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UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d)
of
The Securities Exchange Act of 1934
Date
of report (Date of earliest event reported): January 22, 2024
AGRIFY
CORPORATION
(Exact
name of registrant as specified in its charter)
Nevada |
|
001-39946 |
|
30-0943453 |
(State
or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
|
(IRS
Employer
Identification No.) |
2468
Industrial Row Dr.
Troy, MI |
|
48084 |
(Address
of principal executive offices) |
|
(Zip
Code) |
Registrant’s
telephone number, including area code: (617) 896-5243
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☐ |
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ |
Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ |
Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ |
Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading symbol(s) |
|
Name of each exchange on which registered |
Common Stock, par value
$0.001 per share |
|
AGFY |
|
The Nasdaq Stock Market
LLC |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01
Entry into a Material Definitive Agreement.
Consolidation,
Amendment and Restatement of Convertible Note
As
previously reported, on October 27, 2023, CP Acquisitions LLC (the “New Lender”), an entity affiliated with and controlled
by Raymond Chang, the Chief Executive Officer of Agrify Corporation (the “Company”) and a member of its Board of Directors
(the “Board”), and I-Tseng Jenny Chan, a member of the Board, purchased from an
institutional investor (the “Prior Lender”) the Senior Secured Note issued by
the Company to the Prior Lender on August 19, 2022 (the “Exchange Note”) and the Senior Secured Convertible Note issued by
the Company to the Prior Lender on March 10, 2023 (the “Convertible Note”). Concurrently with that transaction, the Company
issued a junior secured promissory note (the “Junior Secured Note”) to the New Lender, which was subsequently amended and
restated on December 4, 2023 to have a maximum principal amount of $4,000,000.
Also
as previously disclosed, on January 8, 2024, the Company held its 2023 Annual Meeting of Stockholders (the “Annual
Meeting”), at which the stockholders of the Company approved a proposal (the “Note Restatement Proposal”) for the
consolidation of the Junior Secured Note and the Exchange Note into the Convertible Note and the amendment and restatement of the
Convertible Note to, among other things, reduce the conversion price to $1.46 per share, increase the beneficial ownership
limitation to 49.99% with respect to each of Mr. Chang and Ms. Chan to the extent the right to receive shares is assigned by the New
Lender to them or their affiliates, to increase the interest rate to 10%, and to extend the maturity date to December 31, 2025, as
further described in the Company’s definitive
proxy statement filed with the Securities and Exchange Commission on December 18, 2023 (the “Proxy Statement”).
On
January 25, 2024, the Company and the New Lender consolidated the outstanding principal and interest due under the Junior Secured
Note and the Exchange Note into the Convertible Note and amended and restated the Convertible Note consistent with the Note
Restatement Proposal (the “Restated Note”), with an outstanding principal amount of approximately $18.9 million at the
time of issuance of the Restated Note. The Restated Note amended the terms of the Convertible Note by, among other things, (i)
reducing the conversion price to $1.46 per share of common stock, (ii) increasing the beneficial ownership limitation to 49.99% with
respect to any individual or group, provided that the New Lender may assign its right to receive shares upon conversion to Mr. Chang
and/or Ms. Chan or their affiliates, in which case the 49.99% beneficial ownership limitation will apply to each of them
individually, (iii) extending the maturity date to December 31, 2025, (iv) increasing the interest rate from 9% to 10% per
annum, (v) increasing the default interest from 15% to 18% per annum, and (vi) providing for the payment of interest every
six months, or in lieu of cash interest payments, the Company may issue shares as payments-in-kind at a conversion price
equal to the higher of (i) $1.46 or (ii) a 20% discount to its trailing seven-day volume weighted average price as of
the date of interest payment.
Immediately
following the execution of the Restated Note, the New Lender immediately elected to convert approximately $3.9 million of outstanding
principal into an aggregate of 2,671,633 shares of common stock, and assigned its rights to receive such shares to entities affiliated
with Mr. Chang and Ms. Chan. Following the conversion, there was $15.0 million in principal amount outstanding under the Restated Note.
The
foregoing summary of the Restated Note does not purport to be complete, and is qualified in its entirety by reference to a copy of the
Restated Note that is filed as Exhibit 4.1 hereto.
Amendment
and Restatement of Junior Secured Promissory Note
As
previously reported, on July 12, 2023, the Company issued an unsecured promissory note with an original principal amount of $500,000
in favor of GIC Acquisition, LLC (“GIC”), an entity that is indirectly owned and managed by Mr. Chang, and on October 27,
2023, GIC and the Company amended and restated the note to extend the maturity date to December 31, 2023 and to grant a security interest
in the Company’s assets that ranks junior to the Exchange Note and the Convertible Note (the “Junior Note”). On January
25, 2024, GIC and the Company amended and restated the Junior Note to increase the principal amount thereunder to $1.0 million and to
extend the maturity date until June 30, 2024 (as amended and restated, the “Restated Junior Note”).
The
foregoing summary of the Restated Junior Note does not purport to be complete, and is qualified in its entirety by reference to a copy
of the Restated Junior Note that is filed as Exhibit 4.2 hereto.
Item
2.03. Creation of a Direct Financial Obligation.
The
information set forth in Item 1.01 of this Current Report on Form 8-K regarding the Restated Note and the Restated Junior Note
is incorporated herein by reference into this Item 2.03.
Item
3.02. Unregistered Sales of Securities.
The
information set forth in Items 1.01 and 8.01 of this Current Report on Form 8-K regarding the issuance of the Restated
Note, the Restated Junior Note, the Warrant Shares (as defined in Item 8.01 below) and the shares of common stock issued upon
conversion of the Restated Note is incorporated herein by reference into this Item 3.02.
The
Restated Note, the Warrant Shares, the Restated Junior Note, and the shares of common stock underlying the Restated Note (collectively,
the “Securities”) were, and will be, offered and sold in transactions exempt from registration under the Securities Act in
reliance on Section 4(a)(2) thereof and Rule 506(b) of Regulation D thereunder. Each of the Prior Lender and the New Lender is an
“accredited investor,” as defined in Regulation D, and is acquiring the Securities for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution thereof. Accordingly, the Securities will not be registered
under the Securities Act and the Securities may not be offered or sold in the United States absent registration or an exemption from
registration under the Securities Act and any applicable state securities laws.
Neither
this Current Report on Form 8-K nor the exhibits attached hereto is an offer to sell or the solicitation of an offer to buy
shares of common stock, notes, or any other securities of the Company.
Item
5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On
January 22, 2024, the Company reconvened the Annual Meeting, as further described in Item 5.07 below, at which the Company’s stockholders
approved an amendment to the Company’s Articles of Incorporation, to increase the number of authorized shares of the Company’s
common stock from 10,000,000 to 35,000,000, and to correspondingly increase the total authorized shares of stock from 13,000,000 to 38,000,000
(the “Charter Amendment”). The Charter Amendment became effective upon the Company’s filing of the Charter Amendment
with the Secretary of State for the State of Nevada on January 22, 2024.
The
foregoing description of the Charter Amendment does not purport to be complete and is qualified in its entirety by reference to the Charter
Amendment, which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Item
5.07 Submission of Matters to a Vote of Security Holders.
The
Company adjourned its Annual Meeting on January 8, 2024 only with respect to the proposal to approve the Charter Amendment (“Item
3”), to approve an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of the
Company’s common stock from 10,000,000 to 35,000,000, and to correspondingly increase the total authorized shares of stock from
13,000,000 to 38,000,000, as described in more detail in the Proxy Statement. Initially, at the Annual Meeting, the favorable votes for
Item 3 were less than the affirmative vote of a majority of the Company’s outstanding common stock as of the record date, which
is the required minimum vote to approve Item 3. Accordingly, the Annual Meeting was adjourned only with respect to the vote on Item 3,
and such meeting was reconvened on January 22, 2024 (the “Reconvened Meeting”). There were 1,701,243 outstanding shares entitled
to vote and there were 930,985 shares present in person or by proxy at the Reconvened Meeting, representing approximately 54.72% of the
shares outstanding and entitled to vote. The voting result with respect to Item 3, as certified by the inspector of elections for the
Reconvened Meeting, is presented below.
Votes
For |
|
Votes
Against |
|
Votes
Abstained |
878,464 |
|
49,979 |
|
2,542 |
Item
8.01. Other Events.
Warrant
Exercise
On
January 22, 2024, pursuant to notices of exercise received by the Prior Lender, the Company issued an aggregate of 2,473,542 shares of
common stock (the “Warrant Shares”) to the Prior Lender upon the cashless exercise of two warrants issued to the Prior Lender
on October 27, 2023 (the “Prior Lender Warrants”). The issuance of the Warrant Shares represented the full exercise of the
Abeyance Warrant as described in the Company’s Current Report on Form 8-K filed on October 30, 2023 (the “October 30 Form
8-K”) and the partial exercise of the Exchange Warrant as described in the October 30 Form 8-K, which remains exercisable for up
to 659,669 shares of common stock, subject to adjustment pursuant to its terms.
Press
Release
On
January 25, 2024, the Company issued a press release announcing the Restated Note, the partial conversion of the Restated Note, the approval
of the Charter Amendment, and the issuance of the Warrant Shares to the Prior Lender. A copy of the press release is attached as Exhibit
99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item
9.01. Financial Statements and Exhibits.
(d)
Exhibits.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
|
AGRIFY CORPORATION |
|
|
|
Date: January 25, 2024 |
By: |
/s/ Raymond
Nobu Chang |
|
|
Raymond Nobu Chang |
|
|
Chief Executive Officer |
Exhibit 3.1
Exhibit 4.1
Agrify
Corporation
Senior Secured Amended, Restated and Consolidated
Convertible Note due 2025
THE ISSUANCE AND SALE OF NEITHER THE SECURITIES
REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES THAT MAY BE ISSUABLE PURSUANT TO THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. UNTIL THE DATE THAT IS ONE (1) YEAR AFTER
MARCH 23, 2022, THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION AND PROSPECTUS-DELIVERY
REQUIREMENTS OF THE SECURITIES ACT.
Agrify
Corporation
Senior Secured Amended, Restated and Consolidated
Convertible Note due 2025
Certificate No. C-1
Agrify Corporation, a Nevada
corporation (the “Company”), for value received, promises to pay to CP Acquisitions, LLC, as assignee and successor
in interest to High Trail Special Situations LLC (the “Initial Holder”), or its registered assigns, the principal sum
of Eighteen Million Nine Hundred Thousand Five Hundred Eighty-Three Dollars and Seventy-One Cents ($18,900,583.71) (such principal sum,
the “Principal Amount”) on December 31, 2025, and to pay any outstanding interest thereon, as provided in this Note,
in each case as provided in and subject to the other provisions of this Note, including the earlier redemption, repurchase or conversion
of this Note.
Additional provisions of this
Note are set forth on the other side of this Note.
[The Remainder of This Page Intentionally
Left Blank; Signature Page Follows]
IN WITNESS WHEREOF,
Agrify Corporation has caused this instrument to be duly executed as of the date set forth below.
Date: January 25, 2024 |
By: |
/s/ Josh Savitz |
|
|
Name: |
Josh Savitz |
|
|
Title: |
General Counsel |
(Signature Page to Senior Secured Amended,
Restated and Consolidated Convertible Note due
2025, Certificate No. C-1)
Agrify
Corporation
Senior Secured Amended, Restated and Consolidated
Convertible Note due 2025
This Note (this “Note”
and, collectively with any Note issued in exchange therefor or in substitution thereof, the “Notes”) is issued by Agrify
Corporation, a Nevada corporation (the “Company”), and designated as its “Senior Secured Amended, Restated
and Consolidated Convertible Notes due 2025.”
This Note is given by the
Company to the Holder in substitution and replacement for (i) that certain Senior Secured Convertible Note due 2025 in the original principal
amount of $10,000,000 issued by the Company on March 10, 2023, (ii) that certain Senior Secured
Note due 2025 in the original principal amount of $35,000,000 issued by the Company on August 19, 2022, as amended by Amendment No. 1
to Senior Secured Note, dated March 9, 2023, and (iii) that certain Junior Secured Promissory
Note in the original principal amount of $3,000,000 issued by the Company on October 27, 2023 (individually, each a “Prior
Note” and collectively, the “Prior Notes”), to amend, restate and consolidate the terms of the Prior Notes.
The Company does not intend for the substitution and replacement of this Note for the Prior
Notes to constitute, nor shall such be deemed to constitute, a novation or extinguishment of any Prior Note and any obligations of any
kind or nature accruing or due thereunder, and the substitution and replacement of this Note for the Prior Notes shall in no event impair,
limit, reduce or otherwise discharge the liability of the Company or any obligor of the Prior
Notes which liability is hereby reaffirmed by the Company and evidenced by this Note. Therefore,
the Prior Notes are hereby amended, restated, consolidated and replaced in its entirety by this Note.
Section
1. Definitions.
“Affiliate”
has the meaning set forth in Rule 144 under the Securities Act.
