Exhibit
4.1


 


WARRANT
AGENCY AGREEMENT


 


This
WARRANT AGENCY AGREEMENT (this “Warrant Agreement”) is dated as of October 7, 2021 (the “Issuance
Date”) between Harbor Custom Development, Inc., a Washington corporation (the “Company”), and Mountain Share
Transfer, Inc., a Georgia corporation (the “Warrant Agent”).


 


WHEREAS,
pursuant to the terms of that certain Underwriting Agreement (“Underwriting Agreement”), dated October 4, 2021, by
and between the Company and ThinkEquity LLC, as representative of the underwriter set forth therein, the Company is engaged in a public
offering (the “Offering”) of up to 2,760,000 shares of 8.0% Series A Cumulative Convertible Preferred Stock, no par
value per share of the Company (the “Preferred Shares”) convertible into shares of common stock of the Company, no
par value per share (“Common Stock”) and 13,800,000 Warrants (the “Warrants”) to purchase Common
Stock, including the Series A Preferred Shares and Warrants issuable pursuant to the underwriters’ over-allotment option (the Common
Stock issuable upon exercise of the Warrants is referred to as “Warrant Shares”);


 


WHEREAS,
the Company has filed with the Securities and Exchange Commission (the “Commission”) a Registration Statement on Form
S-1 (File No. 333-259465) (collectively, as the same may be amended from time to time, the “Registration Statement”),
for the registration under the Securities Act of 1933, as amended (the “Securities Act”), of the Preferred Shares,
Warrants and Warrant Shares, and the Registration Statement was declared effective on October 4, 2021;


 


WHEREAS,
the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in accordance with
the terms set forth in this Warrant Agreement in connection with the issuance, registration, transfer, exchange, and exercise of the
Warrants;


 


WHEREAS,
the Company desires to provide for the provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective
rights, limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants; and


 


WHEREAS,
all acts and things have been done and performed which are necessary to make the Warrants the valid, binding, and legal obligations of
the Company, and to authorize the execution and delivery of this Warrant Agreement.


 


NOW,
THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:


 


1.
Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company with respect to the
Warrants, and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the express terms and
conditions set forth in this Warrant Agreement (and no duties or obligations shall be inferred or implied).


 




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2.
Warrants.


 


2.1
Form of Warrants. The Warrants shall be registered securities and shall be initially evidenced by a global Warrant certificate
(“Global Certificate”) in the form of Annex A to this Warrant Agreement, which shall be deposited on behalf
of the Company with a custodian for The Depository Trust Company (“DTC”) and registered in the name of Cede &
Co., a nominee of DTC. If DTC subsequently ceases to make its settlement system available for the Warrants, the Company may instruct
the Warrant Agent regarding making arrangements for book-entry settlement. In the event that the Warrants are not eligible for, or it
is no longer necessary to have the Warrants available in, registration in the name of Cede & Co., a nominee of DTC, the Company may
instruct the Warrant Agent to provide written instructions to DTC to deliver to the Warrant Agent for cancellation the Global Certificate,
and the Company shall instruct the Warrant Agent to deliver to each Holder (as defined below) separate certificates evidencing Warrants
(“Definitive Certificates” and, together with the Global Certificate, “Warrant Certificates”),
in the form of Annex C to this Warrant Agreement. The Warrants represented by the Global Certificate are referred to as “Global
Warrants.”


 


2.2.
Issuance and Registration of Warrants.


 


2.2.1.
Warrant Register. The Warrant Agent shall maintain books (“Warrant Register”) for the registration of original
issuance and the registration of transfer of the Warrants. Any Person in whose name ownership of a beneficial interest in the Warrants
evidenced by a Global Certificate is recorded in the records maintained by DTC or its nominee shall be deemed the “beneficial owner”
thereof, provided that all such beneficial interests shall be held through a Participant (as defined below), which shall be the registered
holder of such Warrants.


 


2.2.2.
Issuance of Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue the Global Certificate and deliver
the Warrants in the DTC settlement system in accordance with written instructions delivered to the Warrant Agent by the Company. Ownership
of beneficial interests in the Warrants shall be shown on, and the transfer of such ownership shall be effected through, records maintained
by (i) DTC and (ii) institutions that have accounts with DTC (each, a “Participant”), subject to a Holder’s
right to elect to receive a Warrant in certificated form in the form of Annex C to this Warrant Agreement. Any Holder desiring
to elect to receive a Warrant in certificated form shall make such request in writing delivered to the Warrant Agent pursuant to Section
2.2.8, and shall surrender to the Warrant Agent the interest of the Holder on the books of the Participant evidencing the Warrants which
are to be represented by a Definitive Certificate through the DTC settlement system. Thereupon, the Warrant Agent shall countersign and
deliver to the person entitled thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so requested.


 


2.2.3.
Beneficial Owner; Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent
may deem and treat the person in whose name that Warrant shall be registered on the Warrant Register (the “Holder,”
which term shall include a Holder’s transferees, successors and assigns and a “Holder” shall include, if the Warrants
are held in “street name,” a Participant or a designee appointed by such Participant) as the absolute owner of such Warrant
for purposes of any exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by
any notice to the contrary. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Warrant Agent, or any agent
of the Company or the Warrant Agent from giving effect to any written certification, proxy, or other authorization furnished by DTC governing
the exercise of the rights of a holder of a beneficial interest in any Warrant. The rights of beneficial owners in a Warrant evidenced
by the Global Certificate shall be exercised by the Holder or a Participant through the DTC system, except to the extent set forth herein
or in the Global Certificate.


 




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2.2.4.
Execution. The Warrant Certificates shall be executed on behalf of the Company by any authorized officer of the Company (an “Authorized
Officer”), which need not be the same authorized signatory for all of the Warrant Certificates, either manually or by facsimile
signature. The Warrant Certificates shall be countersigned by an authorized signatory of the Warrant Agent, which need not be the same
signatory for all of the Warrant Certificates, and no Warrant Certificate shall be valid for any purpose unless so countersigned. In
case any Authorized Officer of the Company that signed any of the Warrant Certificates ceases to be an Authorized Officer of the Company
before countersignature by the Warrant Agent and issuance and delivery by the Company, such Warrant Certificates, nevertheless, may be
countersigned by the Warrant Agent, issued and delivered with the same force and effect as though the person who signed such Warrant
Certificates had not ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Warrant Certificate, shall be an Authorized Officer of the Company authorized
to sign such Warrant Certificate, although at the date of the execution of this Warrant Agreement any such person was not such an Authorized
Officer.


 


2.2.5.
Registration of Transfer. At any time at or prior to the Expiration Date (as defined below), a transfer of any Warrants may be
registered and any Warrant Certificate or Warrant Certificates may be split up, combined or exchanged for another Warrant Certificate
or Warrant Certificates evidencing the same number of Warrants as the Warrant Certificate or Warrant Certificates surrendered. Any Holder
desiring to register the transfer of Warrants or to split up, combine or exchange any Warrant Certificate shall make such request in
writing delivered to the Warrant Agent, and shall surrender to the Warrant Agent the Warrant Certificate or Warrant Certificates evidencing
the Warrants the transfer of which is to be registered or that is or are to be split up, combined or exchanged. Thereupon, the Warrant
Agent shall countersign and deliver to the person entitled thereto a Warrant Certificate or Warrant Certificates, as the case may be,
as so requested. The Warrant Agent may require reasonable and customary payment, with respect to a registration of transfer of Warrants
or a split-up, combination or exchange of a Warrant Certificate (but, for purposes of clarity, not upon the exercise of the Warrants
and issuance of Warrant Shares to the Holder), of a sum sufficient to cover any tax or governmental charge that may be imposed in connection
with such registration of transfer, split-up, combination or exchange, together with reimbursement to the Warrant Agent of all reasonable
expenses incidental thereto. All such fees and expenses shall be paid by the Company, and not by the Holder.


 


2.2.6.
Loss, Theft, and Mutilation of Warrant Certificates. Upon receipt by the Company and the Warrant Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction, or mutilation of a Warrant Certificate, and, in case of loss, theft or destruction,
of indemnity or security in customary form and amount, and reimbursement to the Company and the Warrant Agent of all reasonable expenses
incidental thereto, and upon surrender to the Warrant Agent and cancellation of the Warrant Certificate if mutilated, the Warrant Agent
shall, on behalf of the Company, countersign and deliver a new Warrant Certificate of like tenor to the Holder in lieu of the Warrant
Certificate so lost, stolen, destroyed, or mutilated. The Warrant Agent may charge the Holder an administrative fee for processing the
replacement of lost Warrant Certificates, which shall be charged only once in instances where a single surety bond obtained covers multiple
certificates. The Warrant Agent may receive compensation from the surety companies or surety bond agents for administrative services
provided to them.


 




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2.2.7.
Proxies. The Holder of a Warrant may grant proxies or otherwise authorize any person, including the Participants and beneficial
holders that may own interests through the Participants, to take any action that a Holder is entitled to take under this Agreement or
the Warrants; provided, however, that at all times that Warrants are evidenced by a Global Certificate, exercise of those
Warrants shall be effected on their behalf by Participants through DTC in accordance the procedures administered by DTC.


