herein), of which $175,000.00 (the “Purchase Price”)
is the actual amount of the purchase price hereof plus an original issue discount in the amount of $23,611.00 (the “OID”),
and to pay interest on the unpaid Principal Amount hereof at the rate of ten percent (10%) (the “Interest Rate”) per annum
from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration
or by prepayment or otherwise, as further provided herein, with the understanding that the first twelve months of interest under this
Note (equal to $19,861.10) shall be guaranteed and earned in full as of the Issue Date. The maturity date shall be the sooner of twelve
(12) months from the Issue Date or the date of the consummation of a sale, conveyance or disposition of all or substantially all of the
assets of the Borrower, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as
defined below) or Persons when the Borrower is not the survivor (the “Maturity Date”), and is the date upon which the Principal
Amount (which includes the OID) and any accrued and unpaid interest and other fees, 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) fifteen percent
(15%) 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, par value $0.0001 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.
Each
capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase
Agreement, dated as of the Issue Date, pursuant to which this Note was originally issued (the “Purchase Agreement”). 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), 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) 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 (the “Affiliates”), 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 SEC, as the case may be,
(B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting
forth the number of 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. The limitations contained in this paragraph shall apply to a successor
holder of this Note. The number of Conversion Shares (as defined in the Purchase Agreement) 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 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 limitations
provided in this Note, the sum of the number of shares of Common Stock that may be issued under this Note shall be limited to the amount
described in Section 4(r) of the Purchase Agreement (the “Exchange Cap”), unless the Shareholder Approval (as defined in
the Purchase Agreement) is obtained by the Company.
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 $0.30, subject to adjustment as provided in this Note. 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. 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) 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) Adjustment
of Conversion Price relating to Amortization Payment. If the Company fails to pay any Amortization Payment (as defined in this Note)
pursuant to the terms of this Note, then, in addition to all other rights under this Note, the Holder shall have the right to convert
any portion of this Note at any time at a price per share equal to the Market Price (as defined in this Note). “Market Price”
shall mean the lesser of (i) the then applicable Conversion Price under the Note or (ii) 80% of the lowest closing price of the Common
Stock on any Trading Day during the ten (10) Trading Days prior to the respective Conversion Date.
(c) Adjustment
of Conversion Price due to Default. If an Event of Default occurs under this Note, then, in addition to all other rights under this
Note, the Holder shall have the right to convert any portion of this Note at any time at a price per share equal to the Alternate Price
(as defined in this Note). “Alternate Price” shall mean the lesser of (i) the then applicable Conversion Price under the
Note, (ii) the closing price of the Common Stock on the date of the Event of Default (provided, however, that if such date is not a Trading
Day, then the next Trading Day after the date of the Event of Default), or (iii) $0.195 (subject to adjustment as provided in this Note).
For the avoidance of doubt, a failure to make an Amortization Payment subject to Section 1.2(b) shall not result in an adjustment subject
to this Section 1.2(c).
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) 3,529,166 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 a conversion price equal
to the lesser of (i) the then applicable Conversion Price or (ii) the Market Price (even if the Note is not yet convertible at the Market
Price pursuant to the terms of this Note at the time of such calculation) multiplied by (ii) two (2) (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.
If, at any time, 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 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. Notwithstanding the foregoing, if any portion of this Note is
converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower,
whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder
(upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid Principal
Amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions
of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted Principal Amount of this Note represented
by this Note may be less than the amount stated on the face hereof.
(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 1.0%, increasing
to 2.0% on the fifth (5th) Trading Day following the date of such failure if it remains uncured, 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.
(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, and the Conversion Shares may be sold or transferred pursuant to clause (i), clause (ii), or clause
(iii) of the first sentence of Section 1.5 of this Note, 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, (ii) the Borrower or its transfer agent shall have been furnished
with an opinion of counsel (which opinion shall be the Legal Counsel Opinion (as defined in the Purchase Agreement)) to the effect that
the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, (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). 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.”
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(m) 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) [Reserved]
(b) Adjustment
Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of this
Note, 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 (a) it first gives, to the extent practicable, at least
thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special
meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of
shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to
convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations
of this Section 1.6(b). 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.
(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) (other than an Excluded Issuance (as defined in the Purchase Agreement))
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)), 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. 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.
(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 (other than an Excluded Issuance), the Borrower shall, at its expense and within two (2) business days 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 two (2) business days 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 [Intentionally
Omitted].
1.8 Status
as Shareholder. Upon submission of a Notice of Conversion by the Holder, (i) the Conversion Shares covered thereby (other than the
Conversion Shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved
Amount, the Beneficial Ownership Limitation, or the Exchange Cap) 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.
1.9 Prepayment.
At any time prior to the date that an Event of Default occurs under this Note, the Borrower shall have the right, exercisable on
fifteen (15) Trading Days prior written notice to the Holder of the Note, to prepay the outstanding Principal Amount and interest then
due under this Note in accordance with this Section 1.9. Any notice of prepayment hereunder (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 Note, and (2) the date of prepayment which shall be fifteen (15) Trading Days from the date of the Optional Prepayment
Notice (the “Optional Prepayment Date”). The Holder shall have the right, during the period beginning on the date of Holder’s
receipt of the Optional Prepayment Notice and until the Holder’s actual receipt of the full prepayment amount on the Optional Prepayment
Date, to instead convert all or any portion of the Note pursuant to the terms of this Note, including the amount of this Note to be prepaid
by the Borrower in accordance with this Section 1.9. On the Optional Prepayment Date, the Borrower shall make payment of the amounts
designated below to or upon the order of the Holder as specified by the Holder in writing to the Borrower. If the Borrower exercises
its right to prepay the Note in accordance with this Section 1.9, the Borrower shall make payment to the Holder of an amount in cash
equal to the sum of: (w) 110% multiplied by the Principal Amount then outstanding plus (x) 110% multiplied by the accrued and
unpaid interest on the Principal Amount to the Optional Prepayment Date.
If
the Borrower delivers an Optional Prepayment Notice and fails to pay the applicable prepayment amount due to the Holder of the Note as
provided in this Section 1.9, then the Borrower shall forever forfeit its right to prepay any part of the Note pursuant to this Section
1.9.
1.10 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 exercise 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 Company’s offering of securities under Regulation A, 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 100%
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. Notwithstanding the foregoing,
the portion of such proceeds that are used for the repayment of the First Note (as defined in this Note) shall be excluded from this
Section 1.10 of this Note. “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). For the avoidance of doubt, the 110% repayment premium
as further provided for in Section 1.9 of this Note shall apply to any repayment of the Note under this Section 1.10 prior to the occurrence
of an Event of Default.
ARTICLE
II. RANKING AND CERTAIN COVENANTS
2.1 Ranking
and Security. This Note shall be a senior secured obligation of the Borrower, with priority over all existing and future indebtedness
of the Borrower, as provided in that certain security agreement entered into between the Borrower and the Holder on the Issue Date (the
“Security Agreement”), provided, however, that the security interests held by the Holder pursuant to the Security Agreement
shall be junior in priority to the Prior Secured Note (as defined in this Note) and pari passu in priority to that certain senior secured
promissory note issued by the Company to the Holder on or around May 16, 2024, in the original principal amount of $412,500.00 (the “First
Note”). “Prior Secured Note” shall mean that certain Promissory Note in the original principal amount of $2,000,000
issued by the Company to Commerce Bank of Arizona (the “Senior Lender”), dated as of December 11, 2023 and maturing on December
11, 2024, pursuant to that certain Business Loan Agreement, dated as of December 11, 2023, between the Company and the Senior Lender.
2.2 Other
Indebtedness. In addition to all obligations under the Security Agreement, and so long as the Borrower shall have any obligation
under this Note, neither the Borrower nor any of the Borrower’s subsidiaries shall (directly or indirectly) incur or suffer to
exist or guarantee any Indebtedness that is senior to or pari passu with (in priority of payment and performance) the Borrower’s
obligations hereunder (except as provided in Section 2.1 of this Note). “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.
2.3 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 or the Company’s preferred stock, par value
$0.0001 per share, solely in the form of 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.
2.4 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 indebtedness of Borrower other than this Note and the
Prior Secured Note.
2.5 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 except with respect to that certain Certificate of Deposit, Account Number 9000070132 (the “Account”),
with the Senior Lender with an approximate balance of $2,100,000.00 together with (A) all interest, whether now accrued or
hereafter accruing; (B) all additional deposits hereafter made to the Account; (C) any and all proceeds from the Account; and (D) all
renewals, replacements and substitutions for any of the foregoing until the full repayment of the Prior Secured Note, which is subject
to that certain Assignment of Deposit Account, dated as of December 13, 2023, between the Company and the Senior Lender. Any consent
by the Holder to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.
2.6 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 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.
2.7 [Intentionally
Omitted].
2.8 Preservation
of Business and Existence, etc. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without
the Holder’s written consent, which consent shall not be unreasonably withheld, (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.
2.9 Noncircumvention.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate 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.
2.10 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 at any time on or after the Issue Date when any portion of this Note remains issued and outstanding:
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, or fails to fully comply with Section 1.10 of this Note, except in the case of a failure
to make an Amortization Payment.
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, Registration Rights Agreement (as defined in the Purchase Agreement), the Security Agreement, this Note, the Irrevocable Transfer
Agent Instructions, the Warrants (as defined in the Purchase 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, the Registration
Rights Agreement, the Security Agreement, this Note, the Irrevocable Transfer Agent Instructions, the 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 $500,000, 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.
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. At any time after the Issue Date, 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 ending
on or after the date that the Common Stock was registered under Section 12(b) of the 1934 Act.
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 pursuant
to the Purchase Agreement (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
[Intentionally omitted].
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, provided that the Note and any securities issuable upon conversion of which are
at no time held by any affiliate of the Company.
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 listed on the NYSE American LLC.
3.19 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 125% (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. In addition,
the principal balance of the Note shall increase by $3,000.00 on the 1st of each calendar month after the date of the occurrence
of an Event of Default until the Note is repaid in the entirety. 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:
SIGNING
DAY SPORTS, INC.
8355
East Hartford Dr., Suite 100
Scottsdale,
AZ 85255
Attention:
Daniel Nelson
e-mail:
danny.nelson@signingdaysports.com
If
to the Holder:
FIRSTFIRE
GLOBAL OPPORTUNITIES FUND, LLC
1040
First Avenue, Suite 190
New
York, NY 10022
e-mail:
eli@firstfirecapital.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.
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 E 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
E 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 under the Irrevocable Transfer Agent Instructions (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 4.15 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.
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 Purchase
Agreement. The Company and the Holder shall be bound by the applicable terms of the Purchase Agreement, the Security Agreement, and
the Transaction Documents entered into in connection herewith and therewith.
4.9 Notice
of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock
unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification
of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders). In the
event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive
payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger,
consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other
right, or for the purpose of determining shareholders who are entitled to vote in connection with any change in control or any proposed
liquidation, dissolution or winding up of the Borrower, the Borrower shall give a notice to the Holder, at least twenty (20) days prior
to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier),
of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief
statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The
Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with
the notification to the Holder in accordance with the terms of this Section 4.9.
4.10 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.
4.11 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.
4.12 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
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.
4.13 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.
4.14 Terms
of Future Financings. So long as this Note is outstanding, upon any issuance by the Borrower or any of its Subsidiaries of any debt
security, or amendment to a debt 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 debt security or with a term in favor of the holder of such debt security that the Holder
reasonably believes was not similarly provided to the Holder in this Note (even if the holder of such other debt security does not receive
the benefit of such more favorable term until a default occurs under such other debt 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 debt 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 4.14). The types of terms contained in another
debt security that may be more favorable to the holder of such security include, but are not limited to, terms addressing prepayment
rate, interest rates, and original issue discounts.
4.15 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, the closing bid price, 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 4.15(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.
(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 4.15 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 4.15, (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 4.15 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 4.15).
4.16 Amortization
Payments. In addition to all other payment obligations under this Note, Borrower shall also make the following amortization payments
(each an “Amortization Payment”) in cash to the Holder towards the repayment of this Note, as provided in the following table:
| Payment Date: | |
Payment
Amount: | |
| October 18, 2024 | |
$ | 27,309.01 | |
| November 18, 2024 | |
$ | 27,309.01 | |
| December 18, 2024 | |
$ | 27,309.01 | |
| January 18, 2025 | |
$ | 27,309.01 | |
| February 18, 2025 | |
$ | 27,309.01 | |
| March 18, 2025 | |
$ | 27,309.01 | |
| April 18, 2025 | |
$ | 27,309.01 | |
| May 18, 2025 | |
$ | 27,309.01 | |
| June 18, 2025 | |
| The
entire remaining outstanding balance of the Note | |
For
the avoidance of doubt, the 110% repayment premium as further provided for in Section 1.9 of this Note shall not apply to any repayment
of the Note under this Section 4.16.