“Attribution Parties”
means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts,
currently, or from time to time after the Issue Date, directly or indirectly managed or advised by the Holder’s investment manager
or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing, (iii) any Person
acting or who could be deemed to be acting as a “group” (within the meaning of Section 13(d)(3) of the Exchange Act) together
with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Common Stock would or could be aggregated
with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the Exchange Act.
“Authorized Denomination”
means, with respect to the Notes, a Principal Amount thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof, or,
if such Principal Amount then-outstanding is less than $1,000, then such outstanding Principal Amount.
“Bankruptcy Law”
means Title 11, United States Code, or any similar U.S. federal or state or non-U.S. law for the relief of debtors.
“Board of Directors”
means the board of directors of the Company or a committee of such board duly authorized to act on behalf of such board.
“Business Combination
Event” has the meaning set forth in Section 10.
“Business Day”
means any day other than a Saturday, a Sunday or any day on which commercial banks in The City of New York are authorized or required
by law or executive order to close or be closed; provided, however, for clarification, commercial banks in The City of New
York shall not be deemed to be authorized or required by law or executive order to close or be 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 City of New York are open for use by customers on such day.
“Capital Lease”
means, with respect to any Person, any leasing or similar arrangement conveying the right to use any property, whether real or personal
property, or a combination thereof, by that Person as lessee that, in conformity with GAAP, is required to be accounted for as a capital
lease on the balance sheet of such Person.
“Capital Lease Obligation”
means, at the time any determination is to be made, the amount of the liability in respect of a Capital Lease that would at that time
be required to be capitalized on a balance sheet prepared in accordance with GAAP, and the stated maturity thereof shall be the date of
the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the
lessee without payment of a penalty.
“Capital Stock”
of any Person means any and all shares of, interests in, rights to purchase, warrants or options for, participations in, or other equivalents
of, in each case however designated, the equity of such Person, but excluding any debt securities convertible into such equity.
“Cash”
means all cash and liquid funds.
“Cash Equivalents”
means, as of any date of determination, any of the following: (A) marketable securities (i) issued or directly and unconditionally guaranteed
as to interest and principal by the United States Government, or (ii) issued by any agency of the United States the obligations of which
are backed by the full faith and credit of the United States, in each case maturing within one (1) year after such date; (B) marketable
direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality
thereof, in each case maturing within one (1) year after such date and having, at the time of the acquisition thereof, a rating of at
least A-1 from Standard & Poor’s Corporation or at least P-1 from Moody’s Investors Service; (C) commercial paper maturing
no more than one (1) year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1
from Standard & Poor’s Corporation or at least P-1 from Moody’s Investors Service; (D) certificates of deposit or bankers’
acceptances maturing within one (1) year after such date and issued or accepted by any commercial bank organized under the laws of the
United States of America or any State, or the District of Columbia that (i) is at least “adequately capitalized” (as defined
in the regulations of its primary federal banking regulator), and (ii) has Tier 1 capital (as defined in such regulations) of not less
than $5,000,000,000; and (E) shares of any money market mutual fund that (i) has substantially all of its assets invested continuously
in the types of investments referred to in clauses (A) and (B) above, (ii) has net assets of not less than $5,000,000,000, and (iii) has
the highest rating obtainable from either Standard & Poor’s Corporation or Moody’s Investors Service.
“Close of Business”
means 5:00 p.m., New York City time.
“Collateral”
has the meaning set forth in the Security Agreements.
“Collateral Agent”
means CP Acquisitions, LLC in its capacity as collateral agent for the Holder and each Other Holder, together with any successor thereto
in such capacity.
“Commission”
means the U.S. Securities and Exchange Commission.
“Common Stock”
means the common stock, par value $0.001 per share, of the Company.
“Common Stock Change
Event” has the meaning set forth in Section 7(H)(i)(4).
“Company Redemption
Date” has the meaning set forth in Section 8(A).
“Company Redemption
Notice” has the meaning set forth in Section 8(A).
“Company Redemption
Price” means a cash amount equal to one hundred and two point five percent (102.5%) of the Principal Amount then outstanding,
plus accrued and unpaid interest.
“Compliance Certification”
means each certification delivered pursuant to Section 9(G) or Section 9(K)(ii).
“Contingent Obligation”
means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (A) any Indebtedness
or other obligations of another Person, including any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted
or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (B) any obligations
with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (C)
all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar
agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates
or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection
or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated
or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such
amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.
“Conversion Amount”
has the meaning set forth in Section 7(d)(i).
“Conversion Consideration”
has the meaning set forth in Section 7(D)(i).
“Conversion Date”
means the first Business Day on which the requirements set forth in Section 7(C)(i) to convert this Note are satisfied.
“Conversion Price”
means an amount equal to $1.46 per share of Common Stock; provided, however, that if after the date of the amendment and restatement of
this Note the Company effects any stock split, reverse stock split, share combination or similar transaction, the Conversion Price shall
be equitably adjusted to reflect the ratio of such split or similar transaction.
“Conversion Settlement
Date” has the meaning set forth in Section 7(D)(iii).
“Copyright License”
means any written agreement granting any right to use any Copyright or Copyright registration, now owned or hereafter acquired by the
Company or in which the Company now holds or hereafter acquires any interest.
“Copyrights”
means all copyrights, whether registered or unregistered, held pursuant to the laws of the United States, any State thereof, or of any
other country.
“Covering Price”
has the meaning set forth in Section 7(D)(iv)(1).
“Daily VWAP”
means, for any VWAP Trading Day, the per share volume-weighted average price of the Common Stock as displayed under the heading “Bloomberg
VWAP” on Bloomberg page “AGFY <EQUITY> VAP” (or, if such page is not available, its equivalent successor page)
in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such
VWAP Trading Day (or, if such volume-weighted average price is unavailable, the market value of one share of Common Stock on such VWAP
Trading Day, determined, using a volume-weighted average price method, by a nationally recognized independent investment banking firm
selected by the Company). The Daily VWAP will be determined without regard to after-hours trading or any other trading outside of the
regular trading session.
“Default”
means any event that is (or, after notice, passage of time or both, would be) an Event of Default.
“Default Interest”
has the meaning set forth in Section 4(B)(ii).
“Disqualified Stock”
means, with respect to any Person, any Capital Stock that by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable at the option of the holder) or upon the happening of any event:
(A) matures
or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;
(B) is
convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock convertible or exchangeable solely at the
option of the Company or a Subsidiary of the Company; provided that any such conversion or exchange will be deemed an incurrence of Indebtedness
or Disqualified Stock, as applicable); or
(C) is
redeemable at the option of the holder thereof, in whole or in part,
(D) in
the case of each of clauses (A), (B) and (C), at any point prior to the one hundred eighty-first (181st) day after the Maturity Date.
“Eligible Exchange”
means any of The New York Stock Exchange, The NYSE American LLC, The Nasdaq Capital Market, The Nasdaq Global Market or The Nasdaq Global
Select Market (or any of their respective successors).
“Equipment”
means all “equipment” as defined in the UCC with such additions to such term as may hereafter be made, and includes
without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.
“Equity Interests”
shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents, including preferred stock
or membership interests (however designated, whether voting or non-voting), of equity of such Person, including, if such Person is a partnership,
partnership interests (whether general or limited) and including, without limitation, any “equity security” (as that term
is defined under Rule 405 promulgated under the Securities Act), and any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of assets of, such partnership.
“Equity Rights”
shall mean, with respect to any Person, any then-outstanding subscriptions, options, warrants, commitments, preemptive rights, convertible
debt, or other equity-linked securities or agreements of any kind for the issuance or sale, of any additional Equity Interests of any
class, or partnership or other ownership interests of any type in, such Person.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
“Event of Default”
has the meaning set forth in Section 11(A).
“Event of Default
Acceleration Amount” means, with respect to the delivery of a notice pursuant to Section 11(B)(ii) declaring this Note
to be due and payable immediately on account of an Event of Default, a cash amount equal to one hundred fifteen percent (115%) of the
then outstanding Principal Amount of this Note (or such lesser principal amount accelerated pursuant to such notice) plus accrued and
unpaid interest on this Note.
“Event of Default
Notice” has the meaning set forth in Section 11(C).
“Ex-Dividend Date”
means, with respect to an issuance, dividend or distribution on the Common Stock, the first date on which shares of Common Stock trade
on the applicable exchange or in the applicable market, regular way, without the right to receive such issuance, dividend or distribution
(including pursuant to due bills or similar arrangements required by the relevant stock exchange). For the avoidance of doubt, any alternative
trading convention on the applicable exchange or market in respect of the Common Stock under a separate ticker symbol or CUSIP number
will not be considered “regular way” for this purpose.
“Excess Shares”
has the meaning set forth in Section 7(I).
“Exchange Act”
means the U.S. Securities Exchange Act of 1934, as amended.
“Expiration Date”
has the meaning set forth in Section 7(F)(i)(5).
“Expiration Time”
has the meaning set forth in Section 7(F)(i)(5).
“Fiscal Quarter”
means each three month period ending March 31, June 30, September 30, and December 31.
“Fundamental Change”
means any of the following events:
(A) a
“person” or “group” (within the meaning of Section 13(d)(3) of the Exchange Act), other than the Company or its
Wholly Owned Subsidiaries, or the employee benefit plans of the Company or its Wholly Owned Subsidiaries, files any report with the Commission
indicating that such person or group has become the direct or indirect “beneficial owner” (as defined below) of shares of
the Company’s common equity representing more than fifty percent (50%) of the voting power of all of the Company’s then-outstanding
common equity; or
(B) the
consummation of (i) any sale, lease or other transfer, in one transaction or a series of transactions, of all or substantially all of
the assets of the Company and its Subsidiaries, taken as a whole, to any Person (other than solely to one or more of the Company’s
Wholly Owned Subsidiaries); or (ii) any transaction or series of related transactions in connection with which (whether by means of merger,
consolidation, share exchange, combination, reclassification, recapitalization, acquisition, liquidation or otherwise) all of the Common
Stock is exchanged for, converted into, acquired for, or constitutes solely the right to receive, other securities, cash or other property
(other than a subdivision or combination, or solely a change in par value, of the Common Stock); provided, however, that
any merger, consolidation, share exchange or combination of the Company pursuant to which the Persons that directly or indirectly “beneficially
owned” (as defined below) all classes of the Company’s common equity immediately before such transaction directly or indirectly
“beneficially own,” immediately after such transaction, more than fifty percent (50%) of all classes of common equity of the
surviving, continuing or acquiring company or other transferee, as applicable, or the parent thereof, in substantially the same proportions
vis-à-vis each other as immediately before such transaction will be deemed not to be a Fundamental Change pursuant to this clause
(B).
For the purposes of this definition, (x) any transaction
or event described in both clause (A) and in clause (B)(i) or (ii) above (without regard to the proviso in clause
(B)) will be deemed to occur solely pursuant to clause (B) above (subject to such proviso); and (y) whether a Person is a “beneficial
owner” and whether shares are “beneficially owned” will be determined in accordance with Rule 13d-3 under
the Exchange Act.
“Fundamental Change
Base Repurchase Price” means, with respect to this Note (or any portion of this Note to be repurchased) upon a Repurchase Upon
Fundamental Change, a cash amount equal to one hundred two point five percent (102.5%) of the then-outstanding Principal Amount of this
Note (or portion thereof) to be so repurchased.
“Fundamental Change
Notice” has the meaning set forth in Section 6(C).
“Fundamental Change
Repurchase Date” means the date as of which this Note must be repurchased for cash in connection with a Fundamental Change,
as provided in Section 6(B).
“Fundamental Change
Repurchase Price” means the cash price payable by the Company to repurchase this Note (or any portion of this Note) upon its
Repurchase Upon Fundamental Change, calculated pursuant to Section 6(D).
“GAAP”
means generally accepted accounting principles in the United States of America, as in effect from time to time; provided the definitions
set forth in this Note and any financial calculations required by thereby shall be computed to exclude any change to lease accounting
rules from those in effect pursuant to Financial Accounting Standards Board Accounting Standards Codification 840 (Leases) and other related
lease accounting guidance as in effect on the date hereof.
“Holder”
means the person in whose name this Note is registered on the books of the Company, which initially is the Initial Holder.
“Holder Conversion
Notice” has the meaning set forth in Section 7(C)(i).
The term “including”
means “including without limitation,” unless the context provides otherwise.
“Indebtedness”
means, indebtedness of any kind, including, without duplication (A) all indebtedness for borrowed money or the deferred purchase price
of property or services, including reimbursement and other obligations with respect to surety bonds and letters of credit, (B) all obligations
evidenced by notes, bonds, debentures or similar instruments, (C) all Capital Lease Obligations, (D) all Contingent Obligations, and (E)
Disqualified Stock.
“Independent Investigator”
has the meaning set forth in Section 9(S).
“Initial Exchange
Note” has the meaning set forth in the Securities Exchange Agreement.
“Initial Holder”
has the meaning set forth in the cover page of this Note.
“Intellectual Property”
means all of the Company’s Copyrights; Trademarks; Patents; Licenses; trade secrets and inventions; mask works; the Company’s
applications therefor and reissues, extensions, or renewals thereof; and the Company’s goodwill associated with any of the foregoing,
together with the Company’s rights to sue for past, present and future infringement of Intellectual Property and the goodwill associated
therewith.
