Exhibit
10.1


 


AMENDED
AND RESTATED SECURITIES PURCHASE AGREEMENT


 


This
Amended and Restated Securities Purchase Agreement (this “Agreement”) is dated as of September 15, 2021, between
Communications Systems, Inc., a Minnesota corporation (the “Company”), and each purchaser identified on the
signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).


 


WHEREAS,
the Company entered into a Securities Purchase Agreement, dated June 28, 2021 (the “Original Agreement”), by and between
the Company and the purchaser parties thereto, pursuant to which the Company agreed to issue and sell to such original purchasers
the securities described therein;


 


WHEREAS,
following the date of the Original Agreement, the Company and an original purchaser party to the Original Agreement agreed to
terminate such purchaser party’s subscription;


 


WHEREAS,
the Company desires to sell additional subscriptions for the securities described in the Original Agreement and accordingly desires
to amend and restate the Original Agreement as set forth herein; and


 


WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act (as defined
below), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally
and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.


 


NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration
the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:


 


ARTICLE
I.





DEFINITIONS


 


1.1           Definitions.
In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have
the meanings given to such terms in the Certificate of Designation (as defined herein), and (b) the following terms have the meanings
set forth in this Section 1.1:


 


“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.7.


 


“Action”
shall have the meaning ascribed to such term in Section 3.1(j).


 


“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.


 


“BHCA”
shall have the meaning ascribed to such term in Section 3.1(pp).


 



     


     


    




“Board
of Directors”means the board of directors of the Company.


 


“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 are generally are open for use by customers on such day.


 


“Certificate
of Designation” means the Certificate of Designation to be filed prior to the Closing by the Company with the Secretary
of State of Minnesota, in the form of Exhibit A attached hereto.


 


“Closing”
means the closing of the purchase and sale of the Preferred Stock and Warrants pursuant to Section 2.1.


 


“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii)
the Company’s obligations to deliver the Preferred Stock and the Warrants, in each case, have been satisfied or waived.


 


“Closing
Statement” means the Closing Statement in the form on Annex A attached hereto.


 


“Code”
shall have the meaning ascribed to such term in Section 3.1(xx).


 


“Commission”
means the United States Securities and Exchange Commission.


 


“Common
Stock” means the common stock of the Company, par value $0.05 per share, and any other class of securities into which
such common stock may hereafter be reclassified or changed.


 


“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock.


 


“Company
Counsel” means Ballard Spahr LLP, with offices located at 1735 Market Street, 51st Floor, Philadelphia, Pennsylvania
19103-7599.


 


“Company
IT Systems” shall have the meaning ascribed to such term in Section 3.1(vv).


 



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“Conversion
Price” shall have the meaning ascribed to such term in the Certificate of Designation.


 


“Conversion
Shares” shall have the meaning ascribed to such term in the Certificate of Designation.


 


“Disclosure
Schedules” means the Disclosure Schedules delivered by the Company concurrently with the execution and delivery of this
Agreement.


 


“Disclosure
Time” means, (i) if this Agreement is signed on a day that is not a Trading Day or after 9:00 a.m. (New York City time)
and before midnight (New York City time) on any Trading Day, 9:01 a.m. (New York City time) on the Trading Day immediately following
the date hereof, unless otherwise instructed as to an earlier time by the Placement Agent, and (ii) if this Agreement is signed
between midnight (New York City time) and 9:00 a.m. (New York City time) on any Trading Day, no later than 9:01 a.m. (New York
City time) on the date hereof, unless otherwise instructed as to an earlier time by the Placement Agent.


 


“Disqualification
Event” shall have the meaning ascribed to such term in Section 3.1(rr).


 


“Effective
Date” means the earliest of the date that (a) the initial Registration Statement registering for resale all Underlying
Shares required to be registered under the initial Registration Statement pursuant to the Registration Rights Agreement has been
declared effective by the Commission, (b) all of the Underlying Shares have been sold pursuant to Rule 144 or may be sold pursuant
to Rule 144 without the requirement for the Company to be in compliance with the current public information requirement under
Rule 144 and without volume or manner-of-sale restrictions, (c) follows the one year anniversary of the Closing Date provided
that a holder of Underlying Shares is not an Affiliate of the Company, or (d) all of the Underlying Shares may be sold pursuant
to an exemption from registration under Section 4(a)(1) of the Securities Act without volume or manner-of-sale restrictions and
Company Counsel has delivered to such holders a standing written unqualified opinion that resales may then be made by such holders
of the Underlying Shares pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such
holders.


 


“EGS”
means Ellenoff Grossman & Schole LLP, with offices located at 1345 Avenue of the Americas, New York, New York 10105-0302.


 


“Employee
Benefit Plan” shall have the meaning ascribed to such term in Section 3.1(xx).


 


“ERISA”
shall have the meaning ascribed to such term in Section 3.1(xx).


 


“ERISA
Affiliate” shall have the meaning ascribed to such term in Section 3.1(xx).


 



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“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(s).


 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


 


“Exempt
Issuance” means the issuance of (a) shares of Common Stock, restricted stock or restricted stock units, or options to
employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority
of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established
for such purpose for services rendered to the Company, (b) securities upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Agreement, provided that such securities 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
(other than in connection with stock splits or combinations) or to extend the term of such securities, and (c) shares of Common
Stock or Common Stock Equivalents issued in connection with any merger or consolidation of the Company or any Subsidiary with
or into another Person or other similar business combination involving the Company or any Subsidiary or any acquisitions or strategic
transactions involving the Company or any Subsidiary, in each case, approved by a majority of the disinterested directors of the
Company, provided that, except with respect to the issuances of securities set forth on Schedule 1.1, such securities are
issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit
the filing of any registration statement in connection therewith during the prohibition period in Section 4.13(a) herein, and
provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its
subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall
provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which
the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing
in securities. Notwithstanding anything herein to the contrary, a Variable Rate Transaction shall not be an Exempt Issuance.


 


“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.


 


“Federal
Reserve” shall have the meaning ascribed to such term in Section 3.1(pp).


 


“Foreign
Benefit Plan” shall have the meaning ascribed to such term in Section 3.1(xx).


 


“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).






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“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(bb).


 


“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(p).


 


“Issuer
Covered Person” shall have the meaning ascribed to such term in Section 3.1(rr).


 


“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).


 


“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.


 


“Lock-Up
Agreements” means the Lock-Up Agreements, dated as of the Closing Date, by and between the Company and each of the directors
of the Company, officers of the Company, and beneficial owners of 10% or more of the Common Stock, in the form of Exhibit D
attached hereto.


 


“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).


 


“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(n).


 


“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.17.


 


“Merger
Agreement” means that certain Agreement and Plan of Merger by and among the Company, Helios Merger Co., Pineapple Energy
LLC, Lake Street Solar LLC, and Randall D. Sampson, dated as of March 1, 2021.


 


“OFAC”
shall have the meaning ascribed to such term in Section 3.1(nn).


 


“Participation
Maximum” shall have the meaning ascribed to such term in Section 4.12(a).


 


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 


“Placement
Agent” means JMP Securities LLC and Northland Securities, Inc.


