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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
——————
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 22, 2024
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Duos Technologies Group, Inc.
(Exact name of registrant as specified in its
charter)
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Florida |
001-39227 |
65-0493217 |
(State or Other Jurisdiction |
(Commission |
(I.R.S. Employer |
of Incorporation) |
File Number) |
Identification No.) |
7660 Centurion Parkway, Suite 100, Jacksonville,
Florida 32256
(Address of Principal Executive Offices) (Zip
Code)
(904) 296-2807
(Registrant’s telephone number, including
area code)
Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock (par value $0.001 per share) |
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DUOT |
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The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement
On July 22, 2024, Duos Technologies
Group, Inc. (the “Company”) and Duos Edge AI, Inc. (“Edge”), a wholly-owned subsidiary of the Company, entered into
secured promissory notes (the “Notes”) with two institutional investors in the Company. Under the Notes, Edge received an aggregate
of $2.2 million. The Notes mature on December 31, 2025, and bear interest at the rate of 10% per annum. All principal and accrued interest
under the Notes are due and payable on the maturity date.
Edge will use the proceeds
under the Notes solely to pay for the equipment and any services necessary to complete the installation of its previously-announced
edge data centers. As security for the Notes, Edge and the Company entered into a Security Agreement (the “Security
Agreement”), pursuant to which Edge granted a first priority security interest in the equipment installed at the edge data
centers, as well as all revenues from such equipment, and the Company pledged all proceeds from its previously-announced
“at-the-market” offering of its common stock pursuant to the prospectus dated May 17, 2024. All of the pledged revenues from
the equipment and the at-the-market offering will be deposited in a blocked account and used solely to repay the Notes.
In connection with the Notes,
the Company issued warrants (the “Warrants”) to purchase an aggregate of 300,000 shares of common stock. The Warrants are exercisable
at $3.00 per share (subject to adjustment) and expire in five years. In the event the Notes are not paid by the maturity date, the interest
rate on the Notes will increase to 18% per annum and the Company will issue additional warrants (with the same terms as the Warrants)
to purchase an aggregate of 75,000 shares of common stock for each 30 days that the Notes are not paid after maturity.
The Company has guaranteed all
of Edge’s obligations under the Notes pursuant to the terms of a Guaranty (the “Guaranty”). The Notes, Security Agreement and
Guaranty contain customary representations, warranties, agreements, and indemnification rights and obligations of the parties.
The foregoing descriptions of
the Notes, the Security Agreement, the Warrants, and the Guaranty do not purport to be complete and are subject to, and qualified in their
entirely by, such documents, forms of which are attached as exhibits to this Current Report on Form 8-K and incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities
The information set forth in Item
1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
The issuance of the Warrants was
not registered under the Securities Act of 1933, as amended (the “Securities Act”), but qualified for an exemption under Section
4(a)(2) of the Securities Act and by Rule 506 of Regulation D promulgated thereunder as a transaction by an issuer not involving a public
offering.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
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DUOS TECHNOLOGIES GROUP, INC. |
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Dated: July 23, 2024 |
By: |
/s/ Adrian G. Goldfarb |
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Adrian G. Goldfarb
Chief Financial Officer |
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Exhibit 4.1
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. 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.
FORM
OF COMMON STOCK PURCHASE WARRANT
DUOS
TECHNOLOGIES GROUP, INC.
Warrant Shares: ________ |
Initial
Exercise Date: July 22, 2024 |
THIS
COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that, for value received, __________ or its assigns (the
“Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set
forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business
on the five year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe
for and purchase from DUOS TECHNOLOGIES GROUP, INC., a Florida corporation (the “Company”), up to ________________
(______) shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of
one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. In addition to the terms
defined elsewhere in this Warrant, the following terms have the meaning set forth in this Section 1.
Affiliate
means any Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
Business
Day shall mean any day other than a Saturday, Sunday or a legal holiday on which federal banks in The City of New York are authorized
or required to be closed for the conduct of commercial banking business, provided, however, for clarification, federal 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 federal banks in The City of New York generally
are open for use by customers on such day.
Common
Stock means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities
may hereafter be reclassified or changed.
Common
Stock Equivalents means any securities of the Company or its subsidiaries which would entitle the holder thereof to acquire at any
time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any
time convertible into or exercisable or exchangeable for, or otherwise entities the holder thereof to receive, Common Stock.
Person
means an individual, sole proprietorship, joint venture, partnership, company, corporation, association, cooperation, trust, estate,
Governmental Authority, or any other entity of any nature whatsoever.
Rule
144 means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from
time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.
Trading
Day means a day on which the principal Trading Market is open for trading.
Trading
Market means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question:
the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange,
OTCQB or OTCQX (or any successors to any of the foregoing).
Transfer
Agent means Continental Stock Transfer & Trust Co., the current transfer agent of the Company, with a mailing address of 1 State
Street, Floor 30, New York, New York 10279-0741, and any successor transfer agent of the Company.
Section 2. Exercise.
a)
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time
or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile
copy (or e-mail attachment) of the Notice of Exercise in the form annexed hereto. Within the earlier of (i) one (1) Trading Day and (ii)
the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) below) following the date of exercise
as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by
wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c)
below is specified in the applicable Notice of Exercise. No ink- original Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to
the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all
of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this
Warrant to the Company for cancellation within five (5) Trading Days of the date the final Notice of Exercise is delivered to the Company.
Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall
have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number
of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the
date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such
notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this
paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder
at any given time may be less than the amount stated on the face hereof.
b)
Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $3.00, subject to adjustment hereunder
(the “Exercise Price”).
c)
Cashless Exercise. If at any time after the six-month anniversary of the Closing Date, there is no effective registration statement
registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised,
in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number
of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A)
= as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of
Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and
delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in
Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, or (ii) at the option of the Holder,
either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the
Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable
Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered
within two (2) hours thereafter pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if
the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a)
hereof after the close of “regular trading hours” on such Trading Day;
(B)
= the existing Exercise Price of this Warrant at the time of such exercise; and
(X)
= the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such
exercise were by means of a cash exercise rather than a cashless exercise.
If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrants
being exercised may be tacked on to the holding period of the Warrant Shares. The Company agrees not to take any position contrary to
this Section 2(c).
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Stock is not then listed or quoted for trading on a Trading
Market and if prices for the Common Stock are then reported in the OTC Pink published by OTC Markets Group, Inc. (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (c)
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.
On
the Termination Date, if there is no effective registration statement registering, or no current prospectus available for, the resale
of the Warrant Shares by the Holder, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).
d)
Mechanics of Exercise.
i.
Delivery of Warrant Shares Upon Exercise. Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the
Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through
its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either
(A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by
the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule
144, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder
or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified
by the Holder in the Notice of Exercise by the date that is one (1) Trading Day after the delivery to the Company of the Notice of Exercise
(such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise the Holder shall be deemed
for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date of delivery of the Warrant Shares; provided payment of the aggregate Exercise Price (other than in the case
of a Cashless Exercise) is received within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising
the Standard Settlement Period of delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the
Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated
damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the
date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such
liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered
or the Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long
as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard
settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock
as in effect on the date of delivery of the Notice of Exercise.
ii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
iii.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv.
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to
the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, 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 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 amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in
connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed,
and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such
exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder 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 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.
v.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
vi.
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company,
and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company
shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company
(or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii.
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
e)
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the
right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its Affiliates 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 2(e), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the
Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules
required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination
of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution
Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice
of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities
owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each
case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the
number of outstanding 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 Securities and Exchange Commission (the “Commission”),
as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer
Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall
within two (2) Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities
of the Company, including this 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 9.99% of the number
of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise
of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this
Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder
and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective
until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion
hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply
to a successor holder of this Warrant.
Section 3. Certain Adjustments.
a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares
of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of
shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
b)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of 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 complete exercise of this Warrant (without regard to any limitations on exercise
hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the
Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation,
then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of
Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for
the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
c)
Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of 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 complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided,
however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in
the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).
d)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of
its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock,
(iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization
of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for
other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock
or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off
or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding
shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each
a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right
to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number
of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional
consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of
the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without
regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the
Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price
among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction the Company or any Successor
Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within thirty (30) days
after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash
equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental
Transaction. “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation
of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S.
Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and
the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100-day volatility obtained from the HVT function
on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying
price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any
non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between
the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. The Company shall cause any successor
entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in
writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(d) pursuant to written
agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior
to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable
for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the 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 number of shares of capital stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in
form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and
be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant 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 with the same effect as if such Successor Entity had been named as the Company
herein.
e)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
f)
Adjustment to Exercise Price of 2017 Warrants. In the event the Exercise Price (as defined in the 2017 Warrants) pursuant to the
Warrants issued pursuant to the Securities Purchase Agreement entered into by the Company on or about November 24, 2017 is reduced to
less than the Exercise Price of this Warrant, the Exercise Price of this Warrant shall be reduced to equal the adjusted Exercise Price
of the 2017 Warrants.
g)
Adjustment to Purchase Price of 2019 Warrants. In the event the Purchase Price (as defined in the 2019 Warrants) pursuant to the
Warrants issued pursuant to the Promissory Note entered into by the Company on or about September 25, 2019, is reduced to less than the
Exercise Price, the Exercise Price shall be reduced to equal the adjusted Purchase Price.
h)
Notice to Holder.
i.
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities,
cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile
number or email address as it shall appear upon the Warrant Register of the Company, at least five (5) Trading Days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock
for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange;
provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the
corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains,
material, non-public information regarding the Company or any of its subsidiaries, the Company shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period
commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly
set forth herein.
Section 4.Transfer of Warrant.
a)Transferability.
Subject to compliance with any applicable securities laws this Warrant and all rights hereunder (including, without limitation, any registration
rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated
agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its
agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as
applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything
herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned
this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date
the Holder delivers an assignment form to the Company assigning this Warrant full. The Warrant, if properly assigned in accordance herewith,
may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b)
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of
the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original issue date and
shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
d)
Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer
of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and
under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or
current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that
the Holder or transferee of this Warrant, as the case may be, provide to the Company an opinion of counsel selected by the Holder or
transferee and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably acceptable to the Company,
to the effect that such transfer does not require registration under the Securities Act.
e)
Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant
and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to
or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities
law, except pursuant to sales registered or exempted under the Securities Act.
Section 5. Registration Rights. The Holder shall
be entitled to “piggy back” registration rights covering the Warrant Shares only during such period(s) as there is no effective
resale registration statement covering resale of the Holder’s Warrant Shares. The terms of this Section 5 shall survive the exercise
of this Warrant for so long as Holder holds any Warrant Shares.
Section 6. Miscellaneous.
a)
No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading
Day.
d)
Authorized Shares.
The
Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with
the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants
that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction thereof.
e)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and
the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
f)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that
all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of
this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
g)
Notices. Subject to Section 3 of this Warrant, any notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered by a U.S. nationally recognized overnight courier service to the address specified for
the Holder in the Warrant Register.
h)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of
the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
i)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate.
j)
Successors and Assigns. Subject to applicable securities laws and the conditions set forth in Section 4(d) hereof, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns
of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit
of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
k)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and
the Holder.
l)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
m)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed
a part of this Warrant.
********************
(Signature
Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above
indicated.
|
DUOS
TECHNOLOGIES GROUP, INC.
By:
_________________________________________
Name:
_______________________________________
Title:
________________________________________
|
NOTICE
OF EXERCISE
TO:
DUOS TECHNOLOGIES GROUP, INC.
(1)The
undersigned hereby elects to purchase Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised
in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2)Payment
shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to
exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set
forth in subsection 2(c).
(3)Please
issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number:
____________________________________
(4)Accredited
Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of
1933, as amended.
[SIGNATURE
OF HOLDER]
Name
of Investing Entity: ___________________________________________
Signature
of Authorized Signatory of Investing Entity: ________________________________
Name
of Authorized Signatory: _______________________________________
Title
of Authorized Signatory:________________________________________
Date: ______________________________
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
Name: |
________________________________________
(Please
Print)
|
Address: |
________________________________________
________________________________________ |
Phone
Number: |
|
Email
Address: |
________________________________________
|
Dated: |
__________________,
_____
|
Holder’s
Signature: |
________________________________________
|
Holder’s
Address: |
________________________________________
________________________________________
|
Exhibit 10.1
FORM
OF
SECURED
PROMISSORY NOTE
Principal Amount: $______________ |
July 22, 2024 |
FOR
VALUE RECEIVED, DUOS EDGE AI, INC., a corporation incorporated under the laws of the State of Florida and located at 7600 Centurion
Parkway, Suite 100, Jacksonville, Florida 32256 (the “Borrower”), hereby promises to pay to the order of ________________.,
having an address at c/o Bleichroeder LP, 1345 Avenue of the Americas, 47th Floor, New York, NY 10105, or its successors or assigns (the
“Lender”), the principal amount of __________________________ United States Dollars (US$______________) by no later than
the date that is December 31, 2025 (the “Maturity Date”) and to pay interest on the principal amount outstanding hereunder
at the rate of ten percent (10%) per annum commencing on the date hereof (“Issuance Date”); provided that, upon the
occurrence and during the continuance of an Event of Default (as defined below), the interest rate applicable to the outstanding principal
amount shall automatically be increased to a rate equal to eighteen (18%) per annum. This Secured Promissory Note, as may be amended
or supplemented from time to time, shall be referred to herein as the “Note”. In connection with this Note, the Guarantor
is issuing to the Lender a common stock purchase warrant permitting the Lender to purchase for cash ________________________________
(_______) shares of common stock of the Guarantor at a price per share of $3.00 (the “Warrant”) in the form of Exhibit A
hereto.
1.
Defined Terms. For purposes of this Note, except as otherwise expressly provided or otherwise defined elsewhere in this Note,
or unless the context otherwise requires, the capitalized terms in this Note shall have the meanings assigned to them as follows:
1.1
“Assets” means all of the properties and assets of the Person in question, as the context may so require, whether
real, personal or mixed, tangible or intangible, wherever located, whether now owned or hereafter acquired.
1.2
“Borrower” shall have the meaning given to it in the preamble hereof.
1.3
“Business Day” shall mean any day other than a Saturday, Sunday or a legal holiday on which federal banks in The City
of New York are authorized or required to be closed for the conduct of commercial banking business, provided, however, for clarification,
federal 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 other similar orders or restrictions or the closure of physical branch locations at the direction
of any Governmental Authority so long as the electronic funds transfer systems (including for wire transfers) of federal banks in The
City of New York generally are open for use by customers on such day.