“Interest Payment
Date” means (A) the first calendar day of each September and March during the term of this Note, beginning on September 1, 2024;
and (B) if not otherwise included in clause (A), the Maturity Date.
“Interest Shares”
has the meaning set forth in Section 5(A).
“Investment”
means any beneficial ownership (including stock, partnership or limited liability company interests) of or in any Person, or any loan,
advance or capital contribution to any Person or the acquisition of all, or substantially all, of the assets of another Person or the
purchase of any assets of another Person for greater than the fair market value of such assets to solely the extent of the amount in excess
of the fair market value.
“Issue Date”
means March 10, 2023.
“Last Reported Sale
Price” of the shares of Common Stock for any Trading Day means the closing sale price per share (or, if no closing sale price
is reported, the average of the last bid price and the last ask price per share or, if more than one in either case, the average of the
average last bid prices and the average last ask prices per share) of Common Stock on such Trading Day as reported in composite transactions
for the principal U.S. national or regional securities exchange on which the shares of Common Stock are then listed. If the Common Stock
is not listed on a U.S. national or regional securities exchange on such Trading Day, then the Last Reported Sale Price will be the last
quoted bid price per share of Common Stock on such Trading Day in the over-the-counter market as reported by OTC Markets Group Inc. or
a similar organization. If the Common Stock is not so quoted on such Trading Day, then the Last Reported Sale Price will be the average
of the mid-point of the last bid price and the last ask price per share of Common Stock on such Trading Day from a nationally recognized
independent investment banking firm selected by the Company.
“License”
means any Copyright License, Patent License, Trademark License or other license of rights or interests.
“Lien”
means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge
of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other
title retention agreement, and any lease in the nature of a security interest; provided, that for the avoidance of doubt, licenses, strain
escrows and similar provisions in collaboration agreements, research and development agreements that do not create or purport to create
a security interest, encumbrance, levy, lien or charge of any kind shall not be deemed to be Liens for purposes of this Note.
“Market Disruption
Event” means, with respect to any date, the occurrence or existence, during the one-half hour period ending at the scheduled
close of trading on such date on the principal U.S. national or regional securities exchange or other market on which the Common Stock
is listed for trading or trades, of any material suspension or limitation imposed on trading (by reason of movements in price exceeding
limits permitted by the relevant exchange or otherwise) in the Common Stock or in any options contracts or futures contracts relating
to the Common Stock.
“Maturity Date”
means December 31, 2025.
“Maximum Percentage”
has the meaning set forth in Section 7(I).
The term “or”
is not exclusive, unless the context expressly provides otherwise.
“Open of Business”
means 9:00 a.m., New York City time.
“Other Holder”
means any person in whose name any Other Note is registered on the books of the Company.
“Other Notes”
means any Notes that are of the same class of this Note and that are represented by one or more certificates other than the certificate
representing this Note.
“Patent License”
means any written agreement granting any right with respect to any invention covered by a Patent that is in existence or a Patent application
that is pending, in which agreement the Company now holds or hereafter acquires any interest.
“Patents”
means all letters patent of, or rights corresponding thereto, in the United States or in any other country, all registrations and recordings
thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States or any other country.
“Permitted Acquisition”
means any transaction or series of related transactions consummated by the Company or one of its Subsidiaries for the purpose of or resulting,
directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of any business or division of
a Person, (b) the acquisition of in excess of fifty percent (50%) of the capital stock or equity interests of any Person or otherwise
causing any Person to become a Subsidiary of the Company, or (c) a merger or consolidation or any other combination with another Person,
in each case for which (i) the Holder provided prior written consent for such transaction or series of related transactions, provided
that the purchase price or consideration in respect of such transaction or series of related transactions at any time shall not exceed
an amount equal to the aggregate purchase price of the Purchased Securities (as defined in the Securities Purchase Agreement) outstanding
at such time; or (ii) the consideration remitted by the Company or its applicable Subsidiary in connection with such transaction or series
of related transactions is solely in the form of Equity Interests of the Company, provided that, in each case, no Default or Event of
Default shall then exist or would exist after giving effect to any of the foregoing.
“Permitted Indebtedness”
means (A) Indebtedness evidenced by the Initial Exchange Notes and Indebtedness evidenced by the Notes (as defined in the Securities Purchase
Agreement); (B) Indebtedness actually disclosed pursuant to the Securities Exchange Agreement as of the date of the Securities Exchange
Agreement; (C) nonrecourse Indebtedness outstanding at any time secured by a Lien described in clause (G) of the defined term “Permitted
Liens,” provided such Indebtedness does not exceed the cost of the Equipment or real property interests and related expenses financed
with such Indebtedness or in the form of purchase money Indebtedness (whether in the form of a loan or a lease) used solely to acquire
Equipment or real property interests used in the ordinary course of business and secured only by such Equipment and real property interests
and sale and insurance proceeds in respect thereof, and provided further that the total amount of Permitted Indebtedness permitted pursuant
to this clause (C) may not exceed five million dollars ($5,000,000) in the aggregate; (D) nonrecourse Indebtedness outstanding at any
time secured by a Lien described in clause (H) of the defined term “Permitted Liens,” provided such Indebtedness does not
exceed the cost of the software or other intellectual property and related expenses financed with such Indebtedness or in the form of
purchase money Indebtedness (whether in the form of a loan or a lease) used solely to acquire software or other intellectual property
used in the ordinary course of business and secured only by such software or other intellectual property and sale and insurance proceeds
in respect thereof, provided further that the total amount of Permitted Indebtedness permitted pursuant to this clause (D) may not exceed
five hundred thousand dollars ($500,000) in the aggregate; (E) Indebtedness to trade creditors incurred in the ordinary course of business;
(F) Subordinated Indebtedness of the Company that has received the prior written approval of the Holder; (G) reimbursement obligations
in connection with letters of credit or similar instruments that are secured by Cash or Cash Equivalents and issued on behalf of the Company
or a Subsidiary thereof in an aggregate amount not to exceed five hundred thousand dollars ($500,000) at any time outstanding; (H) unsecured
Indebtedness of the Company that has received the prior written approval of the Holder, (I) Contingent Obligations that are guarantees
of Indebtedness described in clauses (A) through (H) and (J); and (J) earn-outs incurred in connection with any Permitted Acquisition
that are subordinated in full to the Notes to the satisfaction of the Holder and do not exceed (a) ten million dollars ($10,000,000) in
the aggregate due in any twelve-month period and (b) twenty million dollars ($20,000,000); provided that in no event shall Permitted Indebtedness
under (x) clauses (B)-(J) of this definition exceed in the aggregate an amount equal to ten million dollars ($10,000,000) or (y) clauses
(F) or (H) (1) have a final maturity date, amortization payment, sinking fund, put right, mandatory redemption or other repurchase obligation
at the option of the lender or holder of such indebtedness, or be prepayable at the option of the Company, in any case earlier than one
hundred eighty-one (181) days following the Maturity Date or (2) have any covenants that are more restrictive on the Company in any material
respect than the covenants set forth in this Note.
“Permitted Intellectual
Property Licenses” means Intellectual Property (A) licenses in existence at March 23, 2022, including those listed on the Schedules
to the Security Agreements, and (B) non-perpetual licenses granted in the ordinary course of business on arm’s length terms consisting
of the licensing of technology, the development of technology or the providing of technical support which may include licenses with unlimited
renewal options solely to the extent such options require mutual consent for renewal or are subject to financial or other conditions as
to the ability of licensee to perform under the license; provided such license was not entered into during an Event of Default or continuance
of a Default.
“Permitted Investment”
means: (A) Investments actually disclosed pursuant to the Securities Exchange Agreement, as in effect as of the Issue Date; (B) (i) marketable
direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within
one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof
and currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service,
(iii) certificates of deposit issued by any bank headquartered in the United States with assets of at least $5,000,000,000 maturing no
more than one year from the date of investment therein, and (iv) money market accounts; (C) Investments accepted in connection with Permitted
Transfers; (D) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers
and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of the
Company’s business; (E) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers
and suppliers in the ordinary course of business and consistent with past practice, provided that this clause (E) shall not apply to Investments
of the Company in any Subsidiary thereof; (F) Investments consisting of (i) loans not involving the net transfer on a substantially contemporaneous
basis of cash proceeds to employees, officers or directors relating to the purchase of capital stock of the Company pursuant to employee
stock purchase plans or other similar agreements approved by the Company’s Board of Directors and (ii) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of business, provided that the aggregate of all such loans
outstanding may not exceed one hundred thousand ($100,000) at any time; (G) Investments in Wholly Owned Subsidiaries; (H) Permitted Intellectual
Property Licenses; (I) Permitted Acquisitions; (J) loans, advances or other capital contributions to Company customers pursuant to a TTK
Contract with such customer; (K) Investments in a TTK SPV; and (L) Investments in real property; provided that, for any Investment set
forth in clause (G), (J) and (K) other than a Permitted Turnkey Investment, such Investment shall not qualify as a Permitted Investment
unless the Company receives the prior written consent to such Investment from the Holder.
“Permitted Liens”
means any and all of the following: (A) Liens in favor of Holder or the Collateral Agent; (B) Liens deemed to be disclosed pursuant to
the Securities Exchange Agreement, as in effect as of the Issue Date; (C) Liens for taxes, fees, assessments or other governmental charges
or levies, either not delinquent or being contested in good faith by appropriate proceedings; provided, that the Company maintains adequate
reserves therefor in accordance with GAAP; (D) Liens securing claims or demands of materialmen, artisans, mechanics, carriers, warehousemen,
landlords and other like Persons arising in the ordinary course of business; provided, that the payment thereof is not yet required; (E)
Liens arising from judgments, decrees or attachments in circumstances which do not constitute a Default or an Event of Default hereunder;
(F) the following deposits, to the extent made in the ordinary course of business: deposits under workers’ compensation, unemployment
insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment
of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other
than for the repayment of borrowed money) or to secure statutory obligations (other than Liens arising under ERISA or environmental Liens)
or surety or appeal bonds, or to secure indemnity, performance or other similar bonds; (G) Liens on Equipment (but, for the avoidance
of doubt, not software or other intellectual property) or real property interests constituting purchase money Liens or Liens securing
construction financing for real property interests and Liens in connection with Capital Leases securing Indebtedness permitted in clause
(C) of “Permitted Indebtedness”; (H) Liens on software or other intellectual property (but, for the avoidance of doubt, not
Equipment or real property interests related thereto) constituting purchase money Liens and Liens in connection with Capital Leases securing
Indebtedness permitted in clause (D) of “Permitted Indebtedness”; (I) leasehold interests in leases or subleases and licenses
granted in the ordinary course of the Company’s business and not interfering in any material respect with the business of the licensor;
(J) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties that are promptly
paid on or before the date they become due; (K) Liens on insurance proceeds securing the payment of financed insurance premiums that are
promptly paid on or before the date they become due (provided that such Liens extend only to such insurance proceeds and not to any other
property or assets); (L) statutory and common law rights of set-off and other similar rights as to deposits of cash and securities in
favor of banks, other depository institutions and brokerage firms; (M) easements, zoning restrictions, rights-of-way and similar encumbrances
on real property imposed by law or arising in the ordinary course of business so long as they do not materially impair the value or marketability
of the related property; (N) Liens on Cash or Cash Equivalents securing obligations permitted under clause (E) and (G) of the definition
of Permitted Indebtedness; (O) Liens securing Subordinated Indebtedness, and (P) Liens incurred in connection with the extension, renewal
or refinancing of the Indebtedness secured by Liens of the type described in clauses (C) through (O) above (other than any Indebtedness
repaid with the proceeds of this Note); provided, that any extension, renewal or replacement Lien shall be limited to the property encumbered
by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced (as may have been reduced by any
payment thereon) does not increase.
“Permitted Transfers”
means (A) dispositions of inventory sold, and Permitted Intellectual Property Licenses entered into, in each case, in the ordinary course
of business, (B) dispositions of worn-out, obsolete or surplus property at fair market value in the ordinary course of business; (C) dispositions
of accounts or payment intangibles (each as defined in the UCC) resulting from the compromise or settlement thereof in the ordinary course
of business for less than the full amount thereof; (D) transfers consisting of Permitted Investments in Wholly Owned Subsidiaries under
clause (G) of Permitted Investments; (E) transfers between Grantors (as defined in the Security Agreement); and (F) other transfers of
assets to any Person other than to a joint venture and which have a fair market value of not more than fifty thousand dollars ($50,000)
in the aggregate in any twelve (12) month period.
“Permitted Turnkey
Investment” shall mean any Investments in any customers using the Company’s Total Turnkey Solution not to exceed in the
aggregate twelve million dollars ($12,000,000).
“Person”
or “person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, company,
trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate,
entity or government agency.
“Principal Amount”
has the meaning set forth in the cover page of this Note; provided, however, that the Principal Amount of this Note will
be subject to reduction pursuant to Section 6, Section 7 and Section 8.
