Form 8-K
8-K — DNA X, Inc.
Accession: 0001493152-26-025433
Filed: 2026-05-27
Period: 2026-05-20
CIK: 0001178697
SIC: 3661 (TELEPHONE & TELEGRAPH APPARATUS)
Item: Entry into a Material Definitive Agreement
Item: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
Item: Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing
Item: Unregistered Sales of Equity Securities
Item: Financial Statements and Exhibits
Documents
8-K — form8-k.htm (Primary)
EX-10.1 (ex10-1.htm)
EX-10.2 (ex10-2.htm)
EX-10.3 (ex10-3.htm)
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UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): May 20, 2026
DNA
X, Inc.
(Exact
name of registrant as specified in its charter)
Delaware
001-38907
94-3336783
(State
or other jurisdiction
of incorporation)
(Commission
File
Number)
(IRS
Employer
Identification No.)
4445
Eastgate Mall, Suite 200
San
Diego, CA
92121
(Address
of principal executive offices)
(Zip
Code)
Registrant’s
telephone number, including area code: (650) 378-8100
N/A
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☐
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 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
SONM
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.
Securities
Purchase Agreement; Issuance of Convertible Note
On
May 20, 2026, DNA X, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”)
with DNA Holdings Venture, Inc. (the “Purchaser”) pursuant to which the Company sold and issued to the Purchaser a convertible
promissory note (the “Note”) in the principal amount of $3,052,787.68 for an aggregate purchase price in the same amount.
The transactions contemplated by the Purchase Agreement, including the issuance of the Note, were consummated on May 26, 2026.
The
aggregate purchase price for the Note consisted of $1,800,000.00 in cash and the surrender of the convertible promissory note, dated
December 15, 2025, in the principal amount of $1,200,000.00 issued by the Company to the Purchaser, including $52,787.68 of accrued unpaid
interest on such principal amount.
The
Purchase Agreement contains customary representations, warranties and covenants by the Company and customary closing conditions. The
SPA requires the proceeds from the sale of the Note to be used for working capital purposes, but not for the satisfaction of any Company
debt (other than the payment of trade payables in the ordinary course of business), the redemption of common stock or common stock equivalents,
the settlement of any litigation, or in violation of certain antibribery and anticorruption laws specified in the Purchase Agreement.
The
Note matures on December 31, 2026, accrues interest at a rate of 10% per annum, and, subject to the prior approval of the conversion
of the Note by the Company’s stockholders (the “Stockholder Approval”), is convertible into shares of the Company’s
common stock at the election of the holder at an initial conversion price of $6.00 per share, subject to adjustment as provided in the
Note, provided, that (i) during the continuance of any Event of Default (as defined in the Note), the conversion price will be equal
to 80% of the closing price of the common stock on the principal trading market on the date of conversion and (ii) upon the occurrence
of a Change of Control Transaction (as defined in the Note), and subject to the prior obtainment of the Stockholder Approval, the conversion
price will be equal to the lower of the closing price of the common stock on (x) the original issue date of the Note or (y) the date
that the Change of Control Transaction is consummated.
The
Company’s obligations under the Note are secured by a first priority lien and security interest in and to the following collateral
(collectively, the “Pledged Collateral”): (i) the limited liability company membership interests owned by the Company in
its wholly owned subsidiary DNA X, LLC, a Delaware limited liability company, and all dividends, cash, instruments, and other property
from time to time received or distributed in respect thereof and all proceeds of any of the foregoing in whatever form. The security
interest in the Pledged Collateral is continuing and shall remain in full force and effect until the indefeasible payment in full of
the Note, upon which the security interest shall terminate and all rights to the Pledged Collateral shall revert to the Company.
Amendment
of Membership Interest Purchase Agreement
Concurrently
with the closing of the transactions contemplated by, and as a condition and inducement to the Company’s willingness to enter into,
the Purchase Agreement, the Company and the Purchaser entered into an Amendment No. 1 to the Membership Interest Purchase Agreement (the
“Purchase Agreement Amendment”) pursuant to which the Company and the Purchaser agreed to terminate the “Put Option”
described therein, effective as of the execution of the Purchase Agreement.
The
foregoing descriptions of the Purchase Agreement, the Note and the Purchase Agreement Amendment do not purport to be complete and are
qualified in the entirety by reference to the full text of the Purchase Agreement, Note and Purchase Agreement Amendment, copies of which
are filed as Exhibits 10.1, 10.2 and 10.3, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Item
2.03 Creation
of a Direct Financial Obligation or an Obligation under an Off-Balane Sheet Arrangement of
a Registrant.
The
information set forth in Item 1.01 above is hereby incorporated by reference into this Item 2.03.
Item
3.01 Notice
of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
As
previously disclosed, on August 22, 2025, the Company received a letter from the staff of the Nasdaq Listing Qualifications Department
(the “Staff”) notifying the Company that it was not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires companies
listed on the Nasdaq Capital Market to maintain stockholders’ equity of at least $2,500,000 (the “Stockholders’ Equity
Requirement”). Subsequently, on February 20, 2026, the Company received a letter from the Staff notifying the Company that the
Staff had determined that the Company had regained compliance with the Stockholders’ Equity Requirement and stating that the Company
may be subject to delisting if the Company failed to evidence compliance with the Stockholders’ Equity Requirement upon the filing
of its next periodic report following the date of such notification. The Company reported stockholders’ deficit of $983,000 in
its Quarterly Report on Form 10-Q for the three-month period ended March 31, 2026, and, as a result, it was not in compliance with the
Stockholders’ Equity Requirement.
On
May 22, 2026, the Company received a delisting determination letter from the Staff advising the Company that unless the Company requests
a hearing before a Nasdaq Hearing Panel (the “Panel”) to appeal Nasdaq’s delisting determination by May 29, 2026, trading
of the Company’s common stock will be suspended at the opening of business on June 2, 2026. The Company intends to timely request
a hearing before the Panel, at which it will request a suspension of delisting pending its return to compliance. Pursuant to Nasdaq Listing
Rule 5815(a)(1)(B), the hearing request will stay the suspension of trading and delisting of the common stock pending the conclusion
of the hearing process. As a result, the Company expects the common stock to remain listed on the Nasdaq Capital Market at least until
the Panel renders a decision following the hearing.
There
can be no assurance that the Company will be able to regain compliance with the Stockholders’ Equity Requirement or will otherwise
be in compliance with other applicable Nasdaq listing rules, that the Panel will grant the Company’s request for a suspension of
delisting on Nasdaq, or that the Company’s appeal of the delisting determination will be successful. If the Company’s common
stock is delisted from Nasdaq, it could be more difficult to buy or sell the Company’s common stock or to obtain accurate quotations,
and the price of the Company’s common stock could suffer a material decline. Delisting could also impair the Company’s ability
to raise capital and/or trigger defaults and penalties under outstanding agreements or securities of the Company.
Except
for the factual statements made herein, information contained in this report consists of “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and assumptions that are difficult
to predict, including statements regarding the Company’s plans to appeal the Nasdaq delisting determination, the Company’s
ability to regain compliance with Nasdaq’s continued listing requirements, the timing of the hearing and of the decision of the
Panel, and the outcome of the hearing. Words such as “will,” “believes,” “intends,” “expects,”
“plans,” and similar expressions, or the use of future tense, identify forward-looking statements, but their absence does
not mean that a statement is not forward-looking. Such forward-looking statements are not guarantees of performance and actual actions
or events could differ materially from those contained in such statements, including, without limitation, risks related to the Company’s
ability to regain compliance with Nasdaq’s continued listing requirements or otherwise maintain compliance with any other listing
requirement of The Nasdaq Capital Market, the potential delisting of the Company’s common stock from The Nasdaq Capital Market
due to the Company’s failure to comply with the applicable rules, the timing of the hearing and the Panel’s decision, which
hearing may be scheduled, and such decision may be issued, more quickly than expected, the outcome of the hearing and the Panel’s
decision, and the other risks set forth in the Company’s filings with the Securities and Exchange Commission. The forward-looking
statements contained in this report speak only as of the date of this report, and the Company undertakes no obligation to publicly update
any forward-looking statements to reflect changes in information, events or circumstances after the date of this report, unless required
by law.
Item
3.02 Unregistered
Sales of Equity Securities.
The
information set forth in Item 1.01 above is hereby incorporated by reference into this Item 3.02. The Note was issued in reliance upon
the exemption from registration afforded by Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated under
the Securities Act. The Purchaser has represented to the Company that it is an “accredited investor” as defined in Rule 501(a)
under the Securities Act. The Purchaser has represented that it is acquiring the Note as principal for its own account and not with a
view to or for distributing or reselling the Note or any part thereof in violation of the Securities Act or any applicable state securities
law. Neither the Company, nor any of its affiliates, nor any person acting on its behalf engaged in any form of general solicitation
or general advertising within the meaning of Regulation D in connection with the offer or sale of the Note.
The
Note is convertible into shares of the Company’s common stock at a conversion price of $6.00 per share (subject to adjustment),
contingent upon receipt of stockholder approval. Any shares of common stock issued upon conversion of the Note will be issued in reliance
upon the same registration exemption. The Company has agreed to timely file a Form D with the SEC with respect to the Note as required
under Regulation D, and with applicable state securities regulators in the state(s) in which the Note was sold.
Item 9.01
Financial Statements and Exhibits.
(d)
Exhibits
Exhibit
Number
Description
10.1
Securities Purchase Agreement, dated May 20, 2026, by and between the Company and DNA Holdings Venture, Inc.
10.2
Convertible Promissory Note dated May 26, 2026 issued by the Company to DNA Holdings Venture, Inc.
10.3
Amendment No. 1 to Membership Interest Purchase Agreement, dated May 26, 2026, by and between the Company and DNA Holdings Venture, Inc.
104
Cover
Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
DNA
X, INC.
Date:
May
27, 2026
By:
/s/
Clayton Crolius
Name:
Clayton Crolius
Title: Chief Financial Officer
EX-10.1
EX-10.1
Filename: ex10-1.htm · Sequence: 2
Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of May 20, 2026, by and among DNA X, Inc. (f/k/a Sonim
Technologies, Inc.), a Delaware corporation (and together with all of its current and future, direct and/or indirect, wholly owned and/or
partially owned Subsidiaries, collectively, the “Company”), and the Purchaser identified on the signature pages hereto
(including its successors and assigns, each a “Purchaser” and collectively, the “Purchasers”).
