Document:

Document

						
		[***] Text Omitted and Filed Separately
with the Securities Exchange Commission
Confidential Treatment Request Under
17 C.F.R Section 240.24b-2

MASTER SUPPLY AGREEMENT

This Master Supply Agreement (this “Agreement”), dated as of February 14, 2022 (the “Effective Date”), is by and between SunPower Corporation, a corporation organized and existing under the laws of the State of Delaware, USA (“Customer”), and Maxeon Solar Technologies, Ltd., a corporation organized and existing under the laws of Singapore ( “Supplier”). Customer and Supplier may also be referred to individually as a “Party” or together as the “Parties.”

BACKGROUND

A.Customer, directly and indirectly, designs, markets, and sells products for use by the solar industry in the Territory and provides services to solar industry customers within the Territory.

B.Supplier, directly and indirectly, designs, manufactures, markets, distributes, and sells products to solar industry customers within and outside of the Territory.

C.Supplier now wishes to sell, and Customer now wishes to purchase, photovoltaic power generation modules as set out and described in this Agreement, and each case subject to all of the terms and conditions as set out in this Agreement.

AGREEMENT

In consideration of the forgoing and the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1.    Defined Terms. Capitalized terms used but not defined in this Agreement have the meanings given to them in the Separation Agreement. As used in this Agreement, the following terms have the meanings given to them below:

“2020 Supply Agreement” means that certain Supply Agreement  by and between Supplier and Customer with the Effective Date of August 26, 2020.

“Agreement” has the meaning set forth in the Preamble.

“Anti-Corruption Laws” has the meaning set forth in Section 11(b)(iii).

“Claim” has the meaning as set out in Section 11(g).

“Confidential Information” means any information or materials that a Party (or its representatives) discloses to the other Party (or its representatives) in connection with this Agreement and designated by the disclosing Party as confidential or proprietary at the time of disclosure, and any other information or materials disclosed by a Party (or its representatives) to the other Party (or its representatives) in connection with this Agreement that should reasonably be understood to be confidential by the recipient at the time of the disclosure, including, without limitation, the Product Specifications and pricing.

“Customer” has the meaning set forth in the Preamble.

“Damages” has the meaning set forth in Section 10(b)(i).

“Delay LDs” has the meaning as set forth in Section 4(b).

“Disclosing Party” has the meaning set forth in Section 9(a).

“Dispute” has the meaning set forth in Section 10(a).

“Effective Date” has the meaning set forth in the Preamble.

“First Amendment to 2020 Supply Agreement” means that certain First Amendment to Supply Agreement by and between Supplier and Customer with the Effective Date of February 25, 2021.

“Force Majeure Event” has the meaning set forth in Section 11(c).

“Good Industry Practice” means using the standards, practices, methods and procedures, and exercising the degree of skill, care, diligence, prudence and foresight that would be expected to be used and observed by a skilled and experienced market leading distributor and supplier of products used in the solar industry engaged in carrying out activities the same or similar to the supply of the Products under the same or similar circumstances as those contemplated in the Agreement at the time such activities were performed. Good Industry Practices are not the optimum practices, methods, techniques, standards and acts to the exclusion of others, but rather refer to those practices, methods, techniques, standards and acts that are generally accepted or approved by a significant portion of the industry in the relevant region, during the relevant time period, as described in the immediately preceding sentence.

“Governmental Authority” means any governmental, regulatory or administrative authority, instrumentality, board, agency, body or commission, self-regulatory organization or any court, tribunal, or judicial or arbitral body of the United States, Singapore, or any other applicable jurisdiction.

“Grace Period” means the date that is 7 calendar days after the date of delivery as set out in a Purchase Order.

“Law” means any law, statute, code, ordinance, rule, regulation, or other requirement of any Governmental Authority.

“MLPE” has the meaning set forth in Section 2(d).

“Negative Product Change” has the meaning set forth in Section 2(b).

“Party” or “Parties” has the meaning set forth in the Preamble.

“Product Collaboration Agreement” means that certain Product Collaboration Agreement, dated August 26, 2020, and entered into between Customer and Supplier in connection with the transactions contemplated by the Separation Agreement.

“Product Specifications” means the specifications, attributes, and standards as described on product datasheets attached to Exhibit A and as may be amended from time to time in accordance with Section 2(b).

“Product Warranty” has the meaning set forth in Section 7(a). 

“Products” has the meaning set forth in Section 2(a).

“Receiving Party” has the meaning set forth in Section 9(a).

“Residential Market Segment” means, subject to the Segment Exclusions, all applications where solar panels are procured for use in the Territory for installation at a residence.

“Restricted Dealers” has the meaning set forth in Section 3(e).

“Sales Employee” means any employee of either Party, or an Affiliate of either Party, who: (a) has had direct contact with any of that Party’s residential or commercial third party dealers in the course of his or her employment, or who otherwise has access to confidential dealer lists and information, or (b) has had direct contact in the course of his or her employment with any of that Party’s customers in a sales role, or who otherwise has access to confidential dealer or customer lists.

“Segment Exclusions” means: (i) off-grid solar panel applications that do not use residential-scale solar panels or are not installed at a residence, such as microgrid and remote applications, (ii) portable or mobile solar panel applications of less than 170 W, including applications where solar cells are integrated into consumer products, (iii) power plant, front-of-the-meter applications where generated electricity will be sold to a utility or another off-taker that intends to resell the electricity (other than community solar applications), (iv) integrated flex solar panels, (v) solar panels of a specialty size or shape and (vi) any other unique category of solar panel that is not included in Customer’s business lines as of the Effective Date.

“Separation Agreement” means that certain Separation and Distribution Agreement by and between Customer and Supplier dated November 8, 2019.

“Supplier” has the meaning set forth in the Preamble.

“Term” has the meaning set forth in Section 8(a).

“Territory” means Canada and the United States, but excluding the following non-state territories and possessions of the United States: Puerto Rico, American Samoa, Guam, Northern Mariana Islands and U.S. Virgin Islands.

“Third Party” means any person other than Supplier, Customer and their respective Affiliates.

2.    Purchase and Supply of Products.

(a)    Products. During the Term, and subject to the other terms and conditions in this Agreement, this Agreement governs the supply and purchase of the products listed on Exhibit A (collectively, the “Products”). Subject to the terms and conditions contained in the Product Collaboration Agreement, the Parties may agree in writing to amend or supplement the list of products in Exhibit A, or to add or remove products. Except as expressly set out in this Agreement, all purchases and sales of any Product shall be on a non-exclusive basis.

(b)    Product Specifications; Changes. The Product Specifications for each Product are attached to Exhibit A. Supplier must notify Customer of changes to any existing Product that materially impact (i) the performance or reliability of that Product, (ii) the compatibility of that Product with other products customarily used in conjunction with that Product, or (iii) whether or not that Product meets the requirements of any certification or other standard specified in the applicable Product Specifications, as well as changes to any key component (a component that, if changed, would impact the form, fit or function of any Product) used to manufacture any Product (any such change that materially decreases or negatively impacts the factors described in clause (i), (ii) or (iii), a “Negative Product Change”), at least six months before such changes take effect. In addition, all engineering, process and test changes must comply with the requirements of Exhibit D. Notwithstanding the foregoing, Supplier may not make a material change, including any Negative Product Change to any Product purchased pursuant to this Agreement without Customer’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed. 

(c)    Quality Control. Supplier will use Good Industry Practice in connection with the manufacture of the Products and such other quality control standards as Supplier may elect to apply consistent with the quality control standards Supplier uses for Products it manufactures for its own account, so long as such quality control standards are in compliance with Exhibit D, applicable Law and any certification or other standard specified in the applicable Product Specifications.

(d)    Module-Level Power Electronics. During the Term, Customer may order and purchase, and Supplier will supply, Products that include module-level power electronics to the extent set forth in the Product Specifications (the “MLPEs”). Supplier will provide a weekly six-month rolling forecast to Customer with respect to the anticipated consumption of MLPEs and, based on such forecasts, (i) Customer will place purchase orders to the manufacturer of all microinverters, and (ii) unless otherwise agreed by the Parties in writing, Supplier will place purchase orders to the manufacturer of all other MLPEs, including module-level shut-down devices. Each MLPE will be purchased by the Party responsible for its procurement pursuant to one or more agreements between that Party and the manufacturer of the MLPE. Following delivery of the MLPEs to Supplier, Supplier will be responsible for attaching the MLPEs to the Products before delivery to Customer. The charges and costs to Customer in connection with Supplier’s MLPE procurement (other than with respect to microinverters) and attachment, as well as a further description of the procurement process for MLPEs, are set forth in Exhibit E. Supplier warrants that it will attach the MLPEs to the Products in accordance with the manufacturer’s instructions using Good Industry Practice; however, Supplier does not provide any warranties, explicit or implicit, related to the MLPEs themselves, and expressly disclaims all such warranties, including any warranty regarding the materials used to manufacture the MLPEs, the design or workmanship of the MLPEs, whether or not the MLPEs conform to any specifications, or fitness of the MLPEs for a particular purpose. Instead, Customer will have rights against the manufacturer of any MLPE pursuant to the warranty provided by that manufacturer.