1.4
“Change of Control” shall mean that (i) the Borrower or any of its Subsidiaries shall, directly or indirectly, in
one or more related transactions, (1) consolidate or merge with or into (whether or not the Borrower or any of its Subsidiaries is the
surviving corporation) any other Person, or (2) 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 (3) 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 capital stock of the Borrower, or (4) 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 capital stock of the Borrower, or (ii) any “person” or “group” (as
these terms are used for purposes of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (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 voting power represented
by the issued and outstanding capital stock of the Borrower (other than the Guarantor).
1.5
“Consent” means any consent, approval, order or authorization of, or any declaration, filing or registration with,
or any application or report to, or any waiver by, or any other action (whether similar or dissimilar to any of the foregoing) of, by
or with, any Person, which is necessary in order to take a specified action or actions, in a specified manner and/or to achieve a specific
result.
1.6
“Event of Default” shall have the meaning given to it in Section 3.1.
1.7
“Governmental Authority” means any foreign, federal, state or local government, or any political subdivision thereof,
or any court, agency or other body, organization, group, stock market or exchange exercising any executive, legislative, judicial, quasi-judicial,
regulatory or administrative function of government.
1.8
“Guarantor” means Duos Technologies Group, Inc., a Florida corporation.
1.9
“Law” means any provision of any law, statute, ordinance, code, constitution, charter, treaty, rule or regulation
of any Governmental Authority.
1.10
“Lender” shall have the meaning given to it in the preamble hereof.
1.11
“Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities,
operations (including results thereof), condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries taken as
a whole or (ii) the authority or ability of the Borrower or any of its Subsidiaries to perform any of their respective obligations under
any of the Transaction Documents.
1.12
“Maturity Date” shall have the meaning given to it in the preamble hereof.
1.13
“Note” shall have the meaning given to it in the preamble hereof.
1.14
“Obligations” means, now existing or in the future, any debt, liability or obligation of any nature whatsoever (including
any required performance of any covenants or agreements), whether secured, unsecured, recourse, nonrecourse, liquidated, unliquidated,
accrued, voluntary or involuntary, direct or indirect, absolute, fixed, contingent, ascertained, unascertained, known, unknown, whether
or not jointly owed with others, whether or not from time to time decreased or extinguished and later decreased, created or incurred,
or obligations existing or incurred under this Note or any other Transaction Documents, or any other agreement between the Borrower or
the Guarantor and the Lender, as such obligations may be amended, supplemented, converted, extended or modified from time to time.
1.15
“Person” means any individual, sole proprietorship, joint venture, partnership, company, corporation, association,
cooperation, trust, estate, Governmental Authority, or any other entity of any nature whatsoever.
1.16
“Subsidiary” means any Person in which the Borrower, directly or indirectly, (i) owns or acquires a majority of the
outstanding capital stock or other equity or similar interest of such Person or (ii) controls or operates all or any part of the business,
operations or administration of such Person, and all of the foregoing, collectively, “Subsidiaries.”
1.17
“Transaction Documents” means this Note, the Security Agreement, the
Warrant (including the registration rights in Section 5 thereof) and the Guaranty Agreement.
| 2. | Payments
of Principal and Interest. |
2.1
Payment of Principal. The principal amount of this Note shall be paid to the Lender no later than the Maturity Date.
2.2
Payment of Interest. Except as otherwise provided herein, all interest on the principal amount of this Note shall be paid to the
Lender no later than the Maturity Date.
2.3
General Payment Provisions. All payments of principal and interest, if any, on this Note shall be made in lawful money of the
United States of America by wire transfer to such account as the Lender may designate by written notice to the Borrower 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 Business Day.
2.4
Optional Prepayment. The Borrower may pre-pay this Note without premium or penalty
at any time, provided that all payments, including prepayments on this Note, shall be made proportionately to Lender and ________________________
pursuant to the Promissory Note dated as of the date hereof issued to _______________________ in the original principal amount of ______________________________
Dollars ($____________) (the “Parallel Note”).
3.1
Events of Default. An “Event of Default” means:
| 3.1.1 | the
Borrower shall fail to pay any interest, principal or other charges due under this Note on
the date when any such payment shall be due and payable, and such failure continues or remains
uncured for ten (10) days following the due date therefor; |
| 3.1.2 | the
Borrower shall fail to perform, comply with or abide by any of the stipulations, agreements,
conditions and/or covenants contained in this Note on the part of the Borrower to be performed,
complied with or abided by, and if such failure is curable, such failure continues or remains
uncured for ten (10) days following written notice from the Lender to the Borrower; |
| 3.1.3 | the
Borrower breaches any representation or warranty in any Transaction Document in any material
respect (other than representations or warranties subject to material adverse effect or materiality
limitations, which may not be breached in any respect); |
| 3.1.4 | any
bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for
the relief of debtors shall be instituted by or against the Borrower or any Subsidiary and,
if instituted against the Borrower or any Subsidiary by a third party, shall not be dismissed
within forty-five (45) days of their initiation; |
| 3.1.5 | the
commencement by the Borrower or any Subsidiary of a voluntary case or proceeding under any
applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar
law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree, order, judgment or other similar document in respect
of the Borrower or any Subsidiary in an involuntary case or proceeding under any applicable
federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or
to the commencement of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization or relief under any
applicable federal, state or foreign law, or the consent by it to the filing of such petition
or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Borrower or any Subsidiary or of any
substantial part of its property, or the making by it of an assignment for the benefit of
creditors, or the execution of a composition of debts, or the occurrence of any other similar
federal, state or foreign proceeding, or the admission by it in writing of its inability
to pay its debts generally as they become due, the taking of corporate action by the Borrower
or any Subsidiary in furtherance of any such action or the taking of any action by any Person
to commence a Uniform Commercial Code foreclosure sale or any other similar action under
federal, state or foreign law; |
| 3.1.6 | the
entry by a court of (i) a decree, order, judgment or other similar document in respect of
the Borrower or any Subsidiary of a voluntary or involuntary case or proceeding under any
applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar
law or (ii) a decree, order, judgment or other similar document adjudging the Borrower or
any Subsidiary as bankrupt or insolvent, or approving as properly filed a petition seeking
liquidation, reorganization, arrangement, adjustment or composition of or in respect of the
Borrower or any Subsidiary under any applicable federal, state or foreign law or (iii) a
decree, order, judgment or other similar document appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Borrower or any Subsidiary
or of any substantial part of its property, or ordering the winding up or liquidation of
its affairs, and the continuance of any such decree, order, judgment or other similar document
or any such other decree, order, judgment or other similar document unstayed and in effect
for a period of thirty (30) consecutive days; |
| 3.1.7 | there
occurs a Change of Control other than by Article 5 hereof;
|
| 3.1.8 | (A)
the Lender’s ability to enforce its rights against the Borrower, the Guarantor or the
Collateral is impaired in any material respect, (B) the security interest in the Collateral
granted pursuant to the Security Agreement shall not be or shall cease to be a valid and
perfected continuing first priority security interest in any Collateral, or (C) the Borrower
or the Guarantor asserts that this Note is not a legal, valid and binding obligation of such
party, enforceable in accordance with its terms; or |
| 3.1.9 | there
occurs on Event of Default as defined in any Transaction Document. |
3.2
Remedies. Upon the occurrence and during the continuation of an Event of Default that is not timely cured within an applicable
cure period hereunder, the Lender may, in its sole discretion, accelerate full repayment of all principal amounts outstanding hereunder,
together with accrued interest thereon, together with all attorneys’ fees, paralegals’ fees and costs and expenses incurred
by the Lender in collecting or enforcing payment hereof (whether such fees, costs or expenses are incurred in negotiations, all trial
and appellate levels, administrative proceedings, bankruptcy proceedings or otherwise), and together with all other sums due by the Borrower
hereunder, all without any relief whatsoever from any valuation or appraisement laws, and payment thereof may be enforced and recovered
in whole or in part at any time by one or more of the remedies provided to the Lender at law, in equity, or under this Note. Additionally,
upon a failure to pay the outstanding principal amount and interest due on this Note upon the Maturity Date, for every thirty (30) calendar
days that the Borrower fails to pay such amounts following the Maturity Date, the Guarantor shall issue to the Lender a common stock
purchase warrant permitting the Lender to purchase for cash Fifty-One Thousand Eight Hundred Eighteen (51,818) shares of common stock
of the Guarantor at a price per share of $3.00, in the form attached hereto as Exhibit A, provided that the Issue Date shall be the date
such warrant is actually issued. In the event of a failure to pay for any partial month, the number of additional common stock purchase
warrants issuable pursuant to the immediately preceding sentence shall be proportionately reduced. The Borrower further agrees that the
Borrower shall remit the proceeds of any financing occurring after the Issuance Date to the Lender to pay down any outstanding principal
or interest up to the amounts then owing. If any amount of principal or interest on this Note remains outstanding on or after the date
which is twelve (12) months from the Issuance Date, upon the request of the Lender, the Borrower shall cause the number of directors
constituting its Board of Directors to be increased by one director and the holders of this Note and the Parallel Note shall have the
exclusive right, voting separately as a class, to elect the director to fill such newly created directorship.
4.
Representations and Warranties. The Borrower and the Guarantor represent and warrant, jointly and severally:
4.1
Organization. Each of the Guarantor and the Borrower is a corporation duly incorporated,
validly existing and in good standing under the Laws of Florida and has the full power and authority and all necessary certificates,
licenses and approvals: (i) to enter into and execute this Note and to perform all of its Obligations hereunder; and (ii) to own and
operate its Assets and properties and to conduct and carry on its business as and to the extent now conducted. Each
of the Guarantor and the Borrower is duly qualified to transact business and is in good standing as a foreign corporation in each
jurisdiction where the character of its business or the ownership or use and operation of its Assets or properties requires such qualification.
The exact legal name of the Borrower is as set forth in the preamble to this Note, and the Borrower does not currently conduct, nor has
the Borrower, during the last five (5) years conducted, business under any other name or trade name (except that the Borrower’s
legal name was Duos Technologies International, Inc. prior to April 23, 2024).
4.2
Authority and Approval of Agreement; Binding Effect. The execution and delivery by the Borrower and the Guarantor of this Note
and the issuance of the Warrants, and the performance by the Borrower and the Guarantor of all of its Obligations hereunder, have been
duly and validly authorized and approved by the Borrower and the Guarantor, pursuant to all applicable Laws and no other action or Consent
on the part of its board, shareholders or any other Person is necessary or required by the Borrower and the Guarantor to execute this
Note, consummate the transactions contemplated herein, and perform all of its respective
Obligations hereunder. This Note has been duly and validly executed by the Borrower and the Guarantor and constitutes the valid and legally
binding agreement of the Borrower and the Guarantor, enforceable against the Borrower and the Guarantor in accordance with its terms,
except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
4.3
Warrant Shares. The issuance of the Warrant and the shares issuable thereunder (the “Warrant Shares”) are duly authorized
and upon issuance in accordance with the terms of the Transaction Documents shall be validly issued, fully paid and non-assessable and
free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances,
security interests and other encumbrances (collectively “Liens”) with respect to the issuance thereof and, with respect to
the Warrant Shares, with the holders being entitled to all rights accorded to a holder of Common Stock. Subject to the accuracy of the
representations and warranties of the Lender in the Security Agreement and the Guaranty, the offer and issuance by the Guarantor of the
Warrant and the Warrant Shares are exempt from registration under the Securities Act of 1933, as amended.
4.4
Application of Takeover Protections; Rights Agreement. The Borrower and Guarantor have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, interested stockholder, business combination, poison pill (including, without
limitation, any distribution under a rights agreement), stockholder rights plan or other similar anti-takeover provision under the Certificate
of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its incorporation or otherwise which is
or could become applicable to Lender as a result of the transactions contemplated by this Agreement, including, without limitation, the
Guarantor’s issuance of the Warrant and the Warrant Shares and the Lender’s ownership of the Warrant and the Warrant Shares.
The Guarantor has taken all necessary action, if any, in order to render inapplicable any stockholder rights plan or similar arrangement
relating to accumulations of beneficial ownership of shares of Common Stock or a change in control of the Guarantor or any of its Subsidiaries
relating to the transactions contemplated hereby, including the exercise of the Warrants and the acquisition of the Warrant Shares.
4.5
SEC Information. Since January 1, 2022, the Guarantor has filed with or furnished to the SEC all reports, schedules, forms, statements
and other documents required to be filed or furnished by it with the Securities and Exchange Commission (“SEC”) pursuant
to the reporting requirements of the 1934 Act (all of the foregoing and all other documents filed with the SEC since such date and all
exhibits included therein schedules thereto and documents incorporated by reference therein, being hereinafter referred to herein as
the “SEC Documents”). As of their respective dates, the SEC Documents complied as to form 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. As of their respective dates, the financial statements of the Guarantor included in the SEC Documents,
including any related notes thereto (the “Financial Statements”), complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with respect thereto. The Guarantor is not currently contemplating
to amend or restate any of the Financial Statements, nor is the Guarantor currently aware of facts or circumstances which would require
it to amend or restate any of the Financial Statements. The Guarantor has not been informed by its independent accountants that they
recommend that the Guarantor amend or restate any of the Financial Statements or that there is any need for the Guarantor to amend or
restate any of the Financial Statements. Since December 31, 2023, there has been no Material Adverse Effect on the Guarantor and its
Subsidiaries, taken as a whole.
5.1
Legal Existence. Each of Borrower and the Guarantor shall at all times preserve and maintain its: (i) existence and good standing
in the jurisdiction of its organization; and (ii) its qualification to do business and good standing in each jurisdiction where the nature
of its business makes such qualification necessary and shall at all times continue as a going concern in the business which the Borrower
is presently conducting.
5.2
Notice of Default. The Borrower shall, promptly, but not more than five (5) days after the commencement thereof, give notice to
the Lender in writing of the occurrence of any “Event of Default” or of any event which, with the lapse of time, the giving
of notice or both, would constitute an Event of Default hereunder.
5.3
Change of Control. The Borrower, the Guarantor or any of their respective Subsidiaries shall not, directly or indirectly, in one
or more related transactions, (1) consolidate or merge with or into any other Person, or (2) 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 (3) enter into
any similar transaction unless the surviving entity in such Change of Control assumes in writing all of the obligations of the Borrower
under this Note and the other Transaction Documents pursuant to written agreements in form and substance satisfactory to the Lender and
approved by the Lender prior to the occurrence of such Change of Control.
5.4
Distributions. Each of the Borrower and the Guarantor shall not declare or pay any dividends on its capital stock (other than
in shares of its capital stock), or 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.