RECITALS
A. The
Company and the Purchasers are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act (as defined below), and/or Rule 506(b) of Regulation D (“Regulation D”) as
promulgated by the United States Securities and Exchange Commission under the Securities Act.
B. The
Purchasers wish to purchase and the Company wishes to sell at closing, upon the terms and conditions stated in this Agreement, the Securities
(as defined herein), all in the amounts and for the price set forth on Schedule 1 hereto.
C. Concurrently
with the Closing and as a condition and inducement to Parent’s willingness to enter into this Agreement, Parent and Purchaser will
enter into an Amendment No. 1 to Membership Interest Purchase Agreement (the “Purchase Agreement Amendment”), pursuant
to which Parent and Purchaser will agree to the termination of the “Put Option” described therein, effective as of the execution
of this Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Company and the Purchaser hereby agrees as follows:
ARTICLE
1
DEFINITIONS
1.1 Defined
Terms. In addition to terms defined elsewhere in this Agreement or in any supplement, amendment or exhibit hereto, when used herein,
the following terms shall have the following meanings:
(a)
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled
by or is under common control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act, including,
among others, executive officers, directors, large stockholders, subsidiaries, parent entities and sister companies.
(b) “Bridge
Note” means that certain convertible promissory note, dated December 15, 2025, with Purchaser and the Company in advance of
the transactions contemplated hereunder with an aggregate principal amount of $1.2 million, plus accrued interest.
-1-
(c) “Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day
on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
(d) “Cash
Subscription Amount” shall have the meaning ascribed to such term in the definition of Subscription Amount.
(e) “Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed
and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchaser’ obligations to pay the Subscription
Amount and (ii) the Company’s obligations to deliver the Notes, in each case, have been satisfied or waived with respect to the
Closing.
(f) “Common
Stock” means (i) the Company’s common stock, par value $0.001 per share, and (ii) any capital stock into which such common
stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(g) “Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that
is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
(h) “Contingent
Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect
to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in
whole or in part) against loss with respect thereto.
(i) “Dollar(s)”
and “$” means lawful money of the United States.
(j) “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(k)
“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time.
-2-
(l) “Indebtedness”
means, with respect to any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations
of such Person for the deferred purchase price of property or services (but excluding trade payables incurred in the ordinary course
of business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or the Purchaser under such agreement in the event of default are limited to repossession
or sale of such property), (e) all capital lease obligations of such Person, (f) all obligations of such Person, contingent or otherwise,
as an account party or applicant under acceptance, letter of credit, surety bond or similar facilities, (g) all obligations of such Person,
contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any capital stock of such Person, (h) all obligations
for any earn-out consideration, (i) the liquidation value of preferred capital stock of such Person, (j) all guarantee obligations of
such Person in respect of obligations of the kind referred to in clauses (a) through (i) above, (k) all obligations of the kind referred
to in clauses (a) through (i) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise,
to be secured by) any lien on property (including, without limitation, accounts and contract rights) owned by such Person, whether or
not such Person has assumed or become liable for the payment of such obligation and all obligations of such Person in respect of hedge
agreements; and (l) all Contingent Obligations in respect to indebtedness or obligations of any Person of the kind referred to in clauses
(a)-(k) above. The Indebtedness of any Person shall include, without duplication, the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s
ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that
such Person is not liable therefor.
(m)
“Liens” or “liens” means a lien, mortgage, charge pledge, security interest, encumbrance, right
of first refusal, preemptive right or other restriction, or other clouds on title.
(n) “Liabilities”
means all direct or indirect liabilities, Indebtedness and obligations of any kind of Company to the Purchaser, howsoever created, arising
or evidenced, whether now existing or hereafter arising (including those acquired by assignment), absolute or contingent, due or to become
due, primary or secondary, joint or several, whether existing or arising through discount, overdraft, purchase, direct loan, participation,
operation of law, or otherwise, including, but not limited to, pursuant to the Note, this Agreement and/or any of the other Transaction
Documents, all accrued but unpaid interest on the Note the principal, any letter of credit, any standby letter of credit, and/or outside
attorneys’ and paralegals’ fees or charges relating to the preparation of the Transaction Documents and the enforcement of
the Purchaser’s rights, remedies and powers under this Agreement, the Note and/or the other Transaction Documents.
(o) “Material
Adverse Effect” means a material adverse effect on (a) the business, assets, property, operations, or condition (financial
or otherwise) of the Company, (b) the validity or enforceability of this Agreement or any of the other Transaction Documents, (c) the
rights or remedies of the Purchaser hereunder or thereunder, or (d) the ability of the Company to perform its obligations under any Transaction
Document.
-3-
(p)
“Note” means the Promissory Notes due on the first anniversary of the Closing Date in such amounts as
set forth on Schedule 1 next to the heading “Note,” in United States Dollars, which, subject to the terms and conditions
set forth in this Agreement, shall be purchased from the Company pursuant to this Agreement, and any and all Note(s) issued in exchange,
transfer or replacement of the Note(s); the form of Note is annexed hereto as Exhibit A.
(q) “Note
Subscription Amount” shall have the meaning ascribed to such term in the definition of Subscription Amount.
(r) “Permitted
Indebtedness” means (a) the indebtedness evidenced by the Note, and (b) any indebtedness of the Company outstanding as of the
date of this Agreement and set forth on Schedule 3.1(n).
(s) “Permitted
Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith
and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established
in accordance with GAAP; (b) Liens imposed by law which were incurred in the ordinary course of the Company’s business, such as
carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in
the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate materially detract from the
value of such property or assets or materially impair the use thereof in the operation of the business of the Company and its consolidated
Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for
the foreseeable future the forfeiture or sale of the property or asset subject to such Lien; (c) pledges and deposits made in the ordinary
course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;
(d) Deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the ordinary course of business and (e) Liens of the Company which are
outstanding as of the date hereof and set forth on Schedule 3.1(n).
(t) “Person”
means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (whether national, federal, state, county, city, municipal or otherwise including, without limitation,
any instrumentality, division, agency, body or department thereof).
(u)
“Principal Market” means the principal Trading Market on which the Common Stock is listed or quoted for trading on
the date in question.
(v) “Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
-4-
(w)
“SEC” or “Commission” means the United States Securities and Exchange Commission.
(x) “SEC
Reports” means all reports, schedules, forms, statements and other documents required to be filed by the Company under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, including the exhibits thereto and documents
incorporated by reference therein.
(y) “Securities”
means the Note and any securities of the Company issued to the Purchaser in replacement, substitution and/or in connection with any exchange,
conversion and/or any other transaction involving all or any of such securities of the Company.
(z) “Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(aa) “SMRH”
means Sheppard, Mullin, Richter & Hampton LLP, with offices located at 30 Rockefeller Plaza, 39th Floor, New York, New
York 10112.
(bb) “Subscription
Amount” means, as to the Purchaser, the aggregate amount to be paid for the Securities purchased at such Closing as specified
on Annex I of this Agreement and under the heading “Subscription Amount”, which Subscription Amount shall consist of (a)
$1,800,000 of United States dollars and in immediately available funds (“Cash Subscription Amount”) and (b) the surrender
of (x) $1,200,000 principal amount of the Bridge Note and (y) $$52,787.58 of accrued interest, each on a $1 for $1 basis (“Note
Subscription Amount”).
(cc) “Subsidiary”
means, with respect to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or
other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership
or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. All of the Company’s Subsidiaries are set forth on Schedule 3.1(a) hereto.
(dd) “Trading
Day” means a day on which the principal Trading Market is open for trading.
(ee) “Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange,
any market or quotation tier of the OTC Markets Group (or any successors to any of the foregoing).
-5-
(ff) “Transaction
Documents” means, collectively, this Agreement, the Note, and such other documents, instruments, certificates, supplements,
amendments, exhibits and schedules required and/or attached pursuant to this Agreement and/or any of the above documents, and/or any
other document and/or instrument related to the above agreements, documents and/or instruments, and the transactions hereunder and/or
thereunder and/or any other agreement, documents or instruments required or contemplated hereunder or thereunder, whether now existing
or at any time hereafter arising.
(gg) “Transfer
Agent” means Equiniti Trust Company, LLC (formerly, American Stock Transfer & Trust Company, LLC) the current transfer
agent of the Company, with a mailing address of 6201 15th Avenue, Brooklyn, New York 11219 and a phone number of (800)
937-5449, and any successor transfer agent of the Company.
(hh) “VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average
price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not
then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or
a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common
Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
1.2 Other
Definitional Provisions.
(a) Use
of Defined Terms. Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used
in the other Transaction Documents or any certificate or other document made or delivered pursuant hereto or thereto.
(b) Accounting
Terms. As used herein and in the other Transaction Documents, and any certificate or other document made or delivered pursuant hereto
or thereto, accounting terms relating to the Company not defined in Section 1.1 and accounting terms partly defined in Section
1.1, to the extent not defined, shall have the respective meanings given to them under GAAP (provided that all terms of an
accounting or financial nature used herein shall be construed, and all computations of amounts referred to herein shall be made without
giving effect to (i) any election under Accounting Standards Codification 825-10-25 (previously referred to as Statement of Financial
Accounting Standards 159) (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or
effect) to value any Indebtedness or other liabilities of the Company at “fair value”, as defined therein, and (ii) any treatment
of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards
Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated
manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof).
-6-
(c) Construction.
The words “hereof”, “herein” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and section, schedule
and exhibit references are to this Agreement unless otherwise specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
ARTICLE
2
PURCHASE AND SALE
2.1 Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchaser agrees
to purchase, the Notes. Purchaser shall deliver to the Company, via wire transfer, immediately available funds equal to such Purchaser’s
Cash Subscription Amount and tender for cancellation the principal amount and accrued interest of the Bridge Note equal to such Purchaser’s
Note Subscription Amount, and the Company shall deliver to the Purchaser the Notes on the Closing Date, and the Company and the Purchaser
shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions
set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of SMRH or such other location as the parties shall mutually
agree.
