Document:

Exhibit 4.6

 

ORDINARY SHARES PURCHASE WARRANT

JEFFS’
BRANDS LTD

 

	Warrant Shares: ___________	Initial Exercise Date: [●]
	 	 
	 	Issue Date: [●]

 

THIS ORDINARY SHARES PURCHASE
WARRANT (the “Warrant”) certifies that, for value received, [●] or its assigns (the “Holder,”
provided that a “Holder” shall include, if the Warrants are held in “street name,” a Participant, any designee
appointed by such Participant and each “beneficial owner” of such Warrants) is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise
Date”) and on or prior to 5:00 p.m. (New York City time) on [*], 2027 (the “Termination Date”) but not thereafter,
to subscribe for and purchase from Jeffs' Brands Ltd, an Israeli company (the “Company”), up to [●] Ordinary
Shares (as subject to adjustment hereunder, the “Warrant Shares”). The purchase price of one Ordinary Share under
this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

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

 

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

 

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

 

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

 

“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally
are open for use by customers on such day.

 

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

 

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

 

     

     

    

 

“Ordinary
Shares” means ordinary shares, no par value, of the Company, and any other class of securities into which such securities may
hereafter be reclassified or changed.

 

“Ordinary
Shares Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Ordinary Shares, 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, Ordinary Shares.

 

“Exempt
Issuance” means the issuance of (a) Ordinary Shares or options to employees, officers or directors of the Company pursuant to
any stock or option plan duly adopted for such purpose by the Board of Directors or a committee of non-employee directors established
for such purpose for services rendered to the Company (including, for the avoidance of doubt, any such plan that may be adopted following
the date of the Underwriting Agreement), (b) securities issued or issuable upon the exercise or exchange of or conversion of any securities
exercisable or exchangeable for or convertible into Ordinary Shares issued and outstanding on the date of (or issuable under) the Underwriting
Agreement, provided that such securities have not been amended since the date of the Underwriting Agreement to increase the number of
such securities or to decrease the exercise price, exchange price or conversion price of such securities, and (c) securities issued pursuant
to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that 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 within 2 years following the Initial Exercise Date, 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.

 

“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.

 

“Qualified
Holder” means each Holder, including each “beneficial holder” of warrants, taken together with all Affiliates of
such Holder and/or “beneficial holder of at least [●] Warrants, provided such Holder has notified the Company of such minimum
ownership, either directly or by virtue of filing a Schedule 13G or 13D at least three (3) days before an event described herein to which
Qualified Holder status applies.

 

“Registration
Statement” means the Company’s registration statement on Form F-1 (File No. 333-262835), as amended.

 

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

 

“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.

 

“Trading
Day” means a day on which the Ordinary Shares are traded on a Trading Market.

 

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

 

“Transfer
Agent” means VStock Transfer, LLC, the current transfer agent of the Ordinary Shares, with a mailing address of 18 Lafayette
Place, Woodmere, NY 11598, and a facsimile number of 646-536-3179, and any successor transfer agent of the Company.

 

“Underwriting
Agreement” means the underwriting agreement, dated as of [*], 2022 among the Company and Aegis Capital Corp. as underwriter
named therein, as amended, modified or supplemented from time to time in accordance with its terms.

 

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

  

“Warrant
Agency Agreement” means that certain warrant agency agreement, dated on or about the Initial Exercise Date, between the Company
and the Warrant Agent.

 

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

 

“Warrants”
means this Warrant and other Ordinary Share purchase warrants issued by the Company pursuant to the Registration Statement.

 

Section 2. Exercise.

 

a) Exercise of
Warrant. Subject to the provisions of Section 2(e) herein, exercise of the purchase rights represented by this Warrant may be made,
in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date, by delivery to
the Company of a duly executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto
as Annex A (the “Notice of Exercise”) , and, unless the cashless exercise procedure specified in Section 2(c) below
is specified in the applicable Notice of Exercise, delivery of the aggregate Exercise Price of the Warrant Shares specified in the applicable
Notice of Exercise as specified in this Section 2(a). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days
comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder
shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer of immediately
available funds or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c)
below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary,
the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant
Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company
for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial
exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the
effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant
Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such
purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Trading Day of receipt of such notice. Notwithstanding
the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 4:00 p.m. (New York City time) on the Trading Date prior
to the Initial Exercise Date, which may be delivered at any time after the time of execution of the Underwriting Agreement, the Company
agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial Exercise Date and the
Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of the aggregate Exercise
Price (other than in the case of a cashless exercise) is received by such Warrant Share Delivery Date. 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.

