Exhibit
1.1
UNDERWRITING
AGREEMENT
between
DIGITAL
BRANDS GROUP, INC.
and
KINGSWOOD
CAPITAL MARKETS,
division of Benchmark Investments, Inc.,
as
Representative of the Several Underwriters
DIGITAL
BRANDS GROUP, INC.
UNDERWRITING
AGREEMENT
New
York, New York
May
13, 2021
Kingswood Capital Markets,
division
of Benchmark Investments, Inc.
as
Representative of the several Underwriters named on Schedule 1 attached hereto
17
Battery Place, Suite 625
New
York, New York 10004
Ladies
and Gentlemen:
The
undersigned, Digital Brands Group, Inc., a corporation formed under the laws of the State of Delaware (collectively with its subsidiaries
and affiliates, including, without limitation, all entities disclosed or described in the Registration Statement (as hereinafter
defined) as being subsidiaries, the “Company”), hereby confirms its agreement (this “Agreement”)
with Kingswood Capital Markets, division of Benchmark Investments, Inc. (hereinafter referred to as “you” (including
its correlatives) or the “Representative”), and with the other underwriters named on Schedule 1 hereto for which the Representative is acting as representative (the Representative and such other underwriters being collectively
called the “Underwriters” or, individually, an “Underwriter”) as follows:
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1.
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PURCHASE
AND SALE OF SHARES.
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1.1.1.
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Nature
and Purchase of Firm Securities.
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(i)
On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth,
the Company agrees to issue and sell to the several Underwriters, an aggregate of 2,409,639 authorized but unissued shares (the
“Firm Shares”) of common stock of the Company, par value $0.0001 per share (the “Common Stock”),
together with warrants to purchase an aggregate of 2,409,639 shares of Common Stock each at an exercise price of $4.57 (110% of
the public offering price per Firm Share in the Offering), in the form filed as an exhibit to the Registration Statement (as hereinafter
defined) (the “Firm Warrants,” and collectively with the Common Stock, the “Firm Securities”).
(ii)
Each Firm Share will be sold together with one Firm Warrant and will be immediately separable upon issuance. The Underwriters,
severally and not jointly, agree to purchase from the Company the number of Firm Shares and accompanying Firm Warrants set forth
opposite their respective names on Schedule 1 attached hereto and made a part hereof, at a purchase price of $3.82 per
Firm Share and accompanying Firm Warrant (92% of the public offering price for each Firm Share and accompanying Firm Warrant).
The Firm Securities are to be offered initially to the public at the offering price set forth on the cover page of the Prospectus
(as defined in Section 2.1.1 hereof).
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1.1.2.
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Payment
and Delivery of Securities.
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(i)
Delivery and payment for the Firm Securities shall be made at 10:00 a.m., Eastern time, on
the second (2nd) Business Day following the effective date (the “Effective Date”) of the Registration
Statement (as defined in Section 2.1.1 below) (or the third (3rd) Business Day following the Effective Date if the
Registration Statement is declared effective after 4:01 p.m., Eastern time) or at such earlier time as shall be agreed upon by
the Representative and the Company, at the offices of Nelson Mullins Riley & Scarborough LLP, 101 Constitution Avenue NW,
Suite 900, Washington, DC 20001 (“Representative Counsel”), or at such other place (or remotely by facsimile
or other electronic transmission) as shall be agreed upon by the Representative and the Company. The hour and date of delivery
and payment for the Firm Securities is called the “Closing Date.”
(ii)
Payment for the Firm Securities shall be made on the Closing Date by wire transfer in Federal (same day) funds, payable to the
order of the Company upon delivery of the certificates (in form and substance satisfactory to the Underwriters) representing the
Firm Securities (or through the facilities of the Depository Trust Company (“DTC”)) for the account of the
Underwriters. The Firm Securities shall be registered in such name or names and in such authorized denominations as the Representative
may request in writing at least one (1) Business Day prior to the Closing Date. The Company shall not be obligated to sell or
deliver the Firm Securities except upon tender of payment by the Representative for all of the Firm Securities. The term “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay-at-home,” “shelter-in-place,” “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental
authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New
York generally are open for use by customers on such day.
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1.2.
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Over-allotment
Option.
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1.2.1.
Option Securities. For the purposes of covering any over-allotments in connection with the distribution and sale of the
Firm Securities, the Company hereby grants to the Underwriters an option to purchase up to 361,445 additional shares of Common
Stock (the “Option Shares”) and accompanying warrants to purchase an aggregate of 361,445 shares of Common
Stock (the “Option Warrants,” and collectively with the Option Shares, the “Option Securities”),
representing fifteen percent (15%) of the Firm Shares and Firm Warrants sold in the offering, from the Company (the “Over-allotment
Option”). The purchase price to be paid per Option Share and accompanying Option Warrant shall be equal to the price
per Firm Share and accompanying Firm Warrant set forth in Section 1.1.1 hereof. The Firm Warrants and the Options Warrants are
hereinafter collectively referred to as the “Warrants.” The shares of Common Stock into which the Warrants
are exercisable are hereinafter referred to as the “Warrant Shares.” The Firm Securities and the Option Securities
are hereinafter collectively referred to as the “Primary Securities.” The Primary Securities and Warrant Shares
are hereinafter collectively referred to as the “Public Securities.” The offering and sale of the Primary Securities
is hereinafter referred to as the “Offering.”
1.2.2.
Exercise of Option. The Over-allotment Option granted pursuant to Section 1.2.1 hereof may be exercised by the Representative
as to all (at any time) or any part (from time to time) of the Option Securities within 45 days after the Effective Date. The
purchase price to be paid per Option Share and accompanying Option Warrants shall be equal to the Firm Share purchase price set
forth in Section 1.1.1(ii) hereof. The Underwriters shall not be under any obligation to purchase any Option Securities prior
to the exercise of the Over-allotment Option. The Over-allotment Option granted hereby may be exercised by the giving of oral
notice to the Company from the Representative, which must be confirmed in writing by overnight mail or facsimile or other electronic
transmission setting forth the number of Option Shares and accompanying Option Warrants to be purchased and the date and time
for delivery of and payment for the Option Securities (the “Option Closing Date”), which shall not be later
than one (1) Business Day after the date of the notice or such other time as shall be agreed upon by the Company and the Representative,
at the offices of Representative Counsel or at such other place (including remotely by facsimile or other electronic transmission)
as shall be agreed upon by the Company and the Representative. If such delivery and payment for the Option Securities does not
occur on the Closing Date, the Option Closing Date will be as set forth in the notice. Upon exercise of the Over-allotment Option
with respect to all or any portion of the Option Securities, subject to the terms and conditions set forth herein, (i) the Company
shall become obligated to sell to the Underwriters the number of Option Shares and accompanying Option Warrants specified in such
notice and (ii) each of the Underwriters, acting severally and not jointly, shall purchase that portion of the total number of
Option Shares and accompanying Option Warrants then being purchased as set forth in Schedule 1 opposite the name of such
Underwriter.
1.2.3.
Payment and Delivery. Payment for the Option Securities shall be made on the Option Closing Date by wire transfer in Federal
(same day) funds, payable to the order of the Company upon delivery to you of certificates (in form and substance satisfactory
to the Underwriters) representing the Option Shares and accompanying Option Warrants (or through the facilities of DTC) for the
account of the Underwriters. The Option Securities shall be registered in such name or names and in such authorized denominations
as the Representative may request in writing at least one (1) Business Day prior to the Option Closing Date. The Company
shall not be obligated to sell or deliver the Option Securities except upon tender of payment by the Representative for applicable
Option Securities.
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1.3.
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Representative’s
Warrants.
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1.3.1.
Purchase Warrants. The Company hereby agrees to issue and sell to the Representative (and/or its designees) on the Closing
Date a warrant (“Representative’s Warrants”) for the purchase of an aggregate of 120,482 shares of Common
Stock, representing 5.0% of the number of Firm Shares, for an aggregate purchase price of $100.00. The agreement(s) representing
the Representative’s Warrants, in the form attached hereto as Exhibit A (the “Representative’s Warrant
Agreement”), shall be exercisable, in whole or in part, commencing on a date which is six (6) months after the Effective
Date and expiring on the five-year anniversary of the Effective Date at an initial exercise price per share of Common Stock of
$5.19, which is equal to 125.0% of the initial public offering price of the Firm Shares. The Representative’s Warrant Agreement
and the shares of Common Stock issuable upon exercise thereof are hereinafter referred to together as the “Representative’s
Securities.” The Representative understands and agrees that there are significant restrictions pursuant to FINRA Rule
5110 against transferring the Representative’s Warrant Agreement and the underlying shares of Common Stock during the three
hundred sixty (360) days after the Effective Date and by its acceptance thereof shall agree that it will not sell, transfer, assign,
pledge or hypothecate the Representative’s Warrant Agreement, or any portion thereof, or be the subject of any hedging,
short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities for
a period of three hundred sixty (360) days following the Effective Date to anyone other than (i) an Underwriter or a selected
dealer in connection with the Offering, or (ii) a bona fide officer or partner of the Representative or of any such Underwriter
or selected dealer; and only if any such transferee agrees to the foregoing lock-up restrictions.
1.3.2.
Delivery. Delivery of the Representative’s Warrant Agreement shall be made on the Closing Date, and shall be issued
in the name or names and in such authorized denominations as the Representative may request.
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2.
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REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
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The
Company represents and warrants to the Underwriters as of the Applicable Time (as defined below), as of the Closing Date and as
of the Option Closing Date, if any, as follows:
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2.1.
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Filing
of Registration Statement.
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2.1.1.
Pursuant to the Securities Act. The Company has filed with the U.S. Securities and Exchange Commission (the “Commission”)
a registration statement, and an amendment or amendments thereto, on Form S-1 (File No. 333-255193), including any related prospectus
or prospectuses, for the registration of the Public Securities and the Representative’s Securities under the Securities
Act of 1933, as amended (the “Securities Act”).Except as the context may otherwise require, such registration
statement, as amended, on file with the Commission at the time the registration statement became effective (including the Preliminary
Prospectus included in the registration statement, financial statements, schedules, exhibits and all other documents filed as
a part thereof or incorporated therein and all information deemed to be a part thereof as of the Effective Date pursuant to paragraph
(b) of Rule 430A (the “Rule 430A Information”) of the rules and regulations of the Commission promulgated thereunder
(the “Securities Act Regulations”), is referred to herein as the “Registration Statement.”
If the Company files any registration statement pursuant to Rule 462(b) of the Securities Act Regulations, then after such filing,
the term “Registration Statement” shall include such registration statement filed pursuant to Rule 462(b).
The Registration Statement has been declared effective by the Commission on the date hereof.
Each
prospectus used prior to the effectiveness of the Registration Statement, and each prospectus that omitted the Rule 430A Information
that was used after such effectiveness and prior to the execution and delivery of this Agreement, is herein called a “Preliminary
Prospectus.” The Preliminary Prospectus, subject to completion, dated May 13, 2021, that was included in the Registration
Statement immediately prior to the Applicable Time is hereinafter called the “Pricing Prospectus.” The final
prospectus in the form first furnished to the Underwriters for use in the Offering, that includes the Rule 430A Information,
is hereinafter called the “Prospectus.” Any reference to the “most recent Preliminary Prospectus”
shall be deemed to refer to the latest Preliminary Prospectus included in the Registration Statement.
“Applicable
Time” means 4:30 p.m., Eastern time, on the date of this Agreement.
“Issuer
Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433 of the
Securities Act Regulations (“Rule 433”), including without limitation any “free writing prospectus”
(as defined in Rule 405 of the Securities Act Regulations) relating to the Public Securities that is (i) required to be filed
with the Commission by the Company, (ii) a “road show that is a written communication” within the meaning of Rule
433(d)(8)(i), whether or not required to be filed with the Commission, or (iii) exempt from filing with the Commission pursuant
to Rule 433(d)(5)(i) because it contains a description of the Public Securities or of the Offering that does not reflect the final
terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form
retained in the Company’s records pursuant to Rule 433(g).
“Issuer
General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is intended for general distribution
to prospective investors (other than a “bona fide electronic road show,” as defined in Rule 433 (the “Bona
Fide Electronic Road Show”)), as evidenced by its being specified in Schedule 2-B hereto.
“Issuer
Limited Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is not an Issuer General Use Free
Writing Prospectus.
“Pricing
Disclosure Package” means any Issuer General Use Free Writing Prospectus issued at or prior to the Applicable Time,
the Pricing Prospectus and the information included on Schedule 2-A hereto, all considered together.
2.1.2. Pursuant to the Exchange Act. The Company has filed with the Commission a Form 8-A (File Number 001-40400) providing for
the registration of the Common Stock and the Warrants (the “Form 8-A Registration Statement”).
The Common Stock and the Warrants are registered pursuant to Section 12(b) under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). The registration of Common Stock and Warrants under the Exchange Act has been
declared effective by the Commission on or prior to the date hereof. The Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the shares of Common Stock and Warrants under the Exchange Act, nor has the
Company received any notification that the Commission is contemplating terminating such registration.
2.2.
Stock Exchange Listing. The shares of Common Stock and Warrants have each been approved for listing on the Nasdaq Capital
Market (the “Exchange”), subject only to official notice of issuance, and the Company has taken no action designed
to, or likely to have the effect of, delisting the shares of Common Stock or Warrants from the Exchange, nor has the Company received
any notification that the Exchange is contemplating terminating such listing except as described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus.
2.3.
No Stop Orders, etc. Neither the Commission nor, to the Company’s knowledge, any state regulatory authority has issued
any order preventing or suspending the use of the Registration Statement, any Preliminary Prospectus or the Prospectus or has
instituted or, to the Company’s knowledge, threatened to institute, any proceedings with respect to such an order. The Company
has complied with each request (if any) from the Commission for additional information.
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2.4.
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Disclosures
in Registration Statement.
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2.4.1. Compliance
with Securities Act and 10b-5 Representation.
(i)
Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all
material respects with the requirements of the Securities Act and the Securities Act Regulations. Each Preliminary Prospectus,
including the prospectus filed as part of the Registration Statement as originally filed or as part of any amendment or supplement
thereto, and the Prospectus, at the time each was filed with the Commission, complied in all material respects with the requirements
of the Securities Act and the Securities Act Regulations. Each Preliminary Prospectus delivered to the Underwriters for use in
connection with this Offering and the Prospectus was or will be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to the Commission’s EDGAR filing system (“EDGAR”), except to the extent
permitted by Regulation S-T promulgated under the Securities Act (“Regulation S-T”).
(ii)
Neither the Registration Statement nor any amendment thereto, at its effective time, as of the Applicable Time, at the Closing
Date or at any Option Closing Date (if any), contained, contains or will contain an untrue statement of a material fact or omitted,
omits or will omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.
(iii)
The Pricing Disclosure Package, as of the Applicable Time, at the Closing Date or at any Option Closing Date (if any), did not,
does not and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not misleading; and each Issuer Limited
Use Free Writing Prospectus hereto does not conflict in any material respect with the information contained in the Registration
Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, and each such Issuer Limited Use Free Writing
Prospectus, as supplemented by and taken together with the Pricing Prospectus as of the Applicable Time, did not include an untrue
statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply
to statements made or statements omitted in reliance upon and in conformity with written information furnished to the Company
with respect to the Underwriters by the Representative expressly for use in the Registration Statement, the Pricing Prospectus
or the Prospectus or any amendment thereof or supplement thereto. The parties acknowledge and agree that such information provided
by or on behalf of any Underwriter consists solely of the following disclosure contained in the “Underwriting” section
of the Prospectus: the names of the Underwriters, the information in the first paragraph under the subheading titled “Commissions
and Discounts” and the information under the subheadings titled “Price Stabilization, Short Positions, and Penalty
Bids” and “Electronic Distribution” (the “Underwriters’ Information”).
(iv)
Neither the Prospectus nor any amendment or supplement thereto (including any prospectus wrapper), as of its issue date, at the
time of any filing with the Commission pursuant to Rule 424(b), at the Closing Date or at any Option Closing Date, included,
includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to the Underwriters’ Information.
2.4.2. Disclosure of Agreements. The agreements and documents described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus conform in all material respects to the descriptions thereof contained therein and there are no agreements
or other documents required by the Securities Act and the Securities Act Regulations to be described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus or to be filed with the Commission as exhibits to the Registration Statement,
that have not been so described or filed. Each agreement or other instrument (however characterized or described) to which the
Company is a party or by which it is or may be bound or affected and (i) that is referred to in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, or (ii) is material to the Company’s business, has been duly authorized and
validly executed by the Company, is in full force and effect in all material respects and is enforceable against the Company and,
to the Company’s knowledge, the other parties thereto, in accordance with its terms, except (x) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, (y) as enforceability
of any indemnification or contribution provision may be limited under the federal and state securities laws, and (z) that the
remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and
to the discretion of the court before which any proceeding therefor may be brought, and except for any unenforceability that,
individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Change (as defined in Section 2.5.1
below). None of such agreements or instruments has been assigned by the Company, and neither the Company nor, to the Company’s
knowledge, any other party is in material default thereunder and, to the Company’s knowledge, no event has occurred that,
with the lapse of time or the giving of notice, or both, would constitute a default thereunder except for such defaults that
would not reasonably be expected to result in a Material Adverse Change (as defined in Section 2.5.1 below). To the Company’s
knowledge, performance by the Company of the material provisions of such agreements or instruments will not result in a violation
of any existing applicable law, rule, regulation, judgment, order or decree of any governmental or regulatory agency, authority,
body, entity or court, domestic or foreign, having jurisdiction over the Company or any of its assets or businesses (each, a “Governmental
Entity”), including, without limitation, those relating to environmental laws and regulations, that, individually or
in the aggregate, would not reasonably be expected to result in a Material Adverse Change as defined in Section 2.5.1 below.
2.4.3. Reserved.
2.4.4.
Regulations. The disclosures in the Registration Statement, the Pricing Disclosure Package and the Prospectus concerning
the effects of federal, state, local and all foreign laws, rules and regulations relating to the Offering and the Company’s
business as currently conducted or contemplated are correct and complete in all material respects and no other such laws, rules
or regulations are required under the Securities Act and the Securities Act Regulations to be disclosed in the Registration Statement,
the Pricing Disclosure Package and the Prospectus which are not so disclosed.
2.4.5. No Other Distribution of Offering Materials. The Company has not, directly or indirectly, distributed and will not distribute
any offering material in connection with the Offering other than any Preliminary Prospectus, any Issuer Free Writing Prospectus,
the Prospectus and other materials, if any, permitted under the Securities Act and consistent with Section 3.2 below.
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2.5.
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Changes
After Dates in Registration Statement.
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2.5.1.
No Material Adverse Change. Since the respective dates as of which information is given in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, except as otherwise specifically stated therein: (i) there has been no material
adverse change in the financial position or results of operations of the Company or its Subsidiaries taken as a whole, nor to
the Company’s knowledge, any change or development that, singularly or in the aggregate, would involve a material adverse
change or a prospective material adverse change, in or affecting the condition (financial or otherwise), results of operations,
business, assets or prospects of the Company or its Subsidiaries taken as a whole (a “Material Adverse Change”);
(ii) there have been no material transactions entered into by the Company or its Subsidiaries, other than as contemplated pursuant
to this Agreement; and (iii) no officer or director of the Company has resigned from any position with the Company.
2.5.2.
Recent Securities Transactions, etc. Subsequent to the respective dates as of which information is given in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, and except as may otherwise be indicated or contemplated herein
or disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has not: (i) issued
any securities or incurred any liability or obligation, direct or contingent, for borrowed money; or (ii) declared or paid any
dividend or made any other distribution on or in respect to its capital stock.
2.7.
Independent Accountants. To the knowledge of the Company, dbbmckennon (the “Auditor”), whose report
is filed with the Commission as part of the Registration Statement, the Pricing Disclosure Package and the Prospectus, is an independent
registered public accounting firm as required by the Securities Act and the Securities Act Regulations and the Public Company
Accounting Oversight Board. The Auditor has not, during the periods covered by the financial statements included in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, provided to the Company any non-audit services, as such term is
used in Section 10A(g) of the Exchange Act.
2.8.
Financial Statements, etc. The financial statements, including the notes thereto
and supporting schedules included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, fairly present
in all material respects the financial position and the results of operations of the Company at the dates and for the periods
to which they apply; and such financial statements have been prepared in conformity with U.S. generally accepted accounting principles
(“GAAP”), consistently applied throughout the periods involved (provided that unaudited interim financial statements
are subject to year-end audit adjustments that are not expected to be material in the aggregate and do not contain all footnotes
required by GAAP); and the supporting schedules included in the Registration Statement present fairly in all material respects
the information required to be stated therein. Except as included therein, no historical or pro forma financial statements are
required to be included in the Registration Statement, the Pricing Disclosure Package or the Prospectus under the Securities Act
or the Securities Act Regulations. The pro forma and pro forma as adjusted financial information and the related notes, if any,
included in the Registration Statement, the Pricing Disclosure Package and the Prospectus have been properly compiled and prepared
in accordance with the applicable requirements of the Securities Act and the Securities Act Regulations and present fairly in
all material respects the information shown therein, and the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. All disclosures
contained in the Registration Statement, the Pricing Disclosure Package or the Prospectus regarding “non-GAAP financial
measures” (as such term is defined by the rules and regulations of the Commission), if any, comply in all material respects
with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Securities Act, to the extent applicable. Each of the
Registration Statement, the Pricing Disclosure Package and the Prospectus discloses all material off-balance sheet transactions,
arrangements, obligations (including contingent obligations), and other relationships of the Company with unconsolidated entities
or other persons that may have a material current or future effect on the Company’s financial condition, changes in financial
condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues or
expenses. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, (a) since the
date of the last balance sheet included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, neither
the Company nor any of its direct and indirect subsidiaries, including each entity disclosed or described in the Registration
Statement, the Pricing Disclosure Package and the Prospectus as being a subsidiary of the Company (each, a “Subsidiary”
and, collectively, the “Subsidiaries”), has incurred any material liabilities or obligations, direct or contingent,
or entered into any material transactions other than in the ordinary course of business, (b) the Company has not declared or paid
any dividends or made any distribution of any kind with respect to its capital stock, (c) there has not been any change in the
capital stock of the Company or any of its Subsidiaries, or, other than in the ordinary course of business, any grants under any
stock compensation plan, and (d) there has not been any material adverse change in the Company’s long-term or short-term
debt. The Company represents that it has no direct or indirect subsidiaries other than those listed in Exhibit 21.1 to the Registration
Statement.
2.9.
Authorized Capital; Options, etc. The Company had, at the date or dates indicated in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, the duly authorized, issued and outstanding capitalization as set forth therein. Based
on the assumptions stated in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company will have
on the Closing Date the adjusted capitalization set forth therein. Except as set forth in, or contemplated by, the Registration
Statement, the Pricing Disclosure Package and the Prospectus, on the Effective Date, as of the Applicable Time and on the Closing
Date and any Option Closing Date, there will be no stock options, warrants, or other rights to purchase or otherwise acquire any
authorized, but unissued shares of Common Stock of the Company or any security convertible or exercisable into shares of Common
Stock of the Company, or any contracts or commitments to issue or sell shares of Common Stock or any such options, warrants, rights
or convertible securities.
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2.10.
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Valid
Issuance of Securities, etc.
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2.10.1.
Outstanding Securities. All issued and outstanding securities of the Company issued prior to the transactions contemplated
by this Agreement have been duly authorized and validly issued and are fully paid and non-assessable; the holders thereof have
no rights of rescission or the ability to force the Company or any of its Subsidiaries to repurchase such securities with respect
thereto, and are not subject to personal liability by reason of being such holders; and none of such securities were issued in
violation of the preemptive rights, rights of first refusal or rights of participation of any holders of any security of the Company
or similar contractual rights granted by the Company. The authorized shares of Common Stock conform in all material respects to
all statements relating thereto contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus. The
offers and sales of the outstanding shares of Common Stock, options, warrants and other outstanding securities convertible into
or exercisable for shares of Common Stock, were at all relevant times either registered under the Securities Act and the applicable
state securities or “blue sky” laws or, based in part on the representations and warranties of the purchasers of such
shares of Common Stock, exempt from such registration requirements. The description of the Company’s stock option, stock
bonus and other related plans or arrangements, and options and/or other rights granted thereunder, as described in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, accurately and fairly present, in all material respects, the information
required to be shown with respect to such plans, arrangements, options and rights.
2.10.2.
Securities Sold Pursuant to this Agreement. The Public Securities and Representative’s Securities have been duly
authorized for issuance and sale and, when issued and paid for, will be validly issued, fully paid and non-assessable; the holders
thereof are not and will not be subject to personal liability by reason of being such holders; the Public Securities and Representative’s
Securities are and will be free from all preemptive rights of any holders of any security of the Company, or similar contractual
rights granted by the Company; and all corporate action required to be taken for the authorization, issuance and sale of the Public
Securities and Representative’s Securities has been duly and validly taken. The Warrants, when issued and paid for pursuant
to this Agreement and the Warrant Agency Agreement (as defined below), will constitute valid and binding obligations of the Company
to issue and sell, upon exercise thereof and payment therefor, the Warrant Shares. The Representative’s Warrant Agreement,
when issued and paid for pursuant to this Agreement, will constitute valid and binding obligations of the Company to issue and
sell, upon exercise thereof and payment therefor, the underlying shares of Common Stock. The Public Securities and Representative’s
Securities conform in all material respects to all statements with respect thereto contained in the Registration Statement, the
Pricing Disclosure Package and the Prospectus. All corporate action required to be taken for the authorization, issuance and sale
of the Representative’s Warrant Agreement has been duly and validly taken; the shares of Common Stock issuable upon exercise
of the Representative’s Warrant have been duly authorized and reserved for issuance by all necessary corporate action on
the part of the Company and when paid for and issued in accordance with the Representative’s Warrant and the Representative’s
Warrant Agreement, such shares of Common Stock will be validly issued, fully paid and nonassessable; the holders thereof are not
and will not be subject to personal liability by reason of being such holders; and such shares of Common Stock are not and will
not be subject to the preemptive rights of any holders of any security of the Company or similar contractual rights granted by
the Company.
2.11.
Registration Rights of Third Parties. Except as set forth in the Registration Statement, the Pricing Disclosure Package and
the Prospectus, no holders of any securities of the Company or any options, warrants, rights or other securities exercisable for
or convertible or exchangeable into securities of the Company have the right to require the Company to register any such securities
of the Company under the Securities Act or to include any such securities in the Registration Statement or any other registration
statement to be filed by the Company.
2.12.
Validity and Binding Effect of Agreements. The execution, delivery and performance of this Agreement, the Warrants, and the
Representative’s Warrant Agreement have been duly and validly authorized by the Company, and, when executed and delivered,
will constitute, the valid and binding agreements of the Company, enforceable against the Company in accordance with their respective
terms, except: (i) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally; (ii) as enforceability of any indemnification or contribution provision may be limited under the federal and
state securities laws; and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief may
be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
2.13.
No Conflicts, etc. The execution, delivery and performance by the Company of this Agreement, the Warrants, the Representative’s
Warrant Agreement, and all ancillary documents, the consummation by the Company of the transactions herein and therein contemplated
and the compliance by the Company with the terms hereof and thereof do not and will not, with or without the giving of notice
or the lapse of time or both: (i) result in a material breach of, or conflict with any of the terms and provisions of, or constitute
a material default under, or result in the creation, modification, termination or imposition of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement or
any other agreement or instrument to which the Company is a party or as to which any property of the Company is a party except
breaches, conflicts or defaults that would not reasonably be expected to result in a Material Adverse Change; (ii) result in any
violation of the provisions of the Company’s Certificate of Incorporation (as the same have been amended or restated from
time to time, the “Charter”) or the by-laws of the Company; or (iii) violate in any material respect any existing
applicable law, rule, regulation, judgment, order or decree of any Governmental Entity as of the date hereof having jurisdiction
over the Company.
2.14.
No Defaults; Violations. Except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus,
no material default exists in the due performance and observance of any term, covenant or condition of any material license, contract,
indenture, mortgage, deed of trust, note, loan or credit agreement, or any other agreement or instrument evidencing an obligation
for borrowed money, or any other material agreement or instrument to which the Company is a party or by which the Company may
be bound or to which any of the properties or assets of the Company is subject except for any such default that would not be reasonably
expected to result in a Material Adverse Change. The Company is not in violation of any term or provision of its Charter or by-laws,
or in violation of any material franchise, license, permit, applicable law, rule, regulation, judgment or decree of any Governmental
Entity, except for such violations that would not be reasonably expected to result in a Material Adverse Change.
2.15. Corporate
Power; Licenses; Consents.
2.15.1.
Conduct of Business. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus,
the Company has all requisite corporate power and authority, and has all material consents, authorizations, approvals, licenses,
certificates, clearances, permits and orders and supplements and amendments thereto (collectively, “Authorizations”)
of and from all Governmental Entities that it needs as of the date hereof to conduct its business purpose as described in the
Registration Statement, the Pricing Disclosure Package and the Prospectus, except for such Authorizations, the absence of which
would reasonably be expected to have a Material Adverse Change.
2.15.2.
Transactions Contemplated Herein. The Company has all corporate power and authority to enter into this Agreement and to
carry out the provisions and conditions hereof, and all Authorizations required in connection therewith have been obtained. No
Authorization of, and no filing with, any Governmental Entity, the Exchange or another body is required for the valid issuance,
sale and delivery of the Public Securities and the consummation of the transactions and agreements contemplated by this Agreement
and the Representative’s Warrant Agreement and as contemplated by the Registration Statement, the Pricing Disclosure Package
and the Prospectus, except with respect to applicable Securities Act Regulations, state securities laws and the rules and regulations
of the Financial Industry Regulatory Authority, Inc. (“FINRA”).
2.16.
D&O Questionnaires. To the Company’s knowledge, all information contained in the questionnaires (the “Questionnaires”)
completed by each of the Company’s directors and officers immediately prior to the Offering (the “Insiders”)
as supplemented by all information concerning the Insiders as described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus provided to the Underwriters, is true and correct in all material respects and the Company has not
become aware of any information which would cause the information disclosed in the Questionnaires to become materially inaccurate
and incorrect.
2.17.
Litigation; Governmental Proceedings. There is no action, suit, proceeding, inquiry, arbitration, investigation, litigation
or governmental proceeding pending or, to the Company’s knowledge, threatened against, or involving the Company or, to the
Company’s knowledge, any executive officer or director which has not been disclosed in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, or in connection with the Company’s listing application for the listing of the Public
Securities on the Exchange.
2.18.
Good Standing. The Company has been duly incorporated and is validly existing as a corporation and is in good standing under
the laws of the State of Delaware as of the date hereof, and is duly qualified to do business and is in good standing in each
other jurisdiction in which its ownership or lease of property or the conduct of business requires such qualification, except
where the failure to qualify, singularly or in the aggregate, would not have or reasonably be expected to result in a Material
Adverse Change.
2.19.
Insurance. The Company carries or is entitled to the benefits of insurance (including, without limitation, as to directors
and officers insurance coverage), with reputable insurers, in such amounts and covering such risks which the Company believes
are adequate as are customary for companies engaged in similar business, and to the Company’s knowledge all such insurance
is in full force and effect. The Company has no reason to believe that it will not be able (i) to renew its existing insurance
coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary
or appropriate to conduct its business as now conducted and at a cost that would not reasonably be expected to result in a Material
Adverse Change.
2.20. Transactions
Affecting Disclosure to FINRA.
2.20.1.
Finder’s Fees. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus,
there are no claims, payments, arrangements, agreements or understandings relating to the payment of a finder’s, consulting
or origination fee by the Company or any Insider with respect to the sale of the Public Securities hereunder or any other arrangements,
agreements or understandings of the Company or, to the Company’s knowledge, any of its stockholders that may affect the
Underwriters’ compensation, as determined by FINRA.
2.20.2.
Payments Within Twelve (12) Months. Except as described in the Registration Statement, the Pricing Disclosure Package and
the Prospectus, the Company has not made any direct or indirect payments in connection with the Offering (in cash, securities
or otherwise) to: (i) any person, as a finder’s fee, consulting fee or otherwise, in consideration of such person raising
capital for the Company or introducing to the Company persons who raised or provided capital to the Company; (ii) any FINRA member;
or (iii) any person or entity that has any direct or indirect affiliation or association with any FINRA member, within the twelve
(12) months prior to the Effective Date, other than the payment to the Underwriters as provided hereunder in connection with the
Offering.
2.20.3.
Use of Proceeds. None of the net proceeds of the Offering will be paid by the Company to any participating FINRA member
or its affiliates, except as specifically authorized herein.
2.20.4.