5.5
Lock Box. Within 30 days of the execution of this Note, the Borrower shall establish a separate bank account (the “Deposit
Account”) which shall be subject to the sole control of the Lender pursuant to a Controlled Account Agreement (as defined in
the Security Agreement) into which shall be deposited the sum of all funds raised by the Guarantor’s “at the market”
(ATM) facility and received starting on the day following the execution of this Note. The Borrower shall also deposit all revenues received
from the EDCs identified as collateral security for this Note pursuant to the Security Agreement. All funds deposited into this account
shall be restricted from further use by the Borrower. The Lender, so long as no Event of Default has occurred and is continuing and upon
reasonably prior written notice from the Borrower will disburse such funds to pre-pay the principal and accrued interest of this Note
without penalty. The funds will be used to pay all accrued interest and then to reduce principal with an associated re-calculated interest
payment starting from the day following the repayment of such principal.
5.6
Monthly Statements. The Borrower shall provide to the Lender by the 10th of each month, a summary statement and any
supporting documentation, listing the transactions involving revenue received on the EDCs listed in Schedule A to the Security Agreement
and identified by serial number therein (the “EDCs”), accrued interest and a listing of receipts from the sale of
shares via the ATM facility.
5.7
Disclosure. Upon receipt or delivery by the Borrower of any notice in accordance with the terms of this Note, unless the Borrower
has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to
the Guarantor or any of its Subsidiaries, the Guarantor shall promptly after any such receipt or delivery publicly disclose such material,
non-public information on a Current Report on Form 8-K or otherwise. In the event that the Borrower believes that a notice contains material,
non-public information relating to the Guarantor or any of its Subsidiaries, the Borrower so shall indicate to the Lender contemporaneously
with delivery of such notice, and in the absence of any such indication, the Lender shall be allowed to presume that all matters relating
to such notice do not constitute material, non-public information relating to the Guarantor or any of its Subsidiaries. If the Borrower
or any of its Subsidiaries provides material non-public information to the Lender that is not simultaneously filed in a Current Report
on Form 8-K and the Lender has not agreed to receive such material non-public information, the Borrower and the Guarantor hereby covenant
and agree that the Lender shall not have any duty of confidentiality to the Guarantor, any of its Subsidiaries or any of their respective
officers, directors, employees, affiliates or agents with respect to, or a duty to any of the foregoing not to trade on the basis of,
such material non-public information.
5.8
Use of Proceeds. The Borrower shall use the proceeds under this Note solely to pay for Equipment and any services necessary to
complete installation of the EDCs. The Borrower may elect, upon reasonable prior written notice to the Lender, to use any balance remaining
to begin production of a 4th EDC which shall be subject to the same terms and conditions as the EDCs except that any revenues
derived from such EDC will be proportionally allocated to the Pledged Account (as defined in the Security Agreement) and any balance
remaining following such uses shall be available for use by the Borrower at its discretion for general corporate purposes.
6.
Seniority and Security. The Obligations under this Note shall be senior and prior to any other indebtedness or obligations of
the Borrower, are and shall continue to be secured to the extent and in the manner set forth in the Transaction Documents (including,
without limitation, the Security Agreement and the Guaranty) on a continuing first priority basis and neither the Borrower nor the Guarantor
shall incur, assume or be liable for any indebtedness for borrowed money or the deferred price of property or services, obligations evidenced
by notes, bonds, debentures or other similar instruments or capitalized obligations in respect of any leasing or similar arrangement
which would be classified as a capital lease on the balance sheet of such party in accordance with GAAP that is secured by a pari passu
or senior lien to the security interest in the Collateral granted pursuant to the Transaction Documents, in each case, without the prior
written consent of the Lender which consent shall be at the Lender’s sole discretion.
7.1
Lost or Stolen Note. Upon notice to the Borrower of the loss, theft, destruction or mutilation of this Note, and, in the case
of loss, theft or destruction, of an indemnification undertaking by the Lender to the Borrower in a customary and reasonable form and,
in the case of mutilation, upon surrender and cancellation of the Note, the Borrower and the Guarantor
shall execute and deliver a new Note of like tenor and date and in substantially the same form as this Note.
7.2
Severability. In the event any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal,
or unenforceable, in whole or in part, in any respect, or in the event that any one or more of the provisions of this Note operates or
would prospectively operate to invalidate this Note, then and in any of those events, only such provision or provisions shall be deemed
null and void and shall not affect any other provision of this Note. The remaining provisions of this Note shall remain operative and
in full force and effect and shall in no way be affected, prejudiced, or disturbed thereby.
7.3
Cancellation. After all principal, accrued interest and other amounts at any time owed on this Note has been indefeasibly paid
in full, this Note shall automatically be deemed canceled, shall be surrendered to the Borrower for cancellation and shall not be re-issued.
7.4
Entire Agreement and Amendments. This Note and the other Transaction Documents represent the entire agreement between the parties
hereto with respect to the subject matter hereof and thereof, and there are no representations, warranties or commitments, except as
set forth herein. This Note may be amended only by an instrument in writing executed by the parties hereto.
7.5
Binding Effect. This Note shall be binding upon the Borrower and the Guarantor and their successors and assigns and shall inure
to the benefit of the Lender and the successors and assigns of the Lender.
7.6
Governing Law and Venue. The Borrower, the Guarantor and the Lender each irrevocably
agrees that any dispute arising under, relating to, or in connection with, directly or indirectly, this Note or related to any matter
which is the subject of or incidental to this Note (whether or not such claim is based upon breach of contract or tort) shall be subject
to the exclusive jurisdiction and venue of the state and/or federal courts located in Duval County, Florida. This provision is intended
to be a “mandatory” forum selection clause and governed by and interpreted consistent with Florida law. The Borrower,
the Guarantor and the Lender each hereby consents to the exclusive jurisdiction and
venue of any state or federal court having its situs in said county, and each waives any objection based on forum non conveniens. The
Borrower and the Guarantor hereby waive personal service of any and all process and consent
that all such service of process may be made by certified mail, return receipt requested, directed to the Borrower and the Guarantor
as set forth herein in the manner provided by applicable statute, law, rule of court or otherwise. All terms and provisions hereof and
the rights and obligations of the Borrower, the Guarantor and Lender hereunder shall be governed, construed and interpreted in accordance
with the laws of the State of Florida, without reference to conflict of laws principles.
7.7
Usury Savings Clause. Notwithstanding any provision in this Note to the contrary, the total liability for payments of interest
and payments in the nature of interest, including, without limitation, all charges, fees, exactions, or other sums which may at any time
be deemed to be interest, shall not exceed the limit imposed by the usury laws of the jurisdiction governing this Note or any other applicable
law. In the event the total liability of payments of interest and payments in the nature of interest, including, without limitation,
all charges, fees, exactions or other sums which may at any time be deemed to be interest, shall, for any reason whatsoever, result in
an effective rate of interest, which for any month or other interest payment period exceeds the limit imposed by the usury laws of the
jurisdiction governing this Note, all sums in excess of those lawfully collectible as interest for the period in question shall, without
further agreement or notice by, between, or to any party hereto, be applied to the reduction of the outstanding principal balance due
hereunder immediately upon receipt of such sums by the Lender hereof, with the same force and effect as though the Borrower had specifically
designated such excess sums to be so applied to the reduction of the principal balance then outstanding, and the Lender hereof had agreed
to accept such sums as a penalty-free payment of principal; provided, however, that the Lender may, at any time and from time to time,
elect, by notice in writing to the Borrower, to waive, reduce, or limit the collection of any sums in excess of those lawfully collectible
as interest, rather than accept such sums as a prepayment of the principal balance then outstanding. It is the intention of the parties
that the Borrower does not intend or expect to pay, nor does the Lender intend or expect to charge or collect any interest under this
Note greater than the highest non-usurious rate of interest which may be charged under applicable law.
7.8
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note, at law or in equity.
7.9
Specific Shall Not Limit General; Construction. No specific provision contained in this Note shall limit or modify any more general
provision contained herein. This Note shall be deemed to be jointly drafted by the Borrower and the Lender and shall not be construed
against any person as the drafter hereof.
7.10
Failure or Indulgence Not Waiver. No failure or delay on the part of the Lender in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege.
7.11
Notice. Notice shall be given to each party at the address indicated in the preamble or at such other address as provided to the
other party in writing.
7.12
Transfer. This Note may be transferred by the Lender without the consent of the Borrower.
7.13
Collection Costs. If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced
through any legal proceeding or the Lender otherwise takes action or incurs costs to collect amounts due under this Note or to enforce
the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Borrower or other proceedings affecting
creditors’ rights and involving a claim under this Note, then the Borrower shall pay the costs incurred by the Lender for such
collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including,
without limitation, attorneys’ fees and disbursements.
[signature
page follows]
IN
WITNESS WHEREOF, the parties have caused this Note to be executed on and as of the Issuance Date.
DUOS
EDGE AI, INC.,
as
Borrower
By: _______________________________
Name: Charles P. Ferry
Title:
CEO
DUOS
TECHNOLOGIES GROUP, INC.,
as
Guarantor
By:
_______________________________
Name: Adrian Goldfarb
Title:
CFO
Date:
July 22, 2024
Principal
Amount: $______________
[signature
page to Promissory Note]
EXHIBIT
A FORM OF WARRANT
EXHIBIT
A
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. 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
DUOS
TECHNOLOGIES GROUP, INC.
Warrant Shares: xx |
Initial Exercise
Date: July __, 2024 |
THIS
COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that, for value received, __________________ or its
assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to
the close of business on the five year anniversary of the Initial Exercise Date (the “Termination Date”) but not
thereafter, to subscribe for and purchase from DUOS TECHNOLOGIES GROUP, INC., a Florida corporation (the
“Company”), up to [______________ (______)] shares (as subject to adjustment hereunder, the “Warrant
Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the
Exercise Price, as defined in Section 2(b).
Section 1. Definitions. In addition to the terms
defined elsewhere in this Warrant, the following terms have the meaning set forth in this Section 1.
Affiliate
means any Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
Business
Day shall mean any day other than a Saturday, Sunday or a legal holiday on which federal banks in The City of New York are authorized
or required to be closed for the conduct of commercial banking business, provided, however, for clarification, federal 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 federal banks in The City of New York generally
are open for use by customers on such day.
Common
Stock means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities
may hereafter be reclassified or changed.
Common
Stock Equivalents means any securities of the Company or its subsidiaries which would entitle the holder thereof to acquire at any
time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any
time convertible into or exercisable or exchangeable for, or otherwise entities the holder thereof to receive, Common Stock.
Person
means an individual, sole proprietorship, joint venture, partnership, company, corporation, association, cooperation, trust, estate,
Governmental Authority, or any other entity of any nature whatsoever.
Rule
144 means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from
time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.
Trading
Day means a day on which the principal Trading Market is open for trading.
Trading
Market means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question:
the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange,
OTCQB or OTCQX (or any successors to any of the foregoing).
Transfer
Agent means Continental Stock Transfer & Trust Co., the current transfer agent of the Company, with a mailing address of 1 State
Street, Floor 30, New York, New York 10279-0741, and any successor transfer agent of the Company.
Section 2. Exercise.
a)
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time
or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile
copy (or e-mail attachment) of the Notice of Exercise in the form annexed hereto. Within the earlier of (i) one (1) Trading Day and (ii)
the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) below) following the date of exercise
as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by
wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c)
below is specified in the applicable Notice of Exercise. No ink- original Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to
the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all
of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this
Warrant to the Company for cancellation within five (5) Trading Days of the date the final Notice of Exercise is delivered to the Company.
Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall
have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number
of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the
date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such
notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this
paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder
at any given time may be less than the amount stated on the face hereof.
b)
Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $3.00, subject to adjustment hereunder
(the “Exercise Price”).
c)
Cashless Exercise. If at any time after the six-month anniversary of the Closing Date, there is no effective registration statement
registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised,
in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number
of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A)
= as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of
Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and
delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in
Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, or (ii) at the option of the Holder,
either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the
Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable
Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered
within two (2) hours thereafter pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if
the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a)
hereof after the close of “regular trading hours” on such Trading Day;
(B)
= the existing Exercise Price of this Warrant at the time of such exercise; and
(X)
= the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such
exercise were by means of a cash exercise rather than a cashless exercise.
If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrants
being exercised may be tacked on to the holding period of the Warrant Shares. The Company agrees not to take any position contrary to
this Section 2(c).
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Stock is not then listed or quoted for trading on a Trading
Market and if prices for the Common Stock are then reported in the OTC Pink published by OTC Markets Group, Inc. (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (c)
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.
On
the Termination Date, if there is no effective registration statement registering, or no current prospectus available for, the resale
of the Warrant Shares by the Holder, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).
d)
Mechanics of Exercise.
i.
Delivery of Warrant Shares Upon Exercise. Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the
Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through
its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either
(A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by
the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule
144, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder
or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified
by the Holder in the Notice of Exercise by the date that is one (1) Trading Day after the delivery to the Company of the Notice of Exercise
(such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise the Holder shall be deemed
for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date of delivery of the Warrant Shares; provided payment of the aggregate Exercise Price (other than in the case
of a Cashless Exercise) is received within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising
the Standard Settlement Period of delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the
Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated
damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the
date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such
liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered
or the Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long
as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard
settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock
as in effect on the date of delivery of the Notice of Exercise.
ii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
iii.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv.
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to
the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, 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 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 amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in
connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed,
and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such
exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder 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 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.
v.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
vi.
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company,
and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company
shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company
(or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii.
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
e)
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the
right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its Affiliates 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 2(e), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the
Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules
required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination
of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution
Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice
of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities
owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each
case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the
number of outstanding 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 Securities and Exchange Commission (the “Commission”),
as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer
Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall
within two (2) Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities
of the Company, including this 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 9.99% of the number
of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise
of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this
Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder
and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective
until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion
hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply
to a successor holder of this Warrant.
Section 3. Certain Adjustments.
a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares
of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of
shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
b)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of 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 complete exercise of this Warrant (without regard to any limitations on exercise
hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the
Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation,
then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of
Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for
the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
c)
Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of 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 complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided,
however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in
the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).
d)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of
its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock,
(iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization
of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for
other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock
or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off
or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding
shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each
a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right
to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number
of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional
consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of
the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without
regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the
Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price
among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction the Company or any Successor
Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within thirty (30) days
after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash
equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental
Transaction. “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation
of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S.
Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and
the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100-day volatility obtained from the HVT function
on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying
price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any
non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between
the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. The Company shall cause any successor
entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in
writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(d) pursuant to written
agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior
to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable
for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the 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 number of shares of capital stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in
form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and
be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant 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 with the same effect as if such Successor Entity had been named as the Company
herein.
e)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
f)
Adjustment to Exercise Price of 2017 Warrants. In the event the Exercise Price (as defined in the 2017 Warrants) pursuant to the
Warrants issued pursuant to the Securities Purchase Agreement entered into by the Company on or about November 24, 2017 is reduced to
less than the Exercise Price of this Warrant, the Exercise Price of this Warrant shall be reduced to equal the adjusted Exercise Price
of the 2017 Warrants.
g)
Adjustment to Purchase Price of 2019 Warrants. In the event the Purchase Price (as defined in the 2019 Warrants) pursuant to the
Warrants issued pursuant to the Promissory Note entered into by the Company on or about September 25, 2019, is reduced to less than the
Exercise Price, the Exercise Price shall be reduced to equal the adjusted Purchase Price.
h)
Notice to Holder.
i.