2.2 Deliveries.
(a) On
or prior to the Closing Date, the Company shall deliver or cause to be delivered to the Purchasers the following:
(i) on
the Closing Date, this Agreement duly executed by the Company;
(ii) on
the Closing Date, the Notes registered in the name of the Purchaser as set forth on Schedule 1;
(iii) a
certificate, in the form acceptable to the Purchaser and its counsel, executed by the secretary of the Company dated as of the Closing
Date, as to (i) the resolutions as adopted by the Company’s board of directors relating to the transactions contemplated by this
Agreement in a form acceptable to the Purchaser, (ii) Certificate of Incorporation or other similar organizational document of the Company,
and (iii) the Bylaws or other similar organizational document of the Company, each as in effect at the Closing;
(iv) a
certificate, duly executed by the Chief Executive Officer of the Company, dated as of the Closing Date, confirming compliance with Section
2.3(a)(i) and (ii) below and as to such other matters as may be reasonably requested by the Purchaser and its counsel in the form acceptable
to the Purchaser;
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(v) certificate
evidencing the good standing of the Company in such entity’s jurisdiction of incorporation issued by the Secretary of State (or
comparable office) of such jurisdiction of formation as of a date within five (5) days of the Closing Date;
(vi)
the Purchase Agreement Amendment, duly executed by the Company;
(vii) such
other documents, instruments, opinions or certificates relating to the transactions contemplated by this Agreement as the Purchaser or
its counsel may reasonably request.
(b) On
or prior to the Closing, the Purchaser shall deliver or cause to be delivered to the Company the following:
(i) on
the Closing Date, this Agreement duly executed by the Purchaser;
(ii) the
Cash Subscription Amount subject to the closing by wire transfer;
(iii)
such Purchaser’s surrendered Bridge Note, with a principal amount and accrued interest
equal to such Purchaser’s Note Subscription Amount; and
(iv)
the Purchase Agreement Amendment, duly executed by the Purchaser.
2.3 Conditions
to Purchase the Securities. Subject to the terms and conditions of this Agreement, the Purchaser will at the Closing purchase from
the Company the Securities in the amounts and for the Subscription Amount as set forth on Schedule 1, provided the following:
(a) The
obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(i) the
accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect,
in all respects) when made and on the date of the Closing of the representations and warranties of the Purchaser contained herein (unless
as of a specific date therein in which case they shall be accurate as of such date);
(ii) all
obligations, covenants and agreements of the Purchaser required to be performed at or prior to the date of the Closing shall have been
performed;
(iii) the
delivery by the Purchaser of the items set forth in Section 2.2(b) of this Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the Company since the date hereof; and
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(v) no
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by
any court or other federal, state, local or other governmental authority of competent jurisdiction that prohibits the consummation of
any of the transactions contemplated by the Transaction Documents.
(b) The
obligations of the Purchaser hereunder in connection with the Closing are subject to the following conditions being met:
(i) the
accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect,
in all respects) when made and on the date of the Closing of the representations and warranties of the Company contained herein (unless
as of a specific date therein in which case they shall be accurate as of such date);
(ii) all
obligations, covenants and agreements of the Company required to be performed at or prior to the Closing shall have been performed in
all material respects;
(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the Company since the date hereof;
(v) the
Company shall have obtained all governmental, regulatory and third party consents and approvals, if any, necessary for the entry into
the Transaction Documents and the sale of the Securities;
(vi) no
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by
any court or other federal, state, local or other governmental authority of competent jurisdiction that prohibits the consummation of
any of the transactions contemplated by the Transaction Documents; and
(vii)
from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended
by the Commission or any foreign securities commission or the Company’s principal Trading Market and, at any time prior to the
Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices
shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking
moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak
or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse
change in, any financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable
to purchase the Securities at the Closing.
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2.4 Purchase
Price and Payment of the Subscription Amount for the Securities. The Subscription Amount for the Securities to be purchased by the
Purchasers at the Closing shall be as set forth on Schedule 1 and shall be paid at the Closing by the Purchasers by wire transfer
of immediately available funds to the Company in accordance with the Company’s written wiring instructions and such Purchaser’s
surrendered Bridge Note with a principal amount and accrued interest equal to such Purchaser’s Note Subscription Amount, against
delivery of the Securities.
ARTICLE
3
REPRESENTATIONS AND WARRANTIES; OTHER ITEMS
3.1 Representation
and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part
hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section
of the Disclosure Schedules (but in no event shall qualify any indemnity obligation of the Company hereunder), the Company (which for
purposes of this Section 3.1 means the Company and all of its Subsidiaries) represents and warrants to the Purchaser that on the
Closing Date (unless as of a specific date set forth below):
(a) Subsidiaries.
All of the direct and indirect subsidiaries of the Company and the locations thereof are set forth on Schedule 3.1(a). The Company
owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and
all of the issued and outstanding shares of capital stock or other interests of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. Schedule 3.1(a) sets forth,
as of the Closing Date, the jurisdiction of organization and the location of the Company’s and its subsidiaries’ executive
offices and other places of business.
(b) Organization,
Etc. The Company and each of the Subsidiaries is duly organized, validly existing and in good standing under the laws of the state
of their respective organization and are duly qualified and in good standing or has applied for qualification as a foreign corporation
authorized to do business in each jurisdiction where, because of the nature of its activities or properties, such qualification is required
except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect.
(c) Authorization:
No Conflict. The execution, delivery and performance of the Transaction Documents and the transactions contemplated thereby by the
Company, including, but not limited to, the sale and issuance of the Securities for the Subscription Amount, (i) are within the Company’s
corporate powers, (ii) have been duly authorized by all necessary action by or on behalf of the Company (and/or its stockholders to the
extent required by law), (iii) have received all necessary and/or required governmental, regulatory and other approvals and consents
(if any shall be required), (iv) do not and shall not contravene or conflict in any material respect with any provision of, or require
any consents under (1) any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including U.S. federal and state
securities laws and regulations) or ordinance, (2) the Company’s organizational documents; and/or (3) any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company
or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, and (v) other than
the Liens granted to the Purchaser pursuant to the Transaction Documents, do not result in, or require, the creation or imposition of
any Lien and/or encumbrance on any of the Company’s properties or revenues pursuant to any law, rule, regulation or ordinance or
otherwise.
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(d) Validity
and Binding Nature. The Transaction Documents to which the Company is a party are the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization and other similar laws of general application affecting the rights and remedies of creditors and by general
equitable principles (whether enforcement is sought by proceedings in equity or at law).
(e) Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good
and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in
each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries, (ii) Liens for the payment
of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and the payment of which
is not delinquent, and (iii) Permitted Liens. Any real property and facilities held under lease by the Company and the Subsidiaries are
held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.
(f) No
Violations of Laws. The Company is not in violation of any law, ordinance, rule, regulation, judgment, decree or order of any federal,
state or local governmental body or court and/or regulatory or self-regulatory body, except as would not reasonably be expected to have
a Material Adverse Effect.
(g) Taxes.
The Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income
and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and
other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations
and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.
(h) Licenses
and Permits. The Company and its Subsidiaries possesses all certificates, authorizations, consents,
approvals, orders, licenses and permits issued by the appropriate federal, state or foreign regulatory authorities as set forth on Schedule
3.1(h) (collectively, the “Permits”), necessary to conduct its business
as now conducted. All of such Permits are valid and in full force and effect. There is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or investigation that individually or in the aggregate would reasonably be expected to lead to the
revocation, modification, termination, suspension or any other impairment of the rights of the holder of any such Permit.
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(i) Investment
Company. The Company is not (i) an “investment company” or a company “controlled”, whether directly or indirectly,
by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended; or (ii) engaged principally,
or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve System).
(j) Absence
of Defaults and Conflicts. The Company and its Subsidiaries is not (i) in violation of its
charter, by-laws or similar incorporation or organizational documents or (ii) in violation
or default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company is a party or by
which it may be bound, or to which any of the property or assets of the Company is subject (collectively, “Agreements
and Instruments”). The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement and the other Transaction Documents, and compliance by the Company with
its obligations under this Agreement and the other Transaction Documents, do not and will not, whether with or without the giving of
notice or passage of time or both, (w) conflict with or result in a breach of any of the terms and provisions of, or constitute a default
or Repayment Event (as defined below) under, (x) result in the creation or imposition of any lien, charge or encumbrance (other than
Permitted Liens) upon any property or assets of the Company pursuant to, the Agreements and Instruments, (y) result in any violation
of the provisions of the charter, by-laws or similar organizational documents of the Company,
or (z) result in any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality
or court, domestic or foreign, having jurisdiction over the Company or any of its assets, properties or operations, except in the case
of this clause (z) for such conflicts, violations, breaches or defaults which would not reasonably be expected to result in a Material
Adverse Effect on the Company. As used herein, a “Repayment Event” means
any event or condition which gives the holder of any note, debenture or other evidence of indebtedness that is material to the operations
or financial results of the Company (or any person acting on such holder’s behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company.
(k) Foreign
Corrupt Practices Act. Neither the Company nor, to the Company’s knowledge, any
of its affiliates, directors, officers, employees, agents or other person acting on behalf of the Company is aware of or has taken any
action, directly or indirectly, that would result in a material violation by such person of the Foreign Corrupt Practices Act of 1977,
as amended, and the rules and regulations thereunder (the “FCPA”), including,
without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of money, or other property, gift, promise to give, or authorization of the giving
of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official
thereof or any candidate for foreign political office, in contravention of the FCPA and the Company and, to the Company’s knowledge,
its affiliates have conducted their businesses in material compliance with the FCPA and have instituted and maintain policies and procedures
designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.
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(l) Rule
506(d) Bad Actor Disqualification Representations and Covenants.
(i) No
Disqualification Events. Neither the Company, nor any of its predecessors, affiliates, any manager, executive officer, other officer
of the Company participating in the offering, any beneficial owner (as that term is defined in Rule 13d-3 under the Exchange Act) of
20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as
that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity as of the date of this Agreement
and on the Closing Date (each, a “Company Covered Person” and, together, “Company Covered Persons”)
is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act
(a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company
has exercised reasonable care to determine (A) the identity of each person that is a Company Covered Person; and (B) whether any Company
Covered Person is subject to a Disqualification Event. The Company has complied with its disclosure obligations under Rule 506(e).
(ii) Other
Covered Persons. The Company is not aware of any person (other than any Company Covered Person) who has been or will be paid (directly
or indirectly) remuneration in connection with the purchase and sale of the Note who is subject to a Disqualification Event (each, an
“Other Covered Person”).
(iii) Reasonable
Notification Procedures. With respect to each Company Covered Person, the Company has established procedures reasonably designed
to ensure that the Company receives notice from each such Company Covered Person of (A) any Disqualification Event relating to that Company
Covered Person, and (B) any event that would, with the passage of time, become a Disqualification Event relating to that Company Covered
Person; in each case occurring up to and including the Closing Date.