3.    Restrictive Covenants.

(a)    Non-Solicitation. As an inducement for the Parties to enter into this Agreement, and as additional consideration for the representations, warranties, covenants, and agreements herein, the Parties agree that, during the Term, neither Party will, and each will cause its Affiliates not to, directly or indirectly, solicit to hire any Sales Employee or otherwise induce any such Sales Employee to terminate his or her employment with the other Party or its Affiliates; provided, however, that nothing herein will restrict or preclude either Party or its Affiliates from making generalized solicitations for employees by use of advertisements in the media (including trade media), via the Internet, or by engaging search firms to engage in solicitations, in each case, that are not targeted or focused on employees of the other Party or its Affiliates.

(b)    Non-Circumvention.  During the Term, and for a period of one year following the conclusion of any exclusivity period as set out in Section 3(c) and 3(d), Supplier will not, and will cause its Affiliates not to, directly or indirectly, attempt to circumvent Customer by contacting or entering into any discussions or contractual arrangements to sell Products to residential dealers provided such dealers have purchased modules for residential use from Customer within the past six (6) calendar months of the Effective Date.  Notwithstanding the foregoing: (i) Within 14 calendar days of the Effective Date, Customer will provide its list of dealers that are in existing supply arrangements with Customer; (ii) Customer will update this list every six months from the Effective Date and at the conclusion of any relevant exclusivity period, and; (iii) Supplier shall have reasonable audit rights in connection with such list.

(c)    M-Series Exclusivity.  In exchange for the commitments made by Customer in this Agreement, Supplier agrees that it shall not (directly or indirectly) sell M-Series Products to any third party for use within the Residential Market Segment within the Territory until December 31, 2022.  In the event that Customer satisfies the conditions set forth in Exhibit B, then Supplier agrees that it shall not (directly or indirectly) sell M-Series Products to any third party for use within the Residential Market Segment within the Territory until October 13, 2023.

(d)    X-Series Exclusivity.   In exchange for the commitments made by Customer in this Agreement and the payment by Customer described in Exhibit B, Supplier agrees that it shall not (directly or indirectly) sell X-Series Products to any third party for use within the Residential Market Segment within the Territory until December 31, 2022.

(e)    All other rights reserved.  Except as expressly set forth in this Section 3, Supplier may market and sell, and Customer may purchase, any photovoltaic power generation device (including any Product) to or from any other third party.

4.    Volume Commitments.

(a)    Agreed Quarterly Volume Commitments.

(i)    Subject to the terms and conditions of this Agreement, Customer agrees to purchase from Supplier, and Supplier agrees to sell and supply to Customer, the Products in the quantities as set forth in Exhibit B.

(ii)    Monthly Purchase Order Submission.  On or prior to the 5th day of each relevant month of the Term, Customer shall submit a Purchase Order specifying the Products to be delivered three months thereafter.  By way of example, on or before March 5, 2022, Customer shall submit a Purchase Order to Supplier for the supply of Products to be delivered in June, 2022.  After submission of such Purchase Order, within five business days Supplier shall either accept the Purchase Order or, alternatively, request changes.  If any change is requested, Customer shall respond to such change request within five business days.  Purchase Orders are binding when accepted by both Parties in writing.  Notwithstanding any provision to the contrary, Customer shall issue Purchase Orders specifying deliveries for March through May 2022 shall be submitted to Supplier by not later than February 21, 2022.

(iii)    The Parties shall work in good faith to accommodate reasonable changes requested in connection with any accepted Purchase Order.  Notwithstanding the foregoing, only changes to Purchase Orders accepted in writing shall be binding.

(b)    Delays by Supplier.  In the event Supplier fails to deliver Products on the dates as set out in a Purchase Order as such dates may be amended from time to time in accordance with this Agreement, and to the extent such failure is not caused by Customer or by a Force Majeure Event, then Supplier shall pay to Customer the sum equal to [***]% of the value of the late Products for each calendar day beyond the Grace Period (the “Delay LDs”).  Notwithstanding any provision to the contrary:

(i)    Delay LDs are Customer’s sole remedy (and Supplier’s sole liability) arising out of or in connection with delays to delivery of any Product hereunder;

(ii)    In no event shall Delay LDs attributable to the delivery of any Product exceed the amount equal to five percent (5%) of the total price payable for such Product;

(iii)    It is expressly agreed that the amounts as set out in this Section are a reasonable estimation of damages accruing to Customer in the event of delays caused by Supplier and are not penalties.

(c)    Purchase of Non-Conforming Non-Fungible Product.  The Parties agree and understand that certain Product is customized for Customer.  Such Product may not conform to specifications but still has economic value.  The Parties shall, on a monthly basis and in good faith, meet to discuss and agree upon the appropriate sales and pricing for such Product.  Such non-conforming Product, if purchased, shall not be included within volume requirements as set out in this Agreement.

(d)    Mandatory Bin Orders. Notwithstanding any provision to the contrary, Customer is obligated to purchase Products that cover all power bins within a Planning Family (L5) in the same proportions as production.

5.    Pricing and Payment.

(a)    2022 Pricing.  For each Product delivered under this Agreement during the calendar year 2022, Customer shall pay to Supplier the pricing as set out in the corresponding table in Exhibit C.

(b)    2023 Pricing.  For each Product delivered during the calendar year 2023, Customer shall pay to Supplier the pricing as set out in Exhibit C.

(c)    Prices exclude Taxes.  Except for the payment of tariffs, import and export duties, and any anti-dumping or countervailing fees, penalties or duties, all pricing excludes (and Supplier shall not be liable for) the costs of any taxes imposed by the United States of America, the State of California, and any agency or instrumentality thereof, except as such taxes arise out of the income of any Party.

(d)    Payment Terms. For any month in which Supplier has delivered any Product to Customer, Supplier will submit an invoice to Customer. Unless the Parties otherwise agree in writing, payment of all undisputed amounts owed pursuant to any invoice will be due either (i) in full at least three days prior to the scheduled shipment date for any volumes of Products delivered during March 2022 until such time as Maxeon is able to factor or assign invoices to a Third Party, and otherwise; (ii) within 45 calendar days after the related Products have been delivered to Customer.  Notwithstanding the foregoing, in the event Customer withdraws consent to an assignment of invoice (factoring),  payment must be made three days prior to the scheduled shipment date of any Products until Supplier has established a factoring relationship with a Third Party.

(e)    Payments Generally. Unless the Parties otherwise agree in writing, all payments will be made, without setoff, by wire transfer of immediately available funds to the account designated by the payee. All payments will be made in U.S. dollars. Payments that are past due by more than seven days will bear interest from the date due at the rate of 1.5% per month, subject to the maximum rate permitted by applicable Law.

6.    Delivery.

(a)    Shipping Terms.

(i)    Supplier will deliver the Products DAP (Incoterms® 2020) to Customer’s warehouse in Rialto, California, USA (or such other location as the Parties may otherwise agree in writing); provided, however, that Customer will be designated as the importer of record for U.S. customs purposes and, subject to Section 11 Customer will be responsible for all import taxes, customs duties and related tariffs assessed with respect to the Products by any U.S. taxing authority. Title to, and risk of loss for, the Products will pass to Customer as soon as Supplier delivers them to Customer.

(ii)    Notwithstanding the foregoing, Customer may invoice Supplier for Customer’s actual out-of-pocket costs incurred with respect to import taxes and customs duties assessed with respect to the Products (together with reasonable supporting documentation) and, within 45 days after receiving such invoice, Supplier will issue Customer a credit memo equal to the invoiced amount.  Customer may apply any such credit memo to amounts payable by Customer (or any of its Affiliates) to Supplier (or any of its Affiliates) under this Agreement or otherwise.

(iii)    Notwithstanding the foregoing, Customer will only be responsible with respect to tariffs (and the rates thereof) that (A) are in effect on the Effective Date and (B) are not characterized as so-called anti-dumping duties or countervailing duties, and if any Law is adopted or takes effect, any interpretation of any Law is announced or modified, or any rules, regulations or guidelines (whether or not having the force of Law) are adopted or take effect, which, in the case of any of the foregoing (or combination thereof), would impose, modify or deem applicable any additional tariff or similar fee (or the rate thereof) with respect to the Products (other than any so-called anti-dumping duties or countervailing duties), and the result is to increase the costs associated therewith, then any such increased costs will be the responsibility of Supplier.  Customer may invoice Supplier for any such increased costs (together with reasonable supporting documentation) and, within 45 days after receiving such invoice, Supplier will issue Customer a credit memo equal to the invoiced amount.  Customer may apply any such credit memo to amounts payable by Customer (or any of its Affiliates) to Supplier (or any of its Affiliates) under this Agreement or otherwise.

(b)    Early Deliveries. Supplier may deliver Products up to fourteen calendar days before the specified date of delivery of such Products as set out in the relevant Purchase Order.

