Document:

Exhibit
4.1

 

EXHIBIT
A

 

communications
systems, inc.

 

CERTIFICATE
OF DESIGNATION OF PREFERENCES, 

RIGHTS
AND LIMITATIONS

OF

SERIES
A CONVERTIBLE PREFERRED STOCK

 

PURSUANT
TO SECTION 302A.401 and 302A.133 OF THE 

minnesota
Business CORPORATION LAW

 

The
undersigned, __________ and ____________, do hereby certify that:

 

1.
They are the President and Secretary, respectively, of Communications Systems, Inc., a Minnesota corporation (the “Corporation”).

 

2.
The Corporation is authorized to issue three million shares of preferred stock, none of which have been issued.

 

3.
The following resolutions were duly adopted by the board of directors of the Corporation (the “Board of Directors”):

 

WHEREAS,
the articles of incorporation of the Corporation provide for a class of its authorized stock known as preferred stock, consisting
of three million shares, $1.00 par value per share, issuable from time to time in one or more series;

 

WHEREAS,
the Board of Directors is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms
of redemption and liquidation preferences of any wholly unissued series of preferred stock and the number of shares constituting
any series and the designation thereof, of any of them; and

 

WHEREAS,
it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions
and other matters relating to a series of the preferred stock, which shall consist of, except as otherwise set forth in the Purchase
Agreement, up to 25,000 shares of the preferred stock which the Corporation has the authority to issue, as follows:

 

NOW,
THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of preferred stock for
cash or exchange of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions
and other matters relating to such series of preferred stock as follows:

 

     

     

    

 

TERMS
OF PREFERRED STOCK

 

Section
1.      Definitions. For the purposes hereof, the following terms shall have the following meanings:

 

“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act.

 

“Alternate
Consideration” shall have the meaning set forth in Section 6(e).

 

“Attribution
Parties” shall have the meaning set forth in Section 5(d).

 

“Base
Conversion Price” shall have the meaning set forth in Section 6(b).

 

“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 5(d).

 

“Bloomberg”
means Bloomberg Financial Markets.

 

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

 

“Buy-In”
shall have the meaning set forth in Section 5(c)(iv).

 

“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership of capital stock of the Corporation, by contract or otherwise)
of in excess of 33% of the voting securities of the Corporation (other than by means of conversion or exercise of Preferred Stock
and the Securities issued together with the Preferred Stock), (b) the Corporation merges into or consolidates with any other Person,
or any Person merges into or consolidates with the Corporation and, after giving effect to such transaction, the stockholders
of the Corporation immediately prior to such transaction own less than 67% of the aggregate voting power of the Corporation or
the successor entity of such transaction, (c) the Corporation (and all of its Subsidiaries, taken as a whole), directly or indirectly,
sells or transfers all or substantially all of its assets to another Person and the stockholders of the Corporation immediately
prior to such transaction own less than 67% of the aggregate voting power of the acquiring Person immediately after the transaction,
(d) a replacement at one time or within a one year period of more than one-half of the members of the Board of Directors which
is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by
those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors
was approved by a majority of the members of the Board of Directors who are members on the Original Issue Date), or (e) the execution
by the Corporation of an agreement to which the Corporation is a party or by which it is bound, providing for any of the events
set forth in clauses (a) through (d) above.

 

    2 

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

“Conversion
Amount” means the sum of the Stated Value at issue.

 

    3 

     

    

 

“Conversion
Date” shall have the meaning set forth in Section 5(a).

 

“Conversion
Price” shall have the meaning set forth in Section 5(b).

 

“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in
accordance with the terms hereof.

 

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

 

“Dilutive
Issuance” shall have the meaning set forth in Section 6(b).

 

“Dilutive
Issuance Conversion Price” shall have the meaning set forth in Section 6(b).

 

“Dilutive
Issuance Notice” shall have the meaning set forth in Section 6(b).

 

“Distribution”
shall have the meaning set forth in Section 6(d).

 

“Effective
Date” means the date that the Registration Statement filed by the Corporation pursuant to the Registration Rights Agreement
is first declared effective by the Commission.

 

“Equity
Conditions” means, during the period in question, (a) the Corporation shall have duly honored all conversions scheduled
to occur or occurring by virtue of one or more Notices of Conversion of the applicable Holder on or prior to the dates so requested
or required, if any, (b) the Corporation shall have paid all liquidated damages and other amounts owing to the applicable Holder
in respect of the Preferred Stock, (c)(i) there is an effective Registration Statement pursuant to which the Holders are permitted
to utilize the prospectus thereunder to resell all of the shares of Common Stock issuable pursuant to the Transaction Documents
(and the Corporation believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable future)
or (ii) all of the Conversion Shares issuable pursuant to the Transaction Documents may be resold pursuant to Rule 144 without
volume or manner-of-sale restrictions or current public information requirements as determined by the counsel to the Corporation
as set forth in a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders,
(d) the Common Stock is trading on a Trading Market and all of the shares issuable pursuant to the Transaction Documents are listed
or quoted for trading on such Trading Market (and the Corporation believes, in good faith, that trading of the Common Stock on
a Trading Market will continue uninterrupted for the foreseeable future), (e) there is a sufficient number of authorized, but
unissued and otherwise unreserved, shares of Common Stock for the issuance of all of the shares then issuable pursuant to the
Transaction Documents, (f) the issuance of the shares in question to the applicable Holder would not violate the limitations set
forth in Section 5(d) herein, (g) there has been no public announcement of a pending or proposed Fundamental

 

    4 

     

    

 

Transaction or Change
of Control Transaction that has not been consummated, (h) the applicable Holder is not in possession of any information provided
by the Corporation, any of its Subsidiaries, or any of their officers, directors, employees, agents or Affiliates, that constitutes,
or may constitute, material, non-public information, and (i) for each Trading Day in a period of 10 consecutive Trading Days prior
to the applicable date in question (but following the Effective Date), the daily dollar trading volume for the Common Stock on
the principal Trading Market exceeds $5 million per Trading Day.

 

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

 

“Exempt
Issuance” means the issuance of (a) shares of Common Stock, restricted stock or restricted stock units, or options to
employees, officers or directors of the Corporation pursuant to any stock or option plan duly adopted for such purpose, by a majority
of the non-employee members of the Board of Directors of the Corporation or a majority of the members of a committee of non-employee
directors established for such purpose for services rendered to the Corporation, (b) securities upon the exercise or exchange
of or conversion of any Securities issued under the Purchase Agreement, Warrants to the Placement Agent in connection with the
transactions pursuant to the Purchase Agreement and any securities upon exercise of Warrants to the Placement Agent and/or other
securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of the
Purchase Agreement, provided that such securities have not been amended since the date of the Purchase Agreement to increase the
number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than
in connection with stock splits or combinations) or to extend the term of such securities, and (c) shares of Common Stock or Common
Stock Equivalents issued in connection with any merger or consolidation of the Corporation or any Subsidiary with or into another
Person or other similar business combination involving the Corporation or any Subsidiary or any acquisitions or strategic transactions
involving the Corporation or any Subsidiary, in each case, approved by a majority of the disinterested directors of the Corporation,
provided, that (i) such securities are issued at a price per share no less than the average of the VWAP for the twenty (20) consecutive
Trading Days immediately following the public announcement of the execution of definitive documents for such transaction, and
(ii) except with respect to the issuances of securities set forth on Schedule 1.1 of the Purchase Agreement, such securities are
issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit
the filing of any registration statement in connection therewith during the prohibition period in Section 4.13(a) of the Purchase
Agreement, and provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself
or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Corporation
and shall provide to the Corporation additional benefits in addition to the investment of funds, but shall not include a transaction
in which the Corporation is issuing securities primarily for the purpose of raising capital or to an entity whose primary business
is investing in securities. Notwithstanding anything herein to the contrary, a Variable Rate Transaction shall not be an Exempt
Issuance.

 

    5 

     

    

 

“Forced
Conversion Date” shall have the meaning set forth in Section 7.

 

“Forced
Conversion Notice” shall have the meaning set forth in Section 7.

 

“Forced
Conversion Notice Date” shall have the meaning set forth in Section 7.

 

“Fundamental
Transaction” shall have the meaning set forth in Section 6(e).

 

“GAAP”
means United States generally accepted accounting principles.

 

“Holder”
means a holder of the Preferred Stock.

 

“Junior
Securities” means the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities
which are explicitly senior or pari passu to the Preferred Stock in dividend rights or liquidation preference.

 

“Lock-Up
Agreements” means the Lock-Up Agreements, dated as of the date of the Purchase Agreement, by and between the Corporation
and each of the directors of the Corporation, officers of the Corporation, and beneficial owners of 10% or more of the Common
Stock, in the form of Exhibit D attached to the Purchase Agreement.

 

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

 

“New
York Courts” shall have the meaning set forth in Section 10(d).

 

“Notice
of Conversion” shall have the meaning set forth in Section 5(a).

 

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

 

“Original
Issue Date” means the date of the first issuance of any shares of the Preferred Stock regardless of the number of transfers
of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence such
Preferred Stock.

 

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

 

“Placement
Agent” shall have the meaning ascribed to such term in Section 1.1 of the Purchase Agreement.

 

“Preferred
Stock” shall have the meaning set forth in Section 2.

 

    6 

     

    

 

“Principal
Market” means The Nasdaq Capital Market.

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of June 28, 2021, among the Corporation and the original
Holders, as amended, modified or supplemented from time to time in accordance with its terms.

 

“Purchase
Rights” shall have the meaning set forth in Section 6(c).

 

“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, among the
Corporation and the original Holders, in the form of Exhibit B attached to the Purchase Agreement.

 

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

 

“Repurchase
Date” shall have the meaning set forth in Section 7.

 

“Repurchase
Notice” shall have the meaning set forth in Section 7.

 

“Repurchase
Price Per Share” shall have the meaning set forth in Section 7.

 

“Required
Holders” shall have the meaning set forth in Section 4.

 

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

 

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

 

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

 

“Share
Delivery Date” shall have the meaning set forth in Section 5(c).

 

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

 

“Side
Letter” means that certain letter agreement, dated as of the date of the Purchase Agreement, by and between CrowdOut
Capital LLC and the Corporation.

 

“Standard
Settlement Period” shall have the meaning set forth in Section 5(c).

 

    7 

     

    

 

“Stated
Value” shall have the meaning set forth in Section 2.

 

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

 

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

 

“Successor
Entity” shall have the meaning set forth in Section 6(e).

 

“Threshold
Period” shall have the meaning set forth in Section 7.

 

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

 

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

 

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

 

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

 

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

 

“Unconverted
Shares” shall have the meaning set forth in Section 7.

 

“Valuation
Event” shall have the meaning set forth in Section 6(b)(iv).