 


“Preferred
Stock” means up to 32,000 shares of the Company’s Series A Convertible Preferred Stock issued hereunder having
the rights, preferences and privileges set forth in the Certificate of Designation, in the form of Exhibit A hereto.


 



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“Pro
Rata Portion” shall have the meaning ascribed to such term in Section 4.12(e).


 


“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether pending or threatened in writing before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or foreign).


 


“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.3(b).


 


“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b).


 


“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.10.


 


“Registration
Rights Agreement” means the Registration Rights Agreement, dated on or about the date hereof, among the Company and
the Purchasers, in the form of Exhibit B attached hereto.


 


“Registration
Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and
covering the resale of the Underlying Shares by each Purchaser as provided for in the Registration Rights Agreement.


 


“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).


 


“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants
or conversion in full of all shares of Preferred Stock, ignoring any conversion or exercise limits set forth therein.


 


“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.


 


“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.


 


“Sanctions”
shall have the meaning ascribed to such term in Section 3.1(nn).


 



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“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).


 


“Securities”
means the Preferred Stock, the Warrants, and the Underlying Shares.


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


“Shareholder
Approval” means such approval as may be required by the applicable rules and regulations of the Trading Market from
the shareholders of the Company with respect to the transactions contemplated by the Transaction Documents, including, without
limitation, the issuance of all of the Underlying Shares in excess of 19.99% of the issued and outstanding Common Stock on the
Closing Date.


 


“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include locating and/or borrowing shares of Common Stock).


 


“Stated
Value” means $1,000 per share of Preferred Stock.


 


“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for the Preferred Stock purchased hereunder as
specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription
Amount,” in United States dollars and in immediately available funds.


 


“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.12(a).


 


“Subsequent
Financing Notice” shall have the meaning ascribed to such term in Section 4.12(b).


 


“Subsidiary”
means any direct or indirect subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary
of the Company formed or acquired after the date hereof. For the avoidance of doubt, the term Subsidiary as of the Closing Date
includes Pineapple Energy LLC and its Subsidiaries.


 


“Trading
Day” means a day on which the principal Trading Market is open for trading.


 


“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
or the New York Stock Exchange (or any successors to any of the foregoing).


 


“Transaction
Documents” means this Agreement, the Certificate of Designation, the Warrants, the Registration Rights Agreement, the
Lock-Up Agreements, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.



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“Transfer
Agent” means Equiniti Trust Company, the current transfer agent of the Company, and any successor transfer agent of
the Company.


 


“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion of the Preferred Stock and upon exercise
of the Warrants.


 


“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.13(b).


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX
as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common
Stock are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market
value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority
in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall
be paid by the Company.


 


“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section
2.2(a) hereof, which Warrants shall be exercisable immediately and have a term of exercise equal to five (5) years, in the form
of Exhibit C attached hereto.


 


“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.


 


ARTICLE
II.


PURCHASE
AND SALE


 


2.1             
Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, immediately (and, in any event,
within one (1) Business Day) following the consummation of the transactions contemplated by the Merger Agreement, the Company
agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, up to an aggregate of $32,000,000 of shares
of Preferred Stock with an aggregate Stated Value for each Purchaser equal to such Purchaser’s Subscription Amount as set
forth on the signature page hereto executed by such Purchaser, and Warrants as determined pursuant to Section 2.2(a). The aggregate number of shares of Preferred Stock sold hereunder shall be up to 32,000. At the Closing, each Purchaser shall deliver to the Company, via wire transfer or a certified check, immediately available funds equal to such Purchaser’s Subscription Amount and the Company shall deliver to each Purchaser its respective shares of Preferred Stock and Warrants as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of EGS or such other location as the parties shall mutually agree.



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		2.2	Deliveries.



 


(a)         On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:


 


(i)           a legal opinion of Company Counsel, in form and substance reasonably satisfactory to the Purchasers;


 


(ii)          a certificate evidencing a number of shares of Preferred Stock equal to such Purchaser’s Subscription Amount divided by
the Stated Value, registered in the name of such Purchaser and evidence of the filing and acceptance of the Certificate of Designation
from the Secretary of State of Minnesota;


 


(iii)         a Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 100% of such
Purchaser’s Conversion Shares, with an exercise price equal to $3.40, subject to adjustment therein;


 


(iv)         a certificate of the Chief Executive Officer of the Company certifying that the conditions set forth in Section 2.3(b)(i), (ii),
(iv), (v), (vi), (vii) and (viii) have been satisfied;


 


(v)          the Company’s wire instructions, on Company letterhead and executed by the Chief Executive Officer or Chief Financial Officer;
and


 


(vi)         the Lock-Up Agreements.


 


(b)         On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:


 


		(i)	such
                                         Purchaser’s Subscription Amount, in accordance with Section 2.1 and the
                                         wire instructions provided by the Company.



 


		2.3	Closing
                                         Conditions.



 


(a)          The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:



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(i)            the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material
Adverse Effect, in all respects) on the date hereof and on the Closing Date of the representations and warranties of the Purchasers
contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);


 


(ii)           all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have
been performed; 


 


(iii)          all conditions to the Merger Agreement shall have been met and the consummation of the transactions contemplated by the Merger
Agreement shall have occurred; 


 


(iv)          Shareholder Approval, including with respect to an amendment to the Company’s Articles of Incorporation to increase the
quantity of Common Stock the Company is authorized to issue to a number of shares of Common Stock at least necessary to complete
the transactions contemplated by this Agreement, shall have been obtained and deemed effective; and


 


(v)           the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.


 


(b)          The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions
being met:


 


(i)            the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material
Adverse Effect, in all respects) on the date hereof and on the Closing Date of the representations and warranties of the Company
contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);


 


(ii)           all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been
performed;


 


(iii)          the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;


 


(iv)          there shall have been no Material Adverse Effect with respect to the Company since the date hereof;


 


(v)           Shareholder Approval shall have been obtained and deemed effective;


 


(vi)          all conditions to the Merger Agreement shall have been met and the consummation of the transactions contemplated by the Merger Agreement shall have occurred;



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(vii)         the Registration Statement shall have been declared effective by the Commission for the resale of all of the Underlying Shares
by the Purchasers; and


 


(viii)        from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg
L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are
reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national
or international calamity (excluding the COVID-19 pandemic) of such magnitude in its effect on, or any material adverse change
in, any financial market which makes it impracticable or inadvisable to purchase the Securities at the Closing.


 


ARTICLE
III.


 


REPRESENTATIONS
AND WARRANTIES


 


3.1          Representations
and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed
a part hereof and shall qualify any representation or warranty otherwise made herein to the extent of the disclosure contained
in the corresponding section of the Disclosure Schedules, the Company hereby represents and warrants as of the date hereof and
as of the Closing Date (unless as of a specific date therein, in which case as of such date) to each Purchaser as follows:


 


(a)          Subsidiaries. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary
free and clear of any Liens, and all of the issued and outstanding shares of capital stock or other equity interests of each Subsidiary
are duly authorized and validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe
for or purchase securities. 


 


(b)         Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite
power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the
Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, 



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except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.