“Prior Securities
Exchange Agreement” means that certain Securities Exchange Agreement, dated as of August 18, 2022, by and between the Company
and each of the investors listed on the Schedule of Holders attached thereto.
“Reference Property”
has the meaning set forth in Section 7(H)(i)(4).
“Reference Property
Unit” has the meaning set forth in Section 7(H)(i)(4).
“Reported Outstanding
Share Number” has the meaning set forth in Section 7(I).
“Repurchase Upon
Fundamental Change” means the repurchase of any Note by the Company pursuant to Section 6.
“Required Holders”
has the meaning set forth in the Securities Purchase Agreement.
“Required Reserve
Amount” has the meaning in Section 9(W).
“Rule 144”
means Rule 144 promulgated under the Securities Act.
“Scheduled Trading
Day” means any day that is scheduled to be a Trading Day on the principal U.S. national or regional securities exchange on which
the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the
principal, in terms of volume, Eligible Exchange on which the Common Stock is listed for trading. If the Common Stock is not so listed
or traded, then “Scheduled Trading day” means a Business Day.
“Securities Act”
means the U.S. Securities Act of 1933, as amended.
“Securities Exchange Agreement”
means that certain Securities Exchange Agreement, dated as of March 8, 2023, by and among the Company and each of the investors listed
on the Schedule of Holders attached thereto.
“Securities Purchase Agreement”
means that certain Securities Purchase Agreement, dated as of March 14, 2022, by and among the Company and each of the investors listed
on the Schedule of Buyers attached thereto.
“Security Agreements”
means those certain Security Agreements, dated March 23, 2022, between the Company and the Collateral Agent, as amended, supplemented
or otherwise modified from time to time.
“Security Document”
has the meaning set forth in the Security Agreements.
“Significant Subsidiary”
means, with respect to any Person, any Subsidiary of such Person that constitutes a “significant subsidiary” (as defined in
Rule 1-02(w) of Regulation S-X under the Exchange Act) of such Person.
“Spin-Off”
has the meaning set forth in Section 7(F)(i)(3)(b).
“Spin-Off Valuation
Period” has the meaning set forth in Section 7(F)(i)(3)(b).
“Stated Interest”
has the meaning set forth in Section 4(B)(i).
“Stated Interest
Rate” means, as of any date, a rate per annum equal to ten percent (10.0%).
“Subordinated Indebtedness”
means Indebtedness subordinated to the Notes that is (a) in amounts and on terms and conditions satisfactory to the Holder in its sole
discretion or (b) nonrecourse Indebtedness incurred in connection with the consummation of a TTK Contract that is secured only by assets
of the respective TTK SPV, provided that, for the avoidance of doubt, no Indebtedness permitted under this clause (b) shall be guaranteed
by the Company or qualify as a liability of the Company.
“Subsidiary”
means, with respect to any Person, (A) any corporation, association or other business entity (other than a partnership or limited liability
company) of which more than fifty percent (50%) of the total voting power of the Capital Stock entitled (without regard to the occurrence
of any contingency, but after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting
power) to vote in the election of directors, managers or trustees, as applicable, of such corporation, association or other business entity
is owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person; and (B) any partnership
or limited liability company where (i) more than fifty percent (50%) of the capital accounts, distribution rights, equity and voting interests,
or of the general and limited partnership interests, as applicable, of such partnership or limited liability company are owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person, whether in the form of membership, general,
special or limited partnership or limited liability company interests or otherwise; and (ii) such Person or any one or more of the other
Subsidiaries of such Person is a controlling general partner of, or otherwise controls, such partnership or limited liability company.
“Successor Corporation”
has the meaning set forth in Section 10(A).
“Successor Person”
has the meaning set forth in Section 7(H)(i).
“Tender/Exchange
Offer Valuation Period” has the meaning set forth in Section 7(F)(i)(5).
“Trademark License”
means any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter acquired by the
Company or in which the Company now holds or hereafter acquires any interest.
“Trademarks”
means all trademarks (registered, common law or otherwise) and any applications in connection therewith, including registrations, recordings
and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof
or any other country or any political subdivision thereof.
“Trading Day”
means any day on which (A) trading in the Common Stock generally occurs on the principal U.S. national or regional securities exchange
on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange,
on the principal other market on which the Common Stock is then traded; and (B) there is no Market Disruption Event. If the Common Stock
is not so listed or traded, then “Trading Day” means a Business Day.
“Transaction Documents”
shall mean the documents included in the definitions of “Transaction Documents” under the Securities Exchange Agreement and
the Prior Securities Exchange Agreement.
“TTK Contracts”
means Total Turn-Key Solution contracts entered into between the Company and customers thereof to implement a TTK Transaction, which include,
without limitation, financing, construction, vertical farming unit leasing, extraction or processing equipment leasing, software, brand
and/or marketing consulting and production-based fee contracts.
“TTK SPV”
means a special purpose vehicle established to implement a TTK Transaction with a customer of the Company.
“TTK Transaction”
means a long-term partnership between the Company and a customer of the Company designed to provide such customer with access to vertical
farming units, extraction or processing equipment, construction and/or equipment funding, facility design and construction services, cultivation
equipment and software, standard operating procedures, training, data and insights, and ongoing maintenance, support, and equipment upgrades.
“UCC” means
the Uniform Commercial Code as the same is, from time to time, in effect in the State of New York.
“Undelivered Shares”
has the meaning set forth in Section 7(D)(iv).
“VWAP Market Disruption
Event” means, with respect to any date, (A) the failure by the principal U.S. national or regional securities exchange on which
the Common Stock is then listed, or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, the principal
other market on which the Common Stock is then traded, to open for trading during its regular trading session on such date; or (B) the
occurrence or existence, for more than one half hour period in the aggregate, of any suspension or limitation imposed on trading (by reason
of movements in price exceeding limits permitted by the relevant exchange or otherwise) in the Common Stock or in any options contracts
or futures contracts relating to the Common Stock, and such suspension or limitation occurs or exists at any time before 1:00 p.m., New
York City time, on such date.
“VWAP Trading Day”
means a day on which (A) there is no VWAP Market Disruption Event; provided that the Holder, by written notice to the Company, may waive
any such VWAP Market Disruption Event; and (B) trading in the Common Stock generally occurs on the principal U.S. national or regional
securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional
securities exchange, on the principal other market on which the Common Stock is then traded. If the Common Stock is not so listed or traded,
then “VWAP Trading Day” means a Business Day.
“Wholly Owned Subsidiary”
of a Person means any Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than
directors’ qualifying shares) are owned by such Person or one or more Wholly Owned Subsidiaries of such Person.
Section
2. Persons Deemed Owners.
The Holder of this Note will
be treated as the owner of this Note for all purposes.
Section
3. Registered Form.
This Note, and any Note issued
in exchange therefor or in substitution thereof, will be in registered form, without coupons.
Section
4. Interest; Maturity Date Payment; Prepayment.
(A) [Reserved].
(B) Interest.
(i) This
Note will accrue interest (the “Stated Interest”) at a rate per annum equal to the Stated Interest Rate. Stated Interest
on this Note will (i) accrue on the Principal Amount of this Note; (ii) accrue from, and including, the most recent date to which Stated
Interest has been paid or duly provided for (or, if no Stated Interest has theretofore been paid or duly provided for, the Issue Date)
to, but excluding, the date of payment of such Stated Interest; (iii) be paid to Holder on each Interest Payment Date in accordance with
Section 5(A); and (iv) be computed on the basis of a 360-day year comprised of twelve 30-day months.
(ii) If
a Default or an Event of Default occurs, then in each case, to the extent lawful, interest (“Default Interest”) will
accrue (rather than at the Stated Interest Rate, if applicable) on the Principal Amount outstanding as of the date of such Default or
Event of Default at a rate per annum equal to eighteen percent (18.0%), from, and including, the date of such Default or Event of Default,
as applicable, to, but excluding, the date such Default is cured and all outstanding Default Interest under this Note has been paid. Default
Interest hereunder will be payable in arrears on the earlier of (i) the first day of each calendar month and (ii) the date such Default
is cured, and will be computed on the basis of a 360-day year comprised of twelve 30-day months.
(C) Maturity
Date Payment. On the Maturity Date, the Company will pay the Holder an amount in cash equal to the then-outstanding Principal Amount
of this Note plus any accrued and unpaid interest on this Note.
(D) Prepayment.
The Company may not prepay the Note without the written consent of the Holder other than pursuant to Section 8(A).
(E) [Reserved].
Section
5. Method of Payment; When Payment Date is Not a Business Day.
(A) Method
of Payment. The Company will pay all cash amounts due under this Note by wire transfer of immediately available funds to an account
of the Holder that is provided to the Company on the date hereof, which account may be changed for any cash amount due under this Note
by written notice provided by the Holder to the Company at least three (3) Business Days before the date such amount is due. Notwithstanding
anything to the contrary herein, any payments of Stated Interest required hereunder may be paid, at the option of the Company, in cash,
in shares of Common Stock (“Interest Shares”) or a combination of cash and Interest Shares. Interest to be paid hereunder
in Interest Shares shall be paid in a number of shares (rounded to the nearest closest whole number in accordance with Section 7(D))
of Common Stock equal to the greater of (A) the quotient obtained by dividing (i) the amount of Stated Interest payable on such date less
any Stated Interest paid in cash on such date by (ii) the Conversion Price, and (B) the quotient obtained by dividing (i) the amount of
Stated Interest payable on such date less any Stated Interest paid in cash on such date by (ii) the average trailing seven (7) day Daily
VWAP less twenty percent (20%) of such average price.
(B) Delay
of Payment when Payment Date is Not a Business Day. If the due date for a payment on this Note as provided in this Note is not a Business
Day, then, notwithstanding anything to the contrary in this Note, such payment may be made on the immediately following Business Day and
no interest will accrue on such payment as a result of the related delay.
Section
6. Required Repurchase of Note upon a Fundamental Change.
(A) Repurchase
Upon Fundamental Change. Subject to the other terms of this Section 6, if a Fundamental Change occurs, then the Holder will
have the right to require the Company to repurchase this Note (or any portion of this Note in an Authorized Denomination) on the Fundamental
Change Repurchase Date for such Fundamental Change for a cash purchase price equal to the Fundamental Change Repurchase Price.
(B) Fundamental
Change Repurchase Date. The Fundamental Change Repurchase Date for any Fundamental Change will be a Business Day of the Holder’s
choosing that is no more than twenty (20) Business Days after the later of (x) the date the Company delivers to the Holder the related
Fundamental Change Notice pursuant to Section 6(C); and (y) the effective date of such Fundamental Change.
(C) Fundamental
Change Notice. No later than the eighth (8th) Business Day before the occurrence of any Fundamental Change, the Company will send
to the Holder a written notice (the “Fundamental Change Notice”) thereof (provided, however, in no event shall such
notice be required prior to the actual public notice of such Fundamental Change), stating the expected date such Fundamental Change will
occur. No later than the fifth (5th) Business Day after the date of delivery of the Fundamental Change Notice, the Holder shall
notify the Company in writing whether it will require the Company to repurchase this Note and specify the Fundamental Change Repurchase
Date.
(D) Fundamental
Change Repurchase Price. The Fundamental Change Repurchase Price for this Note (or any portion of this Note to be repurchased) upon
a Repurchase Upon Fundamental Change following a Fundamental Change is an amount in cash equal to the Fundamental Change Base Repurchase
Price for such Fundamental Change plus any accrued and unpaid interest on this Note (or such portion of this Note) to, but excluding,
the Fundamental Change Repurchase Date for such Fundamental Change. For the avoidance of doubt, no other prepayment premium, fee or penalty
(including the prepayment fee set forth in the definition of “Company Redemption Price”) shall be due or payable in
connection with a Repurchase Upon Fundamental Change.
(E) Effect
of Repurchase. If this Note (or any portion of this Note) is to be repurchased upon a Repurchase Upon Fundamental Change, then, from
and after the date the related Fundamental Change Repurchase Price is paid in full, this Note (or such portion) will cease to be outstanding.
Section
7. Conversion.
(A) Right
to Convert.
(i) [Reserved].
(ii) Conversions
in Part. Subject to the terms of this Section 7, this Note may be converted in part, but only in an Authorized Denomination.
Provisions of this Section 7 applying to the conversion of this Note in whole will equally apply to conversions of any permitted
portion of this Note.
(B) When
this Note May Be Converted.
(i) Generally.
The Holder may convert this Note at any time until the Close of Business on the second (2nd) Scheduled Trading Day immediately before
the Maturity Date.
(ii) Limitations
and Closed Periods. Notwithstanding anything to the contrary in this Section 7, if this Note (or any portion of this Note)
is to be repurchased upon a Repurchase Upon Fundamental Change, then in no event may this Note (or such portion) be converted after the
Close of Business on the Scheduled Trading Day immediately before the related Fundamental Change Repurchase Date; provided, that the limitations
contained in this Section 7(B)(ii) shall no longer apply to this Note (or such applicable portion) if the applicable Fundamental
Change Repurchase Price is not delivered on the Fundamental Change Repurchase Date in accordance with Section 6.