 


2.2.8.
Warrant Certificate Request. A Holder has the right to elect at any time or from time to time a Warrant Exchange (as defined below)
pursuant to a Warrant Certificate Request Notice (as defined below). Upon written notice by a Holder to the Warrant Agent for the exchange
of some or all of such Holder’s Global Warrants for a Definitive Certificate evidencing the same number of Warrants, which request
shall be in the form attached hereto as Annex E (a “Warrant Certificate Request Notice” and the date of delivery
of such Warrant Certificate Request Notice by the Holder, the “Warrant Certificate Request Notice Date” and the deemed
surrender upon delivery by the Holder of a number of Global Warrants for the same number of Warrants evidenced by a Definitive Certificate,
a “Warrant Exchange”), the Warrant Agent shall promptly effect the Warrant Exchange and shall promptly issue and deliver
to the Holder a Definitive Certificate for such number of Warrants in the name set forth in the Warrant Certificate Request Notice. Such
Definitive Certificate shall be dated the original issue date of the Warrants, shall be manually executed by an authorized signatory
of the Company, shall be in the form attached hereto as Annex C, and shall be reasonably acceptable in all respects to such Holder.
In connection with a Warrant Exchange, the Company agrees to deliver, or to direct the Warrant Agent to deliver, the Definitive Certificate
to the Holder within the earlier of (i) two Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period
of the Warrant Certificate Request Notice pursuant to the delivery instructions in the Warrant Certificate Request Notice (“Warrant
Certificate Delivery Date”). If the Company fails for any reason to deliver to the Holder the Definitive Certificate subject
to the Warrant Certificate Request Notice by the Warrant Certificate Delivery Date, the Company shall pay to the Holder, in cash, as
liquidated damages and not as a penalty, for each $1,000 of Warrant Shares evidenced by such Definitive Certificate (based on the VWAP
(as defined in the Warrants) of the Common Stock on the Warrant Certificate Request Notice Date), $10 per Business Day for each Business
Day after such Warrant Certificate Delivery Date until such Definitive Certificate is delivered or, prior to delivery of such Warrant
Certificate, the Holder rescinds such Warrant Exchange. The Company covenants and agrees that, upon the date of delivery of the Warrant
Certificate Request Notice, the Holder shall be deemed to be the holder of the Definitive Certificate and, notwithstanding anything to
the contrary set forth herein, the Definitive Certificate shall be deemed for all purposes to contain all of the terms and conditions
of the Warrants evidenced by such Warrant Certificate and the terms of this Agreement, other than Sections 2.2.8 and 7.8 herein, shall
not apply to the Warrants evidenced by the Definitive Certificate.


 


2.2.9.
For purposes of clarity, if there is a conflict between the express terms of this Warrant Agreement and the Warrant certificate in the
form of Annex C hereto with respect to terms of the Warrants, the terms of the Warrant certificate shall govern and control.


 


3.
Terms and Exercise of Warrants.


 


3.1.
Exercise Price. Each Warrant shall entitle the Holder, subject to the provisions of the applicable Warrant Certificate and of
this Warrant Agreement, to purchase from the Company the number of Common Stock stated therein, at the price of $2.97 per whole share,
subject to the subsequent adjustments provided in Section 4 hereof. The term “Exercise Price” as used in this Warrant
Agreement refers to the price per share at which Common Stock may be purchased at the time a Warrant is exercised.


 




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3.2.
Duration of Warrants. Warrants may be exercised only during the period (“Exercise Period”) commencing on the
Issuance Date and terminating at 5:00 P.M., New York City time (the “close of business”) on October 7, 2026 (the “Expiration
Date”). Each Warrant not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights
in respect thereof under this Warrant Agreement shall cease at the close of business on the Expiration Date.


 


3.3.
Exercise of Warrants.


 


3.3.1.
Exercise and Payment.


 


(a)
Exercise of the purchase rights represented by a Warrant may be made, in whole or in part, at any time or times during the Exercise Period
by delivery to the Warrant Agent of the Notice of Exercise in the form annexed as Annex B hereto (the “Notice of Exercise”).
Within the earlier of (i) two Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following the
date the Holder delivers the Notice of Exercise as aforesaid, the Holder shall deliver, in accordance with the payment instructions in
the Notice of Exercise, the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or
cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 3.3.6 below is specified
in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other
type of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder
shall not be required to physically surrender a Warrant Certificate to the Company until the Holder has purchased all of the Warrant
Shares available thereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender such Warrant to the
Company for cancellation within three Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises
of a Warrant resulting in purchases of a portion of the total number of Warrant Shares available thereunder shall have the effect of
lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares
purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise within one Business Day of receipt of such notice. The Holder and
any assignee, by acceptance of a Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase
of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be
less than the amount stated on the face thereof.


 


Notwithstanding
the foregoing in this Section 3.3.1 a holder whose interest in a Warrant is a beneficial interest in certificate(s) representing such
Warrant held in registered form through DTC (or another established clearing corporation performing similar functions), shall effect
exercises made pursuant to this Section 3.3.1 by delivering to DTC (or such other clearing corporation, as applicable) the appropriate
instruction form for exercise, complying with the procedures to effect exercise that are required by DTC (or such other clearing corporation,
as applicable), subject to a Holder’s right to elect to receive a Warrant in certificated form pursuant to the terms of the Warrant
Agency Agreement, in which case this sentence shall not apply. Upon giving irrevocable instructions to its Participant to exercise Warrants,
solely for purposes of Regulation SHO, the holder whose interest in the Warrant is a beneficial interest shall be deemed to have exercised
such Warrant, notwithstanding when the applicable Warrant Shares are delivered to such holder.


 




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3.3.2.
Issuance of Warrant Shares. (a) The Warrant Agent shall, on the Trading Day following the date of exercise of any Warrant, advise
the Company, the transfer agent and registrar for the Company’s Common Stock, in respect of (i) the number of Warrant Shares indicated
on the Notice of Exercise as issuable upon such exercise with respect to such exercised Warrants; (ii) the instructions of the Holder
or Participant, as the case may be, provided to the Warrant Agent with respect to the delivery of the Warrant Shares and the number of
Warrants that remain outstanding after such exercise; and (iii) such other information as the Company or such transfer agent and registrar
shall reasonably request.


 


(b)
The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the transfer agent to the Holder by (1) crediting
the account of the Holder’s or its designee’s balance account with DTC through its Deposit or Withdrawal at Custodian system
(“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement
permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via
cashless exercise; or (2) if the Warrant Shares cannot be transmitted to the Holder via DWAC pursuant to clause (1) above, or if specifically
requested by the Holder in the applicable Notice of Exercise, by delivery of a book-entry position, registered in the Company’s
share register in the name of the Holder or its designee, in each case for the number of Warrant Shares to which the Holder is entitled
pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earlier of (i) two
Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice
of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall
be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has
been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other
than in the case of a cashless exercise) is received within the earlier of (i) two Trading Days of and (ii) the number of Trading Days
comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver
to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder,
in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of
the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth
Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant
Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST
program so long as the Warrants remain outstanding and exercisable. As used herein, “Standard Settlement Period” means
the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to
the Common Stock as in effect on the date of delivery of the Notice of Exercise.


 


3.3.3.
Valid Issuance. All Warrant Shares issued by the Company upon the proper exercise of a Warrant in conformity with this Warrant
Agreement shall be validly issued, fully paid, and non-assessable.


 


3.3.4.
No Fractional Exercise. No fractional Warrant Shares will be issued upon the exercise of the Warrant. If, by reason of any adjustment
made pursuant to Section 4, a Holder would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a share,
the Company shall, upon such exercise, round up to the nearest whole number of Warrant Shares to be issued to such Holder.


 




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3.3.5
No Transfer Taxes. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and
such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that in the event Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered
for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all
transfer agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another
established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.


 


3.3.6
Restrictive Legend Events; Cashless Exercise Under Certain Circumstances.


 


(i)
The Company shall use its commercially reasonable efforts to maintain the effectiveness of the Registration Statement and the current
status of the prospectus included therein or to file and maintain the effectiveness of another registration statement and another current
prospectus covering the Warrants and the Warrant Shares at any time that the Warrants are exercisable. The Company shall provide to the
Warrant Agent and each Holder prompt written notice of any time that the Company is unable to deliver the Warrant Shares via DTC transfer
or otherwise without restrictive legend because (A) the Commission has issued a stop order with respect to the Registration Statement;
(B) the Commission otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently;
(C) the Company has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently; (D) the
prospectus contained in the Registration Statement is not available for the issuance of the Warrant Shares to the Holder; or (E) otherwise
(each a “Restrictive Legend Event”). To the extent that the Warrants cannot be exercised as a result of a Restrictive
Legend Event, the Company shall, at the election of the Holder, which shall be given within five days of receipt of such notice of the
Restrictive Legend Event, either (A) rescind the previously submitted Election to Purchase and the Company shall return all consideration
paid by registered holder for such shares upon such rescission or (B) treat the attempted exercise as a cashless exercise as described
in paragraph (ii) below and refund the cash portion of the exercise price to the Holder.


 




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(ii)
If a Restrictive Legend Event has occurred, the Warrant may also be exercisable on a cashless basis. Notwithstanding anything herein
to the contrary, but without limiting the rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant
to this Section 3.3.6(b) or to receive cash payments pursuant to Section 3.3.2(b) and Section 3.3.8 herein, the Company shall not be
required to make any cash payments or net cash settlement to the Holder in lieu of delivery of the Warrant Shares. Upon a “cashless
exercise,” the Holder shall be entitled to receive the number of Warrant Shares equal to the quotient (if such quotient would be
a positive number) obtained by dividing (A-B) (X) by (A), where:


 


(A)
= as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of
Exercise is (1) both executed and delivered pursuant to Section 3.3.1(a) hereof on a day that is not a Trading Day or (2) both executed
and delivered pursuant to Section 3.3.1(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined
in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder,
either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the
Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable
Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered
within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day)
pursuant to Section 3.3.1(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of
Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 3.3.1(a) hereof after the close
of “regular trading hours” on such Trading Day;


 


(B)
= the Exercise Price of the Warrant, as adjusted as set forth herein; and


 


(X)
= the number of Warrant Shares that would be issuable upon exercise of the Warrant in accordance with the terms of the Warrant if such
exercise were by means of a cash exercise rather than a cashless exercise.