 


(c)          Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate
the transactions contemplated by this Agreement and each of the other Transaction Documents and the Merger Agreement and otherwise
to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction
Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized
by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or
the Company’s shareholders in connection herewith or therewith other than in connection with the Required Approvals. This
Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed
by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation
of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement
of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable
law.


 


(d)          No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents
to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon
any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, anti-dilution
or similar adjustments, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected,
or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including, without limitation, federal and state securities laws and regulations and the rules and regulations of any self-regulatory organization to which the Company or its securities are subject, including all applicable Trading Markets), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.



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(e)          Filings, Consents and Approvals. The Company is not required to obtain any consent, approval, waiver, authorization or
order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents,
other than: (i) the filings required pursuant to Section 4.6 of this Agreement, (ii) the filing with the Commission pursuant to
the Registration Rights Agreement, (iii) the notice and/or application(s) to each applicable Trading Market for the issuance and
sale of the Securities and the listing of the Underlying Shares for trading thereon in the time and manner required thereby, (iv)
the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws and
(v) Shareholder Approval (collectively, the “Required Approvals”).


 


(f)          Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and non-assessable, free and clear of all Liens other than
restrictions on transfer provided for in the Transaction Documents. Subject to the receipt of Shareholder Approval, the Company
has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Underlying Shares at
least equal to the Required Minimum on the date hereof. 


 


(g)         Capitalization. The capitalization of the Company as of the date hereof is as set forth on Schedule 3.1(g), which
Schedule 3.1(g) shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates
of the Company as of the date hereof. The Company has not issued any capital stock since its most recently filed periodic report
under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans,
the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant
to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the Company’s most recently
filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase
and sale of the Securities or as set forth on Schedule 3.1(g) or the transactions contemplated by the Merger Agreement,
there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock or the capital stock of any 



    13 


     


    

Subsidiary, or contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common
Stock Equivalents or capital stock of any Subsidiary. The issuance and sale of the Securities will not obligate the Company or
any Subsidiary to issue shares of Common Stock or other securities to any Person (other than the Purchasers). There are no outstanding
securities or instruments of the Company or any Subsidiary with any provision that adjusts the exercise, conversion, exchange
or reset price of such security or instrument upon an issuance of securities by the Company or any Subsidiary. There are no outstanding
securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no
contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem
a security of the Company or such Subsidiary. The Company does not have any stock appreciation rights or “phantom stock”
plans or agreements or any similar plan or agreement. All of the outstanding shares of capital stock of the Company are duly authorized,
validly issued, fully paid and non-assessable, have been issued in compliance with all federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase
securities. Except as set forth on Schedule 3.1(g) or in connection with the transactions contemplated by the Merger Agreement,
there are no shareholders agreements, voting agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the actual knowledge of the Company, between or among any of the Company’s
shareholders.


 


(h)         SEC Reports; Financial Statements. Except as set forth on Schedule 3.1(h), the Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, since January 1, 2019 (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on
a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of
the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading. The Company has never been an issuer subject
to Rule 144(i) under the Securities Act. The consolidated financial statements of the Company and Pineapple Energy LLC included
or incorporated by reference in the SEC Reports, together with the related notes and schedules thereto, comply in all material
respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect
at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified
in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations, changes in stockholders’ equity and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. 



    14 


     


    




 


(i)           Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements
included within the SEC Reports, except as set forth on Schedule 3.1(i), (i) there has been no event, occurrence or development
that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant
to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting or changed
its auditors, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders
or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The
Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance
of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability, fact, circumstance,
occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its
Subsidiaries or their respective businesses, prospects, properties, operations, assets or financial condition, that would be required
to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has
not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made. 


 


(j)           Litigation. Except as set forth on Schedule 3.1(j), there is no action, suit, inquiry, notice of violation, Proceeding
or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”). None of the Actions set forth on Schedule
3.1(j), (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or
the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action
involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.
There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission
involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.


 



    15 


     


    




(k)          Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company
and its Subsidiaries believe that their relationships with their employees are good in all material respects. To the knowledge
of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement,
or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each
such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing
matters. The Company and its Subsidiaries are and, since January 1, 2018, have been in compliance with all applicable U.S. federal,
state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment
and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.


 


(l)           Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred
that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received written notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which
it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment,
decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute,
rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local
laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and
labor matters, except in each case where the failure to be in compliance would not have or reasonably be expected to result in
a Material Adverse Effect. 


 


(m)         Environmental
Laws. The Company and its Subsidiaries (i) are and, since January 1, 2018, have been in compliance with all federal,
state, local and foreign laws relating to pollution or protection of human health or the environment (including ambient air,
surface water, groundwater, land surface or subsurface strata), including laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively,
“Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental Laws”); (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) are and, since January 1, 2018, have been in compliance with all terms and conditions of any such permit, license or approval where in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.



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(n)         Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described
in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material
Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any written notice
of Proceedings relating to the revocation or modification of any Material Permit.


 


(o)         Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned
by them and good and marketable title in all personal property owned by them that is material to the business of the Company and
the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries
and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance
with GAAP and, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under
lease by the Company or any of the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the
Company and the Subsidiaries are in compliance in all material respects.


 


(p)         Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual
property rights and similar rights necessary or required for use in connection with their respective businesses as described in
the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”). None of, and neither the Company nor any Subsidiary has received a written notice that any of, the
Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned,
within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the
latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge
that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably
be expected to result in a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and
its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual
properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.



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(q)          Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries
are engaged, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription
Amount. 


 


(r)           Transactions with Affiliates and Employees. Except as set forth on Schedule 3.1(r), none of the officers or directors
of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary
is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, providing for the borrowing of money from or lending of money to or otherwise
requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which
any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member
or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements
under any stock option plan of the Company.


 


(s)          Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in compliance in all material respects
with any and all applicable requirements of the Sarbanes-Oxley Act of 2002, and any and all applicable rules and regulations promulgated
by the Commission thereunder, that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries
maintain effective internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) and a system of 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.
The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that
information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s rules and forms, and that all such information
is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the chief executive officer 



    18 


     


    

and chief financial officer of the Company required under
the Exchange Act with respect to such reports. The Company’s certifying officers have evaluated the effectiveness of the
disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently
filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its
most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness
of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no changes in the internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under
the Exchange Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect,
the internal control over financial reporting of the Company and its Subsidiaries. Neither the Company nor, to the knowledge of
the Company, the Company’s independent registered public accounting firm has identified or been made aware of: (i) any “significant
deficiency” or “material weakness” (each as defined in Rule 12b-2 of the Exchange Act) in the system of internal
control over financial reporting utilized by the Company and its Subsidiaries that has not been subsequently remediated; or (ii)
any fraud that involves the Company’s management or other employees who have a role in the preparation of financial statements
or the internal control over financial reporting utilized by the Company and its Subsidiaries.


 


(t)          Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary
to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect
to the transactions contemplated by the Transaction Documents, other than fees payable to the Placement Agent. The Purchasers
shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees
of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.


 


(u)         Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers
as contemplated hereby. Subject to the receipt of Shareholder Approval and the provision of any Required Approvals, the issuance
and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.