 

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

 

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

 

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

 

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

 

Section
2.      Designation, Amount and Par Value. The series of preferred stock shall be designated as its Series A Convertible
Preferred Stock (the “Preferred Stock”) and the number of shares so designated shall be up to 25,000 (which
shall not be subject to increase without the written consent of the Holders of a majority of the then outstanding shares of the
Preferred Stock). Each share of Preferred Stock shall have a par value of $1.00 per share and a stated value equal to $1,000 (the
“Stated Value”).

 

Section
3.      Dividends. If the Corporation declares, pays or sets aside any dividends on shares of Common Stock of the Corporation
(other than dividends on shares of Common Stock payable in shares of Common Stock), the Holders of the Preferred Stock then outstanding
shall be entitled to participate in such dividend on each outstanding share of Preferred Stock in an amount at least equal to
that dividend per share of Preferred Stock as would equal the product of (A) the dividend payable on each share of Common Stock
determined, if applicable, as if all shares of such class or series had been converted into Common Stock and (B) the number of
shares of Common Stock issuable upon conversion of a share of Preferred Stock, in each case calculated on the record date for
determination of holders entitled to receive such dividend.

 

Section
4.      Voting Rights. Except as otherwise provided herein or as otherwise required by law, the
Preferred Stock shall have no voting rights. However, as long as any shares of Preferred Stock are outstanding, the Corporation
shall not, without the affirmative vote of the Holders of a majority of the then outstanding shares of the Preferred Stock (the
“Required Holders"), (a) alter or change adversely the powers, preferences or rights given to the Preferred Stock or
alter or amend this Certificate of Designation, (b) authorize or create any class of stock ranking as to redemption senior to the
Preferred Stock, (c) amend its articles of incorporation or other charter documents in any manner that adversely affects any rights
of the Holders, (d) increase the number of authorized shares of Preferred Stock, or (e) enter into any agreement with respect to any
of the foregoing.

 

    9 

     

    

 

Section
5.      Conversion.

 

a)          Conversions at Option of Holder. Each share of Preferred Stock shall be convertible, at any time and from time to time
from and after the Original Issue Date at the option of the Holder thereof, into that number of shares of Common Stock (subject
to the limitations set forth in Section 5(d)) determined by dividing the Stated Value of such share of Preferred Stock by the
Conversion Price. Holders shall effect conversions by providing the Corporation with the form of conversion notice attached hereto
as Annex A (a “Notice of Conversion”). Each Notice of Conversion shall specify the number of shares
of Preferred Stock to be converted, the number of shares of Preferred Stock owned prior to the conversion at issue, the number
of shares of Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected,
which date may not be prior to the date the applicable Holder delivers by facsimile such Notice of Conversion to the Corporation
(such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion
Date shall be the date that such Notice of Conversion to the Corporation is deemed delivered hereunder. No ink-original Notice
of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice
of Conversion form be required. The calculations and entries set forth in the Notice of Conversion shall control in the absence
of manifest or mathematical error. To effect conversions of shares of Preferred Stock, a Holder shall not be required to surrender
the certificate(s) representing the shares of Preferred Stock to the Corporation unless all of the shares of Preferred Stock represented
thereby are so converted, in which case such Holder shall deliver the certificate representing such shares of Preferred Stock
promptly following the Conversion Date at issue. Shares of Preferred Stock converted into Common Stock in accordance with the
terms hereof shall be canceled and shall not be reissued.

 

b)          Conversion Price. The conversion price for the Preferred Stock shall equal $3.40, subject to adjustment herein (the
“Conversion Price”).

 

 c)           Mechanics of Conversion.

 

i.               Delivery of Conversion Shares Upon Conversion. Not later than the earlier of (i) two (2) Trading Days and (ii) the number
of Trading Days comprising the Standard Settlement Period (as defined below) after each Conversion Date (the “Share Delivery
Date”), the Corporation shall deliver, or cause to be delivered, to the converting Holder the number of Conversion Shares
being acquired upon the conversion of the Preferred Stock which shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement). The Corporation shall deliver the Conversion Shares required to be delivered by the Corporation under this Section 5 electronically through the Depository Trust Company or another established clearing corporation performing similar functions. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Corporation’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Conversion.

 

    10 

     

    

 

ii.              Failure to Deliver Conversion Shares. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered
to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice
to the Corporation at any time on or before its receipt of such Conversion Shares, to rescind such Conversion, in which event
the Corporation shall promptly return to the Holder any original Preferred Stock certificate delivered to the Corporation and
the Holder shall promptly return to the Corporation the Conversion Shares issued to such Holder pursuant to the rescinded Notice
of Conversion.

 

iii.             Obligation Absolute; Partial Liquidated Damages. The Corporation’s obligation to issue and deliver the Conversion
Shares upon conversion of Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of
any action or inaction by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery
of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged
violation of law by such Holder or any other person, and irrespective of any other circumstance which might otherwise limit such
obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided, however,
that such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against such
Holder. In the event a Holder shall elect to convert any or all of the Stated Value of its Preferred Stock, the Corporation may
not refuse conversion based on any claim that such Holder or any one associated or affiliated with such Holder has been engaged
in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining
and/or enjoining conversion of all or part of the Preferred Stock of such Holder shall have been sought and obtained, and the
Corporation posts a surety bond for the benefit of such Holder in the amount of 150% of the Stated Value of Preferred Stock which
is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying
dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of such injunction,
the Corporation shall issue Conversion Shares and, if applicable, cash, upon a properly noticed conversion. If the Corporation
fails to deliver to a Holder such Conversion Shares pursuant to Section 5(c)(i) by the

 

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Share Delivery Date applicable to such
conversion, the Corporation shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $5,000 of
Stated Value of Preferred Stock being converted, $50 per Trading Day (increasing to $100 per Trading Day on the third Trading
Day and increasing to $200 per Trading Day on the sixth Trading Day after such damages begin to accrue) for each Trading Day after
the Share Delivery Date until such Conversion Shares are delivered or Holder rescinds such conversion. Nothing herein shall limit
a Holder’s right to pursue actual damages for the Corporation’s failure to deliver Conversion Shares within the period
specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit
a Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

 

iv.             Compensation for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion. In addition to any other rights
available to the Holder, if the Corporation fails for any reason to deliver to a Holder the applicable Conversion Shares by the
Share Delivery Date pursuant to Section 5(c)(i), and if after such Share Delivery Date such Holder is required by its brokerage
firm to purchase (in an open market transaction or otherwise), or such Holder’s brokerage firm otherwise purchases, shares
of Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares which such Holder was entitled to
receive upon the conversion relating to such Share Delivery Date (a “Buy-In”), then the Corporation shall (A)
pay in cash to such Holder (in addition to any other remedies available to or elected by such Holder) the amount, if any, by which
(x) such Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y)
the product of (1) the aggregate number of shares of Common Stock that such Holder was entitled to receive from the conversion
at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed
(including any brokerage commissions) and (B) at the option of such Holder, either reissue (if surrendered) the shares of Preferred
Stock equal to the number of shares of Preferred Stock submitted for conversion (in which case, such conversion shall be deemed
rescinded) or deliver to such Holder the number of shares of Common Stock that would have been issued if the Corporation had timely
complied with its delivery requirements under Section 5(c)(i). For example, if a Holder purchases shares of Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Preferred Stock with
respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase
obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Corporation shall be required to
pay such Holder $1,000. The Holder shall provide the Corporation written notice indicating the amounts payable to such Holder
in respect of the Buy-In and, upon request of the Corporation, evidence of the amount of such loss. Nothing herein shall limit
a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Corporation's failure to timely deliver the Conversion Shares upon conversion of the shares of Preferred Stock as required pursuant to the terms hereof

 

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v.              Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available
out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Preferred Stock,
as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder
(and the other Holders of the Preferred Stock), not less than such aggregate number of shares of the Common Stock as shall (subject
to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions
of Section 6) upon the conversion of the then outstanding shares of Preferred Stock. The Corporation covenants that all shares
of Common Stock that shall be so issuable shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable
and, if the Registration Statement is then effective under the Securities Act, shall be registered for public resale in accordance
with such Registration Statement (subject to such Holder’s compliance with its obligations under the Registration Rights
Agreement).

 

vi.             Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of
the Preferred Stock. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion,
the Corporation shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such
fraction multiplied by the Conversion Price or round up to the next whole share. Notwithstanding anything to the contrary contained
herein, but consistent with the provisions of this subsection with respect to fractional Conversion Shares, nothing shall prevent
any Holder from converting fractional shares of Preferred Stock.

 

vii.            Transfer Taxes and Expenses. The issuance of Conversion Shares on conversion of the Preferred Stock shall be made without
charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such
Conversion Shares, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Holders of
such shares of Preferred Stock and the Corporation shall not be required to issue or deliver such Conversion Shares unless or
until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall
have established to the satisfaction of the Corporation that such tax has been paid. The Corporation shall pay all Transfer Agent
fees required for same-day processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established
clearing corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.

 

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d)            Beneficial Ownership Limitation. The Corporation shall not effect any conversion of the Preferred Stock, and a Holder shall
not have the right to convert any portion of the Preferred Stock, to the extent that, after giving effect to the conversion set
forth on the applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any Persons acting
as a group together with such Holder or any of such Holder’s Affiliates (such Persons, “Attribution Parties”))
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon conversion of the Preferred Stock with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining,
unconverted Stated Value of Preferred Stock beneficially owned by such Holder or any of its Affiliates or Attribution Parties
and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation subject to
a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, the Preferred
Stock or the Warrants) beneficially owned by such Holder or any of its Affiliates or Attribution Parties.  Except as set
forth in the preceding sentence, for purposes of this Section 5(d), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained
in this Section 5(d) applies, the determination of whether the Preferred Stock is convertible (in relation to other securities
owned by such Holder together with any Affiliates and Attribution Parties) and of how many shares of Preferred Stock are convertible
shall be in the sole discretion of such Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder’s
determination of whether the shares of Preferred Stock may be converted (in relation to other securities owned by such Holder
together with any Affiliates and Attribution Parties) and how many shares of the Preferred Stock are convertible, in each case
subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, each Holder will be deemed to represent
to the Corporation each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions
set forth in this paragraph and the Corporation shall have no obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 5(d), in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated
in the most recent of the following: (i) the Corporation’s most recent periodic or annual report filed with the Commission,
as the case may be, (ii) a more recent public announcement by the Corporation or (iii) a more recent written notice by the Corporation
or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request (which
may be via email) of a Holder, the Corporation shall within one Trading Day confirm orally and in writing to such 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

 

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securities of the Corporation, including the Preferred Stock, by such Holder
or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported.
The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of
any shares of Preferred Stock, 9.99%) of the number of shares of the Common Stock outstanding immediately after giving effect
to the issuance of shares of Common Stock issuable upon conversion of Preferred Stock held by the applicable Holder. A Holder,
upon notice to the Corporation, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 5(d) applicable
to its Preferred Stock provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this
Preferred Stock held by the Holder and the provisions of this Section 5(d) shall continue to apply. Any such increase in the Beneficial
Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Corporation and
shall only apply to such Holder and no other 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 5(d) to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or
supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall
apply to a successor Holder of Preferred Stock. Notwithstanding anything in this Certificate of Designation to the contrary, upon
the election of a Holder made prior to the issuance of any shares of Preferred Stock, the Beneficial Ownership Limitation and
this Section 5(d) shall not apply to any conversion of Preferred Stock in connection with a Change of Control Transaction.