(iv) Notice
of Disqualification Events. The Company will notify the Purchaser immediately in writing upon becoming aware of (A) any Disqualification
Event relating to any Company Covered Person and (B) any event that would, with the passage of time, become a Disqualification Event
relating to any Company Covered Person and/or Other Covered Person.
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(m) Accuracy
of Information, etc. No statement or information contained in this Agreement, any other Transaction Document or any other document,
certificate or statement furnished to the Purchaser by or on behalf of the Company in writing for use in connection with the transactions
contemplated by this Agreement and/or the other Transaction Documents contained, as of the date such statement, information, document
or certificate was made or furnished, as the case may be, any untrue statement of a material fact or omitted to state a material fact
necessary to make the statements contained herein or therein, taken as a whole, not materially misleading. There is no fact known to
the Company that would reasonably be expected to materially affect the Company that has not been expressly disclosed herein, in the other
Transaction Documents, or in any other documents, certificates and written statements furnished to the Purchaser for use in connection
with the transactions contemplated hereby and by the other Transaction Documents.
(n) Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company
of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds the amount
that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as
now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of
the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the
current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after
taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when
such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any
facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(n) sets
forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company
or any Subsidiary has commitments and all liens on any Indebtedness or other personal property of the Company or any Subsidiary. Neither
the Company nor any Subsidiary is in default with respect to any Indebtedness.
(o) Transactions
With Affiliates and Employees. None of the officers or directors of the Company or any Subsidiary
and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement
or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from
providing for the borrowing of money from or lending of money to, or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee, stockholder, member or partner, in each case in excess of $120,000 other than for: (i)
payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii)
other employee benefits, including stock option agreements under any stock option plan of the Company.
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(p) Intellectual
Property. The Company has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks,
trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as described on
Schedule 3.1(p) that are material to the conduct of its business (collectively, the “Intellectual Property Rights”).
The Company has not received a notice (written or otherwise) that any material Intellectual Property Right has expired, terminated or
been abandoned, or is expected to expire or terminate or be abandoned. The Company has not received, since the Balance Sheet Date, a
written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of
any Person, except as would not have or reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company, all
such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual
Property Rights. The Company has taken commercially reasonable security measures to protect the secrecy, confidentiality and value of
all of its intellectual property.
(q) USA
Patriot Act. The Company is in compliance, in all material respects, with (i) the Trading with the Enemy Act, as amended, and each
of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) and
any other enabling legislation or executive order relating thereto, and (ii) the USA Patriot Act (Title III of Pub. L. 107-56, signed
into law on October 26, 2001) (the “Act”). No part of the proceeds of the Note will be used, directly or indirectly,
for any payments to any governmental official or employee, political party, official of a political party, candidate for political office,
or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.
(r) Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director, officer, agent,
joint venture employee or affiliate of the Company or any Subsidiary is currently, or in the past 5 years, has been subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(s) Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization
or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other
than the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively,
the “Required Approvals”).
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(t) Authorization;
Enforcement. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization,
execution and delivery of the Transaction Documents and the performance of all obligations of the Company under the Transaction Documents
and have been taken on or prior to the date hereof. Each of the Transaction Documents has been duly executed by the Company and, when
delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except: (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by general equitable
principles regardless of whether such enforcement is considered in a proceeding in equity or at law, (iii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iv) insofar as indemnification and contribution
provisions may be limited by applicable law.
(u) Valid
Issuance of Securities. The Notes have been duly authorized and, when issued and paid for in accordance with this Agreement, will
be duly and validly issued, fully paid and nonassessable, free and clear of all Liens and all restrictions on transfer other than those
expressly imposed by the federal securities laws and vest in the Purchaser full and sole title and power to the Notes purchased hereby
by the Purchaser.
(v) Offering.
The offer and sale of the Notes when issued pursuant to this Agreement, as contemplated by this Agreement, are exempt from the registration
requirements of the Securities Act, and the qualification or registration requirements of state securities laws or other applicable blue
sky laws. Neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss
of such exemptions.
(w) Capitalization
and Voting Rights. The capitalization of the Company is as set forth on Schedule
3.1(w), which Schedule 3.1(w) shall also
include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. The
authorized capital stock of the Company and all securities of the Company issued and outstanding are set forth on Schedule 3.1(w)
as of the dates reflected therein. All of the outstanding shares of Common Stock and other securities of the Company have been duly authorized
and validly issued, and are fully paid and nonassessable. Except as set forth on Schedule
3.1(w), no Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as set forth on Schedule
3.1(w), there are no agreements or arrangements under which the Company is obligated to register the sale of any of the Company’s
securities under the Securities Act. Except as set forth on Schedule 3.1(w), no shares of Common Stock and/or other securities
of the Company are entitled to preemptive rights and there are no outstanding debt securities and no contracts, commitments, understandings,
or arrangements by which the Company is or may become bound to issue additional shares of the capital stock and/or other securities of
the Company or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, any shares of capital stock of the Company other than those issued or granted in the
ordinary course of business pursuant to the Company’s equity incentive and/or compensatory plans or arrangements. Except for customary
transfer restrictions contained in agreements entered into by the Company to sell restricted securities and/or as set forth on Schedule
3.1(w), the Company is not a party to, and it has no knowledge of, any agreement restricting the voting or transfer of any shares
of the capital stock and/or other securities of the Company. Except as set forth on Schedule 3.1(w), the offer and sale of all
capital stock, convertible or exchangeable securities, rights, warrants, options and/or any other securities of the Company, when any
such securities of the Company were issued, complied in all material respects with all applicable federal and state securities laws,
and no current and/or prior holder of any securities of the Company has any right of rescission or damages or any “put” or
similar right with respect thereto. Except as set forth on Schedule 3.1(w), there are no securities or instruments of the Company
containing anti-dilution or similar provisions that will be triggered by the issuance and/or sale of the Securities and/or the consummation
of the transactions described herein or in any of the other Transaction Documents.
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(x) Shell
Company Status; SEC Reports; Financial Statements. The Company has never been an issuer subject to Rule 144(i) under the Securities
Act. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve (12) months preceding the date
hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including
the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”)
on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply
in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto
as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise
specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries
as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.
(y) Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest annual financial statements included within
the SEC Reports: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in
a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities reflected in the Company’s
financial statement issued subsequent to the latest annual financial statement, or that are not required to be reflected in the Company’s
financial statements pursuant to GAAP, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared
or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase
or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate,
except pursuant to existing Company stock option plans. Except for the issuance of the Securities contemplated by this Agreement, no
event, liability, fact, circumstance, occurrence or development has occurred or exists, or is reasonably expected to occur or exist,
with respect to the Company or its Subsidiaries or their respective businesses, prospects, properties, operations, assets or financial
condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is
made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made.
(z) Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities
or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge
of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.
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(aa) Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has provided any Purchaser or its respective agents or counsel with any information
that constitutes material, non-public information. The Company understands that the Purchaser may rely on the Transaction Documents,
the information included therein, including, but not limited to, the foregoing representation in purchasing the Securities. All of the
disclosure furnished by or on behalf of the Company to the Purchaser in the Transaction Documents regarding, among other matters relating
to the Company, its business and the transactions contemplated in the Transaction Documents, is true and correct in all material respects
as of the date made and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order
to make the statements made therein, in light of the circumstances under which they were made, not misleading. The Company acknowledges
and agrees that the Purchaser does not make nor has made any representations or warranties with respect to the transactions contemplated
in the Transaction Documents other than those specifically set forth in Section 3.2 hereof.
(bb) No
Integrated Offering. Assuming the accuracy of the representations and warranties set forth in Section 3.2, neither the Company,
nor any of its affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that would cause the issuance and/or sale of the Securities
to be integrated with prior offerings of securities by the Company for purposes of (i) the Securities Act that would require the registration
of any such Securities and/or any other securities of the Company under the Securities Act, or that would invalidate the exemptions from
registration relied upon by the Company, or (ii) any stockholder-approval provisions of any Trading Market on which any of the securities
of the Company are listed, eligible for quotation and/or designated.
(cc) Insurance.
The Company is insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the business in which it is engaged; the Company has not been refused any coverage
sought or applied for; and the Company does not have any reason to believe that it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.
(dd) Manufacturing
and Marketing Rights . The Company has not granted rights to develop, manufacture, produce, assemble, license, distribute, market,
or sell its products to any other Person and is not bound by any agreement that affects the Company’s exclusive right to develop,
manufacture, produce, assemble, license, distribute, market or sell its products.
(ee) Registration
Rights. No Person has any right to cause the Company to affect the registration under the Securities
Act of any securities of the Company or any Subsidiaries.
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(ff) Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect
to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s
or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and
its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer
of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries
to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal,
state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and
wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(gg) Application
of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in order
to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provisions under the Company’s certificate of incorporation, as amended, or the laws of the jurisdiction
of its formation that are or could become applicable to the Purchaser as a result of the transactions contemplated by this Agreement
and/or the other Transaction Documents, including, without limitation, the Company’s issuance of the Securities and the Purchaser’s
ownership of the Securities. The Company has not adopted a stockholder rights plan or similar arrangement relating to accumulations of
beneficial ownership of Common Stock or a change in control of the Company.
(hh)
Affiliate Transactions. The Company has not purchased, acquired or leased any property from, or sold, transferred or leased any
property to, or entered into any other transaction with (i) any Affiliate, (ii) any officer, director, manager, stockholder or member
of the Company or any Affiliate of any thereof, or (iii) any member of the immediate family of any of the foregoing, except on terms
comparable to the terms that would prevail in an arms-length transaction between unaffiliated third parties.
(ii) No
General Solicitation. Neither the Company, nor any of its affiliates, nor, to the knowledge of the Company, any Person acting on
its behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection
with the offer or sale of the Securities.
(jj) Off-Balance
Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other
off-balance sheet entity.
(kk) Certain
Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiaries to any broker,
financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated
by the Transaction Documents. The Purchaser shall have no obligationwith respect to any fees or with respect to any claims made by or
on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated
by the Transaction Documents.
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(ll) Environmental
Laws. The Company and its Subsidiaries, to the best of the Company’s knowledge, (i) are
in compliance with all federal, state, local and foreign laws relating to pollution or protection of human health or the environment
(including ambient air, surface water, groundwater, land surface or subsurface strata), including laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous
Materials”) into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes,
decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations,
issued, entered, promulgated or approved thereunder (“Environmental Laws”);
(ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective
businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or approval where in each clause (i),
(ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
(mm) Seniority.