 


(v)         Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940,
as amended. The Company shall conduct its business in a manner so that it will not become an “investment company”
subject to registration under the Investment Company Act of 1940, as amended.


 


(w)         Registration Rights. Other than each of the Purchasers, except as set forth on Schedule 3.1(w), no Person has any
right to cause the Company or any Subsidiary to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.



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(x)          Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating
terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading
Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and maintenance requirements. The Common Stock is currently
eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company
is current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection
with such electronic transfer.


 


(y)         Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s articles of incorporation (or similar charter
documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers
and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation
as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.


 


(z)          Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that it believes constitutes or might constitute material, non-public information.
The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in
securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company
and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules
to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not
misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken
as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made,
not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.



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(aa)        No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section
3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would
require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions
of any Trading Market on which any of the securities of the Company are listed or designated.


 


(bb)       Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the
receipt by the Company of the proceeds from the sale of the Securities hereunder (i) the fair saleable value of the Company’s
assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small
capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company, consolidated and projected capital requirements
and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient
to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend
to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable
on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the
Closing Date. Schedule 3.1(bb) sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the
Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $100,000 (other than trade accounts payable incurred
in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; and (z) the present value of any lease payments in excess of $100,000 due under leases required to
be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.



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(cc)          Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local
income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) has paid all taxes and other governmental assessments and charges, shown or determined to be due on such returns,
reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no
basis for any such claim.


 


(dd)         No
General Solicitation. Neither the Company nor any Person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.


 


(ee)         Foreign
Corrupt Practices. Neither the Company, any Subsidiary, nor any of their respective directors or officers, nor to the knowledge
of the Company or any Subsidiary, any agent, employee or other person acting on behalf of the Company or any Subsidiary, has (i)
directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees
or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution
made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation
of law or (iv) violated in any material respect any provision of the FCPA.


 


(ff)           Accountants.
The Company’s accounting firm is Baker Tilly LLP. To the knowledge and belief of the Company, the Company’s accounting
firm is a registered public accounting firm as required by the Exchange Act.


 


(gg)         Seniority.
Except as set forth on Schedule 3.1(gg), as of the Closing Date, no Indebtedness or other claim against the Company is
senior to the Preferred Stock in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise,
other than indebtedness secured by purchase money security interests (which is senior only as to underlying assets covered thereby)
and capital lease obligations (which is senior only as to the property covered thereby).


 


(hh)         No
Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and
the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents.


 



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(ii)            Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting
solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given
by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents
to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been
based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.


 


(jj)           Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Sections 3.2(g) and 4.15 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers
has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities
for any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without
limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and
counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, may presently
have a “short” position in the Common Stock and (iv) each Purchaser shall not be deemed to have any affiliation with
or control over any arm’s length counter-party in any “derivative” transaction. The
Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times
during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the
Underlying Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could
reduce the value of the existing shareholders’ equity interests in the Company at and after the time that the hedging activities
are being conducted.  The Company acknowledges that such aforementioned hedging activities do not constitute a breach of
any of the Transaction Documents.


 


(kk)         Regulation
M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting
purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Placement Agent in connection with the placement of the Securities.


 



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(ll)           Form
S-3 Eligibility.       The Company is eligible to register the resale of the Underlying
Shares for resale by the Purchasers on Form S-3 promulgated under the Securities Act.


 


(mm)       Stock
Option and Incentive Plans. Each stock option granted by the Company under any of the Company’s stock option or incentive
plans was granted (i) in accordance with the terms of such stock option or incentive plan and (ii) with an exercise price at least
equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable
law. No stock option granted under any of the Company’s stock option or incentive plans has been backdated. The Company
has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior
to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information
regarding the Company or its Subsidiaries or their financial results or prospects.


 


(nn)         Office
of Foreign Assets Control. Neither the Company, any Subsidiary, nor any of their respective directors or officers, nor, to
the Company’s knowledge, any agent, employee or Affiliate of the Company or any Subsidiary or other Person acting on behalf
of the Company or any Subsidiary is currently subject to any sanctions administered or enforced by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”), the United Nations Security Council, the European Union,
Her Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”), nor is the
Company or any Subsidiary located, organized or resident in a country or territory that is the subject of Sanctions.


 


(oo)         U.S.
Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s
request.


 


(pp)         Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company
Act of 1956, as amended (the “BHCA”), and to regulation by the Board of Governors of the Federal Reserve System
(the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly
or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or
more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.


 



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(qq)         Money
Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no Action or Proceeding by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of
the Company or any Subsidiary, threatened.


 


(rr)           No
Disqualification Events.  With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under
the Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other
officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under
the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”
and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for
a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any
Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure
obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.


 


(ss)          Other
Covered Persons. Other than the Placement Agent, the Company is not aware of any person (other than any Issuer Covered Person)
that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale
of any Securities.


 


(tt)           Notice
of Disqualification Events. The Company will notify the Purchasers in writing, prior to the Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification
Event relating to any Issuer Covered Person.


 


(uu)         Merger
Agreement. To the actual knowledge of the Company, the representations and warranties of Pineapple Energy LLC set forth in
the Merger Agreement are true and correct (except as of the Closing Date, for changes expressly provided for in the Merger Agreement).


 


(vv)         Company
IT Systems. The Company and its Subsidiaries own or have a valid right to access and use all computer systems, networks, hardware,
software, databases, websites, and equipment used to process, store, maintain and operate data, information, and functions used
in connection with the business of the Company and its Subsidiaries (the “Company IT Systems”), except as would
not, individually or in the aggregate, have a Material Adverse Effect. The Company IT Systems are adequate for, and operate and perform in all material respects as required in connection with, the operation of the business of the Company and its Subsidiaries as currently conducted. The Company and its Subsidiaries have implemented commercially reasonable backup, security and disaster recovery technology consistent in all material respects with applicable regulatory standards and customary industry practices.


 



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(ww)        Cybersecurity.
Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, (A) there
has been no security breach or other compromise of or relating to the Company IT Systems; (B) the Company has not been notified
of, and has no knowledge of any event or condition that would reasonably be expected to result in, any such security breach or
other compromise of the Company IT Systems; (C) the Company and its Subsidiaries have implemented policies and procedures
with respect to the Company IT Systems that are reasonably consistent with industry standards and practices, or as required by
applicable regulatory standards; and (D) the Company and its Subsidiaries are presently in compliance with all applicable
laws or statutes, judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority
and contractual obligations relating to the privacy and security of the Company IT Systems and to the protection of the Company
IT Systems from unauthorized use, access, misappropriation or modification.