 

Section
6.      Certain Adjustments.

 

a)            Stock Dividends and Stock Splits. If the Corporation, at any time while this Preferred Stock is outstanding: (i) pays a
stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock
or any other Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the
Corporation upon conversion of this Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a larger number
of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number
of shares, or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the
Corporation, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event, and of which the
denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant
to this Section 6(a) shall become effective immediately after the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision,
combination or re-classification.

 

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b)            Subsequent Equity Sales. If, at any time while this Preferred Stock is outstanding, the Corporation or any Subsidiary,
as applicable sells, enters into an agreement to sell or grants any option to purchase or sells or grants any right to reprice,
or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock
or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower
than the then Conversion Price (such lower price, the “Base Conversion Price” and such issuances, collectively,
a “Dilutive Issuance”) (it being understood and agreed that if the holder of the Common Stock or Common Stock
Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with
such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Conversion
Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance
at such effective price), then simultaneously with the consummation (or, if earlier, the announcement) of each Dilutive Issuance
the Conversion Price shall be reduced to equal the lower of (i) the Base Conversion Price and (ii) the lowest VWAP during the
five (5) consecutive Trading Days immediately following the public announcement of the execution of the Dilutive Issuance (such
lower price, the “Dilutive Issuance Conversion Price”) (for the avoidance of doubt, if such public announcement
is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day in
such five (5) Trading Day period and if the Preferred Stock is converted pursuant to Section 5(a), on any given Conversion Date
during any such five (5) Trading Day period, solely with respect to such portion of the Preferred Stock converted on such applicable
Conversion Date, such applicable five (5) Trading Day period shall be deemed to have ended on, and included, the Trading Day immediately
prior to such Conversion Date). Notwithstanding anything herein to the contrary, no adjustment will be made under this Section
6(b) in respect of an Exempt Issuance. If the Corporation enters into a Variable Rate Transaction, despite the prohibition set
forth in the Purchase Agreement, the Corporation shall be deemed to have issued Common Stock or Common Stock Equivalents at the
lowest possible price, conversion price or exercise price at which such securities may be issued, converted or exercised. The
Corporation shall notify the Holders in writing, no later than the Trading Day following the issuance or deemed issuance of any
Common Stock or Common Stock Equivalents subject to this Section 6(b), indicating therein the applicable issuance price, or applicable
reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”).
For purposes of clarification, whether or not the Corporation provides a Dilutive Issuance Notice pursuant to this Section 6(b),
upon the occurrence of any Dilutive Issuance, the Holders are entitled to receive a number of Conversion Shares based upon the
Dilutive Issuance Conversion Price on or after the date of such Dilutive Issuance, regardless of whether a Holder accurately refers
to the Dilutive Issuance Conversion Price in the Notice of Conversion. For purposes of determining the adjusted Conversion Price
under this Section 6(b), the following shall be applicable:

 

i.               Issuance of Options. If the Corporation in any manner grants or sells, or the Corporation publicly announces the issuance
or sale of, any Options and the lowest price per share for which one share of Common Stock is issuable

 

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upon the exercise of any
such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Options
is less than the then Conversion Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued
and sold by the Corporation at the time of the granting or sale of such Options for such price per share. For purposes of this
Section 6(b)(i), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such
Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Options”
shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Corporation with respect
to any one share of Common Stock upon the granting or sale of the Options, upon exercise of the Options and upon conversion, exercise
or exchange of any Convertible Security issuable upon exercise of such Options less any consideration paid or payable by the Corporation
with respect to such one share of Common Stock upon the granting or sale of such Options, upon exercise of such Options and upon
conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Options. No further adjustment of
the Conversion Price shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon
the exercise of such Options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange
of such Convertible Securities.

 

ii.              Issuance of Convertible Securities. If the Corporation in any manner issues or sells, or the Corporation publicly announces
the issuance or sale of, any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable
upon the conversion, exercise or exchange thereof is less than the then Conversion Price, then such share of Common Stock shall
be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the issuance or sale of such Convertible
Securities for such price per share. For the purposes of this Section 6(b)(ii), the “lowest price per share for which one
share of Common Stock is issuable upon the conversion, exercise or exchange thereof” shall be equal to the sum of the lowest
amounts of consideration (if any) received or receivable by the Corporation with respect to any one share of Common Stock upon
the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security less any
consideration paid or payable by the Corporation with respect to such one share of Common Stock upon the issuance or sale of such
Convertible Security and upon conversion, exercise or exchange of such Convertible Security. No further adjustment of the Conversion
Price shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible
Securities, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustment
of the Conversion Price has been or is to be made pursuant to other provisions of this Section 6(b), no further adjustment of
the Conversion Price shall be made by reason of such issuance or sale.

 

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iii.             Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time,
the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would
have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase
price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted,
issued or sold. For purposes of this Section 6(b)(iii), if the terms of any Option or Convertible Security that was outstanding
as of the date of the Purchase Agreement are increased or decreased in the manner described in the immediately preceding sentence,
then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange
thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section
6(b) shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

 

iv.             Calculation of Consideration Received. If any shares of Common Stock, Options or Convertible Securities are issued or sold
or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received
by the Corporation therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of such consideration received by the Corporation will be the fair value of such consideration, except
where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Corporation
will be the Closing Sale Price of such publicly traded securities on the date of receipt of such publicly traded securities. If
any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection
with any merger in which the Corporation is the surviving entity, the amount of consideration therefor will be deemed to be the
fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common
Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or publicly
traded securities will be determined jointly by the Corporation and the Required Holders. If such parties are unable to reach
agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”),
the fair value of such consideration will be determined within five (5) Business Days after the tenth (10th) day following
the Valuation Event by an independent, reputable appraiser jointly selected by the Corporation and the Required Holders. The determination
of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser
shall be borne by the Corporation.

 

v.              Record Date. In case the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling
them (i) to receive a

 

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dividend or other distribution payable in Common Stock, Options or Convertible Securities or (ii) to subscribe
for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue
or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

 

vi.             Treasury Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held
by or for the account of the Corporation or any of its wholly-owned subsidiaries, and the disposition of any such shares (other
than the cancellation or retirement thereof) shall be considered an issue or sale of Common Stock for the purpose of this paragraph
(b).

 

c)             Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 6(a) and/or Section 6(b) above, if at any
time the Corporation grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”),
then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion
of such Holder’s Preferred Stock (without regard to any limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined
for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the Holder’s right to
participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder
shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock
as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder
until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

d)            Pro Rata Distributions. During such time as this Preferred Stock is outstanding, if the Corporation declares or makes any
dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of
return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a “Distribution”), at any time after the issuance of this Preferred Stock, then, in each such case, the Holder
shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the
Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Preferred Stock (without regard
to any limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before
the date of

 

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which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to
the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial
ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the
Holder exceeding the Beneficial Ownership Limitation).

 

e)             Fundamental Transaction. If, at any time while this Preferred Stock is outstanding, (A) the Corporation shall, directly
or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate
or merge with or into (whether or not the Corporation is the surviving corporation) another Person, Affiliate or group (as that
term is used in Section 13(d) of the Exchange Act and as defined in Rule 13d-5 thereunder) (“Subject Entity”),
or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the
Corporation or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject
Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Corporation to be subject to or have
its shares of Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer
that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding
shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated
with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number
of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party
to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange
Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or
more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50%
of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party
to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common
Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange Act)
of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its shares of Common
Stock, (B) the Corporation shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one
or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, whether through acquisition,
purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common

 

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Stock, merger, consolidation,
business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification
or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued
and outstanding shares of Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock not held by all such Subject Entities as of the date of the Purchase Agreement calculated as
if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate
ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Corporation
sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders
of the Corporation to surrender their Common Stock without approval of the shareholders of the Corporation or (C) directly
or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or
the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of
this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may
be defective or inconsistent with the intended treatment of such instrument or transaction (each a “Fundamental Transaction”),
then, upon any subsequent conversion of this Preferred Stock, the Holder shall have the right to receive, for each Conversion
Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without
regard to any limitation in Section 5(d) on the conversion of this Preferred Stock), the number of shares of Common Stock of the
successor or acquiring corporation or of the Corporation, if it is the surviving corporation, and any additional consideration
(the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number
of shares of Common Stock for which this Preferred Stock is convertible immediately prior to such Fundamental Transaction (without
regard to any limitation in Section 5(d) on the conversion of this Preferred Stock). For purposes of any such conversion, the
determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount
of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation
shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Preferred Stock following such Fundamental Transaction. To the extent necessary
to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall
file a new Certificate of Designation with the same terms and conditions and issue to the Holders new preferred stock consistent
with the foregoing provisions and evidencing the Holders’ right to convert such preferred stock into Alternate Consideration.
The Corporation shall cause any successor entity in a Fundamental Transaction in which the Corporation is not the survivor (the
“Successor Entity”) to assume in writing all of the obligations of the Corporation under this

 

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Certificate of
Designation and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this
Section 6(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder
(without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder of this Preferred Stock,
deliver to the Holder in exchange for this Preferred Stock a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Preferred Stock which is convertible for a corresponding number of shares
of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable
upon conversion of this Preferred Stock (without regard to any limitations on the conversion of this Preferred Stock) prior to
such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital
stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the
value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose
of protecting the economic value of this Preferred Stock immediately prior to the consummation of such Fundamental Transaction),
and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction,
the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction,
the provisions of this Certificate of Designation and the other Transaction Documents referring to the “Corporation”
shall refer instead to the Successor Entity), and may exercise every right and power of the Corporation and shall assume all of
the obligations of the Corporation under this Certificate of Designation and the other Transaction Documents with the same effect
as if such Successor Entity had been named as the Corporation herein. Notwithstanding anything above to the contrary, the consummation
of the transactions contemplated by the Merger Agreement shall not be deemed a Fundamental Transaction.