(C) Conversion
Procedures.
(i) Generally.
To convert this Note, the Holder must complete, sign and deliver to the Company the conversion notice attached to this Note on Exhibit
A or portable document format (.pdf) version of such conversion notice (at which time such conversion will become irrevocable)
(a “Holder Conversion Notice”). For the avoidance of doubt, the Holder Conversion Notice may be delivered by e-mail
in accordance with Section 14. If the Company fails to deliver, by the related Conversion Settlement Date, any shares of Common
Stock forming part of the Conversion Consideration of the conversion of this Note, the Holder, by notice to the Company, may rescind all
or any portion of the corresponding Holder Conversion Notice at any time until such Undelivered Shares are delivered.
(ii) Holder
of Record of Conversion Shares. The person in whose name any shares of Common Stock is issuable upon conversion of this Note will
be deemed to become the holder of record of such shares as of the Close of Business on the Conversion Date for such conversion, conferring,
as of such time, upon such person, without limitation, all voting and other rights appurtenant to such shares.
(iii) Taxes
and Duties. If the Holder converts a Note, the Company will pay any documentary, stamp or similar issue or transfer tax or duty due
on the issue of any shares of Common Stock upon such conversion.
(D) Settlement
upon Conversion.
(i) Generally.
Subject to Section 7(D)(ii), the consideration (the “Conversion Consideration”) due in respect of any portion
of the outstanding Principal Amount of this Note, to be converted (the “Conversion Amount”) will consist of the following:
(1) subject
to Section 7(D)(ii), a number of shares of Common Stock determined by dividing the Conversion Amount by the Conversion Price; and
(2) cash
in an amount equal to the aggregate accrued and unpaid interest on this Note to, but excluding, the Conversion Settlement Date for such
conversion or, at the election of the Company, a number of validly issued, fully paid and Common Stock (the “Conversion Consideration
Interest Shares”) equal to the quotient (rounded up to the closest whole number) obtained by dividing the aggregate accrued
and unpaid interest on this Note to, but excluding, the Conversion Settlement Date by the Conversion Price.
(ii) Fractional
Shares. The total number of shares of Common Stock due in respect of any conversion of this Note pursuant to this Section 7,
will be determined on the basis of the total Principal Amount of this Note to be converted with the same Conversion Date; provided,
however, that if such number of shares of Common Stock is not a whole number, then such number will be rounded up to the nearest
whole number.
(iii) Delivery
of the Conversion Consideration. The Company will pay or deliver, as applicable, the Conversion Consideration due upon the conversion
of this Note, to the Holder on or before the second (2nd) Business Day (or, if earlier, the standard settlement period for the primary
Eligible Exchange (measured in terms of trading volume for its Common Stock) on which the Common Stock are traded) immediately after the
Conversion Date for such conversion (the “Conversion Settlement Date”).
(iv) Company
Failure to Timely Deliver Stock Payments. If (x) the Company shall fail for any reason or for no reason on or prior to the applicable
Conversion Settlement Date to deliver shares of Common Stock in accordance with Section 7(C) (such shares to which Holder is entitled
referred to as the “Undelivered Shares”); and (y) the Holder (whether directly or indirectly, including by any broker
acting on the Holder’s behalf or acting with respect to such Undelivered Shares) purchases any shares of Common Stock (whether in
the open market or otherwise) to cover any such Undelivered Shares (whether to satisfy any settlement obligations with respect thereto
of the Holder or otherwise), then, without limiting the Holder’s right to pursue any other remedy available to it (whether hereunder,
under applicable law or otherwise), the Holder will have the right, exercisable by notice to the Company, to cause the Company to either:
(1) pay,
on or before the second (2nd) Business Day after the date such notice is delivered, cash to the Holder in an amount equal to the aggregate
purchase price (including any brokerage commissions and other out-of-pocket costs) incurred to purchase such shares (such aggregate purchase
price, the “Covering Price”); or
(2) promptly
deliver, to the Holder, such Undelivered Shares in accordance with this Note, together with cash in an amount equal to the excess, if
any, of the Covering Price over the product of (x) the number of such Undelivered Shares; and (y) the Daily VWAP per share of Common Stock
on the applicable Conversion Date.
To exercise such right, the Holder
must deliver notice of such exercise to the Company, specifying whether the Holder has elected clause (1) or (2) above to apply. If the
Holder has elected clause (1) to apply, then the Company’s obligation to deliver the Undelivered Shares in accordance with this
Note will be deemed to have been satisfied and discharged to the extent the Company has paid the Covering Price in accordance with clause
(1). Nothing herein 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
shares of Common Stock as required pursuant to the terms hereof. In addition to the foregoing, if the Company fails for any reason to
deliver Common Stock to the Holder by the applicable Conversion Settlement Date, the Company shall pay to the Holder, in cash, as liquidated
damages and not as a penalty, for each $1,000 of Undelivered Shares (based on the Daily VWAP on the applicable Conversion Settlement Date),
$10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each
Trading Day after the Conversion Settlement Date until the cash amount set forth in Section 7(D)(iv)(1) is paid to the Holder or
the shares of Common Stock are delivered to the Holder pursuant to Section 7(D)(iv)(2).
(v) Effect
of Conversion. If this Note is converted in full, then, from and after the date the Conversion Consideration therefor is issued or
delivered in settlement of such conversion, this Note will cease to be outstanding and all interest will cease to accrue on this Note.
(E)
Common Stock Issued upon Conversion.
(i) Status
of Conversion Shares; Listing. Each share of Common Stock delivered pursuant to this Note will be a newly issued or treasury share
and will be duly and validly issued, fully paid, non-assessable, free from preemptive rights and free of any Lien or adverse claim (except
to the extent of any Lien or adverse claim created by the action or inaction of the Holder or the Person to whom such share will be delivered).
If the Common Stock is then listed on any securities exchange, or quoted on any inter-dealer quotation system, then the Company will cause
each share of Common Stock issued pursuant to this Note, when delivered, to be admitted for listing on such exchange or quotation on such
system.
(ii) [Reserved.]
(F) [Reserved.]
(G) [Reserved.]
(H) Effect
of Certain Recapitalizations, Reclassifications, Consolidations, Mergers and Sales.
(i) Generally.
If there occurs:
(1) recapitalization,
reclassification or change of the Common Stock (other than (x) changes solely resulting from a subdivision or combination of the Common
Stock, (y) a change only in par value or from par value to no par value or no par value to par value and (z) stock splits and stock combinations
that do not involve the issuance of any other series or class of securities);
(2) consolidation,
merger, combination or binding or statutory share exchange involving the Company;
(3) sale,
lease or other transfer of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any Person;
or
(4) other
similar event,
and, in each case, as a result of such
occurrence, the Common Stock is converted into, or is exchanged for, or represents solely the right to receive, other securities or other
property (including cash or any combination of the foregoing) (such an event, a “Common Stock Change Event,” and such
other securities or other property, the “Reference Property,” and the amount and kind of Reference Property that a
holder of one (1) share of Common Stock would be entitled to receive on account of such Common Stock Change Event (without giving effect
to any arrangement not to issue fractional shares of securities or other property), a “Reference Property Unit”), then,
notwithstanding anything to the contrary in this Note, at the effective time of such Common Stock Change Event, (x) the Conversion Consideration
due upon conversion of any Note will be determined in the same manner as if each reference to any number of shares of Common Stock in
this Section 7 (or in any related definitions) were instead a reference to the same number of Reference Property Units; (y) for
purposes of Section 7(A), each reference to any number of shares of Common Stock in such Section (or in any related definitions)
will instead be deemed to be a reference to the same number of Reference Property Units; and (z) for purposes of the definition of “Fundamental
Change,” the term “ Common Stock” and “common equity” will be deemed to mean the common equity, if any,
forming part of such Reference Property. For these purposes, (I) the Daily VWAP of any Reference Property Unit or portion thereof that
consists of a class of common equity securities will be determined by reference to the definition of “Daily VWAP,” substituting,
if applicable, the reported Bloomberg page data for such class of securities in such definition; and (II) the Daily VWAP of any Reference
Property Unit or portion thereof that does not consist of a class of common equity securities, and the Last Reported Sale Price of any
Reference Property Unit or portion thereof that does not consist of a class of securities, will be the fair value of such Reference Property
Unit or portion thereof, as applicable, determined in good faith by the Company (or, in the case of cash denominated in U.S. dollars,
the face amount thereof).
If the Reference Property consists of
more than a single type of consideration to be determined based in part upon any form of stockholder election, then the composition of
the Reference Property Unit will be deemed to be the weighted average of the types and amounts of consideration actually received, per
share of Common Stock, by the holders of Common Stock. The Company will notify the Holder of such weighted average as soon as practicable
after such determination is made.
At or before the effective date of such
Common Stock Change Event, the Company and the resulting, surviving or transferee Person (if not the Company) of such Common Stock Change
Event (the “Successor Person”) will execute and deliver such instruments or agreements that (x) provides for subsequent
conversions of this Note in the manner set forth in this Section 7(H); and (y) contains such other provisions as the Company reasonably
determines are appropriate to preserve the economic interests of the Holder and to give effect to the provisions of this Section 7(H).
If the Reference Property includes shares of stock or other securities or assets of a Person other than the Successor Person, then such
other Person will also execute such instruments or agreements and such instruments or agreements will contain such additional provisions
the Company reasonably determines are appropriate to preserve the economic interests of the Holder.
(ii) Notice
of Common Stock Change Events. As soon as practicable after learning the anticipated or actual effective date of any Common Stock
Change Event, the Company will provide written notice to the Holder of such Common Stock Change Event, including a brief description of
such Common Stock Change Event, its anticipated effective date and a brief description of the anticipated change in the conversion right
of this Note.
(iii) Compliance
Covenant. The Company will not become a party to any Common Stock Change Event unless its terms are consistent with this Section
7(H).
(I) Limitations
on Conversions. Notwithstanding anything to the contrary contained herein, the Company shall not effect the conversion of any portion
of this Note, or otherwise issue shares pursuant to this Note, and the Holder shall not have the right to convert any portion of this
Note, pursuant to the terms and conditions of this Note and any such conversion or issuance shall be null and void and treated as if never
made, to the extent that after giving effect to such conversion or issuance, the Holder together with the other Attribution Parties collectively
would beneficially own in the aggregate in excess of 49.99% (the “Maximum Percentage”) of the number of shares of Common
Stock outstanding immediately after giving effect to such conversion or issuance. For purposes of the foregoing sentence, the aggregate
number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include the number of shares
of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock issuable upon conversion
of, or otherwise pursuant to, this Note with respect to which the determination of such sentence is being made, but shall exclude the
number of shares of Common Stock which would be issuable upon (A) conversion of the remaining, unconverted portion of this Note beneficially
owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or unconverted portion of
any other securities of the Company (including, without limitation, any convertible notes or convertible preferred stock or warrants)
beneficially owned by the Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation
contained in this Section 7(I). For purposes of this Section 7(I), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act. For purposes of this Note, in determining the number of outstanding shares of Common Stock the
Holder may acquire in connection with this Note without exceeding the Maximum Percentage, the Holder may rely on the number of outstanding
shares of Common Stock as reflected in (x) the Company's most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current
Report on Form 8-K or other public filing with the Commission, as the case may be, (y) a more recent public announcement by the Company
or (z) any other written notice by the Company or the Transfer Agent (as defined in the Securities Purchase Agreement) setting forth the
number of shares of Common Stock outstanding (the “Reported Outstanding Share Number”). If the Company receives a notice
from the Holder related to the conversion of this Note or any issuance of shares of Common Stock in connection with this Note at a time
when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall promptly
notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such conversion or issuance
of shares of Common Stock would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section 7(I),
to exceed the Maximum Percentage, the Holder must notify the Company of a reduced number of shares of Common Stock to be issued pursuant
to such notice. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Trading Day
confirm in writing or by electronic mail 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 and any other Attribution Party since the date as of which the Reported Outstanding Share Number was
reported. In the event that the issuance of shares of Common Stock to the Holder upon conversion of, or otherwise pursuant to, this Note
results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage
of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the Exchange Act), the number of shares so issued
by which the Holder's and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess
Shares”) shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote
or to transfer the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase or decrease
the Maximum Percentage to any other percentage not in excess of 49.99% as specified in such notice; provided that (i) any such
increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to
the Company and (ii) any such increase or decrease will apply only to the Holder and the other Attribution Parties and not to any Other
Holder of Notes that is not an Attribution Party of the Holder. For purposes of clarity, the shares of Common Stock issuable pursuant
to the terms of this Note in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose
including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act. No prior inability to convert this Note or receive shares
pursuant to this Note pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect
to any subsequent determination of convertibility. Notwithstanding the foregoing, the Holder may assign its right to receive shares of
Common Stock upon issuance of this Note to any of its members, in which case the Maximum Percentage shall be calculated with respect to
each individual member and its respective Attribution Parties in accordance with this Section 7(I), provided that one member of
the Holder shall not, solely as a result of its status as a member of the Holder, be deemed to be an Attribution Party of any other member
of the Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 7(I) to the extent necessary to correct this paragraph or any portion of this paragraph which may be
defective or inconsistent with the intended beneficial ownership limitation contained in this Section 7(I) or to make changes or
supplements necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph may not be waived
and shall apply to a successor holder of this Note.