 


If
the Warrant Shares are issued in such a cashless exercise, the Company acknowledges and agrees that, in accordance with Section 3(a)(9)
of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised and the Company
agrees not to take any position contrary thereto. Upon receipt of an Election to Purchase for a cashless exercise, the Warrant Agent
will promptly deliver a copy of the Election to Purchase to the Company to confirm the number of Warrant Shares issuable in connection
with the cashless exercise. The Company shall calculate and transmit to the Warrant Agent in a written notice, and the Warrant Agent
shall have no duty, responsibility, or obligation under this section to calculate, the number of Warrant Shares issuable in connection
with any cashless exercise. The Warrant Agent shall be entitled to rely conclusively on any such written notice provided by the Company,
and the Warrant Agent shall not be liable for any action taken, suffered, or omitted to be taken by it in accordance with such written
instructions or pursuant to this Warrant Agreement. Notwithstanding anything herein to the contrary, on the Termination Date (as defined
below), this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 3.3.6.


 


3.3.7
Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of
Warrant Shares issuable in connection with any exercise, the Company shall promptly deliver to the Holder the number of Warrant Shares
that are not disputed.


 




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3.3.8
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to
the Holder, if the Company fails to cause the transfer agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 3.3.2(b) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases,
Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the amount obtained by multiplying
(1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times
(2) the price at which the sell order giving rise to such purchase obligation was executed; provided, however, that such
Holder provides reasonable evidence of the date and time of such sell order and such sell order occurred after the missed Warrant Share
Delivery Date and prior to the delivery of the related Warrant Shares, and (B) at the option of the Holder, either reinstate the portion
of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be
deemed rescinded) or deliver to the Holder the number of Common Stock that would have been issued had the Company timely complied with
its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000
to cover a Buy-In with respect to an attempted exercise of Common Stock with an aggregate sale price giving rise to such purchase obligation
of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder
shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the
Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available
to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect
to the Company’s failure to timely deliver Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
For the avoidance of doubt, except in the event of gross negligence or willful misconduct on its part, the Warrant Agent shall not be
liable for any failure of the Company to timely deliver Warrant Shares pursuant to this Section 3.3.8.


 




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3.3.9
Beneficial Ownership Limitation. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right
to exercise any portion of a Warrant, pursuant to Section 3 or otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons
acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the
number of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of Common
Stock issuable upon exercise of such Warrant with respect to which such determination is being made, but shall exclude the number of
Common Stock which would be issuable upon (i) exercise of the remaining, non-exercised portion of such Warrant beneficially owned by
the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or non-converted portion
of any other securities of the Company (including, without limitation, any other securities of the Company which would entitle the holder
thereof to acquire at any time 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 (“Common Share Equivalents”)) subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding
sentence, for purposes of this Section 3.3.9, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d)
of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 3.3.9 applies, the determination of whether a Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of a Warrant is exercisable
shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination
of whether a Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution
Parties) and of which portion of a Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company
shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status
as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 3.3.9, in determining the number of outstanding Common Stock, a Holder may rely on the number
of outstanding Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission,
as the case may be; (B) a more recent public announcement by the Company; or (C) a more recent written notice by the Company or the transfer
agent setting forth the number of Common Stock outstanding. Upon the written request of a Holder, the Company shall within two Trading
Days confirm in writing (including by e-mail) to the Holder the number of Common Stock then outstanding. In any case, the number of outstanding
Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including such Warrant,
by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding Common Stock was reported.
The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants,
9.99%) of the number of Common Stock outstanding immediately after giving effect to the issuance of Common Stock issuable upon exercise
of a Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this
Section 3.3.9, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of Common Stock outstanding
immediately after giving effect to the issuance of Common Stock upon exercise of this Warrant held by the Holder and the provisions of
this Section 3.3.9 shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st
day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 3.3.9 to correct this paragraph (or any portion hereof) which may
be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary
or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder
of this Warrant.


 


4.
Adjustments.


 


4.1
Adjustment upon Subdivisions or Combinations. If the Company, at any time while the Warrants are outstanding: (i) pays a stock
dividend or otherwise makes a distribution or distributions on its Common Stock or any other equity or equity equivalent securities payable
in Common Stock (which, for avoidance of doubt, shall not include any Common Stock issued by the Company upon exercise of the Warrants);
(ii) subdivides outstanding Common Stock into a larger number of shares; (iii) combines (including by way of reverse stock split) outstanding
Common Stock into a smaller number of shares; or (iv) issues by reclassification of the Common Stock any shares of capital stock of the
Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common
Stock and such other capital stock of the Company (excluding treasury shares, if any) outstanding immediately before such event and of
which the denominator shall be the number of Common Stock and such other capital stock of the Company (excluding treasury shares, if
any) outstanding immediately after such event, and the number of shares issuable upon exercise of each Warrant shall be proportionately
adjusted such that the aggregate Exercise Price of such Warrant shall remain unchanged. Any adjustment made pursuant to this Section
4.1 shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend
or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, or re-classification.


 




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4.2
Adjustment for Other Distributions.


 


(a)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 4.1 above, if at any time the Company grants,
issues or sells any Common Share Equivalents or rights to purchase stock, warrants, securities, or other property pro rata to the record
holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the
number of Common Stock acquirable upon complete exercise of a Warrant (without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance,
or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined
for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in
any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled
to participate in such Purchase Right to such extent (or beneficial ownership of such Common Stock as a result of such Purchase Right
to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).


 


(b)
Extraordinary Dividends. If the Company, at any time during the Exercise Period, shall pay a dividend in cash, securities or other
assets to all holders of Common Stock (or other shares of the Company’s capital stock into which the Warrants are convertible),
other than (i) as described in Sections 4.1, 4.2(a) or 4.3, or (ii) regular quarterly or other periodic dividends (any such non-excluded
event being referred to herein as an “Extraordinary Dividend”), then the Exercise Price shall be decreased, effective
immediately after the effective date of such Extraordinary Dividend, by the quotient of (1) the gross amount of cash and/or fair market
value (as determined by the Company’s Board of Directors, in good faith) of all securities or other assets paid to the holders
of Common Stock (or other shares of the Company’s capital stock into which the Warrants are convertible) in respect of such Extraordinary
Dividend divided by (2) the sum of the number of Common Stock (or other shares of the Company’s capital stock into which the Warrants
are exercisable) outstanding at the time of the Extraordinary Dividend plus the number of Common Stock then issuable upon exercise of
all outstanding Warrants, provided, that the Exercise Price shall not be reduced below zero.


 




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4.3.
Fundamental Transaction. If, at any time while the Warrants are outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment, transfer, conveyance, or other disposition of all or substantially all of
its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer, or exchange offer
(whether by the Company or another Person) is completed pursuant to which all holders of Common Stock are permitted to sell, tender,
or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding
Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization,
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which all outstanding Common Stock are effectively
converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off, or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires
more than 50% of the outstanding Common Stock (not including any Common Stock held by the other Person or other Persons making or party
to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination)
(each a “Fundamental Transaction”), then, upon any subsequent exercise of a Warrant, the Holder shall have the right
to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental
Transaction (without regard to any limitation in Section 3.3.9 on the exercise of a Warrant), the number of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation, and such amount of cash or any other consideration (collectively,
the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of
Common Stock for which a Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in
Section 3.3.9 on the exercise of a Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Common Share
in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given
any choice as to the securities, cash, or property to be received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any exercise of a Warrant following such Fundamental Transaction. The Company
shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”)
to assume in writing all of the obligations of the Company under the Warrants in accordance with the provisions of this Section 4.3 pursuant
to written agreements prior to or during such Fundamental Transaction. Upon the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of the
Warrants referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under the Warrants with the same effect as if such Successor Entity
had been named as the Company therein.


 


The
Company shall instruct the Warrant Agent in writing (including by e-mail) to send by e-mail or by first class mail, postage prepaid,
to each Holder, written notice of the execution of any such amendment, supplement, or agreement with the Successor Entity. Any supplemented
or amended agreement entered into by the successor corporation or transferee shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section 4.3. The Warrant Agent shall have no duty, responsibility
or obligation to determine the correctness of any provisions contained in such agreement or such notice, including but not limited to
any provisions relating either to the kind or amount of securities or other property receivable upon exercise of warrants or with respect
to the method employed and provided therein for any adjustments, and shall be entitled to rely conclusively for all purposes upon the
provisions contained in any such agreement. The provisions of this Section 4.3 shall similarly apply to successive reclassifications,
changes, consolidations, mergers, sales, and conveyances of the kind described above.


 




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4.4.
Notices to Holder. (a) Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 4, the Company shall promptly deliver to the Holder by facsimile or e-mail a notice setting forth the Exercise Price
after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring
such adjustment. Provided, however, that the Company may satisfy this notice requirement in this Section 4.4(a) by filing such notice
with the Commission pursuant to a Current Report on Form 8-K, or, to the extent that the Company is no longer subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, by posting such notice on the Company’s website.


 


(b)
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on
the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock are converted into other securities,
cash, or property; or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation, or winding up of the affairs
of the Company, then, in each case, the Company shall cause to be delivered by mail, facsimile, or e-mail to the Holder at its last mailing
address, facsimile number, or e-mail address as it shall appear upon the Warrant Register of the Company, at least five calendar days
prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined
or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective
or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their Common
Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, or share
exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity
of the corporate action required to be specified in such notice. To the extent that any notice required to be provided in this Warrant
Agreement constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. Provided such notice occurs within the
Exercise Period, the Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to
the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.