 

f)            Calculations. All calculations under this Section 6 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 6, the number of shares of Common Stock deemed to be issued and outstanding as
of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued
and outstanding.

 

g)           Notice to the Holders.

 

i.               Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 6,
the Corporation shall promptly deliver to each Holder by facsimile or email a notice setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

ii.              Notice to Allow Conversion by Holder. If (A) the Corporation shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants to

 

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subscribe
for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Corporation
shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Corporation
is a party, any sale or transfer of all or substantially all of the assets of the Corporation (and all of its Subsidiaries, taken
as a whole), or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or
(E) the Corporation shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the
Corporation, then, in each case, the Corporation shall cause to be filed at each office or agency maintained for the purpose of
conversion of this Preferred Stock, and shall cause to be delivered by facsimile or email to each Holder at its last facsimile
number or email address as it shall appear upon the stock books of the Corporation, at least twenty (20) calendar days prior to
the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants
are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein
or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the
extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Corporation
or any of the Subsidiaries, the Corporation shall simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to convert the Conversion Amount of the Preferred Stock (or any part hereof) during
the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except
as may otherwise be expressly set forth herein.

 

Section
7.     Forced Conversion. Notwithstanding anything herein to the contrary, if after the 10th Trading Day
following the Effective Date, the VWAP for each Trading Day during any 10 consecutive Trading Day period, which 10 consecutive
Trading Day period shall have commenced only after the Effective Date (“Threshold Period”), exceeds 200% of
the then effective Conversion Price and the daily dollar trading volume for the Common Stock exceeds $5 million on each Trading
Day during the Threshold Period, the Corporation may, within 1 Trading Day after the end of any such Threshold Period, deliver
a written notice to all Holders (a “Forced Conversion Notice” and the date such notice is delivered to all
Holders, the “Forced Conversion Notice Date”) to cause each Holder to convert all or part of such Holder’s
Preferred Stock (as specified in such Forced Conversion Notice) plus all accrued but unpaid dividends thereon and all liquidated
damages and other amounts due in respect of the Preferred Stock pursuant to Section 6, it being agreed that the “Conversion
Date” for purposes of Section 5

 

    23 

     

    

 

shall be deemed to occur no later than the earlier of (i) two (2) Trading Days and (ii)
the number of Trading Days comprising the Standard Settlement Period following the Forced Conversion Notice Date (such date, the
“Forced Conversion Date”). The Corporation may not deliver a Forced Conversion Notice, and any Forced Conversion
Notice delivered by the Corporation shall not be effective, unless all of the Equity Conditions have been met on each Trading
Day during the applicable Threshold Period through and including the later of the Forced Conversion Date and the Trading Day after
the date that the Conversion Shares issuable pursuant to such conversion are actually delivered to the Holders pursuant to the
Forced Conversion Notice. Any Forced Conversion Notices shall be applied ratably to all of the Holders based on each Holder’s
initial purchases of Preferred Stock under the Purchase Agreement, provided that any voluntary conversions by a Holder shall be
applied against such Holder’s pro rata allocation, thereby decreasing the aggregate amount forcibly converted hereunder
if less than all shares of the Preferred Stock are forcibly converted. For purposes of clarification, a Forced Conversion shall
be subject to all of the provisions of Section 5, including, without limitation, the provisions requiring payment of liquidated
damages and limitations on conversions, it being understood and agreed that any Preferred Stock that cannot be converted pursuant
to this Section 7 because of the Beneficial Ownership Limitation set forth in Section 5(d) shall remain outstanding (such shares
of Preferred Stock that remain outstanding, the “Unconverted Shares”). The Corporation may elect, upon delivery
of written notice to any Holder holding Unconverted Shares (a “Repurchase Notice”), to repurchase all or a
portion of such Unconverted Shares from each such Holder at a price per Unconverted Share equal to the quotient obtained by dividing
the Stated Value by the then-current Conversion Price and then multiplying such quotient by the greater of (i) the Closing Sale
Price on the Forced Conversion Date and (ii) the then-current Closing Sale Price of the Common Stock as of the Trading Day immediately
prior to the date of such Repurchase Notice (the “Repurchase Price Per Share”). The Repurchase Notice shall
set forth the date on which the closing of such repurchase shall occur (which date shall be no sooner than three (3) Trading Days
from the date of the Repurchase Notice) (the “Repurchase Date”). The Repurchase Price Per Share shall be paid
in cash by wire transfer of immediately available funds at the closing of such repurchase. Each such Holder agrees to execute
and deliver all documents reasonably requested by the Corporation in order to effect and evidence such repurchase and, with regard
to any Unconverted Shares held in certificated form, surrender such certificates to the Corporation. On the Repurchase Date, the
Unconverted Shares subject to such repurchase shall automatically be converted into the right to receive the Repurchase Price
Per Share without interest and without any further act or action of the Holders and whether or not the certificates representing
such shares are surrendered or instruments of transfer are delivered to the Corporation; provided, that the Corporation shall
not be obligated to pay the Repurchase Price Per Share for such Unconverted Shares unless and until all certificates representing
such shares have been surrendered to the Corporation and all reasonably requested instruments of transfer have been executed by
each such Holder and delivered to the Corporation. From and after the Repurchase Date, unless there shall have been any default
in the payment of the Repurchase Price Per Share, all rights of the holders of Unconverted Shares subject to repurchase (other
than the right to receive the Repurchase Price Per Share in accordance with this Section 7) shall cease and be of no further force
or effect with respect to such shares on such Repurchase Date, and such shares shall not thereafter be transferred on the books
of the Corporation or be deemed to be outstanding for any purpose whatsoever.

 

    24 

     

    

 

Section
8.     Negative Covenants. As long as any shares of Preferred Stock are outstanding, unless the Holders of at least
67% in Stated Value of the then outstanding shares of Preferred Stock shall have otherwise given prior written consent, the Corporation
shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:

 

a)             amend its charter documents, including, without limitation, its articles of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder;

 

b)             repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common
Stock, Common Stock Equivalents or Junior Securities, other than as to (i) the Conversion Shares or Warrant Shares as permitted
or required under the Transaction Documents and (ii) repurchases of Common Stock or Common Stock Equivalents of departing officers
and directors of the Corporation, provided that such repurchases shall not exceed an aggregate of $100,000 for all officers and
directors for so long as the Preferred Stock is outstanding;

 

c)             enter into any transaction with any Affiliate of the Corporation which would be required to be disclosed in any public filing
with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the
disinterested directors of the Corporation (even if less than a quorum otherwise required for board approval); or

 

d)             enter into any agreement with respect to any of the foregoing.

 

Section
9.      [RESERVED]

 

Section 10.     Miscellaneous.

 

a)             Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without
limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile or e-mail attachment, or sent
by a nationally recognized overnight courier service, addressed to the Corporation, at the address set forth above Attention:
_________________, facsimile number _______________, e-mail address _____________, or such other facsimile number, e-mail address
or address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section
10. Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing
and delivered personally, by facsimile or e-mail attachment, or sent by a nationally recognized overnight courier service addressed
to each Holder at the facsimile number, e-mail address or address of such Holder appearing on the books of the Corporation, or
if no such facsimile number, e-mail address or address appears on the books of the Corporation, at the principal place of business
of such Holder, as set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed
given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via facsimile
at the facsimile number or e-mail

 

    25 

     

    

 

attachment at the e-mail address set forth or referenced in this Section prior to 5:30 p.m.
(New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number or e-mail attachment at the e-mail address set forth or referenced in this Section
on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given.

 

b)            Absolute Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alter or
impair the obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, accrued dividends and
accrued interest, as applicable, on the shares of Preferred Stock at the time, place, and rate, and in the coin or currency, herein
prescribed.

 

c)             Lost or Mutilated Preferred Stock Certificate. If a Holder’s Preferred Stock certificate shall be mutilated, lost,
stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated
certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of
Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction
of such certificate, and of the ownership thereof reasonably satisfactory to the Corporation.

 

d)             Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Certificate
of Designation shall be governed by and construed and enforced in accordance with the internal laws of the State of Minnesota,
without regard to the principles of conflict of laws thereof. All legal proceedings concerning the interpretation, enforcement
and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its
respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts
sitting in the City of New York, Borough of Manhattan (the “New York Courts”). The Corporation and each Holder
hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement
of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper
or inconvenient venue for such proceeding. The Corporation and each Holder hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Certificate
of Designation and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law.
The Corporation and each Holder hereby

 

    26 

     

    

 

irrevocably waives, to the fullest extent permitted by applicable law, any and all right
to trial by jury in any legal proceeding arising out of or relating to this Certificate of Designation or the transactions contemplated
hereby. If the Corporation or any Holder shall commence an action or proceeding to enforce any provisions of this Certificate
of Designation, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’
fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

e)             Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall
not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of
this Certificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict
adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive
that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this
Certificate of Designation on any other occasion. Any waiver by the Corporation or a Holder must be in writing.

 

f)              Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of
this Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it
shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount
deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall
automatically be lowered to equal the maximum rate of interest permitted under applicable law.

 

g)            Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day,
such payment or other obligation shall be made or performed on the next succeeding Business Day.

 

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

 

i)             Status of Converted or Reacquired Preferred Stock. Shares of Preferred Stock may only be issued pursuant to the Purchase
Agreement. If any shares of Preferred Stock shall be converted or reacquired by the Corporation, such shares shall resume the
status of authorized but unissued shares of preferred stock and shall no longer be designated as its Series A class of Preferred
Stock.

 

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

 

    27 

     

    

RESOLVED,
FURTHER, that the Chairman, the president or any vice-president, and the secretary or any assistant secretary, of the Corporation
be and they hereby are authorized and directed to prepare and file this Certificate of Designation of Preferences, Rights and
Limitations in accordance with the foregoing resolution and the provisions of Minnesota law.

 

IN
WITNESS WHEREOF, the undersigned have executed this Certificate this ___ day of [_____] 2021.

 

	Name:	 	Name:
	Title:	 	Title:

 

     

     

    

 

ANNEX
A

 

NOTICE
OF CONVERSION

 

(To
be Executed by the Registered Holder in order to Convert Shares of Preferred Stock)

 

The
undersigned hereby elects to convert the number of shares of Series A Convertible Preferred Stock indicated below into shares
of common stock, par value $0.05 per share (the “Common Stock”), of Communications Systems, Inc., a Minnesota
corporation (the “Corporation”), according to the conditions hereof, as of the date written below. If shares
of Common Stock are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and opinions as may be required by the Corporation in
accordance with the Purchase Agreement. No fee will be charged to the Holders for any conversion, except for any such transfer
taxes.

