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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
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):
February 28, 2025
Clean Energy Technologies, Inc.
(Exact name of registrant as specified in its charter)
| 001-41654 |
|
20-2675800 |
(Commission
File Number) |
|
(IRS Employer
Identification Number) |
|
1340 Reynolds Avenue, Unit 120
Irvine, CA |
|
92614 |
| (Address of Principal Executive Offices) |
|
(Zip Code) |
(949) 273-4990
(Registrant’s telephone number, including
area code)
N/A
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
|
| ☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
|
| ☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR240.14d-2(b)) |
| |
|
| ☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR240.13e-4(c)) |
Securities registered pursuant to Section 12(b)
of the Act:
| Title of Each Class |
|
Trading Symbol(s) |
|
Name of Each Exchange on Which Registered |
| Common Stock, par value $0.001 |
|
CETY |
|
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 (17 CFR §230.405) or Rule 12b-2 of the Securities
Exchange Act of 1934 (17 CFR §240.12b-2).
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.
Effective February 28, 2025, Clean Energy Technologies,
Inc. (the “Company”), entered into a securities purchase agreement (the “SPA”) with Mast Hill Fund,
L.P., a Delaware limited partnership (“Mast Hill”), pursuant to which the Company sold, and Mast Hill purchased, (i)
a junior secured convertible promissory note in the principal amount of $620,000 (the “Note”), and (ii) warrants to
purchase 310,000 shares of Company common stock (the “Warrants”), for an aggregate purchase price of $558,000 (the
“Transaction”).
The Transaction closed on February 28, 2025, and
on such date pursuant to the SPA, Mast Hill’s legal expenses of $8,000 were paid from the gross purchase price, the Company’s
senior secured lender, Nations Interbanc, was paid $50,000 directly by Mast Hill from closing proceeds for the Company’s benefit,
the Company received net funding of $500,000, and the Note and Warrants were issued to Mast Hill.
The SPA includes customary representations, warranties
and covenants by the Company and customary closing conditions. The SPA requires that the proceeds from the Transaction be used for the
payment of Nations Interbanc, working capital, and business development, but not for repayment of indebtedness owed to officers, directors
or employees of the Company or their affiliates, the repayment of any debt issued in corporate finance transactions, any loan to or investment
in any other corporation, partnership, enterprise or other person (except in connection with the Company’s currently existing operations),
or any loan, credit, or advance to any officers, directors, employees, or affiliates of the Company. The SPA also (i) requires the Company
to hold a special meeting of its shareholders, on or before the date that is 60 calendar days after the first date (after the date of
the SPA) that the Company’s common stock has traded at a price per share of less than $0.50, for the purpose of obtaining shareholder
approval to issue shares of Company common stock to Mast Hill in excess of the Exchange Cap (as defined below), pursuant to Nasdaq’s
listing rules, and (ii) prohibits the issuance of more than 9,156,726 shares of Company common stock (the “Exchange Cap”)
to Mast Hill in the aggregate until shareholder approval has been obtained.
The Note matures 12 months following the issue
date, accrues guaranteed interest of 10% per annum (with the first 12 months of interest guaranteed and earned in full as of issuance
of the Note), and is secured by a junior security interest (subordinate to the Company’s senior secured lender, Nations Interbanc)
in all of the assets of the Company. The Note is convertible into shares of the Company’s common stock at the election of the holder
at a conversion price equal to the lesser of (i) $2.50/share, or (ii) 90% of the lowest dollar volume-weighted average price (during the
period from 9:30 a.m. to 4 pm ET) on any trading day during the 5 trading days prior to the conversion date; provided, however, that the
holder may not convert the Note to the extent that such conversion would result in the holder’s beneficial ownership of the Company’s
common stock being in excess of 4.99% of the Company’s issued and outstanding common stock. Additionally, the holder of the Note
is entitled to deduct $1,750 from the conversion amount in each note conversion to cover the holder’s fees associated with the conversion.
The Warrants have a 5-year term, are exercisable
on a cashless basis, and have an exercise price of $2.50, subject to adjustment as provided in the Warrants.
The foregoing descriptions of the SPA, Note, and
Warrants do not purport to be complete and are qualified in their entirety by reference to the full text of those agreements, copies of
which are filed as Exhibits 10.1-10.3, respectively, to this Current Report on Form 8-K and incorporated by reference herein.
Item 2.03. Creation of a Direct Financial Obligation
or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The disclosure provided above in Item 1.01 above
is incorporated by reference into this Item 2.03.
Item 3.02. Unregistered Sales of Equity Securities.
The disclosure provided above in Item 1.01 above
is incorporated by reference into this Item 3.02. The Note and Warrants were sold in reliance on the exemption from registration provided
by Section 4(a)(2) of the Securities Act of 1933, as amended, as there was no general solicitation, and the issuances did not involve
a public offering.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
* Filed herewith.
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, hereunder duly
authorized.
| |
CLEAN ENERGY TECHNOLOGIES, INC. |
| |
|
|
| Dated: March 3, 2025 |
By: |
/s/ Kambiz Mahdi |
| |
|
Kambiz Mahdi |
| |
|
Chief Executive Officer |
Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of February 27, 2025, by and between CLEAN ENERGY TECHNOLOGIES, INC.,
a Nevada corporation, with headquarters located at 1340 Reynolds Avenue Unit 120, Irvine, CA 92614 (the “Company”), and MAST
HILL FUND, L.P., a Delaware limited partnership, with its address at 150 Grossman Drive, Suite 205, Braintree, MA 02184 (the “Buyer”).
WHEREAS:
A. The Company
and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”) and Rule 506(b) promulgated by the United States Securities
and Exchange Commission (the “SEC”) under the 1933 Act; and
B. Buyer desires
to purchase from the Company, and the Company desires to issue and sell to the Buyer, upon the terms and conditions set forth in this
Agreement, a junior secured promissory note of the Company, in the aggregate principal amount of $620,000.00 (as the principal amount
thereof may be increased pursuant to the terms thereof, and together with any note(s) issued in replacement thereof or as a dividend thereon
or otherwise with respect thereto in accordance with the terms thereof, in the form attached hereto as Exhibit A, the “Note”),
convertible into shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”), upon the terms and
subject to the limitations and conditions set forth in such Note; and
C. The Buyer wishes
to purchase, upon the terms and conditions stated in this Agreement, such principal amount of the Note as is set forth immediately below
its name on the signature pages hereto; and
D. The Company
wishes to issue a common stock purchase warrant to purchase 310,000 shares of Common Stock (the “Warrants”), to the Buyer
as additional consideration for the purchase of the Note, which shall be earned in full as of the Closing Date, as further provided herein;
and
E. In connection
with this Agreement, the Company, the Subsidiaries (as defined below) and the Buyer have entered into an amendment to the security agreement,
a form of which is attached hereto as Exhibit “C” (the “Security Agreement Amendment”); and
F. In connection
with this Agreement, the Company, MGW Investments I Limited (“MGW”), and the Buyer, have entered into a voting agreement (the
“Voting Agreement”), a form of which is attached hereto as Exhibit “D”.
NOW THEREFORE,
in consideration of the foregoing and of the agreements and covenants herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Company and the Buyer hereby agree as follows:
1. Purchase and Sale of Note.
a. Purchase
of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer, and the Buyer agrees to purchase from
the Company, the Note, as further provided herein. As used in this Agreement, the term “business day” shall mean any day other
than a Saturday, Sunday, or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive
order to remain closed.
b.
Form of Payment. On the Closing Date: (i) the Buyer shall pay the purchase price of $558,000.00 (the “Purchase Price”)
for the Note, to be issued and sold to it at the Closing (as defined below), by wire transfer of immediately available funds to the Company,
in accordance with the Company’s written wiring instructions, against delivery of the Note, and (ii) the Company shall deliver such
duly executed Note and Warrants on behalf of the Company, to the Buyer, against delivery of such Purchase Price. On the Closing Date,
the Buyer shall withhold a non-accountable sum of $8,000.00 from the Purchase Price to cover the Buyer’s legal fees in connection
with the transactions contemplated by this Agreement.
c.
Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below,
the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be on
the date that the Purchase Price for the Note is paid by Buyer pursuant to terms of this Agreement.
d. Closing.
The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location
as may be agreed to by the parties (including via exchange of electronic signatures).
1A. Warrants. On
or before the Closing Date, the Company shall issue the Warrants to the Buyer pursuant to the terms contained therein, which shall be
earned in full as of the Closing Date.
2. Buyer’s Representations and
Warranties. The Buyer represents and warrants to the Company as of the Closing Date that:
a. Investment
Purpose. As of the Closing Date, the Buyer is purchasing the Note and Warrants (the Note, Warrants, shares of Common Stock issuable
upon conversion of or otherwise pursuant to the Note (the “Conversion Shares”), and shares of Common Stock issuable upon exercise
of or otherwise pursuant to the Warrants (the “Exercise Shares”) shall collectively be referred to herein as the “Securities”)
for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or
exempted from registration under the 1933 Act; provided, however, that by making the representations herein, the Buyer does
not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at
any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.
b. Accredited
Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited
Investor”).
c. Reliance
on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions from
the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy
of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer
set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.
d. Information.
The Buyer and its advisors, if any, have been, and for so long as the Note remains outstanding will continue to be, furnished with all
materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities
which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for so long as the Note remains
outstanding will continue to be, afforded the opportunity to ask questions of the Company regarding its business and affairs. Notwithstanding
the foregoing, the Company has not disclosed to the Buyer any material nonpublic information regarding the Company or otherwise and will
not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to the
Buyer. Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall
modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below.
e. Governmental
Review. The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed
upon or made any recommendation or endorsement of the Securities.
f. Transfer or
Re-sale. The Buyer understands that (i) the sale or resale of the Securities has not been and is not being registered under the 1933
Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities are sold pursuant to
an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to the Company, at the cost of the Company,
an opinion of counsel (which may be the Legal Counsel Opinion (as defined below)) that shall be in form, substance and scope customary
for opinions of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration, which opinion shall be accepted by the Company, (c) the Securities are sold or transferred
to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”))
of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited
Investor, (d) the Securities are sold pursuant to Rule 144 or other applicable exemption, or (e) the Securities are sold pursuant to
Regulation S under the 1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have delivered to the Company,
at the cost of the Company, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate
transactions, which opinion shall be accepted by the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made
only in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances
in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the
1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and
(iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder (in each case).
g. Legends.
The Buyer understands that until such time as the Note, Warrants, Conversion Shares, and/or Exercise Shares, have been registered under
the 1933 Act or may be sold pursuant to Rule 144, Rule 144A under the 1933 Act, Regulation S, or other applicable exemption without any
restriction as to the number of securities as of a particular date that can then be immediately sold, the Securities may bear a restrictive
legend in substantially the following form (and a stop-transfer order may be placed against transfer of such Securities):
“NEITHER THE ISSUANCE AND
SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE/EXERCISABLE] HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A, REGULATION S, OR OTHER APPLICABLE
EXEMPTION UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
The legend set
forth above shall be removed and the Company shall issue a certificate or book entry statement for the applicable shares of Common Stock
without such legend to the holder of any Security upon which it is stamped or (as requested by such holder) issue the applicable shares
of Common Stock to such holder by electronic delivery by crediting the account of such holder’s broker with The Depository Trust
Company (“DTC”), if, unless otherwise required by applicable state securities laws, (a) such Security is registered
for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144, Rule 144A,
Regulation S, or other applicable exemption without any restriction as to the number of securities as of a particular date that can then
be immediately sold, or (b) the Company or the Buyer provides the Legal Counsel Opinion (as contemplated by and in accordance with Section
4(l) hereof) to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which
opinion shall be accepted by the Company so that the sale or transfer is effected. The Company shall be responsible for the fees of its
transfer agent and all DTC fees associated with any such issuance. The Buyer agrees to sell all Securities, including those represented
by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any. In
the event that the Company does not accept the opinion of counsel (which may be the Legal Counsel Opinion) provided by the Buyer with
respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144, Rule 144A, Regulation S, or other
applicable exemption at the Deadline (as defined in the Note), it will be considered an Event of Default pursuant to Section 3.2 of the
Note.
h. Authorization;
Enforcement. This Agreement has been duly and validly authorized by the Buyer and has been duly executed and delivered on behalf of
the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights
generally and except as may be limited by the exercise of judicial discretion in applying principles of equity.
3. Representations and Warranties of
the Company. The Company represents and warrants to the Buyer as of the Closing Date that:
a. Organization
and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is incorporated or formed, with full power and authority (corporate
and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and
conducted. The SEC Documents set forth a list of all of the Subsidiaries of the Company and the jurisdiction in which each is incorporated.
The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction
in which its ownership or use of property or the nature of the business conducted by it makes such qualification necessary except where
the failure to be so qualified or in good standing would not have a Material Adverse Effect. “Material Adverse Effect” means
any material adverse effect on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries,
if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection
herewith. “Subsidiaries” means any corporation or other organization, whether incorporated or unincorporated, in which the
Company owns, directly or indirectly, any equity or other ownership interest.
b. Authorization;
Enforcement. The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Note, and to
consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof,
(ii) the execution and delivery of this Agreement, the Warrants, the Note, Conversion Shares, and the Exercise Shares by the Company and
the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Note, Warrants,
as well as the issuance and reservation for issuance of the Conversion Shares and Exercise Shares issuable upon conversion of the Note
and/or exercise of the Warrants) have been duly authorized by the Company’s Board of Directors and no further consent or authorization
of the Company, its Board of Directors, its shareholders, or its debt holders is required, (iii) this Agreement, Warrants, and the Note
(together with any other instruments executed in connection herewith or therewith) have been duly executed and delivered by the Company
by its authorized representative, and such authorized representative is the true and official representative with authority to sign this
Agreement, the Note, the Warrants, and the other instruments documents executed in connection herewith or therewith and bind the Company
accordingly, and (iv) this Agreement constitutes, and upon execution and delivery by the Company of the Note and Warrants, each of such
instruments will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with
their terms.
c. Capitalization;
Governing Documents. As of February 27, 2025, the authorized capital stock of the Company consists of: 2,000,000,000 authorized shares
of Common Stock, of which 46,695,637 shares were issued and outstanding, and 20,000,000 authorized shares of preferred stock, of which
877,774 shares of Series E convertible preferred stock were issued and outstanding. All of such outstanding shares of capital stock of
the Company, the Conversion Shares and the Exercise Shares are, or upon issuance will be, duly authorized, validly issued, fully paid
and non-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders
of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. As of the effective date of
this Agreement, other than as publicly announced prior to such date and reflected in the SEC Documents of the Company (i) there are no
outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims
or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any
shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements
or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities
under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company
(or in any agreement providing rights to security holders) that will be triggered by the issuance of any of the Securities. The Company
has furnished to the Buyer true and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof
(“Certificate of Incorporation”), the Company’s By-laws, as in effect on the date hereof (the “By-laws”),
and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders
thereof in respect thereto.
d. Issuance
of Conversion Shares and Exercise Shares. The Conversion Shares and Exercise Shares are duly authorized and reserved for issuance
and, upon conversion of the Note and/or exercise of the Warrants in accordance with its terms, will be validly issued, fully paid and
non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to
preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.
e. Issuance
of Warrants. The issuance of the Warrants are duly authorized and will be validly issued, fully paid and non-assessable, and free
from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other
similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.
f. Acknowledgment
of Dilution. The Company understands and acknowledges the potentially dilutive effect of the Conversion Shares and Exercise Shares
to the Common Stock upon the conversion of the Note and/or exercise of the Warrants. The Company further acknowledges that its obligation
to issue, upon conversion of the Note and/or exercise of the Warrants, the Conversion Shares and/or Exercise Shares, are absolute and
unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
g. No Conflicts.
The execution, delivery and performance of this Agreement and the Note by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares) will
not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws, or (ii) violate or conflict
with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could
become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, note,
evidence of indebtedness, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party,
or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and
regulations and regulations of any self-regulatory organizations to which the Company or its securities is subject) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except
for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect), or (iv) trigger any anti-dilution and/or ratchet provision contained in any other contract
in which the Company is a party thereto or any security issued by the Company. Neither the Company nor any of its Subsidiaries is in violation
of its Certificate of Incorporation, By-laws or other organizational documents and neither the Company nor any of its Subsidiaries is
in default (and no event has occurred which with notice or lapse of time or both could put the Company or any of its Subsidiaries in default)
under, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that would give to others
any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party or by which any property or assets of the Company or any of its Subsidiaries is bound or affected,
except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company
and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in
violation of any law, ordinance or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as
required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court, governmental agency, regulatory agency, self-regulatory organization
or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement and the
Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and, upon conversion
of the Note and/or exercise of the Warrants, issue Conversion Shares and/or Exercise Shares as applicable. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected
on or prior to the date hereof. The Company is not in violation of the listing requirements of the Principal Market (as defined herein)
and does not reasonably anticipate that the Common Stock will be delisted by the Principal Market in the foreseeable future. The Company
and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. The “Principal Market”
shall mean the principal securities exchange or trading market where such Common Stock is listed or traded, including but not limited
to any tier of the OTC Markets, any tier of the NASDAQ Stock Market (including NASDAQ Capital Market), or the NYSE American, or any successor
to such markets.
h.
SEC Documents; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934
Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules
thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein
as the “SEC Documents”). As of their respective dates, the SEC Documents complied in all material respects with the requirements
of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents,
at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable
law (except for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates,
the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present
in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents, the
Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent
to September 30, 2024, and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in such financial statements, which, individually or in the aggregate,
are not material to the financial condition or operating results of the Company. The Company is subject to the reporting requirements
of the 1934 Act. The Company has never been a “shell company” as described in Rule 144(i)(1)(i).
i. Absence of
Certain Changes. Since September 30, 2024, there has been no material adverse change and no material adverse development in the assets,
liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status of the
Company or any of its Subsidiaries.
j. Absence
of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against
or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could have a Material
Adverse Effect. The SEC Documents contain a complete list and summary description of any pending or, to the knowledge of the Company,
threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard to whether it would have a Material
Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.
k. Intellectual
Property. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents, patent applications,
patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names, trade names and
copyrights (“Intellectual Property”) necessary to enable it to conduct its business as now operated (and, as presently contemplated
to be operated in the future); there is no claim or action by any person pertaining to, or proceeding pending, or to the Company’s
knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect to any Intellectual Property necessary
to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); to the best of the
Company’s knowledge, the Company’s or its Subsidiaries’ current and intended products, services and processes do not
infringe on any Intellectual Property or other rights held by any person; and the Company has not received notice of any facts or circumstances
which might give rise to any of the foregoing. The Company and each of its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of their Intellectual Property.
l. No Materially
Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or other legal restriction,
or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has or is expected in the future
to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract or agreement which in the
judgment of the Company’s officers has or is expected to have a Material Adverse Effect.
m.
Tax Status. The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax
returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company
and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes)
and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company
know of no basis for any such claim. The Company has not executed a waiver with respect to the statute of limitations relating to the
assessment or collection of any foreign, federal, state or local tax. None of the Company’s tax returns is presently being audited
by any taxingauthority.
n. Transactions
with Affiliates. Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes payments
in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from third parties
and other than the grant of stock options or bonuses described in the SEC Documents, none of the officers, directors, or employees of
the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee
or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee
has a substantial interest or is an officer, director, trustee or partner.
o. Disclosure.
All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the Buyer
pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct in all material
respects and the Company has not omitted to state any material fact necessary in order to make the statements made herein or therein,
in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or exists with respect
to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly
announced or disclosed (assuming for this purpose that the Company’s reports filed under the 1934 Act are being incorporated into
an effective registration statement filed by the Company under the 1933 Act).
p. Acknowledgment
Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting solely in the capacity
of arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges
that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement
and the transactions contemplated hereby and any statement made by the Buyer or any of its respective representatives or agents in connection
with this Agreement and the transactions contemplated hereby is not advice or a recommendation and is merely incidental to the Buyer’s
purchase of the Securities. The Company further represents to the Buyer that the Company’s decision to enter into this Agreement
has been based solely on the independent evaluation of the Company and its representatives.
q. No Integrated
Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly
made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration
under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the Buyer will not be integrated
with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholder approval provisions
applicable to the Company or its securities.
r. No Brokers;
No Solicitation. Except with respect to J. H. Darbie & Co., a registered broker-dealer (CRD#: 43520), the Company has taken no
action which would give rise to any claim by any person for brokerage commissions, transaction fees or similar payments relating to this
Agreement or the transactions contemplated hereby. The Company represents and warrants that neither the Buyer nor its employee(s), member(s),
beneficial owner(s), or partner(s) solicited the Company to enter into this Agreement and consummate the transactions described in this
Agreement. The Company represents and warrants that neither the Buyer nor its employee(s), member(s), beneficial owner(s), or partner(s)
is required to be registered as a broker-dealer under the Securities Exchange Act of 1934 in order to (i) enter into or consummate the
transactions encompassed by this Agreement, the Note, and the related transaction documents entered into in connection herewith (the “Transaction
Documents”), (ii) fulfill the Investor’s obligations under the Transaction Documents, or (iii) exercise any of the Buyer’s
rights under the Transaction Documents (including but not limited to the sale of the Securities).
s.
Permits; Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties
and to carry on its business as it is now being conducted (collectively, the “Company Permits”), and there is no action
pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits. Neither the
Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits, except for any such
conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect. Since September 30, 2024, neither the Company nor any of its Subsidiaries has received any notification with respect to possible
conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts, defaults or violations, which
conflicts, defaults or violations would not have a Material Adverse Effect.
t. Environmental Matters.
(i) There are, to
the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company, no past or present
violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities, circumstances,
conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability or any liability
under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state, local or foreign laws
and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing, nor is any action pending
or, to the Company’s knowledge, threatened in connection with any of the foregoing. The term “Environmental Laws” means
all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively,
“Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.
(ii) Other than
those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained on or about
any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials were released
on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the period the property
was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company’s or any of its
Subsidiaries’ business.
(iii) There are
no underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries that are not
in compliance with applicablelaw.
u. Title to
Property. The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free
and clear of all liens, encumbrances and defects except such as are described in the SEC Documents, or such as would not have a Material
Adverse Effect. Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as would not have a Material Adverse Effect.
v. Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries
are engaged. Neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business
at a cost that would not have a Material Adverse Effect. Upon written request the Company will provide to the Buyer true and correct copies
of all policies relating to directors’ and officers’ liability coverage, errors and omissions coverage, and commercial general
liability coverage.
w.
Internal Accounting Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient,
in the judgment of the Company’s board of directors, to provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is
permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
x. Foreign Corrupt
Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person acting on
behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Company, used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision
of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.
y. Solvency.