[signature
page follows]
IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer on June 18, 2024.
SIGNING
DAY SPORTS, INC.
| By: |
/s/
Daniel Nelson |
|
| Name: |
Daniel Nelson |
|
| Title: |
Chief Executive Officer |
|
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 SIGNING DAY SPORTS, INC., a Delaware corporation (the
“Borrower”), according to the conditions of the promissory note of the Borrower dated as of June 18, 2024 (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: | |
| | |
ANNEX N
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
SIGNING DAY SPORTS, INC.
Warrant Shares: 662,036
Date of Issuance: June 18, 2024 (“Issuance
Date”)
This COMMON STOCK PURCHASE
WARRANT (the “Warrant”) certifies that, for value received (in connection with the issuance of the senior secured promissory
note in the principal amount of $198,611.00 to the Holder (as defined below) of even date) (the “Note”), FirstFire Global
Opportunities Fund, 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 SIGNING DAY SPORTS, INC., a Delaware corporation (the “Company”), 662,036
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 as of the
date hereof in connection with that certain securities purchase agreement dated June 18, 2024, 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 $0.30, subject to adjustment as provided herein
(including but not limited to cashless exercise), and the term “Exercise Period” shall mean the period commencing on the Issuance
Date and ending on 5:00 p.m. eastern standard time on the five-year anniversary thereof.
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.
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 a material breach under this Warrant.
If the Market Price of one
share of Common Stock is greater than the Exercise Price, then, unless there is an effective non-stale registration statement of the Company
which contains a prospectus that complies with Section 5(b) and Section 10 of the Securities Act at the time of exercise and covers the
Holder’s immediate resale of all of the Warrant Shares at prevailing market prices (and not fixed prices) without any limitation,
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 surrender of this Warrant and an
Exercise Notice, in which event the Company shall issue to Holder a number of shares 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 or
issue a whole share of Common Stock to the Holder.
(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 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(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 SEC, as the case may be, (B) a more recent public announcement by the Company or
(C) a more recent written notice by the Company or the 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 limitations provided in this Warrant, the sum of the number of shares of Common Stock
that may be issued under this Warrant shall be limited to the amount described in Section 4(r) of the Purchase
Agreement, unless and until the date of effectiveness (the “Ex-Exchange Cap Date”) of the Shareholder Approval (as
defined in the Purchase Agreement). In the event that the Company is prohibited from issuing any shares of Common Stock pursuant to this
Warrant due to the Company’s failure to obtain the Shareholder Approval (such number of shares that are prohibited from being issued
are referred to herein as the “Exchange Cap Shares”), in lieu of issuing and delivering such Exchange Cap Shares to the Holder,
the Company shall pay cash to the Holder in exchange for the cancellation of such portion of this Warrant exercisable into such Exchange
Cap Shares (the “Exchange Cap Payment Amount”) at a price equal to the sum of (x) the product of (A) such number of Exchange
Cap Shares and (B) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the
Holder delivers the applicable Exercise Notice with respect to such Exchange Cap Shares to the Company and ending on the date of the aforementioned
payment under this Section 1(c) and (y) to the extent 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 Exchange Cap Shares, any brokerage commissions and other out-of-pocket expenses,
if any, of the Holder incurred in connection therewith. The limitations contained in this paragraph shall apply to a successor holder
of this Warrant.
(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 transmit 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) (other
than in an Excluded Issuance (as defined in the Purchase Agreement)) 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 (other than in an Excluded Issuance) and the lowest price per share for which one share of Common Stock is at
any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such
share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting,
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.
(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 (other than in an Excluded Issuance) 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 (excluding with respect to any Excluded Issuance), 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)
Calculation of Consideration Received. If any Option and/or Convertible Security
and/or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the
Company (excluding with respect to any Excluded Issuance) (as determined jointly by the Holder and the Company), the “Primary
Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”),
together comprising one integrated transaction, (or one or more transactions if such issuances or sales or deemed issuances or sales
of securities of the Company either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable
proximity to each other and/or (C) are consummated under the same plan of financing) the aggregate consideration per share of Common
Stock with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for
which one share of Common Stock was issued (or was deemed to be issued pursuant to Section 2(b)(i) or 2(b)(ii) above, as applicable)
in such integrated transaction solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities,
the sum of (I) the Black Scholes Consideration Value of each such Option, if any, (II) the fair market value (as reasonably
determined jointly by the Holder and the Company in good faith) or the Black Scholes Consideration Value, as applicable, of such
Adjustment Right, if any, and (III) the fair market value (as reasonably determined jointly by the Holder and the Company) of such
Convertible Security, if any, in each case, as determined on a per share basis in accordance with this Section 2(b)(iv). If any
shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the
consideration received therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible
Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the net amount
of consideration received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or
sold for a consideration other than cash, the amount of such consideration received by the Company (for the purpose of determining
the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the
Black Scholes Consideration Value) will be the fair value of such consideration, except where such consideration consists of
publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the
arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If
any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection
with any merger in which the Company is the surviving entity, the amount of consideration therefor (for the purpose of determining
the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the
Black Scholes Consideration Value) will be deemed to be the fair value of such portion of the net assets and business of the
non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The
fair value of any consideration other than cash or publicly traded securities will be reasonably determined jointly by the Company
and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring
valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days
after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the
Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and
the fees and expenses of such appraiser shall be borne by the Company.
(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).
(c) Holder’s
Right of Alternative Exercise Price Following Issuance of Certain Options or Convertible Securities. In addition to and not in limitation
of the other provisions of this Section 2, if the Company in any manner issues or sells or enters into any agreement to issue or
sell, any Common Stock, Options or Convertible Securities (any such securities, “Variable Price Securities”) after the Issuance
Date that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock at a price
which varies or may vary with the market price of the shares of Common Stock, including by way of one or more reset(s) to a fixed price,
but exclusive of such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends
and similar transactions) (each of the formulations for such variable price being herein referred to as, the “Variable Price”),
the Company shall provide written notice thereof via electronic mail and overnight courier to the Holder on the date of such agreement
and the issuance of such Common Stock, Convertible Securities or Options. From and after the date the Company enters into such agreement
or issues any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its sole discretion to substitute
the Variable Price, as calculated pursuant to the agreements governing such Variable Price Securities, for the Exercise Price upon exercise
of this Warrant by designating in the Exercise Notice delivered upon any exercise of this Warrant that solely for purposes of such exercise
the Holder is relying on the Variable Price rather than the Exercise Price then in effect. The Holder’s election to rely on a Variable
Price for a particular exercise of this Warrant shall not obligate the Holder to rely on a Variable Price for any future exercises of
this Warrant.
(d) [Intentionally
omitted].
(e) Other
Events. In the event that the Company (or any Subsidiary (as defined in the Purchase Agreement)) shall take any action to which the
provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from actual dilution or if any
event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s
board of directors shall in good faith determine and implement an appropriate adjustment in the Exercise Price and the number of Warrant
Shares (if applicable) so as to protect the rights of the Holder, provided that no such adjustment pursuant to this Section 2(e) will
increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2, provided further
that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the
Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination shall be final and binding absent manifest error and whose fees and
expenses shall be borne by the Company.
(f) Calculations.
All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th 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, 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 this Section 2, 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 and the Exchange
Cap (as defined in the Purchase Agreement)) 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 (without
regard to the Beneficial Ownership Limitation and the Exchange Cap), 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
second 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.
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 or,
prior to the Ex-Exchange Cap Date, the Exchange Cap) 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 or, prior to the Ex-Exchange Cap
Date, the Exchange Cap, then the Holder shall not be entitled to participate in such Distribution to the extent of the Beneficial Ownership
Limitation or, prior to the Ex-Exchange Cap Date, the Exchange Cap (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 or, prior to the Ex-Exchange Cap Date, the Exchange
Cap, 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) Purchase
Rights. In addition to any adjustments pursuant to Sections 2 or 3 above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class
of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of 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 or, prior to the Ex-Exchange Cap Date, the Exchange Cap) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights (provided,
however, that to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder
and the other Attribution Parties exceeding the Beneficial Ownership Limitation or, prior to the Ex-Exchange Cap Date, the Exchange Cap,
then the Holder shall not be entitled to participate in such Purchase Right to the extent of the Beneficial Ownership Limitation or, prior
to the Ex-Exchange Cap Date, the Exchange Cap (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result
of such Purchase Right (and beneficial ownership) to the extent of any such excess) and such Purchase Right to such extent shall be held
in abeyance 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 or, prior to the Ex-Exchange Cap Date, the Exchange Cap, at which
time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or
on any subsequent Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).
(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.
(c) [Intentionally
omitted].
(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 subject to the Beneficial Ownership Limitation and prior to
the Ex-Exchange Cap Date, the Exchange Cap, 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 certificate 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, two (2) 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.
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.
13. ARBITRATION
OF CLAIMS; GOVERNING LAW; AND VENUE. The Company and Holder shall submit all Claims (as defined in Exhibit E 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 E 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 Irrevocable Transfer Agent Instructions (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 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.
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, Black Scholes Consideration Value, 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.
(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, and (iv) 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) “Black
Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment Right (as the case
may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option or
Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to
the remaining term of such Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance of such Option,
Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv) an expected volatility equal to the
greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization
factor) as of the Trading Day immediately following the date of issuance of such Option, Convertible Security or Adjustment Right (as
the case may be).
(c) “Black
Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s request
pursuant to Section 4(c)(i), which value is calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing Sale Price of the Common
Stock during the period beginning on the Trading Day immediately preceding the announcement of the applicable Change of Control (or the
consummation of the applicable Change of Control, if earlier) and ending on the Trading Day of the Holder’s request pursuant to
Section 4(c)(i) and (2) the sum of the price per share being offered in cash in the applicable Change of Control (if any) plus the value
of the non-cash consideration being offered in the applicable Change of Control (if any), (ii) a strike price equal to the Exercise Price
in effect on the date of the Holder’s request pursuant to Section 4(c)(i), (iii) a risk-free interest rate corresponding to
the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s
request pursuant to Section 4(c)(i) and (2) the remaining term of this Warrant as of the date of consummation of the applicable Change
of Control or as of the date of the Holder’s request pursuant to Section 4(c)(i) if such request is prior to the date of the
consummation of the applicable Change of Control, (iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100%
and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor)
as of the Trading Day immediately following the earliest to occur of (A) the public disclosure of the applicable Change of Control and
(B) the date of the Holder’s request pursuant to Section 4(c)(i).
(d) “Bloomberg”
means Bloomberg, L.P.
(e) “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.
(f) “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.
(g) “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.
(h) “Common
Stock” means the Company’s common stock, par value $0.0001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
(i) “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.
(j) “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.
(k) “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.
(l) [Intentionally
omitted].
(m) [Intentionally
omitted].
(n) [Intentionally
omitted].
(o) “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(p) “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.
(q) “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.
(r) “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.
(s) “Principal
Market” means the principal securities exchange or trading market where such Common Stock is listed or quoted, including but
not limited to any tier of the OTC Markets Group, Inc., any tier of the The Nasdaq Stock Market LLC
(including Nasdaq Capital Market), or the NYSE American LLC, or any successor to such markets.
(t) “Market
Price” means the highest traded price of the Common Stock during the thirty Trading Days prior to the date of the respective
Exercise Notice.
(u) “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.
(v) “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.
(w) “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the
Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market
on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time,
as reported by Quotestream or other similar quotation service provider designated by the Holder through its “VAP” function
(set to 09:30 start time and 16:00 end time) or, if the foregoing does not apply, the dollar volume-weighted average price of such security
in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York time,
and ending at 4:00 p.m., New York time, as reported by Quotestream or other similar quotation service provider designated by the Holder,
or, if no dollar volume-weighted average price is reported for such security by Quotestream or other similar quotation service provider
designated by the Holder for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC) (or a similar
organization or agency succeeding to its functions of reporting prices). If the VWAP cannot be calculated for such security on such date
on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company
and the Holder. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization
or other similar transaction during such period.
* * * * * * *
IN WITNESS WHEREOF, the Company has caused this
Warrant to be duly executed as of the Issuance Date set forth above.