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities,
cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile
number or email address as it shall appear upon the Warrant Register of the Company, at least five (5) Trading Days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock
for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange;
provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the
corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains,
material, non-public information regarding the Company or any of its subsidiaries, the Company shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period
commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly
set forth herein.
Section 4.Transfer of Warrant.
a)Transferability.
Subject to compliance with any applicable securities laws this Warrant and all rights hereunder (including, without limitation, any registration
rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated
agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its
agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as
applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything
herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned
this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date
the Holder delivers an assignment form to the Company assigning this Warrant full. The Warrant, if properly assigned in accordance herewith,
may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b)
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of
the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original issue date and
shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
d)
Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer
of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and
under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or
current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that
the Holder or transferee of this Warrant, as the case may be, provide to the Company an opinion of counsel selected by the Holder or
transferee and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably acceptable to the Company,
to the effect that such transfer does not require registration under the Securities Act.
e)
Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant
and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to
or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities
law, except pursuant to sales registered or exempted under the Securities Act.
Section 5. Registration Rights. The Holder shall
be entitled to “piggy back” registration rights covering the Warrant Shares only during such period(s) as there is no effective
resale registration statement covering resale of the Holder’s Warrant Shares. The terms of this Section 5 shall survive the exercise
of this Warrant for so long as Holder holds any Warrant Shares.
Section 6. Miscellaneous.
a)
No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading
Day.
d)
Authorized Shares.
The
Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with
the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants
that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction thereof.
e)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and
the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
f)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that
all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of
this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
g)
Notices. Subject to Section 3 of this Warrant, any notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered by a U.S. nationally recognized overnight courier service to the address specified for
the Holder in the Warrant Register.
h)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of
the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
i)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate.
j)
Successors and Assigns. Subject to applicable securities laws and the conditions set forth in Section 4(d) hereof, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns
of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit
of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
k)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and
the Holder.
l)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
m)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed
a part of this Warrant.
********************
(Signature
Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above
indicated.
|
DUOS
TECHNOLOGIES GROUP, INC.
By:
____________________________
Name:
__________________________
Title:
___________________________
|
NOTICE
OF EXERCISE
TO:
DUOS TECHNOLOGIES GROUP, INC.
(1)The
undersigned hereby elects to purchase Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised
in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2)Payment
shall take the form of (check applicable box):
[
] in lawful money of the United States; or
[
] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to
exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set
forth in subsection 2(c).
(3)Please
issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
____________________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number:
____________________________________
(4)Accredited
Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of
1933, as amended.
[SIGNATURE
OF HOLDER]
Name
of Investing Entity: ___________________________________________
Signature
of Authorized Signatory of Investing Entity: ________________________________
Name
of Authorized Signatory: _______________________________________
Title
of Authorized Signatory:________________________________________
Date: ______________________________
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
Name: |
________________________________________
(Please
Print)
|
Address: |
________________________________________
________________________________________ |
Phone
Number: |
|
Email
Address: |
________________________________________
|
Dated: |
__________________,
_____
|
Holder’s
Signature: |
________________________________________
|
Holder’s
Address: |
________________________________________
________________________________________
|
Exhibit 10.2
FORM
OF SECURITY AGREEMENT
SECURITY
AGREEMENT, dated as of July 22, 2024 (this “Agreement”), made by Duos Technologies Group, Inc., a Florida corporation,
with offices located at 7660 Centurion Parkway, Suite 100, Jacksonville, Florida 32256 (the “Company”), and each of
the undersigned Subsidiaries of the Company from time to time, if any (each a “Grantor” and together with the Company,
collectively, the “Grantors”), in favor of Bleichroeder LP, in its capacity as collateral agent (in such capacity,
the “Collateral Agent” as hereinafter further defined) for the Noteholders (as defined below) party to the Promissory
Notes, dated as of July 22, 2024 (as amended, modified, supplemented, extended, renewed, restated or replaced from time to time, the
“Notes”).
W
I T N E S S E T H:
WHEREAS,
Duos Edge AI, Inc. (“Edge”), one of the Grantors, and the Company are entering into two promissory notes with two
entities for which the Collateral Agent is acting as an investment advisor, namely 21 April Fund, Ltd. and 21 April Fund, LP (collectively,
the “Noteholders”);
WHEREAS,
the Collateral Agent will act in the capacity as administrator of the Notes and as collateral agent for the Noteholders;
WHEREAS,
the Company is a party to the Guaranty, dated as of the date hereof (the “Guaranty”), in favor of the Collateral Agent
and the Noteholders; and
WHEREAS,
the Grantors are granting a security interest in certain equipment owned by Edge, as identified on Schedule A, all revenues from that
equipment and all proceeds from sales of the Company’s stock via the “at the market” or “ATM” facility
until such time as the Notes are repaid in full.
NOW,
THEREFORE, in consideration of the premises and the agreements herein, each Grantor agrees with the Collateral Agent, for the benefit
of the Collateral Agent and the Noteholders, as follows:
(a)
Reference is hereby made to the Notes for a statement of the terms thereof. All terms used in this Agreement and the recitals hereto
which are defined in the Notes or Code, and which are not otherwise defined herein, shall have the same meanings herein as set forth
therein.
(b)
As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally
to both the singular and plural forms of such terms:
“Affiliate”
of any Person means any other Person which, directly or indirectly, controls or is controlled by or is under common control with
such Person and any officer or director of such Person. A Person shall be deemed to be “controlled by” any other Person if
such Person possesses, directly or indirectly, power to vote 10% or more of the securities (on a fully diluted basis) having ordinary
voting power for the election of directors or managers or power to direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise.
“Bankruptcy
Code” means Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (or other applicable bankruptcy,
insolvency or similar laws).
“Business
Day” means any day other than Saturday, Sunday or other day on which federal banks in The City of New York are authorized or
required to be closed for the conduct of commercial banking business, provided, however, for clarification, federal 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 other similar orders or restrictions or the closure of physical branch locations at the direction of any governmental
authority so long as the electronic funds transfer systems (including for wire transfers) of federal banks in The City of New York generally
are open for use by customers on such day.
“Capital
Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock (including, without limitation, any warrants, options, rights or other
securities exercisable or convertible into equity interests or securities of such Person), and (ii) with respect to any Person that is
not a corporation, any and all partnership, membership or other equity interests of such Person.
“Closing
Date” means the date Edge and the Company initially issued the Notes.
“Code”
means Article 9 of the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if
perfection or the effect of perfection or nonperfection or the priority of any security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “Code” means the Uniform Commercial
Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect
of perfection or nonperfection or priority.
“Collateral”
shall have the meaning set forth in Section 2(a) of this Agreement.
“Collateral
Agent” shall have the meaning set forth in the preamble hereto.
“Company”
shall have the meaning set forth in the preamble hereto.
“Controlled
Account Agreement” means a deposit account control agreement or securities account control agreement with respect to a Pledged
Account, in form and substance satisfactory to the Collateral Agent, as the same may be amended, modified, supplemented, extended, renewed,
restated or replaced from time to time.
“Edge”
shall have the meaning set forth in the preamble hereto.
“Event
of Default” shall have the meaning set forth in Section 3.1 of the Notes.
“GAAP”
means U.S. generally accepted accounting principles consistently applied.
“Governmental
Authority” means any nation or government, any Federal, state, city, town, municipality, county, local, foreign or other political
subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guaranteed
Obligations” shall have the meaning set forth m Section 2 of the Guaranty.
“Guarantor”
shall have the meaning set forth in the Guaranty.
“Guaranty”
shall have the meaning set forth in the recitals hereto.
“Insolvency
Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any
other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, or extensions
generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.
“Lien”
means any mortgage, lien, pledge, charge, security interest, adverse claim or other encumbrance upon or in any property or assets.
“Notes”
shall have the meaning set forth in the recitals hereto.
“Noteholders”
means, at any time, the holders of the Notes at such time.
“Obligations”
shall have the meaning set forth in Section 3 of this Agreement.
“Paid
in Full” or “Payment in Full” means the indefeasible payment in full in cash of all of the Obligations.
“Perfection
Requirement” or “Perfection Requirements” means (i) the filing under the Code as in effect in the applicable
jurisdiction of a financing statement described in Schedule II hereto, and (ii) with respect to the Pledged Account, the execution of
an Account Control Agreement with the depository with which the Pledged Account is maintained.
“Permitted
Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business
by operation of law with respect to a liability that is not yet due or delinquent, and (iii) any Lien created by operation of law, such
as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business with respect
to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings.
“Person”
means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or other enterprise or entity or Governmental Authority.
“Pledged
Account” means all of each Grantor right, title, and interest in the Deposit Account to be established pursuant to the Notes
and identified on Schedule B.
“Subsidiary”
means any Person in which a Grantor directly or indirectly, (i) a majority of the outstanding Capital Stock or equity or similar
interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and
all of the foregoing, collectively, “Subsidiaries”.
| SECTION. 2. | Grant of Security Interest. |
| (a) | As
collateral security for the due and punctual payment and performance of all of the Obligations,
as and when due, each Grantor hereby pledges and assigns to the Collateral Agent, for itself
and for the benefit of the Noteholders, and grants to the Collateral Agent, for itself and
for the benefit of the Noteholders, a continuing security interest in, certain assets of
such Grantor, as identified below (collectively, the “Collateral”): |
| (i) | the
Equipment with serial numbers 45388, 45393, and 46000 situated at Edge’s three data
centers; |
| (ii) | the
Accounts relating to such Equipment; |
| (iii) | the
Pledged Account and all cash and all investments therein; |
| (iv) | all
Cash Proceeds, of the foregoing Collateral; |
| (v) | all
Cash Proceeds, as a result of the sale of stock through the Company’s ATM facility;
and |
| (vi) | all
proceeds, products, offspring, accessions, rents, profits, income, benefits, substitutions
and replacements of and to any of the property described in the preceding clauses of this
Section 2 (including, without limitation, any proceeds of insurance thereon and all causes
of action, claims and warranties now or hereafter held by any Grantor in respect of any of
the items listed above), and all books, correspondence, files and other Records, including,
without limitation, all tapes, disks, cards, software, data and computer programs in the
possession or under the control of any Grantor or any other Person from time to time acting
for such Grantor that at any time evidence or contain information relating to any of the
property described in the preceding clauses of this Section 2 or are otherwise necessary
in the collection or realization thereof. |
| (c) | In
addition, to secure the prompt and complete payment, performance and observance of the Obligations
as aforesaid, each Grantor hereby grants to the Collateral Agent, for itself and for the
ratable benefit of the Noteholders, a right of set-off against the property of such Grantor
held by the Collateral Agent, for itself and for the ratable benefit of the Noteholders,
consisting of property described above in Section 2(a) now or hereafter in the possession
or custody of or in transit to the Collateral Agent, for any purpose, including safekeeping,
collection or pledge, for the account of such Grantor, or as to which such Grantor may have
any right or power; provided that such right shall only to be exercised, after an Event of
Default has occurred and is continuing. |
SECTION. 3. Security for
Obligations. The
security interest created hereby in the Collateral constitutes a continuing first-priority collateral security for all of the Obligations
under and as defined in the Note, including, without limitation:
| (a) | (i)
the payment by the Company and each other Grantor, as and when due and payable (by scheduled
maturity, required prepayment, acceleration, demand or otherwise), of all amounts from time
to time owing by it in respect of the Notes and the other Transaction Documents, and (ii)
in the case of the Guarantor, the payment by the Guarantor, as and when due and payable of
all Guaranteed Obligations under the Guaranty, including, without limitation, in both cases,
(A) all principal of, interest, make-whole and other amounts on the Notes (including, without
limitation, all interest, make-whole and other amounts that accrues after the commencement
of any Insolvency Proceeding of any Grantor, whether or not the payment of such interest
is enforceable or is allowable in such Insolvency Proceeding), and (B) all fees, interest,
premiums, penalties, contract causes of action, costs, commissions, expense reimbursements,
indemnifications and all other amounts due or to become due under this Agreement or any of
the Transaction Documents; and |
| (b) | the
due performance and observance by each Grantor of all of its other obligations from time
to time existing in respect of any of the Transaction Documents, including without limitation,
with respect to any rights of the Noteholders under the Notes. |
SECTION. 4. Representations
and Warranties. Each Grantor represents and warrants as follows:
| (a) | Schedule
I hereto sets forth (i) the exact legal name of each Grantor, and (ii) the state of incorporation,
organization or formation and the organizational identification number of each Grantor in
such state. The information set forth in Schedule I hereto with respect to such Grantor
is true and accurate in all respects. Such Grantor has not previously changed its name (or
operated under any other name), jurisdiction of organization or organizational identification
number from those set forth in Schedule I hereto except as disclosed in Schedule
I hereto. |
| (b) | There
is no pending or, to its knowledge, written notice threatening any action, suit, proceeding
or claim affecting any Grantor before any Governmental Authority or any arbitrator, or any
order, judgment or award issued by any Governmental Authority or arbitrator, in each case,
that may adversely affect the grant by any Grantor, or the perfection, of the security interest
purported to be created hereby in the Collateral, or the exercise by the Collateral Agent
of any of its rights or remedies hereunder. |
| (c) | All
material Federal, state and local tax returns and other reports required by applicable law
to be filed by any Grantor have been filed, or extensions have been obtained, and all taxes,
assessments and other governmental charges imposed upon any Grantor or any property of any
Grantor (including, without limitation, all federal income and social security taxes on employees’
wages) and which have become due and payable on or prior to the date hereof have been paid,
except to the extent contested in good faith by proper proceedings which stay the imposition
of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which
adequate reserves have been set aside for the payment thereof in accordance with GAAP. |
| (d) | All
Equipment included in the Collateral of each Grantor now existing are, and all such Equipment
included in the Collateral of each Grantor hereafter existing will be, located and/or based
at the addresses specified therefor in Schedule A hereto, except that each Grantor
will give the Collateral Agent written notice of any change in the location of any such Collateral
within 20 days of such change. Each Grantor’s principal place of business and chief
executive office, and the place where each Grantor keeps its Records concerning the Collateral
are located and will continue to be located at the addresses specified therefor in Schedule
A hereto. |
| (e) | Each
Grantor is and will be at all times the sole and exclusive owner of the Collateral pledged
by such Grantor hereunder free and clear of any Liens (except for Permitted Liens). |
| (f) | The
exercise by the Collateral Agent of any of its rights and remedies hereunder will not contravene
any law or any contractual restriction binding on or otherwise affecting each Grantor or
any of its properties and will not result in or require the creation of any Lien, upon or
with respect to any of its properties. |
| (g) | No
authorization or approval or other action by, and no notice to or filing with, any Governmental
Authority, is required for the grant by each Grantor, or the perfection, of the security
interest purported to be created hereby in the Collateral, except for the Perfection Requirements.