The Company (after giving effect to the transactions contemplated by this Agreement and the Note) is solvent (i.e., its assets
have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute
and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not, after
giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take any action that would
impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature. The Company’s financial
statements for its most recent fiscal year end and interim financial statements have been prepared assuming the Company will continue
as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
z. No Investment
Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be an “investment
company” required to be registered under the Investment Company Act of 1940 (an “Investment Company”). The Company is
not controlled by an Investment Company.
aa. No Off Balance
Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any of its Subsidiaries and
an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not
so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.
bb. No Disqualification
Events. None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the
Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity
securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected
with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad
Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except
for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer
Covered Person is subject to a Disqualification Event.
cc. Manipulation
of Price. The Company has not, and to its knowledge no one acting on its behalf has: (i) taken, directly or indirectly, any action
designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation
for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any person any compensation for soliciting another
to purchase any other securities of the Company.
dd. Bank Holding
Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”)
and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor
any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of
any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the
BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or affiliates exercises a controlling influence
over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
ee.
Illegal or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the Company’s
knowledge, any of the officers, directors, employees, agents or other representatives of the Company or any of its Subsidiaries or any
other business entity or enterprise with which the Company or any Subsidiary is or has been affiliated or associated, has, directly or
indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable
law, (i) as a kickback or bribe to any person or (ii) to any political organization, or the holder of or any aspirant to any elective
or appointive public office except for personal political contributions not involving the direct or indirect use of funds of the Company
or any of its Subsidiaries.
ff. Breach of
Representations and Warranties by the Company. The Company agrees that if the Company breaches any of the representations or warranties
set forth in this Section 3 and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered
an Event of Default under Section 3.4 of the Note.
4. ADDITIONAL COVENANTS, AGREEMENTS
AND ACKNOWLEDGEMENTS.
a. Best Efforts.
The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6 and 7 of this Agreement.
b. Form D; Blue
Sky Laws. The Company agrees to file a Form D with respect to the Securities if required under Regulation D and to provide a copy
thereof to the Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall
reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable closing pursuant to this Agreement
under applicable securities or “blue sky” laws of the states of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to the Buyer on or prior to the ClosingDate.
c.
Use of Proceeds. The Company shall use the Purchase Price for the payment of $50,000.00 to Nations Interbanc for the partial
repayment of obligations owed under that certain line of credit entered into by the Company and Nations Interbanc on or around November
11, 2013, working capital, and business development, and not for any other purpose, including but not limited to (i) the repayment of
any indebtedness owed to officers, directors or employees of the Company or their affiliates, (ii) the repayment of any debt issued in
corporate finance transactions (including but not limited to promissory notes that have the ability to be converted into Common Stock),
(iii) any loan to or investment in any other corporation, partnership, enterprise or other person (except in connection with the Company’s
currently existing operations), (iv) any loan, credit, or advance to any officers, directors, employees, or affiliates of the Company,
or (v) in violation or contravention of any applicable law, rule or regulation.
d. Right of
Participation and First Refusal.
(i) Other than
arrangements that are in place or disclosed in SEC Documents prior to the date of this Agreement (including, without limitation, the equity
financing agreement entered into between the Company and GHS Investments, LLC, on or around September 1, 2021 (the “Equity Line”)),
from the date of this Agreement until the Note is extinguished in its entirety, the Company will not, (i) directly or indirectly, offer,
sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition
of) any of its or its Subsidiaries’ debt, equity, or equity equivalent securities, including without limitation any debt, preferred
shares or other instrument or security that is, at any time during its life and/or under any circumstances, convertible into, exchangeable,
or exercisable for Common Stock (any such offer, sale, grant, disposition or announcement being referred to as a “Subsequent Placement”)
or (ii) enter into any definitive agreement with regard to the foregoing, in each case unless the Company shall have first complied with
this Section 4(d).
(ii) The Company
shall deliver to the Buyer an irrevocable written notice (the “Offer Notice”) of any proposed or intended Subsequent Placement,
which shall (w) identify and describe the Subsequent Placement, (x) describe the price and other terms upon which they are to be issued,
sold or exchanged, and the number or amount of the securities in the Subsequent Placement to be issued, sold, or exchanged and (y) offer
to issue and sell to or exchange with the Buyer at least one hundred percent (100%) of the securities in the Subsequent Placement (in
each case, an “Offer”).
(iii)
To accept an Offer, in whole or in part, the Buyer must deliver a written notice (the “Notice of Acceptance”) to the Company
prior to the end of the third (3rd) Trading Day (as defined in the Note) after the Buyer’s receipt of the Offer
Notice (the “Offer Period”), setting forth the amount that the Buyer elects to purchase (the “Subscription Amount”).
The Company shall complete the Subsequent Placement and issue and sell the Subscription Amount to the Buyer upon terms and conditions
(including, without limitation, unit prices and interest rates) set forth in the Offer Notice, unless a change to such terms and conditions
is agreed to in writing between the Company and Buyer.
(iv) Notwithstanding
anything to the contrary contained herein, if the Company desires to modify or amend the terms or conditions of a Subsequent Placement
at any time after the Offer Notice is given to Buyer (provided, however, that such modification or amendment to the terms or conditions
cannot occur during any Offer Period), the Company shall deliver to the Buyer a new Offer Notice and the Offer Period of such new Offer
shall expire at the end of the third (3rd) Trading Day after the Buyer’s receipt of such new Offer Notice.
e. Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter
in force, in connection with any action or proceeding that may be brought by the Buyer in order to enforce any right or remedy under this
Agreement, the Note and any document, agreement or instrument contemplated thereby. Notwithstanding any provision to the contrary contained
in this Agreement, the Note and any document, agreement or instrument contemplated thereby, it is expressly agreed and provided that the
total liability of the Company under this Agreement, the Note or any document, agreement or instrument contemplated thereby for payments
which under applicable law are in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the
“Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both
of them, when aggregated with any other sums which under applicable law in the nature of interest that the Company may be obligated to
pay under this Agreement, the Note and any document, agreement or instrument contemplated thereby exceed such Maximum Rate. It is agreed
that if the maximum contract rate of interest allowed by law applicable to this Agreement, the Note and any document, agreement or instrument
contemplated thereby is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum
contract rate of interest allowed by law will be the Maximum Rate applicable to this Agreement, the Note and any document, agreement or
instrument contemplated thereby from the effective date thereof forward, unless such application is precluded by applicable law. If under
any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to the Buyer with respect to indebtedness
evidenced by this Agreement, the Note and any document, agreement or instrument contemplated thereby, such excess shall be applied by
the Buyer to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to
be at the Buyer’s election.
f. Restriction
on Activities. Commencing as of the date first above written, and until the earlier of payment of the Note in full or full conversion
of the Note, the Company shall not, directly or indirectly, without the Buyer’s prior written consent, which consent shall not be
unreasonably withheld: (a) change the nature of its business; or (b) sell, divest, acquire, change the structure of any material assets
other than in the ordinary course of business.
g. Listing.
The Company will, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the Principal
Market or any equivalent replacement exchange or electronic quotation system (including but not limited to the Pink Sheets electronic
quotation system) and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or
rules of the Financial Industry Regulatory Authority (“FINRA”) and such exchanges, as applicable. The Company shall promptly
provide to the Buyer copies of any notices it receives from the Principal Market and any other exchanges or electronic quotation systems
on which the Common Stock is then traded regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation
systems.
h. Corporate
Existence. The Company will, so long as the Buyer beneficially owns any of the Securities, maintain its corporate existence and shall
not sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation or sale of all or substantially
all of the Company’s assets with the written consent of the Buyer, where the surviving or successor entity in such transaction (i)
assumes the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii)
is a publicly traded corporation whose Common Stock is listed for trading or quotation on the Principal Market, any tier of the NASDAQ
Stock Market, the New York Stock Exchange or the NYSE American.
i.
No Integration. The Company shall not make any offers or sales of any security (other than the Securities) under circumstances
that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of the Securities
to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval provision applicable
to the Company or its securities.
j. Compliance
with 1934 Act; Public Information Failures. For so long as the Buyer beneficially owns the Note, Warrants, Conversion Shares, or any
Exercise Shares, the Company shall comply with the reporting requirements of the 1934 Act; and the Company shall continue to be subject
to the reporting requirements of the 1934 Act. During the period that the Buyer beneficially owns the Note, Warrants, Conversion Shares,
or any Exercise Shares, if the Company shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1), including, without
limitation, the failure to satisfy the current public information requirements under Rule 144(c) or (ii) if the Company has ever been
an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition
set forth in Rule 144(i)(2) (each, a “Public Information Failure”) then, as partial relief for the damages to the Buyer by
reason of any such delay in or reduction of its ability to sell the Securities (which remedy shall not be exclusive of any other remedies
available pursuant to this Agreement, the Note, or at law or in equity), the Company shall pay to the Buyer an amount in cash equal to
one percent (1%) of the Purchase Price on each of the day of a Public Information Failure and on every thirtieth day (pro rated for periods
totaling less than thirty days) thereafter until the date such Public Information Failure is cured. The payments to which a holder shall
be entitled pursuant to this Section 4(j) are referred to herein as “Public Information Failure Payments.” Public Information
Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments
are incurred and (iii) the third business day after the event or failure giving rise to the Public Information Failure Payments is cured.
In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments
shall bear interest at the rate of 5% per month (prorated for partial months) until paid in full.
k. Acknowledgement
Regarding Buyer’s Trading Activity. Until the Note is fully repaid or fully converted, the Buyer shall not effect any “short
sale” (as such term is defined in Rule 200 of Regulation SHO of the 1934 Act) of the Common Stock which establishes a net short
position with respect to the Common Stock.
l. Legal Counsel
Opinions. Upon the request of the Buyer from to time to time, the Company shall be responsible (at its cost) for promptly supplying
to the Company’s transfer agent and the Buyer a customary legal opinion letter of its counsel (the “Legal Counsel Opinion”)
to the effect that the resale of the Conversion Shares and/or Exercise Shares by the Buyer or its affiliates, successors and assigns is
exempt from the registration requirements of the 1933 Act pursuant to Rule 144 (provided the requirements of Rule 144 are satisfied and
provided the Conversion Shares and/or Exercise Shares are not then registered under the 1933 Act for resale pursuant to an effective registration
statement) or other applicable exemption (provided the requirements of such other applicable exemption are satisfied). In addition, the
Buyer may (at the Company’s cost) at any time secure its own legal counsel to issue the Legal Counsel Opinion, and the Company will
instruct its transfer agent to accept such opinion. The Company hereby agrees that it may never take the position that it is a “shell
company” in connection with its obligations under this Agreement or otherwise.
m. Piggyback
Registration Rights. The Company hereby grants the Buyer the piggy-back registration rights set forth on Exhibit B hereto.
n. Most Favored
Nation. While the Note or any principal amount, interest or fees or expenses due thereunder remain outstanding and unpaid, the Company
shall not enter into any public or private offering of its securities (including securities convertible into shares of Common Stock) with
any individual or entity (an “Other Investor”) that has the effect of establishing rights or otherwise benefiting such Other
Investor in a manner more favorable in any material respect to such Other Investor (even if the Other Investor does not receive the benefit
of such more favorable term until a default occurs under such other security) than the rights and benefits established in favor of the
Buyer by this Agreement or the Note unless, in any such case, the Buyer has been provided with such rights and benefits pursuant to a
definitive written agreement or agreements between the Company and theBuyer.
o.
Subsequent Variable Rate Transactions. From the date hereof until such time as the Note is fully converted or fully repaid, the
Company shall be prohibited from effecting or entering into an agreement involving a Variable Rate Transaction. “Variable Rate Transaction”
means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise price or
exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common
Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that
is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified
or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into
any agreement, including, but not limited to, an Equity Line of Credit (as defined in the Note), whereby the Company may issue securities
at a future determined price. The Buyer shall be entitled to obtain injunctive relief against the Company to preclude any such issuance,
which remedy shall be in addition to any right to collect damages.
p. Shareholder
Approval; Prohibition on Issuance. “Shareholder Approval” means the approval of the required holders of the Company’s
outstanding voting Common Stock, to effectuate the transactions contemplated by the Agreement, including the issuance of all of the Common
Stock underlying the Note in excess of 19.99% of the issued and outstanding Common Stock on the Closing Date (the “Exchange Cap”).
The Exchange Cap is equal to 9,156,726 shares of Common Stock (subject to appropriate adjustment for any stock dividend, stock split,
stock combination, rights offerings, reclassification or similar transaction that proportionately decreases or increases the Common Stock).
The Company shall not use the Exchange Cap for any purpose other than for the issuance of Common Stock to the Buyer pursuant to this Agreement
and the Note. The Company shall hold a special meeting of shareholders on or before the date that is sixty (60) calendar days after the
first date (after the date of this Agreement) that the Common Stock has traded on the Principal Market at a price per share of less than
$0.50 (subject to appropriate adjustment for any stock dividend, stock split, stock combination, rights offerings, reclassification or
similar transaction that proportionately decreases or increases the Common Stock) (the “Threshold Price”), for the purpose
of obtaining Shareholder Approval, with the recommendation of the Company’s Board of Directors that such proposal be approved, and
the Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals in
such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal. In addition, all members
of the Company’s Board of Directors and all of the Company’s executive officers shall vote in favor of such proposal, for
purposes of obtaining the Shareholder Approval, with respect to all securities of the Company then held by such persons. The Company shall
use its commercially reasonable efforts to obtain such Shareholder Approval. If the Company does not obtain Shareholder Approval at the
first meeting, the Company shall call a meeting as often as possible thereafter to seek Shareholder Approval until the Shareholder Approval
is obtained. Until such approval is obtained, the Buyer shall not be issued in the aggregate, pursuant to the Agreement or upon conversion
of the Note, shares of Common Stock in an amount greater than the Exchange Cap. In the event that the Buyer shall sell or otherwise transfer
any of such Buyer’s Note, the transferee shall be allocated a pro rata portion of such Exchange Cap, and the restrictions of the
prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap allocated to such transferee. Except with
respect to the Securities, during the period beginning on the date of this Agreement and continuing through the date that the Shareholder
Approval is obtained, the Company shall not issue any (i) Common Stock at a price per share or cost basis of less than the Threshold Price
or (ii) Common Stock Equivalents (as defined in the Note) that are exercisable or convertible into Common Stock at a price per share or
cost basis of less than the Threshold Price.
q. No Broker-Dealer
Acknowledgement. Absent a final adjudication from a court of competent jurisdiction stating otherwise, the Company shall not to any
person, institution, governmental or other entity, state, claim, allege, or in any way assert, that Buyer is currently, or ever has been,
a broker-dealer under the Securities Exchange Act of 1934.
r. Subsequent
Securities Sales. In addition to all other restrictions on the issuance of securities by the Company as provided in this Agreement,
from the date of this Agreement until 180 calendar days after the date of this Agreement, neither the Company nor any Subsidiary shall
issue, enter into any agreement to issue, or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock
Equivalents (as defined in the Note).
s.
Non-Public Information. The Company covenants and agrees that neither it, nor any other person acting on its behalf will provide
the Buyer or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public
information, unless prior thereto the Buyer shall have consented to the receipt of such information and agreed with the Company to keep
such information confidential. The Company understands and confirms that the Buyer shall be relying on the foregoing covenant in effecting
transactions in securities of the Company. To the extent that the Company delivers any material, non-public information to the Buyer without
such Buyer’s consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality to the
Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or affiliates, not to trade on the
basis of, such material, non- public information, provided that the Buyer shall remain subject to applicable law. To the extent that any
notice provided, information provided, or any other communications made by the Company, to the Buyer, constitutes or contains material
non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice or other material
information with the SEC pursuant to a Current Report on Form 8-K. In addition to any other remedies provided by this Agreement or the
related transaction documents, if the Company provides any material non-public information to the Buyer without their prior written consent,
and it fails to immediately (no later than that business day) file a Form 8-K disclosing this material non-public information, it shall
pay the Buyer as partial liquidated damages and not as a penalty a sum equal to $3,000 per day beginning with the day the information
is disclosed to the Buyer and ending and including the day the Form 8-K disclosing this information is filed.
t. D&O
Insurance. Within 60 calendar days of the Closing, the Company shall purchase, if available on commercially reasonable terms, director
and officer insurance on behalf of the Company’s (including its subsidiary) officers and directors for a period of 18 months after
the Closing with respect to any losses, claims, damages, liabilities, costs and expense in connection with any actual or threatened claim
or proceeding that is based on, or arises out of their status as a director or officer of the Company.
u. Non-Public
Information. The Company covenants and agrees that neither it, nor any other person acting on its behalf will provide the Buyer or
its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public information,
unless prior thereto the Buyer shall have consented to the receipt of such information and agreed with the Company to keep such information
confidential. The Company understands and confirms that the Buyer shall be relying on the foregoing covenant in effecting transactions
in securities of the Company. To the extent that the Company delivers any material, non-public information to the Buyer without such Buyer’s
consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality to the Company, any of its
Subsidiaries, or any of their respective officers, directors, agents, employees or affiliates, not to trade on the basis of, such material,
non- public information, provided that the Buyer shall remain subject to applicable law. To the extent that any notice provided, information
provided, or any other communications made by the Company, to the Buyer, constitutes or contains material non-public information regarding
the Company or any Subsidiaries, the Company shall simultaneously file such notice or other material information with the SEC pursuant
to a Current Report on Form 8-K. In addition to any other remedies provided by this Agreement or the related transaction documents, if
the Company provides any material non-public information to the Buyer without their prior written consent, and it fails to immediately
(no later than that business day) file a Form 8-K disclosing this material non-public information, it shall pay the Buyer as partial liquidated
damages and not as a penalty a sum equal to $3,000 per day beginning with the day the information is disclosed to the Buyer and ending
and including the day the Form 8-K disclosing this information is filed.
v. Breach of
Covenants. The Company acknowledges and agrees that if the Company breaches any of the covenants set forth in this Section 4, in addition
to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an Event of Default under Section 3.3 of
the Note.
5.
Transfer Agent Instructions. The Company shall issue irrevocable instructions to the Company’s transfer agent to issue certificates
and/or issue shares electronically at the Buyer’s option, registered in the name of the Buyer or its nominee, upon conversion of
the Note and/or exercise of the Warrants, the Conversion Shares and Exercise Shares, in such amounts as specified from time to time by
the Buyer to the Company in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”). In the event
that the Company proposes to replace its transfer agent, the Company shall provide, prior to the effective date of such replacement, a
fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to this Agreement (including but not
limited to the provision to irrevocably reserved shares of Common Stock in the Reserved Amount (as defined in the Note)) signed by the
successor transfer agent to the Company and the Company. Prior to registration of the Conversion Shares and/or Exercise Shares under the
1933 Act or the date on which the Conversion Shares and/or Exercise Shares may be sold pursuant to Rule 144, Rule 144A, Regulation S,
or other applicable exemption without any restriction as to the number of Securities as of a particular date that can then be immediately
sold, all such certificates or book entry shares shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company
warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5 will be given by
the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company
as and to the extent provided in this Agreement and the Note; (ii) it will not direct its transfer agent not to transfer or delay, impair,
and/or hinder its transfer agent in transferring (or issuing)(electronically or in certificated form) any certificate for Securities to
be issued to the Buyer upon conversion of or otherwise pursuant to the Note and/or upon exercise of or otherwise pursuant to the Warrants
as and when required by the Note and this Agreement; (iii) it will not fail to remove (or directs its transfer agent not to remove or
impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions
in respect thereof) on any certificate for any Securities issued to the Buyer upon conversion of or otherwise pursuant to the Note
and/or upon exercise of or otherwise pursuant to the Warrants as and when required by the Note, Warrants, and/or this Agreement and (iv)
it will provide any required corporate resolutions and issuance approvals to its transfer agent within 6 hours of each conversion of the
Note and/or exercise of the Warrants. Nothing in this Section shall affect in any way the Buyer’s obligations and agreement set
forth in Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities. If
the Buyer provides the Company, at the cost of the Company, with (i) an opinion of counsel in form, substance and scope customary for
opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration
under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides reasonable assurances that the Securities can be sold
pursuant to 144, Rule 144A, Regulation S, or other applicable exemption, the Company shall permit the transfer, and, in the case of the
Securities, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in
such denominations as specified by the Buyer. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable
harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges
that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and
without any bond or other security being required.
6. Conditions
to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Note to the Buyer at the
Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions thereto, provided that these
conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:
a. The Buyer shall have executed
this Agreement, Security Agreement Amendment, and Voting Agreement, and delivered the same to the Company.
b. The Buyer shall
have delivered the Purchase Price in accordance with Section 1(b) above.
c. The representations
and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date, as
though made at that time (except for representations and warranties that speak as of a specific date), and the Buyer shall have performed,
satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Buyer at or prior to the Closing Date.
d. No litigation,
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by
or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.
7. Conditions
to The Buyer’s Obligation to Purchase. The obligation of the Buyer hereunder to purchase the Note, on the Closing Date, is subject
to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Buyer’s
sole benefit and may be waived by the Buyer at any time in its sole discretion:
a. The Company shall have executed
this Agreement and delivered the same to the Buyer.
b. The Company
shall have delivered to the Buyer the duly executed Note in such denominations as the Buyer shall request and in accordance with Section
1(b) above.
c. The Company shall have delivered
to the Buyer the Warrants.
d. The Irrevocable
Transfer Agent Instructions, in form and substance satisfactory to the Buyer, shall have been delivered to and acknowledged in writing
by the Company’s Transfer Agent.
e.
The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of
Closing Date, as though made at such time (except for representations and warranties that speak as of a specific date) and the Company
shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.
f. No litigation,
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by
or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.
g. No event shall
have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not limited to a change
in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act reporting obligations.
h. Trading in
the Common Stock on the Principal Market shall not have been suspended by the SEC, FINRA or the Principal Market.
i. The Company
shall have delivered to the Buyer (i) a certificate evidencing the formation and good standing of the Company and each of its Subsidiaries
in such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction, as of a
date within ten (10) days of the Closing Date and (ii) resolutions adopted by the Company’s Board of Directors at a duly called
meeting or by unanimous written consent authorizing this Agreement and all other documents, instruments and transactions contemplated
hereby.
j. The Company
shall have delivered to the Buyer a legal opinion from the Company’s counsel covering the transactions contemplated by the Transaction
Documents in a form acceptable to the Buyer.
k. The Company
shall have delivered to the Buyer the Voting Agreement duly executed by the Company and MGW.
l. The Company
shall have delivered to the Buyer the Security Agreement Amendment duly executed by the Company and its Subsidiaries.
8. Governing Law; Miscellaneous.
a.