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SIGNING DAY SPORTS, INC. |
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/s/ Daniel Nelson |
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Name: |
Daniel Nelson |
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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 SIGNING DAY
SPORTS, INC., a Delaware 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: __________________
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(Print Name of Registered Holder) |
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By: |
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Name: |
|
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Title: |
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EXHIBIT B
ASSIGNMENT OF WARRANT
(To be signed only upon authorized transfer of
the Warrant)
FOR VALUE
RECEIVED, the undersigned hereby sells, assigns, and transfers unto ___________________ the
right to purchase _____________ shares of common stock of SIGNING DAY SPORTS, INC., to which the within Common Stock Purchase Warrant
relates and appoints _____________, as attorney-in-fact, to transfer said right on the books of SIGNING DAY SPORTS, INC. with full power of substitution
and re-substitution in the premises. By accepting such transfer, the transferee has agreed to be bound in all respects by the terms and
conditions of the within Warrant.
Dated: _________________
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(Signature) * |
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(Name) |
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(Address) |
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|
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(Social Security or Tax Identification No.) |
* The signature on this Assignment of Warrant
must correspond to the name as written upon the face of the Common Stock Purchase Warrant in every particular without alteration or enlargement
or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s)
and title(s) with such entity.
ANNEX O
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
SIGNING DAY SPORTS,
INC.
Warrant Shares: 120,370
Date of Issuance: June 18, 2024 (“Issuance
Date”)
This COMMON
STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received (in connection with the issuance of the senior
secured promissory note in the principal amount of $198,611.00 to the Holder (as defined below) of even date) (the “Note”),
FirstFire Global Opportunities Fund, 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 SIGNING DAY SPORTS, INC., a Delaware corporation (the “Company”), 120,370
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 as of the
date hereof in connection with that certain securities purchase agreement dated June 18, 2024, 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), and the term “Exercise Period” shall mean the period commencing
on the Trigger Date (as defined in this Warrant) and ending on 5:00 p.m. eastern standard time on the date that is five (5) years after
the Trigger 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.
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 a material breach under this Warrant.
If the Market
Price of one share of Common Stock is greater than the Exercise Price, then, unless there is an effective non-stale registration statement
of the Company which contains a prospectus that complies with Section 5(b) and Section 10 of the Securities Act at the time of exercise
and covers the Holder’s immediate resale of all of the Warrant Shares at prevailing market prices (and not fixed prices) without
any limitation, 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 surrender of this
Warrant and an Exercise Notice, in which event the Company shall issue to Holder a number of shares of Common Stock computed using the
following formula:
X = Y (A-B)
A
| |
Where |
X = |
the number of Shares to be issued
to Holder. |
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Y = | the number of Warrant Shares that the Holder elects to purchase under this Warrant (at the date of such
calculation). |
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| A = | the Market Price (at the date of such calculation). |
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| 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 or
issue a whole share of Common Stock to the Holder.
(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 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(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 SEC, as the case may be, (B) a more recent public announcement by the Company or (C)
a more recent written notice by the Company or the 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 limitations provided in this Warrant,
the sum of the number of shares of Common Stock that may be issued under this Warrant shall be limited to the amount described in
Section 4(r) of the Purchase Agreement, unless and until the date of effectiveness (the
“Ex-Exchange Cap Date”) of the Shareholder Approval (as defined in the Purchase Agreement). In the event that the
Company is prohibited from issuing any shares of Common Stock pursuant to this Warrant due to the Company’s failure to obtain
the Shareholder Approval (such number of shares that are prohibited from being issued are referred to herein as the “Exchange
Cap Shares”), in lieu of issuing and delivering such Exchange Cap Shares to the Holder, the Company shall pay cash to the
Holder in exchange for the cancellation of such portion of this Warrant exercisable into such Exchange Cap Shares (the
“Exchange Cap Payment Amount”) at a price equal to the sum of (x) the product of (A) such number of Exchange Cap Shares
and (B) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder
delivers the applicable Exercise Notice with respect to such Exchange Cap Shares to the Company and ending on the date of the
aforementioned payment under this Section 1(c) and (y) to the extent 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 Exchange Cap Shares, any brokerage
commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. The limitations contained in
this paragraph shall apply to a successor holder of this Warrant.
(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 transmit 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) (other than in an Excluded Issuance (as defined in the Purchase Agreement)) 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 (other than in an Excluded Issuance) and the lowest price per share for which one share of Common Stock
is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable
upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common
Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting, 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.
(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 (other than in an Excluded Issuance) 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 (excluding
with respect to any Excluded Issuance), 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)
Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection
with the issuance or sale or deemed issuance or sale of any other securities of the Company (excluding with respect to any Excluded Issuance)
(as determined jointly by the Holder and the Company), the “Primary Security”, and such Option and/or Convertible Security
and/or Adjustment Right, the “Secondary Securities”), together comprising one integrated transaction, (or one or more transactions
if such issuances or sales or deemed issuances or sales of securities of the Company either (A) have at least one investor or purchaser
in common, (B) are consummated in reasonable proximity to each other and/or (C) are consummated under the same plan of financing) the
aggregate consideration per share of Common Stock with respect to such Primary Security shall be deemed to be equal to the difference
of (x) the lowest price per share for which one share of Common Stock was issued (or was deemed to be issued pursuant to Section 2(b)(i)
or 2(b)(ii) above, as applicable) in such integrated transaction solely with respect to such Primary Security, minus (y) with respect
to such Secondary Securities, the sum of (I) the Black Scholes Consideration Value of each such Option, if any, (II) the fair market
value (as reasonably determined jointly by the Holder and the Company in good faith) or the Black Scholes Consideration Value, as applicable,
of such Adjustment Right, if any, and (III) the fair market value (as reasonably determined jointly by the Holder and the Company) of
such Convertible Security, if any, in each case, as determined on a per share basis in accordance with this Section 2(b)(iv). If any
shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration
received therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not
for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the net amount of consideration received
by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other
than cash, the amount of such consideration received by the Company (for the purpose of determining the consideration paid for such Common
Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be the
fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of
consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the
five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are
issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount
of consideration therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security,
but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the fair value of such portion
of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible
Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be reasonably
determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence
of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five
(5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest
error and the fees and expenses of such appraiser shall be borne by the Company.
(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).
(c)
Holder’s Right of Alternative Exercise Price Following Issuance of Certain Options or Convertible Securities. In addition
to and not in limitation of the other provisions of this Section 2, if the Company in any manner issues or sells or enters into any
agreement to issue or sell, any Common Stock, Options or Convertible Securities (any such securities, “Variable Price Securities”)
after the Issuance Date that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of
Common Stock at a price which varies or may vary with the market price of the shares of Common Stock, including by way of one or more
reset(s) to a fixed price, but exclusive of such formulations reflecting customary anti-dilution provisions (such as share splits, share
combinations, share dividends and similar transactions) (each of the formulations for such variable price being herein referred to as,
the “Variable Price”), the Company shall provide written notice thereof via electronic mail and overnight courier to the Holder
on the date of such agreement and the issuance of such Common Stock, Convertible Securities or Options. From and after the date the Company
enters into such agreement or issues any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its
sole discretion to substitute the Variable Price, as calculated pursuant to the agreements governing such Variable Price Securities, for
the Exercise Price upon exercise of this Warrant by designating in the Exercise Notice delivered upon any exercise of this Warrant that
solely for purposes of such exercise the Holder is relying on the Variable Price rather than the Exercise Price then in effect. The Holder’s
election to rely on a Variable Price for a particular exercise of this Warrant shall not obligate the Holder to rely on a Variable Price
for any future exercises of this Warrant.
(d)
[Intentionally omitted].
(e)
Other Events. In the event that the Company (or any Subsidiary (as defined in the Purchase Agreement)) shall take any action
to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from actual dilution
or if any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features),
then the Company’s board of directors shall in good faith determine and implement an appropriate adjustment in the Exercise Price
and the number of Warrant Shares (if applicable) so as to protect the rights of the Holder, provided that no such adjustment pursuant
to this Section 2(e) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this
Section 2, provided further that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against
such dilution, then the Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank
of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding absent manifest
error and whose fees and expenses shall be borne by the Company.
(f)
Calculations. All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th
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, 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 this Section 2, 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 and the Exchange Cap (as defined in the Purchase Agreement)) 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 (without regard to the Beneficial Ownership Limitation and the Exchange Cap), 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 second 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.
(j)
Returnable Warrant. This Warrant shall, without any further action by either party hereto, be cancelled and extinguished in its
entirety if the Note is fully repaid in cash prior to the Trigger Date.
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 or,
prior to the Ex-Exchange Cap Date, the Exchange Cap) 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 or, prior to the Ex-Exchange Cap
Date, the Exchange Cap, then the Holder shall not be entitled to participate in such Distribution to the extent of the Beneficial Ownership
Limitation or, prior to the Ex-Exchange Cap Date, the Exchange Cap (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 or, prior to the Ex-Exchange Cap Date, the Exchange
Cap, 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)
Purchase Rights. In addition to any adjustments pursuant to Sections 2 or 3 above, if at any time the Company grants, issues
or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number
of 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 or, prior to the Ex-Exchange Cap Date, the Exchange
Cap) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record
is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such
Purchase Rights (provided, however, that to the extent that the Holder’s right to participate in any such Purchase
Right would result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation or, prior to the Ex-Exchange
Cap Date, the Exchange Cap, then the Holder shall not be entitled to participate in such Purchase Right to the extent of the Beneficial
Ownership Limitation or, prior to the Ex-Exchange Cap Date, the Exchange Cap (and shall not be entitled to beneficial ownership of such
shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to the extent of any such excess) and such Purchase
Right to such extent shall be held in abeyance 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 or, prior to the Ex-Exchange
Cap Date, the Exchange Cap, at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold
on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance) to the same extent as if there had been
no such limitation).
(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.
(c)
[Intentionally omitted].
(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 subject to the Beneficial Ownership
Limitation and prior to the Ex-Exchange Cap Date, the Exchange Cap, 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 certificate 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, two (2) 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.
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.
13. ARBITRATION
OF CLAIMS; GOVERNING LAW; AND VENUE. The Company and Holder shall submit all Claims (as defined in Exhibit E 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 E 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 Irrevocable Transfer Agent
Instructions (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 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.
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, Black Scholes Consideration Value, 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.
(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, and (iv) 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)
“Black Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment
Right (as the case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the
“OV” function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock
on the Trading Day immediately preceding the public announcement of the execution of definitive documents with respect to the issuance
of such Option or Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for
a period equal to the remaining term of such Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance
of such Option, Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv) an expected volatility
equal to the greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing
a 365 day annualization factor) as of the Trading Day immediately following the date of issuance of such Option, Convertible Security
or Adjustment Right (as the case may be).
(c) “Black
Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s
request pursuant to Section 4(c)(i), which value is calculated using the Black Scholes Option Pricing Model obtained from the
“OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing
Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the announcement of the
applicable Change of Control (or the consummation of the applicable Change of Control, if earlier) and ending on the Trading Day of
the Holder’s request pursuant to Section 4(c)(i) and (2) the sum of the price per share being offered in cash in the
applicable Change of Control (if any) plus the value of the non-cash consideration being offered in the applicable Change of Control
(if any), (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s request pursuant to
Section 4(c)(i), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of
(1) the remaining term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c)(i) and (2) the
remaining term of this Warrant as of the date of consummation of the applicable Change of Control or as of the date of the
Holder’s request pursuant to Section 4(c)(i) if such request is prior to the date of the consummation of the applicable
Change of Control, (iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100% and the 30 day volatility
obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading
Day immediately following the earliest to occur of (A) the public disclosure of the applicable Change of Control and (B) the date of
the Holder’s request pursuant to Section 4(c)(i).
(d)
“Bloomberg” means Bloomberg, L.P.
(e)
“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.
(f)
“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.
(g)
“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.
(h)
“Common Stock” means the Company’s common stock, par value $0.0001 per share, and any other class of securities
into which such securities may hereafter be reclassified or changed.
(i)
“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.
(j)
“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.
(k)
“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.
(l)
[Intentionally omitted].
(m)
[Intentionally omitted].
(n)
[Intentionally omitted].
(o)
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities.
(p) “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.
(q)
“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.
(r)
“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.
(s)
“Principal Market” means the principal securities exchange or trading market where such Common Stock is listed
or quoted, including but not limited to any tier of the OTC Markets Group, Inc., any tier of the
The Nasdaq Stock Market LLC (including Nasdaq Capital Market), or the NYSE American LLC, or any successor to such markets.