7.    Product Warranties.

(a)    Product Warranty. Except as provided in Section 2(d) with respect to any MLPEs, Supplier’s warranty obligations with respect to each Product are described in the Limited Product and Power Warranty that corresponds to each Product and is attached as Exhibit D (the “Product Warranty”). Except for non-conforming non-fungible Product sold to Customer pursuant to Section 4(c), the Product Warranty shall apply to Products supplied under this Agreement and Supplier represents and warrants to Customer that the Products (i) will be new (when first delivered), (ii) will be free from defects in materials and workmanship, and (iii) when delivered shall conform to the Product Specifications. Modifications or additions to the Product Warranty or Supplier’s warranty obligations will become binding only following the execution of a written amendment to this Agreement signed by both Parties. Unless the Parties otherwise agree, all claims filed in connection with any Product Warranty are subject to and governed by such Product Warranty.

(b)    DISCLAIMER. EXCEPT FOR THE PRODUCT WARRANTY, TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, SUPPLIER HEREBY EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE PRODUCTS.

8.    Term and Termination.

(a)    Term. The term of this Agreement will commence on the Effective Date and, unless terminated earlier as provided below, will remain in effect until December 31, 2023 (the “Term”), unless the Parties agree in writing to extend the Term or the duration of any obligations described herein.

(b)    Termination. This Agreement may be terminated before its scheduled expiration date, as follows:

(i)    Either Party may terminate this Agreement, effective upon written notice to the other Party, if: (A) such other Party fails to observe or perform any of its obligations in this Agreement and such failure has continued for 30 or more days after such Party receives written notice from the other Party specifying the nature of the alleged breach; (B) any representation or warranty made by such other Party in this Agreement is shown to be inaccurate in any material respect; (C) such other Party voluntarily commences any proceeding or files a petition seeking liquidation, reorganization or other relief under any bankruptcy, receivership or similar Law; (D) an involuntary proceeding is commenced or petition is filed against such other Party seeking liquidation, reorganization or other relief in respect of such Party under any bankruptcy, receivership or similar Law, and such proceeding or petition is not dismissed within 60 days after first initiated; or (E) such other Party has suffered a Force Majeure Event that affects its performance of any material obligation hereunder, and such event has not been alleviated to the reasonable satisfaction of the other Party within 120 days after notice thereof has been delivered in accordance with Section 11(c).

(c)    Effects of Termination. Upon the expiration or termination of this Agreement, without further notice, duly accepted Purchase Orders for the purchase of Products that are scheduled to be shipped after the effective date of expiration or termination will be continue until completed.

(d)    Survival. The terms of Sections 2(d) (with respect to the warranty for MLPEs), 3(b), 4, 5, 6, 7, 9, 10, 11 and this Section 8(d) (each to the extent applicable after the Term), will survive the expiration or termination of this Agreement for any reason. Termination or expiration of this Agreement will not affect any rights or obligations that may have accrued to either Party prior to the effective date thereof.

9.    Confidentiality.

(a)    Confidentiality. The Party that receives any Confidential Information (the “Receiving Party”) of the other Party (the “Disclosing Party”) shall keep all such Confidential Information in Receiving Party’s possession or reasonable control confidential and shall not disclose any such Confidential Information to any third party without the prior written consent of the Disclosing Party, other than the Receiving Party’s representatives who have a business need-to-know such Confidential Information in connection with performing the Receiving Party’s obligations under this Agreement. The Receiving Party shall exercise at least the same degree of care to safeguard the confidentiality of the Disclosing Party’s Confidential Information as it does to safeguard its own proprietary or confidential information, but not less than a reasonable degree of care. The Receiving Party shall ensure, by instruction, contract, or otherwise with its representatives that such representatives comply with the provisions of this Section 9(a). The Receiving Party shall promptly notify the Disclosing Party in the event that the Receiving Party learns of any unauthorized use or disclosure of such Confidential Information by it or its representatives, and shall promptly take all actions necessary to correct and prevent such use or disclosure.

(b)    Exclusions. The confidentiality obligations in Section 9(a) shall not apply to any Confidential Information which: (i) is or becomes generally available to and known by the public (other than as a result of a non-permitted disclosure or other wrongful act directly or indirectly by the Receiving Party); (ii) is or becomes available to the Receiving Party on a non-confidential basis from a source other than the Disclosing Party, provided that the Receiving Party has no knowledge that such source was at the time of disclosure to the Receiving Party bound by a confidentiality agreement with, or other obligation of secrecy to, the Disclosing Party which was breached by the disclosure; (iii) has been or is hereafter independently acquired or developed by the Receiving Party without reference to such confidential Information and without 
otherwise violating any confidentiality agreement with, or other obligation of secrecy to, the Disclosing Party; or (iv) was in the possession of the Receiving Party at the time of disclosure by the Disclosing Party without restriction as to confidentiality.

(c)    Authorized Disclosure. Notwithstanding the foregoing, neither Receiving Party (nor their representatives, as applicable) will be precluded from disclosing Confidential Information of the Disclosing Party to the extent the Receiving Party is required to do so in response to a valid order by a Governmental Authority, or to the extent it reasonably believes, on the basis of advice from outside counsel, that it is required to disclose such Confidential Information by Law, or to the extent necessary to establish its rights under this Agreement; provided, however, that, in the event a Receiving Party believes it is so required to disclose another the Disclosing Party’s Confidential Information, it will promptly provide written notice of such requirement so that the Disclosing Party may seek an appropriate order or other action as it deems appropriate to prevent or limit such disclosure, and the Receiving Party required to make the disclosure will use its reasonable efforts to preserve the confidentiality of the Disclosing Party’s Confidential Information, including by cooperating with the Disclosing Party to obtain an appropriate order or other reliable assurance of confidential treatment. In any event, the Receiving Party required to make the disclosure may disclose only that portion of the Disclosing Party’s Confidential Information that is legally required to be disclosed. Notwithstanding the foregoing, if any Party (or an Affiliate of such Party) is required to include a copy of this Agreement as an exhibit to any current or periodic report filed with the U.S. Securities and Exchange Commission, such Party (or its Affiliate) may make such filing without the prior written consent of any other Party as long as it seeks (or causes its Affiliate to seek) confidential treatment of any portions of this Agreement that, in the opinion of such filing Party, contain confidential or competitively sensitive information, regardless of whether such treatment is obtained.

10.    Disputes and Indemnification.

(a)    Dispute Resolution.

(i)    The Parties will seek to settle any dispute, controversy or claim (“Dispute”) relating to this Agreement through good faith negotiations. If the Parties fail to resolve any such Dispute through good faith negotiations within 30 calendar days after one Party notifies the other Party thereof, such Dispute will be settled through arbitration in accordance with the International Dispute Resolution Procedures of the International Centre for Dispute Resolution (ICDR).  The arbitration award shall be final and binding on the Parties. The place and seat of arbitration shall be San Francisco, California, USA or such other location as the Parties may mutually agree upon. The arbitration proceedings shall be conducted in English by a panel of three arbitrators who are fluent in the English language. Each Party will have the authority to nominate one arbitrator in accordance with the ICDR rules. Following confirmation of the two Party-nominated arbitrators, the arbitrators shall select a third neutral arbitrator to serve as the presiding arbitrator.

(ii)    Notwithstanding the foregoing, if either Party believes the other Party has breached its obligations in Section 3 or 9, then, in addition to any and all other rights and remedies available to such Party, it will be entitled to obtain from the arbitrators and from any court of competent jurisdiction interim or provisional injunctive or other equitable relief. A Party’s application to a court for interim or provisional injunctive or other equitable relief will not be deemed incompatible with the agreement to arbitrate or a waiver of the right to arbitrate.

(b)    Mutual Indemnification.

(i)    Supplier shall indemnify, defend and hold harmless Customer, its Affiliates and its and their respective directors, officers, employees, agents and other representatives from and against any and all damages, liabilities, claims, costs, charges, judgments and expenses (including reasonable attorney’s fees) (collectively “Damages”) brought or maintained by any Third Party arising out of (A) the breach by Supplier of any representation, warranty, covenant or agreement made by Supplier in this Agreement, (B) Supplier’s tortious acts or omissions, or (C) Supplier’s violation of applicable Law or the requirements of any Governmental Authority.

(ii)    Customer shall indemnify, defend and hold harmless Supplier, its Affiliates and its and their respective directors, officers, employees, agents and other representatives from and against any and all damages, liabilities, claims, costs, charges, judgments and expenses (including reasonable attorney’s fees) (collectively “Damages”) brought or maintained by any Third Party arising out of (1) the breach by Customer of any representation, warranty, covenant or agreement made by Customer in this Agreement, (2) Customer’s tortious acts or omissions, or (3) Customer’s violation of applicable Law or the requirements of any Governmental Authority.

(iii)    TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, NEITHER PARTY TO THIS AGREEMENT WILL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR INCIDENTAL DAMAGES ARISING FROM, OR ATTRIBUTABLE TO, THIS AGREEMENT OR THAT PARTY’S PERFORMANCE HEREUNDER, WHETHER ARISING IN CONTRACT, TORT, BY OPERATION OF LAW, OR OTHERWISE, EVEN IF THAT PARTY HAS BEEN PLACED ON NOTICE OF THE POSSIBILITY OF SUCH DAMAGES.