Section
8. Redemption of this Note.
(A) Company
Redemption Election. The Company may redeem all (or a portion thereof not less than five million dollars ($5,000,000)) of the then
outstanding Principal Amount on any date by paying on the Company Redemption Date (as defined below) a cash redemption price equal to
the Company Redemption Price; provided, that (i) the Company shall have not received a Holder Conversion Notice from the Holder prior
to the Company Redemption Date (as defined below) with respect to the applicable Principal Amount to be redeemed pursuant to this Section
8(A) and (ii) the Company must provide irrevocable written notice thereof (a “Company Redemption Notice”) certifying
that no Default has occurred or is continuing as of the date of such notice and that no Event of Default has occurred as of the date of
such notice that has not been waived and setting forth the date upon which such redemption shall occur (the “Company Redemption
Date”) at least twenty (20) Trading Days prior to the Company Redemption Date and the Company must have, on or prior to 9:00
am, New York City time, on such notice delivery date, publicly disclosed any material, non-public information regarding the Company (including
the fact that the Company is redeeming the Note) on a Form 8-K or otherwise; provided, however, that this Section 8(A) will cease
to have any force and effect if a Default has occurred and is continuing or an Event of Default has occurred and has not been waived by
the Required Holders. If this Note is to be redeemed in full pursuant to this Section 8(A), then, from and after the date the related
Company Redemption Price is paid in full, this Note will cease to be outstanding. Notwithstanding the foregoing (and for the avoidance
of doubt), the Holder may elect to convert any Principal Amount to be redeemed pursuant to this Section 8(A) into shares of Common
Stock in accordance with Section 7 by delivering a Holder Conversion Notice to the Company prior to the Company Redemption Date.
Section
9. Affirmative and Negative Covenants.
(A) Stay,
Extension and Usury Laws. To the extent that it may lawfully do so, the Company (A) agrees that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law (wherever or whenever enacted
or in force) that may affect the covenants or the performance of this Note; and (B) expressly waives all benefits or advantages of any
such law and agrees that it will not, by resort to any such law, hinder, delay or impede the execution of any power granted to the Holder
by this Note, but will suffer and permit the execution of every such power as though no such law has been enacted.
(B) Corporate
Existence. Subject to Section 10, the Company will cause to preserve and keep in full force and effect:
(i) its
corporate existence and the corporate existence of its Subsidiaries in accordance with the organizational documents of the Company or
its Subsidiaries, as applicable; and
(ii) the
material rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries;
provided, however, that the Company
need not preserve or keep in full force and effect any such rights (charter and statutory), license or franchise or existence of any of
its Subsidiaries if the Board of Directors determines in good faith that (x) the preservation thereof is no longer desirable in the conduct
of the business of the Company and its Subsidiaries, taken as a whole; and (y) the loss thereof is not, individually or in the aggregate,
materially adverse to the Holder.
(C) Ranking.
All payments due under this Note (i) shall rank pari passu with all Other Notes and (ii) shall rank senior to all other indebtedness of
the Company (other than the indebtedness described in clauses (i)) and any Subordinated Indebtedness.
(D) Indebtedness;
Amendments to Indebtedness. The Company shall not and shall not permit any Subsidiary to: (a) create, incur, assume, guarantee or
be or remain liable with respect to any Indebtedness, other than Permitted Indebtedness; (b) prepay any Indebtedness except for (i) by
the conversion of Indebtedness into equity securities (other than Disqualified Stock) and the payment of cash in lieu of fractional shares
in connection with such conversion, and (ii) a refinancing of the entire amount of such Indebtedness which does not impose materially
more burdensome terms upon the Company or its Subsidiaries than exist in such Indebtedness prior to such refinancing, but with a maturity
date which is later than one hundred eighty-one (181) days following the Maturity Date; or (c) amend or modify any documents or notes
evidencing any Indebtedness in any manner which shortens the maturity date or any amortization, redemption or interest payment date thereof
or otherwise imposes materially more burdensome terms upon the Company or its Subsidiaries than exist in such Indebtedness prior to such
amendment or modification without the prior written consent of Holder. The Company shall not and shall not permit any Subsidiary to incur
any Indebtedness that would cause a breach or Default under the Notes or prohibit or restrict the performance of any of the Company’s
or its Subsidiaries’ obligations under the Notes, including without limitation, the payment of interest and principal thereon.
(E) Liens.
The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist
any Lien of any kind on any asset now owned or hereafter acquired, except Permitted Liens.
(F) Investments.
The Company shall not directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries
so to do, other than Permitted Investments; provided that the Company may not make any Investment (including a Permitted Investment)
or permit any of its Subsidiaries to make any Investment (including a Permitted Investment) if (i) any Event of Default has occurred hereunder
or (ii) any event or circumstance has occurred and is continuing which, with the giving of notice or passage of time or both, could constitute
an Event of Default with respect to Section 11(A)(ii), Section 11(A)(iii), Section 11(A)(x), Section 11(A)(xii),
Section 11(A)(xv) or Section 11(A)(xvi).
(G) Distributions.
The Company shall not, and shall not allow any Subsidiary to, (a) repurchase or redeem any class of stock or other Equity Interest
other than pursuant to employee, director or consultant repurchase plans or other similar agreements provided under plans approved by
the Board of Directors; provided, however, in each case the repurchase or redemption price does not exceed the original consideration
paid for such stock or Equity Interest, or (b) declare or pay any cash dividend or make a cash distribution on any class of stock or other
Equity Interest, except that a Subsidiary of the Company may pay dividends or make distributions to the Company or a parent company that
is a direct or indirect Wholly Owned Subsidiary of the Company, or (c) lend money to any employees, officers or directors (except as permitted
under clause (F) of the definition of Permitted Investment), or guarantee the payment of any such loans granted by a third party in excess
of fifty thousand dollars ($50,000) in the aggregate or (d) waive, release or forgive any Indebtedness owed by any employees, officers
or directors in excess of fifty thousand dollars ($50,000) in the aggregate. Within one (1) Business Day following the date on which the
Company files an Annual Report on Form 10-K or Quarterly Report on Form 10-Q with the Commission, the Company will provide the Holder
with a written notice setting forth the aggregate amount of dividends or distributions made by the Company or any Subsidiary pursuant
to this Section 9(G) for the period covered by such Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as applicable.
Notwithstanding anything herein to the contrary, the Company shall not, and shall not allow any Subsidiary to, declare or pay any cash
dividend or make a cash distribution on any class of stock or other Equity Interest if (A) any Event of Default has occurred hereunder
and has not been waived by the Required Holders or (B) any event or circumstance has occurred and is continuing which, with the giving
of notice or passage of time or both, could constitute an Event of Default with respect to Section 11(A)(ii), Section 11(A)(iii),
Section 11(A)(x), Section 11(A)(xii), Section 11(A)(xv) or Section 11(A)(xvi). On or prior to the first (1st)
Business Day of each calendar month, the Company shall provide to the Holder a certification, executed on behalf of the Company by the
Chief Financial Officer of the Company, certifying whether or not the Company has satisfied the requirements of this Section 9(G)
during the immediately preceding calendar month.” If the Company determines in its sole discretion that any such information constitutes
material non-public information, then the Company will so indicate in the certification provided pursuant to this Section 9(G)
and the Company will concurrently disclose such material non-public information on a Current Report on Form 8-K or otherwise.
(H) Transfers.
The Company shall not, and shall not allow any Subsidiary to, voluntarily or involuntarily transfer, sell, lease, license, lend or in
any other manner convey any equitable, beneficial or legal interest in any material portion of the assets of the Company and its Subsidiaries
(taken as a whole), except for Permitted Transfers and Permitted Investments.
(I) Taxes.
The Company and its Subsidiaries shall pay when due all material taxes, fees or other similar governmental charges (together with any
related interest or penalties) now or hereafter imposed or assessed against the Company and its Subsidiaries or their respective assets
or upon their ownership, possession, use, operation or disposition thereof or upon their rents, receipts or earnings arising therefrom.
The Company and its Subsidiaries shall file on or before the due date therefor all material personal property tax returns. Notwithstanding
the foregoing, the Company and its Subsidiaries may contest, in good faith and by appropriate proceedings, taxes for which they maintain
adequate reserves therefor in accordance with GAAP.
(J) [Reserved].
(K) [Reserved].
(L) [Reserved].
(M) [Reserved].
(N) Maintenance
of Properties, Etc. The Company shall maintain and preserve, and the Company shall cause each of its Subsidiaries to maintain and
preserve, all of its properties which are necessary or useful (as determined by the Company in good faith) to the conduct of its business
in good working order and condition, ordinary wear and tear excepted, and comply at all times with the provisions of all leases to which
it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder (except where
the failure to do so would not, individually or in the aggregate, have a material effect on the Company or any Subsidiary).
(O) Maintenance
of Intellectual Property. The Company will take, and the Company shall cause each of its Subsidiaries to take, all actions necessary
or advisable to maintain all of the Intellectual Property Rights (as defined in the Securities Exchange Agreement) of the Company or such
Subsidiary that are necessary or material (as determined by the Company in good faith) to the conduct of its business in full force and
effect.
(P) Maintenance
of Insurance. The Company shall maintain, and the Company shall cause each of its Subsidiaries to maintain, insurance with responsible
and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business
interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts
and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally
in accordance with sound business practice by companies in similar businesses similarly situated.
(Q) Transactions
with Affiliates. Neither the Company, nor any of its Subsidiaries, shall enter into, renew, extend or be a party to, any transaction
or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets
of any kind or the rendering of services of any kind) with any affiliate (other than the Company or any of its Wholly Owned Subsidiaries),
except (i) transactions for fair consideration and on terms no less favorable to it than would be obtainable in a comparable arm’s
length transaction with a Person that is not an affiliate thereof, (ii) loans or advances made by the Company or one of its Subsidiaries
to its directors, officers and other employees in the ordinary course of business for reasonable travel and entertainment expenses, and
relocation costs up to a maximum of one hundred thousand dollars ($100,000) in the aggregate at any one time outstanding, and (iii) distributions
permitted by Section 9(G).
(R) Restricted
Issuances. The Company shall not, and shall cause its Subsidiaries not to, directly or indirectly, without the prior written consent
of the holders of a majority in aggregate principal amount of the Notes then outstanding, (i) issue any Notes (other than as contemplated
by the Securities Purchase Agreement, the Securities Exchange Agreement and the Notes) or (ii) issue any other securities or incur any
Indebtedness, in each case, that would cause a breach or Default under the Notes or that by its terms would prohibit or restrict the performance
of any of the Company’s or its Subsidiaries’ obligations under the Notes, including without limitation, the payment of interest
and principal thereon.
(S) Independent
Investigation. At the request of the Required Holders (as defined in the Securities Exchange Agreement) at any time the Required Holders
have determined in good faith that (i) an Event of Default has occurred or (ii) any event or circumstance has occurred and is continuing
which, with the giving of notice or passage of time or both, could constitute an Event of Default but the Company has not timely agreed
to such determination in writing, the Company shall hire an independent, reputable investment bank selected by the Company and approved
by the Required Holders to investigate as to whether such Event of Default or event or circumstance has occurred (the “Independent
Investigator”). If the Independent Investigator determines that such Event of Default or event or circumstance has occurred,
the Independent Investigator shall notify the Company of such Event of Default or occurrence of such event or circumstance and the Company
shall promptly deliver written notice to the Holder of such Event of Default if such Event of Default has occurred. In connection with
such investigation, the Independent Investigator may, during normal business hours and upon signing a confidentiality agreement in a form
reasonably acceptable to the Company, inspect all contracts, books, records, personnel, offices and other facilities and properties of
the Company and its Subsidiaries and, to the extent available to the Company after the Company uses reasonable efforts to obtain them,
the records of its accountants (including the accountants’ work papers) and any books of account, records, reports and other papers
not contractually required of the Company to be confidential or secret, or subject to attorney-client or other evidentiary privilege,
and the Independent Investigator may make such copies and inspections thereof as the Independent Investigator may reasonably request.
The Company shall furnish the Independent Investigator with such financial and operating data and other information with respect to the
business and properties of the Company as the Independent Investigator may reasonably request. The Company shall permit the Independent
Investigator to discuss the affairs, finances and accounts of the Company with, and to make proposals and furnish advice with respect
thereto to, any of the Company’s officers, directors, key employees and independent public accountants (and by this provision the
Company authorizes said accountants to discuss with such Independent Investigator the finances and affairs of the Company and any Subsidiaries);
provided, that the Company’s chief executive officer and chief financial officer shall be invited to join any such discussion, all
at such reasonable times, upon reasonable notice, and as often as may be reasonably requested.
(T) 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 Note,
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 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 9(T) shall limit any
obligations of the Company, or any rights of the Holder, under the Securities Exchange Agreement.