Arbitration of Claims; Governing Law; Venue. The Company and Buyer shall submit all Claims (as defined in Exhibit E of this Purchase
Agreement) (the “Claims”) arising under this Agreement or any other agreement between the Company and Buyer or their respective
affiliates (including but not limited to the Transaction Documents) or any Claim relating to the relationship of the Company and Buyer
or their respective affiliates to binding arbitration pursuant to the arbitration provisions set forth in Exhibit E of the Purchase Agreement
(the “Arbitration Provisions”). The Company and Buyer hereby acknowledge and agree that the Arbitration Provisions are unconditionally
binding on the Company and Buyer hereto and are severable from all other provisions of this Agreement. By executing this Agreement, Company
represents, warrants and covenants that Company has reviewed the Arbitration Provisions carefully, consulted with legal counsel about
such provisions (or waived its right to do so), understands that the Arbitration Provisions are intended to allow for the expeditious
and efficient resolution of any dispute hereunder, agrees to the terms and limitations set forth in the Arbitration Provisions, and that
Company will not take a position contrary to the foregoing representations. Company acknowledges and agrees that Buyer may rely upon the
foregoing representations and covenants of Company regarding the Arbitration Provisions. This Agreement shall be construed and enforced
in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be
governed by, the internal laws of the State of Nevada, without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Nevada or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than
the State of Nevada. The Company and Buyer consent to and expressly agree that the exclusive venue for arbitration of any Claims arising
under this Agreement or any other agreement between the Company and Buyer or their respective affiliates (including but not limited to
the Transaction Documents) or any Claim relating to the relationship of the Company and Buyer or their respective affiliates shall be
in the Commonwealth of Massachusetts. Without modifying the Company’s and Buyer’s mandatory obligations to resolve disputes
hereunder pursuant to the Arbitration Provisions, for any litigation arising in connection with any of the Transaction Documents (and
notwithstanding the terms (specifically including any governing law and venue terms) of any transfer agent services agreement or other
agreement between the Company’s transfer agent and the Company, such litigation specifically includes, without limitation any action
between or involving Company and the Company’s transfer agent under the Irrevocable Transfer Agent Instructions or otherwise
related to Buyer in any way (specifically including, without limitation, any action where Company seeks to obtain an injunction, temporary
restraining order, or otherwise prohibit the Company’s transfer agent from issuing shares of Common Stock to Buyer for any reason)),
each party hereto hereby (i) consents to and expressly submits to the exclusive personal jurisdiction of any state or federal court sitting
in the Commonwealth of Massachusetts, (ii) expressly submits to the exclusive venue of any such court for the purposes hereof, (iii) agrees
to not bring any such action (specifically including, without limitation, any action where Company seeks to obtain an injunction, temporary
restraining order, or otherwise prohibit the Company’s transfer agent from issuing shares of Common Stock to Buyer for any reason)
outside of any state or federal court sitting in the Commonwealth of Massachusetts, and (iv) waives any claim of improper venue and any
claim or objection that such courts are an inconvenient forum or any other claim, defense or objection to the bringing of any such proceeding
in such jurisdiction or to any claim that such venue of the suit, action or proceeding is improper. Notwithstanding anything in the foregoing
to the contrary, nothing herein shall limit, or shall be deemed or construed to limit, the ability of the Buyer to realize on any collateral
or any other security, or to enforce a judgment or other court ruling in favor of the Buyer, including through a legal action in any court
of competent jurisdiction. The Company hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any objection
to jurisdiction and venue of any action instituted hereunder, any claim that it is not personally subject to the jurisdiction of any such
court, and any claim that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper (including but not limited to based upon forum non conveniens). THE COMPANY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY. The Company irrevocably waives personal service of process
and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other agreement, certificate,
instrument or document contemplated hereby or thereby by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to Company at the address in effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any other manner permitted by law. The prevailing party in any action or dispute brought in connection with
this Agreement or any other agreement, certificate, instrument or document contemplated hereby or thereby shall be entitled to recover
from the other party its reasonable attorney’s fees and costs. If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement
in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.
b. Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.
A facsimile or .pdf signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and
effect as if the signature were an original, not a facsimile or .pdf signature. Delivery of a counterpart signature hereto by facsimile
or email/.pdf transmission shall be deemed validly delivery thereof.
c. Construction;
Headings. This Agreement shall be deemed to be jointly drafted by the Company and the Buyer and shall not be construed against any
person as the drafter hereof. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect
the interpretation of, this Agreement.
d. Severability.
In the event that any provision of this Agreement, the Note, or any other agreement or instrument delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove
invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Agreement, the Note,
or any other agreement, certificate, instrument or document contemplated hereby or thereby.
e. Entire Agreement;
Amendments. This Agreement, the Note, and the instruments referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes
any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement or any agreement or
instrument contemplated hereby may be waived or amended other than by an instrument in writing signed by the Buyer.
f.
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be
in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified,
return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective
(a) upon hand delivery or delivery by e-mail or facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received),
or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice
is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
If to the Company, to:
CLEAN ENERGY TECHNOLOGIES, INC.
1340 Reynolds Avenue, Unit 120
Irvine, CA 92614
Attention: Kambiz Mahdi
e-mail: [redacted]
If to the Buyer:
MAST HILL FUND, L.P.
150 Grossman Drive, Suite 205
Braintree, MA 02184
e-mail: [redacted]
g. Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. The Company
shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Buyer. The Buyer may assign
its rights hereunder to any “accredited investor” (as defined in Rule 501(a) of the 1933 Act) in a private transaction from
the Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, without the consent of the Company.
h. Third Party
Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns,
and is not for the benefit of, nor may any provision hereof be enforced by, any other person.
i. Survival.
The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the closing
hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The Company agrees to indemnify and
hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage arising as a result of or related to
any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in this Agreement or any
of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.
j. Publicity.
The Company, and the Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC, Principal
Market or FINRA filings, or any other public statements with respect to the transactions contemplated hereby; provided, however,
that the Company shall be entitled, without the prior approval of the Buyer, to make any press release or SEC, Principal Market (or other
applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations (although
the Buyer shall be consulted by the Company in connection with any such press release prior to its release and shall be provided with
a copy thereof and be given an opportunity to comment thereon).
k.
Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order
to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
l. No Strict Construction.
The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any party.
m. Indemnification.
In consideration of the Buyer’s execution and delivery of this Agreement and acquiring the Securities hereunder, and in addition
to all of the Company’s other obligations under this Agreement or the Note, the Company shall defend, protect, indemnify and hold
harmless the Buyer and its stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of
the foregoing persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether
any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating
to (a) any misrepresentation or breach of any representation or warranty made by the Company in this Agreement, the Note or any other
agreement, certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation
of the Company contained in this Agreement, the Note or any other agreement, certificate, instrument or document contemplated hereby or
thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes
a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance or
enforcement of this Agreement, the Note or any other agreement, certificate, instrument or document contemplated hereby or thereby, (ii)
any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities,
or (iii) the status of the Buyer or holder of the Securities as an investor in the Company pursuant to the transactions contemplated by
this Agreement. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make
the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law.
n. Remedies.
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating the intent
and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations
under this Agreement, the Note, the Warrants, or any other agreement, certificate, instrument or document contemplated hereby or thereby
will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Agreement, the Note,
the Warrants, or any other agreement, certificate, instrument or document contemplated hereby or thereby, that the Buyer shall be entitled,
in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction
or injunctions restraining, preventing or curing any breach of this Agreement, the Note, the Warrants, or any other agreement, certificate,
instrument or document contemplated hereby or thereby, and to enforce specifically the terms and provisions hereof and thereof, without
the necessity of showing economic loss and without any bond or other security being required.
o. Payment
Set Aside. To the extent that the (i) Company makes a payment or payments to the Buyer hereunder, pursuant to the Note, pursuant to
the Warrants, or pursuant to any other agreement, certificate, instrument or document contemplated hereby or thereby, or (ii) the Buyer
enforces or exercises its rights hereunder, pursuant to the Note, pursuant to the Warrants, or pursuant to any other agreement, certificate,
instrument or document contemplated hereby or thereby, and such payment or payments or the proceeds of such enforcement or exercise or
any part thereof (including but not limited to the sale of the Securities) are for any reason (i) subsequently invalidated, declared to
be fraudulent or preferential, set aside, recovered from, or disgorged by the Buyer, or (ii) are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver, government entity, or any other person or entity under any law (including, without limitation,
any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then (i) to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred and (ii) the Company shall immediately pay to the Buyer a dollar
amount equal to the amount that was for any reason (i) subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, or disgorged by the Buyer, or (ii) required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver,
government entity, or any other person or entity under any law (including, without limitation, any bankruptcy law, foreign, state or federal
law, common law or equitable cause of action).
p.
Failure or Indulgence Not Waiver. No failure or delay on the part of the Buyer in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privileges. All rights and remedies of the Buyer existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
q. Electronic
Signature. This Agreement may be executed and delivered in one or more counterparts (including by facsimile or electronic mail or
in .pdf or any other form of electronic delivery (including any electronic signature complying with U.S. federal ESIGN Act of 2000)) and
by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document. All counterparts
so executed and delivered shall be construed together and shall constitute one and the same agreement.
[Signature Page Follows]
IN WITNESS WHEREOF,
the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.
CLEAN ENERGY TECHNOLOGIES, INC.
| By: |
/s/ Kambiz Mahdi |
|
| Name: |
KAMBIZ MAHDI |
|
| Title: |
CHIEF EXECUTIVE OFFICER |
|
| |
|
|
| MAST HILL FUND, L.P. |
|
| |
|
|
| By: |
/s/ Patrick Hassani |
|
| Name: |
PATRICK HASSANI |
|
| Title: |
CHIEF INVESTMENT OFFICER |
|
SUBSCRIPTION AMOUNT:
Principal Amount of Note: $620,000.00
Actual Amount of Purchase Price of Note: $558,000.00
EXHIBIT A
FORM OF NOTE
[attached hereto]
EXHIBIT B
PIGGY-BACK REGISTRATION RIGHTS
All of the Conversion
Shares and Exercise Shares shall be deemed “Registrable Securities” subject to the provisions of this Exhibit B. All capitalized
terms used but not defined in this Exhibit B shall have the meanings ascribed to such terms in the Securities Purchase Agreement to which
this Exhibit is attached.
1. Piggy-Back Registration.
1.1 Piggy-Back
Rights. If at any time on or after the date of the Closing the Company proposes to file any Registration Statement under the 1933
Act (a “Registration Statement”) with respect to any offering of equity securities, or securities or other obligations exercisable
or exchangeable for, or convertible into, equity securities, by the Company for its own account or for shareholders of the Company for
their account (or by the Company and by shareholders of the Company), other than a Registration Statement (i) filed in connection with
any employee stock option or other benefit plan on Form S-8, (ii) for a dividend reinvestment plan or (iii) in connection with a merger
or acquisition, then the Company shall (x) give written notice of such proposed filing to the holders of Registrable Securities appearing
on the books and records of the Company as such a holder as soon as practicable but in no event less than ten (10) days before the anticipated
filing date of the Registration Statement, which notice shall describe the amount and type of securities to be included in such Registration
Statement, the intended method(s) of distribution, and the name of the proposed managing underwriter or underwriters, if any, of the offering,
and (y) offer to the holders of Registrable Securities in such notice the opportunity to register the sale of such number of Registrable
Securities as such holders may request in writing within three (3) days following receipt of such notice (a “Piggy- Back Registration”).
The Company shall cause such Registrable Securities to be included in such registration and shall cause the managing underwriter or underwriters
of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration on the
same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities
in accordance with the intended method(s) of distribution thereof (with the understanding that the Company shall file the initial prospectus
covering the Buyer’s sale of the Registrable Securities at prevailing market prices on the same date that the Registration Statement
is declared effective by the SEC).
1.2 Withdrawal.
Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable Securities in any
Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness of the Registration
Statement. The Company (whether on its own determination or as the result of a withdrawal by persons making a demand pursuant to written
contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness of such Registration Statement.
Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders of Registrable Securities in connection
with such Piggy-Back Registration as provided in Section 1.5 below.
1.3 The Company shall
notify the holders of Registrable Securities at any time when a prospectus relating to such holder’s Registrable Securities is required
to be delivered under the 1933 Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included
in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing.
At the request of such holder, the Company shall also prepare, file and furnish to such holder a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of the Registrable Securities,
such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the circumstances then existing. The holders of Registrable Securities
shall not to offer or sell any Registrable Securities covered by the Registration Statement after receipt of such notification until the
receipt of such supplement or amendment.
1.4
The Company may request a holder of Registrable Securities to furnish the Company such information with respect to such holder and such
holder’s proposed distribution of the Registrable Securities pursuant to the Registration Statement as the Company may from
time to time reasonably request in writing or as shall be required by law or by the SEC in connection therewith, and such holders shall
furnish the Company with such information.
1.5
All fees and expenses incident to the performance of or compliance with this Exhibit B by the Company shall be borne by the Company whether
or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence
shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the
Company’s counsel and independent registered public accountants) (A) with respect to filings made with the SEC, (B) with respect
to filings required to be made with any trading market on which the Common Stock is then listed for trading, (C) in compliance with applicable
state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements
of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities) and (D) with respect
to any filing that may be required to be made by any broker through which a holder of Registrable Securities intends to make sales of
Registrable Securities with the FINRA, (ii) printing expenses, (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements
of counsel for the Company, (v) 1933 Act liability insurance, if the Company so desires such insurance, (vi) fees and expenses of all
other persons or entities retained by the Company in connection with the consummation of the transactions contemplated by this Exhibit
B and (vii) reasonable fees and disbursements of a single special counsel for the holders of Registrable Securities (selected by holders
of the majority of the Registrable Securities requesting such registration). In addition, the Company shall be responsible for all of
its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required
hereunder. In no event shall the Company be responsible for any broker or similar commissions of any holder of Registrable Securities.
1.6 The Company and
its successors and assigns shall indemnify and hold harmless the Buyer, each holder of Registrable Securities, the officers, directors,
members, partners, agents and employees (and any other individuals or entities with a functionally equivalent role of a person holding
such titles, notwithstanding a lack of such title or any other title) of each of them, each individual or entity who controls the Buyer
or any such holder of Registrable Securities (within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act) and the
officers, directors, members, stockholders, partners, agents and employees (and any other individuals or entities with a functionally
equivalent role of a person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling individual
or entity (each, an “Indemnified Party”), to the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact
contained in a Registration Statement, any related prospectus or any form of prospectus or in any amendment or supplement thereto or in
any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any such prospectus or supplement thereto, in light of the circumstances
under which they were made) not misleading or (2) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act or any
state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Exhibit B,
except to the extent, but only to the extent, that (i) such untrue statements or omissions are based upon information regarding the Buyer
or such holder of Registrable Securities furnished to the Company by such party for use therein. The Company shall notify the Buyer and
each holder of Registrable Securities promptly of the institution, threat or assertion of any proceeding arising from or in connection
with the transactions contemplated by this Exhibit B of which the Company is aware.
1.7
If the indemnification under Section 1.6 is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless
for any Losses, then the Company shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate
to reflect the relative fault of the Company and Indemnified Party in connection with the actions, statements or omissions that resulted
in such Losses as well as any other relevant equitable considerations. The relative fault of the Company and Indemnified Party shall be
determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, the
Company or the Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct
or prevent such action, statement or omission.
The amount paid or payable by a party
as a result of any Losses shall be deemed to include any reasonable attorneys’ or other fees or expenses incurred by such party
in connection with any proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification
provided for in Section 1.6 was available to such party in accordance with its terms. It is agreed that it would not be just and equitable
if contribution pursuant to this Section 1.7 were determined by pro rata allocation or by any other method of allocation that does not
take into account the equitable considerations referred to in the immediately preceding sentence. Notwithstanding the provisions of this
Section 1.7, neither the Buyer nor any holder of Registrable Securities shall be required to contribute, in the aggregate, any amount
in excess of the amount by which the net proceeds actually received by such party from the sale of all of their Registrable Securities
pursuant to such Registration Statement or related prospectus exceeds the amount of any damages that such party has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.
[End of Exhibit B]
EXHIBIT C
[attached hereto]
EXHIBIT D
[attached hereto]
EXHIBIT E
ARBITRATION PROVISIONS
1. Dispute Resolution. Each party
consents to and expressly agrees that the exclusive venue for arbitration of any dispute arising out of or relating to any of the Transaction
Documents or the relationship of the parties or their affiliates shall be in the Commonwealth of Massachusetts. For purposes of this Exhibit
E, the term “Claims” means any disputes, claims, demands, causes of action, requests for injunctive relief, requests
for specific performance, questions regarding severability of any provisions of the Transaction Documents, liabilities, damages, losses,
or controversies whatsoever arising from, related to, or connected with the transactions contemplated in the Transaction Documents and
any communications between the parties related thereto, including without limitation any claims of mutual mistake, mistake, fraud, misrepresentation,
failure of formation, failure of consideration, promissory estoppel, unconscionability, failure of condition precedent, rescission, and
any statutory claims, tort claims, contract claims, or claims to void, invalidate or terminate the Agreement (or these Arbitration Provisions
(defined below)) or any of the other Transaction Documents. The term “Claims” specifically excludes a dispute over the Warrant
Calculations (as defined in the Warrants) and Note Calculations (as defined in the Note), and the parties hereby acknowledge and agree
that a dispute over any Warrant Calculations (as defined in the Warrants) or Note Calculations (as defined in the Note) shall be resolved
by the parties as expressly provided for in the Warrants and Note respectively. The parties to this Agreement (the “parties”)
hereby agree that the Claims may be arbitrated in one or more Arbitrations pursuant to these Arbitration Provisions (one for an injunction
or injunctions and a separate one for all other Claims). The parties hereby agree that the arbitration provisions set forth in this Exhibit
E (“Arbitration Provisions”) are binding on each of them. As a result, any attempt to rescind the Agreement (or
these Arbitration Provisions) or any other Transaction Document) or declare the Agreement (or these Arbitration Provisions) or any other
Transaction Document invalid or unenforceable pursuant to Section 29 of the 1934 Act or for any other reason is subject to these Arbitration
Provisions. These Arbitration Provisions shall also survive any termination or expiration of the Agreement. Any capitalized term not defined
in these Arbitration Provisions shall have the meaning set forth in the Agreement.
2. Arbitration. Except as otherwise
provided herein, all Claims must be submitted to arbitration (“Arbitration”) to be conducted exclusively in the Commonwealth
of Massachusetts and pursuant to the terms set forth in these Arbitration Provisions. Subject to the arbitration appeal right provided
for in Paragraph 5 below (the “Appeal Right”), the parties agree that the award of the arbitrator rendered pursuant
to Paragraph 4 below (the “Arbitration Award”) shall be (a) final and binding upon the parties, (b) the sole and exclusive
remedy between them regarding any Claims, counterclaims, issues, or accountings presented or pleaded to the arbitrator, and (c) promptly
payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Subject to the Appeal Right,
any costs or fees, including without limitation attorneys’ fees, incurred in connection with or incident to enforcing the Arbitration
Award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement. The Arbitration Award shall
include Default Interest (as defined or otherwise provided for in the Note, “Default Interest”) (with respect to monetary
awards) at the rate specified in the Note for Default Interest both before and after the Arbitration Award. Judgment upon the Arbitration
Award will be entered and enforced by any state or federal court sitting in the Commonwealth of Massachusetts.
3. The Arbitration Act. The parties
hereby incorporate herein the provisions and procedures set forth in the Massachusetts Uniform Arbitration Act, G.L. c. 251 (as amended
or superseded from time to time, the “Arbitration Act”). Notwithstanding the foregoing, pursuant to, and to the maximum
extent permitted by, the Arbitration Act, in the event of conflict or variation between the terms of these Arbitration Provisions and
the provisions of the Arbitration Act, the terms of these Arbitration Provisions shall control and the parties hereby waive or otherwise
agree to vary the effect of all requirements of the Arbitration Act that may conflict with or vary from these Arbitration Provisions.
4. Arbitration
Proceedings. Arbitration between the parties will be subject to the following:
4.1 Initiation
of Arbitration. Pursuant to the Arbitration Act, the parties agree that a party may initiate Arbitration by giving written notice
to the other party (“Arbitration Notice”) in the same manner that notice is permitted under Section 8(f) of the Agreement;
provided, however, that the Arbitration Notice may not be given by email or fax. Arbitration will be deemed initiated as of the
date that the Arbitration Notice is deemed physically delivered to such other party under Section 8(f) of the Agreement (the “Service
Date”). After the Service Date, information may be delivered, and notices may be given, by email or fax pursuant to Section
8(f) of the Agreement or any other method permitted thereunder. The Arbitration Notice must describe the nature of the controversy, the
remedies sought, and the election to commence Arbitration proceedings. All Claims in the Arbitration Notice must be pleaded consistent
with the Massachusetts Rules of Civil Procedure.
4.2 Selection
and Payment of Arbitrator.
(a)
Within ten (10) calendar days after the Service Date, Buyer shall select and submit to Company the names of three (3) arbitrators that
are designated as “neutrals” or qualified arbitrators by the American Arbitration Association (“AAA”),
JAMS (https://www.jamsadr.com/) (“JAMS”), or other arbitration service provider agreed upon by the parties (such three
(3) designated persons hereunder are referred to herein as the “Proposed Arbitrators”). For the avoidance of doubt,
each Proposed Arbitrator must be qualified as a “neutral” with AAA, JAMS, or other arbitration service provider agreed upon
by the parties. Within five (5) calendar days after Buyer has submitted to Company the names of the Proposed Arbitrators, Company must
select, by written notice to Buyer, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties under these Arbitration
Provisions. If Company fails to select one of the Proposed Arbitrators in writing within such 5-day period, then Buyer may select the
arbitrator from the Proposed Arbitrators by providing written notice of such selection to Company.
(b) If Buyer fails
to submit to Company the Proposed Arbitrators within ten (10) calendar days after the Service Date pursuant to subparagraph (a) above,
then Company may by written notice to Buyer at any time prior to Buyer so designating the Proposed Arbitrators, identify the names of
three (3) arbitrators that are designated as “neutrals” or qualified arbitrators by AAA, JAMS, or other arbitration service
provider agreed upon by the parties. Buyer may then, within five
(5) calendar days after Company has
submitted notice of its Proposed Arbitrators to Buyer, select, by written notice to Company, one (1) of the Proposed Arbitrators to act
as the arbitrator for the parties under these Arbitration Provisions. If Buyer fails to select in writing and within such 5-day period
one (1) of the three (3) Proposed Arbitrators selected by Company, then Company may select the arbitrator from its three (3) previously
selected Proposed Arbitrators by providing written notice of such selection to Buyer.
(c) If a Proposed
Arbitrator chosen to serve as arbitrator declines or is otherwise unable to serve as arbitrator, then the party that selected such Proposed
Arbitrator may select one (1) of the other three (3) Proposed Arbitrators within three (3) calendar days of the date the chosen Proposed
Arbitrator declines or notifies the parties he or she is unable to serve as arbitrator. If all three (3) Proposed Arbitrators decline
or are otherwise unable to serve as arbitrator, then the arbitrator selection process shall begin again in accordance with this Paragraph
4.2.
(d) The date that
the Proposed Arbitrator selected pursuant to this Paragraph 4.2 agrees in writing (including via email) delivered to both parties to serve
as the arbitrator hereunder is referred to herein as the “Arbitration Commencement Date”. If an arbitrator resigns
or is unable to act during the Arbitration, a replacement arbitrator shall be chosen in accordance with this Paragraph 4.2 to continue
the Arbitration. If each of AAA, JAMS, and other arbitration service provider previously agreed upon by the parties ceases to exist or
to provide a list of neutrals and there is no successor thereto, then additional arbitrators shall be selected by the parties.