As of the Closing Date, no Indebtedness or other claim against the Company is senior to or pari passu with the Note in right of payment,
whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness secured by purchase money
security interests (which is senior only as to underlying assets covered thereby) and capital lease obligations (which is senior only
as to the property covered thereby).
(nn) Accounts
Receivable. All accounts receivable of the Company and its Subsidiaries that are reflected on the Company’s balance sheet or
interim balance sheet or on the accounting records of the Company and its Subsidiaries as of the Closing Date (collectively, the “Accounts
Receivable”) represent or will represent valid obligations arising from sales actually made or services actually performed
in the ordinary course of business. Unless paid prior to the Closing Date, the Accounts Receivable are or will be as of the Closing Date
current and collectible net of the respective reserves shown on the balance sheet or interim balance sheet or on the accounting records
of the Company and its Subsidiaries as of the Closing Date (which reserves are adequate and calculated consistent with past practice
and, in the case of the reserve as of the Closing Date , will not represent a greater percentage of the Accounts Receivable as of the
Closing Date than the reserve reflected in the interim balance sheet represented of the Accounts Receivable reflected therein and will
not represent a material adverse change in the composition of such Accounts Receivable in terms of aging). Subject to such reserves,
each of the Accounts Receivable either has been or will be collected in full without any set-off, within ninety days after the day on
which it must becomes due and payable. There is no contest, claim, or right of set-off, other than returns in the ordinary course of
business, under any agreement and/or contract with any obligor of an Accounts Receivable relating to the amount or validity of such Accounts
Receivable. Schedule 3.1(nn) contains a complete and accurate list of all Accounts Receivable as of the date of the interim balance
sheet, which list sets forth the aging of such Accounts Receivable.
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(oo) Inventory.
All inventory of the Company and the Subsidiaries, whether or not reflected in the balance sheet or interim balance sheet, consists of
a quality and quantity usable and salable in the ordinary course of business, except for obsolete items and items of below standard quality,
all of which have been written off or written down to net realizable value in the balance sheet or interim balance sheet or on the accounting
records of the Company and the Subsidiaries as of the Closing Date, as the case may be. All inventories not written off have been priced
at the lower of cost or market on the last in, first out basis. The quantities of each item of inventory (whether raw materials, work-in-process,
or finished goods) are not excessive, but are reasonable in the present circumstances of the Company and the Subsidiaries.
(pp) Manipulation
of Price. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid
any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(qq)
DTC Eligible. The Common Stock is DTC eligible and DTC has not placed a “freeze” or a “chill” on the Common
Stock and the Company has no reason to believe that DTC has any intention to make the Common Stock not DTC eligible, or place a “freeze”
or “chill” on the Common Stock.
(rr) No
Delisting from Trading Market. The Common Stock is eligible for quotation on the Principal Market and, except as disclosed in the
SEC Reports, the Company has no reason to believe that the Principal Market has any intention of delisting the Common Stock from the
Principal Market.
(ss) Listing
and Maintenance Requirements. Except as set forth on Schedule 3.1(ss) and in the SEC Reports, the Company has not, in the 12 months
preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Common Stock is eligible
for quotation on the Principal Market and the Company has no reason to believe that the Principal Market has any intention of delisting
or no longer quoting the Common Stock from the Principal Market. The issuance and sale of the Securities hereunder does not contravene
the rules and regulations of the Trading Market.
(tt) Acknowledgment
Regarding the Purchaser’s Purchase of Securities. The Company acknowledges and agrees that the Purchaser is acting solely in
the capacity of an arm’s length purchaser with respect to the other Transaction Documents and the transactions contemplated hereby
and thereby and that the Purchaser is not (i) an officer or director of the Company, (ii) an Affiliate of the Company or (iii) to the
knowledge of the Company, a “beneficial owner” of more than 10% of the shares of Common Stock (as defined for purposes of
Rule 13d-3 of the Exchange Act). The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby,
and any advice given by the Purchaser or any of its representatives or agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to the Purchaser’s purchase of the Securities. The Company further represents
to the Purchaser that the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation
by the Company and its representatives.
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3.2 Representation
and Warranties of the Purchaser. Each Purchaser, severally and not jointly, hereby represents and warrants as of the date hereof
and as of the Closing Date to the Company as follows:
(a) Organization;
Authority. The Purchaser is either an individual or an entity duly incorporated or formed,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate,
partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by
the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction
Documents and performance by the Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by
all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of the Purchaser. Each
Transaction Document to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
(b)
Own Account. The Purchaser understands that the Securities are “restricted securities”
and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities
Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute
or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation
and warranty not limiting the Purchaser’s right to sell the Securities pursuant to an effective registration statement or otherwise
in compliance with applicable federal and state securities laws). The Purchaser is acquiring the Securities hereunder in the ordinary
course of its business.
(c) Purchaser
Status. At the time the Purchaser was offered the Securities, it was, and as of the date hereof
it is an “accredited investor” as defined in Rule 501(a) under the Securities Act.
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(d) Experience
of Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective
investment in the Securities, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(e)
General Solicitation. The Purchaser is not, to the Purchaser’s knowledge, purchasing
the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general
advertisement.
(f) Access
to Information. The Purchaser acknowledges that it has had the opportunity to review the Transaction
Documents (including all exhibits and schedules thereto) and has been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the
Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition,
results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the investment.
(g) Certain
Transactions and Confidentiality. Other than to other Persons party to this Agreement or to the Purchaser’s representatives,
including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, the Purchaser
has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms
of this transaction).
The
Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s
right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement
or the consummation of the transaction contemplated hereby.
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ARTICLE
4
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a) The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of the Purchaser or in connection
with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the
Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and
shall have the rights and obligations of the Purchaser under this Agreement.
(b) The
Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following
form:
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE/EXCERCISABLE HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION/EXERCISE
OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY
SUCH SECURITIES.
The
Company acknowledges and agrees that the Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor”
as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and, if required under
the terms of such arrangement, the Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge
or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor
shall be required in connection therewith. Further, no notice shall be required of such pledge. At the Purchaser’s expense, the
Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in
connection with a pledge or transfer of the Securities, including, if the Securities are then registered for resale on a registration
statement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling stockholders thereunder.
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4.2 Furnishing
of Information. As long as the Purchaser
owns Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period)
all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. As long as the
Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish
to the Purchaser and make publicly available in accordance with Rule 144(c) such information as is required for the Purchaser to sell
the Securities, including without limitation, under Rule 144. The Company further covenants that it will take such further action as
any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities
without registration under the Securities Act, including without limitation, within the requirements of the exemption provided by Rule
144.
4.3 Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the Securities
for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing
of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.
4.4 Securities
Laws Disclosure; Publicity. The Company shall (a) issue a press release disclosing the material terms of the transactions contemplated
hereby and (b) file a Current Report on Form 8-K, including the Transaction Documents as exhibits thereto, with the Commission within
the time required by the Exchange Act (“Form 8-K”). From and after the filing of the Form 8-K, the Company represents
to the Purchasers that the Company shall have publicly disclosed all material, non-public information delivered to any of the Purchasers
by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the
transactions contemplated by the Transaction Documents. In addition, effective upon the filing of the Form 8-K, the Company acknowledges
and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company,
any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates on the one hand, and any of the
Purchasers or any of their Affiliates on the other hand, shall terminate. The Company shall not publicly disclose the name of any Purchaser
in any press release, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market,
without the prior written consent of such Purchaser, except: (a) as required by federal securities law or the Company’s reporting
requirements under the Exchange Act and (b) to the extent such disclosure is required by law or Trading Market regulations, in which
case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).
4.5 Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company,
any other Person, that the Purchaser is an “Acquiring Person” under any
control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover
plan or arrangement in effect or hereafter adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents.
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4.6 Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated
by the Transaction Documents, which shall be disclosed pursuant to Section 4.4, the Company covenants and agrees that neither it, nor
any other Person acting on its behalf will provide the Purchaser or its agents or counsel with any information that constitutes, or the
Company reasonably believes constitutes, material non-public information, unless prior thereto
the Purchaser shall have consented to the receipt of such information and agreed with the Company to keep such information confidential.
The Company understands and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in securities
of the Company. To the extent that the Company delivers any material, non-public information
to the Purchaser without the Purchaser’s consent, the Company hereby covenants and agrees that the Purchaser shall not have any
duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or
Affiliates, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates
not to trade on the basis of, such material, non-public information, provided that the Purchaser
shall remain subject to applicable law. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains,
material, non-public information regarding the Company or any Subsidiaries, the Company
shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K or if not subject to the reporting
requirements under the Commission, file a press release. The Company understands and confirms that
the Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
4.7 Use
of Proceeds. Except as set forth on Schedule 4.7 attached
hereto, the Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes and shall not use
such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary
course of the Company’s business and prior practices), (b) for the redemption of any Common Stock or Common Stock Equivalents,
(c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations.
4.8 Certain
Transactions and Confidentiality. The Purchaser covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.4,
such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Disclosure
Schedules. Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly
acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting
transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly
announced, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance
with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced,
(iii) the Purchaser has not been asked by the Company to agree, nor has the Purchaser
agreed, to desist from purchasing or selling Securities which have been issued under the terms of this Agreement, the Note or any other
Transaction Document, or “derivative” securities based on securities issued by the Company or to hold the Securities for
any specified term, (iv) the Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party
in any “derivative” transaction, (v) the Purchaser may engage in hedging activities at various times during the period that
the Securities are outstanding, and (vi) no Purchaser shall have any duty of confidentiality or
duty not to trade in the securities of the Company to the Company or its Subsidiaries after the issuance of the initial press release.
Except as contemplated above, Company acknowledges that such aforementioned hedging activities do not constitute a breach of any
of the Transaction Documents.
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4.9 Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities
with the Commission as required under Regulation D, and with the applicable securities regulators in the states in which the Securities
were sold, and to provide copies thereof, promptly upon request of the Purchaser. The Company shall take such further action as the Company
shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchaser
at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence
of such actions promptly upon request of the Purchaser.
4.10 Preservation
of Corporate Existence. So long as the Note remains outstanding, the Company shall preserve and maintain its corporate existence,
rights, privileges and franchises in the jurisdiction of its incorporation, and qualify and remain qualified, as a foreign corporation
in each jurisdiction in which such qualification is necessary in view of its business or operations and where the failure to qualify
or remain qualified would reasonably be expected to have a Material Adverse Effect.
4.11 Subsequent
Equity Sales. From the date hereof until such time as the Purchaser no longer holds
the Note, the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of
its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate Transaction.