 


4.5
Other Events. If any event occurs of the type contemplated by the provisions of Section 4.1 or 4.2 but not expressly provided
for by such provisions (including, without limitation, the granting of stock appreciation rights, Adjustment Rights, phantom stock rights,
or other rights with equity features to all holders of Common Stock for no consideration), then the Company’s Board of Directors
will, at its discretion and in good faith, make an adjustment in the Exercise Price and the number of Warrant Shares or designate such
additional consideration to be deemed issuable upon exercise of a Warrant, so as to protect the rights of the registered Holder. No adjustment
to the Exercise Price will be made pursuant to more than one sub-section of this Section 4 in connection with a single issuance.


 




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4.6.
Notices of Changes in Warrant. Upon every adjustment of the Exercise Price or the number of Warrant Shares issuable upon exercise
of a Warrant, the Company shall give written notice thereof (including by e-mail) to the Warrant Agent, which notice shall state the
Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of Warrant Shares purchasable at such
price upon the exercise of a Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation
is based. Upon the occurrence of any event specified in Sections 4.1 or 4.2, then, in any such event, the Company shall give written
notice by mail, e-mail or facsimile to each Holder, at the last address set forth for such holder in the Warrant Register, as of the
record date or the effective date of the event. Provided, however, that the Company may satisfy the notice requirement to Holders in
this Section 4.6 by filing such notice with the Commission pursuant to a Current Report on Form 8-K, or, to the extent that the Company
is no longer subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, by posting such notice on the Company’s
website. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event. The Warrant Agent
shall be entitled to rely conclusively on, and shall be fully protected in relying on, any certificate, notice or instructions provided
by the Company with respect to any adjustment of the Exercise Price or the number of shares issuable upon exercise of a Warrant, or any
related matter, and the Warrant Agent shall not be liable for any action taken, suffered or omitted to be taken by it in accordance with
any such certificate, notice or instructions or pursuant to this Warrant Agreement. The Warrant Agent shall not be deemed to have knowledge
of any such adjustment unless and until it shall have received written notice thereof (including by e-mail) from the Company.


 


5.
Restrictive Legends; Fractional Warrants.


 


In
the event that a Warrant Certificate surrendered for transfer bears a restrictive legend, the Warrant Agent shall not register that transfer
until the Warrant Agent has received an opinion of counsel for the Company stating that such transfer may be made and indicating whether
the Warrants must also bear a restrictive legend upon that transfer. The Warrant Agent shall not be required to effect any registration
of transfer or exchange which will result in the transfer of or delivery of a Warrant Certificate for a fraction of a Warrant.


 


6.
Other Provisions Relating to Rights of Holders of Warrants.


 


6.1.
No Rights as Stockholder. Except as otherwise specifically provided herein, a Holder, solely in its capacity as a holder of Warrants,
shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall
anything contained in this Warrant Agreement be construed to confer upon a Holder, solely in its capacity as the registered holder of
Warrants, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether
any reorganization, issue of stock, reclassification of share capital, consolidation, merger, conveyance or otherwise), receive notice
of meetings, receive dividends or subscription rights or rights to participate in new issues of shares, or otherwise, prior to the issuance
to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of Warrants.


 




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6.2.
Reservation of Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued
Common Stock that will be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant to this Warrant Agreement.


 


7.
Concerning the Warrant Agent and Other Matters.


 


7.1.
Any instructions given to the Warrant Agent orally, as permitted by any provision of this Warrant Agreement, shall be confirmed in writing
(including by e-mail) by the Company as soon as practicable. The Warrant Agent shall not be liable or responsible and shall be fully
authorized and protected for acting, or failing to act, in accordance with any oral instructions which do not conform with the written
confirmation received in accordance with this Section 7.1.


 


7.2.
(a) Whether or not any Warrants are exercised, for the Warrant Agent’s services as agent for the Company hereunder, the Company
shall pay to the Warrant Agent such fees as may be separately agreed between the Company and Warrant Agent and the Warrant Agent’s
out of pocket expenses in connection with this Warrant Agreement, including the reasonable fees and expenses of the Warrant Agent’s
counsel. While the Warrant Agent endeavors to maintain out-of-pocket charges (both internal and external) at competitive rates, these
charges may not reflect actual out-of-pocket costs, and may include handling charges to cover internal processing and use of the Warrant
Agent’s billing systems.


 


(b)
No provision of this Warrant Agreement shall require Warrant Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties under this Warrant Agreement or in the exercise of its rights.


 


7.3
As agent for the Company hereunder, the Warrant Agent:


 


(a)
shall have no duties or obligations other than those specifically set forth herein or as may subsequently be agreed to in writing by
the Warrant Agent and the Company;


 


(b)
shall be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value, or genuineness
of the Warrants or any Warrant Shares;


 


(c)
shall not be obligated to take any legal action hereunder; if, however, the Warrant Agent determines to take any legal action hereunder,
and where the taking of such action might, in its judgment, subject or expose it to any expense or liability it shall not be required
to act unless it has been furnished with an indemnity reasonably satisfactory to it;


 


(d)
may rely on and shall be fully authorized and protected in acting or failing to act upon any certificate, instrument, opinion, notice,
letter, telegram, telex, facsimile transmission, or other document or security delivered to the Warrant Agent and believed by it to be
genuine and to have been signed by the proper party or parties;


 


(e)
shall not be liable or responsible for any recital or statement contained in the Registration Statement or any other documents relating
thereto;


 




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(f)
shall not be liable or responsible for any failure on the part of the Company to comply with any of its covenants and obligations relating
to the Warrants, including without limitation obligations under applicable securities laws;


 


(g)
may rely on and shall be fully authorized and protected in acting or failing to act upon the written, telephonic, or oral instructions
with respect to any matter relating to its duties as Warrant Agent covered by this Warrant Agreement (or supplementing or qualifying
any such actions) of officers of the Company, and is hereby authorized and directed to accept instructions with respect to the performance
of its duties hereunder from the Company or counsel to the Company, and may apply to the Company, for advice or instructions in connection
with the Warrant Agent’s duties hereunder, and the Warrant Agent shall not be liable for any delay in acting while waiting for
those instructions; any applications by the Warrant Agent for written instructions from the Company may, at the option of the Warrant
Agent, set forth in writing any action proposed to be taken or omitted by the Warrant Agent under this Warrant Agreement and the date
on or after which such action shall be taken or such omission shall be effective; the Warrant Agent shall not be liable for any action
taken by, or omission of, the Warrant Agent in accordance with a proposal included in such application on or after the date specified
in such application (which date shall not be less than five Business Days after the date such application is sent to the Company, unless
the Company shall have consented in writing to any earlier date) unless prior to taking any such action, the Warrant Agent shall have
received written instructions in response to such application specifying the action to be taken or omitted;


 


(h)
may consult with counsel satisfactory to the Warrant Agent, including its in-house counsel, if any, and the advice of such counsel shall
be full and complete authorization and protection in respect of any action taken, suffered, or omitted by it hereunder in good faith
and in accordance with the advice of such counsel;


 


(i)
may perform any of its duties hereunder either directly or by or through nominees, correspondents, designees, or subagents, and it shall
not be liable or responsible for any misconduct or negligence on the part of any nominee, correspondent, designee, or subagent appointed
with reasonable care by it in connection with this Warrant Agreement;


 


(j)
is not authorized, and shall have no obligation, to pay any brokers, dealers, or soliciting fees to any person; and


 


(k)
shall not be required hereunder to comply with the laws or regulations of any country other than the United States of America or any
political subdivision thereof.


 


7.4.
(a) In the absence of gross negligence or willful or illegal misconduct on its part, the Warrant Agent shall not be liable for any action
taken, suffered, or omitted by it or for any error of judgment made by it in the performance of its duties under this Warrant Agreement.
Anything in this Warrant Agreement to the contrary notwithstanding, in no event shall the Warrant Agent be liable for special, indirect,
incidental, consequential, or punitive losses or damages of any kind whatsoever (including but not limited to lost profits), even if
the Warrant Agent has been advised of the possibility of such losses or damages and regardless of the form of action. Any liability of
the Warrant Agent will be limited in the aggregate to the amount of fees paid by the Company hereunder. The Warrant Agent shall not be
liable for any failures, delays or losses, arising directly or indirectly out of conditions beyond its reasonable control including,
but not limited to, acts of government, exchange or market ruling, suspension of trading, work stoppages or labor disputes, fires, civil
disobedience, riots, rebellions, storms, electrical or mechanical failure, computer hardware or software failure, communications facilities
failures including telephone failure, war, terrorism, insurrection, earthquakes, floods, acts of God, or similar occurrences.


 




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(b)
In the event any question or dispute arises with respect to the proper interpretation of the Warrants or the Warrant Agent’s duties
under this Warrant Agreement or the rights of the Company or of any Holder, the Warrant Agent shall not be required to act and shall
not be held liable or responsible for its refusal to act until the question or dispute has been judicially settled (and, if appropriate,
it may file a suit in interpleader or for a declaratory judgment for such purpose) by final judgment rendered by a court of competent
jurisdiction, binding on all persons interested in the matter which is no longer subject to review or appeal, or settled by a written
document in form and substance satisfactory to Warrant Agent and executed by the Company and each such Holder. In addition, the Warrant
Agent may require for such purpose, but shall not be obligated to require, the execution of such written settlement by all the Holders
and all other persons that may have an interest in the settlement.


 


7.5.
The Company covenants to indemnify the Warrant Agent and hold it harmless from and against any loss, liability, claim or expense (“Loss”)
arising out of or in connection with the Warrant Agent’s duties under this Warrant Agreement, including the costs and expenses
of defending itself against any Loss, unless such Loss shall have been determined by a court of competent jurisdiction to be a result
of the Warrant Agent’s gross negligence or willful misconduct.