(U) The
Company acknowledges and agrees that the Holder is not a fiduciary or agent of the Company, the Holder will not have any obligations hereunder
except those obligations expressly set forth herein (and in the Securities Exchange Agreement) and the Holder is acting solely in the
capacity of an arm’s length contractual counterparty to the Company with respect to the Note and not as a fiduciary or agent of
the Company. The Company agrees that it will not assert any claim against the Holder based on an alleged breach of fiduciary duty by the
Holder in connection with the Note. The Company acknowledges 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, 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.
(V) The
Company shall cause this Note and any shares of Common Stock issuable pursuant to this Note to be eligible to be offered, sold or otherwise
transferred by the Holder pursuant to Rule 144, without any requirements as to volume, manner of sale, availability of current public
information (whether or not then satisfied) or notice under the Securities Act and without any requirement for registration under any
state securities or “blue sky” law. If this Note is to be transferred, the Holder shall notify the Company and surrender this
Note to the Company (or provide the Company an affidavit in a form reasonably acceptable to the Company that this Note was lost, stolen
or destroyed), whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note, registered as the Holder
may request. The Company shall not be obligated to pay any tax which may be payable with respect to any transfer (or deemed transfer)
arising in connection with the registration of any certificates for Notes in the name of any Person other than the Holder or any of its
Affiliates.
(W) The
Company shall at all times have a number of authorized and unissued shares of Common Stock no less than a number of shares of Common Stock
equal to the sum of (i) 100% of the maximum number of shares of Common Stock as shall be necessary to satisfy the Company’s obligation
to issue shares of Common Stock under the warrants then outstanding issued under the Prior Securities Exchange Agreement and/or the Securities
Purchase Agreement, reserved for the purpose of issuance pursuant to such warrants, plus (ii) a fraction, the numerator of which shall
be the then outstanding Principal Amount of this Note plus an amount equal to all interest accrued on such outstanding Principal Amount
and the denominator of which shall be the Conversion Price (as such term is defined in the Initial Exchange Notes) of the Initial Exchange
Notes (the “Required Reserve Amount”), provided that at no time shall the number of shares of Common Stock reserved
pursuant to this Section 9(W) be reduced other than in connection with any stock combination, reverse stock split or other similar
transaction. If at any time the number of shares of Common Stock authorized and reserved for issuance is not sufficient to meet the Required
Reserve Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares,
including, without limitation, calling a special meeting of stockholders to authorize additional shares to meet the Company’s obligations
pursuant to the Transaction Documents, in the case of an insufficient number of authorized shares, obtain stockholder approval (if required)
of an increase in such authorized number of shares, and voting the management shares of the Company in favor of an increase in the authorized
shares of the Company to ensure that the number of authorized shares is sufficient to meet the Required Reserve Amount.
(X) On or before the
date that is thirty (30) days after the Issue Date, the Company shall have delivered to the Holder the results of a recent lien, bankruptcy
and judgment search in each relevant jurisdiction with respect to the Company and its Subsidiaries and such search shall reveal no Liens
on any of the Collateral (as such term is defined in the Security Agreement Amendments) or other assets of the Company and its Subsidiaries
except, in the case of assets other than Collateral, for Permitted Liens.
Section
10. Successors.
The Company will not consolidate
with or merge with or into, or (directly, or indirectly through one or more of its Subsidiaries) sell, lease or otherwise transfer, in
one transaction or a series of transactions, all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole,
to another Person, other than the Holder or any of its Affiliates (a “Business Combination Event”), unless:
(A) the
resulting, surviving or transferee Person either (x) is the Company or (y) if not the Company, is a corporation (the “Successor
Corporation”) duly organized and existing under the laws of the United States of America, any State thereof or the District
of Columbia that expressly assumes (by executing and delivering to the Holder, at or before the effective time of such Business Combination
Event, a supplement to this instrument) all of the Company’s obligations under this Note; and
(B) immediately
after giving effect to such Business Combination Event, no Default or Event of Default will have occurred and be continuing.
At the effective time of any
Business Combination Event, the Successor Corporation (if not the Company) will succeed to, and may exercise every right and power of,
the Company under this Note with the same effect as if such Successor Corporation had been named as the Company in this Note, and, except
in the case of a lease, the predecessor Company will be discharged from its obligations under this Note.
Section
11. Defaults and Remedies
(A) Events
of Default. “Event of Default” means the occurrence of any of the following:
(i) a
default in the payment when due of the Principal Amount, any amount due under Section 8 or the Fundamental Change Repurchase Price
under this Note;
(ii) a
default for three (3) Business Days in the payment when due of the interest on this Note;
(iii) a
default in the Company’s obligation to issue shares pursuant to this Note (or any portion of this Note) in accordance with Section
7(C) upon the exercise of the Holder’s right with respect thereto;
(iv) a
default in the Company’s obligation to timely deliver a Fundamental Change Notice pursuant to Section 6(C), or a Compliance
Certification pursuant to Section 9(G) or Section 9(K)(ii), and such default continues for three (3) Business Days, or the delivery
of a materially false or inaccurate Fundamental Change Notice, Company Redemption Notice or Compliance Certification;
(v) a
default in the Company’s obligation to deliver when due any Event of Default Acceleration Amount;
(vi) any
failure to timely deliver an Event of Default Notice or a materially false or inaccurate certification as to whether any Event of Default
has occurred;
(vii) a
default in any of the Company’s obligations or agreements under this Note or the Transaction Documents (in each case, other than
a default set forth in clauses (i) - (vi) or (viii) – (xix) of this Section 11(A)), or a breach
of any representation or warranty in any material respect (other than representations or warranties subject to material adverse effect
or materiality qualifications, which may not be breached in any respect) of any Transaction Document; provided, however,
that if such default can be cured, then such default shall not be an Event of Default unless the Company has failed to cure such default
within ten (10) Business Days after its occurrence;
(viii) any
provision of any Transaction Document at any time for any reason (other than pursuant to the express terms thereof) ceases to be valid
and binding on or enforceable against the parties thereto, or the validity or enforceability thereof is contested, directly or indirectly,
by the Company or any of its Subsidiaries, or a proceeding is commenced by the Company or any of its Subsidiaries or any governmental
authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof;
(ix) the
Company fails to comply with any covenant set forth in Section 9(D), Section 9(E), Section 9(F), Section 9(G),
Section 9(H), Section 9(J), Section 9(K), Section 9(L), Section 9(R), Section 9(W), or Section 9(X) of
this Note;
(x) [Reserved];
(xi) (i)
the failure of the Company or any of its Subsidiaries to pay when due or within any applicable grace period any Indebtedness having an
individual principal amount in excess of at least five hundred thousand dollars ($500,000) (or its foreign currency equivalent) in the
aggregate of the Company or any of its Subsidiaries, whether such Indebtedness exists as of the Issue Date or is thereafter created, and
whether such default has been waived for any period of time or is subsequently cured; or (ii) the occurrence of any breach or default
under any terms or provisions of any other Indebtedness of at least five hundred thousand dollars ($500,000) (or its foreign currency
equivalent) in the aggregate of the Company or any of its Subsidiaries, if the effect of such failure or occurrence is to cause or to
permit the holder or holders of any such indebtedness, to cause, Indebtedness having an individual principal amount in excess of five
hundred thousand dollars ($500,000) to become or be declared due prior to its stated maturity;
(xii) one
or more final judgments, orders or awards (or any settlement of any litigation or other proceeding that, if breached, could result in
a judgment, order or award) for the payment of at least five hundred thousand dollars ($500,000) (or its foreign currency equivalent)
in the aggregate (excluding any amounts covered by insurance pursuant to which the insurer has been notified and has not denied coverage),
is rendered against the Company or any of its Subsidiaries and remains unsatisfied and (i) enforcement proceedings shall have been commenced
by any creditor upon any such judgment, order, award or settlement or (ii) there shall be a period of ten (10) consecutive Trading Days
after entry thereof during which (A) a stay of enforcement thereof is not in effect or (B) the same is not vacated, discharged, stayed
or bonded pending appeal;
(xiii) [Reserved];
(xiv) any
Security Document shall for any reason fail or cease to create a separate valid and perfected first priority Lien on the Collateral, in
each case, in favor of the Collateral Agent in accordance with the terms thereof, or any material provision of any Security Document shall
at any time for any reason cease to be valid and binding on or enforceable against the Company or the validity or enforceability thereof
shall be contested by any party thereto, or a proceeding shall be commenced by the Company or any governmental authority having jurisdiction
over the Company, seeking to establish the invalidity or unenforceability thereof;
(xv) [Reserved];
(xvi) [Reserved];
(xvii) the
Company or any of its Significant Subsidiaries, pursuant to or within the meaning of any Bankruptcy Law, either:
(1) commences
a voluntary case or proceeding;
(2) consents
to the entry of an order for relief against it in an involuntary case or proceeding;
(3) consents
to the appointment of a custodian of it or for any substantial part of its property;
(4) makes
a general assignment for the benefit of its creditors;
(5) takes
any comparable action under any foreign Bankruptcy Law; or
(6) generally
is not paying its debts as they become due; or
(xviii) a
court of competent jurisdiction enters an order or decree under any Bankruptcy Law that either:
(1) is
for relief against Company or any of its Significant Subsidiaries in an involuntary case or proceeding;
(2) appoints
a custodian of the Company or any of its Significant Subsidiaries, or for any substantial part of the property of the Company or any of
its Significant Subsidiaries;
(3) orders
the winding up or liquidation of the Company or any of its Significant Subsidiaries; or
(4) grants
any similar relief with respect to the Company or any of its Significant Subsidiaries under any foreign Bankruptcy Law,
and, in each case under this Section 11(A)(xviii),
such order or decree remains unstayed and in effect for at least thirty (30) days.
(xix) the
Company’s stockholders approve any plan for the liquidation or dissolution of the Company:
(B) Acceleration.
(i) Automatic
Acceleration in Certain Circumstances. If an Event of Default set forth in Section 11(A)(xvii) or Section 11(A)(xviii)
occurs with respect to the Company (and not solely with respect to a Significant Subsidiary of the Company), then the then outstanding
portion of the Principal Amount of, and all accrued and unpaid interest on, this Note will immediately become due and payable without
any further action or notice by any Person.
(ii) Optional
Acceleration. If an Event of Default (other than an Event of Default set forth in Section 11(A)(xvii) or Section 11(A)(xviii)
with respect to the Company and not solely with respect to a Subsidiary of the Company) occurs and has not been waived by the Holder,
then the Holder, by notice to the Company, may declare this Note (or any portion thereof) to become due and payable immediately for cash
in an amount equal to the Event of Default Acceleration Amount.
(C) Notice
of Events of Default. Promptly, but in no event later than two (2) Business Days after an Event of Default, the Company will provide
written notice of such Event of Default to the Holder (an “Event of Default Notice”), which Event of Default Notice
shall include (i) a reasonable description of the applicable Event of Default, (ii) the date on which the Event of Default occurred and
(iii) the date on which the Default underlying such Event of Default initially occurred, if different than the date on which the Event
of Default occurred.
Section
12. Ranking.
All payments due under this
Note shall rank (i) pari passu with all Other Notes, (ii) effectively senior to all unsecured indebtedness of the Company to the extent
of the value of the Collateral securing the Notes for so long as the Collateral so secures the Notes in accordance with the terms hereof
and (iii) senior to any Subordinated Indebtedness.
Section
13. Replacement Notes.
If the Holder of this Note
claims that this Note has been mutilated, lost, destroyed or wrongfully taken, then the Company will issue, execute and deliver a replacement
Note upon surrender to the Company of such mutilated Note, or upon delivery to the Company of evidence of such loss, destruction or wrongful
taking reasonably satisfactory to the Company. In the case of a lost, destroyed or wrongfully taken Note, the Company may require the
Holder to provide such security or an indemnity that is reasonably satisfactory to the Company to protect the Company from any loss that
it may suffer if this Note is replaced.
Section
14. Notices.
Any notice or communication
to the Company will be deemed to have been duly given if in writing and delivered in person or by first class mail (registered or certified,
return receipt requested), electronic transmission (including e-mail) or other similar means of unsecured electronic communication or
overnight air courier guaranteeing next day delivery, or to the other’s address, which initially is as follows:
Agrify Corporation
2468 Industrial Row Drive
Troy, Michigan 48084
Attention: Joshua Savitz, Esq., General Counsel
Email address: josh.savitz@agrify.com
Burns & Levinson LLP
125 High Street
Boston, MA 02110
Telephone: 617-345-3684
Attention: Frank A. Segall, Esq.
Email: FSegall@burnslev.com
The Company, by notice to
the Holder, may designate additional or different addresses for subsequent notices or communications.
Any notice or communication
to the Holder will be by email to its email address, which initially are as set forth in the Securities Exchange Agreement. The Holder,
by notice to the Company, may designate additional or different addresses for subsequent notices or communications.
If a notice or communication
is mailed in the manner provided above within the time prescribed, it will be deemed to have been duly given, whether or not the addressee
receives it.
Section
15. Successors and Assigns.
All agreements of the Company
in this Note will bind its successors and will inure to the benefit of the Holder's successors and assigns.