 


(xx)          ERISA.
Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect: (i) at no
time in the past six years has the Company or any ERISA Affiliate maintained, sponsored, participated in, contributed to or had
any liability or obligation in respect of any Employee Benefit Plan subject to Title IV of ERISA or Section 412 of the Code,
any “multiemployer plan” as defined in Section 3(37) of ERISA or any multiple employer plan for which the Company
or any ERISA Affiliate has incurred or could incur material liability under Section 4063 or 4064 of ERISA, (ii) no “welfare
benefit plan” as defined in Section 3(1) of ERISA provides or promises, or at any time provided or promised, retiree
health, or other post-termination benefits except to the extent such benefit is fully insured or as may be required by the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, or similar state law and (iii) each Employee Benefit Plan is and has
been operated in compliance with its terms and all applicable laws, including but not limited to ERISA and the Code. Each Employee
Benefit Plan intended to be qualified under Code Section 401(a) has a favorable determination or opinion letter from
the Internal Revenue Service upon which it can rely, and any such determination or opinion letter remains in effect and has not
been revoked and no event has occurred and no facts or circumstances exist that could reasonably be expected to result in the
loss of qualification or tax exemption of any such Employee Benefit Plan. With respect to each Foreign Benefit Plan, such Foreign
Benefit Plan (1) if intended to qualify for special tax treatment, meets, in all material respects, the requirements for
such treatment, and (2) if required to be funded, is funded to the extent required by applicable law. The Company does not
have any obligations under any collective bargaining agreement with any union. As used in this Section 3.1(xx), “Code”
means the Internal Revenue Code of 1986, as amended; “Employee Benefit Plan” means any “employee benefit
plan” within the meaning of Section 3(3) of ERISA, including, without limitation, all equity and equity-based,
severance, employment, change-in-control, medical, disability, fringe benefit, bonus, incentive, deferred compensation, employee loan and all other employee benefit plans, agreements, programs, policies or other arrangements, whether or not subject to ERISA, under which (x) any current or former employee, director, independent contractor or other service provider of the Company or its Subsidiaries has any present or future right to benefits and which are contributed to, sponsored by or maintained by the Company or any of the Subsidiaries or (y) the Company or any of the Subsidiaries has had or has any present or future direct or contingent obligation or liability; “ERISA” means the Employee Retirement Income Security Act of 1974, as amended; “ERISA Affiliate” means any member of the Company’s controlled group as determined pursuant to Code Section 414(b), (c), (m) or (o), with respect to any Person, each business or entity under “common control” with such Person within the meaning of Section 4001(a)(14) of ERISA; and “Foreign Benefit Plan” means any Employee Benefit Plan established, maintained or contributed to outside of the United States of America and which is not subject to United States law. 


 



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3.2           Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as
of the date hereof and as of the Closing Date (unless as of a specific date therein, in which case as of such date) to the Company
as follows:


 


(a)            Organization;
Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability
company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and
performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary
corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance
with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.


 


(b)            Own
Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.


 



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(c)           Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it exercises any Warrants or converts any shares of Preferred Stock, it will be either: (i) an “accredited investor”
as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), (a)(8), (a)(9), (a)(12), or (a)(13) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the Securities Act.


 


(d)           Experience
of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.


 


(e)            General
Solicitation. Such Purchaser is not, to such Purchaser’s knowledge, purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or, to the knowledge of such Purchaser, any other general solicitation or
general advertisement.


 


(f)            Access
to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including
all exhibits and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it
has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company
and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. 
Such Purchaser acknowledges and agrees that neither the Placement Agent nor any Affiliate of the Placement Agent has provided
such Purchaser with any information or advice with respect to the Securities nor is such information or advice necessary or desired. 
Neither the Placement Agent nor any Affiliate has made or makes any representation as to the Company or the quality of the Securities
and the Placement Agent and any Affiliate may have acquired non-public information with respect to the Company which such Purchaser
agrees need not be provided to it.  In connection with the issuance of the Securities to such Purchaser, neither the Placement Agent nor any of its Affiliates has acted as a financial advisor or fiduciary to such Purchaser.



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(g)           Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not,
nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any
purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that
such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting
forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall
only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement. Other than to other Persons party to this Agreement or to such Purchaser’s representatives,
including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates,
such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including
the existence and terms of this transaction). Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order
to effect Short Sales or similar transactions in the future.


 


(h)           Brokers.
There is no broker, investment banker, financial advisor, finder or other person which has been retained by or is authorized to
act on behalf of such Purchaser who might be entitled to any fee or commission for which the Company will be liable in connection
with the execution of this Agreement and the consummation of the transactions contemplated hereby.


 


The Company acknowledges and agrees that
the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the
Company’s representations and warranties contained in this Agreement or any representations and warranties contained in
any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement
or the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, for the avoidance of doubt, nothing
contained herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing
shares in order to effect Short Sales or similar transactions in the future.


 



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ARTICLE IV.


OTHER AGREEMENTS OF THE PARTIES


 


4.1           Transfer
Restrictions.


 


(a)            The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144 or other available exemption, to the Company or to an Affiliate
of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form
and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree
in writing to be bound by the terms of this Agreement and the Registration Rights Agreement and shall have the rights and obligations
of a Purchaser under this Agreement and the Registration Rights Agreement.


 


(b)           The
Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following
form:


 


[NEITHER] THIS SECURITY [NOR
THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY [AND
THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED
IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.


 


The Company
acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, such
Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be
subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required
in connection therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the
Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request
in connection with a pledge or transfer of the Securities, including, if the Securities are subject to registration pursuant to
the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders (as defined in the Registration Rights Agreement) thereunder.


 



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(c)            Certificates
evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while a
registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities
Act, (ii) following any sale of such Underlying Shares pursuant to Rule 144 (assuming cashless exercise of the Warrants in the case
of Warrant Shares), (iii) if such Underlying Shares are eligible for sale under Rule 144 (assuming cashless exercise of the Warrants
in the case of Warrant Shares), without the requirement for the Company to be in compliance with the current public information
requirement under Rule 144 as to such Underlying Shares and without volume or manner-of-sale restrictions or (iv) if such legend is
not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by
the staff of the Commission). The Company shall cause its counsel, at the expense of the Company, to issue a legal opinion to the
Transfer Agent or the Purchaser promptly after the Effective Date if required by the Transfer Agent to effect the removal of the
legend hereunder, or if requested by a Purchaser, respectively. If all or any shares of Preferred Stock are converted or any portion
of a Warrant is exercised at a time when there is an effective registration statement to cover the resale of the Underlying Shares,
or if such Underlying Shares may be sold under Rule 144 and the Company is then in compliance with the current public information
required under Rule 144, or if the Underlying Shares may be sold under Rule 144 (assuming cashless exercise of the Warrants in the
case of Warrant Shares) without the requirement for the Company to be in compliance with the current public information requirement
under Rule 144 as to such Underlying Shares and without volume or manner-of-sale restrictions or if such legend is not otherwise
required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the
staff of the Commission) then such Underlying Shares shall be issued free of all legends. The Company agrees that following the
Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than the earlier of
(i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) following
the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Underlying Shares, as applicable,
issued with a restrictive legend (such date, the “Legend Removal Date”), deliver or cause to be delivered to such
Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any
notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this
Section 4. Certificates for Underlying Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the
Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by
such Purchaser. 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 a certificate representing Underlying Shares, as applicable, issued with a restrictive legend.