FINRA Affiliation. There is no (i) officer or director of the Company, (ii) beneficial owner of 5% or more of any class
of the Company’s securities or (iii) beneficial owner of the Company’s unregistered equity securities which were acquired
during the 180-day period immediately preceding the filing of the Registration Statement that is an affiliate or associated person
of a FINRA member participating in the Offering (as determined in accordance with the rules and regulations of FINRA).
2.20.5.
Information. All information provided by the Company in its FINRA questionnaire to Representative Counsel specifically
for use by Representative Counsel in connection with its Public Offering System filings (and related disclosure) with FINRA is
true, correct and complete in all material respects.
2.21.
Foreign Corrupt Practices Act. None of the Company and its Subsidiaries or, to the Company’s knowledge, any director,
officer, agent, employee or affiliate of the Company and its Subsidiaries or any other person acting on behalf of, and with authority
from, the Company and its Subsidiaries, has, directly or indirectly, given or agreed to give any money, gift or similar benefit
(other than legal price concessions to customers in the ordinary course of business) to any customer, supplier, employee or agent
of a customer or supplier, or official or employee of any Governmental Entity (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was, is, or may be in a position to help or hinder the business
of the Company (or assist it in connection with any actual or proposed transaction) that (i) might subject the Company to any
damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) if not given in the past, might have had
a Material Adverse Change or (iii) if not continued in the future, might adversely affect the assets, business, operations or
prospects of the Company. The Company has taken reasonable steps to ensure that its accounting controls and procedures are sufficient
to cause the Company to comply in all material respects with the Foreign Corrupt Practices Act of 1977, as amended.
2.22.
Compliance with OFAC. None of the Company and its Subsidiaries or, to the Company’s knowledge, any director, officer,
agent, employee or affiliate of the Company and its Subsidiaries or any other person acting on behalf of, and with authority from,
the Company and its Subsidiaries, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control
of the U.S. Department of the Treasury (“OFAC”), and the Company will not, directly or indirectly, use the
proceeds of the Offering hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture
partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions
administered by OFAC.
2.23.
Money Laundering Laws. The operations of the Company and its Subsidiaries are and have been
conducted at all times in compliance in all material respects with applicable financial recordkeeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions,
the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced
by any Governmental Entity (collectively, the “Money Laundering Laws”); and no action, suit or
proceeding by or before any Governmental Entity involving the Company with respect to the Money Laundering Laws is pending or,
to the best knowledge of the Company, threatened.
2.24.
Officers’ Certificate. Any certificate signed by any duly authorized officer of the Company and delivered to you or
to Representative Counsel on the Closing Date or on the Option Closing Date shall be deemed a representation and warranty by the
Company to the Underwriters as to the matters covered thereby.
2.25.
Lock-Up Agreements. Schedule 3 hereto contains a complete and accurate list of the Company’s officers, directors
and each owner of 5% or more of the Company’s outstanding shares of Common Stock (or securities convertible or exercisable
into shares of Common Stock) (collectively, the “Lock-Up Parties”). The Company has caused each of the Lock-Up
Parties to deliver to the Representative an executed Lock-Up Agreement, in a form substantially similar to that attached hereto
as Exhibit B (the “Lock-Up Agreement”), prior to the execution of this Agreement.
2.26.
Subsidiaries. All direct and indirect Subsidiaries of the Company are duly organized and in good standing under the laws of
the place of organization or incorporation, and each Subsidiary is in good standing in each jurisdiction in which its ownership
or lease of property or the conduct of business requires such qualification, except where the failure to qualify would not have
a material adverse effect on the assets, business or operations of the Company taken as a whole. The Company’s ownership
and control of each Subsidiary is as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
2.27.
Related Party Transactions. There are no business relationships or related party transactions involving the Company or any
other person required to be described in the Registration Statement, the Pricing Disclosure Package and the Prospectus that have
not been described as required under the Securities Act and the Securities Act Regulations.
2.28.
Board of Directors. The Board of Directors of the Company is comprised of the persons set forth under the heading of the Pricing
Prospectus and the Prospectus captioned “Management.” The qualifications of the persons serving as board members and
the overall composition of the board comply with the Exchange Act, the rules and regulations of the Commission promulgated thereunder
(the “Exchange Act Regulations”), the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder (the
“Sarbanes-Oxley Act”) applicable to the Company and the listing rules of the Exchange. At least one member
of the Audit Committee of the Board of Directors of the Company qualifies as an “audit committee financial expert,”
as such term is defined under Regulation S-K and the listing rules of the Exchange. In addition, at least a majority of the persons
serving on the Board of Directors qualify as “independent,” as defined under the listing rules of the Exchange.
2.29. Sarbanes-Oxley
Compliance.
2.29.1.
Disclosure Controls. The Company has developed and currently maintains disclosure controls and procedures that will comply
in all material respects with Rule 13a-15 or 15d-15 under the Exchange Act Regulations, and such controls and procedures are effective
to ensure that all material information concerning the Company will be made known on a timely basis to the individuals responsible
for the preparation of the Company’s Exchange Act filings and other public disclosure documents.
2.29.2.
Compliance. The Company is and at the Applicable Time and on the Closing Date will be, in material compliance with the
provisions of the Sarbanes-Oxley Act applicable to it, and has implemented or will implement such programs and has taken reasonable
steps to ensure the Company’s future compliance (not later than the relevant statutory and regulatory deadlines therefor)
with all of the material provisions of the Sarbanes-Oxley Act.
2.30.
Accounting Controls. The Company and its Subsidiaries maintain systems of “internal control
over financial reporting” (as defined under Rules 13a-15 and 15d-15 under the Exchange Act Regulations) that comply in all
material respects with the requirements of the Exchange Act and have been designed by, or under the supervision of, their respective
principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with GAAP, including, but not limited to, internal accounting controls sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets
is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company is not aware
of any material weaknesses in its internal controls. The Company’s auditors and the Audit Committee of the Board of Directors
of the Company have been advised of: (i) all significant deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting which are known to the Company’s management and that have adversely affected or are reasonably
likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and (ii)
any fraud known to the Company’s management, whether or not material, that involves management or other employees who have
a significant role in the Company’s internal controls over financial reporting.
2.31.
No Investment Company Status. The Company is not and, after giving effect to the Offering and the application of the proceeds
thereof as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, will not be, required to
register as an “investment company,” as defined in the Investment Company Act of 1940, as amended.
2.32.
No Labor Disputes. No labor dispute with the employees of the Company or any of its Subsidiaries exists or, to the knowledge
of the Company, is imminent. The Company is not aware that any officer, key employee or significant group of employees of the
Company plans to terminate employment with the Company.
2.33.
Intellectual Property Rights. The Company and each of its Subsidiaries owns or possesses or has valid rights to use all patents,
patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights,
licenses, inventions, trade secrets and similar rights (“Intellectual Property Rights”) and necessary for the
conduct of the business of the Company and each of its Subsidiaries as currently carried on and as described in the Registration
Statement, the Pricing Disclosure Package and the Prospectus. To the knowledge of the Company, no action or use by the Company
or any of its Subsidiaries necessary for the conduct of its business as currently carried on and as described in the Registration
Statement and the Prospectus will involve or give rise to any infringement of, or license or similar fees for, any Intellectual
Property Rights of others. Neither the Company nor any of its Subsidiaries has received any notice alleging any such infringement,
fee or conflict with asserted Intellectual Property Rights of others. Except as would not reasonably be expected to result, individually
or in the aggregate, in a Material Adverse Change: (A) to the knowledge of the Company, there is no infringement, misappropriation
or violation by third parties of any of the Intellectual Property Rights owned by the Company; (B) there is no pending or, to
the knowledge of the Company, threatened action, suit, proceeding or claim by others challenging the rights of the Company in
or to any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any
such claim, that would, individually or in the aggregate, together with any other claims in this Section 2.33, reasonably be expected
to result in a Material Adverse Change; (C) the Intellectual Property Rights owned by the Company and, to the knowledge of the
Company, the Intellectual Property Rights licensed to the Company have not been adjudged by a court of competent jurisdiction
invalid or unenforceable, in whole or in part, and there is no pending or, to the Company’s knowledge, threatened action,
suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property Rights, and the Company
is unaware of any facts which would form a reasonable basis for any such claim that would, individually or in the aggregate, together
with any other claims in this Section 2.33, reasonably be expected to result in a Material Adverse Change; (D) there is no pending
or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others that the Company infringes, misappropriates
or otherwise violates any Intellectual Property Rights or other proprietary rights of others, the Company has not received any
written notice of such claim and the Company is unaware of any other facts which would form a reasonable basis for any such claim
that would, individually or in the aggregate, together with any other claims in this Section 2.33, reasonably be expected to result
in a Material Adverse Change; and (E) to the Company’s knowledge, no employee of the Company is in or has ever been in violation
in any material respect of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-
competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a former employer
where the basis of such violation relates to such employee’s employment with the Company, or actions undertaken by the employee
while employed with the Company and could reasonably be expected to result, individually or in the aggregate, in a Material Adverse
Change. To the Company’s knowledge, all material technical information developed by and belonging to the Company which has
not been patented has been kept confidential. The Company is not a party to or bound by any options, licenses or agreements with
respect to the Intellectual Property Rights of any other person or entity that are required to be set forth in the Registration
Statement, the Pricing Disclosure Package and the Prospectus and are not described therein. The Registration Statement, the Pricing Disclosure
Package and the Prospectus contain in all material respects the same description of the matters set forth in the preceding sentence.
None of the technology employed by the Company has been obtained or is being used by the Company in violation of any contractual
obligation binding on the Company or, to the Company’s knowledge, any of its officers, directors or employees, or otherwise
in violation of the rights of any persons.
2.34.
Taxes. Each of the Company and its Subsidiaries has filed all returns (as hereinafter defined) required to be filed
with taxing authorities prior to the date hereof or has duly obtained extensions of time for the filing thereof. Each of the Company
and its Subsidiaries has paid all taxes (as hereinafter defined) shown as due on such returns that were filed and has paid all
taxes imposed on or assessed against the Company or such respective Subsidiary except those that are being contested in good faith
or as would not have, individually or in the aggregate, result in a Material Adverse Change. The provisions for taxes payable,
if any, shown on the financial statements filed with or as part of the Registration Statement are sufficient for all accrued and
unpaid taxes, whether or not disputed, and for all periods to and including the dates of such consolidated financial statements.
Except as disclosed in writing to the Underwriters, (i) no material issues have been raised (and are currently pending) by any
taxing authority in connection with any of the returns or taxes asserted as due from the Company or its Subsidiaries, and (ii)
no waivers of statutes of limitation with respect to the returns or collection of taxes have been given by or requested from the
Company or its Subsidiaries. To the Company’s knowledge, there are no tax liens against the assets, properties or business
of the Company or its Subsidiaries. The term “taxes” means all federal, state, local, foreign and other net
income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or
other taxes, fees, assessments or charges of any kind whatever, together with any interest and any penalties, additions to tax
or additional amounts with respect thereto. The term “returns” means all returns, declarations, reports, statements
and other documents required to be filed in respect to taxes.
2.35.
ERISA Compliance. The Company and any “employee benefit plan” (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published interpretations thereunder (collectively, “ERISA”))
established or maintained by the Company or its “ERISA Affiliates” (as defined below) are in compliance in all material
respects with ERISA. “ERISA Affiliate” means, with respect to the Company, any member of any group of organizations
described in Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the “Code”) of which the Company is a member. No “reportable event”
(as defined under ERISA) has occurred or is reasonably expected to occur with respect to any “employee benefit plan”
established or maintained by the Company or any of its ERISA Affiliates. No “employee benefit plan” established or
maintained by the Company or any of its ERISA Affiliates, if such “employee benefit plan” were terminated, would have
any “amount of unfunded benefit liabilities” (as defined under ERISA). Neither the Company nor any of its ERISA Affiliates
has incurred or reasonably expects to incur any material liability under (i) Title IV of ERISA with respect to termination of,
or withdrawal from, any “employee benefit plan” or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each “employee
benefit plan” established or maintained by the Company or any of its ERISA Affiliates that is intended to be qualified under
Section 401(a) of the Code is so qualified and, to the knowledge of the Company, nothing has occurred, whether by action or failure
to act, which would cause the loss of such qualification.
2.36.
Compliance with Laws. Each of the Company and each Subsidiary: (A) is and at all times has been
in compliance with all statutes, rules, or regulations applicable to the business of the Company as currently conducted (“Applicable
Laws”), except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Change;
(B) has not received any warning letter, untitled letter or other correspondence or notice from any Governmental Entity alleging
or asserting noncompliance with any Applicable Laws or any Authorizations; (C) possesses all material Authorizations and such
Authorizations are valid and in full force and effect and are not in material violation of any term of any such Authorizations
, except where the invalidity of such Authorizations or the failure of such Authorizations to be in full force and effect would
not result in a Material Adverse Change; (D) has not received notice of any claim, action, suit, proceeding, hearing, enforcement,
investigation, arbitration or other action from any Governmental Entity or third party alleging that any activity conducted by
the Company is in violation of any Applicable Laws or Authorizations and has no knowledge that any such Governmental Entity or
third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding; (E) has not received
notice that any Governmental Entity has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations
and has no knowledge that any such Governmental Entity is considering such action; and (F) has filed, obtained, maintained or
submitted all material reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments
as required by any Applicable Laws or Authorizations and that all such reports, documents, forms, notices, applications,
records, claims, submissions and supplements or amendments were complete and correct in all material respects on the date filed
(or were corrected or supplemented by a subsequent submission), , except where the failure to be so in compliance would not, individually
or in the aggregate, result in a Material Adverse Change.
2.37.
Emerging Growth Company. From the time of the initial submission of the Registration Statement to the Commission (or, if earlier,
the first date on which the Company engaged directly in or through any Person authorized to act on its behalf in any Testing-the
Waters Communication) through the date hereof, the Company has been and is an “emerging growth company,” as defined
in Section 2(a) of the Securities Act (an “Emerging Growth Company”). “Testing-the-Waters Communication”
means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Securities Act.
The Company has not (i) alone engaged in any Testing- the-Waters Communications, other than Testing-the-Waters Communications
with the written consent of the Representative and with entities that are qualified institutional buyers within the meaning of
Rule 144A under the Securities Act or institutions that are accredited investors within the meaning of Rule 501 under the Securities
Act and (ii) authorized anyone other than the Representative to engage in Testing-the-Waters Communications. The Company confirms
that the Representative has been authorized to act on its behalf in undertaking Testing-the-Waters Communications.
2.38.
Environmental Laws. The Company is in compliance with all foreign, federal, state and local rules, laws and regulations relating
to the use, treatment, storage and disposal of hazardous or toxic substances or waste and protection of health and safety or the
environment which are applicable to their businesses (“Environmental Laws”), except where the failure to comply
would not, singularly or in the aggregate, result in a Material Adverse Change. There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission, or other release of any kind of toxic or other wastes or other hazardous substances
by, due to, or caused by the Company (or, to the Company’s knowledge, any other entity for whose acts or omissions the Company
is or may otherwise be liable) upon any of the property now or previously owned or leased by the Company, or upon any other property,
in violation of any law, statute, ordinance, rule, regulation, order, judgment, decree or permit or which would, under any law,
statute, ordinance, rule (including rule of common law), regulation, order, judgment, decree or permit, give rise to any liability,
except for any violation or liability which would not have, singularly or in the aggregate with all such violations and liabilities,
a Material Adverse Change; and there has been no disposal, discharge, emission or other release of any kind onto such property
or into the environment surrounding such property of any toxic or other wastes or other hazardous substances with respect to which
the Company has knowledge, except for any such disposal, discharge, emission, or other release of any kind which would not have,
singularly or in the aggregate with all such discharges and other releases, a Material Adverse Change. In the ordinary course
of business, the Company conducts periodic reviews of the effect of Environmental Laws on its business and assets, in the course
of which they identify and evaluate associated costs and liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with Environmental Laws or governmental permits issued
thereunder, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such
reviews, the Company has reasonably concluded that such associated costs and liabilities would not have, singularly or in the
aggregate, a Material Adverse Change.
2.39.
Title to Property. Except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the
Company and its Subsidiaries have good and marketable title in fee simple to, or have valid rights to lease or otherwise use,
all items of real or personal property which are material to the business of the Company and its Subsidiaries taken as a whole,
in each case free and clear of all liens, encumbrances, security interests, claims and defects that do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by
the Company or its Subsidiaries; and all of the leases and subleases material to the business of the Company and its Subsidiaries,
considered as one enterprise, and under which the Company or any of its Subsidiaries holds properties described in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, are, to the Company’s knowledge, in full force and effect,
and neither the Company nor any Subsidiary has received any notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any Subsidiary under any of the leases or subleases mentioned above, or affecting
or questioning the rights of the Company or any Subsidiary to the continued possession of the leased or subleased premises under
any such lease or sublease.
2.40.
Contracts Affecting Capital. There are no transactions, arrangements or other relationships
between and/or among the Company, any of its affiliates (as such term is defined in Rule 405 of the Securities Act Regulations)
and any unconsolidated entity, including, but not limited to, any structured finance, special purpose or limited purpose entity
that could reasonably be expected to materially affect the Company’s or its Subsidiaries’ liquidity or the availability
of or requirements for their capital resources required to be described or incorporated by reference in the Registration Statement,
the Pricing Disclosure Package and the Prospectus which have not been described or incorporated by reference as required.
2.41.
Loans to Directors or Officers. There are no outstanding loans, advances (except normal advances for business expenses in
the ordinary course of business) or guarantees or indebtedness by the Company or its Subsidiaries to or for the benefit of any
of the officers or directors of the Company, its Subsidiaries, or any of their respective family members, except as disclosed
in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
2.42.
Ineligible Issuer. At the time of filing the Registration Statement and any post-effective amendment thereto, at the Effective
Date and at the time of any amendment thereto, at the earliest time thereafter that the Company or another offering participant
made a bona fide offer (within the meaning of Rule 164(h)(2) of the Securities Act Regulations) of the Public Securities and at
the Effective Date, the Company was not and is not an “ineligible issuer,” as defined in Rule 405, without taking
account of any determination by the Commission pursuant to Rule 405 that it is not necessary that the Company be considered an
ineligible issuer.
2.43.
Smaller Reporting Company. As of the time of filing of the Registration Statement, the Company was a “smaller reporting
company,” as defined in Rule 12b-2 of the Exchange Act Regulations.
2.44.
Industry Data. The statistical and market-related data included in each of the Registration Statement, the Pricing Disclosure
Package and the Prospectus are based on or derived from sources that the Company reasonably and in good faith believes are reliable
and accurate or represent the Company’s good faith estimates that are made on the basis of data derived from such sources.
2.45.
Electronic Road Show. The Company has made available a Bona Fide Electronic Road Show in compliance with Rule 433(d)(8)(ii)
of the Securities Act Regulations such that no filing of any “road show” (as defined in Rule 433(h) of the Securities
Act Regulations) is required in connection with the Offering.
2.46.
Margin Securities. The Company owns no “margin securities” as that term is defined in Regulation U of the Board
of Governors of the Federal Reserve System (the “Federal Reserve Board”), and none of the proceeds of Offering
will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Public Securities to be considered a “purpose credit” within the meanings of Regulation T,
U or X of the Federal Reserve Board.
2.47.
Dividends and Distributions. Except as disclosed in the Pricing Disclosure Package, Registration Statement and the Prospectus,
no Subsidiary of the Company is currently prohibited or restricted, directly or indirectly, from paying any dividends to the Company,
from making any other distribution on such Subsidiary’s capital stock (to the extent that any such prohibition or restriction
on dividends and/or distributions would have a material effect to the Company), from repaying to the Company any loans or advances
to such Subsidiary from the Company or from transferring any of such Subsidiary’s property or assets to the Company or any
other Subsidiary of the Company, except as may otherwise be provided in current loan or mortgage-related documents.
2.48.
Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act) contained in the Registration Statement, the Pricing Disclosure Package or the Prospectus has been made
or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
2.49.
Integration. 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 Offering to be integrated with prior offerings by the Company for purposes of the Securities Act that would require
the registration of any such securities under the Securities Act.
2.50.
Confidentiality and Non-Competitions. To the Company’s knowledge, no director, officer,
key employee or consultant of the Company or any Subsidiary is subject to any confidentiality, non-disclosure, non- competition
agreement or non-solicitation agreement with any employer (other than the Company) or prior employer that could materially
affect his or her ability to be and act in his or her respective capacity of the Company or such Subsidiary or be expected
to result in a Material Adverse Change.
2.51.
Corporate Records. The minute books of the Company have been made available to the Representative and Representative Counsel
and such books (i) contain minutes of all material meetings and actions of the Board of Directors (including each board committee)
and stockholders of the Company, and (ii) reflect all material transactions referred to in such minutes.
2.52.
Diligence Materials. The Company has provided to the Representative and Representative Counsel all materials required or necessary
to respond in all material respects to the diligence request submitted to the Company or Company Counsel by the Representative.
2.53.
Stabilization. Neither the Company nor, to its knowledge, any of its employees, directors or stockholders (without the consent
of the Representative) has taken, directly or indirectly, any action designed to or that has constituted or that might reasonably
be expected to cause or result in, under Regulation M of the Exchange Act, or otherwise, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the Public Securities.
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3.
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COVENANTS
OF THE COMPANY.
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The
Company covenants and agrees as follows:
3.1.
Amendments to Registration Statement. The Company shall deliver to the Representative, at least one (1) Business Day (or such
shorter time mutually agreed by the parties hereto) prior to filing, any amendment or supplement to the Registration Statement
or Prospectus proposed to be filed after the Effective Date and not file any such amendment or supplement to which the Representative
shall reasonably object in writing.
3.2.
Federal
Securities Laws.
3.2.1.
Compliance. The Company, subject to Section 3.2.2, shall comply with the requirements
of Rule 430A of the Securities Act Regulations, and will notify the Representative promptly, and confirm the notice in writing,
(i) when any post-effective amendment to the Registration Statement shall become effective or any amendment or supplement to the
Prospectus shall have been filed; (ii) of its receipt of any comments from the Commission; (iii) of any request by the Commission
for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information;
(iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective
amendment or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, or of the suspension
of the qualification of the Public Securities and Representative’s Securities for offering or sale in any jurisdiction,
or of the initiation or threatening of any proceedings for any of such purposes or of any examination pursuant to Section 8(d)
or 8(e) of the Securities Act concerning the Registration Statement; or (v) if the Company becomes the subject of a proceeding
under Section 8A of the Securities Act in connection with the Offering of the Public Securities and Representative’s Securities.
The Company shall effect all filings required under Rule 424(b) of the Securities Act Regulations, in the manner and within the
time period required by Rule 424(b) (without reliance on Rule 424(b)(8)), and shall take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the Commission and,
in the event that it was not, it will promptly file such prospectus. The Company shall use its best efforts to prevent the issuance
of any stop order, prevention or suspension and, if any such order is issued, to obtain the lifting thereof at the earliest possible
moment.
3.2.2.
Continued Compliance. The Company shall comply with the Securities Act, the Securities Act Regulations, the Exchange Act
and the Exchange Act Regulations so as to permit the completion of the distribution of the Public Securities as contemplated in
this Agreement and in the Registration Statement, the Pricing Disclosure Package and the Prospectus. If at any time when a prospectus
relating to the Public Securities is (or, but for the exception afforded by Rule 172 of the Securities Act Regulations (“Rule
172”), would be) required by the Securities Act to be delivered in connection with sales of the Public Securities, any
event shall occur or condition shall exist as a result of which it is necessary, in the opinion of Representative Counsel or Company
Counsel, to (i) amend the Registration Statement in order that the Registration Statement will not include an untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein
not misleading; (ii) amend or supplement the Pricing Disclosure Package or the Prospectus in order that the Pricing Disclosure
Package or the Prospectus, as the case may be, will not include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it
is delivered to a purchaser; or (iii) amend the Registration Statement or amend or supplement the Pricing Disclosure Package or
the Prospectus, as the case may be, in order to comply with the requirements of the Securities Act or the Securities Act Regulations,
the Company will promptly (A) give the Representative notice of such event; (B) prepare any amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration Statement, the Pricing Disclosure Package or the Prospectus
comply with such requirements and, a reasonable amount of time prior to any proposed filing or use, furnish the Representative
with copies of any such amendment or supplement; and (C) file with the Commission any such amendment or supplement; provided that
the Company shall not file or use any such amendment or supplement to which the Representative or Representative Counsel shall
reasonably object. The Company will furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters
may reasonably request. The Company shall give the Representative notice of its intention to make any such filing from the Applicable
Time until the later of the Closing Date and the exercise in full or expiration of the Over-allotment Option specified in Section
1.2 hereof and will furnish the Representative with copies of the related document(s) a reasonable amount of time prior to such
proposed filing, as the case may be, and will not file or use any such document to which the Representative or Representative
Counsel shall reasonably object.
3.2.3.
Exchange Act Registration. For a period of three (3) years after the date of this Agreement, the Company shall use its
reasonable best efforts to maintain the registration of the Common Stock and Warrants under the Exchange Act. For a period of
two (2) years after the date of this Agreement, the Company shall not deregister the Common Stock or Warrants under the Exchange
Act without the prior written consent of the Representative.
3.2.4.
Free Writing Prospectuses. The Company agrees that, unless it obtains the prior written consent of the Representative,
it shall not make any offer relating to the Public Securities that would constitute an Issuer Free Writing Prospectus or that
would otherwise constitute a “free writing prospectus,” or a portion thereof, required to be filed by the Company
with the Commission or retained by the Company under Rule 433; provided that the Representative shall be deemed to have consented
to each Issuer General Use Free Writing Prospectus set forth in Schedule 2-B. The Company represents that it has treated
or agrees that it will treat each such free writing prospectus consented to, or deemed consented to, by the Representative as
an “issuer free writing prospectus,” as defined in Rule 433, and that it has complied and will comply with the applicable
requirements of Rule 433 with respect thereto, including timely filing with the Commission where required, legending and record
keeping. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development
as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration
Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading,
the Company will promptly notify the Representative and will promptly amend or supplement, at its own expense, such Issuer Free
Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.
3.2.5.
Testing-the-Waters Communications. If at any time following the distribution of any Written Testing-the-Waters Communication
there occurred or occurs an event or development as a result of which such Written Testing-the-Waters Communication included or
would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Company shall
promptly notify the Representative and shall promptly amend or supplement, at its own expense, such Written Testing-the-Waters
Communication to eliminate or correct such untrue statement or omission.
3.3.
Delivery to the Underwriters of Registration Statements. The Company has delivered or made available or shall deliver or make
available to the Representative and Representative Counsel, without charge, conformed copies of the Registration Statement as
originally filed and each amendment thereto (including exhibits filed therewith) and signed copies of all consents and certificates
of experts, and will also deliver to each Underwriter, without charge, a conformed copy of the Registration Statement as originally
filed and each amendment thereto (without exhibits) upon receipt of a written request therefor from such Underwriter. The copies
of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
3.4.
Delivery to the Underwriters of Prospectuses. The Company has delivered or made available or will deliver or make available
to each Underwriter, without charge, as many copies of each Preliminary Prospectus as such Underwriter reasonably requested, and
the Company hereby consents to the use of such copies for purposes permitted by the Securities Act. The Company will furnish to
each Underwriter, without charge, during the period when a prospectus relating to the Public Securities is (or, but for the exception
afforded by Rule 172 of the Securities Act Regulations, would be) required to be delivered under the Securities Act, such number
of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments
or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
3.5.
Effectiveness and Events Requiring Notice to the Representative. The Company shall use its best efforts to cause the Registration
Statement to remain effective with a current prospectus for at least nine (9) months after the Applicable Time, and shall notify
the Representative promptly and confirm the notice in writing: (i) of the effectiveness of the Registration Statement and any
amendment thereto; (ii) of the issuance by the Commission of any stop order or of the initiation, or the threatening, of any proceeding
for that purpose; (iii) of the issuance by any state securities commission of any proceedings for the suspension of the qualification
of the Public Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding
for that purpose; (iv) of the mailing and delivery to the Commission for filing of any amendment or supplement to the Registration
Statement or Prospectus; (v) of the receipt of any comments or request for any additional information from the Commission; and
(vi) of the happening of any event during the period described in this Section 3.5 that, in the judgment of the Company, makes
any statement of a material fact made in the Registration Statement, the Pricing Disclosure Package or the Prospectus untrue or
that requires the making of any changes in (a) the Registration Statement in order to make the statements therein not misleading,
or (b) in the Pricing Disclosure Package or the Prospectus in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. If the Commission or any state securities commission shall enter a stop order or suspend
such qualification at any time, the Company shall use its commercially reasonable efforts to obtain promptly the lifting of such
order.
3.6.
Review of Financial Statements. For a period of three (3) years after the date of this Agreement, the Company, at its expense,
shall cause its regularly engaged independent registered public accounting firm to review (but not audit) the Company’s
financial statements for each of the three fiscal quarters immediately preceding the announcement of any quarterly financial information.
3.7.
Listing. The Company shall use its reasonable best efforts to maintain the listing of the Securities on the Exchange
until at least three (3) years after the date of this Agreement.
3.8.
Financial Public Relations. Within six (6) months from the Effective Date, the Company shall have retained a financial public
relations firm reasonably acceptable to the Representative and the Company, , which firm shall be experienced in assisting issuers
in initial public offerings of securities and in their relations with their security holders, and shall retain such firm or another
firm reasonably acceptable to the Representative for a period of not less than two (2) years after the Effective Date.
3.9. Reports
to the Representative.
3.9.1.
Periodic Reports, etc. For a period of three (3) years after the date of this Agreement, the Company shall furnish or make
available to the Representative copies of such financial statements and other periodic and special reports as the Company from
time to time furnishes generally to holders of any class of its securities and also promptly furnish to the Representative: (i)
a copy of each periodic report the Company shall be required to file with the Commission under the Exchange Act and the Exchange
Act Regulations; (ii) a copy of every press release and every news item and article with respect to the Company or its affairs
which was released by the Company; (iii) a copy of each Form 8-K prepared and filed by the Company; (iv) a copy of each registration
statement filed by the Company under the Securities Act; (v) a copy of each report or other communication furnished to stockholders
and (vi) such additional documents and information with respect to the Company and the affairs of any future subsidiaries
of the Company as the Representative may from time to time reasonably request. Documents filed with the Commission pursuant to
its EDGAR system or press releases shall be deemed to have been delivered to the Representative pursuant to this Section 3.9.1.
Any documents not filed with the Commission pursuant to its EDGAR system shall be delivered to jrallo@kingswoodcm.com, with a
copy to dboral@kingswoodcm.com.
3.9.2.
Transfer Agent; Transfer Sheets. For a period of three (3) years after the date of this Agreement, the Company shall retain
a transfer agent and registrar acceptable to the Representative (the “Transfer Agent”) and shall furnish to
the Representative at the Company’s sole cost and expense such transfer sheets of the Company’s securities as the
Representative may reasonably request, including the daily and monthly consolidated transfer sheets of the Transfer Agent and
DTC. VStock Transfer, LLC is acceptable to the Representative to act as Transfer Agent for the shares of Common Stock and Warrants.
3.9.3.
Trading Reports. For a period of three (3) years after the date of this Agreement, during such time as any of the Public
Securities are listed on the Exchange, the Company shall provide to the Representative, at the Company’s expense, such reports
published by the Exchange relating to price trading of the Public Securities, as the Representative shall reasonably request.
3.10.
Payment of Expenses
3.10.1.
General Expenses Related to the Offering. The Company hereby agrees to pay on each of the Closing Date and the Option Closing
Date, if any, to the extent not paid at the Closing Date, all expenses related to the Offering or otherwise incident to the performance
of the obligations of the Company under this Agreement, including, but not limited to: (a) all filing fees and communication expenses
relating to the registration of the Public Securities and Representative’s Securities with the Commission; (b) all Public
Filing System filing fees associated with the review of the Offering by FINRA; (c) all fees and expenses relating to the listing
of such Public Securities and Representative’s Securities on the Exchange and such other stock exchanges as the Company
and the Representative together determine, including any fees charged by DTC; (d) all fees, expenses and disbursements relating
to background checks of the Company’s officers and directors; (e) all fees, expenses and disbursements relating to the registration
or qualification of the Public Securities under the “blue sky” securities laws of such states and other jurisdictions
as the Representative may reasonably designate ; (f) all fees, expenses and disbursements relating to the registration, qualification
or exemption of the Public Securities under the securities laws of such foreign jurisdictions as the Representative may reasonably
designate; (g) the costs of all mailing and printing of the underwriting documents (including, without limitation, the Underwriting
Agreement, any Blue Sky Surveys and, if appropriate, any Agreement Among Underwriters, Selected Dealers’ Agreement, Underwriters’
Questionnaire and Power of Attorney), Registration Statements, Prospectuses and all amendments, supplements and exhibits thereto
and as many preliminary and final Prospectuses as the Representative may reasonably deem necessary; (h) the costs and expenses
of a public relations firm; (i) the costs of preparing, printing and delivering certificates representing the Public Securities;
(j) fees and expenses of the transfer agent for the shares of Common Stock; (k) fees and expenses of the warrant agent under the
Warrant Agency Agreement; (l) stock transfer and/or stamp taxes, if any, payable upon the transfer of securities from the Company
to the Underwriters; (m) the costs associated with one set of bound volumes of the public offering materials as well as commemorative
mementos and lucite tombstones, each of which the Company or its designee shall provide within a reasonable time after the Closing
Date in such quantities as the Representative may reasonably request; (n) the fees and expenses of the Company’s accountants;
(o) the fees and expenses of the Company’s legal counsel and other agents and representatives; (p) the fees and expenses
of Representative Counsel; (q) the cost associated with the Underwriters’ use of Ipreo’s book-building, prospectus
tracking and compliance software for the Offering; (r) to the extent approved by the Company in writing, the costs associated
with post-Closing advertising the Offering in the national editions of the Wall Street Journal and New York Times; and (s) the
Underwriters’ actual accountable expenses for the Offering, including, without limitation related to the “road show.”