“Variable Rate Transaction” means a transaction which is not Permitted Indebtedness and in which the Company (i) issues
or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional
shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies
with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity
securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial
issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the
business of the Company or the market for the Common Stock or (ii) enters into, or effects a transaction under, any agreement, including,
but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price. The foregoing restrictions
shall not include any agreement for an at-the-market offering. The Purchaser shall be entitled to obtain injunctive relief against the
Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
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4.12 Post-Closing
Actions. The Company shall, and shall cause each of its relevant Subsidiaries to, execute and deliver the documents and complete
the tasks set forth in this Section 4.12 as soon as reasonably practicable and in each case no later than the time limit specified in
this Section 4.12 or such longer time as the Purchaser may agree in its sole discretion:
(a) The
Company and each Subsidiary shall promptly deliver to Purchaser any documents reasonably requested by the Purchaser to give effect to
the pledge of the membership interests of the Company’s wholly-owned subsidiary in accordance with the terms of Section 8(j) of
the Note.
ARTICLE
5
MISCELLANEOUS
5.1 Fees
and Expenses. Except as expressly set forth below and in the Transaction Documents to the contrary, each party shall pay the reasonable,
documented fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer
Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company
and any exercise notice delivered by the Purchaser), stamp taxes and other taxes and duties
levied in connection with the delivery of any Securities to the Purchaser.
5.2 Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.3 Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile
or email attachment at the facsimile number or email address as set forth on the signature pages attached hereto at or prior to 5:30
p.m. (New York City time) on a Business Day, (b) the next Business Day after the date of transmission, if such notice or communication
is delivered via facsimile or email attachment at the facsimile number or email address as set forth on the signature pages attached
hereto on a day that is not a Business Day or later than 5:30 p.m. (New York City time) on any Business Day, (c) the second (2nd)
Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the
signature pages attached hereto.
5.4 Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in
the case of an amendment, by the Company and the Purchaser or, in the case of a waiver, by the party against whom enforcement of any
such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise
of any such right. Any amendment effected in accordance with accordance with this Section 5.4 shall be binding upon the Purchaser and
holder of Securities and the Company.
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5.5 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser then
holding the outstanding Note (other than by merger). Purchaser may assign any or all of its rights under this Agreement to any Person
to whom Purchaser assigns or transfers any Securities in compliance with the Transaction Documents, provided that such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the
“Purchaser,” and provided further that (i) such transferee is an “accredited investor” within the meaning of
Rule 501 under the Securities Act and (ii) such transferee is not a direct competitor of the Company or any Subsidiary.
5.6 No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
5.7 Governing
Law; Exclusive Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of the Transaction
Documents shall be exclusively governed by and construed and enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against
a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of
any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or Proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding is improper or is an inconvenient
venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such Action or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law. If any party shall commence an Action or Proceeding to enforce any provisions of the Transaction
Documents, then, in addition to the obligations of the Company elsewhere in this Agreement, the prevailing party in such Action or Proceeding
shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Action or Proceeding.
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5.8 Survival.
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities at Closing.
5.9 Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that
the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery
of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original
thereof.
5.10 Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force
and effect and shall in no way be affected, impaired, or invalidated, as long as the essential terms and conditions of the Note for each
party remain valid, binding, and enforceable. The parties shall use their commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction.
5.11 Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting
any similar provisions of) any of the other Transaction Documents, whenever the Purchaser exercises a right, election, demand or option
under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then
the Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice,
demand or election in whole or in part without prejudice to its future actions and rights.
5.12 Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in
the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement
Securities.
5.13 Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchaser
and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may
not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and
hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that a remedy at law
would be adequate.
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5.14 Payment
Set Aside. To the extent that the Company makes a payment or payments to the Purchaser pursuant
to any Transaction Document or the Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds
of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any
other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
5.15 Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter
in force, in connection with any Action or Proceeding that may be brought by the Purchaser in order to enforce any right or remedy under
any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction Document, it is expressly agreed
and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest shall not
exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with
any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum
Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased
or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward, unless such
application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by
the Company to the Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by the
Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess
to be at the Purchaser’s election.
5.16 Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts
owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated
damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.
5.17 Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
5.18 Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any amendments thereto.
5.19 WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND
EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature
Pages Follow)
-31-
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
DNA X, INC.
Address
for Notice:
4445
Eastgate Mall, Suite 200
San
Diego, CA 92121
Attn:
Mike Mulica
By:
/s/ Mike
Mulica
Email:
Name:
Mike
Mulica
Title:
CEO
With
a copy to (which shall not constitute notice):
Goodwin
Procter LLP
100
Northern Avenue
Boston,
Massachusetts 02210
Attention:
John Egan and Justin Anslow
Email:
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
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PURCHASER
SIGNATURE PAGES TO SONM SECURITIES PURCHASE AGREEMENT
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.
Name
of Purchaser: DNA Holdings Venture, Inc.
Signature
of Authorized Signatory of Purchaser: /s/ Scott Walker______________________
Name
of Authorized Signatory: Scott Walker
Title
of Authorized Signatory: Chairman
Address of Authorized Signatory:
Facsimile
Number of Authorized Signatory: ______________________________________
Address
for Notice to Purchaser: 174 De Diego Ave, Suan Juan, PR 00927 United States of America
Address
for Delivery of Securities to Purchaser (if not same as address for notice):
EIN
Number: ______________
-33-
EXHIBIT
A
Form
of Note
[Filed
Separately]
-34-
Schedule
1
Subscription
Amount; Securities Purchased
Name of
Purchaser
Cash
Subscription
Amount
Note
Subscription
Amount
Aggregate Principal
Amount of Notes
being Purchased
DNA Holdings Venture, Inc.
$ 1,800,000
$ 1,252,787.68
$ 3,052,787.68
-35-
EX-10.2
EX-10.2
Filename: ex10-2.htm · Sequence: 3
Exhibit
10.2
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE/EXCERCISABLE HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION/EXERCISE
OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY
SUCH SECURITIES.
Original
Issue Date: May 26, 2026
Original
Principal Amount: $3,052,787.68
Purchase
Price: $3,052,787.68
CONVERTIBLE
PROMISSORY NOTE
DUE
DECEMBER 31, 2026
THIS
CONVERTIBLE PROMISSORY NOTE is a duly authorized and validly issued debt obligation of DNA X, Inc. (f/k/a Sonim Technologies, Inc.),
a Delaware corporation (the “Company” or the “Borrower”), having its principal place of business
at 4445 Eastgate Mall, Suite 200, San Diego, CA 92121, designated as its Convertible Promissory Note due December 31, 2026 (the “Note”).
FOR
VALUE RECEIVED, the Company promises to pay to DNA Venture Holdings, Inc. or its registered assigns (the “Holder”),
or shall have paid pursuant to the terms hereunder, the principal sum of $3,052,787.68 and any other sums due hereunder on December
31, 2026 (the “Maturity Date”), or such earlier date as this Note is required or permitted to be repaid as provided
hereunder, and to pay interest to the Holder on the then outstanding principal amount of this Note in accordance with the provisions
hereof. This Note is subject to the following additional provisions:
Section
1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not
otherwise defined herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following
meanings:
“Alternate
Conversion Price” means 80% of the Closing Price of the Common Stock on the Principal Market on the date of conversion.
-1-
“Bankruptcy
Event” means any of the following events: (a) the Company commences a case or other proceeding under any bankruptcy, reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating
to the Company, (b) there is commenced against the Company any such case or proceeding that is not dismissed within 60 days after commencement,
(c) the Company is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered,
(d) the Company suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged
or stayed within 60 calendar days after such appointment, (e) the Company makes a general assignment for the benefit of creditors, (f)
the Company calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g)
the Company, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or
takes any corporate or other action for the purpose of effecting any of the foregoing.
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day
on which the New York Federal Reserve Bank is closed.
“Buy-In”
shall have the meaning set forth in Section 5(b)(v).
“Change
of Control Transaction” means the occurrence after the date hereof of any of the following: (a) the Company, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (b) the Company or
any Subsidiary, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all
or substantially all of its assets in one or a series of related transactions (other than transactions previously announced on or prior
to the Original Issue Date), (c) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another
Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities,
cash or property and has been accepted by the holders of greater than 50% of the outstanding Common Stock or greater than 50% of the
voting power of the common equity of the Company, (d) the Company, directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or property, (e) the Company, directly or indirectly, in
one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other
Person or group acquires greater than 50% of the outstanding shares of Common Stock or greater than 50% of the voting power of the common
equity of the Company, (f) a replacement at one time or within a three year period of more than one-half of the members of the Board
of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue
Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors
was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (g) the execution by the
Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses
(a) through (f) above.
-2-
“Conversion
Date” shall have the meaning set forth in Section 5(a).
“Conversion
Price” shall have the meaning set forth in Section 5(b).
“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the terms
hereof.
“Distribution”
shall have the meaning set forth in Section 6(c).
“Event
of Default” shall have the meaning set forth in Section 7(a).
“Late
Fees” shall have the meaning set forth in Section 2(d).
“Mandatory
Default Amount” means the payment of 100% of the outstanding principal amount of this Note and accrued and unpaid interest
hereon, in addition to the payment in cash of all other amounts, costs, expenses and liquidated damages due in respect of this Note.
“New
York Courts” shall have the meaning set forth in Section 9(d).
“Note
Register” shall have the meaning set forth in Section 2(c).
“Original
Issue Date” means the date of the first issuance of the Note, as set forth on the first page hereof, regardless of any transfers
of any Note and regardless of the number of instruments which may be issued to evidence such Note.
“Purchase
Agreement” means the Securities Purchase Agreement, dated as of May 20, 2026 among the Company and the original Holder, as
amended, modified or supplemented from time to time in accordance with its terms.
“Required
Minimum” means, as of any date, the number of shares of Common Stock that is two times the number of shares of Common Stock
may be converted into at such time. The initial reserve shall be 300,000 shares of Common Stock.
“Share
Delivery Date” shall have the meaning set forth in Section 5(b)(ii).
“Stockholder
Approval” means the approval of the conversion of this Note in full by the stockholders of the Company, in accordance with
the rules of the Principal Market.