(e) Subject to Paragraph
4.10 below, the cost of the arbitrator must be paid equally by both parties. Subject to Paragraph 4.10 below, if one party refuses or
fails to pay its portion of the arbitrator fee, then the other party can advance such unpaid amount (subject to the accrual of Default
Interest thereupon), with such amount being added to or subtracted from, as applicable, the Arbitration Award.
4.3 Applicability
of Certain Massachusetts Rules. The parties agree that the Arbitration shall be conducted generally in accordance with the Massachusetts
Rules of Civil Procedure and the Massachusetts Rules of Evidence. More specifically, the Massachusetts Rules of Civil Procedure shall
apply, without limitation, to the filing of any pleadings, motions or memoranda, the conducting of discovery, and the taking of any depositions.
The Massachusetts Rules of Evidence shall apply to any hearings, whether telephonic or in person, held by the arbitrator. Notwithstanding
the foregoing, it is the parties’ intent that the incorporation of such rules will in no event supersede these Arbitration Provisions.
In the event of any conflict between the Massachusetts Rules of Civil Procedure or the Massachusetts Rules of Evidence and these Arbitration
Provisions, these Arbitration Provisions shall control.
4.4 Answer and
Default. An answer and any counterclaims to the Arbitration Notice shall be required to be delivered to the party initiating the Arbitration
within twenty (20) calendar days after the Arbitration Commencement Date. If an answer is not delivered by the required deadline, the
arbitrator must provide written notice to the defaulting party stating that the arbitrator will enter a default award against such party
if such party does not file an answer within five (5) calendar days of receipt of such notice. If an answer is not filed within the five
(5) day extension period, the arbitrator must render a default award, consistent with the relief requested in the Arbitration Notice,
against a party that fails to submit an answer within such time period.
4.5 [Intentionally
Omitted].
4.6 Discovery.
The parties agree that discovery shall be conducted as follows:
(a) Written discovery
will only be allowed if the likely benefits of the proposed written discovery outweigh the burden or expense thereof, and the written
discovery sought is likely to reveal information that will satisfy a specific element of a claim or defense already pleaded in the Arbitration.
The party seeking written discovery shall always have the burden of showing that all of the standards and limitations set forth in these
Arbitration Provisions are satisfied. The scope of discovery in the Arbitration proceedings shall also be limited as follows:
(i) To facts
directly connected with the transactions contemplated by the Agreement.
(ii) To facts and information that cannot
be obtained from another source or in another manner that is more convenient, less burdensome or less expensive than in the manner requested.
(b) No party shall
be allowed (i) more than fifteen (15) interrogatories (including discrete subparts), (ii) more than fifteen (15) requests for admission
(including discrete subparts), (iii) more than ten (10) document requests (including discrete subparts), or (iv) more than three (3) depositions
(excluding expert depositions) for a maximum of seven (7) hours per deposition. The costs associated with depositions will be borne by
the party taking the deposition. The party defending the deposition will submit a notice to the party taking the deposition of the estimated
attorneys’ fees that such party expects to incur in connection with defending the deposition. If the party defending the deposition
fails to submit an estimate of attorneys’ fees within five (5) calendar days of its receipt of a deposition notice, then such party
shall be deemed to have waived its right to the estimated attorneys’ fees. The party taking the deposition must pay the party defending
the deposition the estimated attorneys’ fees prior to taking the deposition, unless such obligation is deemed to be waived as set
forth in the immediately preceding sentence. If the party taking the deposition believes that the estimated attorneys’ fees are
unreasonable, such party may submit the issue to the arbitrator for a decision.
(c)
All discovery requests (including document production requests included in deposition notices) must be submitted in writing to the arbitrator
and the other party. The party submitting the written discovery requests must include with such discovery requests a detailed explanation
of how the proposed discovery requests satisfy the requirements of these Arbitration Provisions and the Massachusetts Rules of Civil Procedure.
The receiving party will then be allowed, within five (5) calendar days of receiving the proposed discovery requests, to submit to the
arbitrator an estimate of the attorneys’ fees and costs associated with responding to such written discovery requests and a written
challenge to each applicable discovery request. After receipt of an estimate of attorneys’ fees and costs and/or challenge(s) to
one or more discovery requests, consistent with subparagraph (c) above, the arbitrator will within three (3) calendar days make a finding
as to the likely attorneys’ fees and costs associated with responding to the discovery requests and issue an order that (i) requires
the requesting party to prepay the attorneys’ fees and costs associated with responding to the discovery requests, and (ii) requires
the responding party to respond to the discovery requests as limited by the arbitrator within twenty-five (25) calendar days of
the arbitrator’s finding with respect to such discovery requests. If a party entitled to submit an estimate of attorneys’
fees and costs and/or a challenge to discovery requests fails to do so within such 5-day period, the arbitrator will make a finding that
(A) there are no attorneys’ fees or costs associated with responding to such discovery requests, and (B) the responding party must
respond to such discovery requests (as may be limited by the arbitrator) within twenty-five (25) calendar days of the arbitrator’s
finding with respect to such discovery requests. Any party submitting any written discovery requests, including without limitation interrogatories,
requests for production subpoenas to a party or a third party, or requests for admissions, must prepay the estimated attorneys’
fees and costs, before the responding party has any obligation to produce or respond to the same, unless such obligation is deemed waived
as set forth above.
(d) In order to allow
a written discovery request, the arbitrator must find that the discovery request satisfies the standards set forth in these Arbitration
Provisions and the Massachusetts Rules of Civil Procedure. The arbitrator must strictly enforce these standards. If a discovery request
does not satisfy any of the standards set forth in these Arbitration Provisions or the Massachusetts Rules of Civil Procedure, the arbitrator
may modify such discovery request to satisfy the applicable standards, or strike such discovery request in whole or in part.
(e) Each party may
submit expert reports (and rebuttals thereto), provided that such reports must be submitted within sixty (60) days of the Arbitration
Commencement Date. Each party will be allowed a maximum of two (2) experts. Expert reports must contain the following: (i) a complete
statement of all opinions the expert will offer at trial and the basis and reasons for them; (ii) the expert’s name and qualifications,
including a list of all the expert’s publications within the preceding ten (10) years, and a list of any other cases in which the
expert has testified at trial or in a deposition or prepared a report within the preceding ten (10) years; and (iii) the compensation
to be paid for the expert’s report and testimony. The parties are entitled to depose any other party’s expert witness one
(1) time for no more than four (4) hours. An expert may not testify in a party’s case-in-chief concerning any matter not fairly
disclosed in the expert report.
4.6 Dispositive
Motions. Each party shall have the right to submit dispositive motions pursuant to the Massachusetts Rules of Civil Procedure (a “Dispositive
Motion”). The party submitting the Dispositive Motion may, but is not required to, deliver to the arbitrator and to the other
party a memorandum in support (the “Memorandum in Support”) of the Dispositive Motion. Within seven (7) calendar days
of delivery of the Memorandum in Support, the other party shall deliver to the arbitrator and to the other party a memorandum in opposition
to the Memorandum in Support (the “Memorandum in Opposition”). Within seven (7) calendar days of delivery of the Memorandum
in Opposition, as applicable, the party that submitted the Memorandum in Support shall deliver to the arbitrator and to the other party
a reply memorandum to the Memorandum in Opposition (“Reply Memorandum”). If the applicable party shall fail to deliver
the Memorandum in Opposition as required above, or if the other party fails to deliver the Reply Memorandum as required above, then the
applicable party shall lose its right to so deliver the same, and the Dispositive Motion shall proceed regardless.
4.7
Confidentiality. All information disclosed by either party (or such party’s agents) during the Arbitration process (including
without limitation information disclosed during the discovery process or any Appeal (defined below)) shall be considered confidential
in nature. Each party agrees not to disclose any confidential information received from the other party (or its agents) during the Arbitration
process (including without limitation during the discovery process or any Appeal) unless (a) prior to or after the time of disclosure
such information becomes public knowledge or part of the public domain, not as a result of any inaction or action of the receiving party
or its agents, (b) such information is required by a court order, subpoena or similar legal duress to be disclosed if such receiving party
has notified the other party thereof in writing and given it a reasonable opportunity to obtain a protective order from a court of competent
jurisdiction prior to disclosure, or (c) such information is disclosed to the receiving party’s agents, representatives and legal
counsel on a need to know basis who each agree in writing not to disclose such information to any third party. The arbitrator is hereby
authorized and directed to issue a protective order to prevent the disclosure of privileged information and confidential information upon
the written request of either party.
4.8 Authorization;
Timing; Scheduling Order. Subject to all other portions of these Arbitration Provisions, the parties hereby authorize and direct the
arbitrator to take such actions and make such rulings as may be necessary to carry out the parties’ intent for the Arbitration proceedings
to be efficient and expeditious. The parties hereby agree that an Arbitration Award must be made within one hundred twenty (120) calendar
days after the Arbitration Commencement Date. The arbitrator is hereby authorized and directed to hold a scheduling conference within
ten (10) calendar days after the Arbitration Commencement Date in order to establish a scheduling order with various binding deadlines
for discovery, expert testimony, and the submission of documents by the parties to enable the arbitrator to render a decision prior to
the end of such 120-day period.
4.9 Relief.
The arbitrator shall have the right to award or include in the Arbitration Award (or in a preliminary ruling) any relief which the arbitrator
deems proper under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the arbitrator
may not award exemplary or punitive damages.
4.10 Fees and
Costs. As part of the Arbitration Award, the arbitrator is hereby directed to require the losing party (the party being awarded the
least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any statutory fines,
penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration, and
(b) reimburse the prevailing party for all reasonable attorneys’ fees, arbitrator costs and fees, deposition costs, other discovery
costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration.
5. Arbitration
Appeal.
5.1 Initiation
of Appeal. Following the entry of the Arbitration Award, either party (the “Appellant”) shall have a period of
thirty (30) calendar days in which to notify the other party (the “Appellee”), in writing, that the Appellant elects
to appeal (the “Appeal”) the Arbitration Award (such notice, an “Appeal Notice”) to a panel of arbitrators
as provided in Paragraph 5.2 below. The date the Appellant delivers an Appeal Notice to the Appellee is referred to herein as the “Appeal
Date”. The Appeal Notice must be delivered to the Appellee in accordance with the provisions of Paragraph 4.1 above with respect
to delivery of an Arbitration Notice. In addition, together with delivery of the Appeal Notice to the Appellee, the Appellant must also
pay for (and provide proof of such payment to the Appellee together with delivery of the Appeal Notice) a bond in the amount of 110% of
the sum the Appellant owes to the Appellee as a result of the Arbitration Award the Appellant is appealing. In the event an Appellant
delivers an Appeal Notice to the Appellee (together with proof of payment of the applicable bond) in compliance with the provisions of
this Paragraph 5.1, the Appeal will occur as a matter of right and, except as specifically set forth herein, will not be further conditioned.
In the event a party does not deliver an Appeal Notice (along with proof of payment of the applicable bond) to the other party within
the deadline prescribed in this Paragraph 5.1, such party shall lose its right to appeal the Arbitration Award. If no party delivers an
Appeal Notice (along with proof of payment of the applicable bond) to the other party within the deadline described in this Paragraph
5.1, the Arbitration Award shall be final. The parties acknowledge and agree that any Appeal shall be deemed part of the parties’
agreement to arbitrate for purposes of these Arbitration Provisions and the Arbitration Act.
5.2 Selection
and Payment of Appeal Panel. In the event an Appellant delivers an Appeal Notice to the Appellee (together with proof of payment of
the applicable bond) in compliance with the provisions of Paragraph 5.1 above, the Appeal will be heard by a three (3) person arbitration
panel (the “Appeal Panel”).
(a)
Within ten (10) calendar days after the Appeal Date, the Appellee shall select and submit to the Appellant the names of five (5) arbitrators
that are designated as “neutrals” or qualified arbitrators by AAA, JAMS (https://www.jamsadr.com/), or other arbitration
service provider agreed upon by the parties (such five (5) designated persons hereunder are referred to herein as the “Proposed
Appeal Arbitrators”). For the avoidance of doubt, each Proposed Appeal Arbitrator must be qualified as a “neutral”
with AAA, JAMS, or other arbitration service provider agreed upon by the parties, and shall not be the arbitrator who rendered the Arbitration
Award being appealed (the “Original Arbitrator”). Within five (5) calendar days after the Appellee has submitted to
the Appellant the names of the Proposed Appeal Arbitrators, the Appellant must select, by written notice to the Appellee, three (3) of
the Proposed Appeal Arbitrators to act as the members of the Appeal Panel. If the Appellant fails to select three (3) of the Proposed
Appeal Arbitrators in writing within such 5-day period, then the Appellee may select such three (3) arbitrators from the Proposed
Appeal Arbitrators by providing written notice of such selection to the Appellant.
(b)
If the Appellee fails to submit to the Appellant the names of the Proposed Appeal Arbitrators within ten (10) calendar days after
the Appeal Date pursuant to subparagraph (a) above, then the Appellant may at any time prior to the Appellee so designating the Proposed
Appeal Arbitrators, identify the names of five (5) arbitrators that are designated as “neutrals” or qualified arbitrators
by AAA, JAMS, or other arbitration service provider agreed upon by the parties (none of whom may be the Original Arbitrator) by written
notice to the Appellee. The Appellee may then, within five (5) calendar days after the Appellant has submitted notice of its selected
arbitrators to the Appellee, select, by written notice to the Appellant, three (3) of such selected arbitrators to serve on the Appeal
Panel. If the Appellee fails to select in writing within such 5-day period three (3) of the arbitrators selected by the Appellant to serve
as the members of the Appeal Panel, then the Appellant may select the three (3) members of the Appeal Panel from the Appellant’s
list of five (5) arbitrators by providing written notice of such selection to the Appellee.
(c) If a selected
Proposed Appeal Arbitrator declines or is otherwise unable to serve, then the party that selected such Proposed Appeal Arbitrator may
select one (1) of the other five (5) designated Proposed Appeal Arbitrators within three (3) calendar days of the date a chosen Proposed
Appeal Arbitrator declines or notifies the parties he or she is unable to serve as an arbitrator. If at least three (3) of the five (5)
designated Proposed Appeal Arbitrators decline or are otherwise unable to serve, then the Proposed Appeal Arbitrator selection process
shall begin again in accordance with this Paragraph 5.2; provided, however, that any Proposed Appeal Arbitrators who have already
agreed to serve shall remain on the Appeal Panel.
(d) The date that
all three (3) Proposed Appeal Arbitrators selected pursuant to this Paragraph 5.2 agree in writing (including via email) delivered to
both the Appellant and the Appellee to serve as members of the Appeal Panel hereunder is referred to herein as the “Appeal Commencement
Date”. No later than five (5) calendar days after the Appeal Commencement Date, the Appellee shall designate in writing (including
via email) to the Appellant and the Appeal Panel the name of one (1) of the three (3) members of the Appeal Panel to serve as the lead
arbitrator in the Appeal proceedings. Each member of the Appeal Panel shall be deemed an arbitrator for purposes of these Arbitration
Provisions and the Arbitration Act, provided that, in conducting the Appeal, the Appeal Panel may only act or make determinations upon
the approval or vote of no less than the majority vote of its members, as announced or communicated by the lead arbitrator on the Appeal
Panel. If an arbitrator on the Appeal Panel ceases or is unable to act during the Appeal proceedings, a replacement arbitrator shall be
chosen in accordance with Paragraph 5.2 above to continue the Appeal as a member of the Appeal Panel. If each of AAA, JAMS, and other
arbitration service provider previously agreed upon by the parties ceases to exist or to provide a list of neutrals and there is no successor
thereto, then additional arbitrators shall be selected by the parties.
(d) Subject to Paragraph 5.7 below, the
cost of the Appeal Panel must be paid entirely by the Appellant.
5.3 Appeal
Procedure. The Appeal will be deemed an appeal of the entire Arbitration Award. In conducting the Appeal, the Appeal Panel shall conduct
a de novo review of all Claims described or otherwise set forth in the Arbitration Notice. Subject to the foregoing and all other provisions
of this Paragraph 5, the Appeal Panel shall conduct the Appeal in a manner the Appeal Panel considers appropriate for a fair and expeditious
disposition of the Appeal, may hold one or more hearings and permit oral argument, and may review all previous evidence and discovery,
together with all briefs, pleadings and other documents filed with the Original Arbitrator (as well as any documents filed with the Appeal
Panel pursuant to Paragraph 5.4(a) below). Notwithstanding the foregoing, in connection with the Appeal, the Appeal Panel shall not permit
the parties to conduct any additional discovery or raise any new Claims to be arbitrated, shall not permit new witnesses or affidavits,
and shall not base any of its findings or determinations on the Original Arbitrator’s findings or the Arbitration Award.
5.4 Timing.
(a) Within seven
(7) calendar days of the Appeal Commencement Date, the Appellant (i) shall deliver or cause to be delivered to the Appeal Panel copies
of the Appeal Notice, all discovery conducted in connection with the Arbitration, and all briefs, pleadings and other documents filed
with the Original Arbitrator (which material Appellee shall have the right to review and supplement if necessary), and (ii) may, but
is not required to, deliver to the Appeal Panel and to the Appellee a Memorandum in Support of the Appellant’s arguments concerning
or position with respect to all Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration. Within seven (7)
calendar days of the Appellant’s delivery of the Memorandum in Support, as applicable, the Appellee shall deliver to the Appeal
Panel and to the Appellant a Memorandum in Opposition to the Memorandum in Support. Within seven (7) calendar days of the Appellee’s
delivery of the Memorandum in Opposition, as applicable, the Appellant shall deliver to the Appeal Panel and to the Appellee a Reply
Memorandum to the Memorandum in Opposition. If the Appellant shall fail to substantially comply with the requirements of clause (i) of
this subparagraph (a), the Appellant shall lose its right to appeal the Arbitration Award, and the Arbitration Award shall be final.
If the Appellee shall fail to deliver the Memorandum in Opposition as required above, or if the Appellant shall fail to deliver the Reply
Memorandum as required above, then the Appellee or the Appellant, as the case may be, shall lose its right to so deliver the same, and
the Appeal shall proceed regardless.
(b) Subject to subparagraph
(a) above, the parties hereby agree that the Appeal must be heard by the Appeal Panel within thirty (30) calendar days of the Appeal Commencement
Date, and that the Appeal Panel must render its decision within thirty (30) calendar days after the Appeal is heard (and in no event later
than sixty (60) calendar days after the Appeal Commencement Date).
5.5 Appeal
Panel Award. The Appeal Panel shall issue its decision (the “Appeal Panel Award”) through the lead arbitrator on
the Appeal Panel. Notwithstanding any other provision contained herein, the Appeal Panel Award shall (a) supersede in its entirety and
make of no further force or effect the Arbitration Award (provided that any protective orders issued by the Original Arbitrator shall
remain in full force and effect), (b) be final and binding upon the parties, with no further rights of appeal, (c) be the sole and exclusive
remedy between the parties regarding any Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration, and (d)
be promptly payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Any costs or fees,
including without limitation attorneys’ fees, incurred in connection with or incident to enforcing the Appeal Panel Award shall,
to the maximum extent permitted by law, be charged against the party resisting such enforcement. The Appeal Panel Award shall include
Default Interest (with respect to monetary awards) at the rate specified in the Note for Default Interest both before and after the Arbitration
Award. Judgment upon the Appeal Panel Award will be entered and enforced by a state or federal court sitting in the Commonwealth of Massachusetts.
5.6 Relief.
The Appeal Panel shall have the right to award or include in the Appeal Panel Award any relief which the Appeal Panel deems proper under
the circumstances, including, without limitation, specific performance and injunctive relief, provided that the Appeal Panel may not award
exemplary or punitive damages.
5.7 Fees and
Costs. As part of the Appeal Panel Award, the Appeal Panel is hereby directed to require the losing party (the party being awarded
the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any statutory fines,
penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration and
the Appeal Panel, and (b) reimburse the prevailing party (the party being awarded the most amount of money by the Appeal Panel, which,
for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges awarded to any
part) the reasonable attorneys’ fees, arbitrator and Appeal Panel costs and fees, deposition costs, other discovery costs, and other
expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration (including without limitation
in connection with the Appeal).
6. Miscellaneous.
6.1 Severability.
If any part of these Arbitration Provisions is found to violate or be illegal under applicable law, then such provision shall be modified
to the minimum extent necessary to make such provision enforceable under applicable law, and the remainder of the Arbitration Provisions
shall remain unaffected and in full force and effect.
6.2 Governing
Law. These Arbitration Provisions shall be governed by the laws of the State of Nevada without regard to the conflict of laws principles
therein.
6.3 Interpretation.
The headings of these Arbitration Provisions are for convenience of reference only and shall not form part of, or affect the interpretation
of, these Arbitration Provisions.
6.4 Waiver.
No waiver of any provision of these Arbitration Provisions shall be effective unless it is in the form of a writing signed by the party
granting the waiver.
6.5 Time is of
the Essence. Time is expressly made of the essence with respect to each and every provision of these Arbitration Provisions.
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Exhibit 10.2
NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR (B) AN OPINION OF COUNSEL (WHICH MAY BE THE LEGAL COUNSEL OPINION (AS DEFINED IN THE PURCHASE AGREEMENT)), IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A OR REGULATION S UNDER SAID
ACT OR OTHER APPLICABLE EXEMPTION. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
| Principal Amount: $620,000.00 |
Issue Date: February 27, 2025 |
Actual Amount of Purchase Price:
$558,000.00
JUNIOR SECURED PROMISSORY NOTE
FOR VALUE RECEIVED,
CLEAN ENERGY TECHNOLOGIES, INC., a Nevada corporation (hereinafter called the “Borrower” or the “Company”)
(Trading Symbol: CETY), hereby promises to pay to the order of MAST HILL FUND, L.P., a Delaware limited partnership, or registered
assigns (the “Holder”), in the form of lawful money of the United States of America, the principal sum of $620,000.00 (the
“Principal Amount”) (subject to adjustment herein), of which $558,000.00 is the actual amount of the purchase price hereof
plus an original issue discount in the amount of $62,000.00 (the “OID”), and to pay interest on the unpaid Principal Amount
hereof at the rate of ten percent (10%) (the “Interest Rate”) per annum from the date hereof (the “Issue Date”)
until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise, as further provided herein.
The maturity date shall be twelve (12) months from the Issue Date (the “Maturity Date”), and is the date upon which the Principal
Amount (which includes the OID) and any accrued and unpaid interest and other fees, shall be due and payable.
This Note may not be prepaid or repaid in whole or in part
except as otherwise explicitly set forth herein.
Any Principal
Amount or interest on this Note which is not paid when due shall bear interest at the rate of the lesser of (i) sixteen percent (16%)
per annum and (ii) the maximum amount permitted by law from the due date thereof until the same is paid (“Default Interest”).
Interest and Default Interest shall be computed on the basis of a 365-day year and the actual number of days elapsed.
All payments due
hereunder (to the extent not converted into shares of common stock, $0.001 par value per share, of the Borrower (the “Common Stock”)
in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such
address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever
any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due
on the next succeeding day which is a business day.