(c)    Limitation of Liability.  Notwithstanding any other provision of this Agreement, each Party’s maximum aggregate liability to the other Party for all Damages arising out of or in connection with this Agreement, whether arising in contract, tort (including negligence whether active or passive), warranty, strict liability or otherwise shall in no event exceed the amount equal to [***] percent of the prices attributable to all Products sold under this Agreement as set out in Exhibit B; provided, however, that the foregoing limitation of liability shall not be applicable to, and shall in no way limit, Supplier’s Third Party indemnity obligations.

(d)    Insurance. Supplier and Customer will maintain insurance throughout the Term with financially sound and reputable carriers in such amounts and against such risks (including general liability) and such other hazards as is customarily maintained by companies engaged in the same or similar businesses. Supplier will cause Customer and its Affiliates to be named as additional insureds, as their interests appear, on all of Supplier’s general liability policies. Upon request, Supplier will furnish Customer with a certificate of insurance evidencing such insurance coverage, and such other information in reasonable detail as to the insurance so maintained. All insurance required of Supplier will be primary and non-contributory over any insurance or self-insurance program maintained by Customer. Supplier waives, and any required insurance policy must contain a waiver of, subrogation rights against Customer and its Affiliates. Supplier will not be deemed to be relieved of any liability or responsibility hereunder because of the fact that it maintains (or does not maintain) insurance.

11.    Miscellaneous.

(a)    Governing Law. This Agreement, and any Disputes arising out of or in connection with this Agreement, shall be governed by and construed in accordance with the Laws of the State of California, excluding its rules governing conflicts of Laws. The U.N. Convention on Contracts for the International Sale of Goods will not apply to this Agreement.

(b)    Compliance with Laws and Compliance Audits.

(i)    Each Party agrees at all times to strictly comply with all applicable Laws, now or hereafter in effect, relating to its performance under this Agreement. Each Party further agrees to make, obtain, and maintain in force at all times during the Term, all filings, registrations, reports, licenses, permits, and authorizations required under applicable Law.

(ii)    Each Party hereby acknowledges and agrees that the Products, as well as the Confidential Information, are subject to export controls under the Laws of the United States, including the Export Administration Regulations, 15 C.F.R. Parts 730-774. In the exercise of its rights, and the performance of its obligations under this Agreement, each Party agrees to strictly comply with all such export control Laws, and will not export, re-export, transfer, divert, or disclose any Products or Confidential Information, or any direct product thereof, to any destination, end-use, or end-user restricted or prohibited under export controls Laws. In addition to the foregoing, each Party acknowledges that it is bound by and will comply with Customer’s export compliance policies and procedures as communicated to Supplier from time to time and has may be supplemented, amended, or updated from time to time.

(iii)    Each Party agrees to strictly comply with all applicable foreign or domestic anti-corruption and anti-bribery Laws, as in effect from time to time, including, but not limited to, the United States Foreign Corrupt Practices Act 1977, the UK Bribery Act 2010, and any Laws intended to implement the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (collectively, “Anti-Corruption Laws”). Without limiting the generality of the foregoing, each Party agrees not to make, authorize, offer, or promise to make or give any money or any other thing of value, directly or indirectly, to any current or former government official or employee (including employees of a state-owned or controlled enterprise of public international organization), candidate for political office, or an official of a political party, or any employee, director or consultant of a non-government client or potential client, for the purpose of securing any improper or unfair advantage or obtaining or retaining business in connection with the activities contemplated hereunder. Each Party agrees to immediately notify the other of any request that it receives to take any action that might constitute, or be construed as, a violation of the Anti-Corruption Laws.

(iv)    Each Party further agrees to keep and maintain accurate books and records, in sufficient detail, to demonstrate compliance with this Agreement, including all Anti-Corruption Laws. Each Party will keep such records for a period of time as determined by its normal document retention policies, but in any event not less than three years after the date of the transaction to which those records relate, or longer if required by Law. Upon at least 30 days’ notice and no more frequently than once per year, each Party will (A) furnish the other Party with copies of reasonably requested books and records and (B) permit the other Party (and its representatives) to examine and audit all of such Party’s books and records relating to its activities under this Agreement, in each case, only to the extent necessary for the other Party to verify such Party’s compliance with this Agreement and subject to restrictions implemented in good faith to (I) ensure compliance with applicable Law, (II) preserve any applicable privilege (including the attorney-client privilege), or (III) comply with any applicable contractual confidentiality obligations; provided, however, that if a Party is in breach of any of its representations, warranties, agreements, or covenants in this Agreement (or the first Party has a reasonable basis to assert any such breach), then any such examination 
and audit will be permitted upon at least 24 hours’ notice and, if a breach is confirmed, the costs and expenses of the examination and audit will be the responsibility of the breaching Party.

(c)    Force Majeure. Notwithstanding anything to the contrary in this Agreement, neither Party will be liable for any Damage or delay suffered by the other Party due to any inability to perform any obligation hereunder, and neither Party will be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term or provision of this Agreement, when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party, including, without limitation, as a result of Acts of God, fire, flood, storm, earthquake, explosion, epidemic, delays in transportation, shortages of trucks or vessels, shortages of fuel, shortages of raw materials, environmental catastrophe, embargo, war, acts of war (whether war be declared or not), acts of terrorism, insurrection, riot, civil commotion, or acts, omissions or delays in acting by any governmental authority (including legislative, administrative, judicial, police or any other official governmental acts) (each, a “Force Majeure Event”). For the avoidance of doubt, delays in Supplier’s receipt of MLPEs, to the extent such delays impact the ability of Supplier to timely perform MLPE attachment services, timely supply the required volumes of any Product, or timely deliver any Product, will be deemed to constitute a Force Majeure Event that affects the Supplier. In the case of any delay or failure that a Party anticipates will cause an excusable delay hereunder, such Party will inform the other Party in writing of the anticipated effect of such delay within five days of becoming aware of it, which notice must include a reasonably detailed description of the steps that the notifying Party is taking to alleviate the problem.

(d)    Change in Law.  Except for a change to any tariff, duty, or any anti-dumping or countervailing fee, fine or levy,  in the event any Law is changed after the Effective Date within the Territory, the Parties shall meet and discuss equitable adjustments to the delivery schedule with respect to any Product and adjustments to price as applicable.  In the event the Parties fail to reach a mutually agreeable adjustment to price, schedule or both, Supplier may terminate the delivery of any undelivered Products and all exclusivity obligations (if any) shall immediately terminate.

(e)    General Provisions.

(i)    Customer shall permit the assignment of any invoice (in whole or in part) to a third party (factoring) and shall execute notices of consent and other documentation reasonably necessary to permit such assignment.  Except as set out in this Section, neither Party has the right or power to assign any of its rights, or delegate the performance of any of its duties, under this Agreement without the prior written authorization of the other Party, which authorization will not be unreasonably withheld, conditioned or delayed.

(ii)    The failure of either Party to assert any of its rights under this Agreement shall not be deemed to constitute a waiver of that Party’s right thereafter to enforce each and every provision of this Agreement in accordance with its terms.

(iii)    The subject headings of this Agreement are included for purposes of convenience only and shall not affect the construction or interpretation of any of its provisions.

(iv)    In the event that any provision hereof is found invalid or unenforceable pursuant to a final judicial decree or decision (or arbitration award), the remainder of this Agreement will remain valid and enforceable according to its terms. In the event of such partial invalidity, the Parties shall seek in good faith to agree on replacing any such legally invalid provision with a provision that, in effect, will most nearly and fairly approach the effect of the invalid provision.

(v)    This Agreement is written in English. The Parties may translate this Agreement into any other language and execute counterparts thereof as so translated but, in any and all events, the English language version of this Agreement, as executed by the Parties, will be the controlling version of this Agreement and will prevail for all purposes.

(vi)    This Agreement may be executed in any number of counterparts and by the Parties in separate counterparts, each of which when so executed and delivered will be deemed to be an original and all of which counterparts, taken together, will constitute one and the same instrument. Delivery of an executed counterpart of this Agreement by fax or other electronic means will have the same force and effect as a manual signature delivered in person.

(vii)    Except for Purchase Orders, changes to such Purchase Orders and other commercial communications, which may be sent by e-mail, fax or such other means as the Parties may agree, all notices and other communications required or permitted under this Agreement must be in writing and delivered in person or dispatched by a nationally recognized overnight courier service to the applicable Party at the address specified for such Party in the Separation Agreement. Notices will be deemed duly given upon receipt by the receiving Party or upon such Party’s refusal to accept delivery.

(viii)    This Agreement, together with the Exhibits hereto and the documents delivered hereunder, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements between the Parties, whether written or oral, relating to the same subject matter, including the 2020 Supply Agreement and the First Amendment to Supply Agreement. No modification, amendments or supplements to this Agreement shall be effective for any purpose unless in writing and signed by each Party. Approvals or consents hereunder of a Party shall also be in writing.