Section
2. Interest and Redemption.
a)
Payment of Interest in Cash. The Company shall pay interest to the Holder on the aggregate outstanding principal amount of this
Note at the rate of ten percent (10.0%) per annum, payable on the Redemption Date or the Maturity Date (the “Interest Payment
Date”) (if any Interest Payment Date is not a Business Day, then the applicable payment shall be due on the next succeeding
Business Day), in cash. Upon the occurrence of an Event of Default, the Company shall pay interest to the Holder on the aggregate outstanding
principal amount of this Note at the rate of twenty percent (20%) per annum.
-3-
b)
Interest Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods,
and shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all accrued
and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Interest hereunder will be paid
to the Person in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note (the
“Note Register”).
c)
All overdue accrued and unpaid interest to be paid hereunder shall incur a late fee at an interest rate equal to the lesser of 20% per
annum (the “Late Fees”) which shall accrue daily from the date such interest is due hereunder through and including
the date of actual payment in full.
Section
3. Registration of Transfers and Exchanges.
a)
Different Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations,
as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.
b)
Investment Representations. This Note has been issued subject to certain investment representations of the original Holder set
forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal
and state securities laws and regulations.
c)
Reliance on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the
Company may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such agent
shall be affected by notice to the contrary. The Company shall update the Note Register to reflect permitted transferees and assignees
of the Note.
Section
4. Optional Conversion upon a Change of Control. At any time after the Original Issue Date, upon the occurrence of a Change of Control
Transaction and subject to Stockholder Approval, if required, this Note shall be convertible, in whole or in part, into shares of Common
Stock (or pre-funded warrants in lieu thereof) at the option of the Holder, at a price per share of Common Stock equal to the lower of
the closing price of the Common Stock on (i) the Original Issue Date or (ii) the date of consummation of the Change of Control Transaction.
-4-
Section
5. Conversion. At any time after receipt of Stockholder Approval, this Note shall be convertible, in whole or in part, into
shares of Common Stock at the option of the Holder, at any time and from time to time. The Holder shall effect conversions by delivering
to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”),
specifying therein the principal amount of this Note to be converted and the date on which such conversion shall be effected (such date,
the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be
the date that such Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder, the Holder shall not be required
to physically surrender this Note to the Company unless the entire principal amount of this Note, plus all accrued and unpaid interest
thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note
in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount(s) converted
and the date of such conversion(s). The Company may deliver an objection to any Notice of Conversion within one Business Day of delivery
of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the Company shall be controlling and determinative
in the absence of manifest error. The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason of
the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this
Note may be less than the amount stated on the face hereof.
a)
Conversion Price. The conversion price in effect on any Conversion Date shall be equal to $6.00, subject to adjustment herein
(the “Conversion Price”). Notwithstanding the foregoing, at any time during the continuance of any Event of Default,
the Conversion Price in effect shall be equal to the Alternate Conversion Price. If at any time the Conversion Price as determined hereunder
for any conversion would be less than the par value of the Common Stock, then at the sole discretion of the Holder, the Conversion Price
hereunder may equal such par value for such conversion and the Conversion Amount for such conversion may be increased to include Additional
Principal, where “Additional Principal” means such additional amount to be added to the Principal Amount to the extent necessary
to cause the number of conversion shares issuable upon such conversion to equal the same number of conversion shares as would have been
issued had the Conversion Price not been adjusted by the Holder to the par value price. In the event the Borrower has a DTC “Chill”
on its shares, the Holder may convert the Note at the Alternate Conversion Price while that “Chill” is in effect. All such
determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction
that proportionately decreases or increases the Common Stock during such measuring period.
b)
Mechanics of Conversion.
i.
Conversion Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion hereunder
shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note to be converted by (y) the
Conversion Price.
ii.
Delivery of Certificate Upon Conversion. Not later than one Trading Day after each Conversion Date (the “Share Delivery
Date”), the Company shall deliver, or cause to be delivered, to the Holder (A) a certificate or certificates representing the
Conversion Shares representing the number of Conversion Shares being acquired upon the conversion of this Note and (B) a bank check in
the amount of accrued and unpaid interest (if the Purchaser has elected or is required to pay accrued interest in cash).
-5-
iii.
Failure to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not delivered
to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the
Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event the Company
shall promptly return to the Holder any original Note delivered to the Company and the Holder shall promptly return to the Company the
Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.
iv.
Obligation Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon
conversion of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by
the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder
or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder
in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a
waiver by the Company of any such action the Company may have against the Holder. If the Company fails for any reason to deliver to the
Holder such certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall pay to the Holder,
in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted $5 per Trading Day (increasing
to $10 per Trading Day on the fifth (5th) Trading Day after such liquidated damages begin to accrue) for each Trading Day
after such Share Delivery Date until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall limit a
Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 7 hereof for the Company’s failure
to deliver Conversion Shares within the period specified herein and the Holder shall have the right to pursue all remedies available
to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise
of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable
law.
-6-
v.
Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to
the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date,
and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise),
or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of
the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”),
then the Company shall (A) pay in cash to the Holder (in addition to any other remedies available to or elected by the Holder) the amount,
if any, by which (x) the Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased
exceeds (y) the product of (1) the aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion
at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including
any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal
to the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder
the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements under
Section 4(c)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect
to an attempted conversion of this Note with respect to which the actual sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the
Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit
a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.
vi.
Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out
of its authorized and unissued shares of Common Stock a number of shares of Common Stock at least equal to 100% of the Required Minimum
(to be adjusted monthly) for the sole purpose of issuance upon conversion of this Note and payment of interest on this Note, each as
herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the
other holders of the Note), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions
set forth in the Purchase Agreement) be issuable upon the conversion of the then outstanding principal amount of this Note and payment
of interest hereunder. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized,
validly issued, fully paid and nonassessable.
vii.
Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note.
As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its
election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion
Price or round up to the next whole share.
-7-
viii.
Transfer Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made
without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery
of such certificates, provided that, the Company shall not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note so
converted and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting
the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion.
Section
5. Certain Adjustments.
a)
Stock Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which,
for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, or payment of interest
on, the Note), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of
a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification
of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately
before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
b)
Reserved.
c)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time the Company
grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to
the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if
the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which
the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
-8-
d)
Pro Rata Distributions. During such time as this Note is outstanding, if the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Note immediately before the date of which a record is taken for such Distribution, or, if no such record
is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.
e)
Calculations. All calculations under this Section shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be. For purposes of this Section, the number of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.
f)
Notice to the Holder.
i.
Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section, the Company
shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment.
ii.
Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form)
on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities,
cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion
of this Note, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Note Register, at least twenty
(20) calendar days prior to the applicable record or effective date hereinafter specified (or such shorter period as is reasonably possible,
but not less than ten (10) calendar days, if twenty (20) calendar days is not reasonably possible), a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share
exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record
shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in
the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that
any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain
entitled to convert this Note during the 20-day period commencing on the date of such notice through the effective date of the event
triggering such notice except as may otherwise be expressly set forth herein.
-9-
Section
7. Events of Default.
a)
“Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and
whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of
any court, or any order, rule or regulation of any administrative or governmental body):
i.
any default in the payment of (A) the principal amount of the Note or (B) interest, liquidated damages and other amounts owing to the
Holder on the Note, as and when the same shall become due and payable (whether on a Maturity Date or by acceleration or otherwise) which
default, solely in the case of an interest payment or other default under clause (B) above, is not cured within five (5) Trading days;
ii.
the Company shall fail to observe or perform any other covenant or agreement contained in the Note;
iii.
a breach, default, event of default or the failure observe or perform any covenant or agreement (subject to any grace or cure period
provided in the applicable agreement, document or instrument) shall occur under (A) any of the Transaction Documents or (B) any other
material agreement, lease, document or instrument to which the Company or any Subsidiary is obligated (and not covered by clause (v)
below);
iv.
any Person shall breach any agreement delivered to the initial Holder pursuant to Section 2.2 of the Purchase Agreement;
v.
any representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto or
any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or incorrect
in any material respect (or, to the extent such representation or warranty is qualified by materiality or Material Adverse Effect, in
any respect) as of the date when made or deemed made;
vi.
the Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any
indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater
than $100,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise become due and payable;
vii.
the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy
Event;
viii.
the Company shall be a party to any Change of Control Transaction or shall agree to sell or dispose of all or in excess of fifty percent
(50%) of its assets in one transaction or a series of related transactions (whether or not such sale would constitute a Change of Control
Transaction);
ix.
any monetary judgment, writ or similar final process shall be entered or filed against the Company, any Subsidiary or any of their respective
property or other assets for more than $100,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or
unstayed for a period of forty-five (45) calendar days;
b)
Remedies Upon Event of Default. If any Event of Default occurs, at the Holder’s election (i) the outstanding principal amount
of this Note, plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration,
shall become immediately due and payable in cash pursuant to clause (ii) of the definition of Mandatory Default Amount, or (ii) the outstanding
principal amount of this Note, and, if elected by the Holder, all accrued and unpaid interest hereon, shall be paid to the Holder in
cash. Commencing on the occurrence of any Event of Default and for as long an Event of Default is not cured, the interest rate on this
Note as set forth in Section 2 above shall accrue at a rate equal to 20% per annum. Upon the payment in full of the Mandatory
Default Amount, the Holder shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration
described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any
kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder
and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior
to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full
payment pursuant to this Section 6(b). No such rescission or annulment shall affect any subsequent Event of Default or impair
any right consequent thereon. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent
thereon. The Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.
-10-
Section
7. Negative Covenants. As long as any portion of this Note remains outstanding, unless the Holder shall have otherwise given
prior written consent, the Company shall not, and shall not permit any of its subsidiaries (whether or not a Subsidiary on the Original
Issue Date) to, directly or indirectly:
a)
except for Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money
of any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits therefrom;
b)
except for Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of
its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;
c)
amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that adversely
affects any rights of the Holder;
d)
except for Permitted Indebtedness, repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number
of shares of its Common Stock or Common Stock Equivalents;
e)
repay, repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than the Liabilities, and other than regularly
scheduled principal and interest payments of Permitted Indebtedness as such terms are in effect as of the Original Issue Date, provided
that such payments shall not be permitted if, at such time, or after giving effect to such payment, any Event of Default exist or occur;
f)
pay cash dividends or distributions on any equity securities of the Company; or
g)
enter into any agreement with respect to any of the foregoing.
Section
8. Miscellaneous.
a)
Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder shall be in accordance
with the terms of the Purchase Agreement.
b)
Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this
Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company.
This Note ranks pari passu with all other Notes now or hereafter issued under the terms set forth herein.