 


7.6.
Unless terminated earlier by the parties hereto, this Warrant Agreement shall terminate 90 days after the earlier of the Expiration Date
and the date on which no Warrants remain outstanding (the “Termination Date”). On the Business Day following the Termination
Date, the Warrant Agent shall deliver to the Company any entitlements, if any, held by the Warrant Agent under this Warrant Agreement.
The Warrant Agent’s right to be reimbursed for fees, charges and out-of-pocket expenses as provided in this Section 7 shall survive
the termination of this Warrant Agreement.


 


7.7.
If any provision of this Warrant Agreement shall be held illegal, invalid, or unenforceable by any court, this Warrant Agreement shall
be construed and enforced as if such provision had not been contained herein and shall be deemed an Agreement among the parties to it
to the full extent permitted by applicable law.


 


7.8.
The Company represents and warrants that (a) it is duly incorporated and validly existing under the laws of its jurisdiction of incorporation;
(b) the offer and sale of the Warrants and the execution, delivery and performance of all transactions contemplated thereby (including
this Warrant Agreement) have been duly authorized by all necessary corporate action and will not result in a breach of or constitute
a default under the articles of incorporation, bylaws or any similar document of the Company or any indenture, agreement or instrument
to which it is a party or is bound; (c) this Warrant Agreement has been duly executed and delivered by the Company and constitutes the
legal, valid, binding and enforceable obligation of the Company; (d) the Warrants will comply in all material respects with all applicable
requirements of law; and (e) to the best of its knowledge, there is no litigation pending or threatened as of the date hereof in connection
with the offering of the Warrants.


 


7.9.
In the event of inconsistency between this Warrant Agreement and the descriptions in the Registration Statement, as they may from time
to time be amended, the terms of this Warrant Agreement shall control.


 




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7.10.
Set forth in Annex D hereto is a list of the names and specimen signatures of the persons authorized to act for the Company under
this Warrant Agreement (the “Authorized Representatives”). The Company shall, from time to time, certify to you the
names and signatures of any other persons authorized to act for the Company under this Warrant Agreement.


 


7.11.
Any notice, statement or demand authorized by this Warrant Agreement to be given or made by the Warrant Agent or by the holder of any
Warrant to or on the Company including, without limitation, any Notice of Exercise, shall be in writing and delivered by e-mail, hand
or sent by registered or certified mail or a nationally recognized overnight courier service, addressed (until another address is filed
in writing by the Company with the Warrant Agent) as set forth below and if to any holder any notice, statement or demand shall be given
to the last address set forth for such holder (if any) in the Warrant Register:


 


Harbor
Custom Development, Inc.


11505
Burnham Dr. Suite 301


Gig
Harbor, WA 98332


Attention:
Jeff Habersetzer


Facsimile
No.: (253) 313-5232


E-mail:
jhabersetzer@harborcustomdev.com


 


with
a copy (which shall not constitute notice) to:


 


FitzGerald
Yap Kreditor LLP


2
Park Plaza, Suite 850


Irvine,
CA 92614


Attention:
Lynne Bolduc, Esq.


Facsimile
No.: (949) 788-8980


E-mail:
lbolduc@fyklaw.com


 


Any
notice, statement or demand authorized by this Warrant Agreement to be given or made by the holder of any Warrant or by the Company to
or on the Warrant Agent including, without limitation, any Notice of Exercise, shall be in writing and delivered by e-mail, facsimile,
hand or sent by registered or certified mail a nationally recognized overnight courier service, addressed (until another address is filed
in writing by the Warrant Agent with the Company), as follows:


 


Mountain
Share Transfer, Inc.


2030
Powers Ferry Rd. SE, Suite # 212


Atlanta,
GA 30339


Facsimile
No.: (404) 816-8830


Attention:
Erik Nelson


E-mail:
esn@mountainsharetransfer.com


 




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Any
notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission,
if such notice or communication is delivered via facsimile at the facsimile number or e-mail at the e-mail address set forth above in
this Section 7.11 prior to 5:30 p.m. (New York City time) on any Trading Day, (ii) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile number or e-mail at the e-mail address set forth in this
Section 7.11 on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading
Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the
party to whom such notice is required to be given. Notwithstanding any other provision of this Warrant, where this Warrant provides for
notice of any event to the Holder, if this Warrant is held in global form by DTC (or any successor depositary), such notice shall be
sufficiently given if given to DTC (or any successor depositary) pursuant to the procedures of DTC (or such successor depositary), subject
to a Holder’s right to elect to receive a Warrant in certificated form pursuant to the terms of the Warrant Agency Agreement, in
which case this sentence shall not apply.


 


7.12.
(a) This Warrant Agreement shall be governed by and construed in accordance with the laws of the State of Washington. All actions and
proceedings relating to or arising from, directly or indirectly, this Warrant Agreement may be litigated in courts located in the United
States District Court for the Western District of Washington. The Company hereby submits to the personal jurisdiction of such courts
and consents that any service of process may be made by certified or registered mail, return receipt requested, directed to the Company
at its address last specified for notices hereunder.


 


(b)
This Warrant Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties hereto. This Warrant
Agreement may not be assigned, or otherwise transferred, in whole or in part, by either party without the prior written consent of the
other party, which the other party will not unreasonably withhold, condition or delay; except that (i) consent is not required for an
assignment or delegation of duties by Warrant Agent to any affiliate of Warrant Agent and (ii) any reorganization, merger, consolidation,
sale of assets or other form of business combination by Warrant Agent or the Company shall not be deemed to constitute an assignment
of this Warrant Agreement.


 


(c)
No provision of this Warrant Agreement may be amended, modified, or waived, except in a written document signed by both parties. The
Company and the Warrant Agent may amend or supplement this Warrant Agreement without the consent of any Holder for the purpose of curing
any ambiguity, or curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions
with respect to matters or questions arising under this Agreement as the parties may deem necessary or desirable, so long as such amendment
or supplement shall not materially and adversely affect the interests of the Holders. All other amendments and supplements shall require
the vote or written consent of Holders of at least 50.1% of the then outstanding Warrants; provided that if any such amendment or supplement
disproportionately and adversely affect the rights of a Holder compared to other Holders, the prior written consent of such Holder shall
also be required.


 


7.13
Payment of Taxes. The Company will from time to time promptly pay all taxes and charges that may be imposed upon the Company or
the Warrant Agent in respect of the issuance or delivery of Warrant Shares upon the exercise of Warrants, but the Company may require
the Holders to pay any transfer taxes in respect of the Warrants or such shares. The Warrant Agent may refrain from registering any transfer
of Warrants or any delivery of any Warrant Shares unless or until the persons requesting the registration or issuance shall have paid
to the Warrant Agent for the account of the Company the amount of such tax or charge, if any, or shall have established to the reasonable
satisfaction of the Company and the Warrant Agent that such tax or charge, if any, has been paid.


 




    	19



     


    




 


7.14
Resignation of Warrant Agent.


 


7.14.1.
Appointment of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties,
and be discharged from all further duties and liabilities hereunder after giving 30 days’ notice in writing to the Company, or
such shorter period of time agreed to by the Company. The Company may terminate the services of the Warrant Agent, or any successor Warrant
Agent, after giving 30 days’ notice in writing to the Warrant Agent or successor Warrant Agent, or such shorter period of time
as agreed to by the parties. If the office of the Warrant Agent becomes vacant by resignation, termination, or incapacity to act or otherwise,
the Company shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after it has been notified in writing of such resignation or incapacity by the Warrant Agent,
then the Warrant Agent or any Holder may apply to any court of competent jurisdiction for the appointment of a successor Warrant Agent
at the Company’s cost. Pending appointment of a successor to such Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the Company. Any successor Warrant Agent (but not including the initial Warrant Agent),
whether appointed by the Company or by such court, shall be a person organized and existing under the laws of any state of the United
States of America, in good standing, and authorized under such laws to exercise corporate trust powers and subject to supervision or
examination by federal or state authority. After appointment, any successor Warrant Agent shall be vested with all the authority, powers,
rights, immunities, duties, and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent
hereunder, without any further act or deed, and except for executing and delivering documents as provided in the sentence that follows,
the predecessor Warrant Agent shall have no further duties, obligations, responsibilities, or liabilities hereunder, but shall be entitled
to all rights that survive the termination of this Warrant Agreement and the resignation or removal of the Warrant Agent, including but
not limited to its right to indemnity hereunder. If for any reason it becomes necessary or appropriate or at the request of the Company,
the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor
Warrant Agent all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant
Agent the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting
in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.


 


7.14.2.
Notice of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof
to the predecessor Warrant Agent and the transfer agent for the Common Stock not later than the effective date of any such appointment.


 


7.14.3.
Merger or Consolidation of Warrant Agent. Any person into which the Warrant Agent may be merged or converted or with which it
may be consolidated or any person resulting from any merger, conversion or consolidation to which the Warrant Agent shall be a party
or any person succeeding to the shareowner services business of the Warrant Agent or any successor Warrant Agent shall be the successor
Warrant Agent under this Warrant Agreement, without any further act or deed. For purposes of this Warrant Agreement, “person”
shall mean any individual, firm, corporation, partnership, limited liability company, joint venture, association, trust, or other entity,
and shall include any successor (by merger or otherwise) thereof or thereto.


 




    	20



     


    




 


8.
Miscellaneous Provisions.


 


8.1.
Persons Having Rights under this Warrant Agreement. Nothing in this Warrant Agreement expressed and nothing that may be implied
from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than
the parties hereto and the Holders any right, remedy, or claim under or by reason of this Warrant Agreement or of any covenant, condition,
stipulation, promise, or agreement hereof.


 


8.2.
Examination of the Warrant Agreement. A copy of this Warrant Agreement shall be available at all reasonable times at the office
of the Warrant Agent designated for such purpose for inspection by any Holder. Prior to such inspection, the Warrant Agent may require
any such holder to provide reasonable evidence of its interest in the Warrants.