|
| (h) | This
Agreement creates in favor of the Collateral Agent a legal, valid and enforceable security
interest in the Collateral, as security for the Obligations. The performance of the Perfection
Requirements results in the perfection of such security interest in the Collateral. Such
security interest is (or in the case of Collateral in which each Grantor obtains rights after
the date hereof, will be), subject only to Permitted Liens and the Perfection Requirements,
a first priority, valid, enforceable and perfected security interest in the Collateral. |
| (i) | Such
Grantor (i) is a corporation, limited liability company or limited partnership, as applicable,
duly organized, validly existing and in good standing under the laws of the jurisdiction
of its incorporation, organization or formation, (ii) has all requisite corporate, limited
liability company or limited partnership power and authority to conduct its business as now
conducted and as presently contemplated and to execute and deliver this Agreement and each
other Transaction Document to which such Grantor is a party, and to consummate the transactions
contemplated hereby and thereby and (iii) is duly qualified to do business and is 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, except
where the failure to be so qualified would not result in a Material Adverse Effect. |
| (j) | The
execution, delivery and performance by each Grantor of this Agreement and each other Transaction
Document to which such Grantor is a party (i) have been duly authorized by all necessary
corporate, limited liability company or limited partnership action, (ii) do not and will
not contravene its charter or by-laws, limited liability company or operating agreement,
certificate of partnership or partnership agreement, as applicable, or any applicable law
or any contractual restriction binding on such Grantor or its properties, (iii) do not and
will not result in or require the creation of any Lien (other than pursuant to any Transaction
Document) upon or with respect to any of its assets or properties, and (iv) do not and will
not result in any default, noncompliance, suspension, revocation, impairment, forfeiture
or nonrenewal of any material permit, license, authorization or approval applicable to it
or its operations or any of its assets or properties. |
| (k) | This
Agreement and each of the other Transaction Documents to which any Grantor is or will be
a party, when delivered, will be, a legal, valid and binding obligation of such Grantor,
enforceable against such Grantor in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, suretyship
or other similar laws and equitable principles (regardless of whether enforcement is sought
in equity or at law). |
| (l) | There
are no conditions precedent to the effectiveness of this Agreement that have not been satisfied
or waived. |
SECTION. 5. Covenants as
to the Collateral. So long as any of the Obligations shall remain outstanding, unless the Collateral
Agent shall otherwise consent in writing:
| (a) | Further
Assurances. Each Grantor will, at its expense, at any time and from time to time, promptly
execute and deliver all further instruments and documents and take all further action that
the Collateral Agent may reasonably request in order to: (i) perfect and protect the security
interest of the Collateral Agent created hereby; (ii) enable the Collateral Agent to exercise
and enforce its rights and remedies hereunder in respect of the Collateral; or (iii) otherwise
effect the purposes of this Agreement, including, without limitation, (A) executing and filing
(to the extent, if any, that any Grantor’s signature is required thereon) or authenticating
the filing of, such financing or continuation statements, or amendments thereto, as may be
necessary or that the Collateral Agent may reasonably request in order to perfect and preserve
the security interest created hereby, (B) furnishing to the Collateral Agent from time to
time statements and schedules further identifying and describing the Collateral and such
other reports in connection with the Collateral in each case as the Collateral Agent may
reasonably request, all in reasonable detail, and (C) if any Collateral shall be in the possession
of a third party, notifying such Person of the Collateral Agent’s security interest
created hereby and obtaining a written acknowledgment from such Person, in form and substance
reasonably satisfactory to the Collateral Agent, that such Person holds possession of the
Collateral for the benefit of the Collateral Agent (for the benefit the Noteholders), |
| (b) | Location
of Collateral. Each Grantor will keep the Collateral (i) at the locations specified therefor
on Schedule A hereto, or (ii) at such other locations set forth on Schedule A
and with respect to which the Collateral Agent has filed financing statements and otherwise
fully perfected its Liens thereon, or (iii) at such other locations in the United States,
provided that 30 days prior to any change in the location of any Collateral to such other
location, or upon the acquisition of any Collateral to be kept at such other locations, the
Grantors shall give the Collateral Agent written notice thereof and deliver to the Collateral
Agent a new Schedule A indicating such new locations and such other written statements
and schedules as the Collateral Agent may require. |
| (c) | Condition
of Equipment. Each Grantor will maintain or cause to be maintained and preserved in good
condition, repair and working order, ordinary wear and tear excepted, the Equipment included
in the Collateral and will forthwith, or in the case of any loss or damage to any such Equipment
of any Grantor within a commercially reasonable time after the occurrence thereof, make or
cause to be made all repairs, replacements and other improvements in connection therewith
which are necessary or desirable, consistent with past practice, or which the Collateral
Agent may request to such end. Any Grantor will promptly furnish· to the Collateral
Agent a statement describing in reasonable detail any such loss or damage in excess of $25,000
per occurrence to any such Equipment. |
| (d) | Taxes.
Each Grantor agrees to pay promptly when due all property and other taxes, assessments and
governmental charges or levies imposed upon, and all claims (including claims for labor,
materials and supplies) against, the Equipment included in the Collateral, except to the
extent the validity thereof is being contested in good faith by proper proceedings which
stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and
with respect to which adequate reserves in accordance with GAAP have been set aside for the
payment thereof. |
| (i) | Each
Grantor will, at its own expense, maintain insurance (including without limitation, comprehensive
general liability, hazard, rent and business interruption insurance) with respect to the
Collateral, in such amounts and covering such risks, in such form and with responsible and
reputable insurance companies or associations as is required by any Governmental Authority
having jurisdiction with respect thereto or as is carried generally in accordance with sound
business practice by companies in similar businesses similarly situated and, in any event,
in amount, adequacy and scope reasonably satisfactory to the Collateral Agent. |
| (ii) | To
the extent requested by the Collateral Agent at any time and from time to time, each such
policy for liability insurance shall provide for all losses to be: paid on behalf of the
Collateral Agent and any Grantor as their respective interests may appear, and each policy
for property damage insurance shall provide for all losses to be adjusted with, and paid
directly to, the Collateral Agent. In addition to and without limiting the foregoing, to
the extent requested by the Collateral Agent at any time and from time to time, each such
policy shall in addition (A) name the Collateral Agent as an additional insured party and/or
loss payee, as applicable, thereunder (without any representation or warranty by or obligation
upon the Collateral Agent) as its interests may appear, (B) contain an agreement by the insurer
that any loss thereunder shall be payable to the Collateral Agent on its own account notwithstanding
any action, inaction or breach of representation or warranty by any Grantor, (C) provide
that there shall be no recourse against the Collateral Agent for payment of premiums or other
amounts with respect thereto, and (D) provide that at least 30 days’ prior written
notice of cancellation, lapse, expiration or other adverse change shall be given to the Collateral
Agent by the insurer. Any Grantor will, if so requested by the Collateral Agent, deliver
to the Collateral Agent original or duplicate policies of such insurance (including certificates
demonstrating compliance with this Section 5(e)) and, as often as the Collateral Agent
may reasonably request, a report of a reputable insurance broker with respect to such insurance.
Any Grantor will also, at the request of the Collateral Agent, execute and deliver instruments
of assignment of such insurance policies and cause the respective insurers to acknowledge
notice of such assignment. |
| (iii) | Reimbursement
under any liability insurance maintained by any Grantor pursuant to this Section 5(e)
may be paid directly to the Person who shall have incurred liability covered by such
insurance. In the case of any loss involving damage to Equipment to the extent paragraph
(iv) of this Section 5(e) is not applicable, any proceeds of insurance involving such
damage shall be paid to the Collateral Agent, and any Grantor will make or cause. to be made
the necessary repairs to or replacements of such Equipment and any proceeds of insurance
maintained by any Grantor pursuant to this Section (except as otherwise provided in
paragraph (iv) in this Section 5(e) ) shall be paid by the Collateral Agent to any
Grantor as reimbursement for the reasonable costs of such repairs or replacements. |
| (iv) | Notwithstanding
anything to the contrary in subsection 5(e)(iii) above, following and during the continuance
of an Event of Default, all insurance payments in respect of each Grantor’s Collateral
shall be paid to the Collateral Agent and applied as specified in Section 7(b) hereof. |
| (f) | Provisions
Concerning the Collateral |
| (i) | Each
Grantor will (A) give the Collateral Agent at least 30 days’ prior written notice of
any change in such Grantor’s name, identity or organizational structure, (B) maintain
its jurisdiction of incorporation, organization or formation as· set forth in Schedule
I hereto, (C) immediately notify the Collateral Agent upon obtaining an organizational
identification number, if on the date hereof such Grantor did not have such identification
number, and (D) keep adequate records concerning the Collateral and permit representatives
of the Collateral Agent during normal business hours on reasonable notice to such Granter,
to inspect and make abstracts from such records. |
| (ii) | Each
Grantor will (except as otherwise provided in this subsection (f)), continue to collect,
at its own expense, all amounts due or to become due under the Accounts pledged as part of
the Collateral. In connection with such collections, any Grantor may (and, at the Collateral
Agent’s direction, will) take such action as any Grantor or the Collateral Agent may
deem necessary or advisable to enforce collection or performance of such Accounts; provided,
however, that the Collateral Agent shall have the right at any time following the occurrence
and during the continuance of an Event of Default to notify the applicable Account Debtors
or obligors under such Accounts of the assignment of such Accounts to the Collateral Agent
and to direct such Account Debtors or obligors to make payment of all amounts due or to become
due to any Grantor thereunder directly to the Collateral Agent or its designated agent and,
upon such notification and at the expense of any Grantor and to the extent permitted by applicable
law, to enforce collection of any such Accounts and to adjust, settle or compromise the amount
or payment thereof, in the same manner and to the same extent as any Grantor might have done.
After receipt by any Grantor of a notice from the Collateral Agent that the Collateral Agent
has notified, intends to notify, or has enforced or intends to enforce any Grantor’s
rights against the Account Debtors or obligors under such Accounts as referred to in the
proviso to the immediately preceding sentence, (A) all amounts and proceeds (including Instruments)
received by any Grantor in respect of such Accounts shall be received in trust for the benefit
of the Collateral Agent hereunder (for the benefit the Noteholders), shall be segregated
from other funds of any Grantor and shall be forthwith paid over to the Collateral Agent
in the same form as so received (with any necessary endorsement) to be applied as specified
in Section 7(b) hereof, and (B) no Grantor will adjust, settle or compromise the amount
or payment of any such Account or release wholly or partly any Account Debtor or obligor
thereof or allow any credit or discount thereon. In addition, upon the occurrence and during
the continuance of an Event of Default, the Collateral Agent may (in its sole and absolute
discretion) direct any or all of the banks and financial institutions with which any Grantor
either maintains a Pledged Account or deposits the proceeds of any Accounts pledged as part
of the Collateral to send immediately to the Collateral Agent by wire transfer (to such deposit
account as the Collateral Agent shall specify, or in such other manner as the Collateral
Agent shall direct) all or a portion of such securities, cash, investments and other items
held by such institution. Any such securities, cash, investments and other items so received
by the Collateral Agent shall be applied as specified in accordance with Section 7(b)
hereof. |
| (g) | Transfers
and Other Liens. Except as otherwise expressly permitted in the other Transaction Documents,
no Grantor shall, directly or indirectly, sell, lease, license, assign, transfer, spin-off,
split-off, close, convey or otherwise dispose of any Collateral whether in a single transaction
or a series of related transactions, other than sales, leases, licenses, assignments, transfers,
conveyances and other dispositions of such assets or rights by such Grantor for value in
the ordinary course of business consistent with past practices. No Grantor will create, suffer
to exist, or grant any Lien upon or until respect to the Collateral other than a Permitted
Lien. |
| (h) | Pledged
Account. Each Grantor shall cause each bank and other financial institution which maintains
a Controlled Account (each, a “Controlled Account Bank”) to execute and
deliver to the Collateral Agent, in form and substance reasonably satisfactory to the Collateral
Agent, an Account Control Agreement with respect to such Controlled Account duly executed
by the Grantor and such Controlled Account Bank. |
SECTION. 6. Additional Provisions
Concerning the Collateral.
| (a) | To
the maximum extent permitted by applicable law, and for the purpose of taking any action
that the Collateral Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, each Grantor hereby (i) authorizes the Collateral Agent to execute any such agreements,
instruments or other documents in such Grantor’s name and to file such agreements,
instruments or other documents in such Grantor’s name and in any appropriate filing
office, (ii) authorizes the Collateral Agent at any time and from time to time to file, one
or more financing or continuation statements, and amendments thereto, relating to the Collateral
and (iii) ratifies such authorization to the extent that the Collateral Agent has filed any
such financing or continuation statements, or amendments thereto, prior to the date hereof.
A photocopy or other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement where permitted
by law. |
| (b) | Upon
an Event of Default, each Grantor hereby irrevocably appoints the Collateral Agent as its
attorney-in-fact and proxy, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time in the Collateral Agent’s
discretion, to take any action and to execute any instrument which the Collateral Agent may
deem necessary or advisable to accomplish the purposes of this Agreement, including, without
limitation, (i) to obtain and adjust insurance required to be paid to the Collateral Agent
pursuant to Section 5(e) hereof, (ii) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under or in respect
of any Collateral, (iii) to receive, endorse, and collect any drafts or other instruments
and, documents in connection with clause (i) or (ii) above, (iv) to file any claims or take
any action or institute any proceedings which the Collateral Agent may deem necessary or
desirable for the collection of any Collateral or otherwise to enforce the rights of the
Collateral Agent and the Noteholders with respect to any Collateral, (v) to execute assignments,
licenses and other documents to enforce the rights of the Collateral Agent and the Noteholders
with respect to any Collateral, and (vi) to verify any and all information with respect to
any and all Accounts included in the Collateral. This power is coupled with an interest and
is irrevocable until all of the Obligations are Paid in Full. |
| (c) | If
any Grantor fails to perform any agreement or obligation contained herein, the Collateral
Agent may itself perform, or cause performance of, such agreement or obligation, in the name
of such Grantor or the Collateral Agent, and the expenses of the Collateral Agent incurred
in connection therewith shall be payable by such Grantor pursuant to Section 8 hereof and
shall be secured by the Collateral. |
| (d) | The
powers conferred on the Collateral Agent hereunder are solely to protect its interest in
the Collateral and shall not impose any duty upon it to exercise any such powers. Except
for the safe custody of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or
as to the taking of any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral. |
SECTION. 7.