Notwithstanding the foregoing, the Company’s obligations to reimburse the Representative for any out-of-pocket expenses
actually incurred as set forth in the preceding sentence shall not exceed $150,000 in the aggregate for legal fees and related
expenses. The Representative may deduct from the net proceeds of the Offering payable to the Company on the Closing Date, or the
Option Closing Date, if any, the expenses set forth herein to be paid by the Company to the Underwriters, less the Advance (as
such term is defined in Section 8.3 hereof).
3.11.
Application of Net Proceeds. The Company shall apply the net proceeds from the Offering received by it in a manner consistent
with the application thereof described under the caption “Use of Proceeds” in the Registration Statement, the Pricing
Disclosure Package and the Prospectus.
3.12.
Delivery of Earnings Statements to Security Holders. The Company shall make generally available
to its security holders as soon as practicable, but not later than the first day of the fifteenth (15th) full calendar month
following the date of this Agreement, an earnings statement (which need not be certified by an independent registered public accounting
firm unless required by the Securities Act or the Securities Act Regulations, but which shall satisfy the provisions of Rule 158(a) under
Section 11(a) of the Securities Act) covering a period of at least twelve (12) consecutive months beginning after the date of this Agreement.
3.13.
Stabilization. Neither the Company nor, to its knowledge, any of its employees, directors or stockholders has taken or shall
take, directly or indirectly, any action designed to or that has constituted or that might reasonably be expected to cause or
result in, under Regulation M of the Exchange Act, or otherwise, stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Public Securities.
3.14.
Internal Controls. For a period of one (1) year after the date of this Agreement, the Company shall maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s
general or specific authorization; (ii) transactions are recorded as necessary in order to permit preparation of financial statements
in accordance with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to any differences.
3.15.
Accountants. As of the date of this Agreement, the Company has retained an independent registered public accounting firm,
as required by the Securities Act and the Securities Act Regulations and the Public Company Accounting Oversight Board, reasonably
acceptable to the Representative, and the Company shall continue to retain a nationally recognized independent registered public
accounting firm for a period of at least three (3) years after the date of this Agreement. The Representative acknowledges that
the Auditor is acceptable to the Representative.
3.16.
FINRA. For a period of 90 days from the later of the Closing Date or the Option Closing Date, the Company shall advise the
Representative (who shall make an appropriate filing with FINRA) if it is or becomes aware that (i) any officer or director of
the Company, (ii) any beneficial owner of 5% or more of any class of the Company’s securities or (iii) any beneficial owner
of the Company’s unregistered equity securities which were acquired during the 180 days immediately preceding the filing
of the Registration Statement is or becomes an affiliate or associated person of a FINRA member participating in the Offering
(as determined in accordance with the rules and regulations of FINRA).
3.17.
No Fiduciary Duties. The Company acknowledges and agrees that the Underwriters’ responsibility to the Company is solely
contractual in nature and that none of the Underwriters or their affiliates or any selling agent shall be deemed to be acting
in a fiduciary capacity, or otherwise owes any fiduciary duty to the Company or any of its affiliates in connection with the Offering
and the other transactions contemplated by this Agreement.
3.18.
Company Lock-Up Agreements. The Company, on behalf of itself and any successor entity, agrees that, without the prior written
consent of the Representative, it will not, for a period of three hundred sixty (360) days after the date of this Agreement (the
“Lock-Up Period”), (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly
or indirectly, any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for
shares of capital stock of the Company; (ii) file or cause to be filed any registration statement with the Commission relating
to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable
for shares of capital stock of the Company other than a registration statement on Form S-4 or S-8; (iii) complete any offering
of debt securities of the Company, other than entering into a line of credit or senior credit facility with a traditional bank
or other lending institution; or (iv) enter into any swap or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of capital stock of the Company, whether any such transaction described in clause
(i), (ii), (iii), or (iv) above is to be settled by delivery of shares of capital stock of the Company or such other securities,
in cash or otherwise.
The
restrictions contained in this Section 3.18 shall not apply to (i) the Primary Securities to be sold hereunder, as well as the
Representative’s Warrants and any shares of Common Stock into which the Warrants and Representative’s Warrants are
exercisable; (ii) the issuance by the Company of shares of Common Stock upon the exercise of a stock option or warrant or the
conversion of a security, in each case outstanding on the date hereof, provided that such options, warrants, securities are disclosed
in the Registration Statement, the Pricing Disclosure Package or the Prospectus and have not been amended since the date of this
Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such
securities or to extend the term of such securities, (iii) the issuance of shares of Common Stock issued as part of the purchase
price in connection with the acquisitions or strategic transactions, provided certain conditions are met, or (iv) the issuance
by the Company of any shares of Common Stock or standard options to purchase Common Stock to directors, officers or employees
of the Company in their capacity as such pursuant to an Approved Stock Plan (as defined below). “Approved Stock Plan”
means any employee benefit plan which has been approved by the board of directors of the Company prior to or subsequent to the
date hereof pursuant to which shares of Common Stock and standard options to purchase Common Stock may be issued to any employee,
officer or director for services provided to the Company in their capacity as such.
3.19.
Release of D&O Lock-up Period. If the Representative, in its sole discretion, agrees to release or waive the restrictions
set forth in the Lock-Up Agreements described in Section 2.25 hereof for an officer or director of the Company and provides the
Company with notice of the impending release or waiver at least three (3) Business Days before the effective date of the release
or waiver, the Company agrees to announce the impending release or waiver by a press release substantially in the form of Exhibit
C hereto through a major news service at least two (2) Business Days before the effective date of the release or waiver.
3.20.
Blue Sky Qualifications. The Company shall use its best efforts, in cooperation with the Underwriters, if necessary, to qualify
the Public Securities for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic
or foreign) as the Representative may designate and to maintain such qualifications in effect so long as required to complete
the distribution of the Public Securities; provided, however, that the Company shall not be obligated to file any general consent
to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not
so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so
subject.
3.21.
Reporting Requirements. The Company, during the period when a prospectus relating to the Public Securities is (or, but for
the exception afforded by Rule 172, would be) required to be delivered under the Securities Act, will file all documents required
to be filed with the Commission pursuant to the Exchange Act within the time periods required by the Exchange Act and Exchange
Act Regulations. Additionally, the Company shall report the use of proceeds from the issuance of the Public Securities as may
be required under Rule 463 under the Securities Act Regulations.
3.22.
Emerging Growth Company Status. The Company shall promptly notify the Representative if the Company ceases to be an Emerging
Growth Company at any time prior to the later of (i) completion of the distribution of the Public Securities within the meaning
of the Securities Act and (ii) fifteen (15) days following the completion of the Lock-Up Period.
3.23.
Press Releases. Prior to the Closing Date and any Option Closing Date, the Company shall not issue any press release or other
communication directly or indirectly or hold any press conference with respect to the Company, its condition, financial or otherwise,
or earnings, business affairs or business prospects (except for routine oral marketing communications in the ordinary course of
business and consistent with the past practices of the Company and of which the Representative is notified), without the prior
written consent of the Representative, which consent shall not be unreasonably withheld, unless in the judgment of the Company
and its counsel, and after notification to the Representative, such press release or communication is required by law.
3.25.
Sarbanes-Oxley. For a period of one (1) year after the date of this Agreement, the
Company shall at all times comply in all material respects with all applicable provisions of the Sarbanes-Oxley Act in effect
from time to time.
3.26.
IRS Forms. If requested by the Representative, the Company shall deliver to each Underwriter (or its agent), prior to or at
the Closing Date, a properly completed and executed Internal Revenue Service (“IRS”) Form W-9 or an IRS Form
W-8, as appropriate, together with all required attachments to such form.
3.27.
Warrant Agent. For so long as the Warrants are outstanding, the Company will maintain the Warrant Agency Agreement in full
force and effect with VStock Transfer, LLC or a transfer agent of similar competence and quality. The Firm Warrants, and, if applicable,
Option Warrants, will be issued in accordance with the Warrant Agency Agreement.
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4.
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CONDITIONS
OF UNDERWRITERS’ OBLIGATIONS.
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The
obligations of the Underwriters to purchase and pay for the Public Securities, as provided herein, shall be subject to (i) the
continuing accuracy of the representations and warranties of the Company as of the date hereof and as of each of the Closing Date
and the Option Closing Date, if any; (ii) the accuracy of the statements of officers of the Company made pursuant to the provisions
hereof; (iii) the performance by the Company of its obligations hereunder; and (iv) the following conditions:
4.1. Regulatory
Matters.
4.1.1.
Effectiveness of Registration Statement; Rule 430A Information. The Registration Statement has become effective not later
than 5:30 p.m., Eastern time, on the date of this Agreement or such later date and time as shall be consented to in writing by
the Representative, and, at each of the Closing Date and any Option Closing Date, no stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment thereto shall have been issued under the Securities Act, no order preventing
or suspending the use of any Preliminary Prospectus or the Prospectus shall have been issued and no proceedings for any of those
purposes shall have been instituted or are pending or, to the Company’s knowledge, contemplated by the Commission. The Company
has complied with each request (if any) from the Commission for additional information. A prospectus containing the Rule 430A
Information shall have been filed with the Commission in the manner and within the time frame required by Rule 424(b) under the
Securities Act Regulations (without reliance on Rule 424(b)(8)) or a post-effective amendment providing such information shall
have been filed with, and declared effective by, the Commission in accordance with the requirements of Rule 430A under the Securities
Act Regulations.
4.1.2.
FINRA Clearance. On or before the date of this Agreement, the Representative shall have received clearance from FINRA as
to the amount of compensation allowable or payable to the Underwriters as described in the Registration Statement.
4.1.3.
Exchange Clearance. On the Closing Date, the Common Stock and Warrants shall have been approved for listing on the Exchange,
subject only to official notice of issuance.
4.2. Company
Counsel Matters.
4.2.1.
Closing Date Opinion of Counsel. On the Closing Date, the Representative shall have received the favorable opinion and
negative assurance letter of Manatt, Phelps & Phillips, LLP (“Company Counsel”), counsel to the Company,
dated the Closing Date and addressed to the Representative, in form and substance satisfactory to the Representative.
4.2.2.
Option Closing Date Opinions of Counsel. On the Option Closing Date, if any, the Representative shall have received the
favorable opinion and negative assurance letter of Company Counsel listed in Section 4.2.1, dated the Option Closing Date, addressed
to the Representative and in form and substance reasonably satisfactory to the Representative, confirming as of the Option Closing
Date, the statements made by such counsel in its opinion delivered on the Closing Date.
4.2.3.
Reliance. The opinion of Manatt, Phelps & Phillips, LLP and any opinion relied upon by Manatt, Phelps & Phillips,
LLP shall include a statement to the effect that it may be relied upon by Representative Counsel in its opinion delivered to the
Underwriters.
4.3. Comfort
Letters.
4.3.1.
Comfort Letter. At the time this Agreement is executed the Representative shall have
received a cold comfort letter from the Auditor containing statements and information of the type customarily included in accountants’
comfort letters with respect to the financial statements and certain financial information contained in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, addressed to the Representative and in form and substance satisfactory
in all respects to the Representative and to Representative Counsel from the Auditor, dated as of the date of this Agreement.
4.3.2.
Bring-down Comfort Letter. At each of the Closing Date and the Option Closing Date, if any, the Representative shall have
received from the Auditor a letter, dated as of the Closing Date or the Option Closing Date, as applicable, to the effect that
the Auditor reaffirms the statements made in the letter furnished pursuant to Section 4.3.1.
4.4. Officers’
Certificates.
4.4.1.
Officers’ Certificate. The Company shall have furnished to the Representative a certificate, dated the Closing Date
and any Option Closing Date (if such date is other than the Closing Date), of its Chief Executive Officer or President, and its
Chief Financial Officer stating that on behalf of the Company and not in an individual capacity that (i) such officers have examined
the Registration Statement, the Pricing Disclosure Package, any Issuer Free Writing Prospectus and the Prospectus and, in their
opinion, the Registration Statement and each amendment thereto after the Effective Date, as of the Applicable Time and as of the
Closing Date (or any Option Closing Date if such date is other than the Closing Date) did not include any untrue statement of
a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein
not misleading, and the Pricing Disclosure Package, as of the Applicable Time and as of the Closing Date (or any Option Closing
Date if such date is other than the Closing Date), any Issuer Free Writing Prospectus as of its date and as of the Closing Date
(or any Option Closing Date if such date is other than the Closing Date), the Prospectus and each amendment or supplement thereto
after the Effective Date, as of the respective date thereof and as of the Closing Date, did not include any untrue statement of
a material fact and did not omit to state a material fact necessary in order to make the statements therein, in the light of the
circumstances in which they were made, not misleading, (ii) to their knowledge after reasonable investigation, as of the Closing
Date (or any Option Closing Date if such date is other than the Closing Date), the representations and warranties of the Company
in this Agreement are true and correct and the Company has complied with all agreements and satisfied all conditions on its part
to be performed or satisfied hereunder at or prior to the Closing Date (or any Option Closing Date if such date is other than
the Closing Date), and (iii) there has not been, subsequent to the date of the most recent audited financial statements included
in the Pricing Disclosure Package, a Material Adverse Change.
4.4.2.
Secretary’s Certificate. At each of the Closing Date and the Option Closing Date, if any, the Representative shall
have received a certificate of the Company signed by the Secretary of the Company, dated the Closing Date or the Option Closing
Date, as the case may be, respectively, certifying on behalf of the Company and not in an individual capacity: (i) that each of
the Charter and Bylaws is true and complete, has not been modified and is in full force and effect; (ii) that the resolutions
of the Company’s Board of Directors relating to the Offering are in full force and effect and have not been modified; (iii)
as to the accuracy and completeness of all correspondence between the Company or its counsel and the Commission; and (iv) as to
the incumbency of the officers of the Company. The documents referred to in such certificate shall be attached to such certificate.
4.5.
No Material Changes. Prior to and on each of the Closing Date and each Option
Closing Date, if any: (i) there shall have been no Material Adverse Change in the condition or prospects or the business activities,
financial or otherwise, of the Company from the latest dates as of which such condition is set forth in the Registration Statement,
the Pricing Disclosure Package and the Prospectus; (ii) no action, suit or proceeding, at law or in equity, shall have been pending
or threatened against the Company or any Insider before or by any court or federal or state commission, board or other administrative
agency wherein an unfavorable decision, ruling or finding may reasonably be expected to cause a Material Adverse Change, except
as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus; (iii) no stop order shall have
been issued under the Securities Act and no proceedings therefor shall have been initiated or threatened by the Commission; and
(iv) the Registration Statement, the Pricing Disclosure Package and the Prospectus and any amendments or supplements thereto shall
contain all material statements which are required to be stated therein in accordance with the Securities Act and the Securities
Act Regulations and shall conform in all material respects to the requirements of the Securities Act and the Securities Act Regulations,
and neither the Registration Statement, the Pricing Disclosure Package nor the Prospectus nor any amendment or supplement thereto
shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
4.6.
No Material Misstatement or Omission. The Underwriters shall not have discovered and disclosed to the Company on or prior
to the Closing Date and any Option Closing Date that the Registration Statement or any amendment or supplement thereto contains
an untrue statement of a fact which, in the opinion of Representative Counsel, is material or omits to state any fact which, in
the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein not
misleading, or that the Registration Statement, the Pricing Disclosure Package, any Issuer Free Writing Prospectus or the Prospectus
or any amendment or supplement thereto contains an untrue statement of fact which, in the opinion of Representative Counsel, is
material or omits to state any fact which, in the opinion of Representative Counsel, is material and is necessary in order to
make the statements, in the light of the circumstances under which they were made, not misleading.
4.7.
Corporate Proceedings. All corporate proceedings and other legal matters incident to the authorization, form and validity
of each of this Agreement, the Public Securities, the Registration Statement, the Pricing Disclosure Package, each Issuer Free
Writing Prospectus, if any, and the Prospectus and all other legal matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in all material respects to Representative Counsel, and the Company shall have furnished
to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters.
4.8.
Lock-Up Agreements. On or before the date of this Agreement, the Company shall have delivered to the Representative executed
copies of the Lock-Up Agreements from each of the persons listed in Schedule 3 hereto.
4.9.
Warrant Agency Agreement. On or before the date of this Agreement, the Company shall have entered into a Warrant Agency Agreement
between the Company and VStock Transfer, LLC, as warrant agent with respect to the Warrants, in the form filed as an exhibit to
the Registration Statement (the “Warrant Agency Agreement”), or if applicable, as otherwise directed by the
Underwriters.
4.10.
Additional Documents. At the Closing Date and at each Option Closing Date (if any) Representative Counsel shall have been
furnished with such documents and opinions as they may require for the purpose of enabling Representative Counsel to deliver an
opinion to the Underwriters, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment
of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale
of the Public Securities and Representative’s Securities as herein contemplated shall be satisfactory in form and substance
to the Representative and Representative Counsel.
5.1. Indemnification
of the Underwriters.
5.1.1.
General. The Company shall indemnify and hold harmless each Underwriter, its affiliates
and each of its and their respective directors, officers, members, employees, representatives, partners, shareholders, affiliates,
counsel and agents and each person, if any, who controls any such Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (collectively the “Underwriter Indemnified Parties,” and each an “Underwriter
Indemnified Party”), against any and all loss, liability, claim, damage and expense whatsoever (including but not limited
to any and all legal or other expenses reasonably incurred in investigating, preparing or defending against any litigation, commenced
or threatened, or any claim whatsoever, whether arising out of any action between any of the Underwriter Indemnified Parties and
the Company or between any of the Underwriter Indemnified Parties and any third party, or otherwise) to which they or any of them
may become subject under the Securities Act, the Exchange Act or any other statute or at common law or otherwise or under the
laws of foreign countries, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained
in (i) the Registration Statement, the Pricing Disclosure Package, the Preliminary Prospectus, the Prospectus or any Issuer Free
Writing Prospectus (as from time to time each may be amended and supplemented); (ii) any materials or information provided to
investors by, or with the approval of, the Company in connection with the marketing of the Offering, including any “road
show” or investor presentations made to investors by the Company (whether in person or electronically); or (iii) any application
or other document or written communication (in this Section 5, collectively called “application”) executed
by the Company or based upon written information furnished by the Company in any jurisdiction in order to qualify the Public Securities and the Representative’s Warrant Shares under the securities laws thereof or filed with
the Commission, any state securities commission or agency, the Exchange or any other national securities exchange; or the omission
or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, unless such statement or omission was made in reliance
upon, and in conformity with, the Underwriters’ Information. With respect to any untrue statement or omission or alleged
untrue statement or omission made in the Pricing Disclosure Package, the indemnity agreement contained in this Section 5.1.1 shall
not inure to the benefit of any Underwriter Indemnified Party to the extent that any loss, liability, claim, damage or expense
of such Underwriter Indemnified Party (a) is based on the Underwriters’ Information, (b) results from the fact that a copy
of the Prospectus was not given or sent to the person asserting any such loss, liability, claim or damage at or prior to the written
confirmation of sale of the Public Securities to such person as required by the Securities Act and the Securities Act Regulations,
and if the untrue statement or omission has been corrected in the Prospectus, unless such failure to deliver the Prospectus was
a result of non-compliance by the Company with its obligations under Section 3.3 hereof, or (c) is found in a final, non-appealable
judgment of a court of competent jurisdiction to have resulted primarily from the willful misconduct or gross negligence of such
Underwriter Indemnified Party.
5.1.2.
Procedure. If any action is brought against an Underwriter Indemnified Party in respect of which indemnity may be sought
against the Company pursuant to Section 5.1.1, such Underwriter Indemnified Party shall promptly notify the Company in writing
of the institution of such action and the Company shall be entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume the defense of such action, including the employment and
fees of counsel (subject to the reasonable approval of such Underwriter Indemnified Party) and payment of actual expenses. Such
Underwriter Indemnified Party shall have the right to employ its or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of such Underwriter Indemnified Party unless (i) the employment of such counsel at the
expense of the Company shall have been authorized in writing by the Company in connection with the defense of such action, or
(ii) the Company shall not have employed counsel to have charge of the defense of such action, or (iii) the action includes both
the Company and the indemnified party as defendants and such indemnified party or parties shall have been advised by its counsel
that there may be defenses available to it or them which are different from or additional to those available to the Company which
makes it impossible or inadvisable for the Company and such indemnified party to be represented in the action by the same counsel
(in which case the Company shall not have the right to direct the defense of such action on behalf of the indemnified party),
in any of which events the reasonable fees and expenses of not more than one additional firm of attorneys selected by the Underwriter
Indemnified Parties who are party to such action (in addition to local counsel) shall be borne by the Company. Notwithstanding
anything to the contrary contained herein, if any Underwriter Indemnified Party shall assume the defense of such action as provided
above, the Company shall have the right to approve the terms of any settlement of such action, which approval shall not be unreasonably
withheld.
5.2.
Indemnification of the Company. Each Underwriter, severally and not jointly, shall indemnify and hold harmless the Company,
its directors, its officers who signed the Registration Statement and persons who control the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act against any and all loss, liability, claim, damage and expense described
in the foregoing indemnity from the Company to the several Underwriters, as incurred, but only with respect to such losses, liabilities,
claims, damages and expenses (or actions in respect thereof) which arise out of or are based upon untrue statements or omissions
made in the Registration Statement, any Preliminary Prospectus, the Pricing Disclosure Package or Prospectus or any amendment
or supplement thereto or in any application, in reliance upon, and in strict conformity with, the Underwriters’ Information.
In case any action shall be brought against the Company or any other person so indemnified based on any Preliminary Prospectus,
the Registration Statement, the Pricing Disclosure Package or Prospectus or any amendment or supplement thereto or any application,
and in respect of which indemnity may be sought against any Underwriter, such Underwriter shall have the rights and duties given
to the Company, and the Company and each other person so indemnified shall have the rights and duties given to the several Underwriters
by the provisions of Section 5.1.2. The Company agrees promptly to notify the Representative of the commencement of any litigation
or proceedings against the Company or any of its officers, directors or any person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, in connection with the issuance and sale of the Public Securities or in connection with the Registration Statement, the Pricing Disclosure Package, the Prospectus
or any Issuer Free Writing Prospectus.
5.3. Contribution.
5.3.1.
Contribution Rights. If the indemnification provided for in this Section 5 shall for any reason be unavailable to or insufficient
to hold harmless an indemnified party under Section 5.1 or 5.2 in respect of any loss, claim, damage or liability, or any action
in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute
to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company, on the one hand,
and each of the Underwriters, on the other hand, from the Offering, or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company, on the one hand, and the Underwriters, on the other, with respect
to the statements or omissions that resulted in such loss, claim, damage or liability, or action in respect thereof, as well as
any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters,
on the other, with respect to such Offering shall be deemed to be in the same proportion as the total proceeds from the Offering
purchased under this Agreement (before deducting expenses) received by the Company bear to the total underwriting discount and
commissions received by the Underwriters in connection with the Offering, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault of the Company, on the one hand, and the Underwriters, on the other, shall be determined
by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company, on the one hand, or the Underwriters, on the
other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such
untrue statement, omission, act or failure to act; provided that the parties hereto agree that the written information furnished
to the Company through the Representative by or on behalf of any Underwriter for use in any Preliminary Prospectus, any Registration
Statement or the Prospectus, or in any amendment or supplement thereto, consists solely of the Underwriters’ Information.
The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 5.3.1
were to be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage,
expense, liability, action, investigation or proceeding referred to above in this Section 5.3.1 shall be deemed to include, for
purposes of this Section 5.3.1, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating,
preparing to defend or defending against or appearing as a third party witness in respect of, or otherwise incurred in connection
with, any such loss, claim, damage, expense, liability, action, investigation or proceeding. Notwithstanding the provisions of
this Section 5.3.1 no Underwriter shall be required to contribute any amount in excess of the total discount and commission received
by such Underwriter in connection with the Offering less the amount of any damages which such Underwriter has otherwise paid or
becomes liable to pay by reason of any untrue or alleged untrue statement, omission or alleged omission, act or alleged act or
failure to act or alleged failure to act. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
5.3.2.
Contribution Procedure. Within fifteen (15) days after receipt by any party to this Agreement (or its representative) of
notice of the commencement of any action, suit or proceeding, such party will, if a claim for contribution in respect thereof
is to be made against another party (“contributing party”), notify the contributing party of the commencement thereof,
but the failure to so notify the contributing party will not relieve it from any liability which it may have to any other party
other than for contribution hereunder. In case any such action, suit or proceeding is brought against any party, and such party
notifies a contributing party or its representative of the commencement thereof within the aforesaid 15 days, the contributing
party will be entitled to participate therein with the notifying party and any other contributing party similarly notified. Any
such contributing party shall not be liable to any party seeking contribution on account of any settlement of any claim, action
or proceeding affected by such party seeking contribution without the written consent of such contributing party. The contribution
provisions contained in this Section 5.3.2 are intended to supersede, to the extent permitted by law, any right to contribution
under the Securities Act, the Exchange Act or otherwise available. The Underwriters’ obligations to contribute as provided in this Section 5.3 are several and in proportion to their respective underwriting obligation, and not joint.
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6.
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DEFAULT
BY AN UNDERWRITER.
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6.1.
Default Not Exceeding 10% of Firm Securities or Option Securities. If any Underwriter or Underwriters shall default in its
or their obligations to purchase the Firm Securities or the Option Securities, if the Over-allotment Option is exercised hereunder,
and if the number of the Firm Securities or Option Securities with respect to which such default relates does not exceed in the
aggregate 10% of the number of Firm Shares and accompanying Firm Warrants or Option Shares and accompanying Option Warrants that
all Underwriters have agreed to purchase hereunder, then such Firm Securities or Option Securities to which the default relates
shall be purchased by the non-defaulting Underwriters in proportion to their respective commitments hereunder.
6.2.
Default Exceeding 10% of Firm Securities or Option Securities. In the event that the default addressed in Section 6.1 relates
to more than 10% of the number of Firm Shares and accompanying Firm Warrants or Option Shares and accompanying Option Warrants,
the Representative may in its discretion arrange for itself or for another party or parties to purchase such Firm Securities or
Option Securities to which such default relates on the terms contained herein. If, within one (1) Business Day after such default
relating to more than 10% of the number of Firm Shares and accompanying Firm Warrants or Option Shares and accompanying Option
Warrants, the Representative does not arrange for the purchase of such Firm Securities or Option Securities, then the Company
shall be entitled to a further period of one (1) Business Day within which to procure another party or parties satisfactory to
the Representative to purchase said Firm Securities or Option Securities on such terms. In the event that neither the Representative
nor the Company arrange for the purchase of the Firm Securities or Option Securities to which a default relates as provided in
this Section 6, this Agreement will automatically be terminated by the Representative or the Company without liability on the
part of the Company (except as provided in Sections 3.10 and 5 hereof) or the several Underwriters (except as provided in Section
5 hereof); provided, however, that if such default occurs with respect to the Option Securities, this Agreement will not terminate
as to the Firm Securities; and provided, further, that nothing herein shall relieve a defaulting Underwriter of its liability,
if any, to the other Underwriters and to the Company for damages occasioned by its default hereunder.
6.3.
Postponement of Closing Date. In the event that the Firm Securities or Option Securities to which the default relates are
to be purchased by the non-defaulting Underwriters, or are to be purchased by another party or parties as aforesaid, you or the
Company shall have the right to postpone the Closing Date or Option Closing Date for a reasonable period, but not in any event
exceeding five (5) Business Days, in order to effect whatever changes may thereby be made necessary in the Registration Statement,
the Pricing Disclosure Package or the Prospectus or in any other documents and arrangements, and the Company agrees to file promptly
any amendment to the Registration Statement, the Pricing Disclosure Package or the Prospectus that in the opinion of Representative
Counsel may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any party
substituted under this Section 6 with like effect as if it had originally been a party to this Agreement with respect to such
Firm Securities or Option Securities.
7.1.
Prohibition on Press Releases and Public Announcements. The Company shall
not issue press releases or engage in any other publicity, without the Representative’s prior written consent, for a period
ending at 5:00 p.m., Eastern time, on the first (1st) Business Day following the fortieth (40th) day
after the Closing Date, other than normal and customary releases issued in the ordinary course of the Company’s business.
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8.
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8.
EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION THEREOF.
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8.1. Effective
Date. This Agreement shall become effective when both the Company and the Representative have executed the same and
delivered counterparts of such signatures to the other party.
8.2.
Termination. The Representative shall have the right to terminate this Agreement
at any time prior to any Closing Date, (i) if any domestic or international event or act or occurrence has materially disrupted,
or in the Representative’s opinion will in the immediate future materially disrupt, general securities markets in the United
States; or (ii) if trading on the New York Stock Exchange or the Nasdaq Stock Market LLC shall have been suspended or materially
limited, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have
been required by FINRA or by order of the Commission or any other government authority having jurisdiction; or (iii) if the United
States shall have become involved in a new war or an increase in major hostilities; or (iv) if a banking moratorium has been declared
by a New York State or federal authority; or (v) if a moratorium on foreign exchange trading has been declared which materially
adversely impacts the United States securities markets; or (vi) if the Company shall have sustained a material loss by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether or not such loss shall have
been insured, will, in your opinion, make it inadvisable to proceed with the delivery of the Firm Securities or Option Securities;
or (vii) if the Company is in material breach of any of its representations, warranties or covenants hereunder; or (viii) if the
Representative shall have become aware after the date hereof of a Material Adverse Change, or an adverse material change in general
market conditions as in the Representative’s judgment would make it impracticable to proceed with the offering, sale and/or
delivery of the Public Securities or to enforce contracts made by the Underwriters for the sale of the Public Securities.
8.3.
Expenses. Notwithstanding anything to the contrary in this Agreement, except in the case of a default by the Underwriters,
pursuant to Section 6.2 above, in the event that this Agreement shall not be carried out for any reason whatsoever, within the
time specified herein or any extensions thereof pursuant to the terms herein, the Company shall be obligated to pay to the Underwriters
their actual and accountable out-of-pocket expenses related to the transactions contemplated herein then due and payable (including
the fees and disbursements of Representative Counsel) up to $50,000, inclusive of the $50,000 advance for accountable expenses
previously paid by the Company to the Representative (the “Advance”), and upon demand the Company shall pay
the full amount thereof to the Representative on behalf of the Underwriters; provided, however, that such expense cap in no way
limits or impairs the indemnification and contribution provisions of this Agreement.
Notwithstanding
the foregoing, any advance received by the Representative will be reimbursed to the Company to the extent not actually incurred
in compliance with FINRA Rule 5110(g)(4)(A).
8.4.
Indemnification. Notwithstanding any contrary provision contained in this Agreement, any election hereunder or any termination
of this Agreement, and whether or not this Agreement is otherwise carried out, the provisions of Section 5 shall remain in full
force and effect and shall not be in any way affected by, such election or termination or failure to carry out the terms of this
Agreement or any part hereof.
8.5.
Representations, Warranties, Agreements to Survive. All representations, warranties and agreements contained in this Agreement
or in certificates of officers of the Company submitted pursuant hereto, shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of any Underwriter or its affiliates or selling agents, any person controlling any
Underwriter, its officers or directors or any person controlling the Company or (ii) delivery of and payment for the Public Securities.
9.1.
Notices. All communications hereunder, except as herein otherwise specifically provided, shall be in writing and shall
be mailed (registered or certified mail, return receipt requested), personally delivered or sent by facsimile transmission and
confirmed and shall be deemed given when so delivered or emailed and confirmed (which may be by email) or if mailed, two (2) days
after such mailing.