 


8.3.
Counterparts. This Warrant Agreement may be executed in any number of original, facsimile, or electronic counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one
and the same instrument.


 


8.4.
Effect of Headings. The Section headings herein are for convenience only and are not part of this Warrant Agreement and shall
not affect the interpretation thereof.


 


8.5
If a Warrant is held in global form through DTC (or any successor depositary), such Warrant is issued subject to this Warrant Agent Agreement.
To the extent any provision of a Warrant conflicts with the express provisions of this Warrant Agent Agreement, the provisions of such
Warrant shall govern and be controlling.


 


9.
Certain Definitions.


 


As
used herein, the following terms shall have the following meanings:


 


(i)
“Adjustment Right” means any right granted with respect to any securities issued in connection with, or with respect
to, any issuance, sale or delivery (or deemed issuance, sale or delivery in accordance with Section 4) of Common Stock (other than rights
of the type described in Section 4.2 and 4.3 hereof) that could result in a decrease in the net consideration received by the Company
in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or
other similar rights) but excluding anti-dilution and other similar rights (including pursuant to Section 4.4 of this Agreement).


 


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


 




    	21



     


    




 


(ii)
“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United
States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action
to close.


 


(iii)
“Trading Day” means any day on which the Common Stock are traded on the Trading Market, or, if the Trading Market
is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market in the United
States on which the Common Stock are then traded, provided that “Trading Day” shall not include any day on which the Common
Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock are suspended from trading
during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing
time of trading on such exchange or market, then during the hour ending at 4:00 P.M., New York City time).


 


(iv)
“Trading Market” means the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, or the New York Stock Exchange (or any successors to any of the foregoing).


 


(v)
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common
Stock are 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 are 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 are not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported
in the “Pink Open Market” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions
of reporting prices), the most recent bid price per Common Share so reported, or (d) in all other cases, the fair market value of a Common
Share as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then
outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.


 


[SIGNATURE
PAGE FOLLOWS]


 




    	22



     


    

 


IN
WITNESS WHEREOF, this Warrant Agency Agreement has been duly executed by the parties hereto as of the day and year first above written.


 


 


	 	HARBOR
    CUSTOM DEVELOPMENT, INC. 
	 	 	 
	 	By:	 
	 	Name:	Sterling
Griffin
	 	Title:	President
    and Chief Executive Officer
	 	 	 
	 	MOUNTAIN
    SHARE TRANSFER, INC. 
	 	As
    Warrant Agent
	 	 	 
	 	By:	 
	 	Name:	Erik
Nelson 
	 	Title:	President


 





	Annex A:
    	Form of Global
    Certificate
	Annex B: 	Election to Purchase
	Annex C: 	Form of Certificated Warrant
	Annex D: 	Authorized Representatives
	Annex E: 	Form of Warrant Certificate
    Request Notice





 




    	23



     


    

 


ANNEX
A


 


[FORM
OF GLOBAL CERTIFICATE]


 


UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”),
TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.


 


HARBOR
CUSTOM DEVELOPMENT, INC.

WARRANT CERTIFICATE

NOT EXERCISABLE AFTER OCTOBER 7, 2026


 


This
certifies that ThinkEquity LLC, or its registered assigns, is the registered owner of 13,800,000 Warrants. Each Warrant entitles its
registered holder to purchase from Harbor Custom Development, Inc., a Washington corporation (the “Company”), at any
time prior to 5:00 P.M. (New York City time) on October 7, 2026, one share of common stock, no par value per share, of the Company (each,
a “Warrant Share” and collectively, the “Warrant Shares”), at an exercise price of $2.97 per share,
subject to possible adjustments as provided in the Warrant Agreement (as defined below).


 


The
terms and conditions of the Warrants and the rights and obligations of the holder of this Warrant Certificate are set forth in the Warrant
Agency Agreement, dated as of October 7, 2021 (the “Warrant Agreement”) between the Company and Mountain Share Transfer,
Inc. (the “Warrant Agent”), which Warrant Agreement is hereby incorporated by reference in and made a part of this Warrant
Certificate. A copy of the Warrant Agreement is available for inspection during business hours at the office of the Warrant Agent. Defined
terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.


 


A
transfer of the Warrants evidenced hereby may be registered upon surrender of this Warrant Certificate at the designated office of the
Warrant Agent by the registered holder in person or by a duly authorized attorney, properly endorsed or accompanied by proper instruments
of transfer, a signature guarantee, and such other and further documentation as the Warrant Agent may reasonably request and duly stamped
as may be required by the laws of the State of Washington and of the United States of America.


 


The
Company and the Warrant Agent may deem and treat the registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution
to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company.


 


This
Warrant Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by an authorized signatory
of the Warrant Agent.


 


[Signature
Page Follows]


 




    	24



     


    

 


IN
WITNESS WHEREOF, the parties hereto have caused this Warrant Certificate to be duly executed as of the date first written above.


 


	 	Harbor
    Custom Development, Inc. 
	 	 	 
	 	By:	 
	 	Name:	Sterling
Griffin
	 	Title:	President
    and Chief Executive Officer


 


Dated:
October 7, 2021


Countersigned:


 


	Mountain
    Share Transfer, Inc. 	 
	As
    Warrant Agent	 
	 	 	 
	By:	 	 
	Name:	Erik
Nelson	 
	Title:	President	 


 




    	25



     


    

 


ANNEX
B


 


NOTICE
OF EXERCISE


 


	TO:	MOUNTAIN
    SHARE TRANSFER, INC., as warrant agent


 


	 	(1)	The
    undersigned hereby elects to purchase ________ Warrant Shares of Harbor Custom Development, Inc. (the “Company”) pursuant
    to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together
    with all applicable transfer taxes, if any.
	 	 	 
	 	(2)	Payment
    shall take the form of (check applicable box):


 


	 	 	[  ]	in lawful money of the United States (check applicable box):
	 	 	 	 	 	 
	 	 	 	 	[  ]	Cashier’s
check drawn on a United States bank, made payable to: “Harbor Custom Development, Inc.”; or
	 	 	 	 	 	 
	 	 	 	 	[  ]
    	Wire
    transfer to:


 





	 	Bank
    Name:	WaFd
	 	Bank
    Address:	425
    Pike Street
	 	 	Seattle,
    WA 98101
	 	ABA:	325070980
	 	Account
    #:	62764051488
	 	Account
    Name:	Harbor
    Custom Development, Inc.
	 	Account
    Address:	11505
    Burnham Dr. Suite 301
	 	 	Gig
    Harbor, WA 98332


 





[  ]
if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
3.3.6 of the Warrant Agreement, to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to
the cashless exercise procedure set forth in subsection 3.3.6 of the Warrant Agreement.


 


	 	(3)	Please issue
    said Warrant Shares in the name of the undersigned or in such other name as is specified below:


 


	 	 	 


 


The
Warrant Shares shall be delivered to the following DWAC Account Number:


 


	 	 	 
	 	 	 
	 	 	 


 


[SIGNATURE
OF HOLDER]


 


Name
of Investing Entity: _________________________________________________


 


Signature
of Authorized Signatory of Investing Entity: ___________________________


 


Name
of Authorized Signatory: _____________________________________________


 


Title
of Authorized Signatory: ______________________________________________


 


Date:
_________________________________________________________________


 




    	26



     


    

 


ANNEX
C


 


[FORM
OF CERTIFICATED WARRANT]


 


WARRANT
TO PURCHASE COMMON STOCK


 


HARBOR
CUSTOM DEVELOPMENT, INC.


 


	Warrant
    Shares: 13,800,000	Initial
    Exercise Date: October 7, 2021
	 	Issue
    Date: October 7, 2021


 


	 	CUSIP:
    41150T124
	 	 
	 	ISIN:
    US41150T1245


 


THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, ThinkEquity LLC or its assigns (the
“Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set
forth, at any time on or after October 7, 2021 (the “Initial Exercise Date”) and on or prior to the close of business
on the five year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe
for and purchase from Harbor Custom Development, Inc., a Washington corporation (the “Company”), up to 13,800,000
shares of Common Stock, no par value per share, of the Company (as subject to adjustment hereunder, the “Warrant Shares”).
The purchase price of one Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This Warrant
shall initially be issued and maintained in the form of a security held in book-entry form and the Depository Trust Company or its nominee
(“DTC”) shall initially be the sole registered holder of this Warrant, subject to a Holder’s right to elect
to receive a Warrant in certificated form pursuant to the terms of the Warrant Agency Agreement, in which case this sentence shall not
apply.


 


Section
1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated
in this Section 1:


 


“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.


 


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


 




    	27



     


    




 


“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day
on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.


 


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


 


“Common
Share Equivalents” means any securities of the Company or its subsidiaries that 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.


 


“Common
Stock” means the Company’s common shares, no par value per share.


 


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


 


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


 


“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.


 


“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.


 


“Registration
Statement” means the Company’s registration statement on Form S-1 (File No. 333-259465).


 


“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.


 


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


 


“Trading
Day” means a day on which the Common Stock are traded on a Trading Market.


 


“Trading
Market” means any of the following markets or exchanges on which the Common Stock are 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).


 




    	28



     


    




 


“Transfer
Agent” means Mountain Share Transfer, Inc., with a mailing address of 2030 Powers Ferry Rd. SE, Suite # 212, Atlanta, GA 30339,
and a facsimile number of (404) 816-8830, and any successor transfer agent of the Company.


 


“Warrant
Agreement” means that certain Warrant Agency Agreement, dated as of the Issuance Date, between the Company and the Warrant
Agent.


 


“Warrant
Agent” means the Transfer Agent and any successor warrant agent of the Company.