Each capitalized
term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement, dated
as of the Issue Date, pursuant to which this Note was originally issued (the “Purchase Agreement”). As used in this Note,
the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of
New York, New York are authorized or required by law or executive order to remain closed. As used herein, the term “Trading Day”
means any day that shares of Common Stock are listed for trading or quotation on the Principal Market (as defined in the Purchase Agreement),
provided, however, that if the Common Stock is not then listed or quoted on any Principal Market, then any calendar day.
This Note is free
from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other
similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.
The following terms shall also apply to this Note:
ARTICLE I. CONVERSION RIGHTS
1.1 Conversion
Right. The Holder shall have the right, on any calendar day, at any time on or following the Issue Date, to convert all or any portion
of the then outstanding and unpaid Principal Amount and interest (including any Default Interest) into fully paid and non-assessable shares
of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into
which such Common Stock shall hereafter be changed or reclassified, at the Conversion Price (as defined below) determined as provided
herein (a “Conversion”); by submitting to the Borrower or Borrower’s transfer agent a Notice of Conversion (as defined
in this Note) by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date (as defined in this Note)
prior to 11:59 p.m., New York, New York time; provided, however, that notwithstanding anything to the contrary contained herein,
the Holder shall not have the right to convert any portion of this Note, pursuant to Section 1 or otherwise, to the extent that after
giving effect to such issuance after conversion as set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s
affiliates (the “Affiliates”), and any other Persons (as defined below) acting as a group together with the Holder or any
of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned
by the Holder and Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of this Note with respect
to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) conversion
of the remaining, nonconverted portion of this Note beneficially owned by the Holder or any of its Affiliates or Attribution Parties and
(ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company subject to a limitation
on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for purposes of this Section 1.1, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”) and the rules and regulations
promulgated thereunder, it being acknowledged by the Holder that the Holder is solely responsible for any schedules required to be filed
in accordance therewith. In addition, a determination as to any group status as contemplated above shall be determined in accordance with
Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder. For purposes of this Section 1.1, in determining the
number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in
(A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares
of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within two Trading Days confirm orally
and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the
Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported.
The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding at the time of
the respective calculation hereunder. “Person” and “Persons” means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any governmental entity or
any department or agency thereof. The limitations contained in this paragraph shall apply to a successor holder of this Note. The number
of Conversion Shares to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined
below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto
as Exhibit A (the “Notice of Conversion”), delivered to the Borrower or Borrower’s transfer agent by the Holder
in accordance with the terms of this Note; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means
resulting in, or reasonably expected to result in, notice) to the Borrower or Borrower’s transfer agent before 11:59 p.m., New York,
New York time on such conversion date (the “Conversion Date”). The term “Conversion Amount” means, with respect
to any conversion of this Note, the sum of (1) the Principal Amount of this Note to be converted in such conversion plus (2) at
the Holder’s option, accrued and unpaid interest, if any, on such Principal Amount at the Interest Rate to the Conversion Date,
plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses
(1) and/or (2). In addition to the beneficial ownership limitations provided in this Note, the sum of the number of shares of Common Stock
that may be issued under this Note shall be limited to the amount described in Section 4(r) of the Purchase Agreement, unless the Shareholder
Approval (as defined in the Purchase Agreement) (“Shareholder Approval”) is obtained by the Company.
1.2 Conversion Price.
(a) Calculation
of Conversion Price. The per share conversion price into which Principal Amount and interest (including any Default Interest) under
this Note shall be convertible into shares of Common Stock hereunder as further described in this Note shall equal the lesser of
(i) $2.50 or (ii) the Market Price (as defined in this Note), subject to adjustment as provided in this Note. “Market Price”
shall mean 90% of the lowest VWAP (as defined in this Note) on any Trading Day during the five (5) Trading Day period immediately preceding
the respective Conversion Date, in each case subject to adjustment as provided in this Note (the “Conversion Price”). “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market during the
period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Quotestream or other similar quotation
service provider designated by the Holder. If at any time the Conversion Price as determined hereunder for any conversion would be less
than the par value of the Common Stock, then at the sole discretion of the Holder, the Conversion Price hereunder may equal such par value
for such conversion and the Conversion Amount for such conversion may be increased to include Additional Principal, where “Additional
Principal” means such additional amount to be added to the Conversion Amount to the extent necessary to cause the number of conversion
shares issuable upon such conversion to equal the same number of conversion shares as would have been issued had the Conversion Price
not been adjusted by the Holder to the par value price. Holder shall be entitled to deduct $1,750.00 from the conversion amount in each
Notice of Conversion to cover Holder’s fees associated with each Notice of Conversion. All such Conversion Price determinations
are to be appropriately adjusted for any stock dividend, stock split, stock combination, rights offerings, reclassification or similar
transaction that proportionately decreases or increases the Common Stock. If the Company, at any time while this Note is outstanding:
(i) pays astock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock
or any Common Stock Equivalents, (ii) subdivides outstanding shares of Common Stock into a largernumber of shares, (iii) combines (including
by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a
reclassification of shares of the Common Stock, any sharesof capital stock of the Company, then the Conversion Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding
immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after
such event. Any adjustment made pursuant to the immediately preceding sentence shall become effective immediately after the record date
for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification. “Common Stock Equivalents” means any securities
of the Company or the Company’s Subsidiaries (as defined in the Purchase Agreement) which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
(b) Voluntary
Adjustment By Company. Subject to the rules and regulations of the Principal Market, the Company may at any time while this Note is
outstanding, with the prior written consent of the Holder, reduce the then applicable Conversion Price to any amount and for any period
of time deemed appropriate by the Board of Directors of the Company. For the avoidance of doubt, the Holder shall not be required to effectuate
such conversion in the event of any reduction in Conversion Price by the Company.
1.3 Authorized
and Reserved Shares. The Borrower covenants that at all times until the Note is satisfied in full, the Borrower will reserve from
its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of a
number of Conversion Shares equal to the greater of: (a) 4,650,000 shares of Common Stock or (b) the sum of (i) the number of Conversion
Shares issuable upon the full conversion of this Note (assuming no payment of Principal Amount or interest) at the time of such calculation
(taking into consideration any adjustments to the Conversion Price as provided in this Note) multiplied by (ii) three (3)
(the “Reserved Amount”). The Borrower represents that upon issuance, the Conversion Shares will be duly and validly issued,
fully paid and non-assessable. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates
for the Conversion Shares or instructions to have the Conversion Shares issued as contemplated by Section 1.4(f) hereof, and (ii) agrees
that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock
certificates or cause the Company to electronically issue shares of Common Stock to execute and issue the necessary certificates for the
Conversion Shares or cause the Conversion Shares to be issued as contemplated by Section 1.4(f) hereof in accordance with the terms and
conditions of this Note.
If, at any time, the Borrower does not
maintain the Reserved Amount, it will be considered an Event of Default (as defined in this Note) under this Note.
1.4 Method of Conversion.
(a) [Intentionally Omitted].
(b) Surrender
of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with
the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid Principal
Amount is so converted. The Holder and the Borrower shall maintain records showing the Principal Amount so converted and the dates of
such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical
surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Holder shall, prima
facie, be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note
is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower,
whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder
(upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid Principal
Amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions
of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted Principal Amount of this Note represented
by this Note may be less than the amount stated on the face hereof.
(c) Payment
of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder
(or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless
and until the person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holder’s
account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction
of the Borrower that such tax has been paid.
(d) Delivery
of Common Stock Upon Conversion. Upon receipt by the Borrower or Borrower’s transfer agent from the Holder of a facsimile transmission
or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in
this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates
for the Conversion Shares (or cause the electronic delivery of the Conversion Shares as contemplated by Section 1.4(f) hereof) within
one (1) Trading Day after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid Principal
Amount and interest (including any Default Interest) under this Note, surrender of this Note). If the Company shall fail for any reason
or for no reason to issue to the Holder on or prior to the Deadline a certificate for the number of Conversion Shares or to which the
Holder is entitled hereunder and register such Conversion Shares on the Company’s share register or to credit the Holder’s
balance account with DTC (as defined below) for such number of Conversion Shares to which the Holder is entitled upon the Holder’s
conversion of this Note (a “Conversion Failure”), then, in addition to all other remedies available to the Holder, (i) the
Company shall pay in cash to the Holder on each day after the Deadline and during such Conversion Failure an amount equal to 2.0% of the
product of (A) the sum of the number of Conversion Shares not issued to the Holder on or prior to the Deadline and to which the
Holder is entitled and (B) the closing sale price of the Common Stock on the Trading Day immediately preceding the last possible date
which the Company could have issued such Conversion Shares to the Holder without violating this Section 1.4(d); and (ii) the Holder, upon
written notice to the Company, may void all or any portion of such Notice of Conversion; provided that the voiding of all or any portion
of a Notice of Conversion shall not affect the Company’s obligations to make any payments which have accrued prior to the date of
such notice. In addition to the foregoing, if on or prior to the Deadline the Company shall fail to issue and deliver a certificate to
the Holder and register such Conversion Shares on the Company’s share register or credit the Holder’s balance account with
DTC for the number of Conversion Shares to which the Holder is entitled upon the Holder’s exercise hereunder or pursuant to the
Company’s obligation pursuant to clause (ii) below, and if on or after such Trading Day the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable
upon such exercise that the Holder anticipated receiving from the Company, then the Company shall, within two (2) Trading Days after the
Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s
total purchase price (including brokerage commissions and other reasonable and customary out-of-pocket expenses, if any) for the shares
of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate
(and to issue such Conversion Shares) or credit such Holder’s balance account with DTC for such Conversion Shares shall terminate,
or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Conversion Shares or credit
such Holder’s balance account with DTC and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price
over the product of (A) such number of shares of Common Stock, times (B) the closing sales price of the Common Stock on the date of exercise.
Nothing shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates
representing the Conversion Shares (or to electronically deliver such Conversion Shares) upon the conversion of this Note as required
pursuant to the terms hereof.
(e) Obligation
of Borrower to Deliver Common Stock. At the time that the Holder submits the Notice of Conversion to the Borrower or Borrower’s
transfer agent, the Holder shall be deemed to be the holder of record of the Conversion Shares issuable upon such conversion, the outstanding
Principal Amount and the amount of accrued and unpaid interest (including any Default Interest) under this Note shall be reduced to reflect
such conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion of
this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other
assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s
obligation to issue and deliver the certificates for the Conversion Shares (or cause the electronic delivery of the Conversion Shares
as contemplated by Section 1.4(f) hereof) shall be absolute and unconditional, irrespective of the absence of any action by the Holder
to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any
action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or
any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the
Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection
with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of
Conversion is sent to the Borrower or Borrower’s transfer agent before 11:59 p.m., New York, New York time, on such date.
(f) Delivery
of Conversion Shares by Electronic Transfer. In lieu of delivering physical certificates representing the Conversion Shares issuable
upon conversion hereof, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer or Deposit/Withdrawal at Custodian programs, upon request of the Holder and its compliance with the provisions contained in Section
1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Conversion
Shares issuable upon conversion hereof to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit
Withdrawal Agent Commission system.
1.5 Concerning
the Shares. The Conversion Shares issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are
sold pursuant to an effective registration statement under the 1933 Act or (ii) the Borrower or its transfer agent shall have been furnished
with an opinion of counsel (which opinion shall be the Legal Counsel Opinion (as defined in the Purchase Agreement)) to the effect that
the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are
sold or transferred pursuant to Rule 144, Rule 144A, Regulation S, or other applicable exemption, or (iv) such shares are transferred
to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance
with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase
Agreement (and subject to the removal provisions set forth below), until such time as the Conversion Shares have been registered under
the 1933 Act or otherwise may be sold pursuant to Rule 144, Rule 144A, Regulation S, or other applicable exemption without any restriction
as to the number of securities as of a particular date that can then be immediately sold, each certificate for the Conversion Shares that
has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement
or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:
“NEITHER THE ISSUANCE AND
SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR (B) AN OPINION OF COUNSEL (WHICH MAY BE THE LEGAL COUNSEL OPINION (AS DEFINED IN THE PURCHASE AGREEMENT)), IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A, REGULATION S UNDER SAID ACT,
OR OTHER APPLICABLE EXEMPTION. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
The legend set forth
above shall be removed and the Company shall issue to the Holder a certificate for the applicable Conversion Shares without such legend
upon which it is stamped or (as requested by the Holder) issue the applicable Conversion Shares by electronic delivery by crediting the
account of such holder’s broker with DTC, if, unless otherwise required by applicable state securities laws: (a) such Conversion
Shares are registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to
Rule 144, Rule 144A, Regulation S, or other applicable exemption without any restriction as to the number of securities as of a particular
date that can then be immediately sold, or (b) the Company or the Holder provides the Legal Counsel Opinion (as contemplated by and in
accordance with Section 4(m) of the Purchase Agreement) to the effect that a public sale or transfer of such Conversion Shares may be
made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected.
The Company shall be responsible for the fees of its transfer agent and all DTC fees associated with any such issuance. The Holder agrees
to sell all Conversion Shares, including those represented by a certificate(s) from which the legend has been removed, in compliance with
applicable prospectus delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided by
the Holder with respect to the transfer of Conversion Shares pursuant to an exemption from registration, such as Rule 144, Rule 144A,
Regulation S, or other applicable exemption, at the Deadline, notwithstanding that the conditions of Rule 144, Rule 144A, Regulation S,
or other applicable exemption, as applicable, have been met, it will be considered an Event of Default under this Note.
1.6 Effect of Certain Events.
(a) Effect
of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the
assets of the Borrower, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined
below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default pursuant to which the Borrower
shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to the Default
Amount (as defined in this Note) or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual,
corporation, limited liability company, partnership, association, trust or other entity or organization.
(b) Adjustment
Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of this
Note, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result
of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares of another class or classes
of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets
of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter
have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu
of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would
have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without
regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the
rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment
of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as
may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not effectuate
any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, at least thirty (30) days prior
written notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special meeting of shareholders
to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization,
reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b)
the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b).
The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.
(c) Adjustment
Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders
of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution
to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off))
(a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this Note after the date of record
for determining shareholders entitled to such Distribution, to receive the amount of such assets which would have been payable to the
Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder of such shares of Common
Stock on the record date for the determination of shareholders entitled to such Distribution.
(d) Purchase
Rights. If, at any time when all or any portion of this Note is issued and outstanding, the Borrower issues any convertible securities
or rights to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record holders
of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable
upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
(e) Dilutive
Issuance. If the Borrower, at any time while this Note or any amounts due hereunder are outstanding, issues, sells or grants any option
to purchase, or sells or grants any right to reprice, or otherwise disposes of, or issues or announces any sale, grant or any option to
purchase or other disposition, any Common Stock or other securities convertible into, exercisable for, or otherwise entitle any person
or entity the right to acquire, shares of Common Stock (including, without limitation, any convertible notes or warrants outstanding as
of or following the Issue Date), in each or any case at an effective price per share that is lower than the then Conversion Price (such
lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”) (it being agreed
that if the holder of the Common Stock or other securities so issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which
are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower
than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive
Issuance), then the Conversion Price shall be reduced, at the option of the Holder, to a price equal to the Base Conversion Price. Such
adjustment shall be made whenever such Common Stock or other securities are issued. By way of example, and for the avoidance of doubt,
if the Company issues a convertible promissory note (including but not limited to a Variable Rate Transaction (as defined in the Purchase
Agreement)), and the holder of such convertible promissory note has the right to convert it into Common Stock at an effective price per
share that is lower than the then Conversion Price (including but not limited to a conversion price with a discount that varies with the
trading prices of or quotations for the Common Stock), then the Holder has the right to reduce the Conversion Price to such Base Conversion
Price (including but not limited to a conversion price with a discount that varies with the trading prices of or quotations for the Common
Stock) in perpetuity regardless of whether the holder of such convertible promissory note ever effectuated a conversion at the Base Conversion
Price. In the event of an issuance of securities involving multiple tranches or closings, any adjustment pursuant to this Section 1.6(e)
shall be calculated as if all such securities were issued at the initial closing. Notwithstanding anything to the contrary, the issuance
of the Company’s securities pursuant to an employee stock options plan authorized and approved by the board of directors of the
Company does not constitute a Dilutive Issuance for the purpose of this subsection 1.6(e).
(f) Notice
of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described
in Section 1.6 of this Note, the Borrower shall, at its expense and within one (1) calendar day after the occurrence of each respective
adjustment or readjustment of the Conversion Price, compute such adjustment or readjustment and prepare and furnish to the Holder a certificate
setting forth (i) the Conversion Price in effect at such time based upon the Dilutive Issuance, (ii) the number of shares of Common Stock
and the amount, if any, of other securities or property which at the time would be received upon conversion of the Note, (iii) the detailed
facts upon which such adjustment or readjustment is based, and (iv) copies of the documentation (including but not limited to relevant
transaction documents) that evidences the adjustment or readjustment. In addition, the Borrower shall, within one (1) calendar day after
each written request from the Holder, furnish to such Holder a like certificate setting forth (i) the Conversion Price in effect at such
time based upon the Dilutive Issuance, (ii) the number of shares of Common Stock and the amount, if any, of other securities or
property which at the time would be received upon conversion of the Note, (iii) the detailed facts upon which such adjustment or readjustment
is based, and (iv) copies of the documentation (including but not limited to relevant transaction documents) that evidences the adjustment
or readjustment. For the avoidance of doubt, each adjustment or readjustment of the Conversion Price as a result of the events described
in Section 1.6 of this Note shall occur without any action by the Holder and regardless of whether the Borrower complied with the notification
provisions in Section 1.6 of this Note.
1.7 [Intentionally Omitted].
1.8 Status
as Shareholder. Upon submission of a Notice of Conversion by the Holder, (i) the Conversion Shares covered thereby (other than the
Conversion Shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved
Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder of
such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common
Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower
to comply with the terms of this Note. Notwithstanding the foregoing, if the Holder has not received certificates for all shares of Common
Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion of this
Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower)
the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall,
as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect
that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies for the Borrower’s
failure to convert this Note.
1.9 Prepayment.
At any time prior to the date that an Event of Default occurs under this Note, the Borrower shall have the right, exercisable on fifteen
(15) Trading Days prior written notice to the Holder of the Note, to prepay in whole or in part the outstanding Principal Amount and interest
then due under this Note in accordance with this Section 1.9. Any notice of prepayment hereunder (an “Optional Prepayment Notice”)
shall be delivered to the Holder of the Note at its registered addresses or by email and shall state: (1) that the Borrower is exercising
its right to prepay the Note, (2) the amount of Principal Amount and interest then due that the Borrower is prepaying; and (3)
the date of prepayment which shall be fifteen (15) Trading Days from the date of the Optional Prepayment Notice (the “Optional Prepayment
Date”). The Holder shall have the right, during the period beginning on the date of Holder’s receipt of the Optional Prepayment
Notice and until the Holder’s actual receipt of the full prepayment amount on the Optional Prepayment Date, to instead convert all
or any portion of the Note pursuant to the terms of this Note, including the amount of this Note to be prepaid by the Borrower in accordance
with this Section 1.9. On the Optional Prepayment Date, the Borrower shall make payment of the amounts designated below to or upon the
order of the Holder as specified by the Holder in writing to the Borrower. If the Borrower exercises its right to prepay the Note in accordance
with this Section 1.9, the Borrower shall make payment to the Holder of an amount in cash equal to the sum of: (w) 100% multiplied by
the Principal Amount to be prepaid pursuant to the Optional Prepayment Notice plus (x) accrued and unpaid interest on the Principal
Amount to the Optional Prepayment Date plus (y) $750.00 to reimburse Holder for administrative fees.
If the Borrower delivers an Optional
Prepayment Notice and fails to pay the applicable prepayment amount due to the Holder of the Note as provided in this Section 1.9 on two
(2) separate occasions, then the Borrower shall forever forfeit its right to prepay any part of the Note pursuant to this Section 1.9.
1.10 Repayment
from Proceeds. If, at any time prior to the full repayment or full conversion of all amounts owed under this Note, the Company and
the Company’s Majority-Owned Subsidiaries (defined below) have collectively received cash proceeds of more than $1,000,000.00 (the
“Minimum Threshold”) in the aggregate (for the avoidance of doubt, each time that the Company or any of the Company’s
Majority-Owned Subsidiaries receives cash proceeds on or after the Issue Date (except with respect to this Note), such amount shall be
aggregated together for purposes of calculating the Minimum Threshold) from any source or series of related or unrelated sources, including
but not limited to the issuance of equity or debt, the incurrence of Indebtedness (as defined in this Note), a merchant cash advance,
sale of receivables or similar transaction, the conversion of outstanding warrants of the Company or any of the Company’s Majority-Owned
Subsidiaries, the issuance of securities pursuant to an Equity Line of Credit (as defined in this Note) of the Company, or the sale of
assets by the Company or any of the Company’s Majority- Owned Subsidiaries, the Company shall, within one (1) business day of Company’s
or the Majority-Owned Subsidiaries’ receipt of such proceeds, inform the Holder of or publicly disclose such receipt, following
which the Holder shall have the right in its sole discretion to require the Company or the Majority-Owned Subsidiaries to immediately
apply up to 50% of such proceeds to repay all or any portion of the outstanding Principal Amount and interest (including any Default Interest)
then due under this Note, provided, however, that the Holder may, in Holder’s sole discretion, waive such repayment requirement
in writing. Failure of the Company to comply with this provision shall constitute an Event of Default. “Equity Line of Credit”
shall mean any transaction involving a written agreement between the Company and an investor or underwriter whereby the Company has the
right to “put” its Common Stock to the investor or underwriter over an agreed period of time and at an agreed price or price
formula (such Common Stock must be registered pursuant to a registration statement of the Company for the investor’s or underwriter’s
resale). “Majority-Owned Subsidiaries” refer to the Company’s Subsidiaries in which the Company owns a 50 per centum
or more of the outstanding voting securities, excluding the Company’s subsidiaries incorporated or registered in the People’s
Republic of China (the “PRC Subsidiaries”). Notwithstanding anything in this Section 1.10 of this Note to the contrary, if
any cash proceeds are received by any Subsidiaries or PRC Subsidiaries pursuant to an agreement or contract to which the Company is a
party to, then such proceeds shall be deemed to be received by the Company. Notwithstanding anything in this Section 1.10 of this Note
to the contrary, this Section 1.10 of this Note shall not apply to the Company’s or the Majority-Owned Subsidiaries’ receipt
of proceeds pursuant to accounts receivable or payments from customers.
ARTICLE II. RANKING AND CERTAIN
COVENANTS
2.1 Ranking
and Security. This Note shall be a junior secured obligation of the Borrower, with priority over all existing and future indebtedness
of the Borrower, as provided in this Note and that certain security agreement entered into between the Borrower and the Holder on or around
January 16, 2025, as amended from time to time (including but not limited to by the Security Agreement Amendment (as defined in the Purchase
Agreement)) (the “Security Agreement”), except that such security interest shall be subject to the consent to security interest
agreement entered into on or around January 16, 2025, by and between Borrower, Holder, and Nations Interbanc, as amended from time to
time (the “Consent Agreement”).