 

Conversion
calculations:

 

	Date
                                         to Effect Conversion: ______________________________________________________________________________________________

         

	Number
                                         of shares of Preferred Stock owned prior to Conversion: ________________________________________________________________

         

	Number
                                         of shares of Preferred Stock to be Converted: _________________________________________________________________________

         

	Stated
                                         Value of shares of Preferred Stock to be Converted: _____________________________________________________________________

         

	Number
                                         of shares of Common Stock to be Issued: ____________________________________________________________________________

         

	Applicable
                                         Conversion Price:_____________________________________________________________________________________________

         

	Number
                                         of shares of Preferred Stock subsequent to Conversion: _________________________________________________________________

         

	Address
                                         for Delivery: ______________________

        

        or

        

        DWAC
        Instructions:

        

        Broker
        no: _________

        

        Account
no: ___________

 

	 	[HOLDER]
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:Exhibit 4.2

 

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

 

Communications
Systems, Inc. 

 

WARRANT TO PURCHASE COMMON STOCK

 

Warrant No.: [___]

Number of Shares of Common Stock: [___]

Date of Issuance:[____] (“Issuance Date”)

Expiration Date: [___________________] (“Expiration
Date”)

 

Communications Systems, Inc., a Minnesota
corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged,                             ,
the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set
forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, at any time or times on or
after the Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date, the Warrant Shares (as defined below).
Except as otherwise defined herein, capitalized terms in this Warrant to Purchase Common Stock (including any Warrants to Purchase
Common Stock issued in exchange, transfer or replacement hereof, this “Warrant”), shall have the meanings set
forth in Section 12. This Warrant is one of the Warrants to Purchase Common Stock (the “Warrants”) issued
in connection with the transactions contemplated by that certain Amended and Restated Securities Purchase Agreement, dated as of
[_______], 2021 (the “Subscription Date”) by and among the Company, the Holder and the other purchasers set
forth on the schedule of purchasers thereto (the “Purchase Agreement”).

 

1. EXERCISE OF WARRANT.

 

(a) Mechanics of Exercise. Subject
to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(e)), this Warrant
may be exercised by the Holder at any time or times on or after the Issuance Date, in whole or in part, by delivery (whether via
facsimile, electronic mail or otherwise) of a written notice, in the form attached hereto as Exhibit A (the “Exercise
Notice”), of the Holder’s election to exercise this Warrant. Within one (1) Trading Day following the delivery
of the Exercise Notice, the Holder shall make payment to the Company of an amount equal to the Exercise Price in effect on the
date of such exercise multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the “Aggregate
Exercise Price”) in cash by wire transfer of immediately available funds or, if the provisions of Section 1(c) are
applicable, by notifying the Company that this Warrant is being exercised pursuant to a Cashless Exercise (as defined in Section 1(c)).
The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder (until the Holder has
purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full), nor shall any ink-original
signature or medallion guarantee (or other type of guarantee or notarization) with respect to any Exercise Notice be required.
Execution and delivery of the Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as
cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant
Shares and the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased
all of the Warrant Shares available

 

     

     

    

 

hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender
this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Exercise Notice
is delivered to the Company. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason
of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof. On or before the
first (1st) Trading Day following the date on which the Holder has delivered the
applicable Exercise Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation of receipt
of the Exercise Notice, in the form attached to the Exercise Notice, to the Holder and the Company’s transfer agent (the
“Transfer Agent”). So long as the Holder delivers the Aggregate Exercise Price (or notice of a Cashless Exercise,
if applicable) on or prior to the first (1st) Trading Day following the date on
which the Exercise Notice has been delivered to the Company, then on or prior to the earlier of (i) the second (2nd)
Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period, in each case following the date
on which the Exercise Notice has been delivered to the Company, or, if the Holder does not deliver the Aggregate Exercise Price
(or notice of a Cashless Exercise, if applicable) on or prior to the first (1st)
Trading Day following the date on which the Exercise Notice has been delivered to the Company, then on or prior to the first (1st)
Trading Day following the date on which the Aggregate Exercise Price (or notice of a Cashless Exercise, if applicable) is delivered
(such earlier date, or if later, the earliest day on which the Company is required to deliver Warrant Shares pursuant to this Section 1(a),
the “Share Delivery Date”), the Company shall (X) provided that the Transfer Agent is participating in
The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program (“FAST”),
credit such aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its Deposit / Withdrawal At Custodian system, or (Y) if the Transfer
Agent is not participating in the FAST, issue and dispatch by overnight courier to the address as specified in the Exercise Notice
a certificate, registered in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled
pursuant to such exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to an Exercise
Notice by the Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for
each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Exercise
Notice), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to
accrue) for each Trading Day after such Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise.
The Company shall be responsible for all fees and expenses of the Transfer Agent and all fees and expenses with respect to the
issuance of Warrant Shares via DTC, if any, including without limitation for same day processing. Upon delivery of the Exercise
Notice, the Holder shall be deemed for all corporate purposes to have become the holder of record and beneficial owner of the Warrant
Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the
Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares, as the case may be. If this
Warrant is physically delivered to the Company in connection with any exercise pursuant to this Section 1(a) and the number
of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired
upon an exercise, then the Company shall as soon as practicable and in no event later than three (3) Trading Days after any
exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant (in accordance with Section 5(d))
representing the right to purchase the number of Warrant Shares issuable immediately prior to such exercise under this Warrant,
less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional shares of Common Stock are to
be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock to be issued shall be rounded down
to the nearest whole number. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses
(including, without limitation, fees and expenses of the Transfer Agent) which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant. The Company’s obligations to issue and deliver Warrant Shares in
accordance with the terms and subject to the conditions hereof are absolute and unconditional, irrespective of any action or inaction
by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against
any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination; provided,
however, that the Company shall not be required to deliver Warrant Shares with respect to an exercise prior to the Holder’s
delivery of the Aggregate Exercise Price (or notice of a Cashless Exercise, if applicable) with respect to such exercise. While
this Warrant is outstanding, the Company agrees to use a transfer agent that is participating in the DTC FAST system.

 

(b) Company’s Failure to Timely
Deliver Securities. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent
to transmit to the Holder the Warrant Shares in accordance

 

     2

     

    

 

with the provisions of Section 1(a) above pursuant to an exercise
on or before the Share Delivery Date (other than a failure caused by incorrect or incomplete information provided by the Holder
to the Company), and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise)
or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder
of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company
shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying
(1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at
issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise
was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common
Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example,
if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise
of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of
the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company
written notice within three (3) Trading Days after the occurrence of a Buy-In, indicating the amounts payable to the Holder
in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon
exercise of the Warrant as required pursuant to the terms hereof.

 

(c) Cashless Exercise. Notwithstanding
anything contained herein to the contrary, if the exercise of this Warrant occurs after the Effectiveness Deadline (as defined
in that certain Registration Rights Agreement, dated as of the date of the Purchase Agreement, among the Company and the purchasers
named therein) and a registration statement covering the issuance or resale of the shares of Common Stock that constitute Warrant
Shares is not available for the issuance or resale, as applicable, of such Warrant Shares, the Holder may, in its sole discretion,
exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company
upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number”
of shares of Common Stock determined according to the following formula (a “Cashless Exercise”):

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Net Number =	 	(A x B) - (A x C)	 	 	 	 
	 	 	 	 	 	 	B	 	 	 	 

 

For purposes of the foregoing formula:

 

	 	A= 	the total number of shares of Common Stock with respect to which this Warrant is then being exercised.

 

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

 

	 	C= 	the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise. 

 

     3

     

    

 

If Warrant Shares are issued in such a
cashless exercise, the Company acknowledges and agrees that in accordance with Section 3(a)(9) of the Securities Act
of 1933, as amended (the “Securities Act”), the Warrant Shares shall take on the registered characteristics
of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period
of the Warrant Shares. The Company agrees not to take any position contrary to this Section 1(c).

 

(d) Beneficial Ownership. Notwithstanding
anything to the contrary contained herein, the Company shall not effect the exercise of any portion of this Warrant, and the Holder
shall not have the right to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant and any
such exercise shall be null and void and treated as if never made, to the extent that immediately prior to or after giving effect
to such exercise, the Holder together with the other Attribution Parties collectively would beneficially own in excess of 4.99%
(or, upon election by the Holder prior to the issuance of this Warrant, 9.99%) (the “Maximum Percentage”) of
the number of 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 the Holder and the other Attribution Parties shall
include the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of
Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but
shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, unexercised
portion of this Warrant beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion
of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any convertible
notes or convertible preferred stock or warrants, including the other Warrants) beneficially owned by the Holder or any other Attribution
Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 1(d). For purposes
of this Section 1(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), it being acknowledged by the Holder that the Company is not representing
to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible
for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 1(d)
applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together
with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion
of the Holder, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a
determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. For purposes of this Warrant, in determining the number of outstanding
shares of Common Stock the Holder may acquire upon the exercise of this Warrant without exceeding the Maximum Percentage, the Holder
may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Annual Report
on Form 10-K, Quarterly Report on Form 10-Q and Current Reports on Form 8-K or other public filing with the Securities and Exchange
Commission (the “SEC”), as the case may be, (y) a more recent public announcement by the Company or (z) any
other written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding (the “Reported
Outstanding Share Number”). If the Company receives an Exercise Notice from the Holder at a time when the actual number
of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall (i) notify the
Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Exercise Notice would otherwise
cause the Holder’s beneficial ownership, as determined pursuant to this Section 1(d), to exceed the Maximum Percentage,
the Holder must notify the Company of a reduced number of Warrant Shares to be purchased pursuant to such Exercise Notice (the
number of shares by which such purchase is reduced, the “Reduction Shares”) and (ii) as soon as reasonably
practicable, the Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares. For any reason
at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally
and in writing or by electronic mail to the Holder the number of 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 Warrant, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding
Share Number was reported. In the event that the issuance of Common Stock to the Holder upon exercise of this Warrant results in
the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage
of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the Exchange Act), the number of
shares so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the
Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and
the Holder shall not have the power to

 

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vote or to transfer the Excess Shares. As soon as reasonably practicable after the issuance
of the Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price paid by the Holder
for the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase or decrease
the Maximum Percentage to any other percentage as specified in such notice not in excess of 9.99%; provided that (i) any such
increase in the Maximum Percentage will not be effective until the sixty-first (61st)
day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and
the other Attribution Parties and not to any other holder of Warrants that is not an Attribution Party of the Holder. For purposes
of clarity, the shares of Common Stock issuable pursuant to the terms of this Warrant in excess of the Maximum Percentage shall
not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1)
of the Exchange Act. No prior inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability
of the provisions of this paragraph with respect to any subsequent determination of exercisability. The provisions of this paragraph
shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(d) to
the extent necessary to correct this paragraph or any portion of this paragraph which may be defective or inconsistent with the
intended beneficial ownership limitation contained in this Section 1(d) or to make changes or supplements necessary or desirable
to properly give effect to such limitation. The limitation contained in this paragraph may not be waived and shall apply to a successor
holder of this Warrant. Notwithstanding anything in this Warrant to the contrary, upon the election of the Holder made prior to
the issuance of this Warrant, the Maximum Percentage limitation and this Section 1(d) shall not apply to any exercise of this Warrant
in connection with a Fundamental Transaction.