 


“Warrants”
means this Warrant and other Common Share Purchase Warrants issued by the Company pursuant to the Registration Statement.


 


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


 


Section
2. Exercise.


 


a)
Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times during the Exercise
Period by delivery to the Company of a duly executed facsimile copy (or e-mail attachment) of the Notice of Exercise in the form annexed
hereto (the “Notice of Exercise”). Within the earlier of (i) two Trading Days and (ii) the number of Trading Days comprising
the Standard Settlement Period following the date of exercise as aforesaid, the Holder shall deliver, in accordance with the payment
instructions in the Notice of Exercise, the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by
wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c)
below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to
the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all
of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this
Warrant to the Company for cancellation within three Trading Days of the date the final Notice of Exercise is delivered to the Company.
Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall
have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number
of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the
date of such purchases. The Company shall deliver any objection to any Notice of Exercise within two Trading Days of receipt of such
notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this
paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder
at any given time may be less than the amount stated on the face hereof.


 




    	29



     


    




 


Notwithstanding
the foregoing in this Section 2(a), a Holder whose interest in this Warrant is a beneficial interest in certificate(s) representing this
Warrant held in book-entry form through DTC (or another established clearing corporation performing similar functions), shall effect
exercises made pursuant to this Section 2(a) by delivering to DTC (or such other clearing corporation, as applicable) the appropriate
instruction form for exercise, complying with the procedures to effect exercise that are required by DTC (or such other clearing corporation,
as applicable), subject to a Holder’s right to elect to receive a Warrant in certificated form pursuant to the terms of the Warrant
Agreement, in which case this sentence shall not apply.


 


b)
Exercise Price. The exercise price per Common Share under this Warrant shall be $2.97, subject to adjustment hereunder
(the “Exercise Price”).


 


c)
Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus
contained therein is not available for the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in
whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number
of Warrant Shares equal to the quotient obtained (if such quotient would be a positive number) by dividing (A-B) (X) by (A), where:


 


(A)
= as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of
Exercise is (1) both executed and delivered pursuant to Section 3.3.1(a) hereof on a day that is not a Trading Day or (2) both executed
and delivered pursuant to Section 3.3.1(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined
in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder,
either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the
Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable
Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered
within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day)
pursuant to Section 3.3.1(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of
Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 3.3.1(a) hereof after the close
of “regular trading hours” on such Trading Day;


 


(B)
= the Exercise Price of this Warrant, as adjusted hereunder; and


 


(X)
= the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such
exercise were by means of a cash exercise rather than a cashless exercise.


 




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Notwithstanding
anything herein to the contrary, but without limiting the rights of a Holder to receive Warrant Shares on a “cashless exercise”
pursuant to this Section 2(c) or to receive cash payments pursuant to Section 3(d)(i) and Section 3(d)(iv) herein, the Company shall
not be required to make any cash payments or net cash settlement to the Holder in lieu of delivery of the Warrant Shares. If Warrant
Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities
Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take
any position contrary to this Section 2(c).


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock are 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 are 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
are not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Open
Market” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per Common Share so reported, or (d) in all other cases, the fair market value of a Common Share as determined
by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the Company.


 


Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant
to this Section 2(c).


 




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d)
Mechanics of Exercise.


 


i.
Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by
the Transfer Agent to the Holder by either (1) crediting the account of the Holder’s or its designee’s balance account with
DTC through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system
and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant
Shares by Holder or (B) this Warrant is being exercised via cashless exercise, or (2) by delivery of a book-entry position, registered
in the Company’s share register in the name of the Holder or its designee, in each case for the number of Warrant Shares to which
the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is
earlier of (i) two Trading Days after the delivery to the Company of the Notice of Exercise and (ii) the number of Trading Days comprising
the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery
Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder
of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant
Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received the earlier
of (i) two Trading Days of and (ii) the number of Trading Days comprising the Standard Settlement Period following the delivery of the
Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by
the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000
of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise),
$10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each
Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company
agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable.
As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days,
on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of
Exercise.


 


ii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.


 


iii.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.


 




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iv.
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to
the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, Common
Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise
(a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the amount obtained by multiplying
(1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times
(2) the price at which the sell order giving rise to such purchase obligation was executed; provided, however, that the
Holder provides reasonable evidence of the date and time of such sell order and such sell order occurred after the missed Warrant Share
Delivery Date and prior to the delivery of the related Warrant Shares, and (B) at the option of the Holder, either reinstate the portion
of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be
deemed rescinded) or deliver to the Holder the number of Common Stock that would have been issued had the Company timely complied with
its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000
to cover a Buy-In with respect to an attempted exercise of Common Stock with an aggregate sale price giving rise to such purchase obligation
of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder
shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the
Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available
to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect
to the Company’s failure to timely deliver Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
For the avoidance of doubt, except in the event of gross negligence or willful misconduct on its part, the Warrant Agent shall not be
liable for any failure of the Company to timely deliver Warrant Shares pursuant to this Section 2(d)(iv).


 


v.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, upon such exercise, round up to the next whole number of Warrant Shares to be issued to the Holder.


 


vi.
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company,
and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that in the event Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered
for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all
Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to DTC (or another established clearing corporation
performing similar functions) required for same-day electronic delivery of the Warrant Shares.


 




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vii.
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.


 


e)
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the
right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the
number of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of Common
Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of
Common Stock which would be issuable upon (i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by
the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or non-converted portion
of any other securities of the Company (including, without limitation, any other Common Share Equivalents) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the
Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act
and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation
contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned
by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the
sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties)
and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall
have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 2(e), in determining the number of outstanding Common Stock, a Holder may rely on the number of outstanding
Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may
be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting
forth the number of Common Stock outstanding. Upon the written request of a Holder, the Company shall within two Trading Days confirm
in writing (including by e-mail) to the Holder the number of Common Stock then outstanding. In any case, the number of outstanding Common
Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by
the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding Common Stock was reported.
The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants,
9.99%) of the number of the Common Stock outstanding immediately after giving effect to the issuance of Common Stock issuable upon exercise
of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this
Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of the Common Stock outstanding
immediately after giving effect to the issuance of Common Stock upon exercise of this Warrant held by the Holder and the provisions of
this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st
day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary
or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder
of this Warrant.


 




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Section
3. Certain Adjustments.


 


a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in Common
Stock (which, for avoidance of doubt, shall not include any Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides
outstanding Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding Common
Stock into a smaller number of shares, or (iv) issues by reclassification of the Common Stock any shares of capital stock of the Company,
then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Stock and
such other capital stock of the Company(excluding treasury shares, if any) outstanding immediately before such event and of which the
denominator shall be the number of Common Stock such other capital stock of the Company(excluding treasury shares, if any) outstanding
immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such
that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and
shall become effective immediately after the effective date in the case of a subdivision, combination, or re-classification.


 


b)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Share Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the
number of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined
for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in
any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled
to participate in such Purchase Right to such extent (or beneficial ownership of such Common Stock as a result of such Purchase Right
to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).


 


c)
Extraordinary Dividends. If the Company, at any time during the Exercise Period, shall pay a dividend in cash, securities or other
assets to all holders of Common Stock (or other shares of the Company’s capital stock into which the Warrants are convertible),
other than (i) as described in Sections 3(a), 3(b) or 3(d), or (ii) regular quarterly or other periodic dividends (any such non-excluded
event being referred to herein as an “Extraordinary Dividend”), then the Exercise Price shall be decreased, effective
immediately after the effective date of such Extraordinary Dividend, by the quotient of (i) the gross amount of cash and/or fair market
value (as determined by the Company’s Board of Directors, in good faith) of all securities or other assets paid to the holders
of Common Stock (or other shares of the Company’s capital stock into which the Warrants are convertible) in respect of such Extraordinary
Dividend divided by (ii) the sum of the number of Common Stock (or other shares of the Company’s capital stock into which the Warrants
are exercisable) outstanding at the time of the Extraordinary Dividend plus the number of Common Stock then issuable upon exercise of
all outstanding Warrants, provided, that the Exercise Price shall not be reduced below zero.


 




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d)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of
its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which all holders of Common Stock are permitted to sell, tender or
exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share exchange pursuant to which all outstanding Common Stock are effectively
converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires
more than 50% of the outstanding Common Stock (not including any Common Stock held by the other Person or other Persons making or party
to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination)
(each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the
right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of Common Stock
of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and such amount of cash or any other
consideration (collectively, the “Alternate Consideration”) receivable as a result of such Fundamental Transaction
by a holder of the number of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without
regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the
Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one Common Share in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor
(the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance
with the provisions of this Section 3(d) pursuant to written agreements prior or during such Fundamental Transaction. Upon the occurrence
of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of
such Fundamental Transaction, the provisions of the Warrants referring to the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under the Warrants
with the same effect as if such Successor Entity had been named as the Company therein.


 


e)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be. For purposes of this Section 3, the number of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of Common Stock (excluding treasury shares, if any) issued and outstanding.


 


f)
Notice to Holder.


 


i.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company
shall promptly deliver to the Holder by facsimile or e-mail a notice setting forth the Exercise Price after such adjustment and any resulting
adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment. Provided, however,
that the Company may satisfy this notice requirement in this Section 3(f) by filing such notice with the Commission pursuant to a Current
Report on Form 8-K, or, to the extent that the Company is no longer subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, by posting such notice on the Company’s website.


 




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ii.
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock are converted into other securities,
cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company, then, in each case, the Company shall cause to be delivered by mail, facsimile or e-mail to the Holder at its last mailing
address, facsimile number or e-mail address as it shall appear upon the Warrant Register of the Company, at least five calendar days
prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined
or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective
or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their Common
Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange;
provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the
corporate action required to be specified in such notice. To the extent that any notice required to be provided in this Warrant constitutes,
or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file
such notice with the Commission pursuant to a Current Report on Form 8-K. Provided such notice occurs within the Exercise Period, the
Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of
the event triggering such notice except as may otherwise be expressly set forth herein.