(t)
“Market Price” means the highest traded price of the Common Stock during the thirty Trading Days prior to the
date of the respective Exercise Notice.
(u)
“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.
(v)
“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.
(w)
“Trigger Date” means the date that an Event of Default (as defined in the Note) occurs under the Note.
(x) “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if
the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities
market on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New
York time, as reported by Quotestream or other similar quotation service provider designated by the Holder through its
“VAP” function (set to 09:30 start time and 16:00 end time) or, if the foregoing does not apply, the dollar
volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Quotestream or other
similar quotation service provider designated by the Holder, or, if no dollar volume-weighted average price is reported for such
security by Quotestream or other similar quotation service provider designated by the Holder for such hours, the average of the
highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the
“pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC) (or a similar organization or agency succeeding to
its functions of reporting prices). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases,
the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. All such
determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other
similar transaction during such period.
* * * * * * *
IN WITNESS WHEREOF, the Company has caused
this Warrant to be duly executed as of the Issuance Date set forth above.
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SIGNING DAY SPORTS, INC. |
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/s/ Daniel Nelson |
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Name: |
Daniel Nelson |
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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 SIGNING
DAY SPORTS, INC., a Delaware 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: _____________________
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(Print Name of Registered Holder) |
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By: |
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Name: |
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Title: |
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EXHIBIT B
ASSIGNMENT OF WARRANT
(To be signed only upon authorized
transfer of the Warrant)
FOR VALUE RECEIVED,
the undersigned hereby sells, assigns, and transfers unto _______________ the right to purchase _______________ shares of common
stock of SIGNING DAY SPORTS, INC., to which the within Common Stock Purchase Warrant relates and appoints _________ , as
attorney-in-fact, to transfer said right on the books of SIGNING DAY SPORTS, INC. with full power of substitution and
re-substitution in the premises. By accepting such transfer, the transferee has agreed to be bound in all respects by the terms and
conditions of the within Warrant.
Dated: _____________________
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(Signature) * |
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(Name) |
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(Address) |
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(Social Security or Tax Identification No.) |
| * | The signature on this Assignment of Warrant must correspond
to the name as written upon the face of the Common Stock Purchase Warrant in every particular without alteration or enlargement or any
change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and
title(s) with such entity. |
ANNEX P
SIGNING DAY SPORTS, INC.
AMENDED
AND RESTATED 2022 EQUITY INCENTIVE PLAN
1. Purpose;
Eligibility.
1.1. General
Purpose. The name of this plan is the Signing Day Sports, Inc. Amended
and Restated 2022 Equity Incentive Plan (the “Plan”). The purposes of the Plan are to (a) enable Signing Day
Sports, Inc., a Delaware corporation (the “Company”), and any Affiliate to attract and retain the types of Employees,
Consultants and Directors who will contribute to the Company’s long-term success; (b) provide incentives that align the interests
of Employees, Consultants and Directors with those of the stockholders of the Company; and (c) promote the success of the Company’s
business.
1.2. Eligible
Award Recipients. The persons eligible to receive Awards are the Employees, Consultants and Directors of the Company and its Affiliates
and such other individuals designated by the Committee who are reasonably expected to become Employees, Consultants and Directors after
the receipt of Awards.
1.3. Available
Awards. Awards that may be granted under the Plan include: (a) Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock
Appreciation Rights, (d) Restricted Awards, (e) Performance Share Awards, and (f) Performance Compensation Awards.
2. Definitions.
“Affiliate” means
a corporation or other entity that, directly or through one or more intermediaries, controls, is controlled by or is under common control
with, the Company, including, without limitation, any corporation that is a “parent corporation” or a “subsidiary corporation”
with respect to the Company within the meaning of Section 424(e) or (f) of the Code, and any other non-corporate entity
that would be such a subsidiary corporation if such entity were a corporation.
“Applicable Laws” means
the requirements related to or implicated by the administration of the Plan under applicable state corporate law, United States federal
and state securities laws, the Code, any stock exchange or quotation system on which the shares of Common Stock are listed or quoted,
and the applicable laws of any foreign country or jurisdiction where Awards are granted under the Plan.
“Award” means
any right granted under the Plan, including an Incentive Stock Option, a Non-qualified Stock Option, a Stock Appreciation Right, a Restricted
Award, a Performance Share Award or a Performance Compensation Award.
“Award Agreement” means
a written agreement, contract, certificate or other instrument or document evidencing the terms and conditions of an individual Award
granted under the Plan which may, in the discretion of the Company, be transmitted electronically to any Participant. Each Award Agreement
shall be subject to the terms and conditions of the Plan.
“Beneficial Owner” has
the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership
of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” shall
be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise
of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially
Owns” and “Beneficially Owned” have a corresponding meaning.
“Board” means
the Board of Directors of the Company, as constituted at any time.
“Cause” means:
With respect to any
Employee or Consultant: (a) if the Employee or Consultant is a party to an employment or service agreement with the Company or its Affiliates
and such agreement provides for a definition of Cause, the definition contained therein; or (b) if no such agreement exists, or if such
agreement does not define Cause: (i) the commission of, or plea of guilty or no contest to, a felony or a crime involving moral turpitude
or the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company or an Affiliate;
(ii) conduct that results in or is reasonably likely to result in harm to the reputation or business of the Company or any of its Affiliates;
(iii) gross negligence or willful misconduct with respect to the Company or an Affiliate; or (iv) material violation of state or federal
securities laws.
With respect to any Director,
a determination by a majority of the disinterested Board members that the Director has engaged in any of the following: (a) malfeasance
in office; (b) gross misconduct or neglect; (c) false or fraudulent misrepresentation inducing the director’s appointment; (d) willful
conversion of corporate funds; or (e) repeated failure to participate in Board meetings on a regular basis despite having received proper
notice of the meetings in advance.
The Committee, in its absolute
discretion, shall determine the effect of all matters and questions relating to whether a Participant has been discharged for Cause.
“Change in Control” means
(a) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the properties or assets of the Company and its subsidiaries, taken as
a whole, to any Person that is not a subsidiary of the Company; (b) the Incumbent Directors cease for any reason to constitute at least
a majority of the Board; (c) the date which is 10 business days prior to the consummation of a complete liquidation or dissolution of
the Company; (d) the acquisition by any Person of Beneficial Ownership of more than 50% (on a fully diluted basis) of either (i) the then
outstanding shares of Common Stock of the Company, taking into account as outstanding for this purpose such Common Stock issuable upon
the exercise of options or warrants, the conversion of convertible stock or debt, and the exercise of any similar right to acquire such
Common Stock (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”);
provided, however, that for purposes of this Plan, the following acquisitions shall not constitute a Change in Control: (A) any acquisition
by the Company or any Affiliate, (B) any acquisition by any employee benefit plan sponsored or maintained by the Company or any subsidiary,
(C) any acquisition which complies with clauses, (i), (ii) and (iii) of subsection (e) of this definition or (D) in respect of an Award
held by a particular Participant, any acquisition by the Participant or any group of persons including the Participant (or any entity
controlled by the Participant or any group of persons including the Participant); or (e) the consummation of a reorganization, merger,
consolidation, statutory share exchange or similar form of corporate transaction involving the Company that requires the approval of the
Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”),
unless immediately following such Business Combination: (i) more than 50% of the total voting power of (A) the entity resulting from such
Business Combination (the “Surviving Company”), or (B) if applicable, the ultimate parent entity that directly or indirectly
has beneficial ownership of sufficient voting securities eligible to elect a majority of the members of the board of directors (or the
analogous governing body) of the Surviving Company (the “Parent Company”), is represented by the Outstanding Company
Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into
which the Outstanding Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the
holders thereof is in substantially the same proportion as the voting power of the Outstanding Company Voting Securities among the holders
thereof immediately prior to the Business Combination; (ii) no Person (other than any employee benefit plan sponsored or maintained by
the Surviving Company or the Parent Company) is or becomes the Beneficial Owner, directly or indirectly, of 50% or more of the total voting
power of the outstanding voting securities eligible to elect members of the board of directors of the Parent Company (or the analogous
governing body) (or, if there is no Parent Company, the Surviving Company); and (iii) at least a majority of the members of the board
of directors (or the analogous governing body) of the Parent Company (or, if there is no Parent Company, the Surviving Company) following
the consummation of the Business Combination were Board members at the time of the Board’s approval of the execution of the initial
agreement providing for such Business Combination. The foregoing notwithstanding, if the Award constitutes non-qualified deferred compensation
under Section 409A of the Code, in no event shall a Change in Control be deemed to have occurred unless such change shall satisfy the
definition of a change in control under Section 409A of the Code.
“Code” means
the Internal Revenue Code of 1986, as it may be amended from time to time. Any reference to a section of the Code shall be deemed to include
a reference to any regulations promulgated thereunder.
“Committee” means
the compensation committee of the Board, or if no such committee has been established, the full Board, or a committee of one or more members
appointed to administer the Plan in accordance with Section 3.3 and Section 3.4.
“Common Stock” means
the common stock, par value $0.0001 par
value per share, of the Company, or such other securities of the Company as may be designated by the Committee from time
to time in substitution thereof.
“Consultant” means
any individual who is engaged by the Company or any Affiliate to render consulting or advisory services.
“Continuous Service” means
that the Participant’s service with the Company or an Affiliate, whether as an Employee, Consultant or Director, is not interrupted
or terminated. The Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity
in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity
for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s
Continuous Service; provided further that if any Award is subject to Section 409A of the Code, this sentence shall only be given
effect to the extent consistent with Section 409A of the Code. For example, a change in status from an Employee of the Company to a Director
of an Affiliate will not constitute an interruption of Continuous Service unless otherwise required by Section 409A of the Code. The Committee
or its delegate, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave
of absence approved by that party, including sick leave, military leave or any other personal or family leave of absence.
“Director” means
a member of the Board.
“Disability” means
that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental
impairment; provided, however, for purposes of determining the term of an Incentive Stock Option pursuant to Section 6.10
hereof, the term Disability shall have the meaning ascribed to it under Section 22(e)(3) of the Code. The determination of whether an
individual has a Disability shall be determined under procedures established by the Committee. Except in situations where the Committee
is determining Disability for purposes of the term of an Incentive Stock Option pursuant to Section 6.10 hereof within the
meaning of Section 22(e)(3) of the Code, the Committee may rely on any determination that a Participant is disabled for purposes of benefits
under any long-term disability plan maintained by the Company or any Affiliate in which a Participant participates. The foregoing notwithstanding,
if the Award is subject to Section 409A of the Code, in no event shall a Disability be deemed to have occurred unless such disability
satisfies the requirements of Section 409A of the Code.
“Effective Date” shall
mean August 31, 2022.
“Employee” means
any person, including an Officer or Director, employed by the Company or an Affiliate; provided, that, for purposes of determining
eligibility to receive Incentive Stock Options, an Employee shall mean an employee of the Company or a parent or subsidiary corporation
within the meaning of Section 424 of the Code. Mere service as a Director or payment of a director’s fee by the Company or an Affiliate
shall not be sufficient to constitute “employment” by the Company or an Affiliate.
“Exchange Act” means
the Securities Exchange Act of 1934, as amended.
“Fair Market Value” means,
as of any date, the value of the Common Stock as determined below. If the Common Stock is listed on any established stock exchange or
a national market system, including without limitation, the New York Stock Exchange or,
the NYSE American LLC or The Nasdaq Stock Market LLC,
the Fair Market Value shall be the closing price of a share of Common Stock (or if no sales were reported the closing price on the date
immediately preceding such date) as quoted on such exchange or system on the day of determination, as reported in the Wall Street Journal
or similar publication. In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good
faith by the Committee and such determination shall be conclusive and binding on all persons; provided that if an Award is subject
to Section 409A of the Code, then the Fair Market Value shall be determined in accordance with Section 409A of the Code.
“Grant Date” means
the date on which the Committee adopts a resolution, or takes other appropriate action, expressly granting an Award to a Participant that
specifies the key terms and conditions of the Award or, if a later date is set forth in such resolution, then such date as is set forth
in such resolution.
“Incentive Stock
Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.
“Incumbent Directors” means
individuals who, on the Effective Date, constitute the Board, provided that any individual becoming a Director subsequent to the
Effective Date whose election or nomination for election to the Board was approved by a vote of at least two-thirds of the Incumbent Directors
then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee
for Director without objection to such nomination) shall be an Incumbent Director. No individual initially elected or nominated as a director
of the Company as a result of an actual or threatened election contest with respect to Directors or as a result of any other actual or
threatened solicitation of proxies by or on behalf of any person other than the Board shall be an Incumbent Director.