If
to the Representative:
Kingswood
Capital Markets
17
Battery Place, Suite 625
New
York, New York 10004
Attn:
Joseph T. Rallo
with
a copy (which shall not constitute notice) to:
Nelson
Mullins Riley & Scarborough LLP
101
Constitution Avenue NW, Suite 900
Washington,
DC 20001
Attn:
Andrew M. Tucker, Esq.
Fax No.: (202) 689-2860
If
to the Company:
Digital
Brands Group, Inc.
1400
Lavaca Street
Austin,
Texas 78701
Attn:
John Hilburn Davis IV
Email: hil@dstld.la
with
a copy (which shall not constitute notice) to:
Manatt,
Phelps & Phillips, LLP
695
Town Center Drive, 14th Floor
Costa
Mesa, CA 92646
Attn:
Thomas J. Poletti, Esq.
Fax No.: (714) 371-2551
9.2.
Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or provisions of this Agreement.
9.3.
Amendment. This Agreement may only be amended by a written instrument executed by each of the parties hereto.
9.4.
Entire Agreement. This Agreement (together with the other agreements and documents being delivered pursuant to or in connection
with this Agreement) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and thereof,
and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.
9.5.
Binding Effect. This Agreement shall inure solely to the benefit of and shall be binding upon the Representative, the Underwriters,
the Company and the controlling persons, directors and officers referred to in Section 5 hereof, and their respective successors,
legal representatives, heirs and assigns, and no other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any provisions herein contained. The term “successors
and assigns” shall not include a purchaser, in its capacity as such, of securities from any of the Underwriters.
9.6.
Governing Law; Consent to Jurisdiction; Trial by Jury. This Agreement
shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to
conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of,
or relating in any way to this Agreement shall be brought and enforced in the New York Supreme Court, County of New York, or in
the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction
shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient
forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or
certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 9.1 hereof.
Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim.
The Company agrees that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all
of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection with
the preparation therefor. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders
and affiliates) and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any
and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated
hereby.
9.7.
Execution in Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one
and the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto
and delivered to each of the other parties hereto. Delivery of a signed counterpart of this Agreement by facsimile or email/pdf
transmission shall constitute valid and sufficient delivery thereof.
9.8.
Waiver, etc. The failure of any of the parties hereto to at any time enforce any of the provisions of this Agreement shall
not be deemed or construed to be a waiver of any such provision, nor to in any way effect the validity of this Agreement or any
provision hereof or the right of any of the parties hereto to thereafter enforce each and every provision of this Agreement. No
waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Agreement shall be effective unless set
forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and
no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent
breach, non-compliance or non-fulfillment.
[Signature
Page Follows]
If
the foregoing correctly sets forth the understanding between the Underwriters and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a binding agreement between us.
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Very truly yours,
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DIGITAL BRANDS GROUP, INC.
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By:
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/s/ Hil Davis
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Name:
Hil Davis
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Title: Chief
Executive Officer
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Confirmed as of the date first written above mentioned, on behalf of itself and as Representative of the several Underwriters named on Schedule 1 hereto:
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KINGSWOOD CAPITAL MARKETS,
division of Benchmark Investments, Inc.
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By:
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/s/ Sam Fleischman
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Name: Sam Fleischman
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Title: Supervisory Principal
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[SIGNATURE
PAGE]
DIGITAL
BRANDS GROUP, INC. – UNDERWRITING AGREEMENT
SCHEDULE 1
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Underwriter
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Total Number of
Firm Shares and
Accompanying Firm Warrants
to be
Purchased
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Number of Additional
Option Shares and Accompanying
Option Warrants to be Purchased if
the Over-Allotment Option
is Fully Exercised
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Kingswood Capital Markets, division of Benchmark Investments, Inc.
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2,404,639
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361,445
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Westpark Capital LLC
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5,000
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0
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TOTAL
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2,409,639
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361,445
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SCHEDULE 2-A
Pricing Information
Number of Firm Shares: 2,409,639
Number of Firm Warrants: 2,409,639
Number of Option Shares: 361,445
Number of Option Warrants: 361,445
Public Offering Price per Firm Share and Firm Warrant: $4.15
Public Offering Price per Option Share and Option Warrant: $4.15
Underwriting Discount per Firm Share and Firm Warrant: $0.33
Underwriting Discount per Option Share and Option Warrant: $0.33
Proceeds to Company per Firm Share and Firm Warrant (before expenses): $3.82
Proceeds to Company per Option Share and Option Warrant (before expenses): $3.82
SCHEDULE 2-B
Issuer General Use Free Writing Prospectuses
FWP filed with the Commission on April 28, 2021
SCHEDULE 3
List of Lock-Up Parties
EXHIBIT A
Form of Representative’s Warrant
Agreement
THE REGISTERED HOLDER OF THIS PURCHASE
WARRANT BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE WARRANT EXCEPT AS HEREIN PROVIDED
AND THE REGISTERED HOLDER OF THIS PURCHASE WARRANT AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE
WARRANT FOR A PERIOD OF ONE HUNDRED EIGHTY DAYS FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE OTHER THAN (I) KINGSWOOD
CAPITAL MARKETS, DIVISION OF BENCHMARK INVESTMENTS, INC. OR AN UNDERWRITER OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING,
OR (II) A BONA FIDE OFFICER OR PARTNER OF KINGSWOOD CAPITAL MARKETS, DIVISION OF BENCHMARK INVESTMENTS, INC. OR OF ANY SUCH UNDERWRITER
OR SELECTED DEALER.
THIS PURCHASE WARRANT IS NOT EXERCISABLE
PRIOR TO NOVEMBER 13, 2021. VOID AFTER 5:00 P.M., EASTERN TIME, MAY 13, 2026.
COMMON STOCK PURCHASE WARRANT
For the Purchase of 120,482 Shares of Common
Stock
of
DIGITAL BRANDS GROUP, INC.
1. Purchase
Warrant. THIS CERTIFIES THAT, in consideration of funds duly paid by or on behalf of Kingswood Capital Markets, division of
Benchmark Investments, Inc. (“Holder”), as registered owner of this Purchase Warrant, Digital Brands Group,
Inc., a Delaware corporation (the “Company”), Holder is entitled, at any time or from time to time from November
13, 2021 (the “Commencement Date”), and at or before 5:00 p.m., Eastern time, May 13, 2026 (the “Expiration
Date”), but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to 120,482 shares of common
stock of the Company, par value $0.0001 per share (the “Shares”), subject to adjustment as provided in Section
6 hereof. If the Expiration Date is a day on which banking institutions are authorized by law to close, then this Purchase Warrant
may be exercised on the next succeeding day which is not such a day in accordance with the terms herein. During the period ending
on the Expiration Date, the Company agrees not to take any action that would terminate this Purchase Warrant. This Purchase Warrant
is initially exercisable at $5.19 per Share ; provided, however, that upon the occurrence of any of the events specified
in Section 6 hereof, the rights granted by this Purchase Warrant, including the exercise price per Share and the number of Shares
to be received upon such exercise, shall be adjusted as therein specified. The term “Exercise Price” shall mean
the initial exercise price or the adjusted exercise price, depending on the context. The term “Effective Date”
shall mean May 13, 2021, the date on which the Registration Statement on Form S-1 (File No. 333- 255193) of the Company was declared
effective by the Securities and Exchange Commission.
2.1 Exercise
Form. In order to exercise this Purchase Warrant, the exercise form attached hereto must be duly executed and completed and
delivered to the Company, together with this Purchase Warrant and payment of the Exercise Price for the Shares being purchased
payable in cash by wire transfer of immediately available funds to an account designated by the Company or by certified check or
official bank check. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern time,
on the Expiration Date, this Purchase Warrant shall become and be void without further force or effect, and all rights represented
hereby shall cease and expire.
2.2 Cashless
Exercise. If at any time after the Commencement Date there is no effective registration statement registering, or no current
prospectus available for, the resale of the Shares by the Holder, then in lieu of exercising this Purchase Warrant by payment of
cash or check payable to the order of the Company pursuant to Section 2.1 above, Holder may elect to receive the number of Shares
equal to the value of this Purchase Warrant (or the portion thereof being exercised), by surrender of this Purchase Warrant to
the Company, together with the exercise form attached hereto, in which event the Company shall issue to Holder, Shares in accordance
with the following formula:
Where,
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X
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=
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The number of Shares to be issued to Holder;
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Y
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=
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The number of Shares for which the Purchase Warrant
is being exercised;
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A
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=
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The fair market value of one Share; and
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For purposes of this
Section 2.2, the fair market value of a Share is defined as follows:
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(i)
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if the Company’s common stock is traded on a securities exchange, the value shall be deemed
to be the closing price on such exchange prior to the exercise form being submitted in connection with the exercise of the Purchase
Warrant; or
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(ii)
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if the Company’s common stock is actively traded over-the-counter, the value shall be deemed
to be the closing bid price prior to the exercise form being submitted in connection with the exercise of the Purchase Warrant;
if there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Company’s
Board of Directors.
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2.3 Legend.
Each certificate for the securities purchased under this Purchase Warrant shall bear a legend as follows unless such securities
have been registered under the Securities Act of 1933, as amended (the “Securities Act”):
“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE
STATE LAW. NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT AND APPLICABLE STATE LAW WHICH, IN THE OPINION OF COUNSEL TO THE COMPANY, IS AVAILABLE.”
3.1 General
Restrictions. The registered Holder of this Purchase Warrant agrees by his, her or its acceptance hereof, that such Holder
will not: (a) sell, transfer, assign, pledge or hypothecate this Purchase Warrant or the securities issuable hereunder for a period
of three hundred sixty (360) days following the Effective Date to anyone other than: (i) Kingswood Capital Markets, division of
Benchmark Investments, Inc. (“Kingswood”) or an underwriter or a selected dealer participating in the Offering,
or (ii) a bona fide officer or partner of Kingswood or of any such underwriter or selected dealer, in each case in accordance with
FINRA Conduct Rule 5110(e)(1), or (b) for a period of three hundred sixty (360) days following the Effective Date, cause this Purchase
Warrant or the securities issuable hereunder to be the subject of any hedging, short sale, derivative, put or call transaction
that would result in the effective economic disposition of this Purchase Warrant or the securities hereunder, except as provided
for in FINRA Rule 5110(e)(2). On and after 360 days after the Effective Date, transfers to others may be made subject to compliance
with or exemptions from applicable securities laws. In order to make any permitted assignment, the Holder must deliver to the Company
the assignment form attached hereto duly executed and completed, together with the Purchase Warrant and payment of all transfer
taxes, if any, payable in connection therewith. The Company shall within five (5) business days transfer this Purchase Warrant
on the books of the Company and shall execute and deliver a new Purchase Warrant or Purchase Warrants of like tenor to the appropriate
assignee(s) expressly evidencing the right to purchase the aggregate number of Shares purchasable hereunder or such portion of
such number as shall be contemplated by any such assignment.
3.2 Restrictions
Imposed by the Securities Act. The securities evidenced by this Purchase Warrant shall not be transferred unless and until:
(i) the Company has received the opinion of counsel for the Holder that the securities may be transferred pursuant to an exemption
from registration under the Securities Act and applicable state securities laws, the availability of which is established to the
reasonable satisfaction of the Company (the Company hereby agreeing that the opinion of Manatt, Phelps & Phillips, LLP shall
be deemed satisfactory evidence of the availability of an exemption), or (ii) a registration statement or a post-effective amendment
to the Registration Statement relating to the offer and sale of such securities has been filed by the Company and declared effective
by the U.S. Securities and Exchange Commission (the “Commission”) and compliance with applicable state securities
law has been established.
4.1.1 Grant of Right.
The Company, upon written demand (a “Demand Notice”) of the Holders of at least 51% of the Purchase Warrants
and/or the underlying Shares, agrees to register, on one (1) occasion, all or any portion of the Shares underlying the Purchase
Warrants (collectively, the “Registrable Securities”). On such occasion, the Company will file a registration
statement with the Commission covering the Registrable Securities within sixty (60) days after receipt of a Demand Notice and use
its reasonable best efforts to have the registration statement declared effective promptly thereafter, subject to compliance with
review by the Commission; provided, however, that the Company shall not be required to comply with a Demand Notice
if the Company has filed a registration statement with respect to which the Holder is entitled to piggyback registration rights
pursuant to Section 4.2 hereof and either: (i) the Holder has elected to participate in the offering covered by such registration
statement or (ii) if such registration statement relates to an underwritten primary offering of securities of the Company, until
the offering covered by such registration statement has been withdrawn or until thirty (30) days after such offering is consummated.
The Company covenants and agrees to give written notice of its receipt of any Demand Notice by any Holders to all other registered
Holders of the Purchase Warrants and/or the Registrable Securities within ten (10) days after the date of the receipt of any such
Demand Notice.
4.1.2 Terms.
The Company shall bear all fees and expenses attendant to the registration of the Registrable Securities pursuant to Section 4.1.1,
but the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected by the Holders to
represent them in connection with the sale of the Registrable Securities. The Company agrees to use its reasonable best efforts
to cause the filing required herein to become effective promptly and to qualify or register the Registrable Securities in such
states as are reasonably requested by the Holders; provided, however, that in no event shall the Company be required
to register the Registrable Securities in a State in which such registration would cause: (i) the Company to be obligated to register
or license to do business in such State or submit to general service of process in such State, or (ii) the principal stockholders
of the Company to be obligated to escrow their shares of capital stock of the Company. The Company shall cause any registration
statement filed pursuant to the demand right granted under Section 4.1.1 to remain effective for a period of at least twelve (12)
consecutive months after the date that the Holders of the Registrable Securities covered by such registration statement are first
given the opportunity to sell all of such securities. The Holders shall only use the prospectuses provided by the Company to sell
the shares covered by such registration statement, and will immediately cease to use any prospectus furnished by the Company if
the Company advises the Holder that such prospectus may no longer be used due to a material misstatement or omission. Notwithstanding
the provisions of this Section 4.1.2, the Holder shall be entitled to a demand registration under this Section 4.1.2 on only one
(1) occasion and such demand registration right shall terminate on the fifth anniversary of the Effective Date in accordance with
FINRA Rule 5110(g)(8)(C).
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4.2
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“Piggy-Back” Registration.
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4.2.1 Grant
of Right. In addition to the demand right of registration described in Section 4.1 hereof, the Holder shall have the right,
for a period of no more than five (5) years from the Effective Date in accordance with FINRA Rule 5110(g)(8)(D), to include the
Registrable Securities as part of any other registration of securities filed by the Company (other than in connection with a transaction
contemplated by Rule 145(a) promulgated under the Securities Act or pursuant to Form S-8 or Form S-4 or any equivalent form); provided,
however, that if, solely in connection with any primary underwritten public offering for the account of the Company, the
managing underwriter(s) thereof shall, in its reasonable discretion, impose a limitation on the number of shares of common stock
which may be included in the Registration Statement because, in such underwriter(s)’ judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then the Company shall be obligated to include in such
Registration Statement only such limited portion of the Registrable Securities with respect to which the Holder requested inclusion
hereunder as the underwriter shall reasonably permit. Any exclusion of Registrable Securities shall be made pro rata among the
Holders seeking to include Registrable Securities in proportion to the number of Registrable Securities sought to be included by
such Holders; provided, however, that the Company shall not exclude any Registrable Securities unless the Company
has first excluded all outstanding securities, the holders of which are not entitled to inclusion of such securities in such Registration
Statement or are not entitled to pro rata inclusion with the Registrable Securities.
4.2.2 Terms.
The Company shall bear all fees and expenses attendant to registering the Registrable Securities pursuant to Section 4.2.1 hereof,
but the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected by the Holders to
represent them in connection with the sale of the Registrable Securities. In the event of such a proposed registration, the Company
shall furnish the then Holders of outstanding Registrable Securities with not less than thirty (30) days’ written notice
prior to the proposed date of filing of such registration statement. Such notice to the Holders shall continue to be given for
each registration statement filed by the Company until such time as all of the Registrable Securities have been sold by the Holder.
The holders of the Registrable Securities shall exercise the “piggy-back” rights provided for herein by giving written
notice within ten (10) days of the receipt of the Company’s notice of its intention to file a registration statement. Except
as otherwise provided in this Purchase Warrant, there shall be no limit on the number of times the Holder may request registration
under this Section 4.2.2; provided, however, that such registration rights shall terminate on the fifth anniversary
of the Commencement Date.
4.3.1 Indemnification.
The Company shall indemnify the Holders of the Registrable Securities to be sold pursuant to any registration statement hereunder
and each person, if any, who controls such Holders within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended (“Exchange Act”), against all loss, claim, damage, expense or liability
(including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which any of them may become subject under the Securities Act, the Exchange Act or otherwise,
arising from such registration statement but only to the same extent and with the same effect as the provisions pursuant to which
the Company has agreed to indemnify the Underwriters contained in Section 5.1 of the Underwriting Agreement between the Underwriters
and the Company, dated as of May 13, 2021. The Holders of the Registrable Securities to be sold pursuant to such registration statement,
and their successors and assigns, shall severally, and not jointly, indemnify the Company, against all loss, claim, damage, expense
or liability (including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing
or defending against any claim whatsoever) to which they may become subject under the Securities Act, the Exchange Act or otherwise,
arising from information furnished by or on behalf of such Holders, or their successors or assigns, in writing, for specific inclusion
in such registration statement to the same extent and with the same effect as the provisions contained in Section 5.2 of the Underwriting
Agreement pursuant to which the Underwriters have agreed to indemnify the Company.
4.3.2 Exercise
of Purchase Warrants. Nothing contained in this Purchase Warrant shall be construed as requiring the Holders to exercise their
Purchase Warrants prior to or after the initial filing of any registration statement or the effectiveness thereof.
4.3.3 Documents
Delivered to Holders. The Company shall furnish to each Holder participating in any of the foregoing offerings and to each
underwriter of any such offering, if any, a signed counterpart, addressed to such Holder or underwriter, of: (i) an opinion of
counsel to the Company, dated the effective date of such registration statement (and, if such registration includes an underwritten
public offering, an opinion dated the date of the closing under any underwriting agreement related thereto), and (ii) a “cold
comfort” letter dated the effective date of such registration statement (and, if such registration includes an underwritten
public offering, a letter dated the date of the closing under the underwriting agreement) signed by the independent registered
public accounting firm which has issued a report on the Company’s financial statements included in such registration statement,
in each case covering substantially the same matters with respect to such registration statement (and the prospectus included therein)
and, in the case of such accountants’ letter, with respect to events subsequent to the date of such financial statements,
as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to underwriters in
underwritten public offerings of securities. The Company shall also deliver promptly to each Holder participating in the offering
requesting the correspondence and memoranda described below and to the managing underwriter, if any, copies of all correspondence
between the Commission and the Company, its counsel or auditors and all memoranda relating to discussions with the Commission or
its staff with respect to the registration statement and permit each Holder and underwriter to do such investigation, upon reasonable
advance notice, with respect to information contained in or omitted from the registration statement as it deems reasonably necessary
to comply with applicable securities laws or rules of FINRA. Such investigation shall include access to books, records and properties
and opportunities to discuss the business of the Company with its officers and independent auditors, all to such reasonable extent
and at such reasonable times as any such Holder shall reasonably request.
4.3.4 Underwriting
Agreement. The Company shall enter into an underwriting agreement with the managing underwriter(s), if any, selected by any
Holders whose Registrable Securities are being registered pursuant to this Section 4, which managing underwriter shall be reasonably
satisfactory to the Company. Such agreement shall be reasonably satisfactory in form and substance to the Company, each Holder
and such managing underwriters, and shall contain such representations, warranties and covenants by the Company and such other
terms as are customarily contained in agreements of that type used by the managing underwriter. The Holders shall be parties to
any underwriting agreement relating to an underwritten sale of their Registrable Securities and may, at their option, require that
any or all the representations, warranties and covenants of the Company to or for the benefit of such underwriters shall also be
made to and for the benefit of such Holders. Such Holders shall not be required to make any representations or warranties to or
agreements with the Company or the underwriters except as they may relate to such Holders, their Shares and their intended methods
of distribution.
4.3.5 Documents
to be Delivered by Holders. Each of the Holders participating in any of the foregoing offerings shall furnish to the Company
a completed and executed questionnaire provided by the Company requesting information customarily sought of selling security holders.
4.3.6 Damages.
Should the registration or the effectiveness thereof required by Sections 4.1 and 4.2 hereof be delayed by the Company or the Company
otherwise fails to comply with such provisions, the Holders shall, in addition to any other legal or other relief available to
the Holders, be entitled to obtain specific performance or other equitable (including injunctive) relief against the threatened
breach of such provisions or the continuation of any such breach, without the necessity of proving actual damages and without the
necessity of posting bond or other security.
4.4 Termination
of Registration Rights. The registration rights afforded to the Holders under this Section 4 shall terminate on the earliest
date when all Registrable Securities of such Holder either: (i) have been publicly sold by such Holder pursuant to a Registration
Statement, (ii) have been covered by an effective Registration Statement on Form S-1 or Form S-3 (or successor form), which may
be kept effective as an evergreen Registration Statement, or (iii) may be sold by the Holder within a 90 day period without registration
pursuant to Rule 144 or consistent with applicable SEC interpretive guidance (including CD&I no. 201.04 (April 2, 2007) or
similar interpretive guidance).
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5.
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New Purchase Warrants to be Issued.
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5.1 Partial
Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Purchase Warrant may be exercised or assigned in
whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase Warrant for cancellation,
together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise Price and/or transfer tax
if exercised pursuant to Section 2.1 hereto, the Company shall cause to be delivered to the Holder without charge a new Purchase
Warrant of like tenor to this Purchase Warrant in the name of the Holder evidencing the right of the Holder to purchase the number
of Shares purchasable hereunder as to which this Purchase Warrant has not been exercised or assigned.
5.2 Lost
Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this
Purchase Warrant and of reasonably satisfactory indemnification or the posting of a bond, the Company shall execute and deliver
a new Purchase Warrant of like tenor and date. Any such new Purchase Warrant executed and delivered as a result of such loss, theft,
mutilation or destruction shall constitute a substitute contractual obligation on the part of the Company.
6.1 Adjustments
to Exercise Price and Number of Securities. The Exercise Price and the number of Shares underlying the Purchase Warrant shall
be subject to adjustment from time to time as hereinafter set forth:
6.1.1 Share
Dividends; Split Ups. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding
Shares is increased by a stock dividend payable in Shares or by a split up of Shares or other similar event, then, on the effective
day thereof, the number of Shares purchasable hereunder shall be increased in proportion to such increase in outstanding Shares,
and the Exercise Price shall be proportionately decreased.
6.1.2 Aggregation
of Shares. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares
is decreased by a consolidation, combination or reclassification of Shares or other similar event, then, on the effective date
thereof, the number of Shares purchasable hereunder shall be decreased in proportion to such decrease in outstanding Shares, and
the Exercise Price shall be proportionately increased.
6.1.3 Replacement
of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding Shares other than
a change covered by Section 6.1.1 or 6.1.2 hereof or that solely affects the par value of such Shares, or in the case of any share
reconstruction or amalgamation or consolidation of the Company with or into another corporation (other than a consolidation or
share reconstruction or amalgamation in which the Company is the continuing corporation and that does not result in any reclassification
or reorganization of the outstanding Shares), or in the case of any sale or conveyance to another corporation or entity of the
property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder
of this Purchase Warrant shall have the right thereafter (until the expiration of the right of exercise of this Purchase Warrant)
to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the
kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization,
share reconstruction or amalgamation, or consolidation, or upon a dissolution following any such sale or transfer, by a Holder
of the number of Shares of the Company obtainable upon exercise of this Purchase Warrant immediately prior to such event; and if
any reclassification also results in a change in Shares covered by Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant
to Sections 6.1.1, 6.1.2 and this Section 6.1.3. The provisions of this Section 6.1.3 shall similarly apply to successive reclassifications,
reorganizations, share reconstructions or amalgamations, or consolidations, sales or other transfers.
6.1.4 Changes
in Form of Purchase Warrant. This form of Purchase Warrant need not be changed because of any change pursuant to this Section
6.1, and Purchase Warrants issued after such change may state the same Exercise Price and the same number of Shares as are stated
in the Purchase Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Purchase
Warrants reflecting a required or permissive change shall not be deemed to waive any rights to an adjustment occurring after the
Commencement Date or the computation thereof.
6.2 Substitute
Purchase Warrant. In case of any consolidation of the Company with, or share reconstruction or amalgamation of the Company
with or into, another corporation (other than a consolidation or share reconstruction or amalgamation which does not result in
any reclassification or change of the outstanding Shares), the corporation formed by such consolidation or share reconstruction
or amalgamation shall execute and deliver to the Holder a supplemental Purchase Warrant providing that the holder of each Purchase
Warrant then outstanding or to be outstanding shall have the right thereafter (until the stated expiration of such Purchase Warrant)
to receive, upon exercise of such Purchase Warrant, the kind and amount of shares of stock and other securities and property receivable
upon such consolidation or share reconstruction or amalgamation, by a holder of the number of Shares for which such Purchase Warrant
might have been exercised immediately prior to such consolidation, share reconstruction or amalgamation, sale or transfer. Such
supplemental Purchase Warrant shall provide for adjustments which shall be identical to the adjustments provided for in this Section
6. The above provision of this Section shall similarly apply to successive consolidations or share reconstructions or amalgamations.
6.3 Elimination
of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Shares upon the
exercise of the Purchase Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being
the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up or down, as the case may
be, to the nearest whole number of Shares or other securities, properties or rights.
7. Reservation
and Listing. The Company shall at all times reserve and keep available out of its authorized Shares, solely for the purpose
of issuance upon exercise of the Purchase Warrants, such number of Shares or other securities, properties or rights as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Purchase Warrants and payment of
the Exercise Price therefor, in accordance with the terms hereby, all Shares and other securities issuable upon such exercise shall
be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any stockholder. The Company
further covenants and agrees that upon exercise of the Purchase Warrants and payment of the exercise price therefor, all Shares
and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject
to preemptive rights of any stockholder. As long as the Purchase Warrants shall be outstanding, the Company shall use its commercially
reasonable efforts to cause all Shares issuable upon exercise of the Purchase Warrants to be listed (subject to official notice
of issuance) on all national securities exchanges (or, if applicable, on the OTC Bulletin Board or any successor trading market)
on which the Shares issued to the public in the Offering may then be listed and/or quoted.
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8.
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Certain Notice Requirements.
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8.1 Holder’s
Right to Receive Notice. Nothing herein shall be construed as conferring upon the Holders the right to vote or consent or to
receive notice as a stockholder for the election of directors or any other matter, or as having any rights whatsoever as a stockholder
of the Company. If, however, at any time prior to the expiration of the Purchase Warrants and their exercise, any of the events
described in Section 8.2 shall occur, then, in one or more of said events, the Company shall give written notice of such event
at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination
of the stockholders entitled to such dividend, distribution, conversion or exchange of securities or subscription rights, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of
the closing of the transfer books, as the case may be. Notwithstanding the foregoing, the Company shall deliver to each Holder
a copy of each notice given to the other stockholders of the Company at the same time and in the same manner that such notice is
given to the stockholders.
8.2 Events
Requiring Notice. The Company shall be required to give the notice described in this Section 8 upon one or more of the following
events: (i) if the Company shall take a record of the holders of its Shares for the purpose of entitling them to receive a dividend
or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings,
as indicated by the accounting treatment of such dividend or distribution on the books of the Company; (ii) the Company shall offer
to all the holders of its Shares any additional shares of capital stock of the Company or securities convertible into or exchangeable
for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor; or (iii) a dissolution, liquidation
or winding up of the Company (other than in connection with a consolidation or share reconstruction or amalgamation) or a sale
of all or substantially all of its property, assets and business shall be proposed.
8.3 Notice
of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to
Section 6 hereof, send notice to the Holders of such event and change (“Price Notice”). The Price Notice shall
describe the event causing the change and the method of calculating same and shall be certified as being true and accurate by the
Company’s Chief Financial Officer.
8.4 Transmittal
of Notices. All notices, requests, consents and other communications under this Purchase Warrant shall be in writing and shall
be deemed to have been duly made when hand delivered or mailed by express mail or private courier service: (i) if to the registered
Holder of the Purchase Warrant, to the address of such Holder as shown on the books of the Company, or (ii) if to the Company,
to following address or to such other address as the Company may designate by notice to the Holders:
If to the Holder:
Kingswood Capital Markets
17 Battery Place, Suite 625
New York, New York 10004
Attn: Joseph T. Rallo
with a copy (which shall not constitute
notice) to:
Nelson Mullins Riley & Scarborough
LLP
101 Constitution Avenue NW, Suite 900
Washington, DC 20001
Attn: Andrew M. Tucker, Esq.
Fax No.: (202) 689-2860
If to the Company:
Digital Brands Group, Inc.
1400 Lavaca Street
Austin, Texas 78701
Attn: John Hilburn Davis IV
Email: hil@dstld.la
with a copy (which shall not constitute
notice) to:
Manatt, Phelps & Phillips, LLP
695 Town Center Drive, 14th Floor
Costa Mesa, CA 92646
Attn: Thomas J. Poletti, Esq.
Fax No.: (714) 371-2551
9.1 Amendments.
The Company and Kingswood may from time to time supplement or amend this Purchase Warrant without the approval of any of the Holders
in order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with
any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company
and Kingswood may deem necessary or desirable and that the Company and Kingswood deem shall not adversely affect the interest of
the Holders. All other modifications or amendments shall require the written consent of and be signed by the party against whom
enforcement of the modification or amendment is sought.
9.2 Headings.
The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Purchase Warrant.
9.3 Entire
Agreement. This Purchase Warrant (together with the other agreements and documents being delivered pursuant to or in connection
with this Purchase Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.
9.4 Binding
Effect. This Purchase Warrant shall inure solely to the benefit of and shall be binding upon, the Holder and the Company and
their permitted assignees, respective successors, legal representative and assigns, and no other person shall have or be construed
to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Purchase Warrant or any provisions
herein contained.
9.5 Governing
Law; Submission to Jurisdiction; Trial by Jury. This Purchase Warrant shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees
that any action, proceeding or claim against it arising out of, or relating in any way to this Purchase Warrant shall be brought
and enforced in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District
of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any
objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to be served
upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 8 hereof. Such mailing shall be deemed personal service and shall
be legal and binding upon the Company in any action, proceeding or claim. The Company and the Holder agree that the prevailing
party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees
and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor. The Company (on
its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates) and the Holder hereby
irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated hereby.
9.6 Waiver,
etc. The failure of the Company or the Holder to at any time enforce any of the provisions of this Purchase Warrant shall not
be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Purchase Warrant or
any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Purchase
Warrant. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Purchase Warrant shall be
effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver
is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any
other or subsequent breach, non-compliance or non-fulfillment.
9.7 Execution
in Counterparts. This Purchase Warrant may be executed in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and
the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto and
delivered to each of the other parties hereto. Such counterparts may be delivered by facsimile transmission or other electronic
transmission.
9.8 Exchange
Agreement. As a condition of the Holder’s receipt and acceptance of this Purchase Warrant, Holder agrees that, at any
time prior to the complete exercise of this Purchase Warrant by Holder, if the Company and Kingswood enter into an agreement (“Exchange
Agreement”) pursuant to which they agree that all outstanding Purchase Warrants will be exchanged for securities or cash
or a combination of both, then Holder shall agree to such exchange and become a party to the Exchange Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF,
the Company has caused this Purchase Warrant to be signed by its duly authorized officer as of the ____ day of _______, 2021.
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DIGITAL BRANDS GROUP, INC.
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By:
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Name:
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Title:
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[Form to be used to exercise Purchase
Warrant]
Date: __________, 20___
The undersigned
hereby elects irrevocably to exercise the Purchase Warrant for ______ shares of common stock, par value $0.0001 per share
(the “Shares”), of Digital Brands Group, Inc., a Delaware corporation (the “Company”),
and hereby makes payment of $____ (at the rate of $____ per Share) in payment of the Exercise Price pursuant thereto. Please
issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if
applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been
exercised.
or
The undersigned hereby
elects irrevocably to convert its right to purchase ___ Shares of the Company under the Purchase Warrant for ______ Shares, as
determined in accordance with the following formula:
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Where,
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X
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=
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The number of Shares to be issued to Holder;
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Y
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=
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The number of Shares for which the Purchase Warrant is being exercised;
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A
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=
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The fair market value of one Share which is equal to $______; and
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B
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=
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The Exercise Price which is equal to $ _____ per share
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The undersigned agrees
and acknowledges that the calculation set forth above is subject to confirmation by the Company and any disagreement with respect
to the calculation shall be resolved by the Company in its sole discretion.
Please issue the Shares
as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase
Warrant representing the number of Shares for which this Purchase Warrant has not been converted.