(ix)    For purposes of this Agreement, the Parties will be and remain independent contractors (and, in certain respects, active competitors), and this Agreement will not be construed as establishing a general agency, employment, partnership, joint venture, coalition, alliance or any other similar relationship between the Parties with regards to the relationship created by this Agreement. In accordance with this Agreement, neither Party will have the authority to make any statements, representations or commitments of any kind (whether express or implied) regarding the subject matter of this Agreement, or to take any action, which would be binding on any other Party or create any liability or obligation on behalf of any other Party regarding the subject matter of this Agreement, without the prior written authorization of such other Party to do so. Neither Party will have the right to direct or control the employees of any other Party. Neither Party will be liable for the debts, obligations or other liabilities of any other Party or of any of its agents, employees or contractors, including any costs for salaries, benefits or taxes.

(x)    The Parties hereby acknowledge and agree that references to any supply agreement contained in the Product Collaboration Agreement or Separation Agreement shall be deemed to refer to this Agreement (as it may be further amended from time to time in accordance with the terms hereof).

[Signature Page Follows]

1

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives to be effective as of the Effective Date.

									
		Customer
			
		SUNPOWER CORPORATION
			
			
		By:	/S/ PETER FARICY
		Name:	Peter Faricy
		Title:	President and Chief Executive Officer

			
		Supplier
			
		MAXEON SOLAR TECHNOLOGIES, LTD.

			
			
		By:	/S/ JEFFREY WATERS
		Name:	Jeffrey W. Waters

		Title:	Chief Executive Officer

2Exhibit 4.1

 

UNIT PURCHASE OPTION

 

THE REGISTERED HOLDER OF THIS UNIT PURCHASE OPTION
BY ITS ACCEPTANCE HEREOF, AGREES THAT THE SECURITIES EVIDENCED BY THIS UNIT PURCHASE OPTION MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
EXCEPT AS HEREIN PROVIDED AND THE REGISTERED HOLDER OF THIS UNIT PURCHASE OPTION AGREES THAT THE SECURITIES EVIDENCED BY THIS UNIT PURCHASE
OPTION WILL NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED, OR BE THE SUBJECT OF ANY HEDGING, SHORT SALE, DERIVATIVE, PUT,
OR CALL TRANSACTION THAT WOULD RESULT IN THE EFFECTIVE ECONOMIC DISPOSITION OF THIS UNIT PURCHASE OPTION OR THE SECURITIES EVIDENCED
BY THIS UNIT PURCHASE OPTION, FOR A PERIOD OF ONE HUNDRED EIGHTY (180) DAYS FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE OTHER
THAN TO ANY MEMBER PARTICIPATING IN THE OFFERING AND THE OFFICERS OR PARTNERS THEREOF, IF ALL SECURITIES SO TRANSFERRED REMAIN SUBJECT
TO THE LOCK-UP RESTRICTION SET FORTH ABOVE FOR THE REMAINDER OF THE TIME PERIOD.

 

DIRECT DIGITAL HOLDINGS, INC.

UNIT PURCHASE OPTION

 

FOR THE PURCHASE OF 70,000 UNITS

EACH UNIT CONSISTING OF ONE SHARE OF COMMON
STOCK

AND ONE WARRANT TO PURCHASE COMMON STOCK

 

AND

 

FOR THE PURCHASE OF 10,500 ADDITIONAL
WARRANTS TO PURCHASE

COMMON STOCK THAT ARE NOT INCLUDED IN THE UNITS

 

Unit Purchase Option No.: 1

Number of Units: 70,000

Number of Additional Warrants (not included in the Units): 10,500

Date of Issuance: February 15, 2022 (“Issuance Date”)

Date of Commencement of Sales Pursuant
to the 

Underwriting Agreement: February 10, 2022

(“Sales Commencement Date”)

 

DIRECT DIGITAL HOLDINGS, INC.
(THE “COMPANY”) HEREBY CERTIFIES THAT, in consideration of $50.00 duly paid by or on behalf of all of the recipients
of Unit Purchase Options, The Benchmark Company, LLC (“Holder”), as registered owner of this Unit Purchase Option
(“Unit Purchase Option” or “UPO”), Holder is entitled, at any time or from time to time commencing
on the “Commencement Date,” which shall be the effective date (the “Effective Date”) of the Company’s
registration statement on Form S-1 (File No.: 333-261059) (the “Registration Statement”) pursuant to which units
(each unit consisting of one share of the Company’s Common Stock (“Share”), and one Warrant of the Company)
are offered for sale to the public (the “Offering”) by and at or before 5:00 p.m., Eastern Time, on the fifth anniversary
of the Effective Date (the “Expiration Date”), but not thereafter, to subscribe for, purchase and receive, in whole
or in part, (i) up to 70,000 units (the “Units”), each Unit consisting of one Share and one Warrant of the Company
and (ii) up to 10,500 additional Warrants not included in the Units. The Warrants (both those included in the Units and those that
are not included in the Units) will be identical to the Warrants included in the Units offered to the public by the Company pursuant
to the Registration Statement. If the Expiration Date is a day on which banking institutions are authorized by law to close, then this
UPO may be exercised on the next succeeding day which is not such a day in accordance with the terms herein. During the period ending
on the Expiration Date, the Company agrees not to take any action that would terminate the UPO. This UPO is initially exercisable at
(i) $6.60 per Unit (or 120% of the public offering price of the Units being sold in the Offering) so purchased and (ii) $0.012
per Warrant (or 120% of the public offering price of the Warrants being sold in the Offering); provided, however, that upon the occurrence
of any of the events specified in Section 5 hereof, the rights granted by this UPO, including the exercise price per Unit and per
Warrant and the number of Units and Warrants to be received upon such exercise, shall be adjusted as therein specified. The term “Exercise
Price” shall mean the initial exercise price or the adjusted exercise price, depending on the context. This UPO is one of the
UPOs issued pursuant to (i) Section 3(e) of the Underwriting Agreement, dated as of February 10, 2022, by and among
the Company, The Benchmark Company, LLC and Roth Capital Partners, LLC, as the Representatives of the several underwriters, if any, named
in Schedule I thereto (the “Underwriting Agreement”) and the Company’s Registration Statement. For the avoidance
of doubt, references to “Units” shall include the Warrants not included in the Units that may be purchased pursuant to this
UPO, unless the context dictates otherwise.

 

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		1.	EXERCISE
                                            OF UPO.

 

(a)            Mechanics
of Exercise. Subject to the terms and conditions hereof, this UPO may be exercised by the Holder on any day on or after the date
that is 180 days after the Effective Date (the “Exercisability Date”), on one or more occasions, in whole or in part
(but not as to fractional shares), by delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise
Notice”) of the Holder’s election to exercise this UPO. No ink-original Exercise Notice shall be required, nor shall
any medallion guarantee (or other type of guarantee or notarization) of any Exercise Notice form be required. Within two (2) Trading
Days of the delivery of such Exercise Notice, if the Holder is not electing a Cashless Exercise (as defined below) pursuant to Section 1(d) of
this UPO, the Holder shall pay to the Company an amount equal to the applicable Exercise Price multiplied by the number of Units or Warrants
as to which this UPO is being exercised (the “Aggregate Exercise Price”) in cash or wire transfer of immediately available
funds (a “Cash Exercise”). The Holder shall not be required to surrender this UPO in order to effect an exercise hereunder;
provided, however, that in the event that this UPO is exercised in full or for the remaining unexercised portion hereof, the Holder shall
deliver this UPO to the Company for cancellation within a reasonable time after such exercise. On or before the first Trading Day following
the date on which the Company has received the Exercise Notice (the date upon which the Company has received the Exercise Notice, the
 “Exercise Date”), the Company shall transmit by facsimile or email transmission an acknowledgment of confirmation
of receipt of the Exercise Notice to the Holder and the Company’s transfer agent for the Common Stock (the “Transfer Agent”).
The Company shall deliver any objection to the Exercise Notice on or before the second Trading Day following the date on which the Company
has received the Exercise Notice. On or before the second Trading Day following the date on which the Company has received the Exercise
Notice, provided the Aggregate Exercise Price has been received by the Company prior to such Trading Day, the Company shall, (X) provided
that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer
Program (the “FAST Program”) and so long as the certificates therefor are not required to bear a legend regarding
restriction on transferability, upon the request of the Holder, credit such aggregate number of shares of Common Stock and Warrants included
in the Units or such aggregate number of Warrants to which the Holder is entitled pursuant to such exercise to the Holder’s or
its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, or (Y), if the Transfer Agent is
not participating in the FAST Program or if the certificates are required to bear a legend regarding restriction on transferability,
issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s
share register in the name of the Holder or its designee, for the number of Shares and Warrants to which the Holder is entitled pursuant
to such exercise. Upon delivery of the Exercise Notice and payment of the Aggregate Exercise Price, the Holder shall be deemed for all
corporate purposes to have become the holder of record of the Shares and Warrants with respect to which this UPO has been exercised,
irrespective of the date such Shares and Warrants are credited to the Holder’s DTC account or the date of delivery of the certificates
evidencing such Shares and Warrants, as the case may be. If this UPO is submitted in connection with any exercise pursuant to this Section 1(a) and
the number of Units or Warrants represented by this UPO submitted for exercise is greater than the number of Units or Warrants being
acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three Trading Days after any such
submission and at its own expense, issue a new UPO (in accordance with Section 7(d)) representing the right to purchase the number
of Units and Warrants purchasable immediately prior to such exercise under this UPO, less the number of Units and Warrants with respect
to which this UPO has been and/or is exercised. The Company shall pay any and all taxes and other expenses of the Company (including
overnight delivery charges) that may be payable with respect to the issuance and delivery of Units or Warrants upon exercise of this
UPO; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer
involved in the registration of any certificates for Shares, Warrants or UPOs in a name other than that of the Holder or an affiliate
thereof. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this UPO or
receiving Units upon exercise hereof.