 



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(d)           In
addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, (i) as partial liquidated
damages and not as a penalty, for each $1,000 of Underlying Shares (based on the VWAP of the Common Stock on the date such Securities
are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading
Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after
the Legend Removal Date until such certificate is delivered without a legend and (ii) if the Company fails to (a) issue and deliver
(or cause to be delivered) to a Purchaser by the Legend Removal Date a certificate representing the Securities so delivered to
the Company by such Purchaser that is free from all restrictive and other legends and (b) if after the Legend Removal Date such
Purchaser purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by
such Purchaser of all or any portion of the number of shares of Common Stock, or a sale of a number of shares of Common Stock
equal to all or any portion of the number of shares of Common Stock that such Purchaser anticipated receiving from the Company
without any restrictive legend, then, an amount equal to the excess of such Purchaser’s total purchase price (including
brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including brokerage
commissions and other out-of-pocket expenses, if any) (the “Buy-In Price”) over the product of (x) such
number of Underlying Shares that the Company was required to deliver to such Purchaser by the Legend Removal Date multiplied by
(y) the lowest closing sale price of the Common Stock on any Trading Day during the period commencing on the date of the delivery
by such Purchaser to the Company of the applicable Underlying Shares (as the case may be) and ending on the date of such delivery
and payment under this clause (ii).       


 


(e)           Each
Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any Securities
pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements,
or an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold in compliance
with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.


 


4.2           Acknowledgment
of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares
of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its
obligations under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant
to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other shareholders of the Company.


 



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4.3           Furnishing
of Information; Public Information.


 


(a) Until
the later of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, the Company covenants to maintain
the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date
hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act;
provided, that the foregoing shall in no way prevent a sale, merger or similar transaction involving the Company.


 


(b)           At
any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of
the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without
restriction or limitation pursuant to Rule 144, if the Company (i) shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) or (ii) has ever been an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the
future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a “Public Information Failure”)
then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial
liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Securities, an
amount in cash equal to one and one-half percent (1.5%) of the aggregate Subscription Amount of such Purchaser’s Securities
on the day of a Public Information Failure and on every thirtieth (30th) day (pro rated for periods totaling less than
thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such
public information is no longer required for the Purchasers to transfer the Underlying Shares pursuant to Rule 144. 
The payments to which a Purchaser shall be entitled pursuant to this Section 4.3(b) are referred to herein as “Public
Information Failure Payments.”  Public Information Failure Payments shall be paid on the earlier of (i) the last
day of the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd)
Business Day after the event or failure giving rise to the Public Information Failure Payments is cured.  In the event the
Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear
interest at the rate of 1.5% per month (prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s
right to pursue actual damages for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.


 


4.4           Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.


 



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4.5           Conversion
and Exercise Procedures. Each of the form of Exercise Notice included in the Warrants and the form of Notice of Conversion
included in the Certificate of Designation set forth the totality of the procedures required of the Purchasers in order to exercise
the Warrants or convert the Preferred Stock. Without limiting the preceding sentence, no ink-original Exercise Notice or Notice
of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Exercise
Notice or Notice of Conversion form be required in order to exercise the Warrants or convert the Preferred Stock. No additional
legal opinion, other information or instructions shall be required of the Purchasers to exercise their Warrants or convert their
Preferred Stock. The Company shall honor exercises of the Warrants and conversions of the Preferred Stock and shall deliver Underlying
Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.


 


4.6           Securities
Laws Disclosure; Publicity. The Company shall (a) by the Disclosure Time, issue a press release disclosing the material terms
of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including the Transaction Documents as exhibits
thereto, with the Commission within the time required by the Exchange Act. From and after the issuance of such press release,
the Company represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered
to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees
or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the issuance
of such press release, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents,
employees or Affiliates on the one hand, and any of the Purchasers or any of their Affiliates on the other hand, shall terminate.
The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such
public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the
prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld
or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other
party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market, without the prior written consent of such Purchaser, except (a) as required by federal securities law in connection
with (i) any registration statement contemplated by the Registration Rights Agreement and (ii) the filing of final Transaction
Documents with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which
case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b). Each Purchaser
agrees to furnish to the Company a completed selling stockholder questionnaire (in customary form) on a date that is not less
than two (2) Trading Days prior to the filing of the Registration Statement.


 



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4.7           Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that
any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted
by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of
receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.


 


4.8          Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, which shall be disclosed pursuant to Section 4.6, the Company covenants and agrees that neither it, nor any other Person
acting on its behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company
reasonably believes constitutes, material, non-public information, unless prior thereto such Purchaser shall have consented to
the receipt of such information and agreed with the Company to keep such information confidential. The Company understands and
confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
To the extent that the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or
Affiliates delivers any material, non-public information to a Purchaser without such Purchaser’s consent, the Company hereby
covenants and agrees that such Purchaser shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or
any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company, any of its Subsidiaries
or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis of, such material, non-public
information, provided that the Purchaser shall remain subject to applicable law. To the extent that any notice provided pursuant
to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Company understands
and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.


 


4.9           Use
of Proceeds. Except as set forth on Schedule 4.9 attached hereto, the Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes and shall not use such proceeds: (a) for the satisfaction of any portion
of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior
practices), (b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding
litigation or (d) in violation of FCPA or OFAC regulations.


 


4.10        Indemnification
of Purchasers. Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such 


 



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controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages,
costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs
of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or
(b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any
shareholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by
the Transaction Documents (unless such action is solely based upon a material breach of such Purchaser Party’s
representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party
may have with any such shareholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by
such Purchaser Party which is finally judicially determined to constitute fraud, gross negligence or willful misconduct). If any
action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof
with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the
Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or
(iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position
of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and
expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y)
for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably
withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any
Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in
this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.10 shall be made by periodic
payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred.
The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party
against the Company or others and any liabilities the Company may be subject to pursuant to law.


 


4.11        Reservation
and Listing of Securities; Shareholder Approval.


 


(a)           Following
the Closing Date, the Company shall maintain a reserve of the Required Minimum from its duly authorized shares of Common Stock
for issuance pursuant to the Transaction Documents in such amount as may then be required to fulfill its obligations in full under
the Transaction Documents.


 





 



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(b)           If,
on any date following the Closing Date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock
is less than 200% of (i) the Required Minimum on such date, minus (ii) the number of shares of Common Stock previously issued
pursuant to the Transaction Documents, then the Board of Directors shall use commercially reasonable efforts to amend the Company’s
certificate or articles of incorporation to increase the number of authorized but unissued shares of Common Stock to at least
200% of the Required Minimum at such time (minus the number of shares of Common Stock previously issued pursuant to the Transaction
Documents), as soon as possible and in any event not later than the 75th day after such date.


 


(c)            The
Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such
Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required
Minimum on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for
listing or quotation on such Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing
or quotation and (iv) maintain the listing or quotation of such Common Stock on any date at least equal to the Required Minimum
on such date on such Trading Market or another Trading Market. The Company agrees to maintain the eligibility of the Common Stock
for electronic transfer through the Depository Trust Company or another established clearing corporation, including, without limitation,
by timely payment of fees to the Depository Trust Company or such other established clearing corporation in connection with such
electronic transfer.


 


(d)           In
addition, the Company shall hold a special meeting of shareholders (which may also be at the annual meeting of shareholders) for
the purpose of obtaining Shareholder Approval, with the recommendation of the Company’s Board of Directors that such proposal
be approved, and the Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other
management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such
proposal. The Company shall use its reasonable best efforts to obtain such Shareholder Approval.