Remedies upon Event of Default; Application of Proceeds. If any Event of Default shall have
occurred and be continuing, subject to any applicable cure periods:
| (a) | The
Collateral Agent may exercise in respect of the Collateral, in addition to any other rights
and remedies provided for herein, in any other Transaction Document or otherwise available
to it, all of the rights and remedies of a secured party upon default under the Code (whether
or not the Code applies to the affected Collateral), and also may (i) take absolute control
of the Collateral, including, without limitation, transfer into the Collateral Agent’s
name or into the name of its nominee or nominees (to the extent the Collateral Agent has
not theretofore done so) and thereafter receive, for the benefit of the Noteholders, all
payments made thereon, give all consents, waivers and ratifications in respect thereof and
otherwise act with respect thereto as though it were the outright owner thereof, (ii) require
each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request
of the Collateral Agent forthwith, assemble all or part of its respective Collateral as directed
by the Collateral Agent and make it available to the Collateral Agent at a place or places
to be designated by the Collateral Agent that is reasonably convenient to both parties, and
the Collateral Agent may enter into and occupy any premises owned or leased by any Grantor
where the Collateral or any part thereof is located or assembled for a reasonable period
in order to effectuate the Collateral Agent’s rights and remedies hereunder or under
law, without obligation to any Grantor in respect of such occupation, and (iii) without notice
except as specified below and without any obligation to prepare or process the Collateral
for sale, (A) sell the Collateral or any part thereof in one or more parcels at public or
private sale in accordance with applicable law (including, without limitation, by credit
bid), at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or
for future delivery, and at such price or prices and upon such other terms as the Collateral
Agent may deem commercially reasonable and/or (B) lease, license or dispose of the Collateral
or any part thereof upon such terms as the Collateral Agent may deem commercially reasonable.
Each Grantor agrees that, to the extent notice of sale or any other disposition of its respective
Collateral shall be required by law, at least ten (10) days’ notice to any Grantor
of the time and place of any public sale or the time after which any private sale or other
disposition of its respective Collateral is to be made shall constitute reasonable notification.
The Collateral Agent shall not be obligated to make any sale or other disposition of any
Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and place to which
it was so adjourned. Each Grantor hereby waives any claims against the Collateral Agent and
the Noteholders arising by reason of the fact that the price at which its respective Collateral
may have been sold at a private sale was less than the price which might have been obtained
at a public sale or was less than the aggregate amount of the Obligations, even if the Collateral
Agent accepts the first offer received and does not offer such Collateral to more than one
offeree, and waives all rights that any Grantor may have to require that all or any part
of such Collateral be marshaled upon any sale (public or private) thereof. Each Grantor hereby
acknowledges that (i) any such sale of its respective Collateral by the Collateral Agent
shall be made without warranty, (ii) the Collateral Agent may specifically disclaim any warranties
of title, possession, quiet enjoyment or the like, and (iii) such actions set forth in clauses
(i) and (ii) above shall not adversely affect the commercial reasonableness of any such sale
of Collateral. |
| (b) | Any
cash held by the Collateral Agent as Collateral and all Cash Proceeds received by the Collateral
Agent in respect of any sale or disposition of or collection from, or other realization upon,
all or any part of the Collateral shall be applied as follows: first, to pay any fees,
indemnities or expense reimbursements then due to the Collateral Agent (including those described
in Section 8 hereof); second, to pay any fees, indemnities or expense reimbursements
then due to the Noteholders, on a pro rata basis; third to pay interest due under
the Notes owing to the Noteholders, on a pro rata basis; fourth, to pay or prepay
principal in respect of the Notes, whether or not then due, owing to the Noteholders, on
a pro rata basis; and fifth, to pay or prepay any other Obligations, whether or not
then due, in such order and manner as the Collateral Agent shall elect. Any surplus of such
cash or Cash Proceeds held by the Collateral Agent and remaining after the Payment in Full
of all of the Obligations shall be paid over to whomsoever shall be lawfully entitled to
receive the same or as a court of competent jurisdiction shall direct. |
| (c) | In
the event that the proceeds of any such sale, disposition, collection or realization are
insufficient to pay all amounts to which the Collateral Agent and the Noteholders are legally
entitled, each Grantor shall be, jointly and severally, liable for the deficiency, together
with interest thereon at the highest rate specified in the Notes for interest on overdue
principal thereof or such other rate as shall be fixed by applicable law, together with the
costs of collection and the reasonable fees, costs, expenses and other charges of any attorneys
employed by the Collateral Agent to collect such deficiency. |
| (d) | The
Collateral Agent shall not be required to marshal any present or future collateral security
(including, but not limited to, this Agreement and the Collateral) for, or other assurances
of payment of, the Obligations or any of them or to resort to such collateral security or
other assurances of payment in any particular order, and all of the Collateral Agent’s
rights hereunder and in respect of such collateral security and other assurances of payment
shall be cumulative and in addition to all other rights, however existing or arising. To
the extent that any Grantor lawfully may, each Grantor hereby agrees that it will not invoke
any law relating to the marshaling of collateral which might cause delay in or impede the
enforcement of the Collateral Agent’s rights under this Agreement or under any other
instrument creating or evidencing any of the Obligations or under which any of the Obligations
is outstanding or by which any of the Obligations is secured or payment thereof is otherwise
assured, and, to the extent that it lawfully may, each Grantor hereby irrevocably waives
the benefits of all such laws. |
| SECTION. 8. | Indemnity and Expenses. |
| (a) | Each
Grantor agrees, jointly and severally, to defend, protect, indemnify and hold the Collateral
Agent and each of the Noteholders harmless from and against any and all claims, damages,
losses, liabilities, obligations, penalties, fees, costs and expenses (including, without
limitation, reasonable legal fees, costs, expenses, and disbursements of such Person’s
counsel) to the extent that they arise out of or otherwise result from this Agreement (including,
without limitation, enforcement of this Agreement), except to the extent resulting from such
Person’s gross negligence or willful misconduct, as determined by a final judgment
of a court of competent jurisdiction no longer subject to appeal. |
| (b) | Each
Grantor agrees, jointly and severally, to pay to the Collateral Agent upon demand the amount
of any and all costs and expenses, including the reasonable fees, costs, expenses and disbursements
of counsel for the Collateral Agent and of any experts and agents (including, without limitation,
any collateral trustee which may act as agent of the Collateral Agent), which the Collateral
Agent may incur in connection with (i) the preparation, negotiation, execution, delivery,
recordation, administration, amendment, waiver or other modification or termination of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any Collateral, (iii) the exercise or enforcement of any
of the rights of the Collateral Agent hereunder, or (iv) the failure by any Grantor to perform
or observe any of the provisions hereof. |
| SECTION. 9. | Notices,
etc. All notices and other communications provided for hereunder shall be in writing and shall
be mailed (by certified mail, first-class postage prepaid and return receipt requested), telecopied, e-mailed or delivered, if to any
Grantor, or if to the Collateral Agent or any Noteholder, to such address as shall be designated by such Person in a written notice to
all other parties hereto complying as to delivery with the terms of this Section 9. All such notices and other communications shall be
effective (a) if sent by certified mail, return receipt requested, when received or three business days after deposited in the mails,
whichever occurs first, (b) if telecopied or e-mailed, when transmitted (during normal business hours) and confirmation is received,
and otherwise, the day after the notice or communication was transmitted and confirmation is received, or (c) if delivered in person,
upon delivery. |
| SECTION. 10. |
Miscellaneous. |
| (a) | No
amendment of any provision of this Agreement shall be effective unless it is in writing and
signed by each Grantor and the Collateral Agent, and no waiver of any provision of this Agreement,
and no consent to any departure by each Grantor therefrom, shall be effective unless it is
in writing and signed by each Grantor and the Collateral Agent, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose for which given.
No amendment, modification or waiver of this Agreement shall be effective to the extent that
it (1) applies to fewer than all of the holders of Notes or (2) imposes any obligation or
liability on any holder of Notes without such holder’s prior written consent (which
may be granted or withheld in such holder’s sole discretion). |
| (b) | No
failure on the part of the Collateral Agent to exercise, and no delay in exercising, any
right reasonably hereunder or under any of the other Transaction Documents shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right reasonably
preclude any other or further exercise thereof or the exercise of any other right. The rights
and remedies of the Collateral Agent or any Noteholder provided herein and in the other Transaction
Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies
provided by law. The rights of the Collateral Agent or any Noteholder under any of the other
Transaction Documents against any party thereto are not conditional or contingent on any
attempt by such Person to exercise any of its rights under any of the other Transaction Documents
against such party or against any other Person, including but not limited to, any Grantor. |
| (c) | Any
provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining portions hereof or thereof or affecting the validity or
enforceability of such provision in any other jurisdiction. |
| (d) | This
Agreement shall create a continuing security interest in the Collateral and shall (i) remain
in full force and effect until Payment in Full of the Obligations, and (ii) be binding on
each Grantor and all other Persons who become bound as debtor to this Agreement in accordance
with Section 9-203(d) of the Code and shall inure, together with all rights and remedies
of the Collateral Agent and the Noteholders hereunder, to the benefit of the Collateral Agent
and the Noteholders and their respective permitted successors, transferees and assigns. Without
limiting the generality of clause (ii) of the immediately preceding sentence, without notice
to any Grantor, the Collateral Agent and the Noteholders may assign or otherwise transfer
their rights and obligations under this Agreement and any of the other Transaction Documents,
to any other Person and such other Person shall thereupon become vested with all of the benefits
in respect thereof granted to the Collateral Agent and the Noteholders herein or otherwise.
Upon any such assignment or transfer, all references in this Agreement to the Collateral
Agent or any such Noteholder shall mean the assignee of the Collateral Agent or such Noteholder.
None of the rights or obligations of any Grantor hereunder may be assigned or otherwise transferred
without the prior written consent of the Collateral Agent, and any such assignment or transfer
without such consent of the Collateral Agent shall be null and void. |
| (e) | Upon
the Payment in Full of the Obligations, (i) this Agreement and the security interests created
hereby shall terminate and all rights to the Collateral shall revert to the respective Grantor
that granted such security interests hereunder, and (ii) the Collateral Agent will, upon
any Grantor’s request and at such Grantor’s expense, (A) return to such Grantor
such of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant
to the terms hereof and (B) execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such termination, all without any representation, warranty
or recourse whatsoever. |
| (f) | Governing
Law; Jurisdiction; Jury Trial. |
| (i) | All
questions concerning the construction, validity, enforcement and interpretation of this Agreement
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 jurisdictions
other than the State of New York. |
| (ii) | Each
Grantor hereby irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any
dispute hereunder or in connection herewith or under any of the other Transaction Documents
or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim, defense or objection 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. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by mailing a
copy thereof to such party at the address for such notices to it under Section 9 hereof
and agrees that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law. Nothing contained herein shall be deemed or
operate to preclude the Collateral Agent or the Noteholders from bringing suit or taking
other legal action against any Grantor in any other jurisdiction to collect on a Grantor’s
obligations or to enforce a judgment or other court ruling in favor of the Collateral Agent
or a Noteholder. |
| (iii) | WAIVER
OF JURY TRIAL, EACH GRANTOR IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT
TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER
TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. |
| (iv) | Each
Grantor irrevocably and unconditionally waives any right it may have to claim or recover
in any legal action, suit or proceeding referred to in this Section any special, exemplary,
indirect, incidental, punitive or consequential damages. |
| (g) | Section
headings herein are included for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose. |
| (h) | This
Agreement may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which shall be deemed to be an original, but all of which
taken together constitute one and the same Agreement. Delivery of any executed counterpart
of a signature page of this Agreement by pdf, facsimile or other electronic transmission
shall be effective as delivery of a manually executed counterpart of this Agreement. |
| (i) | This
Agreement shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any of the Obligations is rescinded or must otherwise be returned by
the Collateral Agent, any Noteholder or any other Person (upon (i) the occurrence of any
Insolvency Proceeding of any of the Company or any Grantor or (ii) otherwise, in all cases
as though such payment had not been made). |
| SECTION. 11. |
Material Non-Public Information. Upon receipt or
delivery by the Company of any notice in accordance with the terms of this Agreement, unless
the Company has in good faith determined that the matters relating to such notice do not
constitute material, nonpublic information relating to the Company or any of its Subsidiaries,
the Company shall within one (1) Business Day after any such receipt or delivery publicly
disclose such material, nonpublic information on a Current Report on Form 8-K or otherwise.
In the event that the Company believes that a notice contains material, non-public information
relating to the Company or any of its Subsidiaries, the Company so shall indicate to the
Collateral Agent and any applicable Noteholder contemporaneously with delivery of such notice,
and in the absence of any such indication, the Collateral Agent and each Noteholder shall
be allowed to presume that all matters relating to such notice do not constitute material,
non-public information relating to the Company or its Subsidiaries. |
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as
of the date first above written.
GRANTORS:
DUOS
TECHNOLOGIES GROUP, INC.
By:
_________________________________
DUOS
EDGE AI, INC.