 

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(b)            Exercise
Price. For purposes of this UPO, “Exercise Price” means (i) with respect to the Units, $6.60 per Unit, subject
to adjustment as provided herein, and (ii) with respect to the additional Warrants not included in the Units, $0.012.

 

(c)            Company’s
Failure to Timely Deliver Securities. If the Company shall fail for any reason or for no reason to issue to the Holder within five
(5) Business Days of the Exercise Date certificates for the number of Shares and Warrants to which the Holder is entitled and register
such Shares and Warrants on the Company’s share and warrant register, or to credit the Holder’s balance account with DTC
for such number of Shares and Warrants to which the Holder is entitled upon the Holder’s exercise of this UPO, and if on or after
such Trading Day the Holder purchases, or another Person purchasers on the Holder’s behalf or for the Holder’s account (in
an open market transaction or otherwise) Shares and Warrants to deliver in satisfaction of a sale by the Holder of Shares and Warrants
issuable upon such exercise that the Holder anticipated receiving from the Company, then the Company shall, within three (3) Business
Days after the Holder’s written request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount
equal to the Holder’s total purchase price (including brokerage commissions, if any) for the Shares and Warrants so purchased (the
“Buy-In Price”), at which point the Company’s obligation to deliver such certificates (and to issue such Shares
and Warrants) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing
such Shares and Warrants and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of
(A) such number of Shares and Warrants, respectively, times (B) the Weighted Average Price (as reported by Bloomberg) of the
Shares and Warrants, respectively, on the date of the event giving rise to the Company’s obligation to deliver such certificates.

 

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(d)            Cashless
Exercise. In lieu of the payment of the Exercise Price multiplied by the number of Units or Warrants for which this UPO is exercisable
(and in lieu of being entitled to receive Units) in the manner required by Section 1(a), the Holder shall have the right (but not
the obligation) to convert any exercisable but unexercised portion of this UPO into Units or Warrants (the “Conversion Right”)
as follows:

 

(A)            Upon
exercise of the Conversion Right, the Company shall deliver to the Holder (without payment by the Holder of any of the Exercise Price
in cash) that number of Units or Warrants equal to the quotient obtained by dividing (x) the Value of the portion of the UPO being
converted by (y) in the case of the Units, the combined Current Market Price of a Share and a Warrant or, in the case of the Warrants
not included in the Units, the Current Market Price of a Warrant.

 

(B)            The
 “Value” of the portion of the UPO being converted shall equal the remainder derived by subtracting (a) (i) the
Exercise Price multiplied by (i) the number of Units or Warrants underlying the portion of this UPO being converted, from (ii) in
the case of the Units, the combined Current Market Value of a Share and a Warrant multiplied by the number of Units underlying the portion
of the UPO being converted or, in the case of the Warrants not included in the Units, the Current Market Value of a Warrant multiplied
by the number of Warrants underlying the portion of the UPO being converted.

 

(C)            As
used herein, the term “Current Market Value” per Unit or Warrant at any date means the remainder derived by subtracting
(x) the exercise price per Unit or Warrant from (y) in the case of the Units, the combined Current Market Price of a Share
and a Warrant or, in the case of the Warrants not included in the Units, the Current Market Price of a Warrant.

 

(D)           The
 “Current Market Price” of a Share or a Warrant shall mean (i) if the Shares or Warrants are listed on a
national securities exchange or quoted on the OTCQB or OTCQX (or any successor exchange or entity), the closing or last sale price
of the Shares or Warrants (as applicable) in the principal trading market for the Shares or the Warrants on the last trading day
preceding the day in question as reported by the exchange, the OTCQB or OTCQX, as the case may be; (ii) if the Shares or
Warrants are not listed on a national securities exchange or quoted on the OTCQB or OTCQX, but are traded in the residual
over-the-counter market, the closing bid price for the Shares or Warrants (as applicable) on the last trading day preceding the date
in question for which such quotations are reported in the “pink sheets” published by OTC Markets Group Inc. or similar
publisher of such quotations; and (iii) if the fair market value of the Shares or Warrants cannot be determined pursuant to
clause (i) or (ii) above, such price as the Board of Directors of the Company shall determine, in good faith.

 

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(E)            The
Cashless Exercise Right may be exercised by the Holder on any business day on or after the Exercisability Date and not later than the
Expiration Date by delivering the UPO with the duly executed Exercise Notice attached hereto with the cashless exercise section completed
to the Company, exercising the Cashless Exercise Right and specifying the total number of Units or Warrants the Holder will purchase
pursuant to such Cashless Exercise Right.

 

(e)            Rule 144.
For purposes of Rule 144(d) promulgated under the Securities Act of 1933, as amended, as in effect on the date hereof, assuming
the Holder is not an affiliate of the Company, it is intended that the Units or Warrants issued in a Cashless Exercise shall be deemed
to have been acquired by the Holder, and the holding period for the Units or Warrants shall be deemed to have commenced, on the Issuance
Date.

 

(f)            Disputes.
In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Units or Warrants, the Company
shall promptly issue to the Holder the number of Units or Warrants that are not disputed.

 

(g)            Beneficial
Ownership. The Company shall not effect the exercise of this UPO, and the Holder shall not have the right to exercise this UPO, to
the extent that after giving effect to such exercise, such Person (together with such Person’s affiliates) would beneficially own
in excess of 4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect
to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Person
and its affiliates shall include the number of shares of Common Stock and Warrants issuable upon exercise of this UPO with respect to
which the determination of such sentence is being made, but shall exclude shares of Common Stock and Warrants which would be issuable
upon (i) exercise of the remaining, unexercised portion of this UPO beneficially owned by such Person and its affiliates and (ii) exercise
or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such Person and
its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation
on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of
this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”). For purposes of this UPO, in determining the number of outstanding shares of
Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in the most recent of (1) the
Company’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities
and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by
the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the
written or oral request of the Holder, the Company shall within two (2) Business Days confirm to the Holder the number of shares
of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect
to the conversion or exercise of securities of the Company, including this UPO, by the Holder and its affiliates since the date as of
which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the Holder may from time to time
increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice; provided that (i) any
such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the Company, and (ii) any
such increase or decrease will apply only to the Holder. The provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 1(g) 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.

 

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2.            ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise Price and the number of Units and Warrants shall be adjusted from time to time
as follows:

 

(a)            Voluntary
Adjustment by Company. The Company may at any time during the term of this UPO reduce the then current Exercise Price to any amount
and for any period of time deemed appropriate by the Board of Directors of the Company.

 

(b)            Adjustment
upon Subdivision or Combination of Common Stock. If the Company at any time on or after the Issuance Date subdivides (by any stock
split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise) one or more classes of its outstanding shares
of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of Units and Warrants will be proportionately increased. If the Company at any time on or after the Issuance Date
combines (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination
will be proportionately increased and the number of Units and Warrants will be proportionately decreased. Any adjustment under this Section 2(b) shall
become effective at the close of business on the date the subdivision or combination becomes effective.

 

(c)            Other
Events. If any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation rights or phantom stock rights), then the Company’s
Board of Directors will make an appropriate adjustment in the Exercise Price and the number of Units and Warrants so as to protect the
rights of the Holder; provided that no such adjustment pursuant to this Section 2(c) will increase the Exercise Price or decrease
the number of Units or Warrants as otherwise determined pursuant to this Section 2.

 

3.            RIGHTS
UPON DISTRIBUTION OF ASSETS. If the Company, at any time while this UPO is outstanding, shall distribute to all holders of Common
Stock (and not to the Holders) evidences of its indebtedness or assets (including cash and cash dividends) or rights or UPOs to subscribe
for or purchase any security other than the Common Stock (including, without limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar
transaction), then in each such case the Exercise Price per Unit shall be adjusted by multiplying the Exercise Price in effect immediately
prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator
shall be the Weighted Average Price determined as of the record date mentioned above, and of which the numerator shall be such Weighted
Average Price on such record date less the then per share fair market value at such record date of the portion of such assets or evidence
of indebtedness so distributed applicable to one outstanding share of Common Stock as determined by the Board of Directors in good faith.
In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness
so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution
is made and shall become effective immediately after the record date mentioned above.