 


4.12         Participation
in Future Financing.


 


(a)            From
the date hereof until the date that is the one (1) year anniversary of the Effective Date, upon any issuance by the Company or
any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration (a “Subsequent Financing”),
the Purchasers shall have the right to participate in up to an amount of the Subsequent Financing equal to 25% of the Subsequent
Financing in the aggregate (the “Participation Maximum”) on the same terms, conditions and price provided for
in the Subsequent Financing.


 


(b)           Between
the time period of 4:00 pm (New York City time) and 6:00 pm (New York City time) on the Trading Day immediately prior to the Trading
Day of the expected announcement of the Subsequent Financing (or, if the Trading Day of the expected announcement of the Subsequent
Financing is the first Trading Day following a holiday or a weekend (including a holiday weekend), between the time period of
4:00 pm (New York City time) on the Trading Day immediately prior to such holiday or weekend


 



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and 2:00 pm (New York City time)
on the day immediately prior to the Trading Day of the expected announcement of the Subsequent Financing), the Company shall deliver
to each Purchaser a written notice of the Company’s intention to effect a Subsequent Financing (a “Subsequent Financing
Notice”), which notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount
of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed
to be effected and shall include a term sheet and transaction documents relating thereto as an attachment.


 


(c)           Any
Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by 6:30 am (New York
City time) on the Trading Day following the date on which the Subsequent Financing Notice is delivered to such Purchaser (the
“Notice Termination Time”) that such Purchaser is willing to participate in the Subsequent Financing, the amount
of such Purchaser’s participation, and representing and warranting that such Purchaser has such funds ready, willing, and
available for investment on the terms set forth in the Subsequent Financing Notice. If the Company receives no such notice from
a Purchaser as of such Notice Termination Time, such Purchaser shall be deemed to have notified the Company that it does not elect
to participate in such Subsequent Financing.


 


(d)           If,
by the Notice Termination Time, notifications by the Purchasers of their willingness to participate in the Subsequent Financing
(or to cause their designees to participate) is, in the aggregate, less than the total amount of the Participation Maximum, then
the Company will deliver written notice to each of the Purchasers that elected to participate in such Subsequent Financing of
the remaining portion of the Participation Maximum for which Purchasers did not elect to participate, and such Purchasers may
elect to purchase up to their pro rata percentage of such remaining portion by delivering written notice thereof to the Company
by 8:30 am (New York City time) on the Trading Day of the expected announcement of the Subsequent Financing. Thereafter, if notification
by the Purchasers of their willingness to purchase its pro rata percentage of the remaining portion of the Participation Maximum
is not received in accordance with the foregoing sentence, then the Company may effect the remaining portion of such Subsequent
Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.


 


(e)           If,
by the Notice Termination Time, the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase
more than the aggregate amount of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata
Portion (as defined below) of the Participation Maximum.  “Pro Rata Portion” means the ratio of (x) the
Subscription Amount of Securities purchased on the Closing Date by a Purchaser participating under this Section 4.12 and (y) the
sum of the aggregate Subscription Amounts of Securities purchased on the Closing Date by all Purchasers participating under this
Section 4.12.


 



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(f)            The
Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of
participation set forth above in this Section 4.12, if the definitive agreement related to the initial Subsequent Financing Notice
is not entered into for any reason on the terms set forth in such Subsequent Financing Notice within two (2) Trading Days after
the date of delivery of the initial Subsequent Financing Notice.


 


(g)           The
Company and each Purchaser agree that, if any Purchaser elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision that, directly or indirectly, will, or is intended
to, exclude one or more of the Purchasers from participating in a Subsequent Financing, including, but not limited to, provisions
whereby such Purchaser shall be required to agree to any restrictions on trading as to any securities of the Company or be required
to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection with, this Agreement,
without the prior written consent of such Purchaser. In addition, the Company and each Purchaser agree that, in connection with
a Subsequent Financing, the transaction documents related to the Subsequent Financing shall include a requirement for the Company
to issue a widely disseminated press release by 9:30 am (New York City time) on the Trading Day of execution of the transaction
documents in such Subsequent Financing (or, if the date of execution is not a Trading Day, on the immediately following Trading
Day) that discloses the material terms of the transactions contemplated by the transaction documents in such Subsequent Financing.


 


(h)           Notwithstanding
anything to the contrary in this Section 4.12 and unless otherwise agreed to by such Purchaser, the Company shall either confirm
in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser
will not be in possession of any material, non-public information, by 9:30 am (New York City time) on the second (2nd) Trading
Day following the date of delivery of the Subsequent Financing Notice. If by 9:30 am (New York City time) on such second (2nd)
Trading Day, no public disclosure regarding a transaction with respect to the Subsequent Financing has been made, and no notice
regarding the abandonment of such transaction has been received by such Purchaser, such transaction shall be deemed to have been
abandoned and such Purchaser shall not be deemed to be in possession of any material, non-public information with respect to the
Company or any of its Subsidiaries.


 


(i)            Notwithstanding
the foregoing, this Section 4.12 shall not apply in respect of an Exempt Issuance.       


 


		4.13	Subsequent Equity Sales.



 


(a)          
From the date hereof until forty-five (45) days after the Effective Date, neither the Company nor any Subsidiary shall (i) issue,
enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock
Equivalents or (ii) file any registration statement or any amendment or supplement thereto, in each case other than as contemplated
pursuant to the Registration Rights Agreement or the Merger Agreement; provided, however, that this Section 4.13(a)
shall not prohibit the filing of a shelf registration statement on Form S-3 and any amendments thereto registering up to $150.0
million of the Company’s equity securities.


 



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(b)           From
the date hereof until such time as no Purchaser holds any of the Warrants, the Company shall be prohibited from effecting or entering
into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents
(or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means
a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise
price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares
of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or
exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market
for the Common Stock or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity
line of credit, whereby the Company may issue securities at a future determined price. Any Purchaser shall be entitled to obtain
injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect
damages.


 


(c)           Notwithstanding
anything herein to the contrary, this Section 4.13 shall not apply in respect of an Exempt Issuance.


 


4.14         Equal
Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration
is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate
right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to
treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect
to the purchase, disposition or voting of Securities or otherwise.


 


4.15         Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither
it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending
at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release
as described in Section 4.6.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such
time as the transactions contemplated by this Agreement are publicly disclosed by the Company


 



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pursuant to the initial press release
as described in Section 4.6, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and
the information included in the Disclosure Schedules. Notwithstanding the foregoing, and notwithstanding anything contained in
this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation,
warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time
that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described
in Section 4.6, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company
in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are
first publicly announced pursuant to the initial press release as described in Section 4.6 and (iii) no Purchaser shall have any
duty of confidentiality or duty not to trade in the securities of the Company to the Company or its Subsidiaries after the issuance
of the initial press release as described in Section 4.6.  Notwithstanding the foregoing, in the case of a Purchaser that
is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.


 


4.16        Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers
at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide
evidence of such actions promptly upon request of any Purchaser.