2.2 Other
Indebtedness. In addition to all obligations under the Security Agreement, and so long as the Borrower shall have any obligation under
this Note, neither the Borrower nor any of the Borrower’s Subsidiaries shall (directly or indirectly) incur or suffer to exist or
guarantee any Indebtedness that is (i) secured by the assets of the Borrower or any of the Borrower’s Subsidiaries except with respect
to the Senior Creditor Obligations (as defined in the Consent Agreement) (the “Senior Creditor Obligations”) or pursuant to
the Security Agreement or (ii) senior to or pari passu with (in priority of payment and performance) the Borrower’s obligations
hereunder except with respect to the Senior Creditor Obligations. “Indebtedness” shall mean all indebtedness, including but
not limited to (a) all indebtedness of the Borrower or Subsidiaries for the deferred purchase price of property or services, including
any type of letters of credit, (b) all liabilities, obligations and indebtedness for borrowed money including, but not limited to, all
obligations of the Borrower or Subsidiaries evidenced by notes, bonds, debentures or other similar instruments, (c) purchase money
indebtedness hereafter incurred by the Borrower or Subsidiaries to finance the purchase of fixed or capital assets, including all capital
lease obligations of the Borrower which do not exceed the purchase price of the assets funded, (d) all guaranties, endorsements and other
contingent obligations in respect of indebtedness of Borrower, Subsidiaries or others, whether or not the same are or should be reflected
in the Borrower’s or Subsidiaries’ consolidated balance sheet (or the notes thereto), (e) all guarantee obligations of the
Borrower or Subsidiaries in respect of obligations of the kind referred to in clauses (a) through (d) above that the Borrower or Subsidiaries
would not be permitted to incur or enter into, and (f) all obligations of the kind referred to in clauses (a) through (e) above that the
Borrower or Subsidiaries is not permitted to incur or enter into that are secured and/or unsecured by (or for which the holder of such
obligation has an existing right, contingent or otherwise, to be secured and/or unsecured by) any lien or encumbrance on property (including
accounts and contract rights) owned by the Borrower or Subsidiaries, whether or not the Borrower or Subsidiaries has assumed or become
liable for the payment of such obligation.
2.3 Distributions
on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s
written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other
securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares of Common
Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except
for distributions pursuant to any shareholders’ rights plan which is approved by a majority of the Borrower’s disinterested
directors.
2.4 Restriction
on Stock Repurchases and Debt Repayments. So long as the Borrower shall have any obligation under this Note, the Borrower shall not
without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other
securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants,
rights or options to purchase or acquire any such shares, or repay any pari passu or subordinated indebtedness of Borrower.
2.5 Sale
of Assets. So long as the Borrower shall have any obligation under this Note, neither the Borrower nor any of the Borrower’s
Majority-Owned Subsidiaries shall, without the Holder’s written consent, sell, lease or otherwise dispose of any significant portion
of its assets outside the ordinary course of business. Any consent by the Holder to the disposition of any assets may be conditioned on
a specified use of the proceeds of disposition.
2.6 Advances
and Loans; Affiliate Transactions. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without
the Holder’s written consent, lend money, give credit, make advances to any officers, directors, or employees of the Borrower, except
loans, credits or advances (a) in existence or committed on the Issue Date and which the Borrower has informed Holder in writing prior
to the Issue Date, (b) in regard to transactions with subsidiaries, joint ventures or unaffiliated third parties, made in the ordinary
course of business or (c) in regard to transactions with unaffiliated third parties, not in excess of $200,000 (for the avoidance
of doubt, an unaffiliated third party for purposes of this clause shall not include any entity that the Borrower owns 49% or more of the
total equity interest in). So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s
written consent, repay any affiliate (as defined in Rule 144) of the Borrower in connection with any indebtedness or accrued amounts owed
to any such party.
2.7 3(a)(10)
Transaction. So long as this Note is outstanding, the Borrower shall not enter into any transaction or arrangement structured in accordance
with, based upon, or related or pursuant to, in whole or in part, Section 3(a)(10) of the Securities Act (a “3(a)(10) Transaction”).
In the event that the Borrower does enter into, or makes any issuance of Common Stock related to a 3(a)(10) Transaction while this note
is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this Note, but not less than $25,000, will
be assessed and will become immediately due and payable to the Holder at its election in the form of a cash payment or added to the balance
of this Note (under Holder’s and Borrower’s expectation that this amount will tack back to the Issue Date).
2.8 Preservation
of Business and Existence, etc. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without
the Holder’s written consent, (a) change the nature of its business; (b) sell, divest, change the structure of any material
assets other than in the ordinary course of business; (c) enter into a Variable Rate Transaction; or (d) enter into any merchant cash
advance transactions or sale of receivables. In addition, so long as the Borrower shall have any obligation under this Note, the Borrower
shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence, rights and privileges, and become
or remain, and cause each of its Subsidiaries (other than dormant Subsidiaries that have no or minimum assets) to become or remain, duly
qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary.
2.9 Noncircumvention.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate or Articles of Incorporation or Bylaws,
or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities,
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all
times in good faith carry out all the provisions of this Note and take all action as may be required to protect the rights of the Holder.
2.10 Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company
in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver
to the Holder a new Note.
ARTICLE III. EVENTS OF DEFAULT
It shall be considered an event of default
if any of the following events listed in this Article III (each, an “Event of Default”) shall occur on or after the Issue
Date:
3.1 Failure
to Pay Principal or Interest. The Borrower fails to pay the Principal Amount hereof or interest thereon when due on this Note, whether
at maturity, upon acceleration or otherwise, or fails to fully comply with Section 1.10 of this Note.
3.2 Conversion and the Shares. The Borrower (i) fails to issue Conversion Shares to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, (ii) fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for the Conversion Shares issuable to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, (iii) fails to reserve the Reserved Amount at all times, (iv) the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for the Conversion Shares issuable to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) Trading Days after the Holder shall have delivered a Notice of Conversion, and/or (v) fails to remain current in its obligations to its transfer agent (including but not limited to payment obligations to its transfer agent). It shall be an Event of Default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be added to the principal balance of the Note.
3.3 Breach
of Agreements and Covenants. The Borrower breaches any covenant, agreement, or other term or condition contained in the Purchase Agreement,
Voting Agreement (as defined in the Purchase Agreement) (the “Voting Agreement”), Security Agreement (as defined in the Purchase
Agreement) (the “Security Agreement”), this Note, Irrevocable Transfer Agent Instructions, Warrants (as defined in the Purchase
Agreement) (the “Warrants”), or in any agreement, statement or certificate given in writing pursuant hereto or in connection
herewith or therewith.
3.4 Breach
of Representations and Warranties. Any representation or warranty of the Borrower made in the Purchase Agreement, Voting Agreement,
Security Agreement, this Note, Irrevocable Transfer Agent Instructions, Warrants, or in any agreement, statement or certificate given
in writing pursuant hereto or in connection herewith or therewith shall be false or misleading in any material respect when made.
3.5 Receiver
or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or
consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or
trustee shall otherwise be appointed.
3.6 Judgments.
Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of
its property or other assets for more than $100,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days
unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.
3.7 Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any
bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.
3.8 Failure
to Comply with the 1934 Act. At any time after the Issue Date, the Borrower shall fail to comply with the reporting requirements of
the 1934 Act and/or the Borrower shall cease to be subject to the reporting requirements of the 1934 Act.
3.9 Liquidation. Any dissolution, liquidation,
or winding up of Borrower or any substantial portion of its business.
3.10 Cessation
of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such
debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going concern”
shall not be an admission that the Borrower cannot pay its debts as they become due.
3.11 Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).
3.12 Financial
Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or period from
two years prior to the Issue Date of this Note and until this Note is no longer outstanding.
3.13 Replacement
of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to
the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant
to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount)
signed by the successor transfer agent to Borrower and the Borrower.
3.14 Cross-Default.
The declaration of an event of default by any lender or other extender of credit to the Company under any notes, loans, agreements or
other instruments of the Company evidencing any indebtedness of the Company (including those filed as exhibits to or described in the
Company’s filings with the SEC), after the passage of all applicable notice and cure or grace periods.
3.15 Variable
Rate Transactions. The Borrower consummates a Variable Rate Transaction at any time on or after the Issue Date.
3.16 Inside
Information. Any attempt by the Borrower or its officers, directors, and/or affiliates to transmit, convey, disclose, or any actual
transmittal, conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of, material non-public information
concerning the Borrower, to the Holder or its successors and assigns, which is not immediately cured by Borrower’s filing of a Form
8-K pursuant to Regulation FD on that same date.
3.17 Unavailability
of Rule 144. If, at any time on or after the date that is six (6) calendar months after the Issue Date, the Holder is unable to (i)
obtain a standard “144 legal opinion letter” from an attorney reasonably acceptable to the Holder, the Holder’s brokerage
firm (and respective clearing firm), and the Borrower’s transfer agent in order to facilitate the Holder’s conversion of any
portion of the Note into free trading shares of the Borrower’s Common Stock pursuant to Rule 144, and/or (ii) thereupon deposit
such shares into the Holder’s brokerage account.
3.18 Delisting,
Suspension, or Quotation of Trading of Common Stock. If, at any time on or after the Issue Date, the Borrower’s Common Stock
(i) is suspended from trading, (ii) halted from trading, and/or (iii) fails to be listed on The Nasdaq Capital Market.
3.19 Shareholder
Approval. The Company fails to obtain the Shareholder Approval within one hundred eighty (180) calendar days after the Issue Date.
3.20 Joinder
of New Subsidiaries to Security Agreement. The Borrower fails to deliver to Holder, within three (3) Trading Days after the Borrower
is deemed to beneficially own or control more than 50% of the equity interests in or more than 50% of the voting power of the equity interests
of any entity (each a “New Subsidiary”), the Additional Debtor Joinder in the form attached as Annex A to the Security Agreement
which has been executed by the New Subsidiary.
3.21 Rights
and Remedies Upon an Event of Default. Upon the occurrence of any Event of Default specified in this Article III, this Note shall
become immediately due and payable, and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount
equal to the Principal Amount then outstanding plus accrued interest (including any Default Interest) through the date of full repayment
multiplied by 150% (collectively the “Default Amount”), as well as all costs, including, without limitation, legal fees and
expenses, of collection, all without demand, presentment or notice, all of which hereby are expressly waived by the Borrower. Holder may,
in Holder’s sole discretion, convert all or any portion of this Note (including the Default Amount) into Common Stock pursuant to
the terms of this Note (for the avoidance of doubt, this shall apply even if such conversion occurs after the Maturity Date). For purposes
of payments in Common Stock, the conversion formula set forth in Section 1.2 shall apply as well as all other provisions of this Note.
The Holder shall be entitled to exercise all other rights and remedies available at law or in equity.
ARTICLE IV. MISCELLANEOUS
4.1 Failure
or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privileges. All rights and remedies of the Holder existing hereunder are cumulative to,
and not exclusive of, any rights or remedies otherwise available.
4.2 Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt
requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery,
telegram, e-mail or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand
delivery or delivery by e-mail or facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address
or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be
received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
If to the Borrower, to:
CLEAN ENERGY TECHNOLOGIES, INC.
1340 Reynolds Avenue, Unit 120
Irvine, CA 92614 Attention: Kambiz Mahdi
e-mail: [redacted]
If to the Holder:
MAST HILL FUND, L.P.
150 Grossman Drive, Suite 205
Braintree, MA 02184
e-mail: [redacted]
4.3 Amendments.
This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “Note”
and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended
or supplemented, then as so amended or supplemented.
4.4 Assignability.
This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors
and assigns. The Borrower shall not assign this Note or any rights or obligations hereunder without the prior written consent of the Holder.
The Holder may assign its rights hereunder to any “accredited investor” (as defined in Rule 501(a) of the 1933 Act) in a private
transaction from the Holder or to any of its “affiliates”, as that term is defined under the 1934 Act, without the consent
of the Borrower. Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona
fide margin account or other lending arrangement. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that
following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may
be less than the amount stated on the face hereof.
4.5 Cost
of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including
reasonable attorneys’ fees.
4.6 Arbitration
of Claims; Governing Law; Venue; Attorney’s Fees. The Company and Holder shall submit all Claims (as defined in Exhibit E of
the Purchase Agreement) (the “Claims”) arising under this Note or any other agreement between the parties and their affiliates
or any Claim relating to the relationship of the parties to binding arbitration pursuant to the arbitration provisions set forth in Exhibit
E of the Purchase Agreement (the “Arbitration Provisions”). The Company and Holder hereby acknowledge and agree that the Arbitration
Provisions are unconditionally binding on the Company and Holder hereto and are severable from all other provisions of this Note.
By executing this Note, Company represents, warrants and covenants that Company has reviewed the Arbitration Provisions carefully, consulted
with legal counsel about such provisions (or waived its right to do so), understands that the Arbitration Provisions are intended to allow
for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations set forth in the Arbitration
Provisions, and that Company will not take a position contrary to the foregoing representations. The Company acknowledges and agrees that
Holder may rely upon the foregoing representations and covenants of the Company regarding the Arbitration Provisions. This Note shall
be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance
of this Note shall be governed by, the internal laws of the State of Nevada, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of Nevada or any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Nevada. The Company and Holder consent to and expressly agree that the exclusive venue for arbitration
of any Claims arising under this Note or any other agreement between the Company and Holder or their respective affiliates (including
but not limited to the Transaction Documents) or any Claim relating to the relationship of the Company and Holder or their respective
affiliates shall be in the Commonwealth of Massachusetts. Without modifying the Company’s and Holder’s obligations to resolve
disputes hereunder pursuant to the Arbitration Provisions, for any litigation arising in connection with any of the Transaction Documents
(and notwithstanding the terms (specifically including any governing law and venue terms) of any transfer agent services agreement or
other agreement between the Company’s transfer agent and the Company, such litigation specifically includes, without limitation
any action between or involving Company and the Company’s transfer agent under the Irrevocable Transfer Agent Instructions (as defined
in the Purchase Agreement) or otherwise related to Holder in any way (specifically including, without limitation, any action where Company
seeks to obtain an injunction, temporary restraining order, or otherwise prohibit the Company’s transfer agent from issuing shares
of Common Stock to Holder for any reason)), each party hereto hereby (i) consents to and expressly submits to the exclusive personal jurisdiction
of any state or federal court sitting in the Commonwealth of Massachusetts, (ii) expressly submits to the exclusive venue of any such
court for the purposes hereof, (iii) agrees to not bring any such action (specifically including, without limitation, any action where
Company seeks to obtain an injunction, temporary restraining order, or otherwise prohibit the Company’s transfer agent from issuing
shares of Common Stock to Holder for any reason) outside of any state or federal court sitting in the Commonwealth of Massachusetts, and
(iv) waives any claim of improper venue and any claim or objection that such courts are an inconvenient forum or any other claim, defense
or objection to the bringing of any such proceeding in such jurisdiction or to any claim that such venue of the suit, action or proceeding
is improper. Notwithstanding anything in the foregoing to the contrary, nothing herein (i) shall limit, or shall be deemed or construed
to limit, the ability of the Holder to realize on any collateral or any other security, or to enforce a judgment or other court ruling
in favor of the Holder, including through a legal action in any court of competent jurisdiction, or (ii) shall limit, or shall be deemed
or construed to limit, any provision of Section 4.15 of this Note. The Company hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any objection to jurisdiction and venue of any action instituted hereunder, any claim that it is not personally
subject to the jurisdiction of any such court, and any claim that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper (including but not limited to based upon forum non conveniens).
THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTIONS CONTEMPLATED HEREBY. The Company irrevocably waives
personal service of process and consents to process being served in any suit, action or proceeding in connection with this Note or any
other agreement, certificate, instrument or document contemplated hereby or thereby by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to Company at the address in effect for notices to it under this Note and agrees
that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any other manner permitted by law. The prevailing party in any action or dispute brought
in connection with this Note or any other agreement, certificate, instrument or document contemplated hereby or thereby shall be entitled
to recover from the other party its reasonable attorney’s fees and costs. If any provision of this Note shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Note
in that jurisdiction or the validity or enforceability of any provision of this Note in any other jurisdiction.
4.7 Certain
Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding Principal Amount (or
the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest, the Borrower
and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult to determine
and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the Holder
in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired
upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder
hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt
of a cash payment without the opportunity to convert this Note into shares of Common Stock.
4.8 Purchase
Agreement. The Company and the Holder shall be bound by the applicable terms of the Purchase Agreement, Security Agreement, Voting
Agreement, and the Transaction Documents entered into in connection herewith and therewith.
4.9 Notice
of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock
unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification
of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders). In the
event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive
payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger,
consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other
right, or for the purpose of determining shareholders who are entitled to vote in connection with any change in control or any proposed
liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior
to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier),
of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief
statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The
Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with
the notification to the Holder in accordance with the terms of this Section 4.9.
4.10 Remedies.
The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the
intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach
of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the
provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition
to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce
specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being
required.
4.11 Construction;
Headings. This Note shall be deemed to be jointly drafted by the Company and all the Holder and shall not be construed against any
person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation
of, this Note.
4.12 Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter
in force, in connection with any action or proceeding that may be brought by the Holder in order to enforce any right or remedy under
this Note. Notwithstanding any provision to the contrary contained in this Note, it is expressly agreed and provided that the total liability
of the Company under this Note for payments which under the applicable law are in the nature of interest shall not exceed the maximum
lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any
rate of interest or default interest, or both of them, when aggregated with any other sums which under the applicable law in the nature
of interest that the Company may be obligated to pay under this Note exceed such Maximum Rate. It is agreed that if the maximum contract
rate of interest allowed by applicable law and applicable to this Note is increased or decreased by statute or any official governmental
action subsequent to the Issue Date, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to this
Note from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever,
interest in excess of the Maximum Rate is paid by the Company to the Holder with respect to indebtedness evidenced by this the Note, such
excess shall be applied by the Holder to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner
of handling such excess to be at the Holder’s election.
4.13 Severability.
In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law (including any judicial
ruling), then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified
to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision of this Note.
4.14 Terms
of Future Financings. So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries of any security,
or amendment to a security that was originally issued before the Issue Date, with any term that the Holder reasonably believes is more
favorable to the holder of such security or with a term in favor of the holder of such security that the Holder reasonably believes was
not similarly provided to the Holder in this Note (even if the holder of such other security does not receive the benefit of such more
favorable term until a default occurs under such other security), then (i) the Borrower shall notify the Holder of such additional or
more favorable term within one (1) business day of the issuance and/or amendment (as applicable) of the respective security, and (ii)
such term, at Holder’s option, shall become a part of the transaction documents with the Holder (regardless of whether the Borrower
complied with the notification provision of this Section 4.14). The types of terms contained in another security that may be more favorable
to the holder of such security include, but are not limited to, terms addressing prepayment rate, interest rates, and original issue discounts.
4.15 Dispute Resolution.
(a) In
the case of a dispute relating to the Conversion Price, Market Price, Conversion Amount, any prepayment amount or Default Amount, Issue
Date, Closing Date, Maturity Date, the closing bid price, or fair market value (as the case may be) (including, without limitation, a
dispute relating to the determination of any of the foregoing) (the “Note Calculations”), the Company or the Holder (as the
case may be) shall submit the dispute to the other party via electronic mail (A) if by the Company, within two (2) Trading Days after
the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder, at any time after the Holder learned of the circumstances
giving rise to such dispute. If the Holder and the Company are unable to agree upon such determination or calculation within two (2) Trading
Days following such initial notice by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as
the case may be), then the Holder may, at its sole option, submit the dispute to an independent, reputable investment bank or independent,
outside accountant selected by the Holder (the “Independent Third Party”), and the Company shall pay all expenses of such
Independent Third Party.
(b) The
Holder and the Company shall each deliver to such Independent Third Party (A) a copy of the initial dispute submission so delivered in
accordance with the first sentence of this Section 4.15(a) and (B) written documentation supporting its position with respect to such
dispute, in each case, no later than 5:00 p.m. (New York time) by second (2nd) Business Day immediately following the date on which the
Holder selected such Independent Third Party (the “Dispute Submission Deadline”) (the documents referred to in the immediately
preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood
and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission
Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives
its right to) deliver or submit any written documentation or other support to such Independent Third Party with respect to such dispute
and such Independent Third Party shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such
Independent Third Party prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder
or otherwise requested by such Independent Third Party, neither the Company nor the Holder shall be entitled to deliver or submit any
written documentation or other support to such Independent Third Party in connection with such dispute, other than the Required Dispute
Documentation.
(c) The
Company and the Holder shall cause such Independent Third Party to determine the resolution of such dispute and notify the Company and
the Holder of such resolution no later than five (5) Business Days immediately following the Dispute Submission Deadline. The fees and
expenses of such Independent Third Party shall be borne solely by the Company, and such Independent Third Party’s resolution of
such dispute shall be final and binding upon all parties absent manifest error.
(d) The
Company expressly acknowledges and agrees that (i) this Section 4.15 constitutes an agreement to arbitrate between the Company and the
Holder (and constitutes an arbitration agreement) under the rules then in effect under the Nevada Rules of Civil Procedure (“NRCP”)
and that the Holder is authorized to apply for an order to compel arbitration pursuant to the NRCP in order to compel compliance with
this Section 4.15, (ii) a dispute relating to the Note Calculations includes, without limitation, disputes as to (A) whether an issuance
or sale or deemed issuance or sale of Common Stock occurred under Section 1.6 of this Note, (B) the consideration per share at which an
issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock was
an issuance or sale or deemed issuance or sale, (D) whether an agreement, instrument, security or the like constitutes a Common
Stock Equivalent and (E) whether a Dilutive Issuance occurred, (iii) the terms of this Note and each other applicable Transaction Document
shall serve as the basis for the selected Independent Third Party’s resolution of the applicable dispute, such Independent Third
Party shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such Independent Third
Party determines are required to be made by such Independent Third Party in connection with its resolution of such dispute (including,
without limitation, determining (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 1.6
of this Note, (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance
or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale, (D) whether an agreement, instrument,
security or the like constitutes a Common Stock Equivalent and (E) whether a Dilutive Issuance occurred) and in resolving such dispute
such Independent Third Party shall apply such findings, determinations and the like to the terms of this Note and any other applicable
Transaction Documents, and (iv) nothing in this Section 4.15 shall limit the Holder from obtaining any injunctive relief or other equitable
remedies (including, without limitation, with respect to any matters described in this Section 4.15).