 

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

 

b) Exercise
Price. The exercise price per Ordinary Share under this Warrant shall be $[*], subject to adjustment hereunder (as in effect from
time to time, the “Exercise Price”).

  

c) Cashless Exercise.
The Company shall use its best efforts to cause the Registration Statement to remain effective with a current prospectus and to maintain
the registration of the Ordinary Shares and of the Warrants under the Exchange Act. If at any time after the Initial Exercise Date, there
is no effective registration statement registering, or no current prospectus available for the issuance of, the Warrant Shares to the
Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which
the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

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

		 	 

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

		 	 

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

 

If Warrant Shares
are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act,
the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position
contrary to this Section 2(c).

 

Notwithstanding
anything herein to the contrary, in the event that, on the Termination Date, there is no effective registration statement registering,
or no current prospectus available for the issuance of, the Warrant Shares to the Holder, this Warrant shall be automatically exercised
via cashless exercise pursuant to this Section 2(c) on such Termination Date.

 

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d) Mechanics
of Exercise.

 

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

  

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

 

iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i)
by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise; provided, however, that the Holder shall
be required to return any Warrant Shares subject to any such rescinded exercise notice concurrently with the return to Holder of the aggregate
Exercise Price paid to the Company for such Warrant Shares and the restoration of Holder’s right to acquire such Warrant Shares
pursuant to this Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).

 

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iv. Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if
the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section
2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its
broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, Ordinary Shares
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 Ordinary Shares 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 Ordinary Shares that would have been issued had the
Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Ordinary Shares having
a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of Ordinary Shares with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely deliver Ordinary Shares upon exercise of the Warrant as
required pursuant to the terms hereof.

 

v. No Fractional
Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As
to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election,
either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or
round up to the next whole share.

 

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

 

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

 

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

  

Section 3. Certain Adjustments.
If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions
on its Ordinary Shares or any other equity or equity equivalent securities payable in Ordinary Shares (which, for avoidance of doubt,
shall not include any Ordinary Shares issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding Ordinary Shares
into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding Ordinary Shares into a smaller number
of shares, or (iv) issues by reclassification of Ordinary Shares any shares of capital stock of the Company, then in each case the Exercise
Price shall be multiplied by a fraction of which the numerator shall be the number of Ordinary Shares and such other capital stock of
the Company (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number
of Ordinary Shares and such other capital stock of the Company (excluding treasury shares, if any) outstanding immediately after such
event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise
Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after
the record date for the determination of shareholders 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
Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells
any Ordinary Share Equivalents or rights to purchase stock, warrants, securities or other property pro rata to all (or substantially all)
of the record holders of any class of Ordinary Shares (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had
held the number of Ordinary Shares acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Ordinary Shares 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 Ordinary Shares as a result
of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time,
if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

c) Pro Rata
Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution
of its assets (or rights to acquire its assets) to all (or substantially all) of holders of Ordinary Shares, 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 Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of Ordinary Shares acquirable upon
complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of Ordinary Shares are to be determined for the participation in such Distribution. To the extent
that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion of the Distribution shall
be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.

 

d) Fundamental Transaction.
If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects
any merger or consolidation of the Company with or into another Person, (ii) the Company or any Subsidiary, directly or indirectly, effects
any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a
series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Ordinary Shares are permitted to sell, tender or exchange their shares for
other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Ordinary Shares, (iv) the Company,
directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of Ordinary
Shares or any compulsory share exchange pursuant to which the Ordinary Shares are effectively converted into or exchanged for other securities,
cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase
agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme
of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding Ordinary
Shares (not including any Ordinary Shares held by the other Person or other Persons making or party to, or associated or affiliated with
the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of a Warrant, the Holder shall have the right to receive, for each Warrant
Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option
of the Holder, the number of Ordinary Shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation,
or depositary shares representing those shares, and any additional consideration (the “Alternate Consideration”) receivable
as a result of such Fundamental Transaction by a holder of the number of Ordinary Shares for which this Warrant is exercisable immediately
prior to such Fundamental Transaction (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Ordinary Share in such Fundamental
Transaction and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration. If holders of Ordinary Shares are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.