 

(e) Required Reserve Amount. So
long as this Warrant remains outstanding, the Company shall at all times keep reserved for issuance under this Warrant a number
of shares of Common Stock at least equal to 200% of the maximum number of shares of Common Stock as shall be necessary to satisfy
the Company’s obligation to issue shares of Common Stock under the Warrants then outstanding (without regard to any limitations
on exercise) (the “Required Reserve Amount”); provided that at no time shall the number of shares of
Common Stock reserved pursuant to this Section 1(e) be reduced other than in connection with any exercise of Warrants or such
other event covered by Section 2 below. The Required Reserve Amount (including, without limitation, each increase in the number
of shares so reserved) shall be allocated pro rata among the holders of the Warrants based on the number of shares of Common Stock
issuable upon exercise of Warrants held by each holder thereof on the Issuance Date (without regard to any limitations on exercise)
(the “Authorized Share Allocation”). In the event that a holder shall sell or otherwise transfer any of such
holder’s Warrants, each transferee shall be allocated a pro rata portion of such holder’s Authorized Share Allocation.
Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Warrants shall be allocated to the remaining
holders of Warrants, pro rata based on the number of shares of Common Stock issuable upon exercise of the Warrants then held by
such holders thereof (without regard to any limitations on exercise).

 

(f)       Call
Provision. Subject to the provisions of this Section 1(f), if, after the Effective Date, (i) the VWAP for each of 10 consecutive
Trading Days (the “Measurement Period,” which 10 consecutive Trading Day period shall not have commenced until
after the Effective Date) exceeds 300% of the then current Exercise Price (subject to adjustment for forward and reverse stock
splits, recapitalizations, stock dividends and the like after the Issuance Date), (ii) the average daily dollar volume for such
Measurement Period exceeds $5,000,000 per Trading Day and (iii) the Holder is not in possession of any information that constitutes,
or might constitute, material, non-public information which was provided by the Company, any of its Subsidiaries, or any of their
officers, directors, employees, agents or Affiliates, then the Company may, within 1 Trading Day of the end of such Measurement
Period, call for cancellation of all or any portion of this Warrant for which an Exercise Notice has not yet been delivered (such
right, a “Call”) for consideration equal to $0.001 per Warrant Share; provided, however, that notwithstanding
anything herein to the contrary, the Company may not exercise its rights under this Section 1(f) to the extent the exercise of
the Warrant would cause the Holder to be in violation of the Maximum Percentage (any portion of this Warrant that remains unexercised
as a result of this sentence, the “Unexercised Portion”). To exercise this right, the Company must deliver to
the Holder an irrevocable written notice (a “Call Notice”), indicating therein the portion of unexercised portion
of this Warrant to which such notice applies. If the conditions set forth below for such Call are satisfied from the period from
the date of the Call Notice through and including the Call Date (as defined below), then any portion of this Warrant subject to
such Call Notice for which an Exercise Notice shall not have been received by the Call Date will be cancelled at 6:30 p.m. (New
York City time) on the tenth Trading Day after the date the Call Notice is received by the Holder (such date and time, the “Call
Date”). Any unexercised portion of this Warrant to which the Call Notice does not pertain will be unaffected by such
Call

 

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Notice. In furtherance thereof, the Company covenants and agrees that it will honor all Exercise Notices with respect to Warrant
Shares subject to a Call Notice that are tendered through 6:30 p.m. (New York City time) on the Call Date. The parties agree that
any Exercise Notice delivered following a Call Notice which calls less than all of the Warrants shall first reduce to zero the
number of Warrant Shares subject to such Call Notice prior to reducing the remaining Warrant Shares available for purchase under
this Warrant. For example, if (A) this Warrant then permits the Holder to acquire 100 Warrant Shares, (B) a Call Notice pertains
to 75 Warrant Shares, and (C) prior to 6:30 p.m. (New York City time) on the Call Date the Holder tenders an Exercise Notice in
respect of 50 Warrant Shares, then (x) on the Call Date the right under this Warrant to acquire 25 Warrant Shares will be automatically
cancelled, (y) the Company, in the time and manner required under this Warrant, will have issued and delivered to the Holder 50
Warrant Shares in respect of the exercises following receipt of the Call Notice, and (z) the Holder may, until the Termination
Date, exercise this Warrant for 25 Warrant Shares (subject to adjustment as herein provided and subject to subsequent Call Notices).
Subject again to the provisions of this Section 1(f), the Company may deliver subsequent Call Notices for any portion of this Warrant
for which the Holder shall not have delivered an Exercise Notice. Notwithstanding anything to the contrary set forth in this Warrant,
the Company may not deliver a Call Notice or require the cancellation of this Warrant (and any such Call Notice shall be void),
unless, from the beginning of the Measurement Period through the Call Date, (1) the Equity Conditions (as defined in the Certificate
of Designation) shall be then met, (2) the Company shall have honored in accordance with the terms of this Warrant all Exercise
Notices delivered by 6:30 p.m. (New York City time) on the Call Date, (3) there is a sufficient number of authorized shares of
Common Stock for issuance of all Warrant Shares and (4) the issuance of all Warrant Shares subject to a Call Notice shall not cause
a breach of any provision of Section 1(d) herein. The Company’s right to call the Warrants under this Section 1(f) shall
be exercised ratably among the Holders based on each Holder’s initial holding of Warrants. To the extent the Company is not
permitted to exercise its rights under this Section 1(f) as a result of the Holder not being able to exercise this Warrant without
exceeding the Maximum Percentage, then the Company may elect, upon delivery of written notice to the Holder (a “Repurchase
Notice”), to repurchase all or a portion of such Unexercised Portion from the Holder at a price per Warrant Share equal
to the difference between the greater of (i) the Closing Sale Price on the last day of the Measurement Period and (ii) the then
current Closing Sale Price of Common Stock as of the Trading Day immediately prior to the date of such Repurchase Notice, less
the then current Exercise Price per Warrant Share (the “Repurchase Price Per Warrant Share”). The Repurchase
Notice shall set forth the date on which the closing of such repurchase shall occur (which date shall be no sooner than three (3)
Trading Days from the date of the Repurchase Notice) (the “Repurchase Date”). The Repurchase Price Per Warrant
Share shall be paid in cash by wire transfer of immediately available funds at the closing of such repurchase. The Holder agrees
to execute and deliver all documents reasonably requested by the Company in order to effect and evidence such repurchase and to
deliver any original Warrant covering such Unexercised Portion of the Warrant Shares to the Corporation. On the Repurchase Date,
the Unexercised Portion subject to such repurchase shall automatically be converted into the right to receive the Repurchase Price
Per Warrant Share without interest and without any further act or action of the Holder and whether or not an original Warrant with
respect to such Warrant Shares is surrendered or instruments of transfer are delivered to the Company; provided, that the Company
shall not be obligated to pay the Repurchase Price Per Warrant Share for such Unexercised Portion unless and until all original
Warrants for such Warrant Shares have been surrendered to the Company and all reasonably requested instruments of transfer have
been executed by the Holder and delivered to the Company. From and after the Repurchase Date, unless there shall have been any
default in the payment of the Repurchase Price Per Warrant Share, all rights of the Holder in the Unexercised Portion of Warrant
Shares subject to repurchase (other than the right to receive the Repurchase Price Per Warrant Share in accordance with this Section
2(f)) shall cease and be of no further force and effect on such Repurchase Date, and such Warrant subject to a repurchase shall
not thereafter be transferred on the books of the Company or be deemed to be outstanding for any purpose whatsoever.

 

(g) Rescission Rights. If the Company
fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 1(a) by the Share Delivery Date,
then the Holder will have the right to rescind such exercise.

 

2. CERTAIN ADJUSTMENTS.

 

(a) Subdivisions or Combinations.
If the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the applicable Exercise
Price in effect immediately prior to such subdivision will be proportionately reduced and the number of the applicable Warrant
Shares will be

 

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proportionately increased. If the Company at any time on or after the Subscription Date combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares,
the applicable Exercise Price in effect immediately prior to such combination will be proportionately increased and the number
of the applicable Warrant Shares will be proportionately decreased. Any adjustment under this Section 2(a) shall become effective
at the close of business on the date the subdivision or combination becomes effective.

 

(b) Voluntary Adjustment by Company.
The Company may, with the approval of the Holder, at any time during the term of this Warrant 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.

 

(c) Rights Upon Distribution of Assets.
In addition to any adjustments pursuant to the other subsections of this Section 2, if, on or after the Subscription Date
and on or prior to the Expiration Date, the Company shall declare or make any dividend or other distribution of its assets (or
rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without
limitation, any distribution of cash, stock or other securities, property, options, evidence of indebtedness or any other assets
by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction),
other than for the transactions contemplated by the Merger Agreement (a “Distribution”), then, in each such
case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated
therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately
before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the
extent that the Holder’s right to participate in any such Distribution would result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent
(and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial
ownership) to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such
time or times as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage,
at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution
or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).

 

(d) Purchase Rights. In addition
to any adjustments pursuant to the other subsections of this Section 2, if at any time on or after the Subscription Date and
on or prior to the Expiration Date, 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, other than for the transactions
contemplated by the Merger Agreement (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 Warrant (without regard to any limitations
or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights (provided,
however, that to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder
and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such
Purchase Right to such extent (and shall not be entitled to beneficial ownership of such Common Stock as a result of such Purchase
Right (and beneficial ownership) to such extent) and such Purchase Right to such extent shall be held in abeyance for the benefit
of the Holder until such time or times as its right thereto would not result in the Holder and the other Attribution Parties exceeding
the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or
sold on such initial Purchase Right or on any subsequent Purchase Right to be held similarly in abeyance) to the same extent as
if there had been no such limitation).