 

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		4.	PURCHASE
                                            RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a)            Purchase
Rights. In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase 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 shares
of Common Stock acquirable upon complete exercise of this UPO (without regard to any limitations on the exercise of this UPO) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

 

(b)            Fundamental
Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in
writing (unless the Company is the Successor Entity) all of the obligations of the Company under this UPO in accordance with the
provisions of this Section (4)(b) pursuant to written agreements in form and substance reasonably satisfactory to the
Required Holders and approved by the Required Holders prior to such Fundamental Transaction, including agreements to deliver to each
holder of the UPOs in exchange for such UPOs securities of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this UPO, including, without limitation, adjusted exercise prices equal to the values for the Units
and Warrants reflected by the terms of such Fundamental Transaction, and exercisable for a corresponding number of units and
warrants of securities equivalent to the shares of Common Stock and Warrants acquirable and receivable upon exercise of this UPO
(without regard to any limitations on the exercise of this UPO) prior to such Fundamental Transaction, and reasonably satisfactory
to the Required Holders. Upon the occurrence of any 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 this UPO referring to the
 “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this UPO with the same effect as if such Successor Entity had been named as the
Company herein. Upon consummation of the Fundamental Transaction, the Successor Entity shall deliver to the Holder
confirmation that there shall be issued upon exercise of this UPO at any time after the consummation of the Fundamental Transaction,
in lieu of the shares of Common Stock (or other securities, cash, assets or other property) issuable upon the exercise of the UPO
prior to such Fundamental Transaction, such shares of the publicly traded common stock or common shares (or its equivalent) and
warrants (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to
receive upon the happening of such Fundamental Transaction had this UPO been converted immediately prior to such Fundamental
Transaction, as adjusted in accordance with the provisions of this UPO. In addition to and not in substitution for any other rights
hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled
to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate
Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive
upon an exercise of this UPO at any time after the consummation of the Corporate Event but prior to the Expiration Date, in lieu of
shares of Common Stock and Warrants (or other securities, cash, assets or other property) purchasable upon the exercise of this UPO
prior to such Corporate Event, such shares of stock, securities, cash, assets or any other property whatsoever (including UPOs or
other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of such Corporate
Event had this UPO been exercised immediately prior to such Corporate Event. Provision made pursuant to the preceding sentence shall
be in a form and substance reasonably satisfactory to the Required Holders. The provisions of this Section 4(b) shall
apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall be applied without regard to any
limitations on the exercise of this UPO.

 

    -7-

     

    

 

(c)           Applicability
to Successive Transactions. The provisions of this Section shall apply similarly and equally to successive Fundamental Transactions
and Corporate Events and shall be applied without regard to any limitations on the exercise of this UPO.

 

5.            NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or through
any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, 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 UPO, and will at all times in
good faith comply with all the provisions of this UPO and take all actions consistent with effectuating the purposes of this UPO. Without
limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable
upon the exercise of this UPO or the Warrants issuable upon exercise of the UPO above the Exercise Price then in effect, (ii) shall
take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this UPO, and (iii) shall, so long as this UPO is outstanding, take all action necessary
to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise
of this UPO and the Warrants issuable upon exercise of the UPO, 100% of the number of shares of Common Stock and Warrants issuable upon
exercise of this UPO then outstanding (without regard to any limitations on exercise).

 

6.            UPO
HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in such Person’s capacity
as a holder of this UPO, 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 UPO be construed to confer upon the Holder, solely in such Person’s capacity
as the Holder of this UPO, 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 stock, consolidation, merger, conveyance or otherwise), receive
notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Shares which such
Person is then entitled to receive upon the due exercise of this UPO. In addition, nothing contained in this UPO shall be construed as
imposing any liabilities on the Holder to purchase any securities (upon exercise of this UPO or otherwise) or as a stockholder of the
Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

    -8-

     

    

 

		7.	REISSUANCE
                                            OF UPOS.

 

(a)            Transfer
of UPO. If this UPO is to be transferred, the Holder shall surrender this UPO to the Company and deliver the completed and executed
Assignment Form, in the form attached hereto as Exhibit B, whereupon the Company will forthwith issue and deliver upon the
order of the Holder a new UPO (in accordance with Section 7(d)), registered as the Holder may request, representing the right to
purchase the number of Units being transferred by the Holder and, if less than the total number of Units and Warrants then underlying
this UPO is being transferred, a new UPO (in accordance with Section 7(d)) to the Holder representing the right to purchase the
number of Units and Warrants not being transferred.

 

(b)            Lost,
Stolen or Mutilated UPO. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this UPO, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company
in customary form and, in the case of mutilation, upon surrender and cancellation of this UPO, the Company shall execute and deliver
to the Holder a new UPO (in accordance with Section 7(d)) representing the right to purchase the Units and Warrants then underlying
this UPO.

 

(c)            Exchangeable
for Multiple UPOs. This UPO is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for
a new UPO or UPOs (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of Units and
Warrants then underlying this UPO, and each such new UPO will represent the right to purchase such portion of such Units and Warrants
as is designated by the Holder at the time of such surrender; provided, however, that no UPOs for fractional shares of Common Stock and
no fractional Warrants shall be given.

 

(d)            Issuance
of New UPOs. Whenever the Company is required to issue a new UPO pursuant to the terms of this UPO, such new UPO (i) shall be
of like tenor with this UPO, (ii) shall represent, as indicated on the face of such new UPO, the right to purchase the Units and
Warrants then underlying this UPO (or in the case of a new UPO being issued pursuant to Section 7(a) or Section 7(c),
the Units and Warrants designated by the Holder which, when added to the number of Units and Warrants underlying the other new UPOs issued
in connection with such issuance, does not exceed the number of Units and Warrants then underlying this UPO), (iii) shall have an
issuance date, as indicated on the face of such new UPO which is the same as the Issuance Date, and (iv) shall have the same rights
and conditions as this UPO.

 

8.            NOTICES.
The Company shall provide Holder with prompt written notice of all actions taken pursuant to this UPO. Whenever notice is required to
be given under this UPO, unless otherwise provided herein, such notice shall be given in writing, will be mailed (a) if within the
domestic United States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid,
or by facsimile or (b) if delivered from outside the United States, by International Federal Express or facsimile, and (c) will
be deemed given (i) if delivered by first-class registered or certified mail domestic, three business days after so mailed, (ii) if
delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal
Express, two business days after so mailed and (iv) if delivered by email, upon electronic confirmation of receipt, and will be
delivered and addressed as follows:

 

    -9-

     

    

 

		(i)	if
                                            to the Company, to:

 

Direct Digital Holdings, Inc.

1233 West Loop South, Suite 1170

Houston, TX 77027

Attn: Mark
Walker, Chairman and Chief Executive Officer

Email: mwalker@directdigitalholdings.com

 

with a copy to:

 

McGuireWoods LLP

1251 Avenue of the Americas, 20th
Floor

New York, NY 10020

Attn:
Stephen E. Older, Esq.

   Rakesh
Gopalan, Esq.

   David
S. Wolpa, Esq.

Email: solder@mcguirewoods.com

    rgopalan@mcguirewoods.com

    dwolpa@mcguirewoods.com

 

(ii)            if
to the Holder, at the address of the Holder appearing on the books of the Company.

 

9.            AMENDMENT
AND WAIVER. Except as otherwise provided herein, the provisions of this UPO may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of
the Required Holders. Any such amendment shall apply to all UPOs and be binding upon all registered holders of such UPOs.

 

10.          GOVERNING
LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. This UPO shall be governed by, and construed in accordance with, the internal
laws of the State of New York, without reference to the choice of law provisions thereof. The Company and, by accepting this UPO, the
Holder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and
the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating
to or arising out of this UPO and the transactions contemplated hereby. Service of process in connection with any such suit, action or
proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under
this UPO. The Company and, by accepting this UPO, the Holder, each irrevocably consents to the jurisdiction of any such court in any
such suit, action or proceeding and to the laying of venue in such court. The Company and, by accepting this UPO, the Holder, each irrevocably
waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any
claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE COMPANY
AND, BY ITS ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS UPO
AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

    -10-

     

    

 

11.            CONSTRUCTION;
HEADINGS. This UPO shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any person
as the drafter hereof. The headings of this UPO are for convenience of reference and shall not form part of, or affect the interpretation
of, this UPO.