4.16 Right
of First Refusal. If at any time while this Note is outstanding, the Borrower has a bona fide offer of capital or financing from any
3rd party, that the Borrower intends to act upon, then the Borrower must first offer such opportunity to the Holder to provide such capital
or financing to the Borrower on the same terms as each respective 3rd party’s terms. Should the Holder be unwilling or unable to
provide such capital or financing to the Borrower within three (3) Trading Days from Holder’s receipt of written notice of the offer
(the “Offer Notice”) from the Borrower, then the Borrower may obtain such capital or financing from that respective 3rd party
upon the exact same terms and conditions offered by the Borrower to the Holder, which transaction must be completed within 30 days after
the date of the Offer Notice. If the Borrower does not receive the capital or financing from the respective 3rd party within 30 days after
the date of the respective Offer Notice, then the Borrower must again offer the capital or financing opportunity to the Holder as described
above, and the process detailed above shall be repeated. The Offer Notice must be sent via electronic mail to admin@masthillfund.com.
[signature page follows]
IN WITNESS WHEREOF, Borrower
has caused this Note to be signed in its name by its duly authorized officer on February 27, 2025.
| CLEAN ENERGY TECHNOLOGIES, INC. |
|
| |
|
|
| By: |
/s/ Kambiz Mahdi |
|
| Name: |
Kambiz Mahdi |
|
| Title: |
Chief Executive Officer |
|
EXHIBIT A — NOTICE OF CONVERSION
The undersigned
hereby elects to convert
$ principal
amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note
(“Common Stock”) as set forth below, of CLEAN ENERGY TECHNOLOGIES, INC., a Nevada corporation (the
“Borrower”), according to the conditions of the junior secured promissory note of the Borrower dated as of February 27,
2025 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except for
transfer taxes, if any.
Box Checked as to applicable instructions:
| ☐ | The Borrower shall electronically transmit the Common Stock
issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal
Agent Commission system (“DWAC Transfer”). |
Name of DTC Prime Broker:
Account Number:
| ☐ | The undersigned hereby requests that the Borrower issue a certificate
or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached
hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto: |
Date
of Conversion: |
|
|
|
| Applicable Conversion Price: |
$ |
|
|
| Number of Shares of Common Stock to be |
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| Issued Pursuant to Conversion of the Note: |
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| Amount of Principal Balance Due remaining |
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| Under the Note after this conversion: |
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Exhibit 10.3
NEITHER THIS SECURITY NOR THE SECURITIES
AS TO WHICH THIS SECURITY MAY BE EXERCISED HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT. THIS SECURITY AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED
BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
CLEAN ENERGY TECHNOLOGIES, INC.
Warrant Shares: 310,000
Date of Issuance: February 27, 2025 (“Issuance
Date”)
This COMMON
STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received (in connection with the issuance of the junior
secured promissory note in the principal amount of $620,000.00 to the Holder (as defined below) of even date) (the “Note”),
Mast Hill Fund, L.P., a Delaware limited partnership (including any permitted and registered assigns, the “Holder”),
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after
the date of issuance hereof, to purchase from CLEAN ENERGY TECHNOLOGIES, INC., a Nevada corporation (the “Company”),
310,000 shares of Common Stock (the “Warrant Shares”) (whereby such number may be adjusted from time to time pursuant
to the terms and conditions of this Warrant) at the Exercise Price per share then in effect. This Warrant is issued by the Company as
of the date hereof in connection with that certain securities purchase agreement dated February 27, 2025, by and among the Company and
the Holder (the “Purchase Agreement”).
Capitalized
terms used in this Warrant shall have the meanings set forth in the Purchase Agreement unless otherwise defined in the body of this Warrant
or in Section 16 below. For purposes of this Warrant, the term “Exercise Price” shall mean $2.50, subject to adjustment as
provided herein (including but not limited to cashless exercise), and the term “Exercise Period” shall mean the period commencing
on the Issuance Date and ending on 5:00 p.m. eastern standard time on the five-year anniversary thereof.
1. EXERCISE OF WARRANT.
(a) Mechanics of Exercise. Subject to the terms and conditions hereof, the rights represented by this Warrant may
be exercised in whole or in part at any time or times during the Exercise Period by delivery of a written notice, in the form attached
hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant. The Holder shall
not be required to deliver the original Warrant in order to effect an exercise hereunder. Partial exercises of this Warrant resulting
in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding
number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. On or before the
second Trading Day (the “Warrant Share Delivery Date”) following the date on which the Holder sent the Exercise Notice
to the Company or the Company’s transfer agent, and upon receipt by the Company of payment to the Company of an amount equal to
the applicable Exercise Price multiplied by the number of Warrant Shares as to which all or a portion of this Warrant is being exercised
(the “Aggregate Exercise Price” and together with the Exercise Notice, the “Exercise Delivery Documents”)
in cash or by wire transfer of immediately available funds (or by cashless exercise, in which case there shall be no Aggregate Exercise
Price provided), the Company shall (or direct its transfer agent to) issue and deliver by overnight courier to the address as specified
in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for
the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise (or deliver such shares of Common Stock
in electronic format if requested by the Holder). Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all
corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective
of the date of delivery of the certificates evidencing such Warrant Shares. If this Warrant is submitted in connection with any exercise
and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being
acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three Business Days after any exercise
and at its own expense, issue a new Warrant (in accordance with Section 7) representing the right to purchase the number of Warrant Shares
purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant
is exercised.
If the Company
fails to cause its transfer agent to issue to the Holder the respective shares of Common Stock by the respective Warrant Share Delivery
Date, then the Holder will have the right to rescind such exercise in Holder’s sole discretion in addition to all other rights and
remedies at law, under this Warrant, or otherwise, and such failure shall also be deemed an Event of Default under the Note (as defined
in the Purchase Agreement) (the “Note”) (any Event of Default (as defined in the Note) under the Note, including but not limited
to the share delivery failure described in this sentence, shall be referred to in this Warrant as an “Event of Default”),
a material breach under this Warrant, and a material breach under the Purchase Agreement.
If the Market
Price of one share of Common Stock is greater than the Exercise Price, then, unless there is an effective non-stale registration statement
of the Company which contains a prospectus that complies with Section 5(b) and Section 10 of the Securities Act of 1933 at the time of
exercise and covers the Holder’s immediate resale of all of the Warrant Shares at prevailing market prices (and not fixed prices)
without any limitation, the Holder may elect to receive Warrant Shares pursuant to a cashless exercise, in lieu of a cash exercise, equal
to the value of this Warrant determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of
this Warrant and an Exercise Notice, in which event the Company shall issue to Holder a number of Common Stock computed using the following
formula:
X = Y (A-B)
A
| Where |
X = |
the number of Shares to be issued to Holder. |
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Y = |
the number of Warrant Shares that the Holder elects to purchase under this Warrant (at the date of such calculation). |
| |
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A = |
the Market Price (at the date of such calculation). |
| |
|
|
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B = |
Exercise Price (as adjusted to the date of such calculation). |
(b) No Fractional
Shares. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto.
All Warrant Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether
the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance of
a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction
a sum in cash equal to the product resulting from multiplying the then-current fair market value of a Warrant Share by such fraction.
(c) Holder’s
Exercise Limitations; Exchange Cap. Notwithstanding anything to the contrary contained herein, the Company shall not effect any exercise
of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 1 or otherwise, to
the extent that after giving effect to such issuance after exercise as set forth on the applicable Exercise Notice, the Holder (together
with the Holder’s Affiliates), and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates
(such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined
below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and Attribution
Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion
of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock
Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the
Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 1(c),
beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Holder is solely responsible for any schedules required to be filed in accordance
therewith. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 1(c), in determining the number
of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s
most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company
or (C) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common
Stock outstanding. Upon the written or oral request of a Holder, the Company shall within three (3) Trading Days confirm orally and in
writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock
shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder
or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The
“Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding at the time of the
respective calculation hereunder. In addition to the beneficial ownership limitations provided in this Warrant, the sum of the number
of shares of Common Stock that may be issued under this Warrant shall be limited to the amount described in Section 4(p) of the Purchase
Agreement, unless the Shareholder Approval (as defined in the Purchase Agreement) (“Shareholder Approval”) is obtained by
the Company. In the event that the Company is prohibited from issuing any shares of Common Stock pursuant to this Warrant due to the Company’s
failure to obtain the Shareholder Approval (such number of shares that are prohibited from being issued are referred to herein as the
“Exchange Cap Shares”), in lieu of issuing and delivering such Exchange Cap Shares to the Holder, the Company shall pay cash
to the Holder in exchange for the cancellation of such portion of this Warrant exercisable into such Exchange Cap Shares (the “Exchange
Cap Payment Amount”) at a price equal to the sum of (x) the product of (A) such number of Exchange Cap Shares and (B) the greatest
Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable
Exercise Notice with respect to such Exchange Cap Shares to the Company and ending on the date of the aforementioned payment under this
Section 1(c) and (y) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of Exchange Cap Shares, any brokerage commissions and other out-of-pocket expenses, if any, of
the Holder incurred in connection therewith. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
(d) Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if
the Company fails to cause the Company’s transfer agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of this Warrant (including but not limited to Section 1(a) above pursuant to an exercise on or before the respective Warrant Share Delivery
Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s
brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which
the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder, within
one (1) Business Day of Holder’s request, the amount, if any, by which (x) the Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased exceeds (y) the product of (1) the number of Warrant Shares that the
Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving
rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to
the Holder within one (1) Business Day of Holder’s request the number of shares of Common Stock that would have been issued had
the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases, or effectuates
a cashless exercise hereunder for, Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of
the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount
of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to
timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
2. ADJUSTMENTS. The Exercise
Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in
this Section 2.
(a) Stock
Dividends and Splits. Without limiting any provision of Section 2(b), Section 3 or Section 4, if the Company, at any time on or after
the Issuance Date, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock or otherwise makes
a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its then outstanding shares of Common Stock into a larger number of shares or (iii)
combines (by combination, reverse stock split or otherwise) one or more classes of its then outstanding shares of Common Stock into a
smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares
of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment
pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this paragraph occurs during the period that an Exercise Price is calculated
hereunder, then the calculation of such Exercise Price shall be adjusted appropriately to reflect such event.
(b) Adjustment
Upon Issuance of Shares of Common Stock. If and whenever on or after the Issuance Date, the Company grants, issues or sells (or enters
into any agreement to grant, issue or sell), or in accordance with this Section 2 is deemed to have granted, issued or sold, any shares
of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company) (other than
in an Excluded Issuance (as defined in this Warrant)) for a consideration per share (the “New Issuance Price”) less than a
price equal to the Exercise Price in effect immediately prior to such granting, issuance or sale or deemed granting, issuance or sale
(such Exercise Price then in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”),
then the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of the foregoing
(including, without limitation, determining the adjusted Exercise Price and the New Issuance Price under this Section 2(b)), the following
shall be applicable:
(i) Issuance
of Options. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell) any Options
(other than in an Excluded Issuance)and the lowest price per share for which one share of Common Stock is at any time issuable upon the
exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such
Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time of the granting, issuance or sale (or the time of execution
of such agreement to grant, issue or sell, as applicable) of such Option for such price per share. For purposes of this Section 2(b)(i),
the “lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Options or
upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to
the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable
by the Company with respect to any one share of Common Stock upon the granting, issuance or sale (or pursuant to the agreement to grant,
issue or sell, as applicable) of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible
Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth
in such Option for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon
the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any
such Option or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Option
(or any other Person) upon the granting, issuance or sale (or the agreement to grant, issue or sell, as applicable) of such Option, upon
exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or
otherwise pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on,
the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made
upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise
pursuant to the terms of or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible
Securities.
(ii) Issuance
of Convertible Securities. If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any Convertible
Securities (other than in an Excluded Issuance) and the lowest price per share for which one share of Common Stock is at any time issuable
upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such
share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or
sale (or the time of execution of such agreement to issue or sell, as applicable) of such Convertible Securities for such price per share.
For the purposes of this Section 2(b)(ii), the “lowest price per share for which one share of Common Stock is at any time issuable
upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of
(x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common
Stock upon the issuance or sale (or pursuant to the agreement to issue or sell, as applicable) of the Convertible Security and upon conversion,
exercise or exchange of such Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth
in such Convertible Security for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions)
upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable
to the holder of such Convertible Security (or any other Person) upon the issuance or sale (or the agreement to issue or sell, as applicable)
of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder
of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be
made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities or otherwise
pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for
which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 2(b), except as contemplated below,
no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.
(iii) Change
in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than
(i) proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 2(a), or
(ii) changes in conversion or exercise prices, as applicable, in respect of securities issued in an Excluded Issuance), the Exercise
Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such
time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or
increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section
2(b)(iii), if the terms of any Option or Convertible Security (including, without limitation, any Option or Convertible Security that
was outstanding as of the Issuance Date) are increased or decreased in the manner described in the immediately preceding sentence, then
such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall
be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 2(b) shall be made
if such adjustment would result in an increase of the Exercise Price then in effect.
(iv) Calculation
of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance
or sale or deemed issuance or sale of any other securities of the Company (as determined jointly by the Holder and the Company), the
“Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”),
together comprising one integrated transaction, (or one or more transactions if such issuances or sales or deemed issuances or sales
of securities of the Company either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity
to each other and/or (C) are consummated under the same plan of financing) the aggregate consideration per share of Common Stock with
respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for which one share
of Common Stock was issued (or was deemed to be issued pursuant to Section 2(b)(i) or 2(b)(ii) above, as applicable) in such integrated
transaction solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (I) the Black
Scholes Consideration Value of each such Option, if any, (II) the fair market value (as reasonably determined jointly by the Holder and
the Company in good faith) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right, if any, and (III) the fair
market value (as reasonably determined jointly by the Holder and the Company) of such Convertible Security, if any, in each case, as
determined on a per share basis in accordance with this Section 2(b)(iv). If any shares of Common Stock, Options or Convertible Securities
are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of determining
the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black
Scholes Consideration Value) will be deemed to be the net amount of consideration received by the Company therefor. If any shares of
Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration
received by the Company (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security,
but not for the purpose of the calculation of the Black Scholes Consideration Value) will be the fair value of such consideration, except
where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for
such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding
the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity
in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor (for the purpose of
determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation
of the Black Scholes Consideration Value) will be deemed to be the fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any
consideration other than cash or publicly traded securities will be reasonably determined jointly by the Company and the Holder. If such
parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation
Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th)
day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination
of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall
be borne by the Company.
(v) Record
Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend
or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares
of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase (as the case may be).
(c) Holder’s
Right of Alternative Exercise Price Following Issuance of Certain Options or Convertible Securities. In addition to and not in limitation
of the other provisions of this Section 2, if the Company in any manner issues or sells or enters into any agreement to issue or sell,
any Common Stock, Options or Convertible Securities (any such securities, “Variable Price Securities”) after the Issuance
Date that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock at a price
which varies or may vary with the market price of the shares of Common Stock, including by way of one or more reset(s) to a fixed price,
but exclusive of such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends
and similar transactions) (each of the formulations for such variable price being herein referred to as, the “Variable Price”),
the Company shall provide written notice thereof via electronic mail and overnight courier to the Holder on the date of such agreement
and the issuance of such Common Stock, Convertible Securities or Options. From and after the date the Company enters into such agreement
or issues any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its sole discretion to substitute
the Variable Price, as calculated pursuant to the agreements governing such Variable Price Securities, for the Exercise Price upon exercise
of this Warrant by designating in the Exercise Notice delivered upon any exercise of this Warrant that solely for purposes of such exercise
the Holder is relying on the Variable Price rather than the Exercise Price then in effect. The Holder’s election to rely on a Variable
Price for a particular exercise of this Warrant shall not obligate the Holder to rely on a Variable Price for any future exercises of
this Warrant.
(d) Stock
Combination Event Adjustment. If at any time and from time to time on or after the Issuance Date there occurs any stock split, stock
dividend, stock combination recapitalization or other similar transaction involving the Common Stock (each, a “Stock Combination
Event”, and such date thereof, the “Stock Combination Event Date”) and the Event Market Price is less than the Exercise
Price then in effect (after giving effect to the adjustment in clause 2(a) above), then on the sixteenth (16th) Trading Day immediately
following such Stock Combination Event, the Exercise Price then in effect on such sixteenth (16th) Trading Day (after giving effect to
the adjustment in clause 2(a) above) shall be reduced (but in no event increased) to the Event Market Price. For the avoidance of doubt,
if the adjustment in the immediately preceding sentence would otherwise result in an increase in the Exercise Price hereunder, no adjustment
shall be made.
(e) Other
Events. In the event that the Company (or any Subsidiary (as defined in the Purchase Agreement)) shall take any action to which the
provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from actual dilution or if any
event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s
board of directors shall in good faith determine and implement an appropriate adjustment in the Exercise Price and the number of Warrant
Shares (if applicable) so as to protect the rights of the Holder, provided that no such adjustment pursuant to this Section 2(e) will
increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2, provided further
that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the
Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination shall be final and binding absent manifest error and whose fees and
expenses shall be borne by the Company.
(f) Calculations.
All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable.
The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issuance or sale of Common Stock
(g) Voluntary
Adjustment By Company. Subject to the rules and regulations of the Principal Market, the Company may at any time during the term of
this Warrant, with the prior written consent of the Holder, reduce the then current Exercise Price to any amount and for any period of
time deemed appropriate by the board of directors of the Company.
(h) Number
of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 2, the number of Warrant Shares
that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the
aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price
in effect immediately prior to such adjustment (without regard to any limitations on exercise contained herein). For the avoidance of
doubt, the aggregate Exercise Price payable prior to such adjustment is calculated as follows: the total number of Warrant Shares issuable
upon exercise of this Warrant immediately prior to such adjustment (without regard to the Beneficial Ownership Limitation) multiplied
by the Exercise Price in effect immediately prior to such adjustment. By way of example, if E is the total number of Warrant Shares issuable
upon exercise of this Warrant immediately prior to such adjustment (without regard to the Beneficial Ownership Limitation), F is the Exercise
Price in effect immediately prior to such adjustment, and G is the Exercise Price in effect immediately after such adjustment, the adjustment
to the number of Warrant Shares can be expressed in the following formula: Total number of Warrant Shares after such adjustment = the
number obtained from dividing [E x F] by G.
(i) Notice.
In addition to all other notice(s) required under this Section 2, the Company shall also notify the Holder in writing, no later than the
Trading Day following any adjustment to the Warrant under this Section 2, indicating therein the occurrence of such applicable exercise
price and warrant share adjustment (such notice the “Adjustment Notice”). For purposes of clarification, regardless of whether
(i) the Company provides an Adjustment Notice pursuant to this Section 2 or (ii) the Holder accurately refers to the number of Warrant
Shares or Exercise Price in the Exercise Notice, the Holder is entitled to receive the adjustments to the number of Warrant Shares and
Exercise Price at all times on and after the date of such adjustment event.
3. RIGHTS UPON
DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above or Section 4(a) below, if the Company shall declare
or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way
of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property, options,
evidence of indebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement
or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case,
the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if
the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations
or restrictions on exercise of this Warrant, including without limitation, the Beneficial Ownership Limitation) immediately before the
date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that the Holder’s
right to participate in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such Distribution to the extent of the Beneficial Ownership Limitation
(and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership)
to the extent of any such excess) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until
such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Beneficial
Ownership Limitation, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on
such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such
limitation).
4. PURCHASE RIGHTS; FUNDAMENTAL
TRANSACTIONS.
(a) Purchase
Rights. In addition to any adjustments pursuant to Sections 2 or 3 above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class
of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including
without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are
to be determined for the grant, issuance or sale of such Purchase Rights (provided, however, that to the extent that the
Holder’s right to participate in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to the extent of the
Beneficial Ownership Limitation (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such
Purchase Right (and beneficial ownership) to the extent of any such excess) and such Purchase Right to such extent shall be held in abeyance
for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution
Parties exceeding the Beneficial Ownership Limitation, at which time or times the Holder shall be granted such right (and any Purchase
Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance) to the same
extent as if there had been no such limitation).
(b) Fundamental
Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing
all of the obligations of the Company under this Warrant and the other Transaction Documents (as defined in the Purchase Agreement) in
accordance with the provisions of this Section 4(b) pursuant to written agreements in form and substance satisfactory to the Holder and
approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to the Holder in exchange for this Warrant
a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant, including,
without limitation, which is exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common Stock
acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to
such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares
of capital stock, such adjustments to the number of shares of capital stock and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction). Upon the consummation of each
Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of the applicable
Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall
refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations
of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named
as the Company herein. Upon consummation of each Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation
that there shall be issued upon exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction,
in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections
3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of this Warrant prior to the applicable
Fundamental Transaction, such shares of publicly traded common stock (or its equivalent) of the Successor Entity (including its Parent
Entity) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant
been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this
Warrant), as adjusted in accordance with the provisions of this Warrant. Notwithstanding the foregoing, and without limiting Section
1(c) hereof, the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 4(b) to permit
the Fundamental Transaction without the assumption of this Warrant. In addition to and not in substitution for any other rights hereunder,
prior to the consummation of each Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall
make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any
time after the consummation of the applicable Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of the
Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above,
which shall continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such
shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights)
which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been
exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant)
(the “Corporate Event Consideration”). Provision made pursuant to the preceding sentence shall be in a form and substance
reasonably satisfactory to the Holder.
(c) Black Scholes Value.
(i) Change of
Control Redemption. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of the Holder delivered
at any time commencing on the earliest to occur of (A) the public disclosure of any Change of Control, (B) the consummation of any Change
of Control and (C) the Holder first becoming aware of any Change of Control through the date that is ninety (90) days after the public
disclosure of the consummation of such Change of Control by the Company pursuant to a Report on Form 8-K or Report of Foreign Issuer
on Form 6-K filed with the SEC, the Company or the Successor Entity (as the case may be) shall exchange this Warrant for consideration
equal to the Black Scholes Value of such portion of this Warrant subject to exchange (collectively, the “Aggregate Black Scholes
Value”) in the form of, at the Holder’s election (such election to pay in cash or by delivery of the Rights (as defined below),
a “Consideration Election”), either (I) rights (with a beneficial ownership limitation in the form of Section 1(c) hereof,
mutatis mutandis) (collectively, the “Rights”), convertible in whole, or in part, at any time, without the requirement
to pay any additional consideration, at the option of the Holder, into such Corporate Event Consideration applicable to such Change of
Control equal in value to the Aggregate Black Scholes Value (as determined in accordance with Section 2(b)(iv) above, but with the aggregate
number of Successor Shares (as defined below) issuable upon conversion of the Rights to be determined in increments of 10% (or such greater
percentage as the Holder may notify the Company from time to time) of the portion of the Aggregate Black Scholes Value attributable to
such Successor Shares (the “Successor Share Value Increment”), with the aggregate number of Successor Shares issuable upon
exercise of the Rights with respect to the first Successor Share Value Increment determined based on 70% of the Closing Bid Price of
the Successor Shares on the date the Rights are issued and on each of the nine (9) subsequent Trading Days, in each case, the aggregate
number of additional Successor Shares issuable upon exercise of the Rights shall be determined based upon a Successor Share Value Increment
at 70% of the Closing Bid Price of the Successor Shares in effect for such corresponding Trading Day (such ten (10) Trading Day period
commencing on, and including, the date the Rights are issued, the “Rights Measuring Period”)), or (II) in cash; provided,
that the Company shall not consummate a Change of Control if the Corporate Event Consideration includes share capital or other equity
interest (the “Successor Shares”) either in an entity that is not listed on an Eligible Market or an entity in which the
daily share volume for the applicable Successor Shares for each of the twenty (20) Trading Days prior to the date of consummation of
such Change of Control is less than the aggregate number of Successor Shares issuable to the Holder upon conversion in full of the applicable
Rights (without regard to any limitations on conversion therein, assuming the exercise in full of the Rights on the date of issuance
of the Rights and assuming the Closing Bid Price of the Successor Shares for each Trading Day in the Rights Measuring Period is the Closing
Bid Price on the Trading Day ended immediately prior to the time of consummation of the Change of Control). The Company shall give the
Holder written notice of each Consideration Election at least twenty (20) Trading Days prior to the time of consummation of such Change
of Control. Payment of such amounts or delivery of the Rights, as applicable, shall be made by the Company (or at the Company’s
direction) to the Holder on or prior to the later of (x) the second (2nd) Trading Day after the date of such request and (y) the date
of consummation of such Change of Control (or, with respect to any Right, if applicable, such later time that holders of Common Stock
are initially entitled to receive Corporate Event Consideration with respect to the Common Stock of such holder). Any Corporate Event
Consideration included in the Right, if any, pursuant to this Section 4(c)(i) is pari passu with the Corporate Event Consideration
to be paid to holders of Common Stock and the Company shall not permit a payment of any Corporate Event Consideration to the holders
of Common Stock without on or prior to such time delivering the Right to the Holder hereunder.