Section
16. Severability.
If any provision of this Note
is invalid, illegal or unenforceable, then the validity, legality and enforceability of the remaining provisions of this Note will not
in any way be affected or impaired thereby.
Section
17. Headings, Etc.
The headings of the Sections
of this Note have been inserted for convenience of reference only, are not to be considered a part of this Note and will in no way modify
or restrict any of the terms or provisions of this Note.
Section
18. Amendments
This Note may not be amended
or modified unless in writing by the Company and the Required Holders (as defined in the Securities Exchange Agreement), and no condition
herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit.
Section
19. Governing Law; Waiver of Jury Trial.
All questions concerning the
construction, validity, enforcement and interpretation of this Note shall be governed by the internal laws of the State of Delaware, without
giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of Delaware. The Company and each Holder hereby
irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, for the adjudication of any dispute
hereunder or in connection herewith or under any of the other Transaction Documents or with any transaction contemplated hereby or thereby,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under 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 manner permitted by law. Nothing contained herein shall be deemed
or operate to preclude any Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect
on the Company’s obligations to such Holder or to enforce a judgment or other court ruling in favor of such Holder. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR
UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR THEREBY.
Section
20. Submission to Jurisdiction.
The Company and each Holder
(A) agree that any suit, action or proceeding against it arising out of or relating to this Note shall be instituted in the Court of Chancery
of the State of Delaware; (B) waive, to the fullest extent permitted by applicable law, (i) any objection that it may now or hereafter
have to the laying of venue of any such suit, action or proceeding; and (ii) any claim that it may now or hereafter have that any such
suit, action or proceeding in such a court has been brought in an inconvenient forum; and (C) submit to the nonexclusive jurisdiction
of such court in any such suit, action or proceeding.
Section
21. Enforcement Fees.
The Company agrees to pay
all costs and expenses of the Holder incurred as a result of enforcement of this Note and the collection of any amounts owed to the Holder
hereunder (whether in cash, Common Stock or otherwise), including, without limitation, reasonable attorneys’ fees and expenses.
Section
22. Electronic Execution.
The words “execution,”
“signed,” “signature,” and words of similar import in the Note shall be deemed to include electronic or digital
signatures or the keeping of records in electronic form, each of which shall be of the same effect, validity, and enforceability as manually
executed signatures or a paper-based recordkeeping system, as the case may be, to the extent and as provided for under applicable law,
including the Electronic Signatures in Global and National Commerce Act of 2000 (15 U.S.C. §§ 7001-7006), the Electronic Signatures
and Records Act of 1999 (N.Y. State Tech. §§ 301-309), or any other similar state laws based on the Uniform Electronic Transactions
Act.
* * *
Exhibit A
Conversion Notice
Agrify
Corporation
Senior Secured
Convertible Note due 2025
Subject to the terms of this Note, by executing
and delivering this Conversion Notice, the undersigned Holder of this Note directs the Company to convert the following Principal Amount
of this Note: $______________,000 in accordance with the following details.
Shares of Common Stock to be delivered (the “Delivered
Shares”):
Accrued interest amount:
Date: |
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(Legal Name of Holder) |
For the purposes of that certain Irrevocable Letter of Instructions
to Transfer Agent, dated as of March 8, 2023, by and between the Company and the Holder (the “Instruction Letter”),
to the extent the Delivered Shares exceed the Note Shares Reserve (as such term is defined in the Instruction Letter) as of the date hereof
(such amount, the “Excess Shares”), the Note Shares Reserve shall be deemed to be increased by a number of shares of
Common Stock equal to the Excess Shares.
Exhibit 4.2
SECOND
AMENDED AND RESTATED JUNIOR SECURED PROMISSORY NOTE
$1,000,000.00 |
January 25, 2024 |
|
Boston, Massachusetts |
FOR VALUE RECEIVED, AGRIFY
CORPORATION, a Nevada corporation (“Maker”), promises to pay to the order of GIC ACQUISITION LLC, a Delaware
limited liability company with an office at 675 VFW Parkway, Suite 152, Chestnut Hill, Massachusetts 02467-3656 (“Holder”),
the principal sum advanced to Maker from time to time up to a maximum of ONE MILLION DOLLARS ($1,000,000.00) in lawful
money of the United States of America, under the terms and at the times stated herein.
The principal and interest
due under this Second Amended and Restated Junior Secured Promissory Note (this “Note”) shall be payable in full on June 30,
2024.
This Note may be prepaid,
in whole or in part, at any time without any penalty, fee, or premium of any kind.
This Note represents a junior
security interest in Maker, and such junior security interest herein granted and provided for is made and given to secure, and shall secure,
the payment and performance of this Note, provided that such security interest and any payments due under this Note shall
be subordinate to any obligations of and interests granted in those certain senior secured notes previously issued by Maker (the “Senior
Secured Notes”).
The principal balance outstanding
under this Note from time to time shall bear interest at the rate of ten percent (10%) per annum computed on the basis of a 360 day year.
Upon the occurrence a payment
default, and at all times thereafter until this Note is paid in full, the principal balance of this Note shall bear interest at the default
rate of eighteen percent (18%) per annum computed on the basis of a 360 day year.
Maker waives presentment,
demand, notice, protest, and delay in connection with the delivery, acceptance, performance, collection, and enforcement of this Note.
No delay or omission on the
part of Holder in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note. A waiver
on anyone occasion shall not be construed as a bar to or a waiver of any such right and/or remedy on any future occasion.
Holder shall be entitled to
an award of its reasonable costs and expenses, including, but not limited to, reasonable attorney’s fees, incurred in enforcing
and collecting the amounts due under this Note.
This Note shall be governed
by the laws of the Commonwealth of Massachusetts.
Maker will take all reasonably
necessary steps to publish and file any financing statements associated with the security interest contained herein under applicable law.
This Note constitutes an amendment
and restatement, but not an extinguishment, of the Promissory Note dated as of July 12, 2022, made by Maker, as amended and restated on
October 27, 2023 (as previously amended and restated, the “Prior Note”). Nothing herein shall be construed to constitute satisfaction
of the outstanding obligations under the Prior Note, provided, however, that upon the execution and delivery of this
Note, such obligations shall be enforceable in accordance with this Note and not the Prior Note.
This Note is intended to be
consolidated, amended and restated and replaced in its entirety with and into certain of the Senior Secured Notes held now or in the future
by Holder.
[Signature Page Follows]
IN WITNESS WHEREOF, Maker
has executed this Note as a sealed instrument as of the date first hereinabove written.
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AGRIFY CORPORATION |
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By: |
/s/ Joshua Savitz |
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Name: |
Joshua Savitz |
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Title: |
General Counsel |
Exhibit 99.1
Agrify Announces the Result of its Reconvened
Annual Meeting, At Premium $3.9 Million Debt Conversion,
and the Exercise of a Majority of Previously Issued Warrants
TROY, Michigan, January 25, 2024 – Agrify
Corporation (Nasdaq: AGFY) (“Agrify” or the “Company”), a leading provider of innovative cultivation and extraction
solutions for the cannabis industry, today announced that the shareholders of the Company approved an amendment to the Company’s
Articles of Incorporation to increase the number of authorized shares of the Company’s common stock from 10,000,000 to 35,000,000
(the “Charter Amendment”), that all its outstanding debt held by CP Acquisitions LLC (the “New Lender”), an entity
affiliated with Raymond Chang, the Chief Executive Officer of the Company and a member of the Board of Directors (the “Board”),
and I-Tseng Jenny Chan, a member of the Board, has been consolidated under a single convertible note and approximately $3.9 million of
the outstanding debt has been converted into equity at a conversion price per share equal to $1.46, or 212% premium to the latest closing
price, and that its prior secured lender (the “Prior Lender”) has exercised 2,475,629 of the warrants previously issued in
October 2023 on a cashless basis for a net issuance of 2,473,542 shares of common stock, thus greatly reducing the number of outstanding
warrants.
The Company’s Annual Meeting of Stockholders
on January 8, 2024 (the “Annual Meeting”) was adjourned until January 22, 2024 (the “Reconvened Meeting”), only
with respect to the proposal to approve the Charter Amendment, owing to Item 3 receiving less than the affirmative vote of a majority
of the Company’s outstanding common stock as of the record date of December 6, 2023, which was the required minimum vote to approve
the Charter Amendment. At the Reconvened Meeting, shares representing approximately 51.6% of the outstanding shares of common stock as
of the record date were voted in favor of the Charter Amendment, representing approximately 94.6% of votes cast on the proposal, resulting
in the Charter Amendment being approved. The Charter Amendment will provide the Company with a number of shares of common stock so that
common stock can be issued in connection with conversion of the Restated Note into equity, among other things.
In addition, the New Lender, which previously
purchased from the Prior Lender the Senior Secured Note issued by the Company to the Prior Lender on August 19, 2022 (the “Exchange
Note”) and the Senior Secured Convertible Note issued by the Company to the Prior Lender on March 10, 2023 (the “Convertible
Note”), and to which the Company previously issued a junior secured promissory note (the “Junior Secured Note”) with
a maximum principal amount of $4,000,000, entered into a consolidation, amendment and restatement of the Convertible Note with the Company
to consolidate the outstanding principal and interest due under the Junior Secured Note and the Exchange Note into the Convertible Note
and to amend and restate the Convertible Note (the “Restated Note”) consistent with the terms contained in the proposal approved
by the stockholders of the Company at the Annual Meeting, with an outstanding principal amount of approximately $18.9 million at the time
of issuance of the Restated Note. Immediately following the execution of the Restated Note, the New Lender elected to convert approximately
$3.9 million of outstanding principal into an aggregate of 2,671,633 shares of common stock, at a conversion price of $1.46 per share,
and assigned its rights to receive such shares to entities affiliated with Mr. Chang and Ms. Chan. Concurrently, GIC Acquisition, another
entity affiliated with Mr. Chang, agreed to increase the principal amount under its previously-issued junior secured note from $0.5 million
to $1 million.
On January 22, 2024, pursuant to notices of exercise
received from the Prior Lender, the Company issued an aggregate of 2,473,542 shares of common stock (to the Prior Lender upon the cashless
exercise of two warrants issued to the Prior Lender on October 27, 2023. The issuance of the Warrant Shares represents the full exercise
of the Abeyance Warrant as described in the Company’s Current Report on Form 8-K filed on October 30, 2023 (the “October 30
Form 8-K”) and the partial exercise of the Exchange Warrant as described in the October 30 Form 8-K, which remains exercisable for
up to 659,669 shares of common stock, subject to adjustment pursuant to its terms.
The consolidation of the outstanding debt held
by the New Lender into the Restated Note and the conversion of some amount of the debt thereunder, together with the reduction in the
number of outstanding warrants held by the Prior Lender is expected to result in a reduction in liabilities on the Company’s balance
sheet, which the Company believes will help it to regain compliance with Nasdaq’s Listing Rule 5550(b)(1), which requires that listed
companies maintain a minimum of $2.5 million in stockholders’ equity.
“We are very pleased to achieve yet another
major milestone in our effort to restructure Agrify’s balance sheet. The $3.9 million conversion at a significant premium to our
current market price exemplifies our continuous confidence and support in Agrify’s turnaround initiatives,” noted Raymond
Chang, Chief Executive Officer of Agrify.
About Agrify
Agrify is a leading provider of innovative cultivation
and extraction solutions for the cannabis industry, bringing data, science, and technology to the forefront of the market. Our proprietary
micro-environment-controlled Vertical Farming Units (VFUs), enable cultivators to produce the highest quality products with unmatched
consistency, yield, and ROI (return on investment) at scale. Our comprehensive extraction product line, which includes hydrocarbon, ethanol,
solventless extraction, post-processing, and lab equipment, empowers producers to maximize the quantity and quality of extract required
for premium concentrates. For more information, please visit our website at http://www.agrify.com.
Forward-Looking Statements
This press release contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 concerning Agrify and other matters. All statements contained
in this press release that do not relate to matters of historical fact should be considered forward-looking statements including, without
limitation, statements regarding future financial results, including the ability to regain compliance with Nasdaq listing standards and
the ability to reduce liabilities on its balance sheet. In some cases, you can identify forward-looking statements by terms such as “may,”
“will,” “should,” “expects,” “plans,” “anticipates,” “could,”
“intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,”
“predicts,” “potential,” or “continue” or the negative of these terms or other similar expressions.
The forward-looking statements in this press release are only predictions. We have based these forward-looking statements largely on our
current expectations and projections about future events and financial trends that we believe may affect our business, financial condition,
and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that
may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. You should carefully consider the risks and uncertainties that affect our business,
including those described in our filings with the Securities and Exchange Commission (“SEC”), including under the caption
“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 that was filed with the SEC on November
28, 2023, which can be obtained on the SEC website at www.sec.gov. These forward-looking statements speak only as of the date of this
communication. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements, whether
as a result of any new information, future events, or otherwise. You are advised, however, to consult any further disclosures we make
on related subjects in our public announcements and filings with the SEC.
Agrify Investor Relations
IR@agrify.com
(857) 256-8110
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