 

    8

     

    

 

Notwithstanding
anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at
the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction
(or, if later, the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by
paying to the Holder an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this
Warrant on the date of the consummation of such Fundamental Transaction; provided, however, that, if the Fundamental Transaction is not
within the Company’s control, including not approved by the Company’s Board of Directors, 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 Ordinary Shares of the Company in connection
with the Fundamental Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the
holders of Ordinary Shares are given the choice to receive from among alternative forms of consideration in connection with the Fundamental
Transaction; provided, further, that if holders of Ordinary Shares of the Company are not offered or paid any consideration in such Fundamental
Transaction, such holders will be deemed to have received Ordinary Shares of the Successor Entity (which Entity may be the Company following
such Fundamental Transaction) in such Fundamental Transaction.

 

“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 of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting
(A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement
of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100
day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such
calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration,
if any, being offered in such Fundamental Transaction and (ii) the highest VWAP during the period beginning on the Trading Day immediately
preceding the announcement of the applicable Fundamental Transaction (or the consummation of the applicable Fundamental Transaction, if
earlier) and ending on the Trading Day of the Holder’s request pursuant to this Section 3(d) and (D) a remaining option time equal
to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date and (E) a zero
cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds (or such other consideration)
within the later of (i) five (5) Business Days of the Holder’s election and (ii) the date of consummation of the Fundamental Transaction.

 

The Company shall
cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”),
to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(d) pursuant
to written agreements in form 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, deliver to such 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 that is exercisable for
a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the Ordinary Shares acquirable
and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental
Transaction and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account
the relative value of the Ordinary Shares pursuant to such Fundamental Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such exercise price being for the purpose of protecting the economic value this Warrant had immediately
prior to the consummation of such Fundamental Transaction). Upon the occurrence of any such Fundamental Transaction, the Successor Entity
shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant
referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company
and shall assume all of the obligations of the Company under this Warrant Agreement and the Warrant with the same effect as if such Successor
Entity had been named as the Company herein.

 

    9

     

    

 

e) Adjustment
Upon Issuance of Ordinary Shares. From the date hereof until the later of (a) two (2) years after the Issuance Date or (b) the date
there are no Qualified Holders (such period, the “Adjustment Period”), the Company issues or sells, or, in accordance
with this Section 3(e), is deemed to have issued or sold, any Ordinary Shares (excluding any Excluded Securities (as defined below)
issued or sold or deemed to have been issued or sold) for a consideration per share (the “New Issuance Price”) less
than a price equal to the Exercise Price in effect immediately prior to such issue or sale or deemed issuance or sale (such Exercise Price
then in effect is referred to as the “Applicable Price”) (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 New Issuance
Price. “Excluded Securities” means any issuance of Ordinary Shares, restricted share units, Options and/or Convertible Securities
(i) under the Company’s current or future equity incentive plans or issued to employees, directors, consultants or officers
as compensation or consideration in the ordinary course of business, including any issuance of Options (and the underlying Ordinary Shares)
in exchange for Options issued under the Company’s equity incentive plans, subject to a limitation of 15% of Ordinary Shares outstanding
as of the Issuance Date, (ii) issued pursuant to agreements, Options, restricted share units, Convertible Securities or Adjustment
Rights (as defined below) existing as of the date hereof, provided that such agreements, Options, Convertible Securities or Adjustment
Rights have not been amended since the initial issuance date of this Warrant to increase the number of such securities or decrease the
exercise price, exchange price or conversion price of such securities, (iii) issued pursuant to acquisitions (whether by merger,
consolidation, purchase of equity, purchase of assets, reorganization or otherwise), mergers, consolidations, reorganizations or strategic
transactions approved by a majority of the disinterested directors of the Company, 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 complementary 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, or (iv) to which the Holder consents in writing. “Adjustment
Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or sale
(or deemed issuance or sale in accordance with this Section 3(e)) of Ordinary Shares (other than rights of the type described in
Sections 3(a) through (d)) that could result in a decrease in the net consideration received by the Company in connection with, or with
respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights). For
all purposes of the foregoing, the following shall be applicable:

 

i. Issuance
of Options. If, during the Adjustment Period, the Company in any manner grants or sells any Options (other than Excluded Securities)
and the lowest price per share for which one Ordinary Share is issuable upon the exercise of any such Option or upon conversion, exercise
or exchange of any Convertible Securities issuable upon exercise of any such Option (such Ordinary Shares issuable upon such exercise
of any Option or upon conversion, exercise or exchange of any Convertible Securities, the “Convertible Securities Shares”)
is less than the Applicable Price, then such Ordinary Shares 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 Option for such price per share. For purposes of this Section 3(e)(i), the “lowest
price per share for which one Ordinary Share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange
of any Convertible Securities issuable upon exercise of any such Option” shall be equal to (A) the sum of (1) the lowest
amount of consideration (if any) received or receivable by the Company with respect to any one Convertible Securities Share upon the granting
or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon
exercise of such Option and (2) the lowest exercise price set forth in such Option for which one Convertible Securities Share is
issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise
of any such Option, minus (B) the sum of all amounts paid or payable to the holder of such Option (or any other Person), with respect
to any one Convertible Securities Share, upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise
or exchange of any Convertible Security issuable upon exercise of such Option plus the value of any other consideration received or receivable
by, or benefit conferred on, the holder of such Option (or any other Person), with respect to any one Convertible Securities Share. Except
as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Convertible Securities
Share or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Convertible Securities Share
upon conversion, exercise or exchange of such Convertible Securities.

 

    10

     

    

 

ii. Issuance
of Convertible Securities. If, during the Adjustment Period, the Company in any manner issues or sells any Convertible Securities
(other than Excluded Securities) and the lowest price per share for which one Convertible Securities Share is issuable upon the conversion,
exercise or exchange thereof is less than the Applicable Price, then such Convertible Securities Share 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 3(e)(ii), the “lowest price per share for which one Convertible Securities Share is
issuable upon the conversion, exercise or exchange thereof” shall be equal to (A) the sum of (1) the lowest amount of
consideration (if any) received or receivable by the Company with respect to one Convertible Securities Share upon the issuance or sale
of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security and (2) the lowest conversion
price set forth in such Convertible Security for which one Convertible Securities Share is issuable upon conversion, exercise or exchange
thereof, minus (B) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person), with
respect to any one Convertible Securities Share, upon the issuance or sale of such Convertible Security plus the value of any other consideration
received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person), with respect to any
one Convertible Securities Share. Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual
issuance of such Convertible Securities Share upon conversion, exercise or exchange of such Convertible Securities, and if any such issue
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 3(e), except as contemplated below, no further adjustment of the Exercise
Price shall be made by reason of such issue or sale.

 

iii. Change
in Option Price or Rate of Conversion. If, during the Adjustment Period, the purchase or exercise 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 Ordinary Shares increases or decreases at
any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in
Section 3(a)), 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 3(e)(iii), if the terms of any Option or Convertible Security that was outstanding as of the date of issuance of
this Warrant are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible
Security and the Convertible Securities Shares 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 3(e) 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 Option or Convertible Security is issued in connection with the issuance or sale or deemed issuance
or sale of any other securities of the Company (the “Primary Security”, and such Option or Convertible Security, the
“Secondary Securities” and together with the Primary Security, each a “Unit”), together comprising
one integrated transaction, the aggregate consideration per Ordinary Share with respect to such Primary Security shall be deemed to be
the lowest of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the
lowest price per share for which one Ordinary Share is at any time issuable upon the exercise or conversion of the Primary Security in
accordance with Section 3(e)(i) or 3(e)(ii) above and (z) the lowest VWAP of the Ordinary Shares on any Trading Day during the
five Trading Day period immediately following the public announcement of such Dilutive Issuance (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 Trading Day period); provided. If any Ordinary Shares, 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 of cash received by the Company
therefor. If any Ordinary Shares, 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 for such securities will be the arithmetic
average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any Ordinary
Shares, 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 market value of such
portion of the net assets and business of the non-surviving entity as is attributable to such Ordinary Shares, Options or Convertible
Securities (as the case may be). The fair market value of any consideration other than cash or publicly traded securities will be determined
jointly by the Company and the Holder. 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 market value of such consideration will be determined
within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Holder. 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.

 

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v. Record
Date. If, during the Adjustment Period, the Company takes a record of the holders of the Ordinary Shares for the purpose of entitling
them (A) to receive a dividend or other distribution payable in Ordinary Shares, Options or in Convertible Securities or (B) to
subscribe for or purchase Ordinary Shares, Options or Convertible Securities, then such record date will be deemed to be the date of the
issue or sale of Ordinary Shares 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).

 

vii. Exercise
Floor Price.  No adjustment to the Exercise Price pursuant to Section 3(e) of this Warrant shall cause the Exercise Price
to be less than 50% of the per share price of Ordinary Shares issued in the Company’s initial public offering (the “Exercise
Floor Price”).  For the avoidance of doubt, if a Dilutive Issuance would cause the Exercise Price to be lower than the
Exercise Floor Price but for the immediately preceding sentence, then the Exercise Price shall be equal to the Exercise Floor Price.