 

(e) Fundamental Transactions. Other
than the transactions contemplated by the Merger Agreement, the Company shall not enter into or be party to a Fundamental Transaction
unless the Successor Entity assumes in writing, pursuant to written agreements in form and substance satisfactory to the holders,
as of any date, of at least a majority of the Warrant Shares underlying all Warrants (the “Required Holders”)
outstanding as of the date of such Fundamental Transaction, all of the obligations of the Company under this Warrant and all other
Transaction

 

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Documents in accordance with the provisions of this Section 2(e), including agreements to deliver to the Holder in
exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and
substance to this Warrant, but which is exercisable for a corresponding number of shares of capital stock equivalent to the shares
of Common Stock issuable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior
to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital
stock (taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value
of such shares of capital stock, such adjustments to the number of shares of capital stock and such exercise price being for the
purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction).
Upon the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for the Company
(so that from and after the date of such Fundamental Transaction, each and every provision of this Warrant referring to the “Company”
shall instead refer to the Successor Entity), and the Successor Entity may exercise every prior right and power of the Company
and shall assume all prior obligations of the Company under this Warrant with the same effect as if the Successor Entity had been
named as the Company in this Warrant. On or prior to the consummation of each Fundamental Transaction, the Successor Entity shall
deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the consummation
of the Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property purchasable
upon the exercise of this Warrant prior to such Fundamental Transaction), such shares of stock, securities, cash, assets or any
other property whatsoever (including warrants or other purchase or subscription rights), which for purposes of clarification may
continue to be shares of Common Stock, if any, that the Holder would have been entitled to receive upon the happening of such Fundamental
Transaction or the record, eligibility or other determination date for the event resulting in such Fundamental Transaction, had
this Warrant been exercised immediately prior to such Fundamental Transaction or the record, eligibility or other determination
date for the event resulting in such Fundamental Transaction (without regard to any limitations on the exercise of this Warrant),
as adjusted in accordance with the provisions of this Warrant. Notwithstanding the foregoing, and without limiting the provisions
of Section 1(g) hereof, the Holder may elect, at its sole discretion, by delivery of a written notice to the Company, to permit
a Fundamental Transaction without the required assumption of this Warrant. 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 Common Stock are entitled
to receive securities, cash, assets or other property with respect to or in exchange for Common Stock (a “Corporate Event”),
the Company shall make appropriate provision to ensure that, and any applicable Successor Entity shall ensure that, the Holder
will thereafter have the right to receive upon exercise of this Warrant at any time after the consummation of the Corporate Event,
shares of Common Stock or capital stock of the Successor Entity or, if so elected by the Holder, in lieu of the shares of Common
Stock (or other securities, cash, assets or other property) (except such items still issuable under Sections 2(c) and 2(d), which
shall continue to be receivable thereafter) issuable upon exercise of this Warrant prior to such Corporate Event, such shares of
stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights)
which the Holder would have been entitled to receive upon the consummation of such Corporate Event or the record, eligibility or
other determination date for the event resulting in such Corporate Event, had this Warrant been exercised immediately prior to
such Corporate Event or the record, eligibility or other determination date for the event resulting in such Corporate Event (without
regard to any limitations on exercise of this Warrant). Provision made pursuant to the preceding sentence shall be in a form and
substance reasonably satisfactory to the Holder. The provisions of this Section 2(e) shall apply similarly and equally to successive
Fundamental Transactions and Corporate Events.

 

Notwithstanding the foregoing, in the
event of a Change of Control, at the request of the Holder or at the election of the Company delivered before the sixtieth (60th)
day after the consummation of such Change of Control, the Company (or the Successor Entity) shall purchase this Warrant from the
Holder by paying to the Holder, within five (5) Business Days after such request (or, if later, on the effective date of the Change
of Control), cash in an amount equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date
of such Change of Control; provided, however, that if the Change of Control is not within the Company’s control,
including not approved by the Company’s Board of Directors, the Holder shall only be entitled to receive from the Company
or any Successor Entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the
unexercised portion of this Warrant, that is being offered and paid to the holders of the Common Stock of the Company in connection
with the Change of Control, whether that consideration be in the form of cash, securities or any combination thereof, or whether
the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection with the
Fundamental Transaction; provided, further, that if

 

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holders of Common Stock are not offered or paid any consideration
in such Change of Control, such holders of Common Stock will be deemed to have received common stock of the Successor Entity (which
entity may be the Company following such Change of Control) in such Change of Control.

 

(f) Subsequent Equity Sales. If
and whenever on or after the Subscription Date, the Company issues, sells, publicly announces the contemplated issuance or sale
of, or in accordance with this Section 2(f) is deemed to have issued or sold, any shares of Common Stock (including the issuance,
sale or public announcement of the issuance or sale, of shares of Common Stock owned or held by or for the account of the Company,
but excluding shares of Common Stock deemed to have been issued or sold by the Company in connection with any Exempt Issuance)
for a consideration per share (the “New Issuance Price”) less than a price (the “Applicable Price”)
equal to the Exercise Price in effect immediately prior to such issuance or sale or deemed issuance or sale (the foregoing a “Dilutive
Issuance”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount
equal to the lesser of (1) the New Issuance Price and (2) the lowest VWAP of the Common Shares on any Trading Day during the 5
Trading Days immediately following the public announcement of the execution of the Dilutive Issuance (the “Adjustment
Period”) (for the avoidance of doubt, if such public announcement is released prior to the opening of the Principal Market
on a Trading Day, such Trading Day shall be the first Trading Day in such five (5) Trading Day period and if this Warrant is exercised,
on any given Exercise Date during any such Adjustment Period, solely with respect to such portion of this Warrant exercised on
such applicable Exercise Date, such applicable Adjustment Period shall be deemed to have ended on, and included, the Trading Day
immediately prior to such Exercise Date). Additionally, the number of Warrant Shares issuable hereunder shall be increased such
that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal
to the aggregate Exercise Price prior to such adjustment. For purposes of determining the adjusted Exercise Price under this Section
2(f), the following shall be applicable:

 

(i)          Issuance
of Options. If the Company in any manner grants or sells, or the Company publicly announces the issuance or sale of, any Options
and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any such Options is less than the Applicable Price,
then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of
the granting or sale of such Options for such price per share. For purposes of this Section 2(f)(i), the “lowest price per
share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange
of any Convertible Securities issuable upon exercise of any such Options” shall be equal to the sum of the lowest amounts
of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting
or sale of the Options, upon exercise of the Options and upon conversion, exercise or exchange of any Convertible Security issuable
upon exercise of such Options less any consideration paid or payable by the Company with respect to such one share of Common Stock
upon the granting or sale of such Options, upon exercise of such Options and upon conversion, exercise or exchange of any Convertible
Security issuable upon exercise of such Options. No further adjustment of the Exercise Price shall be made upon the actual issuance
of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance
of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.

 

(ii)         Issuance
of Convertible Securities. If the Company in any manner issues or sells, or the Company publicly announces the issuance or
sale of, any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion,
exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding
and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price
per share. For the purposes of this Section 2(f)(ii), the “lowest price per share for which one share of Common Stock is
issuable upon the conversion, exercise or exchange thereof” shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the Convertible
Security and upon conversion, exercise or exchange of such Convertible Security less any consideration paid or payable by the Company
with respect to such one share of Common Stock upon the issuance or sale of such Convertible Security and upon conversion, exercise
or exchange of such Convertible Security. No further adjustment of the Exercise Price shall be made upon the actual issuance of
such shares of Common

 

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Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issuance or sale
of such Convertible Securities is made upon exercise of any Options for which adjustment of the Exercise Price has been or is to
be made pursuant to other provisions of this Section 2(f), no further adjustment of the Exercise Price shall be made by reason
of such issuance or sale.

 

(iii)        Change
in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the
Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been
in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For
purposes of this Section 2(f)(iii), if the terms of any Option or Convertible Security that was outstanding as of the Subscription
Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible
Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been
issued as of the date of such increase or decrease. No adjustment pursuant to this Section 2(f) shall be made if such adjustment
would result in an increase of the Exercise Price then in effect.

 

(iv)        Calculation
of Consideration Received. If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to
have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company
therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash,
the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration
consists of publicly traded securities, in which case the amount of consideration received by the Company will be the Closing Sale
Price of such publicly traded securities on the date of receipt of such publicly traded securities. If any shares of Common Stock,
Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the
Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the
net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities,
as the case may be. The fair value of any consideration other than cash or publicly traded securities will be determined jointly
by the Company and the Required Holders. If such parties are unable to reach agreement within ten (10) days after the occurrence
of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined
within five (5) Business Days after the tenth (10th) day following the Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the Required Holders. The determination of such appraiser shall be final and binding
upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

(v)         Record
Date. In case the Company shall take a record of the holders of its Common Stock for the purpose of entitling them (i) to receive
a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (ii) to subscribe for or purchase
Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase, as the case may be.

 

(vi)        Treasury
Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for
the account of the Company or any of its wholly-owned subsidiaries, and the disposition of any such shares (other than the cancellation
or retirement thereof) shall be considered an issue or sale of Common Stock for the purpose of this paragraph (f).

 

(g) Certain Exempt Issuances. For
the avoidance of doubt, notwithstanding anything herein to the contrary, no adjustment will be made under this Section 2 with respect
to or as a result of any of the transactions contemplated by the Merger Agreement.

 

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3. NONCIRCUMVENTION. The Company
hereby covenants and agrees that the Company will not, by amendment of its certificate of incorporation or by-laws, or through
any reorganization, transfer of assets, consolidation, merger, scheme, arrangement, dissolution, issuance or sale of securities,
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will
at all times in good faith carry out all of the provisions of this Warrant and take all action as may be required to protect the
rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of
any shares of Common Stock receivable upon the exercise of this Warrant above the applicable 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 Warrant, and (iii) shall, so long as any of the Warrants are
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 the Warrants, the number of shares of Common Stock as shall from time to time
be necessary to effect the exercise of the Warrants then outstanding (without regard to any limitations on exercise).

 

4. WARRANT HOLDER NOT DEEMED A SHAREHOLDER.
Except as otherwise specifically provided herein, the Holder, solely in such Person’s capacity as a holder of this Warrant,
shall not be entitled to vote or receive dividends or be deemed the holder of capital stock of the Company for any purpose, nor
shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the
Holder of this Warrant, any of the rights of a shareholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of 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
Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained
in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this
Warrant or otherwise) or as a shareholder of the Company, whether such liabilities are asserted by the Company or by creditors
of the Company.

 

5. REISSUANCE OF WARRANTS.

 

(a) Transfer of Warrant. If this
Warrant is to be transferred, the Holder shall surrender this Warrant to the Company together with a written assignment of this
Warrant duly executed by the Holder and in form and substance reasonably acceptable to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 5(d)), registered as the
Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less
than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 5(d))
to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

 

(b) Lost, Stolen or Mutilated Warrant.
Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in
customary form (but without the obligation to post a bond) and, in the case of mutilation, upon surrender and cancellation of this
Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 5(d)) representing
the right to purchase the Warrant Shares then underlying this Warrant.

 

(c) Exchangeable for Multiple Warrants.
This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant
or Warrants (in accordance with Section 5(d)) representing in the aggregate the right to purchase the number of Warrant Shares
then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares
as is designated by the Holder at the time of such surrender.