“Non-qualified Stock
Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.
“Officer” means
a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.
“Option” means
an Incentive Stock Option or a Non-qualified Stock Option granted pursuant to the Plan.
“Optionholder” means
a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.
“Option Exercise
Price” means the price at which a share of Common Stock may be purchased upon the exercise of an Option.
“Participant” means
an eligible person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.
“Performance Compensation
Award” means any Award designated by the Committee as a Performance Compensation Award pursuant to Section 7.4
of the Plan.
“Performance Criteria” means
the criterion or criteria that the Committee shall select for purposes of establishing the Performance Goal(s) for a Performance Period
with respect to any Performance Compensation Award under the Plan. The Performance Criteria that will be used to establish the Performance
Goal(s) shall be based on the attainment of specific levels of performance of the Company (or Affiliate, division, business unit or operational
unit of the Company) and may include the following: (a) net earnings or net income (before or after taxes); (b) basic or diluted
earnings per share (before or after taxes); (c) net revenue or net revenue growth; (d) gross revenue; (e) gross profit or gross profit
growth; (f) net operating profit (before or after taxes); (g) return on assets, capital, invested capital, equity, or sales; (h) cash
flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital); (i) earnings before or after
taxes, interest, depreciation and/or amortization; (j) gross or operating margins; (k) improvements in capital structure; (l) budget and
expense management; (m) productivity ratios; (n) economic value added or other value added measurements; (o) share price (including, but
not limited to, growth measures and total stockholder return); (p) expense targets; (q) margins; (r) operating efficiency; (s) working
capital targets; (t) enterprise value; (u) safety record; (v) completion of acquisitions or business expansion; (w) achieving research
and development goals and milestones; (x) achieving product commercialization goals; and (y) other criteria as may be set by the Committee
from time to time.
Any one or more of the Performance
Criteria may be used on an absolute or relative basis to measure the performance of the Company and/or an Affiliate as a whole or any
division, business unit or operational unit of the Company and/or an Affiliate or any combination thereof, as the Committee may deem appropriate,
or as compared to the performance of a group of comparable companies, or published or special index that the Committee, in its sole discretion,
deems appropriate, or the Committee may select Performance Criterion (o) above as compared to various stock market indices. The Committee
also has the authority to provide for accelerated vesting of any Award based on the achievement of Performance Goals pursuant to the Performance
Criteria specified in this paragraph, provided that if the Award is subject to Section 409A of the Code, such accelerated vesting does
not violate the rules of Code Section 409A. The Committee shall, within the first 90 days of a Performance Period (or, such longer or
shorter time period as the Committee shall determine) define in an objective fashion the manner of calculating the Performance Criteria
it selects to use for such Performance Period. In the event that applicable tax and/or securities laws change to permit the Committee
discretion to alter the governing Performance Criteria without obtaining stockholder approval of such changes, the Committee shall have
sole discretion to make such changes without obtaining stockholder approval.
“Performance Formula” means,
for a Performance Period, the one or more objective formulas applied against the relevant Performance Goal to determine, with regard to
the Performance Compensation Award of a particular Participant, whether all, some portion but less than all, or none of the Performance
Compensation Award has been earned for the Performance Period.
“Performance Goals” means,
for a Performance Period, the one or more goals established by the Committee for the Performance Period based upon the Performance Criteria.
The Committee is authorized at any time during the first 90 days of a Performance Period (or such longer or shorter time period as the
Committee shall determine) or at any time thereafter, in its sole and absolute discretion, to adjust or modify the calculation of a Performance
Goal for such Performance Period in order to prevent the dilution or enlargement of the rights of Participants based on the following
events: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles,
or other laws or regulatory rules affecting reported results; (d) any reorganization and restructuring programs; (e) extraordinary nonrecurring
items as described in Accounting Principles Board Opinion No. 30 (or any successor or pronouncement thereto) and/or in management’s
discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders
for the applicable year; (f) acquisitions or divestitures; (g) any other specific unusual or nonrecurring events, or objectively determinable
category thereof; (h) foreign exchange gains and losses; and (i) a change in the Company’s fiscal year.
“Performance Period” means
the one or more periods of time not less than one fiscal quarter in duration, as the Committee may select, over which the attainment of
one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance
Compensation Award.
“Performance Share Award” means
the grant of a right to receive a number of actual shares of Common Stock or share units based upon the performance of the Company during
a Performance Period, as determined by the Committee.
“Permitted Transferee” means:
(a) a member of the Optionholder’s immediate family (child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships), any person sharing the Optionholder’s household (other than a tenant or employee), a trust in which these
persons have more than 50% of the beneficial interest, a foundation in which these persons (or the Optionholder) control the management
of assets, and any other entity in which these persons (or the Optionholder) own more than 50% of the voting interests; (b) third parties
designated by the Committee in connection with a program established and approved by the Committee pursuant to which Participants may
receive a cash payment or other consideration in consideration for the transfer of a Non-qualified Stock Option; and (c) such other transferees
as may be permitted by the Committee in its sole discretion.
“Restricted Award” means
any Award granted pursuant to Section 7.2(a).
“Rule 16b-3” means
Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.
“Securities Act” means
the Securities Act of 1933, as amended.
“Stock Appreciation
Right” means the right pursuant to an Award granted under Section 7.1 to receive, upon exercise, an amount
payable in cash or shares equal to the number of shares subject to the Stock Appreciation Right that is being exercised multiplied by
the excess of (a) the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (b) the exercise price specified
in the Stock Appreciation Right Award Agreement.
“Ten Percent Stockholder” means
a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of any of its Affiliates.
3. Administration.
3.1. Authority
of Committee. The Plan shall be administered by the Committee or, in the Board’s sole discretion, by the Board. Subject to the
terms of the Plan and the provisions of Section 409A of the Code (if applicable), the Committee’s charter and Applicable Laws, and
in addition to other express powers and authorization conferred by the Plan, the Committee shall have the authority:
(a) to
construe and interpret the Plan and apply its provisions;
(b) to
promulgate, amend, and rescind rules and regulations relating to the administration of the Plan;
(c) to
authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;
(d) to
delegate its authority to one or more Officers of the Company with respect to Awards that do not involve “insiders” within
the meaning of Section 16 of the Exchange Act;
(e) to
determine when Awards are to be granted under the Plan and the applicable Grant Date;
(f) from
time to time to select, subject to the limitations set forth in this Plan, those Participants to whom Awards shall be granted;
(g) to
determine the number of shares of Common Stock to be made subject to each Award;
(h) to
determine whether each Option is to be an Incentive Stock Option or a Non-qualified Stock Option;
(i) to
prescribe the terms and conditions of each Award, including, without limitation, the exercise price and medium of payment and vesting
provisions, and to specify the provisions of the Award Agreement relating to such grant;
(j) to
determine the target number of Performance Sharesshares
of Common Stock to be granted pursuant to a Performance Share Award, the performance measures that will be used to establish the
performance goals, the performance period(s) and the number of Performance Sharesshares
of Common Stock earned by a Participant;
(k) to
designate an Award (including a cash bonus) as a Performance Compensation Award and to select the Performance Criteria that will be used
to establish the Performance Goals;
(l) to
amend any outstanding Awards, including for the purpose of modifying the time or manner of vesting, or the term of any outstanding Award;
provided, however, that if any such amendment impairs a Participant’s rights or increases a Participant’s obligations
under his or her Award or creates or increases a Participant’s federal income tax liability with respect to an Award, such amendment
shall also be subject to the Participant’s consent;
(m) to
determine the duration and purpose of leaves of absences which may be granted to a Participant without constituting termination of their
employment for purposes of the Plan, which periods shall be no shorter than the periods generally applicable to Employees under the Company’s
employment policies;
(n) to
make decisions with respect to outstanding Awards that may become necessary upon a change in corporate control or an event that triggers
anti-dilution adjustments;
(o) to
interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan and any instrument
or agreement relating to, or Award granted under, the Plan; and
(p) to
exercise discretion to make any and all other determinations which it determines to be necessary or advisable for the administration of
the Plan.
The Committee also may modify
the purchase price or the exercise price of any outstanding Award, provided that if the modification effects a repricing, stockholder
approval shall be required before the repricing is effective.
3.2. Committee
Decisions Final. All decisions made by the Committee pursuant to the provisions of the Plan shall be final and binding on the Company
and the Participants, unless such decisions are determined by a court having jurisdiction to be arbitrary and capricious.
3.3. Delegation. The
Committee may delegate administration of the Plan to a subcommittee or subcommittees of one or more members of the Committee, and the
term “Committee” shall apply to any person or persons to whom such authority has been delegated. The Committee shall have
the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this
Plan to the Board or the Committee shall thereafter be to the committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at
any time and re-vest in the Board the administration of the Plan. The members of the Committee shall be appointed by and serve at the
pleasure of the Board. From time to time, the Board may increase or decrease the size of the Committee, add additional members to, remove
members (with or without cause) from, appoint new members in substitution therefor, and fill vacancies, however caused, in the Committee.
The Committee shall act pursuant to a vote of the majority of its members or, in the case of a Committee comprised of only two members,
the unanimous consent of its members, whether present or not, or by the written consent of the majority of its members and minutes shall
be kept of all of its meetings and copies thereof shall be provided to the Board. Subject to the limitations prescribed by the Plan and
the Board, the Committee may establish and follow such rules and regulations for the conduct of its business as it may determine to be
advisable.
3.4. Committee
Composition. Except as otherwise determined by the Board, the Committee shall consist solely of two or more Non-Employee Directors.
The Board shall have discretion to determine whether or not it intends to comply with the exemption requirements of Rule 16b-3. However,
if the Board intends to satisfy such exemption requirements, with respect to Awards to any insider subject to Section 16 of the Exchange
Act, the Committee shall be a compensation committee of the Board that at all times consists solely of two or more Non-Employee Directors.
Within the scope of such authority, the Board or the Committee may delegate to a committee of one or more members of the Board who are
not Non-Employee Directors the authority to grant Awards to eligible persons who are not then subject to Section 16 of the Exchange Act.
Nothing herein shall create an inference that an Award is not validly granted under the Plan in the event Awards are granted under the
Plan by a compensation committee of the Board that does not at all times consist solely of two or more Non-Employee Directors.
3.5. Indemnification.
In addition to such other rights of indemnification as they may have as Directors or members of the Committee, and to the extent allowed
by Applicable Laws, the Committee shall be indemnified by the Company against the reasonable expenses, including attorney’s fees,
actually incurred in connection with any action, suit or proceeding or in connection with any appeal therein, to which the Committee may
be party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted under the Plan, and
against all amounts paid by the Committee in settlement thereof (provided, however, that the settlement has been approved by the
Company, which approval shall not be unreasonably withheld) or paid by the Committee in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Committee
did not act in good faith and in a manner which such person reasonably believed to be in the best interests of the Company, or in the
case of a criminal proceeding, had no reason to believe that the conduct complained of was unlawful; provided, however, that within
60 days after institution of any such action, suit or proceeding, such Committee shall, in writing, offer the Company the opportunity
at its own expense to handle and defend such action, suit or proceeding.
4. Shares
Subject to the Plan.
4.1. Subject
to adjustment in accordance with Section 11, a total of 3,750,0004,500,000
shares of Common Stock shall be available for the grant of Awards under the Plan. Shares of Common Stock
granted in connection with all Awards under the Plan shall be counted against this limit as one (1) share of Common Stock for every one
(1) share of Common Stock granted in connection with such Award. During the terms of the Awards, the Company shall keep
available at all times the number of shares of Common Stock required to satisfy such Awards.
4.2. Shares
of Common Stock available for distribution under the Plan may consist, in whole or in part, of authorized and unissued shares, treasury
shares or shares reacquired by the Company in any manner.
4.3. Subject
to adjustment in accordance with Section 14, no more than 4,500,000 shares of Common Stock may be issued in the aggregate pursuant
to the exercise of Incentive Stock Options.
4.4. 4.3.
Any shares of Common Stock subject to an Award that is canceled, forfeited or expires prior to exercise or realization,
either in full or in part, shall again become available for issuance under the Plan. Any shares of Common
Stock that again become available for future grants pursuant to this Section 4.3 shall be added back as one (1) share. Notwithstanding
anything to the contrary contained herein: shares subject to an Award under the Plan shall not again be made available for issuance or
delivery under the Plan if such shares are (a) shares tendered in payment of an Option, (b) shares delivered or withheld by the Company
to satisfy any tax withholding obligation, or (c) shares covered by a stock-settled Stock Appreciation Right or other Awards that were
not issued upon the settlement of the Award.