 

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

 

g) Notice to Holder.

 

i. Adjustment to
Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver
to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the
number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii. Notice to Allow
Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Ordinary Shares, (B)
the Company shall declare a special nonrecurring cash dividend on or a redemption of the Ordinary Shares, (C) the Company shall authorize
the granting to all holders of the Ordinary Shares rights or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification
of the Ordinary Shares, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer
of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Ordinary Shares are converted into
other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding
up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its
last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to
the applicable record or effective date hereinafter specified, a notice (unless such information is filed with the Commission, in which
case a notice shall not be required) 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 Ordinary Shares 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 Ordinary Shares of record shall be entitled to exchange their Ordinary Shares 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 in this Warrant constitutes, or contains, material, non-public information regarding
the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Report on
Form 6-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective
date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

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h) Voluntary
Adjustment by Company. Subject to the rules and regulations of the Trading Market, the Company may 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.

 

i) Home Country Practice. For so long as this Warrant remains
outstanding, the Company shall elect to follow home country practice in lieu of any rules and regulations of the Trading Market that would
limit the Company’s ability to effect the provisions of this Warrant, including but not limited to shareholder approval rules related
to the issuance of securities or adjustment of terms of this Warrant for the benefit of Holders.

 

Section 4. Transfer
of Warrant.

 

a) Transferability.
This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part,
upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so
assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required
to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the
Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for
the purchase of Warrant Shares without having a new Warrant issued.

 

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

 

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

 

Section 5. Participation
Right. For so long as this Warrant is outstanding, neither the Company nor any of its Subsidiaries shall, directly or indirectly,
issue, offer, sell, grant any option or right to purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant of any
option or right to purchase or other disposition of) any equity security or any equity-linked or related security (including, without
limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the 1933 Act)), any Convertible
Securities (as defined below), any debt, any preferred shares or any purchase rights (any such issuance, offer, sale, grant, disposition
or announcement is referred to as a “Subsequent Placement”) unless the Company shall have first complied with this Section
5. The Company acknowledges and agrees that the right set forth in this Section 5 is a right granted by the Company, separately, to each
Qualified Holder.

  

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a) At least five
(5) Trading Days prior to any proposed or intended Subsequent Placement, the Company shall deliver to each Qualified Holder a written
notice (each such notice, a “Pre-Notice”), which Pre-Notice shall not contain any information (including, without limitation,
material, non-public information) other than: (A) if the proposed Offer Notice (as defined below) constitutes or contains material, non-public
information, a statement asking whether the Investor is willing to accept material non-public information or (B) if the proposed Offer
Notice does not constitute or contain material, non-public information, (x) a statement that the Company proposes or intends to effect
a Subsequent Placement, (y) a statement that the statement in clause (x) above does not constitute material, non-public information and
(z) a statement informing such Qualified Holder that it is entitled to receive an Offer Notice (as defined below) with respect to such
Subsequent Placement upon its written request. Upon the written request of a Qualified Holder within three (3) Trading Days after the
Company’s delivery to such Qualified Holder of such Pre-Notice, and only upon a written request by such Qualified Holder, the Company
shall promptly, but no later than one (1) Trading Day after such request, deliver to such Qualified Holder an irrevocable written notice
(the “Offer Notice”) of any proposed or intended issuance or sale or exchange (the “Offer”) of the
securities being offered (the “Offered Securities”) in a Subsequent Placement, which Offer Notice shall (A) identify
and describe the Offered Securities, (B) describe the price and other terms upon which they are to be issued, sold or exchanged, and the
number or amount of the Offered Securities to be issued, sold or exchanged, (C) identify the Persons (if known) to which or with which
the Offered Securities are to be offered, issued, sold or exchanged and (D) offer to issue and sell to or exchange with such Qualified
Holder in accordance with the terms of the Offer such Qualified Holder’s pro rata portion of 30% of the Offered Securities, provided
that the number of Offered Securities which such Qualified Holder shall have the right to subscribe for under this Section 5 shall be
(x) based on such Qualified Holder’s pro rata portion of the aggregate number of Purchased Shares purchased hereunder by all Qualified
Holders (the “Basic Amount”), and (y) with respect to each Qualified Holder that elects to purchase its Basic Amount,
any additional portion of the Offered Securities attributable to the Basic Amounts of other Qualified Holders as such Qualified Holder
shall indicate it will purchase or acquire should the other Qualified Holders subscribe for less than their Basic Amounts (the “Undersubscription
Amount”), which process shall be repeated until each Qualified Holder shall have an opportunity to subscribe for any remaining
Undersubscription Amount.