 

(d) Issuance of New Warrants. Whenever
the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like
tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant
Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 5(a) or Section 5(c),
the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new
Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii)
shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall
have the same rights and conditions as this Warrant.

 

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6. NOTICES. Whenever notice is required
to be given under this Warrant, including, without limitation, an Exercise Notice, unless otherwise provided herein, such notice
shall be given in writing, (i) if delivered (a) from within the domestic United States, by first-class registered or
certified airmail, or nationally recognized overnight express courier, postage prepaid, electronic mail or by facsimile or (b) from
outside the United States, by International Federal Express, electronic mail or facsimile, and (ii) will be deemed given (A) if
delivered by first-class registered or certified mail domestic, three (3) Business Days after so mailed, (B) if delivered
by nationally recognized overnight carrier, one (1) Business Day after so mailed, (C) if delivered by International Federal
Express, two (2) Business Days after so mailed and (D) at the time of transmission, if delivered by electronic mail to
the email address specified in this Section 6 prior to 5:00 p.m. (New York time) on a Trading Day, (E) the next Trading
Day after the date of transmission, if delivered by electronic mail to the email address specified in this Section 6 on a
day that is not a Trading Day or later than 5:00 p.m. (New York time) on any Trading Day and (F) if delivered by facsimile,
upon electronic confirmation of delivery of such facsimile, and will be delivered and addressed as follows:

 

		(i)	If to the Company, to:

 

Communications Systems, Inc.

Attention: Roger H. D. Lacey

10900 Red Circle Drive

Minnetonka, Minnesota 55343

Email: rogerl@commsysinc.com

 

		(ii)	if to the Holder, at such address or other contact information delivered by the Holder to Company or as is on the books and
records of the Company.

 

The Company shall provide the Holder with prompt written notice
of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action and the reason therefor.
Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon
any adjustment of the Exercise Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and
(ii) at least five (5) days prior to the date on which the Company closes its books or takes a record (A) with respect
to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of 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 or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution
or liquidation; provided in each case that, to the extent such notice constitutes or contains material, non-public information
regarding the Company, such information shall be made known to the public prior to or in conjunction with such notice being provided
to the Holder; provided, further, that the failure to deliver such notice or any defect therein or in the delivery thereof shall
not affect the validity of the corporate action required to be specified in such notice.

 

7. AMENDMENT AND WAIVER. Except
as otherwise provided herein, the provisions of this Warrant may be amended or waived and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent
of the Holder.

 

8. GOVERNING LAW; JURY TRIAL. This
Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for
the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not
to assert in any action, litigation, or proceeding, any claim that it is not personally subject to the jurisdiction of any such
court, that such action, litigation, or proceeding is improper or is an inconvenient venue for such action, litigation or proceeding.
If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in
such action, suit or

 

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proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs
and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. THE COMPANY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

9. REMEDIES, OTHER OBLIGATIONS, BREACHES
AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available
under this Warrant and any other Transaction Document, 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 Warrant. The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that,
in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available
remedies, to seek an injunction restraining any breach, without the necessity of showing economic loss and without any bond or
other security being required.

 

10. TRANSFER. Subject to compliance
with applicable federal and state securities laws, this Warrant and the Warrant Shares may be offered for sale, sold, transferred,
pledged or assigned without the consent of the Company. If, at the time of the surrender of this Warrant in connection with any
transfer of this Warrant, this Warrant shall not be either (i) registered pursuant to an effective registration statement under
the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale
restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing
such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Article IV of the
Purchase Agreement.

 

11. SEVERABILITY; CONSTRUCTION; HEADINGS.
If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties
or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which
comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). This Warrant shall be deemed to be
jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings
of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

 

12. CERTAIN DEFINITIONS. For purposes
of this Warrant, the following terms shall have the following meanings:

 

(a) “Affiliate” means
any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

(b) “Attribution Parties”
means, collectively, the Holder, together with the Holder’s Affiliates, and any other Persons acting as a group together
with the Holder or any of the Holder’s Affiliates. For clarity, the purpose of the foregoing is to subject collectively the
Holder and all other Attribution Parties to the Maximum Percentage.

 

(c) “Bid Price” means,
for any security as of the particular time of determination, the bid price for such security on the Principal Market as reported
by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange or trading
market for such security, the bid price of such security on the principal securities exchange or trading market where such security
is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply, the bid price
of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg as
of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination,
the

 

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average of the bid prices of any market makers for such security as reported on the Pink Open Markets as of such time of determination.
If the Bid Price cannot be calculated for a security as of the particular time of determination on any of the foregoing bases,
the Bid Price of such security as of such time of determination shall be the fair market value as mutually determined by the Company
and the Holder. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination
or other similar transaction during such period.

 

(d) “Black Scholes Value”
means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV” function on
Bloomberg determined as of the day immediately following the first public announcement of the applicable contemplated Change of
Control, or, if the Change of Control is not publicly announced, the date the Change of Control is consummated, for pricing purposes
and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term
of this Warrant as of such date of request, (ii) an expected volatility equal to the greater of 100% and the 100 day volatility
obtained from the HVT function on Bloomberg as of the day immediately following the public announcement of the applicable contemplated
Change of Control, or, if the Change of Control is not publicly announced, the date the Change of Control is consummated, (iii)
the underlying price per share used in such calculation shall be the greater of (A) the sum of the price per share being offered
in cash, if any, plus the per share value of any non-cash consideration, if any, being offered in such Change of Control and (B) the
greater of (x) the last VWAP immediately prior to the public announcement of such Change of Control and (y) the last
VWAP immediately prior to the consummation of such Change of Control, (iv) a zero cost of borrow and (v) a 360 day annualization
factor.

 

(e) “Bloomberg” means
Bloomberg Financial Markets.

 

(f) “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.

 

(g) “Change of Control”
means any Fundamental Transaction other than (i) any reorganization, recapitalization or reclassification of the Common Stock
in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification
continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly,
are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting
power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities)
after such reorganization, recapitalization or reclassification, (ii) pursuant to a migratory merger effected solely for the
purpose of changing the jurisdiction of incorporation of the Company or (iii) a merger in connection with a bona fide acquisition
by the Company of any Person in which (x) the gross consideration paid, directly or indirectly, by the Company in such acquisition
is not greater than 20% of the Company’s market capitalization as calculated on the date of the consummation of such merger
and (y) such merger does not contemplate a change to the identity of a majority of the board of directors of the Company.
Notwithstanding anything herein to the contrary, any transaction or series of transactions that, directly or indirectly, results
in the Company or the Successor Entity not having Common Stock or common stock, as applicable, registered under the Exchange Act
and listed on an Eligible Market shall be deemed a Change of Control.

 

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

 

(i) “Common Stock”
means (i) the Company’s Common Stock, par value $0.05 per share, and (ii) any capital stock into which such Common
Stock shall have been changed or any capital stock resulting from a reclassification of such Common Stock.

 

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

 

(k) “Eligible Market”
means The Nasdaq Capital Market, The Nasdaq Global Select Market, The Nasdaq Global Market, The New York Stock Exchange, Inc. or
The NYSE American LLC.

 

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

 

(m) “Exercise Price”
means $3.40 per share, subject to adjustment as provided herein.

 

(n) “Fundamental Transaction”
means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one
or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation)
another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties
or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one
or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject
to or have its shares of Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange
offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding
shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated
with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number
of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party
to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange
Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or
more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50%
of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party
to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common
Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the Exchange Act)
of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its shares of Common
Stock, (B) that the Company

 

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shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one
or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, whether through acquisition,
purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation,
business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification
or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued
and outstanding shares of Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock not held by all such Subject Entities as of the Subscription Date calculated as if any shares
of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting
power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow
such Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders of the Company
to surrender their Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including
through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other
instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case
this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition
to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with
the intended treatment of such instrument or transaction.

 

(o) “Group” means a
“group” as that term is used in Section 13(d) of the Exchange Act and as defined in Rule 13d-5 thereunder.

 

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

 

(q) “Parent Entity”
of a Person means an entity that, directly or indirectly, controls the applicable Person, including such entity whose common stock
or equivalent equity security is quoted or listed on an Eligible Market (or, if so elected by the Holder, any other market, exchange
or quotation system), or, if there is more than one such Person or such entity, the Person or such entity designated by the Holder
or in the absence of such designation, such Person or entity with the largest public market capitalization as of the date of consummation
of the Fundamental Transaction.

 

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

 

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

 

(t) “Standard Settlement Period”
means the standard settlement period, expressed in a number of Trading Days, for the Company’s primary trading market or
quotation system with respect to the Common Stock that is in effect on the date of delivery of an applicable Exercise Notice.

 

(u) “Subject Entity”
means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.

 

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

 

(w) “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.

 

(x) “Transaction Documents”
shall have the meaning set forth in the Purchase Agreement.

 

(y) “VWAP” means, for
any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted
on an Eligible Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Eligible Market on which the Common Stock

 

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

 

(z) “Warrant Shares”
means the fully paid, non-assessable shares of Common Stock issuable upon exercise of this Warrant.

 

[Signature Page Follows] 

 

     17

     

    

 

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

 

	 	Communications Systems, Inc.
	 	 
	 	By:	           
	 	Name:

Title:

 

     18

     

    

 

EXHIBIT A 

 

EXERCISE NOTICE 

 

TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THIS WARRANT TO PURCHASE COMMON STOCK

 

Communications
Systems, Inc.

 

The undersigned holder hereby exercises
the right to purchase              shares of Common Stock (“Warrant
Shares”) of Communications Systems, Inc., a Minnesota corporation (the “Company”), evidenced by the
attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined
shall have the respective meanings set forth in the Warrant.

 

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

	 	 	 	 	 
	 	 	☐ “Cash Exercise” with respect to	 	Warrant Shares; and/or
	 	 	 
	 	 	☐ “Cashless Exercise” with respect to	 	Warrant Shares

 

Payment of Exercise Price. In the event that the holder
has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay
the Aggregate Exercise Price in the sum of $                
to the Company in accordance with the terms of the Warrant.

 

Delivery of Warrant Shares. The Company shall deliver
to the holder                  shares of Common
Stock in accordance with the terms of the Warrant.

 

 

 

Date:

 

	Name of Registered Holder	 
	 	 
	By:	 	 
	 	Name:

Title:	 

 

     

     

    

 

ACKNOWLEDGMENT 

 

The Company hereby acknowledges this Exercise
Notice and hereby directs Equiniti Trust Company to issue the above indicated number of Warrant Shares on or prior to the applicable
Share Delivery Date.

 

	 	COMMUNICATIONS SYSTEMS, INC.
	 	 
	 	By:	           
	 	Name:

Title:

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