By:
_______________________________
ACCEPTED
BY:
Bleichroeder
LP
as
Collateral Agent
By:
_______________________________
Schedule
A
Secured
Equipment List
|
|
|
|
|
|
|
|
SECURED
ASSETS: |
CURRENT
PHYSICAL
LOCATION (as of 7/19/24): |
|
|
|
|
|
UNIT
1 |
EDGE
DATACENTER |
Duos
Technologies |
* |
|
|
7660
Centurion Parkway |
|
|
SERIAL
NUMBER 45388 |
Suite
100 |
|
|
ASSET
TAG NO: 20001100 |
Jacksonville,
FL 32256 |
|
UNIT
INCLUDES: |
|
|
|
30FTX12FT
MANUFACTURED BUILDING |
|
|
|
AIR
CONDITIONING UNIT |
|
|
|
8
CABINETS |
|
|
|
1
UNINTERRUPTED POWER SUPPLY |
|
|
|
1
PDU (Power Distribution Unit) |
|
|
|
1
ATS (Automatic Transfer Switch) |
|
|
|
1400
AMP ELECTRICAL PANEL |
|
|
|
|
|
|
|
BACKUP
GENERATOR |
|
|
|
ASSET
TAG NO: 20001105
|
|
|
|
|
|
|
UNIT
2 |
EDGE
DATACENTER |
Duos
Technologies |
* |
|
|
7660
Centurion Parkway |
|
|
SERIAL
NUMBER 45393 |
Suite
100 |
|
|
ASSET
TAG NO: 20001101 |
Jacksonville,
FL 32256 |
|
UNIT
INCLUDES: |
|
|
|
30FTX12FT
MANUFACTURED BUILDING |
|
|
|
AIR
CONDITIONING UNIT |
|
|
8
CABINETS |
|
|
1
UNINTERRUPTED POWER SUPPLY |
|
|
1
PDU (Power Distribution Unit) |
|
|
1
ATS (Automatic Transfer Switch) |
|
|
1400
AMP ELECTRICAL PANEL |
|
|
BACKUP
GENERATOR |
|
|
ASSET
TAG NO: 20001106
*
Address for Units 1 and 2 will be updated when deployed
|
|
|
|
|
UNIT
3 |
EDGE
DATACENTER |
Servtech |
|
SERIAL
NO 46000 |
333
Centennial Parkway |
|
ASSET
TAG NO: 20001104 |
Louisville,
CO 80027 |
UNIT
INCLUDES: |
|
|
13FTX
45FT MANUFACTURED BUILDING |
will
be deployed to: |
|
15
CABINETS |
5800
Bell Street |
|
1
UNINTERRUPTED POWER SUPPLY |
Amarillo,
TX 79109 |
|
1
PDU (Power Distribution Unit) |
|
|
1
ATS (Automatic Transfer Switch) |
|
|
1
x 1200 AMP ELECTRICAL PANEL |
|
|
2
x 600 AMP ELECTRICAL PANEL |
|
Schedule
B
Secured
Bank Account
Account
Number _______ in the name of Duos Edge AI, Inc. at _____ Bank, National Association.
SCHEDULE
I
Legal
Names; Organizational Identification Numbers; States or Jurisdiction of Organization
Grantor
Name |
State
of Organization |
Federal
Employer ID |
Organizational
I.D. |
Duos
Technologies
Group,
Inc. |
Florida |
65-0493217 |
P94000041346 |
Duos
Edge AI, Inc. |
Florida |
20-8157405 |
P06000153809 |
SCHEDULE
II
Financing
Statement
Financing
statement filed with the Secured Transaction Registry of the State of Florida with regard to each Grantor.
Exhibit 10.3
FORM
OF GUARANTY
This
GUARANTY, dated as of July 22, 2024 (this “Guaranty”), is made by the undersigned (the “Guarantor”),
in favor of Bleichroeder LP, in its capacity as collateral agent (in such capacity, the “Collateral Agent” as hereinafter
further defined) for the Noteholders party to the Notes (each as defined below).
WITNESSETH:
WHEREAS,
Duos Edge AI, Inc., a Florida corporation, with offices located at 7660 Centurion Parkway, Suite 100, Jacksonville, Florida 32256 (the
“Company”), and the Guarantor have issued on the date hereof a promissory note in the principal amount of $680,000
to 21 April Fund LP and a promissory note in the principal amount of $1,520,000 to 21 April Fund Ltd. (21 April Fund LP and 21 April
Fund Ltd., and their successors and assigns, each a "Noteholder" and, collectively, the "Noteholders"
and such promissory notes, as they may be amended, restated, extended, replaced or otherwise modified from time to time in accordance
with the terms thereof, collectively, the "Notes");
WHEREAS,
the Company is a wholly-owned subsidiary of the Guarantor; and
WHEREAS,
the Guarantor has determined that the execution, delivery and performance of this Guaranty directly benefits, and is in the best interest
of, the Guarantor.
NOW,
THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Noteholders to perform under the Notes,
the Guarantor hereby agrees with the Collateral Agent as follows:
SECTION 1. Definitions. Reference is hereby made to the Notes for a statement of the terms thereof. All
terms used in this Guaranty and the recitals hereto which are defined in the Notes, and which are not otherwise defined herein shall
have the same meanings herein as set forth therein. In addition, the following terms when used in the Guaranty shall have the meanings
set forth below:
“Bankruptcy
Code” means Chapter 11 of Title 11 of the United States Code, 11 U.S.C §§ 101 et seq. (or other applicable bankruptcy,
insolvency or similar laws).
“Business
Day” means any day other than Saturday, Sunday or other day on which federal banks in The City of New York are authorized or
required to be closed for the conduct of commercial banking business, provided, however, for clarification, federal 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 other similar orders or restrictions or the closure of physical branch locations at the direction of any governmental
authority so long as the electronic funds transfer systems (including for wire transfers) of federal banks in The City of New York generally
are open for use by customers on such day.
“Capital
Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock (including, without limitation, any warrants, options, rights or other
securities exercisable or convertible into equity interests or securities of such Person), and (ii) with respect to any Person that is
not a corporation, any and all partnership, membership or other equity interests of such Person.
“Collateral”
means the specific assets and properties of the Company and the Guarantor, wherever located and whether now or hereafter existing and
whether now owned or hereafter acquired, of every kind and description, tangible or intangible, described in Section 2 of the
Security Agreement.
“Collateral
Agent” shall have the meaning set forth in the recitals hereto.
“Company”
shall have the meaning set forth in the recitals hereto.
“Governmental
Authority” means any nation or government, any Federal, state, city, town, municipality, county, local, foreign or other political
subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guaranteed
Obligations” shall have the meaning set forth in Section 2 of this Guaranty.
“Guarantor”
shall have the meaning set forth in the recitals hereto.
“Indemnified
Party” shall have the meaning set forth in Section 13(a) of this Guaranty
“Insolvency
Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any
other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, or extensions
generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.
“Notes”
shall have the meaning set forth in the recitals hereto.
“Obligations”
shall have the meaning set forth in Section 3 of the Security Agreement.
“Other
Taxes” shall have the meaning set forth in Section 12(a)(iv) of this Guaranty.
“Paid
in Full” or “Payment in Full” means the indefeasible payment in full in cash of all of the Guaranteed Obligations.
“Person”
means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization,
joint venture or other enterprise or entity or Governmental Authority.
“Security
Agreement” means the Security Agreement, dated as of the date hereof, by the Company and the Guarantor in favor of the Collateral
Agent.
“Subsidiary”
means any Person in which the Guarantor directly or indirectly, (i) owns a majority of the outstanding Capital Stock or equity or similar
interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and
all of the foregoing, collectively, “Subsidiaries”.
“Taxes”
shall have the meaning set forth in Section 12(a) of this Guaranty.
“Transaction
Party” means the Company and the Guarantor, collectively, “Transaction Parties”.
SECTION 2. Guaranty.
(a)
The Guarantor hereby unconditionally and irrevocably, guaranties to the Collateral Agent, for the benefit of the Collateral Agent and
the Noteholders, the punctual payment and performance, as and when due and payable, by stated maturity or otherwise, of all Obligations,
including, without limitation, all interest, make-whole and other amounts that accrue after the commencement of any Insolvency Proceeding
of the Company or the Guarantor, whether or not the payment of such interest, make-whole and/or other amounts are enforceable or are
allowable in such Insolvency Proceeding, and all fees, interest, premiums, penalties, causes of actions, costs, commissions, expense
reimbursements, indemnifications and all other amounts due or to become due under any of the Transaction Documents (all of the foregoing
collectively being the “Guaranteed Obligations”), and agrees to pay any and all reasonable costs and expenses (including
counsel fees and expenses) incurred by the Collateral Agent in enforcing any rights under this Guaranty or any other Transaction Document.
Without limiting the generality of the foregoing, the Guarantor’s liability hereunder shall extend to all amounts that constitute
part of the Guaranteed Obligations and would be owed by the Company to the Collateral Agent or any Noteholders under the Notes and any
other Transaction Document but for the fact that they are unenforceable or not allowable due to the existence of an Insolvency Proceeding
involving any Transaction Party.
(b)
The Guarantor, and by its acceptance of this Guaranty, the Collateral Agent and each Noteholder, hereby confirms that it is the intention
of all such Persons that this Guaranty and the Guaranteed Obligations of the Guarantor hereunder not constitute a fraudulent transfer
or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar foreign, federal, provincial, state, or other applicable law to the extent applicable to this Guaranty and the Guaranteed Obligations
of the Guarantor hereunder. To effectuate the foregoing intention, the Collateral Agent, the Noteholders and the Guarantor hereby irrevocably
agree that the Guaranteed Obligations of the Guarantor under this Guaranty at any time shall be limited to the maximum amount as will
result in the Guaranteed Obligations of the Guarantor under this Guaranty not constituting a fraudulent transfer or conveyance.
SECTION 3. Guaranty Absolute; Continuing Guaranty; Assignments.
(a)
The Guarantor guaranties that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Transaction Documents,
regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of
the Collateral Agent or any Noteholder with respect thereto. The obligations of the Guarantor under this Guaranty are independent of
the Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against the Guarantor to enforce such obligations,
irrespective of whether any action is brought against any Transaction Party or whether any Transaction Party is joined in any such action
or actions. The liability of the Guarantor under this Guaranty shall be as a primary obligor (and not merely as a surety) and shall be
irrevocable, absolute and unconditional irrespective of, and the Guarantor hereby irrevocably waives, to the extent permitted by law,
any defenses it may now or hereafter have in any way relating to, any or all of the following:
(i)
any lack of validity or enforceability of any Transaction Document;
(ii)
any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other
amendment or waiver of or any consent to departure from any Transaction Document, including, without limitation, any increase in the
Guaranteed Obligations resulting from the extension of additional credit to any Transaction Party or extension of the maturity of any
Guaranteed Obligations or otherwise;
(iii)
any taking, exchange, release or non-perfection of any Collateral;
(iv)
any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;
(v)
any change, restructuring or termination of the corporate, limited liability company or partnership structure or existence of any Transaction
Party;
(vi)
any manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or
any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Guaranteed Obligations or any
other Obligations of any Transaction Party under the Transaction Documents or any other assets of any Transaction Party or any of its
Subsidiaries;
(vii)
any failure of the Collateral Agent or any Noteholder to disclose to any Transaction Party any information relating to the business,
condition (financial or otherwise), operations, performance, properties or prospects of any other Transaction Party now or hereafter
known to the Collateral Agent or any Noteholder (the Guarantor waiving any duty on the part of the Collateral Agent or any Noteholder
to disclose such information);
(viii)
taking any action in furtherance of the release of the Guarantor or any other Person that is liable for the Obligations from all or any
part of any liability arising under or in connection with any Transaction Document without the prior written consent of the Collateral
Agent; or
(ix)
any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation
by the Collateral Agent or any Noteholder that might otherwise constitute a defense available to, or a discharge of, any Transaction
Party or any other guarantor or surety.
(b)
This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed
Obligations is rescinded or must otherwise be returned by the Collateral Agent, any Noteholder, or any other Person upon the insolvency,
bankruptcy or reorganization of any Transaction Party or otherwise, all as though such payment had not been made.
(c)
This Guaranty is a continuing guaranty, and not merely a guaranty of collection and shall (i) remain in full force and effect until Payment
in Full of the Guaranteed Obligations (other than inchoate indemnity obligations) and shall not terminate for any reason prior to the
respective Maturity Date of each Note (other than Payment in Full of the Guaranteed Obligations) and (ii) be binding upon the Guarantor
and its respective successors and assigns. This Guaranty shall inure to the benefit of and be enforceable by the Collateral Agent, the
Noteholders, and their respective successors, and permitted pledgees, transferees and assigns. Without limiting the generality of the
foregoing sentence, the Collateral Agent or any Noteholder may pledge, assign or otherwise transfer all or any portion of its rights
and obligations under and subject to the terms of any Transaction Document to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to the Collateral Agent or such Noteholder (as applicable) herein or otherwise,
in each case as provided in the Notes or such Transaction Document.
SECTION 4. Waivers. To the extent permitted by applicable law, the Guarantor hereby waives promptness, diligence,
protest, notice of acceptance and any other notice or formality of any kind with respect to any of the Guaranteed Obligations and this
Guaranty and any requirement that the Collateral Agent exhaust any right or take any action against any Transaction Party or any other
Person or any Collateral. The Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements
contemplated herein and that the waiver set forth in this Section 4 is knowingly made in contemplation of such benefits. The Guarantor
hereby waives any right to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed
Obligations, whether existing now or in the future. Without limiting the foregoing, to the extent permitted by applicable law, the Guarantor
hereby unconditionally and irrevocably waives (a) any defense arising by reason of any claim or defense based upon ·an election
of remedies by the Collateral Agent or any Noteholder that in any manner impairs, reduces, releases or otherwise adversely affects the
subrogation, reimbursement, exoneration, contribution or indemnification rights of the Guarantor or other rights of the Guarantor to
proceed against any of the other Transaction Parties, any other guarantor or any other Person or any Collateral, and (b) any defense
based on any right of set-off or counterclaim against or in respect of the Guaranteed Obligations of the Guarantor hereunder. The Guarantor
hereby unconditionally and irrevocably waives any duty on the part of the Collateral Agent or any Noteholder to disclose to the Guarantor
any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects
of any other Transaction Party or any of its Subsidiaries now or hereafter known by the Collateral Agent or a Noteholder.
SECTION 5. Subrogation. The Guarantor may not exercise any rights that it may now or hereafter acquire against
any Transaction Party or any other guarantor that arise from the existence, payment, performance or enforcement of the Guarantor’s
obligations under this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the Collateral Agent or any Noteholder against any Transaction
Party or any other guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute
or common law, including, without limitation, the right to take or receive from any Transaction Party or any other guarantor, directly
or indirectly, in cash or other property or by set-off or in any other manner, payment or security solely on account of such claim, remedy
or right, unless and until there has been Payment in Full of the Guaranteed Obligations. If any amount shall be paid to the Guarantor
in violation of the immediately preceding sentence at any time prior to Payment in Full of the Guaranteed Obligations and all other amounts
payable under this Guaranty, such amount shall be held in trust for the benefit of the Collateral Agent and shall forthwith be paid to
the Collateral Agent to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether
matured or unmatured, in accordance with the terms of the Transaction Document, or to be held as Collateral for any Guaranteed Obligations
or other amounts payable under this Guaranty thereafter arising. If (a) the Guarantor shall make payment to the Collateral Agent of all
or any part of the Guaranteed Obligations, and (b) there has been Payment in Full of the Guaranteed Obligations, the Collateral Agent
will, at the Guarantor’s request and expense, execute and deliver to the Guarantor appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by subrogation to the Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by the Guarantor.
SECTION 6. Representations, Warranties and Covenants.
(a)
The Guarantor hereby represents and warrants as of the date first written above as follows:
(i)
the Guarantor (A) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization
as set forth on the signature pages hereto, (B) has all requisite corporate, limited liability company or limited partnership power and
authority to conduct its business as now conducted and as presently contemplated and to execute, deliver and perform its obligations
under this Guaranty and each other Transaction Document to which the Guarantor is a party, and to consummate the transactions contemplated
hereby and thereby and (C) is duly qualified to do business and is 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 except where the failure
to be so qualified (individually or in the aggregate) would not result in a Material Adverse Effect.