5. Eligibility.
5.1. Eligibility
for Specific Awards. Incentive Stock Options may be granted only to Employees. Awards other than Incentive Stock Options may be granted
to Employees, Consultants and Directors and those individuals whom the Committee determines are reasonably expected to become Employees,
Consultants and Directors following the Grant Date.
5.2. Ten
Percent Stockholders. A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the Option Exercise Price is
at least 110% of the Fair Market Value of the Common Stock at the Grant Date and the Option is not exercisable after the expiration of
five years from the Grant Date.
6. Option
Provisions. Each Option granted under the Plan shall be evidenced by an Award Agreement. Each Option so granted shall be subject to
the conditions set forth in this Section 6, and to such other conditions not inconsistent with the Plan as may be reflected
in the applicable Award Agreement. All Options shall be separately designated Incentive Stock Options or Non-qualified Stock Options at
the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased
on exercise of each type of Option. Notwithstanding the foregoing, the Company shall have no liability to any Participant or any other
person if an Option designated as an Incentive Stock Option fails to qualify as such at any time or if an Option is determined to constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the Code and the terms of such Option do not satisfy
the requirements of Section 409A of the Code. The provisions of separate Options need not be identical, but each Option shall include
(through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions:
6.1. Term.
Subject to the provisions of Section 5.2 regarding Ten Percent Stockholders, no Incentive Stock Option shall be exercisable
after the expiration of 10 years from the Grant Date. The term of a Non-qualified Stock Option granted under the Plan shall be determined
by the Committee; provided, however, no Non-qualified Stock Option shall be exercisable after the expiration of 10 years from the
Grant Date.
6.2. Exercise
Price of An Incentive Stock Option. Subject to the provisions of Section 5.2 regarding Ten Percent Stockholders, the
Option Exercise Price of each Incentive Stock Option shall be not less than 100% of the Fair Market Value of the Common Stock subject
to the Option on the Grant Date. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an Option Exercise Price
lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option
in a manner satisfying the provisions of Section 424(a) of the Code.
6.3. Exercise
Price of a Non-qualified Stock Option. The Option Exercise Price of each Non-qualified Stock Option shall be not less than 100% of
the Fair Market Value of the Common Stock subject to the Option on the Grant Date. Notwithstanding the foregoing, a Non-qualified Stock
Option may be granted with an Option Exercise Price lower than that set forth in the preceding sentence if such Option is granted pursuant
to an assumption or substitution for another option in a manner satisfying the provisions of Section 409A of the Code.
6.4. Consideration.
The Option Exercise Price of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes
and regulations, either (a) in cash or by certified or bank check at the time the Option is exercised or (b) in the discretion of the
Committee, upon such terms as the Committee shall approve, the Option Exercise Price may be paid: (i) by delivery to the Company of other
Common Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the Option Exercise
Price (or portion thereof) due for the number of shares being acquired, or by means of attestation whereby the Participant identifies
for delivery specific shares of Common Stock that have an aggregate Fair Market Value on the date of attestation equal to the Option Exercise
Price (or portion thereof) and receives a number of shares of Common Stock equal to the difference between the number of shares thereby
purchased and the number of identified attestation shares of Common Stock (a “Stock for Stock Exchange”); (ii) a “cashless”
exercise program established with a broker; (iii) by reduction in the number of shares of Common Stock otherwise deliverable upon exercise
of such Option with a Fair Market Value equal to the aggregate Option Exercise Price at the time of exercise; (iv) any combination of
the foregoing methods; or (v) in any other form of legal consideration that may be acceptable to the Committee. Unless otherwise specifically
provided in the Option, the exercise price of Common Stock acquired pursuant to an Option that is paid by delivery (or attestation) to
the Company of other Common Stock acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock
of the Company that have been held for more than six months (or such longer or shorter period of time required to avoid a charge to earnings
for financial accounting purposes). Notwithstanding the foregoing, during any period for which the Common Stock is publicly traded (i.e.,
the Common Stock is listed on any established stock exchange or a national market system) an exercise by a Director or Officer that involves
or may involve a direct or indirect extension of credit or arrangement of an extension of credit by the Company, directly or indirectly,
in violation of Section 402(a) of the Sarbanes-Oxley Act of 2002 shall be prohibited with respect to any Award under this Plan.
6.5. Transferability
of An Incentive Stock Option. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution
and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder
may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of
the death of the Optionholder, shall thereafter be entitled to exercise the Option.
6.6. Transferability
of a Non-qualified Stock Option. A Non-qualified Stock Option may, in the sole discretion of the Committee, be transferable to a Permitted
Transferee, upon written approval by the Committee to the extent provided in the Award Agreement. If the Non-qualified Stock Option does
not provide for transferability, then the Non-qualified Stock Option shall not be transferable except by will or by the laws of descent
and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing,
the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who,
in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.
6.7. Vesting
of Options. Each Option may, but need not, vest and therefore become exercisable in periodic installments that may, but need not,
be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based
on performance or other criteria) as the Committee may deem appropriate. The vesting provisions of individual Options may vary. No Option
may be exercised for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration
of vesting and exercisability in the terms of any Award Agreement upon the occurrence of a specified event, provided that if such Award
is subject to Section 409A of the Code, such acceleration of vesting and exercisability complies with the provisions of Section 409A of
the Code.
6.8. Termination
of Continuous Service. Unless otherwise provided in an Award Agreement or in an employment agreement the terms of which have been
approved by the Committee, in the event an Optionholder’s Continuous Service terminates (other than upon the Optionholder’s
death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination) but only within such period of time ending on the earlier of (a) the date three months following
the termination of the Optionholder’s Continuous Service or (b) the expiration of the term of the Option as set forth in the Award
Agreement; provided that, if the termination of Continuous Service is by the Company for Cause, all outstanding Options (whether
or not vested) shall immediately terminate and cease to be exercisable. If, after termination, the Optionholder does not exercise his
or her Option within the time specified in the Award Agreement, the Option shall terminate.
6.9. Extension
of Termination Date. An Optionholder’s Award Agreement may also provide that if the exercise of the Option following the termination
of the Optionholder’s Continuous Service for any reason would be prohibited at any time because the issuance of shares of Common
Stock would violate the registration requirements under the Securities Act or any other state or federal securities law or the rules of
any securities exchange or interdealer quotation system, then the Option shall terminate on the earlier of (a) the expiration of the term
of the Option in accordance with Section 6.1 or (b) the expiration of a period after termination of the Participant’s
Continuous Service that is three months after the end of the period during which the exercise of the Option would be in violation of such
registration or other securities law requirements.
6.10. Disability
of Optionholder. Unless otherwise provided in an Award Agreement, in the event that an Optionholder’s Continuous Service terminates
as a result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only within such period of time ending on the earlier of (a)
the date 12 months following such termination or (b) the expiration of the term of the Option as set forth in the Award Agreement. If,
after termination, the Optionholder does not exercise his or her Option within the time specified herein or in the Award Agreement, the
Option shall terminate.
6.11. Death
of Optionholder. Unless otherwise provided in an Award Agreement, in the event an Optionholder’s Continuous Service terminates
as a result of the Optionholder’s death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise
such Option as of the date of death) by the Optionholder’s estate, by a person who acquired the right to exercise the Option by
bequest or inheritance or by a person designated to exercise the Option upon the Optionholder’s death, but only within the period
ending on the earlier of (a) the date 12 months following the date of death or (b) the expiration of the term of such Option as set forth
in the Award Agreement. If, after the Optionholder’s death, the Option is not exercised within the time specified herein or in the
Award Agreement, the Option shall terminate.
6.12. Incentive
Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all
plans of the Company and its Affiliates) exceeds $100,000, the Options or portions thereof which exceed such limit (according to the order
in which they were granted) shall be treated as Non-qualified Stock Options.
7. Provisions
of Awards Other Than Options.
7.1. Stock
Appreciation Rights.
(a) General.
Each Stock Appreciation Right granted under the Plan shall be evidenced by an Award Agreement. Each Stock Appreciation Right so granted
shall be subject to the conditions set forth in this Section 7.1, and to such other conditions not inconsistent with the
Plan as may be reflected in the applicable Award Agreement. Stock Appreciation Rights may be granted alone (“Free Standing Rights”)
or in tandem with an Option granted under the Plan (“Related Rights”). All such grants shall be exempt from, or comply
with, the provisions of Section 409A of the Code.
(b) Grant
Requirements. Any Related Right that relates to a Non-qualified Stock Option may be granted at the same time the Option is granted
or at any time thereafter but before the exercise or expiration of the Option. Any Related Right that relates to an Incentive Stock Option
must be granted at the same time the Incentive Stock Option is granted.
(c) Term
of Stock Appreciation Rights. The term of a Stock Appreciation Right granted under the Plan shall be determined by the Committee;
provided, however, no Stock Appreciation Right shall be exercisable later than the tenth anniversary of the Grant Date.
(d) Vesting
of Stock Appreciation Rights. Each Stock Appreciation Right may, but need not, vest and therefore become exercisable in periodic installments
that may, but need not, be equal. The Stock Appreciation Right may be subject to such other terms and conditions on the time or times
when it may be exercised as the Committee may deem appropriate. The vesting provisions of individual Stock Appreciation Rights may vary.
No Stock Appreciation Right may be exercised for a fraction of a share of Common Stock. The Committee may, but shall not be required to,
provide for an acceleration of vesting and exercisability in the terms of any Stock Appreciation Right upon the occurrence of a specified
event, provided that if such Award is subject to Section 409A of the Code, such acceleration of vesting and exercisability complies with
the provisions of Section 409A of the Code.
(e) Exercise
and Payment. Upon exercise of a Stock Appreciation Right, the holder shall be entitled to receive from the Company an amount equal
to the number of shares of Common Stock subject to the Stock Appreciation Right that is being exercised multiplied by the excess of (i)
the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (ii) the exercise price specified in the Stock
Appreciation Right or related Option. Payment with respect to the exercise of a Stock Appreciation Right shall be made on the date of
exercise. Payment shall be made in the form of shares of Common Stock (with or without restrictions as to substantial risk of forfeiture
and transferability, as determined by the Committee in its sole discretion), cash or a combination thereof, as determined by the Committee.
(f) Exercise
Price. The exercise price of a Free Standing Stock Appreciation Right shall be determined by the Committee, but shall not be less
than 100% of the Fair Market Value of one share of Common Stock on the Grant Date of such Stock Appreciation Right. A Related Right granted
simultaneously with or subsequent to the grant of an Option and in conjunction therewith or in the alternative thereto shall have the
same exercise price as the related Option, shall be transferable only upon the same terms and conditions as the related Option, and shall
be exercisable only to the same extent as the related Option; provided, however, that a Stock Appreciation Right, by its terms,
shall be exercisable only when the Fair Market Value per share of Common Stock subject to the Stock Appreciation Right and related Option
exceeds the exercise price per share thereof and no Stock Appreciation Rights may be granted in tandem with an Option unless the Committee
determines that the requirements of Section 7.1(b) are satisfied.
(g) Reduction
in the Underlying Option Shares. Upon any exercise of a Related Right, the number of shares of Common Stock for which any related
Option shall be exercisable shall be reduced by the number of shares for which the Stock Appreciation Right has been exercised. The number
of shares of Common Stock for which a Related Right shall be exercisable shall be reduced upon any exercise of any related Option by the
number of shares of Common Stock for which such Option has been exercised.
7.2. Restricted
Awards.
(a) General.
A Restricted Award is an Award of actual shares of Common Stock (“Restricted Stock”) or hypothetical Common Stock units
(“Restricted Stock Units”) having a value equal to the Fair Market Value of an identical number of shares of Common
Stock, which may, but need not, provide that such Restricted Award may not be sold, assigned, transferred or otherwise disposed of, pledged
or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other purpose for such period
(the “Restricted Period”) as the Committee shall determine. Each Restricted Award granted under the Plan shall be evidenced
by an Award Agreement. Each Restricted Award so granted shall be subject to the conditions set forth in this Section 7.2,
and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement.
(b) Restricted
Stock and Restricted Stock Units.