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
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Name:
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(Print in Block Letters)
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Address:
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NOTICE: The signature
to this form must correspond with the name as written upon the face of the Purchase Warrant without alteration or enlargement or
any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership
on a registered national securities exchange.
[Form to be used to assign Purchase Warrant]
ASSIGNMENT
(To be executed by the registered Holder to effect a transfer
of the within Purchase Warrant):
FOR VALUE RECEIVED, __________________ does hereby sell, assign
and transfer unto the right to purchase shares of common stock, par value $0.0001 per share, of Digital Brands Group, Inc., a Delaware
corporation (the “Company”), evidenced by the Purchase Warrant and does hereby authorize the Company to transfer
such right on the books of the Company.
Dated: __________, 20__
Signature__________________________________________
Signature Guaranteed__________________________________________
NOTICE: The signature to this form must correspond with the
name as written upon the face of the within Purchase Warrant without alteration or enlargement or any change whatsoever, and must
be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national
securities exchange.
EXHIBIT B
Form of Lock-Up Agreement
Lock-Up Agreement
____________, 2021
Kingswood Capital Markets,
division of Benchmark Investments, Inc.
as Representative of the Underwriters
17 Battery Place, Suite 625
New York, New York 10004
Ladies and Gentlemen:
The undersigned understands
that Kingswood Capital Markets, division of Benchmark Investments, Inc. (the “Representative”) proposes to
enter into an Underwriting Agreement (the “Underwriting Agreement”) with Digital Brands Group, Inc., a Delaware
corporation (the “Company”), providing for the public offering (the “Public Offering”) of
shares of common stock of the Company, par value $0.0001 per share (the “Common Stock”), and warrants to purchase
shares of Common Stock (the “Warrants,” and collectively with the Common Stock, the “Securities”).
To
induce the Representative to continue its efforts in connection with the Public Offering, the undersigned hereby agrees that,
without the prior written consent of the Representative, the undersigned will not, during the period commencing on the date hereof
and ending 180 days after the date of the final prospectus (the “Prospectus”) relating to the Public Offering
(the “Lock-Up Period”), (1) offer, pledge, sell, contract to sell, grant, lend, or otherwise transfer or dispose
of, directly or indirectly, any Securities or any securities convertible into or exercisable or exchangeable for the Securities,
whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires
the power of disposition (collectively, the “Lock-Up Securities”); (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences of ownership of the Lock-Up Securities, whether
any such transaction described in clause (1) or (2) above is to be settled by delivery of Lock-Up Securities, in cash or otherwise;
(3) make any demand for or exercise any right with respect to the registration of any Lock-Up Securities; or (4) publicly disclose
the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement
relating to any Lock-Up Securities. Notwithstanding the foregoing, and subject to the conditions below, the undersigned may transfer
Lock-Up Securities without the prior written consent of the Representative in connection with (a) transactions relating to Lock-Up
Securities acquired in open market transactions after the completion of the Public Offering; provided that no filing under
Section 13 or Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or other
public announcement shall be required or shall be voluntarily made during the Lock-Up Period in connection with subsequent sales
of Lock-Up Securities acquired in such open market transactions; (b) transfers of Lock-Up Securities as a bona fide gift,
by will or intestacy or to a family member or trust for the benefit of a family member (for purposes of this lock-up agreement,
“family member” means any relationship by blood, marriage or adoption, not more remote than first cousin); (c) transfers
of Lock-Up Securities to a charity or educational institution; or (d) if the undersigned, directly or indirectly, controls a corporation,
partnership, limited liability company or other business entity, any transfers of Lock-Up Securities to any shareholder, partner
or member of, or owner of similar equity interests in, the undersigned, as the case may be; provided that in the case of
any transfer pursuant to the foregoing clauses (b), (c) or (d), (i) it shall be a condition to any such transfer that (i) the
transferee/donee agrees to be bound by the terms of this lock-up agreement (including, without limitation, the restrictions set
forth in the preceding sentence) to the same extent as if the transferee/donee were a party hereto; (ii) each party (donor, donee,
transferor or transferee) shall not be required by law (including without limitation the disclosure requirements of the Securities
Act of 1933, as amended (the “Securities Act”), and the Exchange Act) to make, and shall agree to not voluntarily
make, any filing or public announcement of the transfer or disposition prior to the expiration of the Lock-Up Period; and (iii)
the undersigned notifies the Representative at least two (2) business days prior to the proposed transfer or disposition.
In addition, the foregoing
restrictions shall not apply to (i) the exercise or vesting of stock options or other equity awards granted pursuant to the Company’s
equity incentive plans; provided that it shall apply to any of the undersigned’s Common Stock issued upon such exercise,
(ii) the conversion or exercise of convertible debt or warrants; provided that it shall apply to any of the undersigned’s
Common Stock issued upon such exercise, or (iii) the establishment of any new plan (a “Plan”) that satisfies
all of the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act; provided that no sales of the undersigned’s Securities
shall be made pursuant to such new Plan prior to the expiration of the Lock-Up Period (as such may have been extended pursuant
to the provisions hereof), and such a Plan may only be established if no public announcement of the establishment or existence
thereof and no filing with the Securities and Exchange Commission or other regulatory authority in respect thereof or transactions
thereunder or contemplated thereby, by the undersigned, the Company or any other person, shall be required, and no such announcement
or filing is made voluntarily, by the undersigned, the Company or any other person, prior to the expiration of the Lock-Up Period
(as such may have been extended pursuant to the provisions hereof).
The undersigned also
agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the
transfer of the undersigned’s securities subject to this this lock-up agreement except in compliance with this this lock-up
agreement.
If the undersigned
is an officer or director of the Company, (i) the undersigned agrees that the foregoing restrictions shall be equally applicable
to any Securities that the undersigned may purchase in the Public Offering; (ii) the Representative agrees that, at least three
(3) business days before the effective date of any release or waiver of the foregoing restrictions in connection with a transfer
of Lock-Up Securities, the Representative will notify the Company of the impending release or waiver; and (iii) the Company has
agreed in the Underwriting Agreement to announce the impending release or waiver by press release through a major news service
at least two (2) business days before the effective date of the release or waiver. Any release or waiver granted by the Representative
hereunder to any such officer or director shall only be effective two (2) business days after the publication date of such press
release. The provisions of this paragraph will not apply if (a) the release or waiver is effected solely to permit a transfer of
Lock-Up Securities not for consideration and (b) the transferee has agreed in writing to be bound by the same terms described in
this lock-up agreement to the extent and for the duration that such terms remain in effect at the time of such transfer.
The undersigned understands
that the Company and the Representative are relying upon this lock-up agreement in proceeding toward consummation of the Public
Offering. The undersigned further understands that this lock-up agreement is irrevocable and shall be binding upon the undersigned’s
heirs, legal representatives, successors and assigns.
The undersigned understands
that, if the Underwriting Agreement does not become effective, or if the Underwriting Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment for and delivery of the Securities to be sold thereunder,
the undersigned shall be released from all obligations under this lock-up agreement.
This lock-up agreement
shall be governed by, and construed in accordance with, the laws of the State of New York.
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Very truly yours,
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(Name - Please Print)
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(Signature)
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(Name of Signatory, in the case of entities - Please Print)
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(Title of Signatory, in the case of entities - Please Print)
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EXHIBIT C
Form of Press Release
DIGITAL BRANDS GROUP, INC.
[Date]
Digital Brands Group, Inc. (the “Company”)
announced today that Kingswood Capital Markets, division of Benchmark Investments, Inc., acting as representative for the underwriters
in the Company’s recent public offering of _______ shares of the Company’s Common Stock, and warrants to purchase _______
shares of the Company’s Common Stock, is [waiving] [releasing] a lock-up restriction with respect to _______ shares of Common
Stock and accompanying Warrants held by [certain officers or directors] [an officer or director] of the Company. The [waiver] [release]
will take effect on _______, 20___, and such shares of Common Stock and Warrants may be sold on or after such date.
This press release is not an offer or
sale of the securities in the United States or in any other jurisdiction where such offer or sale is prohibited, and such securities
may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act
of 1933, as amended.
Exhibit 4.1
Representative’s Warrant Agreement
THE REGISTERED HOLDER OF THIS PURCHASE WARRANT
BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE WARRANT EXCEPT AS HEREIN PROVIDED AND THE REGISTERED
HOLDER OF THIS PURCHASE WARRANT AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE WARRANT FOR A PERIOD
OF ONE HUNDRED EIGHTY DAYS FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE OTHER THAN (I) KINGSWOOD CAPITAL MARKETS, DIVISION
OF BENCHMARK INVESTMENTS, INC. OR AN UNDERWRITER OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING, OR (II) A BONA FIDE OFFICER
OR PARTNER OF KINGSWOOD CAPITAL MARKETS, DIVISION OF BENCHMARK INVESTMENTS, INC. OR OF ANY SUCH UNDERWRITER OR SELECTED DEALER.
THIS PURCHASE WARRANT IS NOT EXERCISABLE PRIOR
TO NOVEMBER 13, 2021. VOID AFTER 5:00 P.M., EASTERN TIME, MAY 13, 2026.
COMMON STOCK PURCHASE WARRANT
For the Purchase of 120,482
Shares of Common Stock
of
DIGITAL BRANDS GROUP, INC.
1. Purchase
Warrant. THIS CERTIFIES THAT, in consideration of funds duly paid by or on behalf of Kingswood Capital Markets, division of Benchmark
Investments, Inc. (“Holder”), as registered owner of this Purchase Warrant, Digital Brands Group, Inc., a
Delaware corporation (the “Company”), Holder is entitled, at any time or from time to time from November 13, 2021
(the “Commencement Date”), and at or before 5:00 p.m., Eastern time, May 13, 2026 (the ”Expiration Date”),
but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to 120,482 shares of common stock of the Company,
par value $0.0001 per share (the “Shares”), subject to adjustment as provided in Section 6 hereof. If the Expiration
Date is a day on which banking institutions are authorized by law to close, then this Purchase Warrant may be exercised on the next succeeding
day which is not such a day in accordance with the terms herein. During the period ending on the Expiration Date, the Company agrees not
to take any action that would terminate this Purchase Warrant. This Purchase Warrant is initially exercisable at $5.19 per Share ; provided,
however, that upon the occurrence of any of the events specified in Section 6 hereof, the rights granted by this Purchase
Warrant, including the exercise price per Share and the number of Shares to be received upon such exercise, shall be adjusted as therein
specified. The term “Exercise Price” shall mean the initial exercise price or the adjusted exercise price, depending
on the context. The term “Effective Date” shall mean May 13, 2021, the date on which the Registration Statement
on Form S-1 (File No. 333- 255193) of the Company was declared effective by the Securities and Exchange Commission.
2. Exercise.
2.1 Exercise
Form. In order to exercise this Purchase Warrant, the exercise form attached hereto must be duly executed and completed and delivered
to the Company, together with this Purchase Warrant and payment of the Exercise Price for the Shares being purchased payable in cash by
wire transfer of immediately available funds to an account designated by the Company or by certified check or official bank check. If
the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date, this Purchase
Warrant shall become and be void without further force or effect, and all rights represented hereby shall cease and expire.
2.2 Cashless
Exercise. If at any time after the Commencement Date there is no effective registration statement registering, or no current
prospectus available for, the resale of the Shares by the Holder, then in lieu of exercising this Purchase Warrant by payment of cash
or check payable to the order of the Company pursuant to Section 2.1 above, Holder may elect to receive the number of Shares equal
to the value of this Purchase Warrant (or the portion thereof being exercised), by surrender of this Purchase Warrant to the Company,
together with the exercise form attached hereto, in which event the Company shall issue to Holder, Shares in accordance with the following
formula:
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Where,
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X
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The number of Shares to be issued to Holder;
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Y
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The number of Shares for which the Purchase Warrant is being exercised;
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A
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The fair market value of one Share; and
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B
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=
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The Exercise Price.
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For purposes of this Section 2.2,
the fair market value of a Share is defined as follows:
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(i)
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if the Company’s common stock is traded on a securities exchange, the value shall be deemed to be
the closing price on such exchange prior to the exercise form being submitted in connection with the exercise of the Purchase Warrant;
or
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(ii)
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if the Company’s common stock is actively traded over-the-counter, the value shall be deemed to
be the closing bid price prior to the exercise form being submitted in connection with the exercise of the Purchase Warrant; if there
is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Company’s Board
of Directors.
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2.3 Legend.
Each certificate for the securities purchased under this Purchase Warrant shall bear a legend as follows unless such securities have been
registered under the Securities Act of 1933, as amended (the “Securities Act”):
“THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE
STATE LAW. NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND APPLICABLE STATE LAW WHICH, IN THE OPINION OF COUNSEL TO THE COMPANY, IS AVAILABLE.”
3. Transfer.
3.1 General
Restrictions. The registered Holder of this Purchase Warrant agrees by his, her or its acceptance hereof, that such Holder will not:
(a) sell, transfer, assign, pledge or hypothecate this Purchase Warrant or the securities issuable hereunder for a period of three
hundred sixty (360) days following the Effective Date to anyone other than: (i) Kingswood Capital Markets, division of Benchmark
Investments, Inc. (“Kingswood”) or an underwriter or a selected dealer participating in the Offering, or (ii) a
bona fide officer or partner of Kingswood or of any such underwriter or selected dealer, in each case in accordance with FINRA Conduct
Rule 5110(e)(1), or (b) for a period of three hundred sixty (360) days following the Effective Date, cause this Purchase Warrant
or the securities issuable hereunder to be the subject of any hedging, short sale, derivative, put or call transaction that would result
in the effective economic disposition of this Purchase Warrant or the securities hereunder, except as provided for in FINRA Rule 5110(e)(2).
On and after 360 days after the Effective Date, transfers to others may be made subject to compliance with or exemptions from applicable
securities laws. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto
duly executed and completed, together with the Purchase Warrant and payment of all transfer taxes, if any, payable in connection therewith.
The Company shall within five (5) business days transfer this Purchase Warrant on the books of the Company and shall execute and
deliver a new Purchase Warrant or Purchase Warrants of like tenor to the appropriate assignee(s) expressly evidencing the right to
purchase the aggregate number of Shares purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.
3.2 Restrictions
Imposed by the Securities Act. The securities evidenced by this Purchase Warrant shall not be transferred unless and until: (i) the
Company has received the opinion of counsel for the Holder that the securities may be transferred pursuant to an exemption from registration
under the Securities Act and applicable state securities laws, the availability of which is established to the reasonable satisfaction
of the Company (the Company hereby agreeing that the opinion of Manatt, Phelps & Phillips, LLP shall be deemed satisfactory evidence
of the availability of an exemption), or (ii) a registration statement or a post-effective amendment to the Registration Statement
relating to the offer and sale of such securities has been filed by the Company and declared effective by the U.S. Securities and Exchange
Commission (the “Commission”) and compliance with applicable state securities law has been established.
4 Registration
Rights.
4.1 Demand
Registration.
4.1.1 Grant
of Right. The Company, upon written demand (a “Demand Notice”) of the Holders of at least 51% of the Purchase Warrants
and/or the underlying Shares, agrees to register, on one (1) occasion, all or any portion of the Shares underlying the Purchase Warrants
(collectively, the “Registrable Securities”). On such occasion, the Company will file a registration statement with
the Commission covering the Registrable Securities within sixty (60) days after receipt of a Demand Notice and use its reasonable best
efforts to have the registration statement declared effective promptly thereafter, subject to compliance with review by the Commission;
provided, however, that the Company shall not be required to comply with a Demand Notice if the Company has filed a registration
statement with respect to which the Holder is entitled to piggyback registration rights pursuant to Section 4.2 hereof and either:
(i) the Holder has elected to participate in the offering covered by such registration statement or (ii) if such registration
statement relates to an underwritten primary offering of securities of the Company, until the offering covered by such registration statement
has been withdrawn or until thirty (30) days after such offering is consummated. The Company covenants and agrees to give written notice
of its receipt of any Demand Notice by any Holders to all other registered Holders of the Purchase Warrants and/or the Registrable Securities
within ten (10) days after the date of the receipt of any such Demand Notice.
4.1.2 Terms.
The Company shall bear all fees and expenses attendant to the registration of the Registrable Securities pursuant to Section 4.1.1,
but the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected by the Holders to represent
them in connection with the sale of the Registrable Securities. The Company agrees to use its reasonable best efforts to cause the filing
required herein to become effective promptly and to qualify or register the Registrable Securities in such states as are reasonably requested
by the Holders; provided, however, that in no event shall the Company be required to register the Registrable Securities
in a State in which such registration would cause: (i) the Company to be obligated to register or license to do business in such
State or submit to general service of process in such State, or (ii) the principal stockholders of the Company to be obligated to
escrow their shares of capital stock of the Company. The Company shall cause any registration statement filed pursuant to the demand right
granted under Section 4.1.1 to remain effective for a period of at least twelve (12) consecutive months after the date that the Holders
of the Registrable Securities covered by such registration statement are first given the opportunity to sell all of such securities. The
Holders shall only use the prospectuses provided by the Company to sell the shares covered by such registration statement, and will immediately
cease to use any prospectus furnished by the Company if the Company advises the Holder that such prospectus may no longer be used due
to a material misstatement or omission. Notwithstanding the provisions of this Section 4.1.2, the Holder shall be entitled to a demand
registration under this Section 4.1.2 on only one (1) occasion and such demand registration right shall terminate on the fifth
anniversary of the Effective Date in accordance with FINRA Rule 5110(g)(8)(C).
4.2 “Piggy-Back”
Registration.
4.2.1 Grant
of Right. In addition to the demand right of registration described in Section 4.1 hereof, the Holder shall have the right, for
a period of no more than five (5) years from the Effective Date in accordance with FINRA Rule 5110(g)(8)(D), to include the
Registrable Securities as part of any other registration of securities filed by the Company (other than in connection with a transaction
contemplated by Rule 145(a) promulgated under the Securities Act or pursuant to Form S-8 or Form S-4 or any equivalent
form); provided, however, that if, solely in connection with any primary underwritten public offering for the account of
the Company, the managing underwriter(s) thereof shall, in its reasonable discretion, impose a limitation on the number of shares
of common stock which may be included in the Registration Statement because, in such underwriter(s)’ judgment, marketing or other
factors dictate such limitation is necessary to facilitate public distribution, then the Company shall be obligated to include in such
Registration Statement only such limited portion of the Registrable Securities with respect to which the Holder requested inclusion hereunder
as the underwriter shall reasonably permit. Any exclusion of Registrable Securities shall be made pro rata among the Holders seeking to
include Registrable Securities in proportion to the number of Registrable Securities sought to be included by such Holders; provided,
however, that the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities,
the holders of which are not entitled to inclusion of such securities in such Registration Statement or are not entitled to pro rata inclusion
with the Registrable Securities.
4.2.2 Terms.
The Company shall bear all fees and expenses attendant to registering the Registrable Securities pursuant to Section 4.2.1 hereof,
but the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected by the Holders to represent
them in connection with the sale of the Registrable Securities. In the event of such a proposed registration, the Company shall furnish
the then Holders of outstanding Registrable Securities with not less than thirty (30) days’ written notice prior to the proposed
date of filing of such registration statement. Such notice to the Holders shall continue to be given for each registration statement filed
by the Company until such time as all of the Registrable Securities have been sold by the Holder. The holders of the Registrable Securities
shall exercise the “piggy-back” rights provided for herein by giving written notice within ten (10) days of the receipt
of the Company’s notice of its intention to file a registration statement. Except as otherwise provided in this Purchase Warrant,
there shall be no limit on the number of times the Holder may request registration under this Section 4.2.2; provided, however,
that such registration rights shall terminate on the fifth anniversary of the Commencement Date.
4.3 General
Terms.
4.3.1 Indemnification.
The Company shall indemnify the Holders of the Registrable Securities to be sold pursuant to any registration statement hereunder and
each person, if any, who controls such Holders within the meaning of Section 15 of the Securities Act or Section 20(a) of
the Securities Exchange Act of 1934, as amended (“Exchange Act”), against all loss, claim, damage, expense or liability
(including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, arising from such
registration statement but only to the same extent and with the same effect as the provisions pursuant to which the Company has agreed
to indemnify the Underwriters contained in Section 5.1 of the Underwriting Agreement between the Underwriters and the Company, dated
as of May 13, 2021. The Holders of the Registrable Securities to be sold pursuant to such registration statement, and their successors
and assigns, shall severally, and not jointly, indemnify the Company, against all loss, claim, damage, expense or liability (including
all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which they may become subject under the Securities Act, the Exchange Act or otherwise, arising from information furnished
by or on behalf of such Holders, or their successors or assigns, in writing, for specific inclusion in such registration statement to
the same extent and with the same effect as the provisions contained in Section 5.2 of the Underwriting Agreement pursuant to which
the Underwriters have agreed to indemnify the Company.
4.3.2 Exercise
of Purchase Warrants. Nothing contained in this Purchase Warrant shall be construed as requiring the Holders to exercise their Purchase
Warrants prior to or after the initial filing of any registration statement or the effectiveness thereof.
4.3.3 Documents
Delivered to Holders. The Company shall furnish to each Holder participating in any of the foregoing offerings and to each underwriter
of any such offering, if any, a signed counterpart, addressed to such Holder or underwriter, of: (i) an opinion of counsel to the
Company, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering,
an opinion dated the date of the closing under any underwriting agreement related thereto), and (ii) a “cold comfort”
letter dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, a
letter dated the date of the closing under the underwriting agreement) signed by the independent registered public accounting firm which
has issued a report on the Company’s financial statements included in such registration statement, in each case covering substantially
the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of such accountants’
letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer’s
counsel and in accountants’ letters delivered to underwriters in underwritten public offerings of securities. The Company shall
also deliver promptly to each Holder participating in the offering requesting the correspondence and memoranda described below and to
the managing underwriter, if any, copies of all correspondence between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with respect to the registration statement and permit each Holder and
underwriter to do such investigation, upon reasonable advance notice, with respect to information contained in or omitted from the registration
statement as it deems reasonably necessary to comply with applicable securities laws or rules of FINRA. Such investigation shall
include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent
auditors, all to such reasonable extent and at such reasonable times as any such Holder shall reasonably request.
4.3.4 Underwriting
Agreement. The Company shall enter into an underwriting agreement with the managing underwriter(s), if any, selected by any Holders
whose Registrable Securities are being registered pursuant to this Section 4, which managing underwriter shall be reasonably satisfactory
to the Company. Such agreement shall be reasonably satisfactory in form and substance to the Company, each Holder and such managing underwriters,
and shall contain such representations, warranties and covenants by the Company and such other terms as are customarily contained in agreements
of that type used by the managing underwriter. The Holders shall be parties to any underwriting agreement relating to an underwritten
sale of their Registrable Securities and may, at their option, require that any or all the representations, warranties and covenants of
the Company to or for the benefit of such underwriters shall also be made to and for the benefit of such Holders. Such Holders shall not
be required to make any representations or warranties to or agreements with the Company or the underwriters except as they may relate
to such Holders, their Shares and their intended methods of distribution.
4.3.5 Documents
to be Delivered by Holders. Each of the Holders participating in any of the foregoing offerings shall furnish to the Company a completed
and executed questionnaire provided by the Company requesting information customarily sought of selling security holders.
4.3.6 Damages.
Should the registration or the effectiveness thereof required by Sections 4.1 and 4.2 hereof be delayed by the Company or the Company
otherwise fails to comply with such provisions, the Holders shall, in addition to any other legal or other relief available to the Holders,
be entitled to obtain specific performance or other equitable (including injunctive) relief against the threatened breach of such provisions
or the continuation of any such breach, without the necessity of proving actual damages and without the necessity of posting bond or other
security.
4.4 Termination
of Registration Rights. The registration rights afforded to the Holders under this Section 4 shall terminate on the earliest
date when all Registrable Securities of such Holder either: (i) have been publicly sold by such Holder pursuant to a Registration
Statement, (ii) have been covered by an effective Registration Statement on Form S-1 or Form S-3 (or successor form), which
may be kept effective as an evergreen Registration Statement, or (iii) may be sold by the Holder within a 90 day period without registration
pursuant to Rule 144 or consistent with applicable SEC interpretive guidance (including CD&I no. 201.04 (April 2, 2007)
or similar interpretive guidance).
5. New
Purchase Warrants to be Issued.
5.1 Partial
Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Purchase Warrant may be exercised or assigned in
whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase Warrant for cancellation,
together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise Price and/or transfer tax if exercised
pursuant to Section 2.1 hereto, the Company shall cause to be delivered to the Holder without charge a new Purchase Warrant of like
tenor to this Purchase Warrant in the name of the Holder evidencing the right of the Holder to purchase the number of Shares purchasable
hereunder as to which this Purchase Warrant has not been exercised or assigned.
5.2 Lost
Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Purchase
Warrant and of reasonably satisfactory indemnification or the posting of a bond, the Company shall execute and deliver a new Purchase
Warrant of like tenor and date. Any such new Purchase Warrant executed and delivered as a result of such loss, theft, mutilation or destruction
shall constitute a substitute contractual obligation on the part of the Company.
6. Adjustments.
6.1 Adjustments
to Exercise Price and Number of Securities. The Exercise Price and the number of Shares underlying the Purchase Warrant shall be subject
to adjustment from time to time as hereinafter set forth:
6.1.1 Share
Dividends; Split Ups. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding
Shares is increased by a stock dividend payable in Shares or by a split up of Shares or other similar event, then, on the effective day
thereof, the number of Shares purchasable hereunder shall be increased in proportion to such increase in outstanding Shares, and the Exercise
Price shall be proportionately decreased.
6.1.2 Aggregation
of Shares. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares is
decreased by a consolidation, combination or reclassification of Shares or other similar event, then, on the effective date thereof, the
number of Shares purchasable hereunder shall be decreased in proportion to such decrease in outstanding Shares, and the Exercise Price
shall be proportionately increased.
6.1.3 Replacement
of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding Shares other than
a change covered by Section 6.1.1 or 6.1.2 hereof or that solely affects the par value of such Shares, or in the case of any share
reconstruction or amalgamation or consolidation of the Company with or into another corporation (other than a consolidation or share reconstruction
or amalgamation in which the Company is the continuing corporation and that does not result in any reclassification or reorganization
of the outstanding Shares), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as
an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Purchase Warrant shall
have the right thereafter (until the expiration of the right of exercise of this Purchase Warrant) to receive upon the exercise hereof,
for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other
securities or property (including cash) receivable upon such reclassification, reorganization, share reconstruction or amalgamation, or
consolidation, or upon a dissolution following any such sale or transfer, by a Holder of the number of Shares of the Company obtainable
upon exercise of this Purchase Warrant immediately prior to such event; and if any reclassification also results in a change in Shares
covered by Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to Sections 6.1.1, 6.1.2 and this Section 6.1.3.
The provisions of this Section 6.1.3 shall similarly apply to successive reclassifications, reorganizations, share reconstructions
or amalgamations, or consolidations, sales or other transfers.
6.1.4 Changes
in Form of Purchase Warrant. This form of Purchase Warrant need not be changed because of any change pursuant to this Section 6.1,
and Purchase Warrants issued after such change may state the same Exercise Price and the same number of Shares as are stated in the Purchase
Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Purchase Warrants reflecting
a required or permissive change shall not be deemed to waive any rights to an adjustment occurring after the Commencement Date or the
computation thereof.
6.2 Substitute
Purchase Warrant. In case of any consolidation of the Company with, or share reconstruction or amalgamation of the Company with or
into, another corporation (other than a consolidation or share reconstruction or amalgamation which does not result in any reclassification
or change of the outstanding Shares), the corporation formed by such consolidation or share reconstruction or amalgamation shall execute
and deliver to the Holder a supplemental Purchase Warrant providing that the holder of each Purchase Warrant then outstanding or to be
outstanding shall have the right thereafter (until the stated expiration of such Purchase Warrant) to receive, upon exercise of such Purchase
Warrant, the kind and amount of shares of stock and other securities and property receivable upon such consolidation or share reconstruction
or amalgamation, by a holder of the number of Shares for which such Purchase Warrant might have been exercised immediately prior to such
consolidation, share reconstruction or amalgamation, sale or transfer. Such supplemental Purchase Warrant shall provide for adjustments
which shall be identical to the adjustments provided for in this Section 6. The above provision of this Section shall similarly
apply to successive consolidations or share reconstructions or amalgamations.
6.3 Elimination
of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Shares upon the exercise
of the Purchase Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being the intent
of the parties that all fractional interests shall be eliminated by rounding any fraction up or down, as the case may be, to the nearest
whole number of Shares or other securities, properties or rights.
7. Reservation
and Listing. The Company shall at all times reserve and keep available out of its authorized Shares, solely for the purpose of issuance
upon exercise of the Purchase Warrants, such number of Shares or other securities, properties or rights as shall be issuable upon the
exercise thereof. The Company covenants and agrees that, upon exercise of the Purchase Warrants and payment of the Exercise Price therefor,
in accordance with the terms hereby, all Shares and other securities issuable upon such exercise shall be duly and validly issued, fully
paid and non-assessable and not subject to preemptive rights of any stockholder. The Company further covenants and agrees that upon exercise
of the Purchase Warrants and payment of the exercise price therefor, all Shares and other securities issuable upon such exercise shall
be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any stockholder. As long as the Purchase
Warrants shall be outstanding, the Company shall use its commercially reasonable efforts to cause all Shares issuable upon exercise of
the Purchase Warrants to be listed (subject to official notice of issuance) on all national securities exchanges (or, if applicable, on
the OTC Bulletin Board or any successor trading market) on which the Shares issued to the public in the Offering may then be listed and/or
quoted.
8. Certain
Notice Requirements.
8.1 Holder’s
Right to Receive Notice. Nothing herein shall be construed as conferring upon the Holders the right to vote or consent or to receive
notice as a stockholder for the election of directors or any other matter, or as having any rights whatsoever as a stockholder of the
Company. If, however, at any time prior to the expiration of the Purchase Warrants and their exercise, any of the events described in
Section 8.2 shall occur, then, in one or more of said events, the Company shall give written notice of such event at least fifteen
(15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders
entitled to such dividend, distribution, conversion or exchange of securities or subscription rights, or entitled to vote on such proposed
dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of the closing of the transfer books,
as the case may be. Notwithstanding the foregoing, the Company shall deliver to each Holder a copy of each notice given to the other stockholders
of the Company at the same time and in the same manner that such notice is given to the stockholders.
8.2 Events
Requiring Notice. The Company shall be required to give the notice described in this Section 8 upon one or more of the following
events: (i) if the Company shall take a record of the holders of its Shares for the purpose of entitling them to receive a dividend
or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the books of the Company; (ii) the Company shall offer
to all the holders of its Shares any additional shares of capital stock of the Company or securities convertible into or exchangeable
for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor; or (iii) a dissolution, liquidation
or winding up of the Company (other than in connection with a consolidation or share reconstruction or amalgamation) or a sale of all
or substantially all of its property, assets and business shall be proposed.
8.3 Notice
of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section 6
hereof, send notice to the Holders of such event and change (“Price Notice”). The Price Notice shall describe the event
causing the change and the method of calculating same and shall be certified as being true and accurate by the Company’s Chief Financial
Officer.
8.4 Transmittal
of Notices. All notices, requests, consents and other communications under this Purchase Warrant shall be in writing and shall be
deemed to have been duly made when hand delivered or mailed by express mail or private courier service: (i) if to the registered
Holder of the Purchase Warrant, to the address of such Holder as shown on the books of the Company, or (ii) if to the Company, to
following address or to such other address as the Company may designate by notice to the Holders:
If to the Holder:
Kingswood Capital Markets
17 Battery Place, Suite 625
New York, New York 10004
Attn: Joseph T. Rallo
with a copy (which shall not constitute
notice) to:
Nelson Mullins Riley & Scarborough
LLP
101 Constitution Avenue NW, Suite 900
Washington, DC 20001
Attn: Andrew M. Tucker, Esq.
Fax No.: (202) 689-2860
If to the Company:
Digital Brands Group, Inc.
1400 Lavaca Street
Austin, Texas 78701
Attn: John Hilburn Davis IV
Email: hil@dstld.la
with a copy (which shall not constitute
notice) to:
Manatt, Phelps & Phillips, LLP
695 Town Center Drive, 14th
Floor
Costa Mesa, CA 92646
Attn: Thomas J. Poletti, Esq.
Fax No.: (714) 371-2551
9. Miscellaneous.
9.1 Amendments.
The Company and Kingswood may from time to time supplement or amend this Purchase Warrant without the approval of any of the Holders in
order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with any other
provisions herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company and Kingswood
may deem necessary or desirable and that the Company and Kingswood deem shall not adversely affect the interest of the Holders. All other
modifications or amendments shall require the written consent of and be signed by the party against whom enforcement of the modification
or amendment is sought.