-11-
c)
Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in
exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of
such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.
d)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the Purchase Agreement.
e)
Waiver. Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed
to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company
or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion.
Any waiver by the Company or the Holder must be in writing.
f)
Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect,
and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and
circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing
usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under
applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall 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 or other law which would prohibit
or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to
any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution
of every such as though no such law has been enacted.
g)
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including
a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual
and consequential damages for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that
there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided
for herein with respect to payments, and the like (and the computation thereof) shall be the amounts to be received by the Holder and
shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for
any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder
shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach,
without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information
and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the
terms and conditions of this Note.
-12-
h)
Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
i)
Headings. The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed
to limit or affect any of the provisions hereof.
j)
Pledge and Security Interest.
i.
The Company hereby unconditionally and irrevocably pledges, grants and hypothecates to the Holder, and grants to the Holder a continuing
first priority security interest in, a first lien upon and a right of set-off against, all of its respective rights, titles and interests
of whatsoever kind and nature in (the “Security Interest”), and to secure the complete and timely payment, performance
and discharge in full, as the case may be, of all of the obligations pursuant to this Note, the following (collectively, the “Pledged
Collateral”): (i) the limited liability company membership interests owned by the Company in its wholly owned subsidiary, DNA
X, LLC, a Delaware limited liability company (the “Pledged Shares”), and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares;
and (ii) all proceeds of any and all of the foregoing Pledged Collateral, in whatever form (including, without limitation, proceeds that
constitute property of the types described above). The provisions of this Section are intended to secure the payment and performance
of all present and future obligations, covenants, duties and liabilities under this Note to the Holder now existing or hereafter arising,
including but not limited to, under or in connection with this Note, the Purchase Agreement and all agreements and documents executed
and delivered in connection therewith.
ii.
Company agrees that at any time and from time to time following the Original Issue Date, at its expense, shall promptly execute and deliver
all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Holder may reasonably
request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Holder to exercise
and enforce their rights and remedies hereunder with respect to any Pledged Collateral.
-13-
iii.
The Company agrees that it shall not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option
with respect to, any of the Pledged Collateral, or (ii) create or permit to exist any Lien upon or with respect to any of the Pledged
Collateral, except for the security interest granted pursuant to this Note.
iv.
Upon and after the occurrence of any Event of Default, the Holder may exercise in respect of the Pledged Collateral, in addition to other
rights and remedies provided for herein or otherwise available to the Holder, all the rights and remedies of a secured party on default
under the Uniform Commerical Code, and may also, without notice, sell the Pledged Collateral or any part thereof at public or private
sale, at any exchange, broker’s board or at any of the Agent’s offices or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Agent may deem commercially reasonable
v.
The Company hereby irrevocably appoints the Holder as the Company’s attorney-in-fact, with full authority in the place and stead
of the Company and in the name of the Company, from time to time in the Holder’s discretion, to take any action and to execute
any instrument which the Holder may deem necessary or advisable to accomplish the purposes of this Section, including the filing, in
its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Pledged Collateral
without the signature of the Company where permitted by law.
vi.
If the Company fails to perform any agreement contained in this Section, the Holder may itself perform, or cause performance of, this
Section, and the expenses of the Holder incurred in connection therewith shall be payable by the Company.
vii.
This Section shall create a continuing security interest in the Pledged Collateral and shall remain in full force and effect until the
indefeasible payment in full of this Note. Upon the indefeasible payment in full of all obligations under this Note, the security interest
granted hereby shall terminate and all rights to the Pledged Collateral shall revert to the Company.
(Signature
Pages Follow)
-14-
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.
DNA
X, INC.
By:
/s/
Mike Mulica
Name:
Mike
Mulica
Title:
Chief Executive Officer
Address:
4445
Eastgate Mall, Suite 200
San
Diego, CA 92121
Attn:
Address for delivery of Notices:
-15-
ANNEX
A - NOTICE OF CONVERSION
The
undersigned hereby elects to convert principal under the Convertible Promissory Note issued May __, 2026 of DNA X, Inc. (f/k/a Sonim
Technologies, Inc.), a Delaware corporation (the “Company”), into shares of common stock (the “Common Stock”),
of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith
such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for
any conversion, except for such transfer taxes, if any.
Conversion
Information
Date
to Effect Conversion: ____________________________________________________________
Outstanding
Principal: ________________________________________________________________
Outstanding
Interest: _________________________________________________________________
Principal
Amount of Note to be Converted: ________________________________________________
Interest
Amount of Note to be Converted: __________________________________________________
Conversion
Price Calculations:
Total
Shares of Common Stock to be Issued:
Outstanding
Principal After Conversion: ____________________________________
Outstanding
Interest After Conversion: __________________________________________
DWAC
Instructions
Physical
Delivery
Broker:
DTC#:
Issue
to:
Account:
Address:
Account
Name:
Entity Name:
Signatory
Name:
Title:
Signature:
-16-
EX-10.3
EX-10.3
Filename: ex10-3.htm · Sequence: 4
Exhibit
10.3
AMENDMENT
NO. 1 TO
MEMBERSHIP
INTEREST PURCHASE AGREEMENT
This
AMENDMENT NO. 1 TO MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Amendment”) is entered into as of May 26, 2026 (the
“Amendment Effective Date”), by and between DNA Holdings Venture, Inc., a Puerto Rico corporation (“Seller”),
and DNA X, Inc. (f/k/a Sonim Technologies, Inc.), a Delaware corporation (“Purchaser”). Capitalized terms used but
not defined herein shall have the meanings ascribed to them in the Agreement (as defined below).
RECITALS
WHEREAS,
Seller and Purchaser entered into that certain Membership Interest Purchase Agreement, dated as of December 15, 2025 (the “Agreement”),
pursuant to which Purchaser acquired from Seller all of Seller’s right, title and interest in and to 100% of the membership interests
of DNA X, LLC, a Delaware limited liability company (the “Company”), in exchange for 223,201 shares of common stock,
par value $0.001 per share, of Purchaser;
WHEREAS,
Section 7 of the Agreement grants to Seller a put option (the “Put Option”) to exchange all or any portion of the
shares of Purchaser’s common stock issued to Seller pursuant to the Agreement (the “Put Shares”) for 100% of
the equity securities of the Company held by Purchaser (the “Put Exchange Shares”) if, at any time prior to June 30,
2026 (the “Put Period”), the Company does not realize either (i) aggregate trading volume of $600,000,000 or (ii)
aggregate revenues of $1,000,000 per day;
WHEREAS,
concurrently with the execution and delivery of this Amendment, Purchaser and Seller are entering into that certain Securities Purchase
Agreement (the “SPA”) and the other Transaction Documents (as defined therein) pursuant to which Purchaser is issuing
to Seller a convertible promissory note in the principal amount of $3,000,000;
WHEREAS,
as a condition to and as an inducement for Purchaser’s willingness to enter into the SPA and the other Transaction Documents, the
parties desire to irrevocably terminate the Put Option and amend the Agreement as set forth herein; and
WHEREAS,
pursuant to Section 17 of the Agreement, any term of the Agreement may be amended with the written consent of Seller and Purchaser.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth in this Amendment, the consummation of the transactions
contemplated by the SPA and the other Transaction Documents, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound, the parties hereby agree as follows:
1.
Put Option. Section 7 of the Agreement (entitled “Put Option”) is
hereby deleted in its entirety and replaced with the following text:
“[Intentionally
Omitted.]”
2. Termination
of Put Option. Seller hereby irrevocably (a) waives, terminates and extinguishes any and all rights, claims and interests Seller
may have had under Section 7 of the Agreement as in effect immediately prior to the effectiveness of this Amendment, including, without
limitation, any right to exercise the Put Option, deliver a Put Notice, or exchange Put Shares for Put Exchange Shares (each as defined
in Section 7 as in effect prior to the effectiveness of this Amendment), in each case whether or not the conditions to the exercise of
the Put Option would otherwise be satisfied, and (b) acknowledges and agrees that neither Purchaser nor the Company shall have any obligation
or liability to Seller of any nature arising out of or relating to the Put Option.
3.
Representations and Warranties. Each party represents and warrants to the other party as of the Amendment Effective Date that:
(a) it has full power and authority (including full corporate or other entity power and authority) to execute and deliver this Amendment
and to perform its obligations hereunder; (b) all corporate or other entity action required to authorize the execution, delivery and
performance of this Amendment has been duly taken; (c) this Amendment has been duly authorized, executed and delivered by such party
and constitutes the legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms, except
as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement
of creditors’ rights generally and by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies; and (d) the execution, delivery and performance of this Amendment do not conflict with or violate any agreement to which such
party is a party or by which it is bound.
4. Effect
of Amendment; Ratification. Except as expressly modified by this Amendment, all terms and conditions of the Agreement shall remain
unchanged and in full force and effect and are hereby ratified and confirmed in their entirety. This Amendment shall be deemed a part
of, and shall be construed in accordance with, the Agreement. In the event of any conflict or inconsistency between the terms of this
Amendment and the terms of the Agreement, the terms of this Amendment shall govern and control. References in the Agreement to “this
Agreement,” “hereof,” “herein,” “hereunder” and words of similar import shall, from and after
the Amendment Effective Date, be deemed to refer to the Agreement as amended by this Amendment.
5. Governing
Law. This Amendment shall be governed by and interpreted and enforced in accordance with the laws of the State of Delaware (including
in respect of the statute of limitations or other limitations period applicable to any claim, controversy or dispute), without giving
effect to its conflicts of law principles.
6. Counterparts.
This Amendment may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute
one and the same instrument. Counterparts may be delivered via electronic mail (including in PDF or any electronic signature complying
with the U.S. federal ESIGN Act of 2000) or other transmission method and any counterpart so delivered shall be deemed to have been duly
and validly delivered and be valid and effective for all purposes.
7. Entire
Agreement. This Amendment, together with the Agreement, constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or
written, between the parties with respect to the subject matter hereof. No amendment, modification or waiver of any provision of this
Amendment shall be effective unless made in writing and signed by each of the parties hereto.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 to Membership Interest Purchase Agreement as of the date first
written above.
SELLER:
PURCHASER:
DNA
Holdings Venture, Inc.,
DNA
X, Inc. (f/k/a Sonim Technologies, Inc.),
a
Puerto Rico corporation
a
Delaware corporation
By:
/s/
Scott Walker
By:
/s/
Michael Mulica
Name:
Scott
Walker
Name:
Michael
Mulica
Title:
Chairman
Title:
Chief
Executive Officer
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