(i) Each
Participant granted Restricted Stock shall execute and deliver to the Company an Award Agreement with respect to the Restricted Stock
setting forth the restrictions and other terms and conditions applicable to such Restricted Stock. If the Committee determines that the
Restricted Stock shall be held by the Company or in escrow rather than delivered to the Participant pending the release of the applicable
restrictions, the Committee may require the Participant to additionally execute and deliver to the Company (A) an escrow agreement satisfactory
to the Committee, if applicable and (B) the appropriate blank stock power with respect to the Restricted Stock covered by such agreement.
If a Participant fails to execute an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and stock
power, the Award shall be null and void. Subject to the restrictions set forth in the Award, the Participant generally shall have the
rights and privileges of a stockholder as to such Restricted Stock, including the right to vote such Restricted Stock and the right to
receive dividends; provided that, any cash dividends and stock dividends with respect to the Restricted Stock shall similarly be
held in escrow by the Company for the Participant’s account, and interest may be credited on the amount of the cash dividends so
placed in escrow at a rate and subject to such terms as determined by the Committee. The cash dividends or stock dividends so placed in
escrow by the Committee and attributable to any particular share of Restricted Stock (and earnings thereon, if applicable) shall be distributed
to the Participant in cash or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to the amount
of such dividends, if applicable, upon the release of restrictions on such share and, if such share is forfeited, the Participant shall
have no right to such dividends.
(ii) The
terms and conditions of a grant of Restricted Stock Units shall be reflected in an Award Agreement. No shares of Common Stock shall be
issued at the time a Restricted Stock Unit is granted, and the Company will not be required to set aside a fund for the payment of any
such Award. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder. The Committee may
also grant Restricted Stock Units with a deferral feature, if permitted in Section 409A of the Code, whereby settlement is deferred beyond
the vesting date until the occurrence of a future payment date or event set forth in an Award Agreement (“Deferred Stock Units”).
At the discretion of the Committee, each Restricted Stock Unit or Deferred Stock Unit (representing one share of Common Stock) may be
credited with cash and stock dividends paid by the Company in respect of one share of Common Stock (“Dividend Equivalents”).
Dividend Equivalents shall not be paid but shall be credited to the Participant’s account, and interest may be credited on the amount
of cash Dividend Equivalents credited to the Participant’s account at a rate and subject to such terms as determined by the Committee.
Dividend Equivalents credited to a Participant’s account and attributable to any particular Restricted Stock Unit or Deferred Stock
Unit (and earnings thereon, if applicable) shall be distributed in cash or, at the discretion of the Committee, in shares of Common Stock
having a Fair Market Value equal to the amount of such Dividend Equivalents and earnings, if applicable, to the Participant upon settlement
of such Restricted Stock Unit or Deferred Stock Unit and, if such Restricted Stock Unit or Deferred Stock Unit is forfeited, the Participant
shall have no right to such Dividend Equivalents.
(c) Restrictions.
(i) Restricted
Stock awarded to a Participant shall be subject to the following restrictions until the expiration of the Restricted Period, and to such
other terms and conditions as may be set forth in the applicable Award Agreement: (A) if an escrow arrangement is used, the Participant
shall not be entitled to delivery of the stock certificate; (B) the shares shall be subject to the restrictions on transferability set
forth in the Award Agreement; (C) the shares shall be subject to forfeiture to the extent provided in the applicable Award Agreement;
and (D) to the extent such shares are forfeited, the stock certificates shall be returned to the Company, and all rights of the Participant
to such shares and as a stockholder with respect to such shares shall terminate without further obligation on the part of the Company.
(ii) Restricted
Stock Units and Deferred Stock Units awarded to any Participant shall be subject to (A) forfeiture until the expiration of the Restricted
Period, and satisfaction of any applicable Performance Goals during such period, to the extent provided in the applicable Award Agreement,
and to the extent such Restricted Stock Units or Deferred Stock Units are forfeited, all rights of the Participant to such Restricted
Stock Units or Deferred Stock Units shall terminate without further obligation on the part of the Company and (B) such other terms and
conditions as may be set forth in the applicable Award Agreement.
(iii) The
Committee shall have the authority to remove any or all of the restrictions on the Restricted Stock, Restricted Stock Units and Deferred
Stock Units whenever it may determine that, by reason of changes in Applicable Laws or other changes in circumstances arising after the
date the Restricted Stock or Restricted Stock Units or Deferred Stock Units are granted, such action is appropriate.
(d) Restricted
Period. With respect to Restricted Awards, the Restricted Period shall commence on the Grant Date and end at the time or times set
forth on a schedule established by the Committee in the applicable Award Agreement. No Restricted Award may be granted or settled for
a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting in the
terms of any Award Agreement upon the occurrence of a specified event, provided that if such Award is subject to Section 409A of the Code,
such acceleration is consistent with the provisions of Section 409A of the Code.
(e) Delivery
of Restricted Stock and Settlement of Restricted Stock Units. Upon the expiration of the Restricted Period with respect to any shares
of Restricted Stock, the restrictions set forth in Section 7.2(c) and the applicable Award Agreement shall be of no further
force or effect with respect to such shares, except as set forth in the applicable Award Agreement. If an escrow arrangement is used,
upon such expiration, the Company shall deliver to the Participant, or his or her beneficiary, without charge, the stock certificate evidencing,
or enter into book entry form, the shares of Restricted Stock which have not then been forfeited and with respect to which the Restricted
Period has expired (to the nearest full share) and any cash dividends or stock dividends credited to the Participant’s account with
respect to such Restricted Stock and the interest thereon, if any. Upon the expiration of the Restricted Period with respect to any outstanding
Restricted Stock Units, or at the expiration of the deferral period with respect to any outstanding Deferred Stock Units, the Company
shall deliver to the Participant, or his or her beneficiary, without charge, one share of Common Stock for each such outstanding vested
Restricted Stock Unit or Deferred Stock Unit (“Vested Unit”) and cash equal to any Dividend Equivalents credited with
respect to each such Vested Unit in accordance with Section 7.2(b)(ii) hereof and the interest thereon or, at the discretion
of the Committee, in shares of Common Stock having a Fair Market Value equal to such Dividend Equivalents and the interest thereon, if
any; provided, however, that, if explicitly provided in the applicable Award Agreement, the Committee may, in its sole discretion,
elect to pay cash or part cash and part Common Stock in lieu of delivering only shares of Common Stock for Vested Units. If a cash payment
is made in lieu of delivering shares of Common Stock, the amount of such payment shall be equal to the Fair Market Value of the Common
Stock as of the date on which the Restricted Period lapsed in the case of Restricted Stock Units, or the delivery date in the case of
Deferred Stock Units, with respect to each Vested Unit.
(f) Stock
Restrictions. Each certificate or book entry form representing Restricted Stock awarded under the Plan shall bear a legend or notation
in such form as the Company deems appropriate.
7.3. Performance
Share Awards.
(a) Grant
of Performance Share Awards. Each Performance Share Award granted under the Plan shall be evidenced by an Award Agreement. Each Performance
Share Award so granted shall be subject to the conditions set forth in this Section 7.3, and to such other conditions
not inconsistent with the Plan as may be reflected in the applicable Award Agreement. The Committee shall have the discretion to determine:
(i) the number of shares of Common Stock or stock-denominated units subject to a Performance Share Award granted to any Participant; (ii)
the performance period applicable to any Award; (iii) the conditions that must be satisfied for a Participant to earn an Award; and (iv)
the other terms, conditions and restrictions of the Award.
(b) Earning
Performance Share Awards. The number of Performance Sharesshares
of Common Stock earned by a Participant pursuant to a Performance
Share Award will depend on the extent to which the performance goals established by the Committee are attained within the applicable
Performance Period, as determined by the Committee. No payout shall be made with respect to any Performance Share Award except upon written
certification by the Committee that the minimum threshold performance goal(s) have been achieved.
7.4. Performance
Compensation Awards.
(a) General.
The Committee shall have the authority, at the time of grant of any Award described in this Plan (other than Options and Stock Appreciation
Rights granted with an exercise price equal to or greater than the Fair Market Value per share of Common Stock on the Grant Date), to
designate such Award as a Performance Compensation Award. In addition, the Committee shall have the authority to make an Award of a cash
bonus to any Participant and designate such Award as a Performance Compensation Award.
(b) Eligibility.
The Committee will, in its sole discretion, designate within the first 90 days of a Performance Period (or such shorter or longer time
period as the Committee shall determine) which Participants will be eligible to receive Performance Compensation Awards in respect of
such Performance Period. However, designation of a Participant eligible to receive an Award hereunder for a Performance Period shall not
in any manner entitle the Participant to receive payment in respect of any Performance Compensation Award for such Performance Period.
The determination as to whether or not such Participant becomes entitled to payment in respect of any Performance Compensation Award shall
be decided solely in accordance with the provisions of this Section 7.4. Moreover, designation of a Participant eligible
to receive an Award hereunder for a particular Performance Period shall not require designation of such Participant eligible to receive
an Award hereunder in any subsequent Performance Period and designation of one person as a Participant eligible to receive an Award hereunder
shall not require designation of any other person as a Participant eligible to receive an Award hereunder in such period or in any other
period.
(c) Discretion
of Committee with Respect to Performance Compensation Awards. With regard to a particular Performance Period, the Committee shall
have full discretion to select the length of such Performance Period (provided any such Performance Period shall be not less than one
fiscal quarter in duration), the type(s) of Performance Compensation Awards to be issued, the Performance Criteria that will be used to
establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance Goal(s) that is (are) to apply to the Company and the
Performance Formula. Within the first 90 days of a Performance Period (or such shorter or longer time period as the Committee shall determine),
the Committee shall, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion
with respect to each of the matters enumerated in the immediately preceding sentence of this Section 7.4(c) and record the
same in writing.
(d) Payment
of Performance Compensation Awards.
(i) Condition
to Receipt of Payment. Unless otherwise provided in the applicable Award Agreement, a Participant must be employed by the Company
on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such Performance
Period.
(ii) Limitation.
A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that: (A) the Performance
Goals for such period are achieved; and (B) the Performance Formula as applied against such Performance Goals determines that all or some
portion of such Participant’s Performance Compensation Award has been earned for the Performance Period.
(iii) Certification.
Following the completion of a Performance Period, the Committee shall review and certify in writing whether, and to what extent, the Performance
Goals for the Performance Period have been achieved and, if so, calculate and certify in writing the amount of the Performance Compensation
Awards earned for the period based upon the Performance Formula. The Committee shall then determine the actual size of each Participant’s
Performance Compensation Award for the Performance Period.
(iv) Use
of Discretion. The Committee shall not have the discretion to grant or provide payment in respect of Performance Compensation Awards
for a Performance Period if the Performance Goals for such Performance Period have not been attained.
(v) Timing
of Award Payments. Performance Compensation Awards granted for a Performance Period shall be paid to Participants as soon as administratively
practicable following completion of the certifications required by this Section 7.4 but in no event later than 2 1/2 months
following the end of the fiscal year during which the Performance Period is completed.
8. Securities
Law Compliance. Each Award Agreement shall provide that no shares of Common Stock shall be purchased or sold thereunder unless and
until (a) any then applicable requirements of state or federal laws and regulatory agencies have been fully complied with to the satisfaction
of the Company and its counsel and (b) if required to do so by the Company, the Participant has executed and delivered to the Company
a letter of investment intent in such form and containing such provisions as the Committee may require. The Company shall use reasonable
efforts to seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required
to grant Awards and to issue and sell shares of Common Stock upon exercise of the Awards; provided, however, that this undertaking
shall not require the Company to register under the Securities Act the Plan, any Award or any Common Stock issued or issuable pursuant
to any such Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell Common Stock upon exercise of such Awards unless and until such authority is obtained.
9. Use
of Proceeds from Stock. Proceeds from the sale of Common Stock pursuant to Awards, or upon exercise thereof, shall constitute general
funds of the Company.
10. Miscellaneous.
10.1. Acceleration
of Exercisability and Vesting. The Committee shall have the power to accelerate the time at which an Award may first be exercised
or the time during which an Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Award
stating the time at which it may first be exercised or the time during which it will vest, provided that if such Award is subject to Section
409A of the Code, any such acceleration or exercisability or vesting is in compliance with the provisions of Section 409A of the Code.
10.2. Stockholder
Rights. Except as provided in the Plan or an Award Agreement, no Participant shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares of Common Stock subject to such Award unless and until such Participant has satisfied
all requirements for exercise of the Award pursuant to its terms and no adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions of other rights for which the record date is prior to the date such Common
Stock certificate or book entry form is issued, except as provided in Section 11 hereof.