9.2 Headings.
The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Purchase Warrant.
9.3 Entire
Agreement. This Purchase Warrant (together with the other agreements and documents being delivered pursuant to or in connection with
this Purchase Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes
all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.
9.4 Binding
Effect. This Purchase Warrant shall inure solely to the benefit of and shall be binding upon, the Holder and the Company and their
permitted assignees, respective successors, legal representative and assigns, and no other person shall have or be construed to have any
legal or equitable right, remedy or claim under or in respect of or by virtue of this Purchase Warrant or any provisions herein contained.
9.5 Governing
Law; Submission to Jurisdiction; Trial by Jury. This Purchase Warrant shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any
action, proceeding or claim against it arising out of, or relating in any way to this Purchase Warrant shall be brought and enforced in
the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, and irrevocably
submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction
and that such courts represent an inconvenient forum. Any process or summons to be served upon the Company may be served by transmitting
a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in
Section 8 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding
or claim. The Company and the Holder agree that the prevailing party(ies) in any such action shall be entitled to recover from the other
party(ies) all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection
with the preparation therefor. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders
and affiliates) and the Holder hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial
by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
9.6 Waiver, etc.
The failure of the Company or the Holder to at any time enforce any of the provisions of this Purchase Warrant shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the validity of this Purchase Warrant or any provision hereof
or the right of the Company or any Holder to thereafter enforce each and every provision of this Purchase Warrant. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Purchase Warrant shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance
or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.
9.7 Execution
in Counterparts. This Purchase Warrant may be executed in one or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement,
and shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other
parties hereto. Such counterparts may be delivered by facsimile transmission or other electronic transmission.
9.8 Exchange
Agreement. As a condition of the Holder’s receipt and acceptance of this Purchase Warrant, Holder agrees that, at any time prior
to the complete exercise of this Purchase Warrant by Holder, if the Company and Kingswood enter into an agreement (“Exchange
Agreement”) pursuant to which they agree that all outstanding Purchase Warrants will be exchanged for securities or cash or
a combination of both, then Holder shall agree to such exchange and become a party to the Exchange Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has caused this
Purchase Warrant to be signed by its duly authorized officer as of the 18 day of May, 2021.
DIGITAL BRANDS GROUP, INC.
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By:
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/s/ John Hilburn Davis IV
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Name: John Hilburn Davis IV
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Title: President and Chief Executive Officer
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Exhibit 10.1
WARRANT AGENT AGREEMENT
WARRANT AGENT AGREEMENT (this
“Warrant Agreement”) dated as of May 18, 2021 (the “Issuance Date”) between Digital Brands
Group, Inc., a Delaware corporation (the “Company”), and VStock Transfer, LLC (the “Warrant Agent”).
WHEREAS, pursuant to the terms
of that certain Underwriting Agreement (“Underwriting Agreement”), dated May 13, 2021, by and among the Company
and Kingswood Capital Markets, division of Benchmark Investments, Inc., as representative of the underwriters set forth therein,
the Company is engaged in a public offering (the “Offering”) of up to 2,409,693 shares (the “Shares”)
of common stock, par value $0.0001 per share (the “Common Stock”) of the Company and up to 2,409,693 Warrants (the
“Warrants”) to purchase shares of Common Stock (the “Warrant Shares”), including Shares and Warrants
issuable pursuant to the underwriters’ over-allotment option;
WHEREAS, the Company has filed
with the Securities and Exchange Commission (the “Commission”) a Registration Statement, No. 333-255193, on Form S-1
(as the same may be amended from time to time, the “Initial Registration Statement”), for the registration under the
Securities Act of 1933, as amended (the “Securities Act”), of the Shares, Warrants and Warrant Shares, and such Initial
Registration Statement was declared effective on May 13, 2021, and filed with the Commission a Registration Statement No. 333-256174
on Form S-1 pursuant to 462(b) of the Securities Act, declared effective May 14, 2021 (the “462(b) Registration
Statement” and together with the Initial Registration Statement, the “Registration Statement”);
WHEREAS, the Company desires
the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in accordance with the terms set forth
in this Warrant Agreement in connection with the issuance, registration, transfer, exchange and exercise of the Warrants;
WHEREAS, the Company desires
to provide for the provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights, limitation
of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants; and
WHEREAS, all acts and things
have been done and performed which are necessary to make the Warrants the valid, binding and legal obligations of the Company, and to
authorize the execution and delivery of this Warrant Agreement.
NOW, THEREFORE, in consideration
of the mutual agreements herein contained, the parties hereto agree as follows:
1. Appointment
of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company with respect to the Warrants, and
the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the express terms and conditions
set forth in this Warrant Agreement (and no implied terms or conditions).
2. Warrants.
2.1 Form of
Warrants. The Warrants shall be registered securities and shall be initially evidenced by a global Warrant certificate (“Global
Certificate”) in the form of Annex A to this Warrant Agreement, which shall be deposited on behalf of the Company with
a custodian for The Depository Trust Company (“DTC”) and registered in the name of Cede & Co., as nominee
of DTC. If DTC subsequently ceases to make its settlement system available for the Warrants, the Company may instruct the Warrant Agent
regarding making arrangements for book-entry settlement. In the event that the Warrants are not eligible for, or it is no longer necessary
to have the Warrants available in, registration in the name of Cede & Co., as nominee of DTC, the Company may instruct the Warrant
Agent to provide written instructions to DTC to deliver to the Warrant Agent for cancellation the Global Certificate, and the Company
shall instruct the Warrant Agent to deliver to each Holder (as defined below) separate certificates evidencing the Warrants (“Definitive
Certificates” and, together with the Global Certificate, “Warrant Certificates”), in the form of Annex B
to this Warrant Agreement. The Warrants represented by the Global Certificate are referred to as “Global Warrants”.
2.2 Issuance
and Registration of Warrants.
2.2.1 Warrant
Register. The Warrant Agent shall maintain books (“Warrant Register”) for the registration of original issuance
and the registration of transfer of the Warrants. Any person in whose name ownership of a beneficial interest in the Warrants evidenced
by a Global Certificate is recorded in the records maintained by DTC or its nominee shall be deemed the “beneficial owner”
thereof, provided that all such beneficial interests shall be held through a Participant (as defined below), and, in turn, held by Cede &
Co. which shall be the registered holder of such Warrants.
2.2.2 Issuance
of Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue the Global Certificate and deliver the Warrants
in the DTC settlement system in accordance with written instructions delivered to the Warrant Agent by the Company. Ownership of beneficial
interests in the Warrants shall be shown on, and the transfer of such ownership shall be effected through, records maintained (i) by
DTC and (ii) by institutions that have accounts with DTC (each, a “Participant”), subject to a Holder’s
right to elect to receive a Definitive Certificate. Any Holder desiring to elect to receive a Warrant in certificated form shall make
such request in writing delivered to the Warrant Agent pursuant to Section 2.2.8, and shall surrender to the Warrant Agent the interest
of the Holder on the books of the Participant evidencing the Warrants which are to be represented by a Definitive Certificate through
the DTC settlement system. Thereupon, the Warrant Agent shall countersign and deliver to the person entitled thereto a Definitive Certificate
or Definitive Certificates, as the case may be, as so requested. Alternatively, non-certificated warrants may be issued and the Warrant
Agent will deliver a statement representing the book-entry position to the Holder upon written instructions from the Company, the Holder,
or DTC.
2.2.3 Beneficial
Owner; Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent may deem and
treat the person in whose name that Warrant shall be registered on the Warrant Register (the “Holder”) as the absolute
owner of such Warrant for purposes of any exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent
shall be affected by any notice to the contrary. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Warrant
Agent or any agent of the Company or the Warrant Agent from giving effect to any written certification, proxy or other authorization furnished
by DTC governing the exercise of the rights of a holder of a beneficial interest in any Warrant. The rights of beneficial owners in a
Warrant evidenced by the Global Certificate shall be exercised by the Holder or a Participant through the DTC system, except to the extent
set forth herein or in the Global Certificate.
2.2.4 Execution.
The Warrant Certificates shall be executed on behalf of the Company by any authorized officer of the Company (an “Authorized
Officer”), which need not be the same authorized signatory for all of the Warrant Certificates, either manually or by facsimile
signature. The Warrant Certificates shall be countersigned by an authorized signatory of the Warrant Agent, which need not be the same
signatory for all of the Warrant Certificates, and no Warrant Certificate shall be valid for any purpose unless so countersigned. In case
any Authorized Officer of the Company that signed any of the Warrant Certificates ceases to be an Authorized Officer of the Company before
countersignature by the Warrant Agent and issuance and delivery by the Company, such Warrant Certificates, nevertheless, may be countersigned
by the Warrant Agent, issued and delivered with the same force and effect as though the person who signed such Warrant Certificates had
not ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Warrant Certificate, shall be an Authorized Officer of the Company authorized to sign such Warrant
Certificate, although at the date of the execution of this Warrant Agreement any such person was not such an Authorized Officer.
2.2.5 Registration
of Transfer. At any time at or prior to the Expiration Date (as defined below), a transfer of any Warrants may be registered and any
Warrant Certificate or Warrant Certificates may be split up, combined or exchanged for another Warrant Certificate or Warrant Certificates
evidencing the same number of Warrants as the Warrant Certificate or Warrant Certificates surrendered. Any Holder desiring to register
the transfer of Warrants or to split up, combine or exchange any Warrant Certificate shall make such request in writing delivered to the
Warrant Agent, and shall surrender to the Warrant Agent the Warrant Certificate or Warrant Certificates evidencing the Warrants the transfer
of which is to be registered or that is or are to be split up, combined or exchanged. Thereupon, the Warrant Agent shall countersign and
deliver to the person entitled thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so requested. The Warrant
Agent may require reasonable and customary payment, by the Holder requesting a registration of transfer of Warrants or a split-up, combination
or exchange of a Warrant Certificate (but, for purposes of clarity, not upon the exercise of the Warrants and issuance of Warrant Shares
to the Holder), of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with such registration of
transfer, split-up, combination or exchange, together with reimbursement to the Warrant Agent of all reasonable expenses incidental thereto.
2.2.6 Loss,
Theft and Mutilation of Warrant Certificates. Upon receipt by the Company and the Warrant Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Warrant Certificate, and, in case of loss, theft or destruction, of indemnity
or security in customary form and amount, and reimbursement to the Company and the Warrant Agent of all reasonable expenses incidental
thereto, and upon surrender to the Warrant Agent and cancellation of the Warrant Certificate if mutilated, the Warrant Agent shall, on
behalf of the Company, countersign and deliver a new Warrant Certificate of like tenor to the Holder in lieu of the Warrant Certificate
so lost, stolen, destroyed or mutilated. The Warrant Agent may charge the Holder an administrative fee for processing the replacement
of lost Warrant Certificates, which shall be charged only once in instances where a single surety bond obtained covers multiple certificates.
The Warrant Agent may receive compensation from the surety companies or surety bond agents for administrative services provided to them.
2.2.7 Proxies.
The Holder of a Warrant may grant proxies or otherwise authorize any person, including the Participants and beneficial holders that may
own interests through the Participants, to take any action that a Holder is entitled to take under this Agreement or the Warrants; provided,
however, that at all times that Warrants are evidenced by a Global Certificate, exercise of those Warrants shall be effected on their
behalf by Participants through DTC in accordance the procedures administered by DTC.
2.2.8 Warrant
Certificate Request. A Holder has the right to elect at any time or from time to time a Warrant Exchange (as defined below) pursuant
to a Warrant Certificate Request Notice (as defined below). Upon written notice by a Holder to the Warrant Agent for the exchange of some
or all of such Holder’s Global Warrants for a Definitive Certificate evidencing the same number of Warrants, which request shall
be in the form attached hereto as Exhibit A (a “Warrant Certificate Request Notice” and the date of delivery of
such Warrant Certificate Request Notice by the Holder, the “Warrant Certificate Request Notice Date” and the deemed
surrender upon delivery by the Holder of a number of Global Warrants for the same number of Warrants evidenced by a Definitive Certificate,
a “Warrant Exchange”), the Warrant Agent shall promptly effect the Warrant Exchange and shall promptly issue and deliver
to the Holder a Definitive Certificate for such number of Warrants in the name set forth in the Warrant Certificate Request Notice. Such
Definitive Certificate shall be dated the original issue date of the Warrants, shall bear a facsimile signature of an authorized signatory
of the Company, shall be in the form attached hereto as Annex B, and shall be reasonably acceptable in all respects to such Holder. In
connection with a Warrant Exchange, the Company agrees to deliver, or to direct the Warrant Agent to deliver, the Definitive Certificate
to the Holder within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard
Settlement Period of the Warrant Certificate Request Notice pursuant to the delivery instructions in the Warrant Certificate Request Notice
(“Warrant Certificate Delivery Date”). If the Company fails for any reason to deliver to the Holder the Definitive
Certificate subject to the Warrant Certificate Request Notice by the Warrant Certificate Delivery Date, the Company shall pay to the Holder,
in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares evidenced by such Definitive Certificate (based
on the VWAP (as defined in the Warrants) of the Common Stock on the Warrant Certificate Request Notice Date), $10 per Business Day for
each Business Day after such Warrant Certificate Delivery Date until such Definitive Certificate is delivered or, prior to delivery of
such Warrant Certificate, the Holder rescinds such Warrant Exchange. The Company covenants and agrees that, upon the date of delivery
of the Warrant Certificate Request Notice, the Holder shall be deemed to be the holder of the Definitive Certificate and, notwithstanding
anything to the contrary set forth herein, the Definitive Certificate shall be deemed for all purposes to contain all of the terms and
conditions of the Warrants evidenced by such Warrant Certificate and the terms of this Warrant Agreement.
2.2.9 For
purposes of clarity, if there is a conflict between the express terms of this Warrant Agreement and the Warrant certificate in the form
of Annex B hereto with respect to terms of the Warrants, the terms of the Warrant certificate shall govern and control.
3. Terms
and Exercise of Warrants.
3.1 Exercise
Price. Each Warrant shall entitle the Holder, subject to the provisions of the applicable Warrant Certificate and of this Warrant
Agreement, to purchase from the Company the number of shares of Common Stock stated therein, at the price of $5.50 per whole share, subject
to the subsequent adjustments provided in Section 4 hereof. The term “Exercise Price” as used in this Warrant Agreement
refers to the price per share at which shares of Common Stock may be purchased at the time a Warrant is exercised.
3.2 Duration
of Warrants. Warrants may be exercised only during the period (“Exercise Period”) commencing on the Issuance Date
and terminating at 5:00 P.M., New York City time (the “close of business”) on [ ], 2026 (“Expiration Date”).
Each Warrant not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights in respect thereof
under this Warrant Agreement shall cease at the close of business on the Expiration Date.
3.3 Exercise
of Warrants.
3.3.1 Exercise
and Payment.
(a) Exercise
of the purchase rights represented by a Warrant may be made, in whole or in part, at any time or times during the Exercise Period by delivery
to the Warrant Agent (with a copy to the Company) of the Notice of Exercise in the form annexed as Exhibit A hereto (the “Notice
of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising
the Standard Settlement Period following the date the Holder delivers the Notice of Exercise as aforesaid, the Holder shall deliver the
aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn
on a United States bank to the Company unless the cashless exercise procedure specified in Section 3.3.6 below is specified in the
applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type
of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder
shall surrender such Warrant to the Warrant Agent for cancellation within three (3) Trading Days of the date the Notice of Exercise
is delivered to the Warrant Agent. Partial exercises of a Warrant resulting in purchases of a portion of the total number of Warrant Shares
available thereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal
to the applicable number of Warrant Shares purchased. The Holder and the Warrant Agent shall maintain records showing the number of Warrant
Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business
Day of receipt of such notice. The Holder and any assignee, by acceptance of a Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion of the Warrant Shares under a Warrant, the number of Warrant Shares
available for purchase thereunder at any given time may be less than the amount stated on the face thereof.
(b) Notwithstanding
the foregoing in this Section 3.3.1, a holder whose interest in a Warrant is a beneficial interest in certificate(s) representing
such Warrant held in registered form through DTC (or another established clearing corporation performing similar functions), shall effect
exercises made pursuant to this Section 3.3.1 by delivering to DTC (or such other clearing corporation, as applicable) the appropriate
instruction form for exercise, complying with the procedures to effect exercise that are required by DTC (or such other clearing corporation,
as applicable), subject to a holder’s right to elect to receive a Definitive Warrant pursuant to the terms of this Warrant Agreement,
in which case this sentence shall not apply. Upon giving irrevocable instructions to its Participant to exercise Warrants, solely for
purposes of Regulation SHO, the holder whose interest in the Warrant is a beneficial interest shall be deemed to have exercised such Warrant,
regardless of when the applicable Warrant Shares are delivered to such holder.
3.3.2 Issuance
of Warrant Shares. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder
by crediting the account of the Holder’s or its designee’s balance account with DTC through its Deposit or Withdrawal at Custodian
system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration
statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant is being
exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register
in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise
to the address specified by the Holder in the Notice of Exercise by the date that is the earlier of (i) two (2) Trading Days
and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of
Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall
be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which a Warrant has been
exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than
in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days of and (ii) the number of
Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason
to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay
to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based
on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading
Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date
until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant
in the FAST program so long as the Warrants remain outstanding and exercisable. As used herein, “Standard Settlement Period”
means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect
to the Common Stock as in effect on the date of delivery of the Notice of Exercise.
3.3.3 Valid
Issuance. All Warrant Shares issued by the Company upon the proper exercise of a Warrant in conformity with this Warrant Agreement
shall be validly issued, fully paid and non-assessable.
3.3.4 No
Fractional Exercise. No fractional Warrant Shares will be issued upon the exercise of the Warrant. If, by reason of any adjustment
made pursuant to Section 4, a Holder would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a
share, the Company shall, upon such exercise, round up or down, as applicable, to the nearest whole number the number of Warrant Shares
to be issued to such Holder.
3.3.5 No
Transfer Taxes. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant
Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however,
that in the event Warrant Shares are to be issued in a name other than the name of the Holder, the Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent
fees required for same-day processing of any Notice of Exercise and all fees to the DTC (or another established clearing corporation performing
similar functions) required for same-day electronic delivery of the Warrant Shares.
3.3.6 Restrictive
Legend Events; Cashless Exercise Under Certain Circumstances.
(i) The
Company shall use its reasonable best efforts to maintain the effectiveness of the Registration Statement and the current status of the
prospectus included therein or to file and maintain the effectiveness of another registration statement and another current prospectus
covering the Warrants and the Warrant Shares at any time that the Warrants are exercisable. The Company shall provide to the Warrant
Agent and each Holder prompt written notice of any time that the Company is unable to deliver the Warrant Shares via DTC transfer or
otherwise without restrictive legend because (A) the Commission has issued a stop order with respect to the Registration Statement,
(B) the Commission otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently,
(C) the Company has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, (D) the
prospectus contained in the Registration Statement is not available for the issuance of the Warrant Shares to the Holder or (E) otherwise
(each a “Restrictive Legend Event”). To the extent that the Warrants cannot be exercised as a result of a Restrictive
Legend Event or a Restrictive Legend Event occurs after a Holder has exercised Warrants in accordance with the terms of the Warrants
but prior to the delivery of the Warrant Shares, the Company shall, at the election of the Holder, which shall be given within five (5) days
of receipt of such notice of the Restrictive Legend Event, either (A) rescind the previously submitted Notice of Exercise and the
Company shall return all consideration paid by registered holder for such shares upon such rescission or (B) treat the attempted
exercise as a cashless exercise as described in paragraph (ii) below and refund the cash portion of the exercise price to the Holder.
(ii) If
a Restrictive Legend Event has occurred and is continuing, the Warrants may also be exercisable on a cashless basis. Notwithstanding anything
herein to the contrary, the Company shall not be required to make any cash payments or net cash settlement to the Holder in lieu of delivery
of the Warrant Shares. Upon a “cashless exercise”, the Holder shall be entitled to receive the number of Warrant Shares equal
to the quotient (if such quotient would be a positive number) obtained by dividing (A-B) (X) by (A), where:
(A) = As
applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of
Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both
executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours”
(as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at
the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise
or (z) the Bid Price of the Common Shares on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s
execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a
Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular
trading hours” on a Trading Day) pursuant to Section 2(a) hereof, or (iii) the VWAP on the date of the applicable
Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered
pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day.
(B) = The
Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.
(X) = the
number of Warrant Shares that would be issuable upon exercise of the Warrant in accordance with the terms of the Warrant if such exercise
were by means of a cash exercise rather than a cashless exercise.
If the Warrant Shares are issued in such
a cashless exercise, the Company acknowledges and agrees that, in accordance with Section 3(a)(9) of the Securities Act, the
Warrant Shares shall take on the registered characteristics of the Warrants being exercised and the holding period of the Warrants being
exercised may be tacked to the holding period of the Warrant Shares, and the Company agrees not to take any position contrary thereto,
except as required by applicable law based on additional facts and circumstances. Upon receipt of a Notice of Exercise for a cashless
exercise, the Warrant Agent will promptly deliver a copy of the Notice of Exercise to the Company to confirm the number of Warrant Shares
issuable in connection with the cashless exercise. The Company shall calculate and transmit to the Warrant Agent in a written notice,
and the Warrant Agent shall have no duty, responsibility or obligation under this section to calculate, the number of Warrant Shares issuable
in connection with any cashless exercise. The Warrant Agent shall be entitled to rely conclusively on any such written notice provided
by the Company, and the Warrant Agent shall not be liable for any action taken, suffered or omitted to be taken by it in accordance with
such written instructions or pursuant to this Warrant Agreement.
3.3.7 Disputes.
In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of Warrant Shares issuable
in connection with any exercise, the Company shall promptly deliver to the Holder the number of Warrant Shares that are not disputed.
3.3.8 Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if
the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 3.3.2(b) above
pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase
(in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”),
then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying
(1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue
times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the
Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in
which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with
an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence
the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit
a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock
upon exercise of the Warrant as required pursuant to the terms hereof.
3.3.9 Beneficial
Ownership Limitation. The Company shall not be required to effect any exercise of a Warrant, and a Holder shall not have the right
to exercise any portion of a Warrant, pursuant to Section 3 or otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates (as defined
below), and any other persons acting as a group together with the Holder or any of the Holder’s Affiliates (such persons, “Attribution
Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon exercise of such Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, non-exercised
portion of such Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion
of the unexercised or non-converted portion of any other securities of the Company (including, without limitation, any other securities
of the Company which would entitle the holder thereof to acquire at any time shares of Common Stock, including, without limitation, any
debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable
for, or otherwise entitles the holder thereof to receive, shares of Common Stock (“Common Stock Equivalents”)) subject
to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its
Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 3.3.9, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 3.3.9
applies, the determination of whether a Warrant is exercisable (in relation to other securities owned by the Holder together with any
Affiliates and Attribution Parties) and of which portion of a Warrant is exercisable shall be in the sole discretion of the Holder, and
the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether a Warrant is exercisable (in
relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of a Warrant
is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm
the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 3.3.9,
in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock
as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a
more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days
confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including such
Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common
Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the
issuance of any Warrants, 9.99%) of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance
of shares of Common Stock issuable upon exercise of a Warrant. The Holder, upon written notice to the Company and the Warrant Agent, may
increase or decrease the Beneficial Ownership Limitation provisions of this Section 3.3.9, provided that the Beneficial Ownership
Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance
of shares of Common Stock upon exercise of a Warrant held by the Holder and the provisions of this Section 3.3.9 shall continue to
apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st
day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 3.3.9 to correct this paragraph (or any portion hereof) which may be defective
or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable
to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of a Warrant.
4. Adjustments.
4.1 Adjustment
upon Subdivisions or Combinations. If the Company, at any time while the Warrants are outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable
in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise
of the Warrants), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including
by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification
of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by
a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately
before such event and of which the denominator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding
immediately after such event, and the number of shares issuable upon exercise of each Warrant shall be proportionately adjusted such that
the aggregate Exercise Price of such Warrant shall remain unchanged. Any adjustment made pursuant to this Section 4.1 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.
4.2 Adjustment
for Other Distributions.
(a) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 4.1 above, if at any time the Company grants, issues or
sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders
of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the
number of shares of Common Stock acquirable upon complete exercise of a Warrant (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common
Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s
right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder
shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as
a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until
such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
(b) Dividends.
If the Company, at any time during the Exercise Period, shall pay a dividend in cash, securities or other assets to all holders of Common
Stock (or other shares of the Company’s capital stock for which the Warrants are exercisable), other than a transaction described
in Sections 4.1, 4.2(a) or 4.3 (any such non-excluded event being referred to herein as a “Dividend”), then the
Exercise Price shall be decreased, effective immediately after the effective date of such Dividend, by the quotient of (i) the gross
amount of cash and/or fair market value (as determined by the Company’s Board of Directors, in good faith) of all securities or
other assets paid to the holders of Common Stock (or other shares of the Company’s capital stock for which the Warrants are exercisable)
in respect of such Dividend divided by (ii) the sum of the number of shares of Common Stock (or other shares of the Company’s
capital stock into which the Warrants are exercisable) outstanding at the time of the Dividend plus the number of shares of Common Stock
then issuable upon exercise of all outstanding Warrants, provided, that the Exercise Price shall not be reduced below zero.
4.3 Fundamental
Transaction. If, at any time while the Warrants are outstanding, (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into another person, (ii) the Company, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one
or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the
Company or another person) is completed pursuant to which all holders of Common Stock are permitted to sell, tender or exchange their
shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the
Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization
of the Common Stock or any compulsory share exchange pursuant to which all outstanding shares of Common Stock are effectively converted
into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another person or group of persons whereby such other person or group acquires more than 50% of
the outstanding shares of Common Stock (not including any shares of Common Stock held by the other person or other persons making or party
to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination)
(each a “Fundamental Transaction”), then, upon any subsequent exercise of a Warrant, the Holder shall have the right
to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental
Transaction (without regard to any limitation in Section 3.3.9 on the exercise of a Warrant), the number of shares of Common Stock
of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and such amount of cash or any other
consideration (collectively, the “Alternate Consideration”) receivable as a result of such Fundamental Transaction
by a holder of the number of shares of Common Stock for which a Warrant is exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 3.3.9 on the exercise of a Warrant). For purposes of any such exercise, the determination
of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among
the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of a Warrant following such
Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor
(the “Successor Entity”) to assume in writing all of the obligations of the Company under the Warrants in accordance
with the provisions of this Section 4.3 pursuant to written agreements prior to or during such Fundamental Transaction. Upon the
occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after
the date of such Fundamental Transaction, the provisions of the Warrants referring to the “Company” shall refer instead to
the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under
the Warrants with the same effect as if such Successor Entity had been named as the Company therein.
The Company shall instruct
the Warrant Agent in writing to mail by first class mail, postage prepaid, to each Holder, written notice of the execution of any such
amendment, supplement or agreement with the Successor Entity. Any supplemented or amended agreement entered into by the successor corporation
or transferee shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for
in this Section 4.3. The Warrant Agent shall have no duty, responsibility or obligation to determine the correctness of any provisions
contained in such agreement or such notice, including but not limited to any provisions relating either to the kind or amount of securities
or other property receivable upon exercise of warrants or with respect to the method employed and provided therein for any adjustments,
and shall be entitled to rely conclusively for all purposes upon the provisions contained in any such agreement. The provisions of this
Section 4.3 shall similarly apply to successive reclassifications, changes, consolidations, mergers, sales and conveyances of the
kind described above.
4.4 Notices
to Holder.
(a) Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 4, the Company shall promptly
deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment
to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
(b) Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all
or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities,
cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile
number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the
Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close,
and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange;
provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the
corporate action required to be specified in such notice. To the extent that any notice required by this Warrant Agreement constitutes,
or contains, material, non-public information regarding the Company or any of its Subsidiaries, the Company shall simultaneously file
such notice with the Commission pursuant to a Current Report on Form 8-K. Provided such notice occurs within the Exercise Period,
the Holder shall remain entitled to exercise a Warrant during the period commencing on the date of such notice to the effective date of
the event triggering such notice except as may otherwise be expressly set forth herein.
4.5 Other
Events. If any event occurs of the type contemplated by the provisions of Section 4.1 or 4.2 but not expressly provided for by
such provisions (including, without limitation, the granting of stock appreciation rights, Adjustment Rights, phantom stock rights or
other rights with equity features to all holders of Common Stock for no consideration), then the Company's Board of Directors will, at
its discretion and in good faith, make an adjustment in the Exercise Price and the number of Warrant Shares or designate such additional
consideration to be deemed issuable upon exercise of a Warrant, so as to protect the rights of the registered Holder. No adjustment to
the Exercise Price will be made pursuant to more than one sub-section of this Section 4 in connection with a single issuance.
4.6 Notices
of Changes in Warrant. Upon every adjustment of the Exercise Price or the number of Warrant Shares issuable upon exercise of a Warrant,
the Company shall give written notice thereof to the Warrant Agent, which notice shall state the Exercise Price resulting from such adjustment
and the increase or decrease, if any, in the number of Warrant Shares purchasable at such price upon the exercise of a Warrant, setting
forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon the occurrence of any event
specified in Sections 4.1 or 4.2, then, in any such event, the Company shall give written notice to each Holder, at the last address set
forth for such holder in the Warrant Register, as of the record date or the effective date of the event. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of such event. The Warrant Agent shall be entitled to rely conclusively
on, and shall be fully protected in relying on, any certificate, notice or instructions provided by the Company with respect to any adjustment
of the Exercise Price or the number of shares issuable upon exercise of a Warrant, or any related matter, and the Warrant Agent shall
not be liable for any action taken, suffered or omitted to be taken by it in accordance with any such certificate, notice or instructions
or pursuant to this Warrant Agreement. The Warrant Agent shall not be deemed to have knowledge of any such adjustment unless and until
it shall have received written notice thereof from the Company.
5. Restrictive
Legends; Fractional Warrants. In the event that a Warrant Certificate surrendered for transfer bears a restrictive legend, the Warrant
Agent shall not register that transfer until the Warrant Agent has received an opinion of counsel for the Company stating that such transfer
may be made and indicating whether the Warrants must also bear a restrictive legend upon that transfer. The Warrant Agent shall not be
required to effect any registration of transfer or exchange which will result in the transfer of or delivery of a Warrant Certificate
for a fraction of a Warrant.
6. Other
Provisions Relating to Rights of Holders of Warrants.
6.1 No
Rights as Stockholder. Except as otherwise specifically provided herein, a Holder, solely in its capacity as a holder of Warrants,
shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall
anything contained in this Warrant Agreement be construed to confer upon a Holder, solely in its capacity as the registered holder of
Warrants, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether
any reorganization, issue of stock, reclassification of share capital, consolidation, merger, conveyance or otherwise), receive notice
of meetings, receive dividends or subscription rights or rights to participate in new issues of shares, or otherwise, prior to the issuance
to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of Warrants.
6.2 Reservation
of Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued shares of Common
Stock that will be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant to this Warrant Agreement.
7. Concerning
the Warrant Agent and Other Matters.
7.1 Any
instructions given to the Warrant Agent orally, as permitted by any provision of this Warrant Agreement, shall be confirmed in writing
by the Company as soon as practicable. The Warrant Agent shall not be liable or responsible and shall be fully authorized and protected
for acting, or failing to act, in accordance with any oral instructions which do not conform with the written confirmation received in
accordance with this Section 7.1.
7.2 (a) Whether
or not any Warrants are exercised, for the Warrant Agent’s services as agent for the Company hereunder, the Company shall pay to
the Warrant Agent such fees as may be separately agreed between the Company and Warrant Agent and the Warrant Agent’s out of pocket
expenses in connection with this Warrant Agreement, including, without limitation, the reasonable fees and expenses of the Warrant Agent’s
counsel. While the Warrant Agent endeavors to maintain out-of-pocket charges (both internal and external) at competitive rates, these
charges may not reflect actual out-of-pocket costs, and may include handling charges to cover internal processing and use of the Warrant
Agent’s billing systems.
(b) All
amounts owed by the Company to the Warrant Agent under this Warrant Agreement are due within 30 days of the Company’s receipt of
an invoice.
(c) No
provision of this Warrant Agreement shall require Warrant Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties under this Warrant Agreement or in the exercise of its rights.