(ii) Event
of Default Redemption. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of the Holder delivered
at any time after the occurrence of an Event of Default (as defined in the Note) under the Note, the Company or the Successor Entity (as
the case may be) shall purchase this Warrant from the Holder on the date of such request by paying to the Holder cash in an amount equal
to the Event of Default Black Scholes Value.
(d) Application.
The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall
be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without regard to any limitations on the exercise
of this Warrant (provided that the Holder shall continue to be entitled to the benefit of the Beneficial Ownership Limitation, applied
however with respect to shares of capital stock registered under the 1934 Act and thereafter receivable upon exercise of this Warrant
(or any such other warrant)).
5. NON-CIRCUMVENTION.
The Company covenants and agrees that it will not, by amendment of its articles of incorporation, bylaws or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out
all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality
of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and non- assessable shares of Common Stock upon the exercise of this Warrant, and (iii)
shall, for so long as this Warrant is outstanding, have authorized and reserved, free from preemptive rights, four (4) times the number
of shares of Common Stock into which the Warrants are then exercisable into to provide for the exercise of the rights represented by this
Warrant (without regard to any limitations on exercise).
6. WARRANT
HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in its capacity as a holder
of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose,
nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its capacity as the Holder of this Warrant,
any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which it is then entitled
to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities
on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the
Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with
the giving thereof to the stockholders.
7. REISSUANCE.
(a) Lost, Stolen or Mutilated
Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company will, on such terms as to indemnity or otherwise as
it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.
(b) Issuance
of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant shall
be of like tenor with this Warrant, and shall have an issuance date, as indicated on the face of such new Warrant which is the same as
the Issuance Date.
8. TRANSFER.
This Warrant shall be binding upon the Company and its successors and assigns, and shall inure to be the benefit of the Holder and its
successors and assigns. Notwithstanding anything to the contrary herein, the rights, interests or obligations of the Company hereunder
may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior signed written consent of
the Holder, which consent may be withheld at the sole discretion of the Holder (any such assignment or transfer shall be null and void
if the Company does not obtain the prior signed written consent of the Holder). This Warrant or any of the severable rights and obligations
inuring to the benefit of or to be performed by Holder hereunder may be assigned by Holder to a third party, in whole or in part, without
the need to obtain the Company’s consentthereto.
9. NOTICES.
Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance
with the notice provisions contained in the Purchase Agreement. The Company shall provide the Holder with prompt written notice (i) immediately
upon any adjustment of the Exercise Price, setting forth in reasonable detail, the calculation of such adjustment and (ii) at least 20
days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the
shares of Common Stock, (B) with respect to any grants, issuances or sales of any stock or other securities directly or indirectly convertible
into or exercisable or exchangeable for shares of Common Stock or other property, pro rata to the holders of shares of Common Stock or
(C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that
such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.
10. DISCLOSURE.
Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice in accordance with the terms of this
Warrant, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public
information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 am, New York city time on the Business
Day immediately following such notice delivery date, publicly disclose such material, non-public information on a Current Report on Form
8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company
or any of its Subsidiaries, the Company so shall indicate to the Holder explicitly in writing in such notice (or immediately upon receipt
of notice from the Holder, as applicable), and in the absence of any such written indication in such notice (or notification from the
Company immediately upon receipt of notice from the Holder), the Holder shall be entitled to presume that information contained in the
notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing contained in this
Section 10 shall limit any obligations of the Company, or any rights of the Holder, under the Purchase Agreement.
11. ABSENCE
OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees that the Holder is not a fiduciary or agent of the Company
and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company or (b) refrain
from trading any securities while in possession of such information in the absence of a written non-disclosure agreement signed by an
officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such an executed,
written non-disclosure agreement and subject to compliance with any applicable securities laws, the Company acknowledges that the Holder
may freely trade in any securities issued by the Company, may possess and use any information provided by the Company in connection with
such trading activity, and may disclose any such information to any third party.
12. AMENDMENT AND WAIVER.
The terms of this Warrant may be amended or waived (either generally or in a particular instance and either retroactively or prospectively)
only with the signed written consent of the Company and the Holder.
13. ARBITRATION
OF CLAIMS; GOVERNING LAW; AND VENUE. The Company and Holder shall submit all Claims (as defined in Exhibit E of the Purchase Agreement)
(the “Claims”) arising under this Warrant or any other agreement between the parties and their affiliates or any Claim relating
to the relationship of the parties to binding arbitration pursuant to the arbitration provisions set forth in Exhibit E of the Purchase
Agreement (the “Arbitration Provisions”). The Company and Holder hereby acknowledge and agree that the Arbitration Provisions
are unconditionally binding on the Company and Holder hereto and are severable from all other provisions of this Warrant. By executing
this Warrant, Company represents, warrants and covenants that Company has reviewed the Arbitration Provisions carefully, consulted with
legal counsel about such provisions (or waived its right to do so), understands that the Arbitration Provisions are intended to allow
for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations set forth in the Arbitration
Provisions, and that Company will not take a position contrary to the foregoing representations. The Company acknowledges and agrees
that Holder may rely upon the foregoing representations and covenants of the Company regarding the Arbitration Provisions. This Warrant
shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance
of this Warrant shall be governed by, the internal laws of the State of Nevada, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of Nevada or any other jurisdictions) that would cause the application of the laws of
any jurisdictions other than the State of Nevada. The Company and Holder consent to and expressly agree that the exclusive venue for
arbitration of any Claims arising under this Warrant or any other agreement between the Company and Holder or their respective affiliates
(including but not limited to the Transaction Documents) or any Claim relating to the relationship of the Company and Holder or their
respective affiliates shall be in the Commonwealth of Massachusetts. Without modifying the Company’s and Holder’s obligations
to resolve disputes hereunder pursuant to the Arbitration Provisions, for any litigation arising in connection with any of the Transaction
Documents (and notwithstanding the terms (specifically including any governing law and venue terms) of any transfer agent services agreement
or other agreement between the Company’s transfer agent and the Company, such litigation specifically includes, without limitation
any action between or involving Company and the Company’s transfer agent under the Irrevocable Transfer Agent Instructions (as
defined in the Purchase Agreement) or otherwise related to Holder in any way (specifically including, without limitation, any action
where Company seeks to obtain an injunction, temporary restraining order, or otherwise prohibit the Company’s transfer agent from
issuing shares of Common Stock to Holder for any reason)), each party hereto hereby (i) consents to and expressly submits to the exclusive
personal jurisdiction of any state or federal court sitting in the Commonwealth of Massachusetts, (ii) expressly submits to the exclusive
venue of any such court for the purposes hereof, (iii) agrees to not bring any such action (specifically including, without limitation,
any action where Company seeks to obtain an injunction, temporary restraining order, or otherwise prohibit the Company’s transfer
agent from issuing shares of Common Stock to Holder for any reason) outside of any state or federal court sitting in the Commonwealth
of Massachusetts, and (iv) waives any claim of improper venue and any claim or objection that such courts are an inconvenient forum or
any other claim, defense or objection to the bringing of any such proceeding in such jurisdiction or to any claim that such venue of
the suit, action or proceeding is improper. Notwithstanding anything in the foregoing to the contrary, nothing herein (i) shall limit,
or shall be deemed or construed to limit, the ability of the Holder to realize on any collateral or any other security, or the ability
of either party hereto to enforce a judgment or other court ruling in favor of such party, including through a legal action in any court
of competent jurisdiction, or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 15 of this Warrant.
Each party hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any objection to jurisdiction and venue
of any action instituted hereunder, any claim that it is not personally subject to the jurisdiction of any such court, and any claim
that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper
(including but not limited to based upon forum non conveniens). EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTIONS CONTEMPLATED HEREBY. Each party hereto irrevocably waives personal service
of process and consents to process being served in any suit, action or proceeding in connection with this Warrant or any other agreement,
certificate, instrument or document contemplated hereby or thereby by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any other manner permitted by law. The prevailing party in any action or dispute brought in
connection with this Warrant or any other agreement, certificate, instrument or document contemplated hereby or thereby shall be entitled
to recover from the other party its reasonable attorney’s fees and costs. If any provision of this Warrant shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder
of this Warrant in that jurisdiction or the validity or enforceability of any provision of this Warrant in any other jurisdiction.
14. ACCEPTANCE. Receipt
of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.
15. DISPUTE RESOLUTION.
(a) Submission to Dispute Resolution.
(i) Notwithstanding
anything to the contrary in this Warrant, in the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Closing
Bid Price, Black Scholes Consideration Value, Event of Default Black Scholes Value, Black Scholes Value or fair market value or the arithmetic
calculation of the number of Warrant Shares (as the case may be) (including, without limitation, a dispute relating to the determination
of any of the foregoing) (the “Warrant Calculations”), the Company or the Holder (as the case may be) shall submit the dispute
to the other party via electronic mail (A) if by the Company, within two (2) Trading Days after the occurrence of the circumstances giving
rise to such dispute or (B) if by the Holder, at any time after the Holder learned of the circumstances giving rise to such dispute. If
the Holder and the Company are unable to agree upon such determination or calculation within two (2) Trading Days following such initial
notice by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder
may, at its sole option, submit the dispute to an independent, reputable investment bank or independent, outside accountant selected by
the Holder (the “Independent Third Party”), and the Company shall pay all expenses of such Independent Third Party.
(ii) The Holder
and the Company shall each deliver to such Independent Third Party (A) a copy of the initial dispute submission so delivered in accordance
with the first sentence of this Section 15(a) and (B) written documentation supporting its position with respect to such dispute, in
each case, no later than 5:00 p.m. (New York time) by second (2nd) Business Day immediately following the date on which the Holder selected
such Independent Third Party (the “Dispute Submission Deadline”) (the documents referred to in the immediately preceding
clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood and
agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission
Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby
waives its right to) deliver or submit any written documentation or other support to such Independent Third Party with respect to such
dispute and such Independent Third Party shall resolve such dispute based solely on the Required Dispute Documentation that was delivered
to such Independent Third Party prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company
and the Holder or otherwise requested by such Independent Third Party, neither the Company nor the Holder shall be entitled to deliver
or submit any written documentation or other support to such Independent Third Party in connection with such dispute, other than the
Required Dispute Documentation.
(iii) The Company
and the Holder shall cause such Independent Third Party to determine the resolution of such dispute and notify the Company and the Holder
of such resolution no later than five (5) Business Days immediately following the Dispute Submission Deadline. The fees and expenses
of such Independent Third Party shall be borne solely by the Company, and such Independent Third Party’s resolution of such dispute
shall be final and binding upon all parties absent manifest error.
(b) Miscellaneous. The
Company expressly acknowledges and agrees that (i) this Section 15 constitutes an agreement to arbitrate between the Company and the
Holder (and constitutes an arbitration agreement) under the rules then in effect under the Nevada Rules of Civil Procedure (“NRCP”)
and that the Holder is authorized to apply for an order to compel arbitration pursuant to the NRCP in order to compel compliance with
this Section 15, (ii) a dispute relating to the Warrant Calculations includes, without limitation, disputes as to (A) whether an issuance
or sale or deemed issuance or sale of Common Stock occurred under Section 2 of this Warrant, (B) the consideration per share at which
an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock
was an issuance or sale or deemed issuance or sale, (D) whether an agreement, instrument, security or the like constitutes an Option
or Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the terms of this Warrant and each other applicable Transaction
Document shall serve as the basis for the selected Independent Third Party’s resolution of the applicable dispute, such Independent
Third Party shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such Independent
Third Party determines are required to be made by such Independent Third Party in connection with its resolution of such dispute (including,
without limitation, determining (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 2 of
this Warrant, (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance
or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale, (D) whether an agreement, instrument,
security or the like constitutes an Option or Convertible Security and (E) whether a Dilutive Issuance occurred) and in resolving such
dispute such Independent Third Party shall apply such findings, determinations and the like to the terms of this Warrant and any other
applicable Transaction Documents, and (iv) nothing in this Section 15 shall limit the Holder from obtaining any injunctive relief or
other equitable remedies (including, without limitation, with respect to any matters described in this Section 15).
16. CERTAIN
DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:
(a) “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly
or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct
or cause the direction of the management and policies of such Person whether by contract or otherwise.
(b) “Black
Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment Right (as the case
may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option or
Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to
the remaining term of such Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance of such Option,
Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv) an expected volatility equal to the
greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization
factor) as of the Trading Day immediately following the date of issuance of such Option, Convertible Security or Adjustment Right (as
the case may be).
(c) “Black
Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s request
pursuant to Section 4(c)(i), which value is calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing Sale Price of the Common
Stock during the period beginning on the Trading Day immediately preceding the announcement of the applicable Change of Control (or the
consummation of the applicable Change of Control, if earlier) and ending on the Trading Day of the Holder’s request pursuant to
Section 4(c)(i) and (2) the sum of the price per share being offered in cash in the applicable Change of Control (if any) plus the value
of the non-cash consideration being offered in the applicable Change of Control (if any), (ii) a strike price equal to the Exercise Price
in effect on the date of the Holder’s request pursuant to Section 4(c)(i), (iii) a risk-free interest rate corresponding to the
U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s request
pursuant to Section 4(c)(i) and (2) the remaining term of this Warrant as of the date of consummation of the applicable Change of Control
or as of the date of the Holder’s request pursuant to Section 4(c)(i) if such request is prior to the date of the consummation
of the applicable Change of Control, (iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100% and the 30
day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of
the Trading Day immediately following the earliest to occur of (A) the public disclosure of the applicable Change of Control and (B)
the date of the Holder’s request pursuant to Section 4(c)(i).
(d) “Bloomberg”
means Bloomberg, L.P.
(e) “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in the State of Nevada are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in the State of Nevada generally are
open for use by customers on such day.
(f) “Change
of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect, wholly-owned
Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification of the shares of
Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification
continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly,
are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power
to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such
reorganization, recapitalization or reclassification, (iii) pursuant to a migratory merger effected solely for the purpose of changing
the jurisdiction of incorporation of the Company or any of its Subsidiaries or (iv) bone fide arm’s length acquisitions by the Company
with one or more third parties as long as holders of the Company’s voting power as of the Issuance Date continue after such acquisition
to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of at least 51% of the voting
power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their
equivalent if other than a corporation) of such entity or entities) after such acquisition.
(g) “Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, (i) the last closing bid price
and last closing trade price, respectively, for such security on the Principal Market, as reported by Quotestream or other similar quotation
service provider designated by the Holder, or, if the Principal Market begins to operate on an extended hours basis and does not designate
the closing trade price, then the last trade price of such security prior to 4:00 p.m., New York time, as reported by Quotestream or other
similar quotation service provider designated by the Holder, or (ii) if the foregoing does not apply, the last trade price of such security
in the over-the-counter market for such security as reported by Quotestream or other similar quotation service provider designated by
the Holder, or (iii) if no last trade price is reported for such security by Quotestream or other similar quotation service provider designated
by the Holder, the average of the bid and ask prices of any market makers for such security as reported by Quotestream or other similar
quotation service provider designated by the Holder. If the Closing Sale Price cannot be calculated for a security on a particular date
on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such
dispute shall be resolved in accordance with the procedures in Section 15. All such determinations to be appropriately adjusted for any
stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.
(h) “Common
Stock” means the Company’s common stock, par value $0.0001, and any other class of securities into which such securities
may hereafter be reclassified or changed.
(i) “Common
Stock Equivalents” means any securities of the Company that would entitle the holder thereof to acquire at any time Common Stock,
including without limitation any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
(j) “Convertible
Securities” means any stock or other security (other than Options) that is at any time and under any circumstances, directly
or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares
of Common Stock.
(k) “Eligible
Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, Nasdaq
Capital Market, or equivalent national securities exchange.
(l) “Event
Market Price” means, with respect to any Stock Combination Event Date, the quotient determined by dividing (x) the sum of the
VWAP of the Common Stock for each of the five (5) lowest Trading Days during the twenty (20) consecutive Trading Day period ending and
including the Trading Day immediately preceding the sixteenth (16th) Trading Day after such Stock Combination Event Date, divided by (y)
five (5). All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization
or other similar transaction during such period.
(m) “Event
of Default Black Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s
request pursuant to Section 4(c)(ii), which value is calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the highest Closing Sale Price of the Common Stock during the
period beginning on the date of the occurrence of the Event of Default through the date that the Note is extinguished in the entirety
or, if earlier, the Trading Day of the Holder’s request pursuant to Section 4(c)(ii), (ii) a strike price equal to the Exercise
Price in effect on the date of the Holder’s request pursuant to Section 4(c)(ii), (iii) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s
request pursuant to Section 4(c)(ii) and (2) the remaining term of this Warrant as of the date of the occurrence of such Event of Default,
(iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the “HVT”
function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following later of (x) the
date of the occurrence of such Event of Default and (y) the date of the public announcement of such Event of Default.
(n) “Excluded
Issuance” means the issuance or deemed issuance of shares of Common Stock issued or issuable to directors or officers of the Company
pursuant to an equity compensation program approved by the Board of Directors of the Company.
(o) “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(p) “Fundamental Transaction”
means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related
transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Subject Entity,
or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company or
any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii)
make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its Common Stock be subject to or
party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of at least either
(x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common
Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender
or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party to,
or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial
owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a
stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off
or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire,
either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated
as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or
party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock
such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50%
of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall,
directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject
Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange,
reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off,
scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least
50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary
voting power represented by issued and outstanding Common Stock not held by all such Subject Entities as of the date of this Warrant
calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate
ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient
to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders of the Company
to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including
through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument
or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition
shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary
to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such
instrument or transaction.
(q) “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(r) “Person”
and “Persons” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization, any other entity and any governmental entity or any department or agency thereof.
(s) “Principal
Market” means the principal securities exchange or trading market where such Common Stock is listed or quoted, including but
not limited to any tier of the OTC Markets, any tier of the NASDAQ Stock Market (including NASDAQ Capital Market), or the NYSE American,
or any successor to such markets.
(t) “Market
Price” means the highest traded price of the Common Stock during the thirty Trading Days prior to the date of the respective
Exercise Notice.
(u) “Successor
Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been
entered into.
(v) “Trading
Day” means any day on which the Common Stock is listed or quoted on its Principal Market, provided, however, that if the Common
Stock is not then listed or quoted on any Principal Market, then any calendar day.
(w) “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the
Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market
on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time,
as reported by Quotestream or other similar quotation service provider designated by the Holder through its “VAP” function
(set to 09:30 start time and 16:00 end time) or, if the foregoing does not apply, the dollar volume-weighted average price of such security
in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York time,
and ending at 4:00 p.m., New York time, as reported by Quotestream or other similar quotation service provider designated by the Holder,
or, if no dollar volume-weighted average price is reported for such security by Quotestream or other similar quotation service provider
designated by the Holder for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting
prices). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such
date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to
agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 15.
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other
similar transaction during such period.
* * * * * * *
IN WITNESS WHEREOF, the Company
has caused this Warrant to be duly executed as of the Issuance Date set forth above.
| CLEAN ENERGY TECHNOLOGIES, INC. |
|
| |
|
| /s/ Kambiz Mahdi |
|
| Name: |
Kambiz Mahdi |
|
| Title: |
Chief Executive Officer |
|
EXHIBIT A
EXERCISE NOTICE
(To be executed by the registered
holder to exercise this Common Stock Purchase Warrant)
THE
UNDERSIGNED holder hereby exercises the right to purchase of the shares of Common Stock (“Warrant
Shares”) of CLEAN ENERGY TECHNOLOGIES, INC., a Nevada corporation (the “Company”), evidenced by the attached copy of
the Common Stock Purchase Warrant (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.
| 1. | Form of Exercise Price. The Holder intends that payment
of the Exercise Price shall be made as (check one): |
| ☐ | a cash exercise with respect to Warrant Shares; or |
| ☐ | by cashless exercise pursuant to the Warrant. |
| 2. | Payment of Exercise Price. If cash exercise is selected
above, the holder shall pay the applicable Aggregate Exercise Price in the sum of $ to the Company in accordance with the terms of the
Warrant. |
| 3. | Delivery of Warrant Shares. The Company shall deliver
to the holder Warrant Shares in accordance with the terms of the Warrant. |
Date: ______________________
| |
|
| |
(Print Name of Registered Holder) |
| |
|
|
| |
By: |
|
| |
Name: |
|
| |
Title: |
|
EXHIBIT B
ASSIGNMENT OF WARRANT
(To be signed only upon authorized
transfer of the Warrant)
FOR
VALUE RECEIVED, the undersigned hereby sells, assigns,
and transfers unto the right to purchase shares of common stock of CLEAN ENERGY TECHNOLOGIES, INC., to which the within Common Stock Purchase
Warrant relates and appoints , as attorney-in-fact, to transfer said right on the books of CLEAN ENERGY TECHNOLOGIES, INC. with full power
of substitution and re-substitution in the premises. By accepting such transfer, the transferee has agreed to be bound in all respects
by the terms and conditions of the within Warrant.
Dated: ______________________
| |
|
| |
(Signature) * |
| |
|
| |
|
| |
(Name) |
| |
|
| |
|
| |
(Address) |
| |
|
| |
|
| |
(Social Security or Tax Identification No.) |
* The signature on this Assignment
of Warrant must correspond to the name as written upon the face of the Common Stock Purchase Warrant in every particular without alteration
or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate
your position(s) and title(s) with such entity.
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Grafico Azioni Clean Energy Technologies (NASDAQ:CETY)
Storico
Da Feb 2025 a Mar 2025
Grafico Azioni Clean Energy Technologies (NASDAQ:CETY)
Storico
Da Mar 2024 a Mar 2025