 

12.            DISPUTE
RESOLUTION. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Units or
Warrants, the Company shall submit the disputed determinations or arithmetic calculations via email within two (2) Business Days
of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable
to agree upon such determination or calculation of the Exercise Price or the Units or Warrants within three Business Days of such disputed
determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days submit
via email (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company
and approved by the Holder, which approval shall not be unreasonably withheld, or (b) the disputed arithmetic calculation of the
Units or Warrants to the Company’s independent, outside accountant. The Company shall cause the investment bank or the accountant,
as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than
ten Business Days from the time it receives the disputed determinations or calculations. The prevailing party (which, for purposes of
this UPO, is the party whose determinations or calculations is closest to those of the investment bank or the accountant, as the case
may be) in any dispute resolved pursuant to this Section 12 shall be entitled to the full amount of all reasonable expenses, including
all costs and fees paid or incurred in good faith, in relation to the resolution of such dispute. Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

 

13.            REMEDIES,
OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this UPO shall be cumulative and in addition to all other
remedies available under this UPO, at law or in equity (including a decree of specific performance and/or other injunctive relief), and
nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of
this UPO.

 

14.            TRANSFER.
Subject to applicable laws and the restrictions set forth in this paragraph, this UPO may be offered for sale, sold, transferred or assigned
without the consent of the Company. The Holder agrees that, pursuant to the Lock-Up Period (as defined below) contained in Rule 5110(e)(1) of
the Financial Industry Regulatory Authority, Inc. (“FINRA”), it will not (a) sell, transfer, assign, pledge,
hypothecate or otherwise transfer this UPO (including any Shares and Warrants issued or issuable hereunder); provided that the following
will not be prohibited: (i) the transfer of this UPO or any Shares and/or Warrants to any member participating in the offering and/or
to its officers or partners, its registered persons or affiliates, if all transferred securities remain subject to the lock-up restriction
in Rule 5110(e)(1) for the remainder of the Lock-Up Period; (ii) the exercise of this UPO, if all securities received
remain subject to the lock-up restriction in Rule 5110(e)(1) for the remainder of the Lock-Up Period; or (iii) the transfer
or sale of this UPO or any Shares and/or Warrants to the Company in a transaction exempt from registration under the Securities Act of
1933, as amended. As used herein, the term “Lock-Up Period” means the period beginning on the date of the commencement
of sales of the public offering contemplated by the Underwriting Agreement under the registration statement registering this UPO (the
 “Sales Commencement Date”) and ending on the one hundred eighty day anniversary of the Sales Commencement Date. In
addition, notwithstanding the other terms of this UPO or any agreement between the Company and the Holder, the Holder agrees that, as
required by FINRA Rule 5110, (i) this UPO may not be exercised more than five years from the Sales Commencement Date; (ii) the
Holder shall not have more than one demand registration right at the Company’s expense; (iii) the Holder shall not have the
right to demand registration of this UPO or the Units or Warrants more than five years after the Sales Commencement Date; (iv) the
Holder shall not have the right to piggyback registration with respect to this UPO or the Units or Warrants more than seven years from
the Sales Commencement Date; (v) this UPO may not have anti-dilution terms that allow the Holder and related persons to receive
more shares or to exercise at a lower price than originally agreed upon at the time of the Offering, when the public shareholders have
not been proportionally affected by a stock split, stock dividend, or other similar event; and (vi) this UPO may not have anti-dilution
terms that allow the Holder and related persons to receive or accrue cash dividends prior to the exercise or conversion of the security.

 

    -11-

     

    

 

15.            CERTAIN
DEFINITIONS. For purposes of this UPO, the following terms shall have the following meanings:

 

		(a)	“Bloomberg”
                                            means Bloomberg Financial Markets.

 

(b)            “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.

 

(c)            “Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and
last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market
begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may
be, then the last bid price or the last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing
bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security
is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively,
of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no
closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the
ask prices, respectively, of any market makers for such security as reported in the “pink sheets” published by OTC Markets
Group Inc. or similar publisher of such quotations. If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security
on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security
on such date shall be the fair market value as mutually determined by the Company and the Holder. All such determinations to be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

(d)            “Common
Stock” means (i) the Company’s shares of Class A Common Stock, par value $0.001 per share, and (ii) any
share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common
Stock.

 

(e)            “Convertible
Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable
for shares of Common Stock.

 

(f)            “Eligible
Market” means the Principal Market, The New York Stock Exchange, Inc., The NYSE MKT, The Nasdaq Global Market or The Nasdaq
Global Select Market.

 

    -12-

     

    

 

(g)            “Expiration
Date” means the fifth (5th) anniversary of the Exercisability Date or, if such date falls on a day other than a Trading Day
or on which trading does not take place on the Principal Market, or, if the Principal Market is not the principal trading market for
the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded (a “Holiday”),
the next date that is not a Holiday.

 

(h)            “Fundamental
Transaction” means that the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate
or merge with or into (whether or not the Company is the surviving corporation) another Person (but excluding a migratory merger effected
solely for the purpose of changing the jurisdiction of incorporation of the Company), or

 

(ii) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company to another Person, or (iii) allow another Person to make a purchase,
tender or exchange offer that is accepted by the holders of more than the 50% of the outstanding shares of Common Stock (not including
any shares of Common Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party
to, such purchase, tender or exchange offer), or (iv) consummate a stock purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement
or other business combination), (v) reorganize, recapitalize or reclassify its Common Stock, or (vi) any “person”
or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become
the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate
ordinary voting power represented by issued and outstanding Common Stock.

 

(i)            “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

(j)            “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or
equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the
Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

 

(k)            “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity and a government or any department or agency thereof.

 

		(l)	“Principal
                                            Market” means The Nasdaq Capital Market.

 

(m)            “Required
Holders” means, as of any date, the holders of at least a majority of the UPOs outstanding as of such date.

 

(n)            “Successor
Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been
entered into.

 

    -13-

     

    

 

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

 

(p)            “Warrants”
means the Warrants (both those included in the Units and those that are not included in the Units) registered for offer and sale
pursuant to the Registration Statement.

 

(q)            “Weighted
Average Price” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal
Market during the period beginning at 9:30:01 a.m., New York time (or such other time as the Principal Market publicly announces is the
official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the Principal Market publicly announces is
the official close of trading), as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board
for such security during the period beginning at 9:30:01 a.m., New York time (or such other time as the Principal Market publicly announces
is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the Principal Market publicly announces
is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security
by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers
for such security as reported in the “pink sheets” published by OTC Markets Group Inc. or similar publisher of such quotations.
If the Weighted Average Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Weighted Average
Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company
and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 12
with the term “Weighted Average Price” being substituted for the term “Exercise Price.” All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable
calculation period.

 

[Signature Page Follows]

 

    -14-

     

    

 

IN
WITNESS WHEREOF, the Company has caused this Unit Purchase Option to be duly executed as of the Issuance Date set out above.

 

	 	DIRECT DIGITAL HOLDINGS, INC.
	 	 
	 	By:	/s/ Mark D. Walker   
	 	Name:	Mark D. Walker
	 	Title:	Chairman and Chief Executive Officer

 

     

     

    

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO
EXERCISE THIS 

UNIT PURCHASE OPTION TO PURCHASE COMMON STOCK

 

DIRECT DIGITAL HOLDINGS, INC.

 

The undersigned holder hereby
exercises the right to purchase [Units (“Units”)][Warrants (“Warrants”)] of DIRECT DIGITAL HOLDINGS, INC.,
a Delaware corporation (the “Company”) securities, evidenced by the attached Unit Purchase Option. Capitalized terms used
herein and not otherwise defined shall have the respective meanings set forth in the Unit Purchase Option.

 

1.         Form of
Exercise Price. The Holder intends that payment of the Exercise Price shall be made as:

 

			                a “Cash
Exercise” with respect to   	 	 

	 	 	[Units][Warrants]; and/or

 

			                a “Cashless
Exercise” with respect to   	 	 

	 	 	[Units][Warrants]. 

 

2.         Payment
of Exercise Price. In the event that the holder has elected a Cash Exercise with respect to some or all of the [Units][Warrants]
to be issued pursuant hereto, the holder shall pay the Aggregate Exercise Price
in the sum of $______ ___  to the Company in accordance with the terms of the Unit Purchase Option.

 

3.        
Delivery of Units. The Company shall deliver to the holder _______ [Units][Warrants] in accordance with the
terms of the Unit Purchase Option and, after delivery of such [Units][Warrants], __________ [Units][Warrants]
remain subject to the Unit Purchase Option.

 

	Date:	______________________________________, _________________	 

 

 

	    Name  of Registered Holder	
	 	 

 

	By:		 
	 	Name:	 

	 	Title:

 

    A-1

     

    

EXHIBIT B

 

ASSIGNMENT FORM

 

DIRECT DIGITAL HOLDINGS, INC.

 

(To assign the foregoing Unit Purchase Option,
execute this form and supply required information. Do not use this form to purchase Units or Warrants.)

 

FOR VALUE RECEIVED, the foregoing Unit Purchase
Option and all rights evidenced thereby are hereby assigned to

 

		Name:	(Please Print)

 

		Address:	(Please Print)

 

		Dated:	                                            ,	

 

	 	Holder’s Signature:	  	 
     
	 	Holder’s Address:	 	 

 

NOTE: The signature to this Assignment Form must correspond
with the name as it appears on the face of the Unit Purchase Option, without alteration or enlargement or any change whatever. Officers
of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the
foregoing Unit Purchase Option.

 

    B-1

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