 


Section
4. Transfer of Warrant.


 


a)
Transferability. This Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at
the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the
form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant
or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender
this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant
to the Company within three Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full.
The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without
having a new Warrant issued.


 




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b)
New Warrants. If this Warrant is not held in global form through DTC (or any successor depository), this Warrant may be divided
or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying
the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance
with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a
new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants
issued on transfers or exchanges shall be dated the original Issuance Date of this Warrant and shall be identical with this Warrant except
as to the number of Warrant Shares issuable pursuant thereto.


 


c)
Warrant Register. The Warrant Agent shall register this Warrant, upon records to be maintained by the Warrant Agent for that purpose
(the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company and the Warrant Agent
may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, absent actual notice to the contrary.


 


Section
5. Miscellaneous.


 


a)
No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends, or other rights
as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section
3.


 


b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.


 


c)
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 Trading Day, then, such action may be taken, or such right may be exercised on the next succeeding Trading
Day.


 




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d)
Authorized Shares.


 


The
Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with
the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants
that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly
issued, fully paid and non-assessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with such issue).


 


Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and non-assessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this Warrant.


 


Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction thereof.


 


e)
Governing Law. All questions concerning the construction, validity, enforcement, and interpretation of this Warrant shall be governed
by and construed and enforced in accordance with the internal laws of the State of Washington, without regard to the principles of conflict
of laws thereof. Each party agrees that all legal Proceedings concerning the interpretation, enforcement and defense of this Warrant
shall be commenced in the United States District Court for the Western District of Washington, or, in the event such jurisdiction is
not available, any of the appropriate courts of the State of Washington (the “Washington Courts”). Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the Washington Courts 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
provision hereunder), and hereby irrevocably waives, and agrees not to assert in any suit, action or Proceeding, any claim that it is
not personally subject to the jurisdiction of such Washington Courts, or such Washington Courts are improper or inconvenient venue for
such Proceeding. If any party shall commence an action or Proceeding to enforce any provisions of this Warrant, then the prevailing party
in such action or Proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred
in the investigation, preparation and prosecution of such action or Proceeding.


 




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f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and
the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.


 


g)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers, or remedies. Without limiting any other provision
of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including,
but not limited to, reasonable attorneys’ fees, including those of appellate Proceedings, incurred by the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.


 


h)
Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without
limitation, any Notice of Exercise, shall be in writing and delivered personally, by facsimile or by e-mail, or sent by a nationally
recognized overnight courier service, addressed to the Company, at:


 


Harbor
Custom Development, Inc.


11505
Burnham Dr. Suite 301


Gig
Harbor, WA 98332


Attention:
Jeff Habersetzer


Facsimile
No.: (253) 313-5232


E-mail:
jhabersetzer@harborcustomdev.com


 


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


 


FitzGerald
Yap Kreditor LLP


2
Park Plaza, Suite 850


Irvine,
CA 92614


Attention:
Lynne Bolduc, Esq.


Facsimile
No.: (949) 788-8980


E-mail:
lbolduc@fyklaw.com


 




    	40



     


    




 


or
such other facsimile number, e-mail address or address as the Company may specify for such purposes by notice to the Holders. Any and
all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally,
by e-mail, by facsimile, or sent by registered or certified mail or a nationally recognized overnight courier service addressed to each
Holder at the facsimile number, e-mail address or address of such Holder appearing on the books of the Warrant Agent. Any notice or other
communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice
or communication is delivered via facsimile at the facsimile number or e-mail at the e-mail address set forth in this Section 5(h) prior
to 5:30 p.m. (New York City time) on any Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number or e-mail at the e-mail address set forth in this Section 5(h) on a day that is not
a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required
to be given. Notwithstanding any other provision of this Warrant, where this Warrant provides for notice of any event to the Holder,
if this Warrant is held in global form by DTC (or any successor depositary), such notice shall be sufficiently given if given to DTC
(or any successor depositary) pursuant to the procedures of DTC (or such successor depositary), subject to a Holder’s right to
elect to receive a Warrant in certificated form pursuant to the terms of the Warrant Agency Agreement, in which case this sentence shall
not apply.


 


i)
Warrant Agreement. If this Warrant is held in global form through DTC (or any successor depositary), this Warrant is issued subject
to the Warrant Agreement. To the extent any provision of this Warrant conflicts with the express provisions of the Warrant Agreement,
the provisions of this Warrant shall govern and be controlling.


 


j)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of
the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.


 


k)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate.


 


l)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall
inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall
be enforceable by the Holder or holder of Warrant Shares.


 




    	41



     


    




 


m)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on
the one hand, and either: (i) the Holder or the beneficial owner of this Warrant, on the other hand, or (ii) the vote or written consent
of the Holders of at least 50.1% of the then outstanding Warrants issued pursuant to the Warrant Agreement, on the other hand; provided
that if any such modification, amendment or waiver disproportionately and adversely affect the rights of a Holder compared to other Holders,
the prior written consent of such Holder shall also be required.


 


n)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.


 


o)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed
a part of this Warrant.


 


********************


 


(Signature
Page Follows)


 




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IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above
indicated.


 


	 	HARBOR
    CUSTOM DEVELOPMENT, INC. 
	 	 	 
	 	By:	 
	 	Name:	Sterling
    Griffin 
	 	Title:	President
    and Chief Executive Officer


 




    	43



     


    




 


NOTICE
OF EXERCISE


 


	To:	HARBOR
    CUSTOM DEVELOPMENT, INC. 


 


	 	(1)	The undersigned
    hereby elects to purchase ________ Warrant Shares of Harbor Custom Development, Inc. (the “Company”) pursuant to the
    terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with
    all applicable transfer taxes, if any.
	 	 	 
	 	(2)	Payment shall take the
    form of (check applicable box):


 


	 	[  ]	in lawful money of the United States (check applicable box):
	 	 	 	 	 
	 	 	 	[  ] 	Cashier’s check drawn
    on a United States bank, made payable to: “Harbor Custom Development, Inc.”; or
	 	 	 	 	 
	 	 	 	[  ] 	Wire transfer to:


 


	 	Bank
    Name:	WaFd
	 	Bank
    Address:	425
    Pike Street
	 	 	Seattle,
    WA 98101
	 	ABA:
    	325070980
	 	Account
    #:	62764051488
	 	Account
    Name: 	Harbor
    Custom Development, Inc.
	 	Account
    Address: 	11505
    Burnham Dr. Suite 301
	 	 	Gig
    Harbor, WA 98332


 


[  ]
if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).


 


	 	(3)	Please issue
    said Warrant Shares in the name of the undersigned or in such other name as is specified below:


 


	 	 	 


 


The
Warrant Shares shall be delivered to the following DWAC Account Number:


 


	 	 	 
	 	 	 
	 	 	 


 


[SIGNATURE
OF HOLDER]


 


Name
of Investing Entity: ____________________________________________


 


Signature
of Authorized Signatory of Investing Entity: ______________________


 


Name
of Authorized Signatory: ________________________________________


 


Title
of Authorized Signatory: _________________________________________


 


Date:
______________________________________ _____________________


 




    	44



     


    

 


ASSIGNMENT
FORM


 


(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)


 


FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to


 


	Name:	 	 
	 	 	(Please Print)
	 	 	 
	Address:	 	 
	 	 	(Please Print)
	 	 	 
	Phone Number:	 	 
	 	 	 
	E-mail Address:	 	 
	 	 	 
	Dated: _____________________
    __, ______	 	 
	 	 	 
	Holder’s
    Signature:	 	 	 
	 	 	 	 
	Holder’s Address:	 	 	 


 




    	45



     


    

 


ANNEX
D


 


AUTHORIZED
REPRESENTATIVES


 


	Name	 	Title	 	Signature
	 	 	 	 	 
	Sterling
    Griffin	 	President
    and CEO	 	 


 




    	46



     


    




 


ANNEX
E


 


FORM
OF


WARRANT
CERTIFICATE REQUEST NOTICE


 


	To:	MOUNTAIN
    SHARE TRANSFER, INC., as Warrant Agent for HARBOR CUSTOM DEVELOPMENT, INC. (the “Company”)


 


The
undersigned Holder of Common Stock Purchase Warrants (“Warrants”) in the form of Global Warrants issued by the Company
hereby elects to receive a Definitive Certificate evidencing the Warrants held by the Holder as specified below:


 


	1)	Name
    of Holder of Warrants in form of Global Warrants:
	 	 
	2)	Name
    of Holder in Definitive Certificate (if different from name of Holder of Warrants in form of Global Warrants):
	 	 
	3)	Number
    of Warrants in name of Holder in form of Global Warrants:
	 	 
	4)	Number
    of Warrants for which Definitive Certificate shall be issued:
	 	 
	5)	Number
    of Warrants in name of Holder in form of Global Warrants after issuance of
	 	 
	Definitive
    Certificate, if any:
	 
	6)	Definitive
    Certificate shall be delivered to the following address:


 





	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 


 








The
undersigned hereby acknowledges and agrees that, in connection with this Warrant Exchange and the issuance of the Definitive Certificate,
the Holder is deemed to have surrendered the number of Warrants in form of Global Warrants in the name of the Holder equal to the number
of Warrants evidenced by the Definitive Certificate.


 


[SIGNATURE
OF HOLDER]


 


Name
of Investing Entity: _____________________________________


 


Signature
of Authorized Signatory of Investing Entity: _____________________________


 


Name
of Authorized Signatory: _____________________________________


 


Title
of Authorized Signatory: _____________________________________


 


Date:________________________________________


 




    	47