(ii)
The execution, delivery and performance by the Guarantor of this Guaranty and each other Transaction Document to which the Guarantor
is a party (A) have been duly authorized by all necessary corporate actions, (B) do not and will not contravene its charter, articles,
certificate of formation or by-laws, as applicable, or any applicable law or any contractual restriction binding on the Guarantor or
its properties, (C) do not and will not result in or require the creation of any lien, security interest or encumbrance (other than pursuant
to any Transaction Document) upon or with respect to any of its properties, and (D) do not and will not result in any default, noncompliance,
suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to
it or its operations or any of its properties.
(iii)
No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or other Person is required
in connection with the due execution, delivery and performance by the Guarantor of this Guaranty or any of the other Transaction Documents
to which the Guarantor is a party (other than expressly provided for in any of the Transaction Documents).
(iv)
This Guaranty has been duly executed and delivered by the Guarantor and is, and each of the other Transaction Documents to which the
Guarantor is or will be a party, when executed and delivered, will be, a legal, valid and binding obligation of the Guarantor, enforceable
against the Guarantor in accordance with its terms, except as may be limited by the Bankruptcy Code or other applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, suretyship or similar laws and equitable principles (regardless of whether enforcement
is sought in equity or at law).
(v)
There is no pending or, to the knowledge of the Guarantor, threatened action, suit or proceeding against the Guarantor or to which any
of the properties of the Guarantor is subject, before any court or other Governmental Authority or any arbitrator that (A) if adversely
determined, could reasonably be expected to have a Material Adverse Effect or (B) relates to this Guaranty or any of the other Transaction
Documents to which the Guarantor is a party or any transaction contemplated hereby or thereby.
(vi)
The Guarantor (A) has read and understands the terms and conditions of the Notes and the other Transaction Documents, and (B) now has
and will continue to have independent means of obtaining information concerning the affairs, financial condition and business of the
Company and the other Transaction Parties, and has no need of, or right to obtain from the Collateral Agent or any Noteholder, any credit
or other information concerning the affairs, financial condition or business of the Company or the other Transaction Parties.
(vii)
There are no conditions precedent to the effectiveness of this Guaranty that have not been satisfied or waived.
(b)
The Guarantor covenants and agrees that until Payment in Full of the Guaranteed Obligations, it will comply with each of the covenants
(except to the extent applicable only to a public company) which are set forth in Section 5 of the Notes as if the Guarantor were
a party thereto.
SECTION 7. Right of Set-off. Upon the occurrence and during the continuance of any Event of Default, the
Collateral Agent and any Noteholder may, and is hereby authorized to, at any time and from time to time, without notice to the Guarantor
(any such notice being expressly waived by the Guarantor) and to the fullest extent permitted by law, set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Collateral
Agent or any Noteholder to or for the credit or the account of the Guarantor against any and all obligations of the Guarantor now or
hereafter existing under this Guaranty or any other Transaction Document, irrespective of whether or not the Collateral Agent or any
Noteholder shall have made any demand under this Guaranty or any other Transaction Document and although such obligations may be contingent
or unmatured. The Collateral Agent and each Noteholder agrees to notify the Guarantor promptly after any such set-off and application
made by the Collateral Agent or such Noteholder, provided that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Collateral Agent or any Noteholder under this Section 7 are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which the Collateral Agent or such Noteholder may have under this
Guaranty or any other Transaction Document in law or otherwise.
SECTION 8. Limitation on Guaranteed Obligations.
(a)
Notwithstanding any provision herein contained to the contrary, the Guarantor’s liability hereunder shall be limited to an amount
not to exceed as of any date of determination the greater of:
(i)
the amount of all Guaranteed Obligations, plus interest thereon at the applicable Interest Rate as specified in the Note; and
(ii)
the amount which could be claimed by the Collateral Agent from the Guarantor under this Guaranty without rendering such claim voidable
or avoidable under the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act
or similar statute or common law after taking into account, among other things, Guarantor’s right of contribution and indemnification.
(b)
The Guarantor agrees that the Guaranteed Obligations may at any time and from time to time exceed the amount of the liability of the
Guarantor hereunder without impairing the guaranty hereunder or affecting the rights and remedies of the Collateral Agent or any Noteholder
hereunder or under applicable law.
(c)
No payment made by the Company, the Guarantor, any other guarantor or any other Person or received or collected by the Collateral Agent
or any Noteholder from the Company, the Guarantor, any other guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Guaranteed Obligations
shall be deemed to modify, reduce, release or otherwise affect the liability of the Guarantor hereunder which shall, notwithstanding
any such payment (other than any payment made by the Guarantor in respect of the Guaranteed Obligations or any payment received or collected
from the Guarantor in respect of the Guaranteed Obligations), remain liable for the Guaranteed Obligations up to the maximum liability
of the Guarantor hereunder until after all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have
been Paid in Full.
SECTION 9. Notices, Etc. Any notices, consents, waivers or other communications required or permitted to
be given under the terms of this Guaranty must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (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 courier service
with next day delivery specified, in each case, properly addressed to the party to receive the same. All notices and other communications
provided for hereunder shall be sent, if to the Guarantor, to its address and/or facsimile number, or if to the Collateral Agent or any
Noteholder, to the Collateral Agent’s address and/or facsimile number, each as set forth on the signature pages hereto.
SECTION
10. Governing Law; Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of
this Guaranty 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 Guarantor hereby irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or under any of the other Transaction Documents or with any transaction contemplated hereby or thereby, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim, obligation or defense 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. Each party hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing’ a copy thereof to such party at the address for such notices to
it as provided in Section 9 and agrees that such service shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained
herein shall be deemed or operate to preclude the Collateral Agent or the Noteholders from bringing suit or taking other legal action
against the Guarantor in any other jurisdiction to collect on the Guarantor’s obligations or to enforce a judgment or other court
ruling in favor of the Collateral Agent or a Noteholder.
SECTION
11. WAIVER OF JURY TRIAL, ETC. THE GUARANTOR 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 UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT
OF THIS GUARANTY, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
SECTION
12. Taxes.
(a)
Subject to applicable law, all payments made by the Guarantor hereunder or under any other Transaction Document shall be made in accordance
with the terms of the respective Transaction Document and shall be made without set-off, counterclaim, withholding, deduction or other
defense. Without limiting the foregoing and subject to applicable law, all such payments shall be made free and clear of and without
deduction or withholding for any present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding taxes imposed on the net income of the Collateral Agent or any Noteholder by the jurisdiction in which
the Collateral Agent or such Noteholder is organized or where it has its principal lending office (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities, collectively or individually, “Taxes”). If the Guarantor
shall be required to deduct or to withhold any Taxes from or in respect of any amount payable hereunder or under any other Transaction
Document:
(i)
the amount so payable shall be increased to the extent necessary so that after making all required deductions and withholdings (including
Taxes on amounts payable to the Collateral Agent or any Noteholder pursuant to this sentence) the Collateral Agent or each Noteholder
receives an amount equal to the sum it would have received had no such deduction or withholding been made,
(ii)
the Guarantor shall make such deduction or withholding,
(iii)
the Guarantor shall pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law,
and
(iv)
as promptly as possible thereafter, the Guarantor shall send the Collateral Agent or each Noteholder an official receipt (or, if an official
receipt is not available, such other documentation as shall be satisfactory to the Collateral Agent or such Noteholder, as the case may
be) showing payment. In addition, the Guarantor agrees to pay any present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery, registration or
enforcement of, or otherwise with respect to, this Guaranty or any other Transaction Document (collectively, “Other Taxes”).
(b)
The Guarantor hereby indemnifies and agrees to hold each Indemnified Party harmless from and against Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 12) paid by any
Indemnified Party as a result of any payment made hereunder or from the execution, delivery, registration or enforcement of, or otherwise
with respect to, this Guaranty or any other Transaction Document, and any liability (including penalties, interest and expenses for nonpayment,
late payment or otherwise) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be paid within thirty (30) days from the date on which the Collateral Agent or such Noteholder makes
written demand therefor, which demand shall ·identify the nature and amount of such Taxes or Other Taxes.
(c)
If· the Guarantor fails to perform any of its obligations under this Section 12, the Guarantor shall indemnify the Collateral
Agent and each Noteholder for any taxes, interest or penalties that may become payable as a result of any such failure. The obligations
of the Guarantor under this Section 12 shall survive the termination of this Guaranty and the payment of the Obligations and all
other amounts payable hereunder.
SECTION
13. Indemnification.
(a)
Without limitation of any other obligations of the Guarantor or remedies of the Collateral Agent or the Noteholders under this Guaranty
or applicable law, except to the extent resulting from such Indemnified Party’s gross negligence or willful misconduct, as determined
by a final judgment of a court of competent jurisdiction no longer subject to appeal, the Guarantor shall, to the fullest extent permitted
by law, indemnify, defend and save and hold harmless the Collateral Agent and each Noteholder and each of their affiliates and their
respective officers, directors, members, managers, employees, agents and advisors (each, an “Indemnified Party”) from
and against, and shall pay on demand, any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable
fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party in connection with or as a
result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of any Transaction Party enforceable
against such Transaction Party in accordance with their terms.
(b)
The Guarantor hereby also agrees that none of the Indemnified Parties shall have any liability (whether direct or indirect, in contract,
tort or otherwise) or any fiduciary duty or obligation to the Guarantor or any of its affiliates or any of their respective officers,
directors, employees, agents and advisors, and the Guarantor hereby agrees not to assert any claim against any Indemnified Party on any
theory of liability, for special, indirect, consequential, incidental or punitive damages arising out of or otherwise relating to the
facilities, the actual or proposed use of the proceeds of the advances, the Transaction Documents or any of the transactions contemplated
by the Transaction Documents.
SECTION
14. Miscellaneous.
(a)
The Guarantor will make each payment hereunder in lawful money of the United States of America and in immediately available funds to
the Collateral Agent or each Noteholder, at such address specified by the Collateral Agent or such Noteholder from time to time by notice
to the Guarantor.
(b)
No amendment or waiver of any provision of this Guaranty and no consent to any departure by the Guarantor therefrom shall in any event
be effective unless the same shall be in writing and signed by the Guarantor, the Collateral Agent and each Noteholder, and then such
waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
(c)
No failure on the part of the Collateral Agent or any Noteholder to exercise, and no delay in exercising, any right or remedy hereunder
or under any other Transaction Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder
or under any Transaction Document preclude any other or further exercise thereof or the exercise of any other right or remedy. The rights
and remedies of the Collateral Agent and the Noteholders provided herein and in the other Transaction Documents are cumulative and are
in addition to, and not exclusive of, any rights or remedies provided by law. The rights and remedies of the Collateral Agent and the
Noteholders under any Transaction Document against any party thereto are not conditional or contingent on any attempt by the Collateral
Agent or any Noteholders to exercise any of their respective rights or remedies under any other Transaction Document against such party
or against any other Person.
(d)
Any provision of this Guaranty that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
(e)
This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until Payment in Full of the Guaranteed Obligations
(other than inchoate indemnity obligations) and shall not terminate for any reason prior to the respective Maturity Date of the Note
(other than Payment in Full of the Guaranteed Obligations) and (ii) be binding upon the Guarantor and its successors and assigns. This
Guaranty shall inure, together with all rights and remedies of the Collateral Agent hereunder, to the benefit of and be enforceable by
the Collateral Agent, the Noteholders, and their respective successors, and permitted pledgees, transferees and assigns. Without limiting
the generality of the foregoing sentence, the Collateral Agent or any Noteholder may pledge, assign or otherwise transfer all or any
portion of its rights and obligations under and subject to the terms of the Notes or any other Transaction Document to any other Person
in accordance with the terms thereof, and such other Person shall thereupon become vested with all the benefits in respect thereof granted
to the Collateral Agent or such Noteholder (as applicable) herein or otherwise, in each case as provided in the Notes or such Transaction
Document. None of the rights or obligations· of the Guarantor hereunder may be assigned or otherwise transferred without the prior
written consent of each Noteholder.
(f)
This Guaranty and the other Transaction Documents reflect the entire understanding of the transaction contemplated hereby and shall not
be contradicted or qualified by any other agreement, oral or written, entered into before the date hereof.
(g)
Section headings herein are included for convenience of reference only and shall not constitute a part of this Guaranty for any other
purpose.
SECTION
15. Currency Indemnity.
If,
for the purpose of obtaining or enforcing judgment against the Guarantor in any court in any jurisdiction, it becomes necessary to convert
into any other currency (such other currency being hereinafter in this Section 15 referred to as the “Judgment Currency”)
an amount due under this Guaranty in any currency (the “Obligation Currency”) other than the Judgment Currency, the
conversion shall be made at the rate of exchange prevailing on the Business Day immediately preceding (a) the date of actual payment
of the amount due, in the case of any proceeding in the courts of the jurisdiction that will give effect to such conversion being made
on such date, or (b) the date on which the judgment is given, in the case of any proceeding in the courts of any other jurisdiction (the
applicable date as of which such conversion is made pursuant to this Section 15 being hereinafter in this Section 15 referred
to as the “Judgment Conversion Date”).
If,
in the case of any proceeding in the court of any jurisdiction referred to in the preceding paragraph, there is a change in the rate
of exchange prevailing between the Judgment Conversion Date and the date of actual receipt of the amount due in immediately available
funds, the Guarantor shall pay such additional amount (if any, but in any event not a lesser amount) as may be necessary to ensure that
the amount actually received in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been purchased with the amount of’ the Judgment Currency stipulated
in the judgment or judicial order at the rate of exchange prevailing on the Judgment Conversion Date. Any amount due from the Guarantor
under this Section 15 shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts
due under or in respect of this Guaranty.
IN
WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed by its duly authorized officer, as of the date first above written.
GUARANTOR:
DUOS
TECHNOLOGIES GROUP, INC.
By:___________________________________________
Name:
_________________________________________
Title: __________________________________________
Notice
Address:
Duos
Technologies Group, Inc.
7660
Centurion Parkway
Suite
100
Jacksonville,
Florida 32286
Attn:
Adrian Goldfarb
Facsimile:
(904) 701-0052
[Signature
Page to Guaranty]
ACCEPTED
BY:
BLEICHROEDER
LP,
as
Collateral Agent
By:
___________________________
Name:
Michael M. Kellen
Title:
Authorized Person
Notice
Address:
Bleichroeder
LP
1345
Avenue of the Americas
47th
Floor
New
York, NY 10105
Attn:
Michael M. Kellen
Email:
michael.kellen@bleichroederlp.com
[Signature
Page to Guaranty]
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