7.3 As
agent for the Company hereunder, the Warrant Agent:
(a) shall
have no duties or obligations other than those specifically set forth herein or as may subsequently be agreed to in writing by the Warrant
Agent and the Company;
(b) shall
be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value, or genuineness of the
Warrants or any Warrant Shares;
(c) shall
not be obligated to take any legal action hereunder; if, however, the Warrant Agent determines to take any legal action hereunder, and
where the taking of such action might, in its judgment, subject or expose it to any expense or liability it shall not be required to act
unless it has been furnished with an indemnity reasonably satisfactory to it;
(d) may
rely on and shall be fully authorized and protected in acting or failing to act upon any certificate, instrument, opinion, notice, letter,
telegram, telex, facsimile transmission or other document or security delivered to the Warrant Agent and believed by it to be genuine
and to have been signed by the proper party or parties;
(e) shall
not be liable or responsible for any recital or statement contained in the Registration Statement or any other documents relating thereto;
(f) shall
not be liable or responsible for any failure on the part of the Company to comply with any of its covenants and obligations relating to
the Warrants, including without limitation obligations under applicable securities laws;
(g) may
rely on and shall be fully authorized and protected in acting or failing to act upon the written, telephonic or oral instructions with
respect to any matter relating to its duties as Warrant Agent covered by this Warrant Agreement (or supplementing or qualifying any such
actions) of officers of the Company, and is hereby authorized and directed to accept instructions with respect to the performance of its
duties hereunder from the Company or counsel to the Company, and may apply to the Company, for advice or instructions in connection with
the Warrant Agent’s duties hereunder, and the Warrant Agent shall not be liable for any delay in acting while waiting for those
instructions; any applications by the Warrant Agent for written instructions from the Company may, at the option of the Warrant Agent,
set forth in writing any action proposed to be taken or omitted by the Warrant Agent under this Warrant Agreement and the date on or after
which such action shall be taken or such omission shall be effective; the Warrant Agent shall not be liable for any action taken by, or
omission of, the Warrant Agent in accordance with a proposal included in such application on or after the date specified in such application
(which date shall not be less than five business days after the date such application is sent to the Company, unless the Company shall
have consented in writing to any earlier date) unless prior to taking any such action, the Warrant Agent shall have received written instructions
in response to such application specifying the action to be taken or omitted;
(h) may
consult with counsel satisfactory to the Warrant Agent, including its in-house counsel, and the advice of such counsel shall be full and
complete authorization and protection in respect of any action taken, suffered, or omitted by it hereunder in good faith and in accordance
with the advice of such counsel;
(i) may
perform any of its duties hereunder either directly or by or through nominees, correspondents, designees, or subagents, and it shall not
be liable or responsible for any misconduct or negligence on the part of any nominee, correspondent, designee, or subagent appointed with
reasonable care by it in connection with this Warrant Agreement;
(j) is
not authorized, and shall have no obligation, to pay any brokers, dealers, or soliciting fees to any person and
(k) shall
not be required hereunder to comply with the laws or regulations of any country other than the United States of America or any political
subdivision thereof.
7.4 (a) In
the absence of gross negligence or willful or illegal misconduct on its part, the Warrant Agent shall not be liable for any action taken,
suffered, or omitted by it or for any error of judgment made by it in the performance of its duties under this Warrant Agreement. Anything
in this Warrant Agreement to the contrary notwithstanding, in no event shall Warrant Agent be liable for special, indirect, incidental,
consequential or punitive losses or damages of any kind whatsoever (including but not limited to lost profits), even if the Warrant Agent
has been advised of the possibility of such losses or damages and regardless of the form of action. Any liability of the Warrant Agent
will be limited in the aggregate to the amount of fees paid by the Company hereunder. The Warrant Agent shall not be liable for any failures,
delays or losses, arising directly or indirectly out of conditions beyond its reasonable control including, but not limited to, acts of
government, exchange or market ruling, suspension of trading, work stoppages or labor disputes, fires, civil disobedience, riots,
rebellions, storms, electrical or mechanical failure, computer hardware or software failure, communications facilities failures including
telephone failure, war, terrorism, insurrection, earthquakes, floods, acts of God or similar occurrences.
(b) In
the event any question or dispute arises with respect to the proper interpretation of the Warrants or the Warrant Agent’s duties
under this Warrant Agreement or the rights of the Company or of any Holder, the Warrant Agent shall not be required to act and shall not
be held liable or responsible for its refusal to act until the question or dispute has been judicially settled (and, if appropriate, it
may file a suit in interpleader or for a declaratory judgment for such purpose) by final judgment rendered by a court of competent jurisdiction,
binding on all persons interested in the matter which is no longer subject to review or appeal, or settled by a written document in form
and substance satisfactory to Warrant Agent and executed by the Company and each such Holder. In addition, the Warrant Agent may require
for such purpose, but shall not be obligated to require, the execution of such written settlement by all the Holders and all other persons
that may have an interest in the settlement.
7.5 The
Company covenants to indemnify the Warrant Agent and hold it harmless from and against any loss, liability, claim or expense (“Loss”)
arising out of or in connection with the Warrant Agent’s duties under this Warrant Agreement, including the costs and expenses of
defending itself against any Loss, unless such Loss shall have been determined by a court of competent jurisdiction to be a result of
the Warrant Agent’s gross negligence or willful misconduct.
7.6 Unless
terminated earlier by the parties hereto, this Warrant Agreement shall terminate 90 days after the earlier of the Expiration Date and
the date on which no Warrants remain outstanding (the “Termination Date”). On the business day following the Termination
Date, the Warrant Agent shall deliver to the Company any entitlements, if any, held by the Warrant Agent under this Warrant Agreement.
The Warrant Agent’s right to be reimbursed for fees, charges and out-of-pocket expenses as provided in this Section 7 shall
survive the termination of this Warrant Agreement.
7.7 If
any provision of this Warrant Agreement shall be held illegal, invalid, or unenforceable by any court, this Warrant Agreement shall be
construed and enforced as if such provision had not been contained herein and shall be deemed an agreement among the parties to it to
the full extent permitted by applicable law.
7.8 The
Company represents and warrants that (a) it is duly incorporated and validly existing under the laws of its jurisdiction of incorporation,
(b) the offer and sale of the Warrants and the execution, delivery and performance of all transactions contemplated thereby (including
this Warrant Agreement) have been duly authorized by all necessary corporate action and will not result in a breach of or constitute a
default under the articles of association, bylaws or any similar document of the Company or any indenture, agreement or instrument to
which it is a party or is bound, (c) this Warrant Agreement has been duly executed and delivered by the Company and constitutes the
legal, valid, binding and enforceable obligation of the Company, (d) the Warrants will comply in all material respects with all applicable
requirements of law and (e) to the best of its knowledge, there is no litigation pending or threatened as of the date hereof in connection
with the offering of the Warrants.
7.9 In
the event of inconsistency between this Warrant Agreement and the descriptions in the Registration Statement, as they may from time to
time be amended, the terms of this Warrant Agreement shall control.
7.10 Any
notice, statement or demand authorized by this Warrant Agreement to be given or made by the Warrant Agent or by the holder of any Warrant
to or on the Company, including, without limitation, the copy of any Notice of Exercise, shall be in writing and delivered by e-mail,
hand or sent by a nationally recognized overnight courier service, addressed (until another address is filed in writing by the Company
with the Warrant Agent) as set forth below and if to any holder any notice, statement or demand shall be given to the last address set
forth for such holder (if any) in the Warrant Register:
Digital Brands
Group, Inc.
1400 Lavaca Street
Austin, Texas 78701
Attn: Chief Executive
Officer
Email: hil@dstld.la
with a copy (which shall not
constitute notice) to:
Manatt, Phelps and Phillips, LLP
695 Town Center Drive, 14th Floor
Costa Mesa, CA 92626
Attention: Thomas Poletti
Phone No: +1 714 371 2501
Email: tpoletti@manatt.com
Any notice, statement or demand
authorized by this Warrant Agreement to be given or made by the holder of any Warrant or by the Company to or on the Warrant Agent, including,
without limitation, any Notice of Exercise, shall be in writing and delivered by facsimile, hand or sent by a nationally recognized overnight
courier service, addressed (until another address is filed in writing by the Warrant Agent with the Company), as follows:
VStock Transfer, LLC
18 Lafayette Place
Woodmere, NY 11598
Attn: Yoel Goldfeder, CEO
Fax No: 646-536-3179
Email: yoel@vstocktransfer.com
Any notice or other communication
or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication
is delivered via facsimile at the facsimile number or e-mail at the e-mail address set forth above in this Section 7.11 prior to
5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number or e-mail at the e-mail address set forth in this Section on a day that is not
a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given. Notwithstanding any other provision of this Warrant Agreement, where this Warrant Agreement provides for
notice of any event to the Holder, if a Warrant is held in global form by DTC (or any successor depositary), such notice shall be sufficiently
given if given to DTC (or any successor depositary) pursuant to the procedures of DTC (or such successor depositary).
7.11 (a) This
Warrant Agreement shall be governed by and construed in accordance with the laws of the State of New York. All actions and proceedings
relating to or arising from, directly or indirectly, this Warrant Agreement may be litigated in courts located within the Borough of Manhattan
in the City and State of New York. The Company hereby submits to the personal jurisdiction of such courts and consents that any service
of process may be made by certified or registered mail, return receipt requested, directed to the Company at its address last specified
for notices hereunder.
(b) This
Warrant Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties hereto. This Warrant Agreement
may not be assigned, or otherwise transferred, in whole or in part, by either party without the prior written consent of the other party,
which the other party will not unreasonably withhold, condition or delay; except that (i) consent is not required for an assignment
or delegation of duties by Warrant Agent to any Affiliate of Warrant Agent and (ii) any reorganization, merger, consolidation, sale
of assets or other form of business combination by Warrant Agent or the Company shall not be deemed to constitute an assignment of this
Warrant Agreement.
(c) No
provision of this Warrant Agreement may be amended, modified or waived, except in a written document signed by both parties. The Company
and the Warrant Agent may amend or supplement this Warrant Agreement without the consent of any Holder for the purpose of curing any ambiguity,
or curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions with respect
to matters or questions arising under this Warrant Agreement as the parties may deem necessary or desirable and that the parties determine,
in good faith, shall not adversely affect the interest of the Holders. All other amendments and supplements shall require the vote or
written consent of Holders of at least 50.1% of the then outstanding Warrants, provided that adjustments may be made to the Warrant terms
and rights in accordance with Section 4 without the consent of the Holders.
7.12 Payment
of Taxes. The Company will from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant
Agent in respect of the issuance or delivery of Warrant Shares upon the exercise of Warrants, but the Company may require the Holders
to pay any transfer taxes in respect of the Warrants or such shares. The Warrant Agent may refrain from registering any transfer of Warrants
or any delivery of any Warrant Shares unless or until the persons requesting the registration or issuance shall have paid to the Warrant
Agent for the account of the Company the amount of such tax or charge, if any, or shall have established to the reasonable satisfaction
of the Company and the Warrant Agent that such tax or charge, if any, has been paid.
7.13 Resignation
of Warrant Agent.
7.13.1 Appointment
of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged
from all further duties and liabilities hereunder after giving thirty (30) days’ notice in writing to the Company, or such shorter
period of time agreed to by the Company. The Company may terminate the services of the Warrant Agent, or any successor Warrant Agent,
after giving thirty (30) days’ notice in writing to the Warrant Agent or successor Warrant Agent, or such shorter period of time
as agreed. If the office of the Warrant Agent becomes vacant by resignation, termination or incapacity to act or otherwise, the Company
shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within
a period of 30 days after it has been notified in writing of such resignation or incapacity by the Warrant Agent, then the Warrant Agent
or any Holder may apply to any court of competent jurisdiction for the appointment of a successor Warrant Agent at the Company’s
cost. Pending appointment of a successor to such Warrant Agent, either by the Company or by such a court, the duties of the Warrant Agent
shall be carried out by the Company. Any successor Warrant Agent (but not including the initial Warrant Agent), whether appointed by the
Company or by such court, shall be a person organized and existing under the laws of any state of the United States of America, in good
standing, and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state
authority. After appointment, any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties,
and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further
act or deed, and except for executing and delivering documents as provided in the sentence that follows, the predecessor Warrant Agent
shall have no further duties, obligations, responsibilities or liabilities hereunder, but shall be entitled to all rights that survive
the termination of this Warrant Agreement and the resignation or removal of the Warrant Agent, including but not limited to its right
to indemnity hereunder. If for any reason it becomes necessary or appropriate or at the request of the Company, the predecessor Warrant
Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority,
powers, and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent the Company shall make,
execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such
successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.
7.13.2 Notice
of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof to the
predecessor Warrant Agent and the transfer agent for the Common Stock not later than the effective date of any such appointment.
7.13.3 Merger
or Consolidation of Warrant Agent. Any person into which the Warrant Agent may be merged or converted or with which it may be consolidated
or any person resulting from any merger, conversion or consolidation to which the Warrant Agent shall be a party or any person succeeding
to the shareowner services business of the Warrant Agent or any successor Warrant Agent shall be the successor Warrant Agent under this
Warrant Agreement, without any further act or deed.
8. Miscellaneous
Provisions.
8.1 Persons
Having Rights under this Warrant Agreement. Nothing in this Warrant Agreement expressed and nothing that may be implied from any of
the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties
hereto and the Holders any right, remedy, or claim under or by reason of this Warrant Agreement or of any covenant, condition, stipulation,
promise, or agreement hereof.
8.2 Examination
of the Warrant Agreement. A copy of this Warrant Agreement shall be available at all reasonable times at the office of the Warrant
Agent designated for such purpose for inspection by any Holder. Prior to such inspection, the Warrant Agent may require any such holder
to provide reasonable evidence of its interest in the Warrants.
8.3 Counterparts.
This Warrant Agreement may be executed in any number of original, facsimile or electronic counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
8.4 Effect
of Headings. The Section headings herein are for convenience only and are not part of this Warrant Agreement and shall not affect
the interpretation thereof.
9. Certain
Definitions. As used herein, the following terms shall have the following meanings:
(i) “Adjustment
Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance, sale
or delivery (or deemed issuance, sale or delivery in accordance with Section 4) of Common Stock (other than rights of the type described
in Section 4.2 and 4.3 hereof) that could result in a decrease in the net consideration received by the Company in connection with,
or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights)
but excluding anti-dilution and other similar rights (including pursuant to Section 4.4 of this Agreement).
(ii) “Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
(iii) “person”
shall mean any individual, firm, corporation, partnership, limited liability company, joint venture, association, trust or other entity,
and shall include any successor (by merger or otherwise) thereof or thereto.
(iv) “Trading
Day” means any day on which the Common Stock is traded on the Trading Market, or, if the Trading Market is not the principal
trading market for the Common Stock, then on the principal securities exchange or securities market in the United States on which the
Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final
hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on
such exchange or market, then during the hour ending at 4:00 P.M., New York City time)
(v) “Trading
Market” means the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the
New York Stock Exchange (or any successors to any of the foregoing).
(vi) “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 in the
“Pink Open Market” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions
of reporting prices), the most recent bid price per share of the Common Stock so reported, or (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.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, this Warrant
Agreement has been duly executed by the parties hereto as of the day and year first above written.
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DIGITAL BRANDS GROUP, INC.
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By:
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/s/ John Hilburn Davis IV
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Name: John “Hil” Davis IV
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Title: President and Chief Executive Officer
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VSTOCK TRANSFER, LLC,
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as Warrant Agent
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By:
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/s/ Young D. Kim
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Name: Young D. Kim
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Title: Compliance Officer
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Annex A
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Form of Global Certificate
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Annex B
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Form of Certificated Warrant
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ANNEX A
[FORM OF GLOBAL CERTIFICATE]
UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”),
TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
DIGITAL BRANDS GROUP, INC.
WARRANT CERTIFICATE
NOT EXERCISABLE AFTER [ ], 2026
This certifies that the person
whose name and address appears below, or registered assigns, is the registered owner of the number of Warrants set forth below. Each Warrant
entitles its registered holder to purchase from Digital Brands Group, Inc., a company incorporated under the laws of the State of
Delaware (the “Company”), at any time prior to 5:00 P.M. (New York City time) on [ ], 2026, one share of common
stock, par value $0.0001 per share, of the Company (each, a “Warrant Share” and collectively, the “Warrant
Shares”), at an exercise price of $5.50 per share, subject to possible adjustments as provided in the Warrant Agreement (as
defined below).
This Warrant Certificate,
with or without other Warrant Certificates, upon surrender at the designated office of the Warrant Agent, may be exchanged for another
Warrant Certificate or Warrant Certificates evidencing the same number of Warrants as the Warrant Certificate or Warrant Certificates
surrendered. A transfer of the Warrants evidenced hereby may be registered upon surrender of this Warrant Certificate at the designated
office of the Warrant Agent by the registered holder in person or by a duly authorized attorney, properly endorsed or accompanied by proper
instruments of transfer, a signature guarantee, and such other and further documentation as the Warrant Agent may reasonably request and
duly stamped as may be required by the laws of the State of New York and of the United States of America.
The terms and conditions of
the Warrants and the rights and obligations of the holder of this Warrant Certificate are set forth in the Warrant Agency Agreement dated
as of April __, 2021 (the “Warrant Agreement”) between the Company
and VStock Transfer, LLC, as Warrant Agent (the “Warrant Agent”). A copy of the Warrant Agreement is available for
inspection during business hours at the office of the Warrant Agent.
This Warrant Certificate shall
not be valid or obligatory for any purpose until it shall have been countersigned by an authorized signatory of the Warrant Agent.
WITNESS the facsimile signature
of a proper officer of the Company.
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DIGITAL BRANDS GROUP, INC.
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By:
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Name:
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Title:
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Dated: [ ], 2021
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Countersigned:
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VSTOCK TRANSFER, LLC,
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as Warrant Agent
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PLEASE DETACH
HERE
——————————————————————————————————————
Certificate No.:____1_____ Number of Warrants:_[
]__
WARRANT CUSIP NO.: ___________
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DIGITAL BRANDS GROUP, INC.
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[Name & Address of Holder]
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VSTOCK TRANSFER, LLC, Warrant Agent
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By Mail:
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By hand or overnight courier:
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ANNEX B
[FORM OF CERTIFICATED WARRANT]
THE
NUMBER OF COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT
TO SECTION 1(d) OF THIS WARRANT.
DIGITAL
BRANDS GROUP, INC.
Warrant
To Purchase Common Shares
Warrant No.:
Date of Issuance: [ ], 2021 ("Issuance
Date")
Digital Brands Group, Inc.,
a Delaware corporation (the "Company"), hereby certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, [BUYER], the registered holder hereof or its permitted
assigns (the "Holder"), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise
Price (as defined below) then in effect, upon exercise of this Warrant to Purchase Common Shares (including any Warrants to Purchase Common
Shares issued in exchange, transfer or replacement hereof, the "Warrant"), at any time or times on or after the Issuance
Date, but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), _________________1
(subject to adjustment as provided herein) fully paid and non-assessable shares of Common Stock (as defined below) (the "Warrant
Shares", and such number of Warrant Shares, the "Warrant Number"). Except as otherwise defined herein, capitalized
terms in this Warrant shall have the meanings set forth in Section 17. This Warrant is one of the Warrants to Purchase Common Shares
(the "Registered Warrants") issued pursuant to (i) Section 1 of that certain Underwriting Agreement, dated
as of [ ], 2021 (the "Subscription Date"), by and among the Company and the underwriter(s) referred to therein,
as amended from time to time (the "Underwriting Agreement") and (ii) the Company’s Registration Statement
on Form S-1 (File number 333-*) (the "Registration Statement").
1.
EXERCISE OF WARRANT.
(a) Mechanics of
Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(f)),
this Warrant may be exercised by the Holder on any day on or after the Issuance Date (an "Exercise Date"), in whole or
in part, by delivery (whether via facsimile, electronic mail or otherwise) of a written notice, in the form attached hereto as Exhibit A
(the "Exercise Notice"), of the Holder’s election to exercise this Warrant. Within one (1) Trading Day following
an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the Company of an amount equal to the Exercise Price in
effect on the date of such exercise multiplied by the number of Warrant Shares as to which this Warrant was so exercised (the "Aggregate
Exercise Price") in cash or via wire transfer of immediately available funds if the Holder did not notify the Company in such
Exercise Notice that such exercise was made pursuant to a Cashless Exercise (as defined in Section 1(d)). The Holder shall not be
required to deliver the original of this Warrant in order to effect an exercise hereunder. Execution and delivery of an Exercise Notice
with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original of this Warrant and issuance
of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. Execution and delivery of an Exercise Notice
for all of the then-remaining Warrant Shares shall have the same effect as cancellation of the original of this Warrant after delivery
of the Warrant Shares in accordance with the terms hereof. On or before the first (1st) Trading Day following the date on which the Company
has received an Exercise Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation of receipt
of such Exercise Notice, in the form attached hereto as Exhibit B, to the Holder and the Company’s transfer agent
(the "Transfer Agent"), which confirmation shall constitute an instruction to the Transfer Agent to process such Exercise
Notice in accordance with the terms herein. On or before the second (2nd) Trading Day following the date on which the Company has received
such Exercise Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the
settlement of a trade of such Warrant Shares initiated on the applicable Exercise Date), the Company shall (i) provided that the
Transfer Agent is participating in The Depository Trust Company ("DTC") Fast Automated Securities Transfer Program ("FAST
Program"), upon the request of the Holder, credit such aggregate number of Common Shares to which the Holder is entitled pursuant
to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system,
or (ii) if the Transfer Agent is not participating in the DTC FAST Program, upon the request of the Holder, issue and deliver (via
reputable overnight courier) to the address as specified in the Exercise Notice, a certificate, registered in the name of the Holder or
its designee, for the number of Common Shares to which the Holder shall be entitled pursuant to such exercise, which Common Shares shall
be freely tradeable pursuant to all applicable securities laws. Upon delivery of an Exercise Notice, the Holder shall be deemed for all
corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective
of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing
such Warrant Shares (as the case may be). If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and
the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired
upon an exercise and upon surrender of this Warrant to the Company by the Holder, then, at the request of the Holder, the Company shall
as soon as practicable and in no event later than two (2) Business Days after any exercise and at its own expense, issue and deliver
to the Holder (or its designee) a new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which
this Warrant is exercised. No fractional Common Shares are to be issued upon the exercise of this Warrant, but rather the number of Common
Shares to be issued shall be rounded up to the nearest whole number. The Company shall pay any and all transfer, stamp, issuance and similar
taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent) that may be payable with respect to
the issuance and delivery of Warrant Shares upon exercise of this Warrant. Notwithstanding the foregoing, except in the case where an
exercise of this Warrant is validly made pursuant to a Cashless Exercise, the Company’s failure to deliver Warrant Shares to the
Holder on or prior to the later of (A) two (2) Trading Days after receipt of the applicable Exercise Notice (or such earlier
date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade of such Warrant
Shares initiated on the applicable Exercise Date) and (B) one (1) Trading Day after the Company’s receipt of the Aggregate
Exercise Price (or valid notice of a Cashless Exercise) (such later date, the "Share Delivery Date") shall not be deemed
to be a breach of this Warrant. From the Issuance Date through and including the Expiration Date, the Company shall maintain a transfer
agent that participates in the DTC FAST Program. Notwithstanding any other provision in this Agreement, the Holder may elect, at its sole
discretion, to receive unregistered Warrant Shares issued in response to an Exercise Notice instead of Warrant Shares (i) registered
pursuant to the Registration Statement or any other registration statement or (ii) issued pursuant to Section 1(c).
1
100% Warrant coverage
(b) Exercise Price.
For purposes of this Warrant, "Exercise Price" means $5.50 subject to adjustment as provided herein.
(c) Company’s
Failure to Timely Deliver Securities. If the Company shall fail, for any reason or for no reason, on or prior to the Share Delivery
Date, either (I) if the Transfer Agent is not participating in the DTC FAST Program, to issue and deliver to the Holder (or its designee)
a certificate for the number of Warrant Shares to which the Holder is entitled and register such Warrant Shares on the Company’s
share register or, if the Transfer Agent is participating in the DTC FAST Program, to credit the balance account of the Holder or the
Holder’s designee with DTC for such number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise of
this Warrant (as the case may be) or (II) if the Registration Statement (or prospectus contained therein) covering the issuance of
the Warrant Shares that are the subject of the Exercise Notice (the "Unavailable Warrant Shares") is not available for
the issuance of such Unavailable Warrant Shares and the Company fails to promptly (x) so notify the Holder and (y) deliver the
Warrant Shares electronically without any restrictive legend by crediting such aggregate number of Warrant Shares to which the Holder
is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal
At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a "Notice Failure"
and together with the event described in clause (I) above, a "Delivery Failure"), and if on or after such Share
Delivery Date the Holder purchases (in an open market transaction or otherwise) Common Shares to deliver in satisfaction of a sale by
the Holder of all or any portion of the number of Common Shares issuable upon such exercise that the Holder is entitled to receive from
the Company (a "Buy-In"), then, in addition to all other remedies available to the Holder, the Company shall, within
two (2) Business Days after the Holder’s request and in the Holder’s discretion, either (i) as an indemnity for
loss hereunder, pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions
and other out-of-pocket expenses, if any) for the Common Shares so purchased (including, without limitation, by any other Person in respect,
or on behalf, of the Holder) (the "Buy-In Price"), at which point the Company’s obligation to so issue and deliver
such certificate (and to issue such Common Shares) or credit the balance account of such Holder or such Holder’s designee, as applicable,
with DTC for the number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may
be) (and to issue such Warrant Shares) shall terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder
a certificate or certificates representing such Warrant Shares or credit the balance account of such Holder or such Holder’s designee,
as applicable, with DTC for the number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise hereunder (as
the case may be) and, as an indemnity for loss hereunder, pay cash to the Holder in an amount equal to the excess (if any) of the Holder’s
total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the Common Shares so purchased (including,
without limitation, by any other Person in respect, or on behalf, of the Holder) (the "Buy-In Price") over the product
of (A) such number of Warrant Shares multiplied by (B) the lowest Closing Sale Price of the Common Shares on any Trading Day
during the period commencing on the date of the applicable Exercise Notice and ending on the date of such issuance and payment under this
clause (ii) (the "Buy-In Payment Amount"). Nothing shall limit the Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief
with respect to the Company’s failure to timely deliver certificates representing Common Shares (or to electronically deliver such
Common Shares) upon the exercise of this Warrant as required pursuant to the terms hereof. While this Warrant is outstanding, the Company
shall cause its transfer agent to participate in the DTC FAST Program. In addition to the foregoing rights, (i) if the Company fails
to deliver the applicable number of Warrant Shares upon an exercise pursuant to Section 1 by the applicable Share Delivery Date,
then the Holder shall have the right to rescind such exercise in whole or in part and retain and/or have the Company return, as the case
may be, any portion of this Warrant that has not been exercised pursuant to such Exercise Notice; provided that the rescission of an exercise
shall not affect the Company’s obligation to make any payments that have accrued prior to the date of such notice pursuant to this
Section 1(c) or otherwise except with respect to any returned portion of an exercise under this subclause (i), and (ii) if
a registration statement (which may be the Registration Statement) covering the issuance or resale of the Warrant Shares that are subject
to an Exercise Notice is not available for the issuance or resale, as applicable, of such Exercise Notice Warrant Shares and the Holder
has submitted an Exercise Notice prior to receiving notice of the non-availability of such registration statement and the Company has
not already delivered the Warrant Shares underlying such Exercise Notice electronically without any restrictive legend by crediting such
aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s
balance account with DTC through its Deposit / Withdrawal At Custodian system, the Holder shall have the option, by delivery of notice
to the Company, to (x) rescind such Exercise Notice in whole or in part and retain or have returned, as the case may be, any portion
of this Warrant that has not been exercised pursuant to such Exercise Notice; provided that the rescission of an Exercise Notice shall
not affect the Company’s obligation to make any payments that have accrued prior to the date of such notice pursuant to this Section 1(c) or
otherwise, and/or (y) switch some or all of such Exercise Notice from a cash exercise to a Cashless Exercise.
(d) Cashless Exercise.
Notwithstanding anything contained herein to the contrary (other than Section 1(f) below), if at the time of exercise
hereof the Registration Statement is not effective (or the prospectus contained therein is not available for use) for the issuance of
all of the Warrant Shares, then the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making
the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect
instead to receive upon such exercise the "Net Number" of Warrant Shares determined according to the following formula (a "Cashless
Exercise"):
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Net Number =
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[(A-B) x (X)]
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A
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For purposes of the foregoing
formula:
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A=
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As applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of "regular trading hours" (as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Shares on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during "regular trading hours" on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of "regular trading hours" on a Trading Day) pursuant to Section 2(a) hereof, or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of "regular trading hours" on such Trading Day.
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B=
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The Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.
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X=
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The number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.
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If the Warrant Shares are issued in a Cashless
Exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the 1933 Act, the Warrant Shares take
on the registered characteristics of the Warrants being exercised. For purposes of Rule 144(d) promulgated under the 1933 Act,
as in effect on the Initial Exercise Date, it is intended that the Warrant Shares issued in a Cashless Exercise shall be deemed to have
been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant
was originally issued pursuant to the Underwriting Agreement. Notwithstanding anything herein to the contrary, on the Expiration Date,
this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 1(d).
(e) Disputes.
In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of Warrant Shares to
be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed
and resolve such dispute in accordance with Section 13.
(f) Limitations on
Exercises. The Company shall not effect the exercise of any portion of this Warrant, and the Holder shall not have the right to exercise
any portion of this Warrant, pursuant to the terms and conditions of this Warrant and any such exercise shall be null and void and treated
as if never made, to the extent that after giving effect to such exercise, the Holder together with the other Attribution Parties collectively
would beneficially own in excess of 4.99% (the "Maximum Percentage") of the Common Shares outstanding immediately after
giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of Common Shares beneficially owned by the
Holder and the other Attribution Parties shall include the number of Common Shares held by the Holder and all other Attribution Parties
plus the number of Common Shares issuable upon exercise of this Warrant with respect to which the determination of such sentence is being
made, but shall exclude Common Shares which would be issuable upon (A) exercise of the remaining, unexercised portion of this Warrant
beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company (including, without limitation, any convertible notes or convertible preferred shares or
warrants, including other Registered Warrants) beneficially owned by the Holder or any other Attribution Party subject to a limitation
on conversion or exercise analogous to the limitation contained in this Section 1(f)(i). For purposes of this Section 1(f)(i),
beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining the number
of outstanding Common Shares the Holder may acquire upon the exercise of this Warrant without exceeding the Maximum Percentage, the Holder
may rely on the number of outstanding Common Shares as reflected in (x) the Company’s most recent Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as the case may be, (y) a
more recent public announcement by the Company or (z) any other written notice by the Company or the Transfer Agent, if any, setting
forth the number of Common Shares outstanding (the "Reported Outstanding Share Number"). If the Company receives an Exercise
Notice from the Holder at a time when the actual number of outstanding Common Shares is less than the Reported Outstanding Share Number,
the Company shall (i) notify the Holder in writing of the number of Common Shares then outstanding and, to the extent that such Exercise
Notice would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section 1(f)(i), to exceed the
Maximum Percentage, the Holder must notify the Company of a reduced number of Warrant Shares to be acquired pursuant to such Exercise
Notice (the number of shares by which such purchase is reduced, the "Reduction Shares") and (ii) as soon as reasonably
practicable, the Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares. For any reason at
any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing
or by electronic mail to the Holder the number of Common Shares then outstanding. In any case, the number of outstanding Common Shares
shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder
and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In the event that the issuance
of Common Shares to the Holder upon exercise of this Warrant results in the Holder and the other Attribution Parties being deemed to beneficially
own, in the aggregate, more than the Maximum Percentage of the number of outstanding Common Shares (as determined under Section 13(d) of
the 1934 Act), the number of shares so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial
ownership exceeds the Maximum Percentage (the "Excess Shares") shall be deemed null and void and shall be cancelled ab
initio, and the Holder shall not have the power to vote or to transfer the Excess Shares. As soon as reasonably practicable after the
issuance of the Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price paid by the Holder
for the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase (with such increase
not effective until the sixty-first (61st) day after delivery of such notice) or decrease
the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase
in the Maximum Percentage will not be effective until the sixty-first (61st) day after
such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the other Attribution
Parties and not to any other holder of Registered Warrants that is not an Attribution Party of the Holder. For purposes of clarity, the
Common Shares issuable pursuant to the terms of this Warrant in excess of the Maximum Percentage shall not be deemed to be beneficially
owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No
prior inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this
paragraph with respect to any subsequent determination of exercisability. The provisions of this paragraph shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this Section 1(f)(i) to the extent necessary to correct this
paragraph or any portion of this paragraph which may be defective or inconsistent with the intended beneficial ownership limitation contained
in this Section 1(f)(i) or to make changes or supplements necessary or desirable to properly give effect to such limitation.
The limitation contained in this paragraph may not be waived and shall apply to a successor holder of this Warrant.
(g) Reservation of
Shares.