 


4.17         Lock-Up
Agreements. The Company shall not amend, modify, waive or terminate any provision of any of the Lock-Up Agreements except
to extend the term of the lock-up period and shall enforce the provisions of each Lock-Up Agreement in accordance with its terms.
If any party to a Lock-Up Agreement breaches any provision of a Lock-Up Agreement, the Company shall promptly use its best efforts
to seek specific performance of the terms of such Lock-Up Agreement.


 


ARTICLE V.


MISCELLANEOUS


 


5.1           Termination. 
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before March 31, 2022; provided, however, that, in the event that the Registration
Statement and/or Proxy Statement/Prospectus (each as defined in the Merger Agreement) is still being reviewed or commented on
by the Commission, the Company or any Purchaser shall be entitled to extend the date for termination of this Agreement pursuant


 



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to this Section 5.1 for an additional thirty (30) days; provided further, however, that no
such termination will affect the right of any party to sue for any breach by any other party (or parties); provided, further,
that this Agreement shall automatically terminate and be of no further force and effect in the event the Merger Agreement is terminated
prior to the consummation of the transactions contemplated thereby.


 


5.2          Fees
and Expenses. At the Closing, the Company has agreed to reimburse the lead Purchaser the non-accountable sum of $25,000 for
its legal fees and expenses. The Company shall deliver to each Purchaser, prior to the Closing, a completed and executed copy
of the Closing Statement, attached hereto as Annex A. Except as expressly set forth in the Transaction Documents to the
contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any
instruction letter delivered by the Company and any conversion or exercise notice delivered by a Purchaser), stamp taxes and other
taxes and duties levied in connection with the delivery of any Securities to the Purchasers.


 


5.3          Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral
or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.


 


5.4          Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication is delivered
via facsimile at the facsimile number or email attachment at the e-mail address as set forth on the signature pages attached hereto
at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the time of transmission, if such
notice or communication is delivered via facsimile or email attachment at the facsimile number or e-mail address as set forth
on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any
Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for
such notices and communications shall be as set forth on the signature pages attached hereto.


 


5.5          Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and Purchasers which purchased at least 50.1% in interest of the Preferred Stock based
on the initial Subscription Amounts hereunder (or, prior to the Closing, the Company and each Purchaser) or, in the case of a
waiver, by the party against whom enforcement of any such waived provision is sought, provided that if any proposed amendment,
modification or waiver disproportionately and adversely impacts a Purchaser (or group of Purchasers), the prior written consent
of such disproportionately impacted Purchaser (or group of Purchasers) shall also be required. No waiver of any default with respect
to any provision,


 



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condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission
of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any amendment effected in accordance
with this Section 5.5 shall be binding upon each Purchaser and holder of Securities and the Company.


 


5.6           Headings.
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.


 


5.7           Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of
each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to
whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”


 


5.8          No
Third-Party Beneficiaries. The Placement Agent shall be the third-party beneficiary of the representations and warranties
of the Company in Section 3.1 hereof and with respect to the representations and warranties of the Purchasers in Section 3.2 hereof.
This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section
4.10 and this Section 5.8.


 


5.9           Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including
with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Action or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action
or Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party shall commence
an Action or Proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the


 



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Company
under Section 4.10, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its
reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of
such Action or Proceeding.


 


5.10         Survival.
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.


 


5.11        Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being
understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of
the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.


 


5.12         Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.


 


5.13        Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand
or election in whole or in part without prejudice to its future actions and rights; provided, however, that, in
the case of a rescission of a conversion of the Preferred Stock or exercise of a Warrant, the applicable Purchaser shall be required
to return any shares of Common Stock subject to any such rescinded conversion or exercise notice concurrently with the return
to such Purchaser of the aggregate number of shares of Preferred Stock converted and/or exercise price paid to the Company for
such shares, as applicable, and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s
Preferred Stock and Warrant (including, issuance of a replacement Preferred Stock certificate and warrant certificate evidencing
such restored right).


 


5.14        Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence


 



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reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances
shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement
Securities.


 


5.15        Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation
the defense that a remedy at law would be adequate.


 


5.16        Payment
Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.


 


5.17        Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim,
and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at
any time hereafter in force, in connection with any Action or Proceeding that may be brought by any Purchaser in order to enforce
any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction
Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments
in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated
with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed
such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction
Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum
contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date
thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess
of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the
Company, the manner of handling such excess to be at such Purchaser’s election.


 



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5.18        Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any Proceeding for such purpose. Each Purchaser has been represented by its own separate
legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each
Purchaser and its respective counsel have chosen to communicate with the Company through EGS. EGS does not represent all of the
Purchasers and only represents the lead Purchaser. The Company has elected to provide all Purchasers with the same terms and Transaction
Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers. It
is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between
the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the
Purchasers.


 


5.19         Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.


 


5.20         Saturdays,
Sundays, Holidays, etc.       If the last or appointed day for the taking of any action
or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right
may be exercised on the next succeeding Business Day.


 


5.21         Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.


 


5.22         WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER


 



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PARTY, THE PARTIES
EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. 


 


(Signature Pages Follow)


 



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IN WITNESS WHEREOF,
the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.


 


	communications
                                         systems, inc.	Address
                                         for Notice:
	 	 
	By:	     	Email:
	 	Name:

Title:	Fax:
	 	 	 
	With a copy to (which shall not constitute notice):	 


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE PAGE FOR PURCHASER FOLLOWS]


 




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[PURCHASER SIGNATURE PAGES TO JCS
SECURITIES PURCHASE AGREEMENT]


 


IN WITNESS WHEREOF,
the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.


 


Name of Purchaser: ____________________________________________________


 


Signature of Authorized Signatory of Purchaser: __________________________


 


Name of Authorized Signatory: ____________________________________


 


Title of Authorized Signatory: _____________________________________


 


Email Address of Authorized Signatory: ___________________________________________


 


Address for Notice to Purchaser:


 


Address for Delivery of Securities to Purchaser (if not same
as address for notice):


 


Subscription Amount: $____________


 


Shares of Preferred Stock: ____________


 


Warrant Shares: ________________


 


EIN Number: _______________________


 


[SIGNATURE PAGES CONTINUE]


 




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Annex A 


 


CLOSING STATEMENT


 


Pursuant to the attached Securities Purchase
Agreement, dated as of September 15, 2021, the Purchasers shall purchase up to $______ of Preferred Stock and Warrants from Communications
Systems, Inc., a Minnesota corporation (the “Company”). All funds will be wired into an account maintained
by the Company. All funds will be disbursed in accordance with this Closing Statement.


 


Disbursement
Date: ____________, 2021


 

 



 


	I.
PURCHASE PRICE
	 
	 	Gross
    Proceeds to be Received	$
	 	 
	II. DISBURSEMENTS	 
	 	 	$
	 	 	$
	 	 	$
	 	 	$
	 	 	$
	 	 
	Total
    Amount Disbursed:	$


 


WIRE INSTRUCTIONS:


Please see attached.


 


Acknowledged and agreed to


this ___ day of _________, _____


 


	Communications Systems, Inc.	 
	 	 
	By:	           	 
	Name:

Title:	 


 


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