10.3. No
Employment or Other Service Rights. Nothing in the Plan or any instrument executed or Award granted pursuant thereto shall confer
upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted
or shall affect the right of the Company or an Affiliate to terminate (a) the employment of an Employee with or without notice and with
or without Cause or (b) the service of a Director pursuant to the By-laws of the Company or an Affiliate, and any applicable provisions
of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.
10.4. Transfer;
Approved Leave of Absence. For purposes of the Plan, no termination of employment by an Employee shall be deemed to result from either
(a) a transfer of employment to the Company from an Affiliate or from the Company to an Affiliate, or from one Affiliate to another, or
(b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the Employee’s
right to reemployment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was
granted or if the Committee otherwise so provides in writing, in either case, except to the extent inconsistent with Section 409A of the
Code if the applicable Award is subject thereto.
10.5. Withholding
Obligations. To the extent provided by the terms of an Award Agreement and subject to the discretion of the Committee, the Participant
may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under an Award
by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (a) tendering a cash payment; (b) authorizing the Company to withhold shares of Common Stock
from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under
the Award, provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required
to be withheld by law; or (c) delivering to the Company previously owned and unencumbered shares of Common Stock of the Company.
11. Adjustments
Upon Changes in Stock. In the event of changes in the outstanding Common Stock or in the capital structure of the Company by reason
of any stock or extraordinary cash dividend, stock split, reverse stock split, an extraordinary corporate transaction such as any recapitalization,
reorganization, merger, consolidation, combination, exchange, or other relevant change in capitalization occurring after the Grant Date
of any Award, Awards granted under the Plan and any Award Agreements, the exercise price of Options and Stock Appreciation Rights, the
maximum number of shares of Common Stock subject to all Awards stated in Section 4 and the maximum number of shares of Common
Stock with respect to which any one person may be granted Awards during any period stated in Section 4 will be equitably
adjusted or substituted, as to the number, price or kind of a share of Common Stock or other consideration subject to such Awards to the
extent necessary to preserve the economic intent of such Award. In the case of adjustments made pursuant to this Section 11,
unless the Committee specifically determines that such adjustment is in the best interests of the Company or its Affiliates, the Committee
shall, in the case of Incentive Stock Options, ensure that any adjustments under this Section 11 will not constitute a modification,
extension or renewal of the Incentive Stock Options within the meaning of Section 424(h)(3) of the Code and in the case of Non-qualified
Stock Options, ensure that any adjustments under this Section 11 will not constitute a modification of such Non-qualified
Stock Options within the meaning of Section 409A of the Code. Any adjustments made under this Section 11 shall be made in
a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act. The Company shall give
each Participant notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.
12. Effect
of Change in Control.
12.1. In
the discretion of the Board and the Committee, any Award Agreement may provide, or the Board or the Committee may provide by amendment
of any Award Agreement or otherwise, notwithstanding any provision of the Plan to the contrary, that in the event of a Change in Control,
Options and/or Stock Appreciation Rights shall become immediately exercisable with respect to all or a specified portion of the shares
subject to such Options or Stock Appreciation Rights, and/or the Restricted Period shall expire immediately with respect to all or a specified
portion of the shares of Restricted Stock or Restricted Stock Units.
12.2. In
addition, in the event of a Change in Control, the Committee may in its discretion and upon at least 10 days’ advance notice to
the affected persons, cancel any outstanding Awards and pay to the holders thereof, in cash or stock, or any combination thereof, the
value of such Awards based upon the price per share of Common Stock received or to be received by other stockholders of the Company in
the event. In the case of any Option or Stock Appreciation Right with an exercise price that equals or exceeds the price paid for a share
of Common Stock in connection with the Change in Control, the Committee may cancel the Option or Stock Appreciation Right without the
payment of consideration therefor.
12.3. The
obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation
or other reorganization of the Company, or upon any successor corporation or organization succeeding to all or substantially all of the
assets and business of the Company and its Subsidiaries, taken as a whole.
13. Amendment
of the Plan and Awards.
13.1. Amendment
of Plan. The Board may amend, alter, suspend, discontinue, or terminate this Plan or any portion thereof at any time; provided
that (a) no amendment to the persons eligible to receive Awards set forth in Section 1.2 or to the maximum number of
shares as to which Awards may be granted set forth in Section 4.1 (except for adjustments pursuant to Section 11),
shall be made without stockholder approval, and (b) no such amendment, alteration, suspension, discontinuation or termination shall be
made without stockholder approval if such approval is necessary to comply with any Applicable Laws (including, without limitation, as
necessary to comply with any tax or regulatory requirement applicable to this Plan); and provided further, that any such amendment,
alteration, suspension, discontinuance or termination that would materially and adversely affect the rights of any Participant or any
holder or beneficiary of any Award theretofore granted shall not to that extent be effective without the prior written consent of the
affected Participant, holder or beneficiary.
13.2. Contemplated
Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to
provide eligible Employees, Consultants and Directors with the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to Incentive Stock Options or to the nonqualified deferred compensation provisions
of Section 409A of the Code and/or to bring the Plan and/or Awards granted under it into compliance therewith.
13.3. No
Impairment of Rights. Rights under any Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan
unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.
13.4. Amendment
of Awards. The Committee may, to the extent consistent with the terms of any applicable Award Agreement, waive any conditions or rights
under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted or the associated Award
Agreement, prospectively or retroactively; provided, however that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would materially and adversely affect the rights of any Participant with respect to any
Award theretofore granted shall not to that extent be effective without the consent of the affected Participant.
14. General
Provisions.
14.1. Forfeiture
Events. The Committee may specify in an Award Agreement that the Participant’s rights, payments and benefits with respect to
an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events, in addition to applicable
vesting conditions of an Award. Such events may include, without limitation, breach of non-competition, non-solicitation, confidentiality,
or other restrictive covenants that are contained in the Award Agreement or otherwise applicable to the Participant, a termination of
the Participant’s Continuous Service for Cause, or other conduct by the Participant that is detrimental to the business or reputation
of the Company and/or its Affiliates.
14.2. Clawback.
Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law, government regulation or stock
exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government
regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation
or stock exchange listing requirement).
14.3. Other
Compensation Arrangements. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements,
subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only
in specific cases.
14.4. Sub-plans.
The Committee may from time to time establish sub-plans under the Plan for purposes of satisfying blue sky, securities, tax or other laws
of various jurisdictions in which the Company intends to grant Awards. Any sub-plans shall contain such limitations and other terms and
conditions as the Committee determines are necessary or desirable. All sub-plans shall be deemed a part of the Plan, but each sub-plan
shall apply only to the Participants in the jurisdiction for which the sub-plan was designed.
14.5. Deferral
of Awards. The Committee may establish one or more programs under the Plan to permit selected Participants the opportunity to elect
to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event that absent the election
would entitle the Participant to payment or receipt of shares of Common Stock or other consideration under an Award. The Committee may
establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings,
if any, on amounts, shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Committee
deems advisable for the administration of any such deferral program. All of such programs and procedures shall be consistent with the
rules of Section 409A of the Code.
14.6. Unfunded
Plan. The Plan shall be unfunded. Neither the Company, the Board nor the Committee shall be required to establish any special or separate
fund or to segregate any assets to assure the performance of its obligations under the Plan.
14.7. Recapitalizations.
Each Award Agreement shall contain provisions required to reflect the provisions of Section 11.
14.8. Delivery.
Upon exercise of a right granted under this Plan, the Company shall issue Common Stock or pay any amounts due within a reasonable period
of time thereafter. Subject to any statutory or regulatory obligations the Company may otherwise have, for purposes of this Plan, thirty
(30) days shall be considered a reasonable period of time.
14.9. No
Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan. The Committee shall determine
whether cash, additional Awards or other securities or property shall be issued or paid in lieu of fractional shares of Common Stock or
whether any fractional shares should be rounded, forfeited or otherwise eliminated.
14.10. Other
Provisions. The Award Agreements authorized under the Plan may contain such other provisions not inconsistent with this Plan, including,
without limitation, restrictions upon the exercise of the Awards, as the Committee may deem advisable.
14.11. Section
409A. The Plan and all Awards granted under the Plan are intended to comply with Section 409A of the Code to the extent subject thereto,
and, accordingly, to the maximum extent permitted, the Plan and all Awards Agreements shall be interpreted and administered to be in compliance
therewith. Any payments described in the Plan that are due within the “short-term deferral period” as defined in Section 409A
of the Code shall not be treated as deferred compensation unless Applicable Laws require otherwise. Notwithstanding anything to the contrary
in the Plan or any Award Agreement, to the extent required to avoid accelerated taxation and tax penalties under Section 409A of the Code,
amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan or Award Agreement during the
six (6) month period immediately following the Participant’s termination of Continuous Service shall instead be paid on the first
payroll date after the six-month anniversary of the Participant’s separation from service (or the Participant’s death, if
earlier). Notwithstanding the foregoing, neither the Company nor the Committee shall have any obligation to take any action to prevent
the assessment of any excise tax or penalty on any Participant under Section 409A of the Code and neither the Company nor the Committee
will have any liability to any Participant for such tax or penalty.
14.12. Disqualifying
Dispositions. Any Participant who shall make a “disposition” (as defined in Section 424 of the Code) of all or any portion
of shares of Common Stock acquired upon exercise of an Incentive Stock Option within two years from the Grant Date of such Incentive Stock
Option or within one year after the issuance of the shares of Common Stock acquired upon exercise of such Incentive Stock Option (a “Disqualifying
Disposition”) shall be required to immediately advise the Company in writing as to the occurrence of the sale and the price
realized upon the sale of such shares of Common Stock.
14.13. Section
16. It is the intent of the Company that the Plan satisfy, and be interpreted in a manner that satisfies, the applicable requirements
of Rule 16b-3 as promulgated under Section 16 of the Exchange Act so that Participants will be entitled to the benefit of Rule 16b-3,
or any other rule promulgated under Section 16 of the Exchange Act, and will not be subject to short-swing liability under Section 16
of the Exchange Act. Accordingly, if the operation of any provision of the Plan would conflict with the intent expressed in this Section
14.13, such provision to the extent possible shall be interpreted and/or deemed amended so as to avoid such conflict.
14.14. Beneficiary
Designation. Each Participant under the Plan may from time to time name any beneficiary or beneficiaries by whom any right under the
Plan is to be exercised in case of such Participant’s death. Each designation will revoke all prior designations by the same Participant,
shall be in a form reasonably prescribed by the Committee and shall be effective only when filed by the Participant in writing with the
Company during the Participant’s lifetime.
14.15. Expenses.
The costs of administering the Plan shall be paid by the Company.
14.16. Severability.
If any of the provisions of the Plan or any Award Agreement is held to be invalid, illegal or unenforceable, whether in whole or in part,
such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and
the remaining provisions shall not be affected thereby.
14.17. Plan
Headings. The headings in the Plan are for purposes of convenience only and are not intended to define or limit the construction of
the provisions hereof.
14.18. Non-Uniform
Treatment. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons
who are eligible to receive, or actually receive, Awards. Without limiting the generality of the foregoing, the Committee shall be entitled
to make non-uniform and selective determinations, amendments and adjustments, and to enter into non-uniform and selective Award Agreements.
15. Effective
Date of Plan. The Plan shall become effective as of the Effective Date, but no Award shall be exercised (or, in the case of a stock
Award, shall be granted) unless and until the Plan has been approved by the stockholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the Board.
16. Termination
or Suspension of the Plan. The Plan shall terminate automatically on August 30, 2032. No Award shall be granted pursuant to the Plan
after such date, but Awards theretofore granted may extend beyond that date. The Board may suspend or terminate the Plan at any earlier
date pursuant to Section 13.1 hereof, provided any such suspension or termination is consistent with the provisions of Section
409A of the Code. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated.
17. Choice
of Law. Except to the extent governed by Federal law, the law of the State of Delaware shall govern all questions concerning the construction,
validity and interpretation of this Plan, without regard to such state’s conflict of law rules.
As adoptedAdopted
by the Board of Directors of the Company on August 31, 2022.
As approvedApproved
by the stockholders of the Company on August 31, 2022.
Adopted
as amended and restated by the Board of Directors of the Company on July 22, 2024.
Adopted
as amended and restated by the stockholders of the Company on September 18, 2024.
Signing Day Sports (AMEX:SGN)
Gráfica de Acción Histórica
De Jun 2024 a Jul 2024
Signing Day Sports (AMEX:SGN)
Gráfica de Acción Histórica
De Jul 2023 a Jul 2024