(i) Required
Reserve Amount. So long as this Warrant remains outstanding, the Company shall at all times keep reserved for issuance under this
Warrant a number of Common Shares at least equal to 100% of the maximum number of Common Shares as shall be necessary to satisfy the Company’s
obligation to issue Common Shares under the Registered Warrants then outstanding (without regard to any limitations on exercise) (the
"Required Reserve Amount"); provided that at no time shall the number of Common Shares reserved pursuant to this Section 1(g)(i) be
reduced other than proportionally in connection with any exercise or redemption of Registered Warrants or such other event covered by
Section 2(a) below. The Required Reserve Amount (including, without limitation, each increase in the number of shares so reserved)
shall be allocated pro rata among the holders of the Registered Warrants based on number of Common Shares issuable upon exercise of Registered
Warrants held by each holder on the Issuance Date (without regard to any limitations on exercise) or increase in the number of reserved
shares, as the case may be (the "Authorized Share Allocation"). In the event that a holder shall sell or otherwise transfer
any of such holder’s Registered Warrants, each transferee shall be allocated a pro rata portion of such holder’s Authorized
Share Allocation. Any Common Shares reserved and allocated to any Person which ceases to hold any Registered Warrants shall be allocated
to the remaining holders of Registered Warrants, pro rata based on the number of Common Shares issuable upon exercise of the Registered
Warrants then held by such holders (without regard to any limitations on exercise).
(ii) Insufficient
Authorized Shares. If, notwithstanding Section 1(g)(i) above, and not in limitation thereof, at any time while any of the
Registered Warrants remain outstanding, the Company does not have a sufficient number of authorized and unreserved Common Shares to satisfy
its obligation to reserve the Required Reserve Amount (an "Authorized Share Failure"), then the Company shall immediately
take all action necessary to increase the Company’s authorized Common Shares to an amount sufficient to allow the Company to reserve
the Required Reserve Amount for all the Registered Warrants then outstanding. Without limiting the generality of the foregoing sentence,
as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after
the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its shareholders for the approval of an increase
in the number of authorized Common Shares. In connection with such meeting, the Company shall provide each shareholder with a proxy statement
and shall use its best efforts to solicit its shareholders’ approval of such increase in authorized Common Shares and to cause its
board of directors to recommend to the shareholders that they approve such proposal. In the event that the Company is prohibited from
issuing Common Shares upon an exercise of this Warrant due to the failure by the Company to have sufficient Common Shares available out
of the authorized but unissued Common Shares (such unavailable number of Common Shares, the "Authorization Failure Shares"),
in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash in exchange for the cancellation of
such portion of this Warrant exercisable into such Authorization Failure Shares at a price equal to the sum of (i) the product of
(x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the Common Shares on any Trading
Day during the period commencing on the date the Holder delivers the applicable Exercise Notice with respect to such Authorization Failure
Shares to the Company and ending on the date of such issuance and payment under this Section 1(f); and (ii) to the extent the
Holder purchases (in an open market transaction or otherwise) Common Shares to deliver in satisfaction of a sale by the Holder of Authorization
Failure Shares, any Buy-In Payment Amount, brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection
therewith.
(h) Warrant Agency
Agreement. If this Warrant is held in global form through DTC (or any successor depositary), this Warrant is issued subject to the
Warrant Agency Agreement, dated [on or about the Issuance Date] with VStock Transfer LLC (the "Warrant Agency Agreement").
To the extent any provision of this Warrant conflicts with the express provisions of the Warrant Agency Agreement, the provisions of this
Warrant shall govern and be controlling.
2. ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this Section 2.
(a) Share Dividends
and Splits. Without limiting any provision of Section 4, if the Company, at any time on or after the Subscription Date, (i) pays
a share dividend on one or more classes of its then outstanding Common Shares or otherwise makes a distribution on any class of capital
shares that is payable in Common Shares, (ii) subdivides (by any share split, share dividend, recapitalization or otherwise) one
or more classes of its then outstanding Common Shares into a larger number of shares or (iii) combines (by combination, reverse share
split or otherwise) one or more classes of its then outstanding Common Shares into a smaller number of shares, then in each such case
the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares outstanding immediately
before such event and of which the denominator shall be the number of Common Shares outstanding immediately after such event. Any adjustment
made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of shareholders
entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or combination.
(b) Number of Warrant
Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 2, the number of Warrant Shares that
may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate
Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect
immediately prior to such adjustment (without regard to any limitations on exercise contained herein).
(c) Other Events.
In the event that the Company (or any Subsidiary (as defined in the Underwriting Agreement)) shall take any action to which the provisions
hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of
the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including, without limitation,
the granting of share appreciation rights, phantom share rights or other rights with equity features), then the Company’s board
of directors shall in good faith determine and implement an appropriate adjustment in the Exercise Price and the number of Warrant Shares
(if applicable) so as to protect the rights of the Holder, provided that no such adjustment pursuant to this Section 2(c) will
increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2, provided
further that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution,
then the Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally
recognized standing to make such appropriate adjustments, whose determination shall be final and binding absent manifest error and whose
fees and expenses shall be borne by the Company.
(d) Calculations.
All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable.
The number of Common Shares outstanding at any given time shall not include shares owned or held by or for the account of the Company,
and the disposition of any such shares shall be considered an issuance or sale of Common Shares.
(e) Voluntary Adjustment
By Company. The Company may at any time during the term of this Warrant, subject to the prior consent of the Principal Market if less
than $[ ]2 (as adjusted for share splits,
share dividends, share combinations, recapitalizations or other similar transactions), with the prior written consent of the holders of
a majority of the Registered Warrants then outstanding, reduce the then current Exercise Price to any amount and for any period of time
deemed appropriate by the board of directors of the Company.
3. RIGHTS
UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above, if the Company shall declare
or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Shares, by way of return
of capital or otherwise (including, without limitation, any distribution of cash, shares or other securities, property, options, evidence
of indebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, plan of arrangement or
other similar transaction) (a "Distribution"), at any time after the issuance of this Warrant, then, in each such case,
the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if
the Holder had held the number of Common Shares acquirable upon complete exercise of this Warrant (without regard to any limitations or
restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before the date on which a
record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of Common Shares are to
be determined for the participation in such Distribution (provided,
however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder
and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution
to the extent of the Maximum Percentage (and shall not be entitled to beneficial ownership of such Shares Common Shares as a result of
such Distribution (and beneficial ownership) to the extent of any such excess) and the portion of such Distribution shall be held in abeyance
for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such Distribution (and any Distributions
declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there
had been no such limitation).
4. PURCHASE
RIGHTS; FUNDAMENTAL TRANSACTIONS.
(a) Purchase Rights.
In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase shares, warrants, securities or other property pro rata to the record holders of any class of Common
Shares (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 Common Shares acquirable
upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without
limitation, the Maximum Percentage) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the grant, issuance
or sale of such Purchase Rights (provided, however, that to the extent that the Holder’s right to participate in any
such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall
not be entitled to participate in such Purchase Right to the extent of the Maximum Percentage (and shall not be entitled to beneficial
ownership of such Common Shares as a result of such Purchase Right (and beneficial ownership) to the extent of any such excess) and such
Purchase Right to such extent shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right
thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the
Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent
Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).
2 Insert 20% of the IPO Price
(b) Fundamental Transactions.
The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all
of the obligations of the Company under this Warrant in accordance with the provisions of this Section 4(b) pursuant to written
agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including
agreements to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant, including, without limitation, which is exercisable for a corresponding number
of capital shares equivalent to of Common Shares acquirable and receivable upon exercise of this Warrant (without regard to any limitations
on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder
to such capital shares (but taking into account the relative value of the Common Shares pursuant to such Fundamental Transaction and the
value of such capital shares, such adjustments to the number of capital shares and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction) and (ii) the Successor
Entity (including its Parent Entity) is a publicly traded corporation whose common shares are quoted on or listed for trading on an Eligible
Market. Upon the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that
from and after the date of the applicable Fundamental Transaction, the provisions of this Warrant referring to the "Company"
shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations
of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation
of each Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon exercise
of this Warrant at any time after the consummation of the applicable Fundamental Transaction, in lieu of the Common Shares (or other securities,
cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of this Warrant prior to the applicable Fundamental Transaction, such publicly traded common shares
(or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the
happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction
(without regard to any limitations on the exercise of this Warrant), as adjusted in accordance with the provisions of this Warrant. Notwithstanding
the foregoing, and without limiting Section 1(f) hereof, the Holder may elect, at its sole option, by delivery of written notice
to the Company to waive this Section 4(b) to permit the Fundamental Transaction without the assumption of this Warrant. In addition
to and not in substitution for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant to which
holders of Common Shares are entitled to receive securities or other assets with respect to or in exchange for Common Shares (a "Corporate
Event"), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon
an exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction but prior to the Expiration Date,
in lieu of the Common Shares (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and
4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental
Transaction, such shares, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription
rights) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant
been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this
Warrant). Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Holder.
(c) Black Scholes
Value. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of the Holder delivered at
any time commencing on the earliest to occur of (x) the public disclosure of any Fundamental Transaction, (y) the consummation
of any Fundamental Transaction and (z) the Holder first becoming aware of any Fundamental Transaction through the date that is thirty
(30) days after the public disclosure of the consummation of such Fundamental Transaction by the Company pursuant to a Current Report
on Form 8-K filed with the SEC, the Company or the Successor Entity (as the case may be) shall purchase this Warrant from the Holder
on the date of such request by paying to the Holder cash in an amount equal to the Black Scholes Value. Payment of such amounts shall
be made by the Company (or at the Company’s direction) to the Holder on or prior to the later of (x) the second (2nd) Trading
Day after the date of such request and (y) the date of consummation of such Fundamental Transaction; provided, however,
if the Fundamental Transaction is not within the Company’s control, including not approved by the Company’s Board of Directors
or the consideration is not in all shares of the Successor Entity, the Holder shall only be entitled to receive from the Company or any
Successor Entity, as of the date of consummation of such Fundamental Transaction, the same type or form of consideration (and in the same
proportion), at the Black Scholes Value (as defined below) of the unexercised portion of this Warrant, that is being offered and paid
to the holders of Common Shares of the Company in connection with the Fundamental Transaction, whether that consideration be in the form
of cash, shares or any combination thereof, or whether the holders of Common Shares are given the choice to receive from among alternative
forms of consideration in connection with the Fundamental Transaction.
(d) Application.
The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and
shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without regard to any limitations on
the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit of the Maximum Percentage, applied
however with respect to capital shares registered under the 1934 Act and thereafter receivable upon exercise of this Warrant (or any such
other warrant)).
5. NONCIRCUMVENTION. The Company hereby
covenants and agrees that the Company will not, by amendment of its certificate of incorporation or other organizational documents or
through any reorganization, transfer of assets, consolidation, merger, amalgamation, plan of arrangement, dissolution, issuance or sale
of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the
rights of the Holder. Without limiting the generality of the foregoing, the Company (a) shall not increase the par value of any Common
Shares receivable upon the exercise of this Warrant above the Exercise Price then in effect, and (b) shall take all such actions
as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable Common Shares
upon the exercise of this Warrant, which Common Shares shall be freely tradeable pursuant to all applicable securities laws. Notwithstanding
anything herein to the contrary, if after the sixty (60) calendar day anniversary of the Issuance Date, the Holder is not permitted to
exercise this Warrant in full for any reason (other than pursuant to restrictions set forth in Section 1(f) hereof), the Company
shall use its best efforts to promptly remedy such failure, including, without limitation, obtaining such consents or approvals as necessary
to permit such exercise into Common Shares.
6. WARRANT HOLDER NOT DEEMED A SHAREHOLDER.
Except as otherwise specifically provided herein, the Holder, solely in its capacity as a holder of this Warrant, shall not be entitled
to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the Holder, solely in its capacity as the Holder of this Warrant, any of the rights of a shareholder
of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of shares, reclassification
of shares, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise,
prior to the issuance to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of this Warrant.
In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities
(upon exercise of this Warrant or otherwise) or as a shareholder of the Company, whether such liabilities are asserted by the Company
or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices
and other information given to the shareholders of the Company generally, contemporaneously with the giving thereof to the shareholders.
7 . REISSUANCE
OF WARRANTS.
(a) Transfer of Warrant.
If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the Holder may request, representing
the right to purchase the number of Warrant Shares being transferred by the Holder and, if less than the total number of Warrant Shares
then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing the
right to purchase the number of Warrant Shares not being transferred.
(b) Lost, Stolen
or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant (as to which a written certification and the indemnification contemplated below shall suffice as such evidence),
and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable
form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder
a new Warrant (in accordance with Section 7(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.
(c) Exchangeable
for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company,
for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of
Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant
Shares as is designated by the Holder at the time of such surrender; provided, however, no warrants for fractional Common Shares shall
be given.
(d) Issuance of New
Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall
be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the
Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a) or Section 7(c),
the Warrant Shares designated by the Holder which, when added to the number of Common Shares underlying the other new Warrants issued
in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an
issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same
rights and conditions as this Warrant.
8. NOTICES. (a) General. Whenever
notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in writing, (i) if
delivered (a) from within the domestic United States, by first-class registered or certified airmail, or nationally recognized overnight
express courier, postage prepaid, electronic mail or by facsimile or (b) from outside the United States, by International Federal
Express, electronic mail or facsimile, and (ii) will be deemed given (A) if delivered by first-class registered or certified
mail domestic, three (3) Business Days after so mailed, (B) if delivered by nationally recognized overnight carrier, one (1) Business
Day after so mailed, (C) if delivered by International Federal Express, two (2) Business Days after so mailed and (D) if
delivered by electronic mail, when sent (provided that such sent email is kept on file (whether electronically or otherwise) by the sending
party and the sending party does not receive an automatically generated message from the recipient’s email server that such e-mail
could not be delivered to such recipient) and (E) if delivered by facsimile, upon electronic confirmation of receipt of such facsimile,
and will be delivered and addressed as follows:
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(i)
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if to the Company, to:
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Digital Brands Group, Inc.
1400 Lavaca Street
Austin, Texas 78701
Attn: Chief Executive Officer
Email: hil@dstld.la
with a copy (which shall not constitute
notice) to:
Manatt, Phelps & Phillips, LLP
2049 Century Park East, 17th Floor
Los Angeles, CA 90067
Attn: Veronica Lah, Esq.
Email: vlah@manatt.com
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(ii)
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if to the Holder, at such address or other contact information delivered by the Holder to Company or as is on the books and records of the Company.
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(b) Required Notices.
The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant (other than the issuance
of Common Shares upon exercise in accordance with the terms hereof), including in reasonable detail a description of such action and the
reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately
upon each adjustment of the Exercise Price and the number of Warrant Shares, setting forth in reasonable detail, and certifying, the calculation
of such adjustment(s), (ii) at least ten Trading Days prior to the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the Common Shares, (B) with respect to any grants, issuances or sales of any Options,
Convertible Securities or rights to purchase shares, warrants, securities or other property to holders of Common Shares or (C) for
determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information
shall be made known to the public prior to or in conjunction with such notice being provided to the Holder, and (iii) at least ten
(10) Trading Days prior to the consummation of any Fundamental Transaction. To the extent that any notice provided hereunder constitutes,
or contains, material, non-public information regarding the Company or any of its Subsidiaries, the Company shall simultaneously file
such notice with the SEC pursuant to a Current Report on Form 8-K. It is expressly understood and agreed that the time of execution
specified by the Holder in each Exercise Notice shall be definitive and may not be disputed or challenged by the Company.
9. AMENDMENT AND WAIVER. Except as otherwise
provided herein, the provisions of this Warrant (other than Section 1(f)) may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of
the Holder. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
10. SEVERABILITY. If any provision of this
Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be
valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions
of this Warrant so long as this Warrant as so modified continues to express, without material change, the original intentions of the parties
as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits
that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid
or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited,
invalid or unenforceable provision(s).
11. GOVERNING LAW. This Warrant shall be
governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law
or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof to the Company at its principal executive
office and agrees that such service shall constitute good and sufficient service of process and notice thereof. The Company 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, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding
is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing
contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company
in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security
for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
12. CONSTRUCTION; HEADINGS. This Warrant
shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof.
The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.
13 . DISPUTE RESOLUTION.
(a) Submission to
Dispute Resolution.
(i) In the
case of a dispute relating to the Exercise Price, the Closing Sale Price, the Bid Price, Black Scholes Value or fair market value or the
arithmetic calculation of the number of Warrant Shares (as the case may be) (including, without limitation, a dispute relating to the
determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute to the other party via
facsimile or electronic mail (A) if by the Company, within two (2) Business Days after the occurrence of the circumstances giving
rise to such dispute or (B) if by the Holder, at any time after the Holder learned of the circumstances giving rise to such dispute.
If the Holder and the Company are unable to promptly resolve such dispute relating to such Exercise Price, such Closing Sale Price, such
Bid Price, Black Scholes Value or such fair market value or such arithmetic calculation of the number of Warrant Shares (as the case may
be), at any time after the second (2nd) Business Day following such initial notice by
the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may,
at its sole option, select an independent, reputable investment bank to resolve such dispute.
(ii) The Holder
and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in accordance
with the first sentence of this Section 13 and (B) written documentation supporting its position with respect to such dispute,
in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business
Day immediately following the date on which the Holder selected such investment bank (the "Dispute Submission Deadline")
(the documents referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the "Required
Dispute Documentation") (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the
Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation
shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or other support to such investment
bank with respect to such dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation
that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the
Company and the Holder or otherwise requested by such investment bank, neither the Company nor the Holder shall be entitled to deliver
or submit any written documentation or other support to such investment bank in connection with such dispute (other than the Required
Dispute Documentation).
(iii) The Company
and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and the Holder of such
resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of such
investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute shall be final and binding
upon all parties absent manifest error.
(b) Miscellaneous.
The Company expressly acknowledges and agrees that (i) this Section 13 constitutes an agreement to arbitrate between the Company
and the Holder (and constitutes an arbitration agreement) under the rules then in effect under § 7501, et seq. of the New York
Civil Practice Law and Rules ("CPLR") and that the Holder is authorized to apply for an order to compel arbitration
pursuant to CPLR § 7503(a) in order to compel compliance with this Section 13, (ii) the terms of this Warrant shall
serve as the basis for the selected investment bank’s resolution of the applicable dispute, such investment bank shall be entitled
(and is hereby expressly authorized) to make all findings, determinations and the like that such investment bank determines are required
to be made by such investment bank in connection with its resolution of such dispute and in resolving such dispute such investment bank
shall apply such findings, determinations and the like to the terms of this Warrant, (iii) the Holder (and only the Holder), in its
sole discretion, shall have the right to submit any dispute described in this Section 13 to any state or federal court sitting in
The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 13 and (iv) nothing
in this Section 13 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including, without limitation,
with respect to any matters described in this Section 13).
14. REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS,
BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available
under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein
shall limit the right of the Holder to pursue actual and consequential damages for any failure by the Company to comply with the terms
of this Warrant. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as
expressly provided herein. Amounts set forth or provided for herein with respect to payments, exercises and the like (and the computation
thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that,
in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available
remedies, to specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of
competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security.
The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm
the Company’s compliance with the terms and conditions of this Warrant (including, without limitation, compliance with Section 2
hereof). The issuance of shares and certificates for shares as contemplated hereby upon the exercise of this Warrant shall be made without
charge to the Holder or such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other
than the Holder or its agent on its behalf.
15. PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Warrant is placed in the hands of an attorney for collection or
enforcement or is collected or enforced through any legal proceeding or the holder otherwise takes action to collect amounts due under
this Warrant or to enforce the provisions of this Warrant or (b) there occurs any bankruptcy, reorganization, receivership of the
company or other proceedings affecting company creditors’ rights and involving a claim under this Warrant, then the Company shall
pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements.
16. TRANSFER. This Warrant may be offered
for sale, sold, transferred or assigned without the consent of the Company.
17. CERTAIN DEFINITIONS. For purposes of
this Warrant, the following terms shall have the following meanings:
(a) "1933 Act"
means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) "1934 Act"
means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c) "Affiliate"
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that "control" of a Person means the power directly or
indirectly either to vote 10% or more of the shares having ordinary voting power for the election of directors of such Person or direct
or cause the direction of the management and policies of such Person whether by contract or otherwise.
(d) "Attribution
Parties" means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder
funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by the Holder’s
investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing,
(iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of the foregoing and (iv) any
other Persons whose beneficial ownership of the Company’s Common Shares would or could be aggregated with the Holder’s and
the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose of the foregoing is to
subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.
(e) "Bid Price"
means, for any security as of the particular time of determination, the bid price for such security on the Principal Market as reported
by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange or trading market
for such security, the bid price of such security on the principal securities exchange or trading market where such security is listed
or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply, the bid price of such security
in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg as of such time of determination,
or, if no bid price is reported for such security by Bloomberg as of such time of determination, the average of the bid prices of any
market makers for such security as reported in the "pink sheets" by OTC Markets Group Inc. (formerly Pink Sheets LLC) as of
such time of determination. If the Bid Price cannot be calculated for a security as of the particular time of determination on any of
the foregoing bases, the Bid Price of such security as of such time of determination shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such
dispute shall be resolved in accordance with the procedures in Section 13. All such determinations shall be appropriately adjusted
for any shares dividend, share split, share combination or other similar transaction during such period.
(f) "Black Scholes
Value" means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s request pursuant
to Section 4(c), which value is calculated using the greater of the Black Scholes Option Pricing Model obtained from the "OV"
function on Bloomberg, as a put option or a call option, utilizing (i) an underlying price per share equal to, at the Holder’s
election, either, (1) the highest or lowest (at the Holder’s election) Closing Sale Price of the Common Shares during the period
beginning on the Trading Day immediately preceding the announcement of the applicable Fundamental Transaction (or the consummation of
the applicable Fundamental Transaction, if earlier) and ending on the Trading Day of the Holder’s request pursuant to Section 4(c) or
the sum of the price per share being offered in cash in the applicable Fundamental Transaction (if any) plus the value of the non-cash
consideration being offered in the applicable Fundamental Transaction (if any), (ii) (1) if calculating as a call option, a
strike price equal to the Exercise Price in effect on the date of the Holder’s request pursuant to Section 4(c) if calculating
as a put option, a strike price equal to $____3
(as adjusted for share splits, share dividends, share combinations, recapitalizations or other similar events), (iii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant
as of the date of the Holder’s request pursuant to Section 4(c) the remaining term of this Warrant as of the date of consummation
of the applicable Fundamental Transaction or as of the date of the Holder’s request pursuant to Section 4(c) if such request
is prior to the date of the consummation of the applicable Fundamental Transaction, (iv) a zero cost of borrow and (v) an expected
volatility equal to the greater of 100% and the 30 day volatility obtained from the "HVT" function on Bloomberg (determined
utilizing a 365 day annualization factor) as of the Trading Day immediately following the earliest to occur of (A) the public disclosure
of the applicable Fundamental Transaction, (B) the consummation of the applicable Fundamental Transaction and (C) the date on
which the Holder first became aware of the applicable Fundamental Transaction.
(g) "Bloomberg"
means Bloomberg, L.P.
(h) "Business
Day" means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required
by law to remain closed due to "stay at home", "shelter-in-place", "non-essential employee" or any other
similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long
as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally are open
for use by customers on such day.
(i) "Closing
Sale Price" means, for any security as of any date, the last closing trade price for such security on the Principal Market, as
reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade
price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal
Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal
securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing does not apply,
the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the ask prices of any market makers for
such security as reported in the "pink sheets" by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing Sale Price
cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such
date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to
agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13.
All such determinations shall be appropriately adjusted for any share dividend, share split, share combination or other similar transaction
during such period.
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Insert Warrant Exercise Price
(j) "Common
Shares" means (i) the Company’s common shares, no par value per share, and (ii) any capital shares into which
such common shares shall have been changed or any share capital resulting from a reclassification of such common shares.
(k) "Convertible
Securities" means any shares or other security (other than Options) that is at any time and under any circumstances, directly
or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any Common
Shares.
(l) "Eligible
Market" means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the
Nasdaq Capital Market or the Principal Market.
(m) "Expiration
Date" means the date that is the fifth (5th) anniversary of the Issuance Date or, if such date falls on a day other than a Business
Day or on which trading does not take place on the Principal Market (a "Holiday"), the next date that is not a Holiday.
(n) "Fundamental
Transaction" means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise,
in one or more related transactions, (i) consolidate, amalgamate, enter into a plan of arrangement, or merge with or into (whether
or not the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose
of all or substantially all of the properties or assets of the Company or any of its "significant subsidiaries" (as defined
in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make,
or allow the Company to be subject to or have its Common Shares be subject to or party to one or more Subject Entities making, a purchase,
takeover bid, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding Common Shares,
(y) 50% of the outstanding Common Shares calculated as if any Common Shares held by all Subject Entities making or party to, or Affiliated
with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of
Common Shares such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase,
tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50%
of the outstanding Common Shares, or (iv) consummate a share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, redesignation, reclassification, spin-off or plan of arrangement) with one or more Subject
Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding
shares of Common Shares, (y) at least 50% of the outstanding Common Shares calculated as if any Common Shares held by all the Subject
Entities making or party to, or Affiliated with any Subject Entity making or party to, such share purchase agreement or other business
combination were not outstanding; or (z) such number of Common Shares such that the Subject Entities become collectively the beneficial
owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding Common Shares, or (v) reorganize, recapitalize,
redesignate, or reclassify its Common Shares, (B) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate
to be or become the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through
acquisition, purchase, assignment, transfer, license, conveyance, tender, tender offer, takeover bid, exchange, reduction in outstanding
Common Shares, merger, consolidation, amalgamation, business combination, spin-off, plan of arrangement, reorganization, recapitalization
or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented
by issued and outstanding Common Shares, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding
Common Shares not held by all such Subject Entities as of the date of this Warrant calculated as if any Common Shares held by all such
Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding
Common Shares or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger
or other transaction requiring other shareholders of the Company to surrender their Common Shares without approval of the shareholders
of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions,
the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the
intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective
or inconsistent with the intended treatment of such instrument or transaction.
(o) "Group"
means a "group" as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(p) "Options"
means any rights, warrants or options to subscribe for or purchase Common Shares or Convertible Securities.
(q) "Parent
Entity" of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(r) "Person"
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity or a government or any department or agency thereof.
(s) "Principal
Market" means the Nasdaq Capital Market.
(t) "SEC"
means the United States Securities and Exchange Commission or the successor thereto.
(u) "Spot Price"
means, as applicable: (i) the Closing Sale Price of the Common Shares on the Trading Day immediately preceding the date of the applicable
Exercise Notice if such Exercise Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that
is not a Trading Day or (2) both executed and delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening
of "regular trading hours" (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws)
on such Trading Day, (ii) the Bid Price of the Common Shares as of the time of the Holder’s execution of the applicable Exercise
Notice if such Exercise Notice is executed during "regular trading hours" on a Trading Day and is delivered within two (2) hours
thereafter pursuant to Section 1(a) hereof, or (iii) the Closing Sale Price of the Common Shares on the date of the applicable
Exercise Notice if the date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed and delivered pursuant
to Section 1(a) hereof after the close of "regular trading hours" on such Trading Day.
(v) "Subject
Entity" means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(w) "Successor
Entity" means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been
entered into.
(x) "Trading
Day" means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Shares,
any day on which the Common Shares is traded on the Principal Market, or, if the Principal Market is not the principal trading market
for the Common Shares, then on the principal securities exchange or securities market on which the Common Shares is then traded, provided
that "Trading Day" shall not include any day on which the Common Shares is scheduled to trade on such exchange or market for
less than 4.5 hours or any day that the Common Shares is suspended from trading during the final hour of trading on such exchange or market
(or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour
ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with
respect to all determinations other than price determinations relating to the Common Shares, any day on which The New York Stock Exchange
(or any successor thereto) is open for trading of securities.
(y) "VWAP"
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the
Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market
on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York
time, as reported by Bloomberg through its "HP" function (set to weighted average) or, if the foregoing does not apply, the
dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if
no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing
bid price and the lowest closing ask price of any of the market makers for such security as reported in the "pink sheets" by
OTC Markets Group Inc. (formerly Pink Sheets LLC). If the VWAP cannot be calculated for such security on such date on any of the foregoing
bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If
the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance
with the procedures in Section 13. All such determinations shall be appropriately adjusted for any share dividend, share split, share
combination, recapitalization or other similar transaction during such period.
(Signature Page Follows)
IN WITNESS WHEREOF, the Company
has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
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DIGITAL BRANDS GROUP, Inc.
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By:
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Name:
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Title:
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EXHIBIT A
NOTICE OF EXERCISE
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To:
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DIGITAL BRANDS GROUP, INC.
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(1) The undersigned
hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full),
and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take
the form of (check applicable box):
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in lawful money of the United States; or
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if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
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(3) Please issue said
Warrant Shares in the name of the undersigned or in such other name as is specified below:
The Warrant Shares shall be delivered to the following
DWAC Account Number:
[SIGNATURE
OF HOLDER]
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Name of Investing Entity:
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Signature of Authorized Signatory of Investing Entity:
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Name of Authorized Signatory:
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Title of Authorized Signatory:
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NOTICE OF EXERCISE
TO BE
EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON SHARES
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Date: _____________ __, 20__
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To: digital brands group, inc.
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The undersigned holder hereby exercises the right to purchase _________________ of Common Shares ("Warrant Shares") of Digital Brands Group, Inc., a Delaware corporation (the "Company"), evidenced by Warrant to Purchase Common Shares No. _______ (the "Warrant"). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
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1. Form of Exercise
Price. The Holder intends that payment of the Aggregate Exercise Price shall be made as:
____________ a "Cash
Exercise" with respect to _________________ Warrant Shares; and/or
____________ a "Cashless
Exercise" with respect to _______________ Warrant Shares.
In the event that the Holder
has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder hereby represents
and warrants that (i) this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.] on the date set forth below and
(ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice was $________.
2. Payment of Exercise
Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the Holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms
of the Warrant.
3. Delivery of Warrant
Shares. The Company shall deliver to Holder, or its designee or agent as specified below, __________ Warrant Shares in accordance
with the terms of the Warrant. Delivery shall be made to Holder, or for its benefit, as follows:
[ ] Check here if requesting
delivery as a certificate to the following name and to the following address:
[ ] Check here if requesting
delivery by Deposit/Withdrawal at Custodian as follows:
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DTC Participant:
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DTC Number:
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Account Number:
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Name of Registered Holder
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By:
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Tax ID:
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Name:
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Email:
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Title:
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Telephone:
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Facsimile:
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EXHIBIT B
ACKNOWLEDGMENT
The Company hereby
acknowledges this Exercise Notice and hereby directs _______________________ to issue the above indicated number of Common
Shares in accordance with the Transfer Agent Instructions dated _________, 20__, from the Company and acknowledged and agreed to by
_________________________.
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DIGITAL BRANDS GROUP, Inc.
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By:
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Name:
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Title:
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ASSIGNMENT FORM
(To assign the foregoing
Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing
Warrant and all rights evidenced thereby are hereby assigned to
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Name:
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(Please Print)
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Address:
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(Please Print)
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Phone Number:
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Email Address:
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Dated:
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Holder’s Signature:
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Holder’s Address:
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Form of Warrant Certificate Request Notice
WARRANT CERTIFICATE REQUEST NOTICE
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To:
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VStock Transfer, LLC, as Warrant Agent for Digital Brands Group, Inc. (the "Company")
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The undersigned Holder of
Common Stock Purchase Warrants ("Warrants") in the form of Global Warrants issued by the Company hereby elects to receive a
Definitive Certificate evidencing the Warrants held by the Holder as specified below:
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1)
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Name of Holder of Warrants in form of Global Warrants:
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2)
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Name of Holder in Definitive Certificate (if different from name of Holder of Warrants in form of Global Warrants):
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3)
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Number of Warrants in name of Holder in form of Global Warrants:
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4)
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Number of Warrants for which Definitive Certificate shall be issued:
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5)
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Number of Warrants in name of Holder in form of Global Warrants after issuance of Definitive Certificate, if any:
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6)
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Definitive Certificate shall be delivered to the following address:
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The undersigned hereby acknowledges
and agrees that, in connection with this Warrant Exchange and the issuance of the Definitive Certificate, the Holder is deemed to have
surrendered the number of Warrants in form of Global Warrants in the name of the Holder equal to the number of Warrants evidenced by the
Definitive Certificate.
[SIGNATURE OF HOLDER]
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Name of Investing Entity:
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Signature of Authorized Signatory of Investing Entity:
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Name of Authorized Signatory:
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Title of Authorized Signatory:
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Date:
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____________________________________
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