 

b) To accept an
Offer, in whole or in part, such Qualified Holder must deliver a written notice to the Company prior to the end of the fifth (5th)
Business Day after such Qualified Holder’s receipt of the Offer Notice (the “Offer Period”), setting forth the
portion of such Qualified Holder’s Basic Amount that such Qualified Holder elects to purchase and, if such Qualified Holder shall
elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Qualified Holder elects to purchase (in either
case, the “Notice of Acceptance”). If the Basic Amounts subscribed for by all Qualified Holders are less than the total
of all of the Basic Amounts, then each Qualified Holder who has set forth an Undersubscription Amount in its Notice of Acceptance shall
be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed for; provided,
however, if the Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic
Amounts subscribed for (the “Available Undersubscription Amount”), each Qualified Holder who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the Available Undersubscription Amount as the Basic Amount
of such Qualified Holder bears to the total Basic Amounts of all Qualified Holders that have subscribed for Undersubscription Amounts,
subject to rounding by the Company to the extent it deems reasonably necessary. Notwithstanding the foregoing, if the Company desires
to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Company may deliver to each
Qualified Holder a new Offer Notice and the Offer Period shall expire on the fifth (5th) Business Day after such Qualified
Holder’s receipt of such new Offer Notice.

  

c) The Company shall
have five (5) Business Days from the expiration of the Offer Period above (A) to offer, issue, sell or exchange all or any part of such
Offered Securities as to which a Notice of Acceptance has not been given by a Qualified Holder (the “Refused Securities”)
pursuant to a definitive agreement(s) (the “Subsequent Placement Agreement”), but only to the offerees described in
the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation, unit prices and interest
rates) that are not more favorable to the acquiring Person or Persons or less favorable to the Company than those set forth in the Offer
Notice and (B) to publicly announce (x) the execution of such Subsequent Placement Agreement, and (y) either (I) the consummation of the
transactions contemplated by such Subsequent Placement Agreement or (II) the termination of such Subsequent Placement Agreement, which
shall be filed with the SEC on a Report on Form 6-K with such Subsequent Placement Agreement and any documents contemplated therein filed
as exhibits thereto.

 

    14

     

    

 

d) In the event
the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified in
Section 5(c) above), then each Qualified Holder may, at its sole option and in its sole discretion, reduce the number or amount of the
Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number or amount of the Offered
Securities that such Qualified Holder elected to purchase pursuant to Section 5(b) above multiplied by a fraction, (A) the numerator of
which shall be the number or amount of Offered Securities the Company actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to Qualified Holders pursuant to this Section 5 prior to such reduction) and (B) the denominator of which
shall be the original amount of the Offered Securities. In the event that any Qualified Holder so elects to reduce the number or amount
of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange more than the reduced number
or amount of the Offered Securities unless and until such securities have again been offered to the Qualified Holders in accordance with
Section 5(a) above.

 

e) Upon the closing
of the issuance, sale or exchange of all or less than all of the Refused Securities, such Qualified Holder shall acquire from the Company,
and the Company shall issue to such Qualified Holder, the number or amount of Offered Securities specified in its Notice of Acceptance,
as reduced pursuant to Section 5(d) above if such Qualified Holder has so elected, upon the terms and conditions specified in the Offer.
The purchase by such Qualified Holder of any Offered Securities is subject in all cases to the preparation, execution and delivery by
the Company and such Qualified Holder of a separate purchase agreement relating to such Offered Securities reasonably satisfactory in
form and substance to such Qualified Holder and its counsel.

 

f) Any Offered Securities
not acquired by a Qualified Holder or other Persons in accordance with this Section 5 may not be issued, sold or exchanged until they
are again offered to such Qualified Holder under the procedures specified in this Agreement.

 

g) The Company and
each Qualified Holder agree that if any Qualified Holder elects to participate in the Offer, neither the Subsequent Placement Agreement
with respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement Documents”)
shall include any term or provision whereby such Qualified Holder shall be required to agree to any restrictions on trading as to any
securities of the Company or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under
or in connection with, any agreement previously entered into with the Company or any instrument received from the Company.

 

h) Notwithstanding
anything to the contrary in this Section 5 and unless otherwise agreed to by such Qualified Holder, the Company shall either confirm in
writing to such Qualified Holder that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose
its intention to issue the Offered Securities, in either case, in such a manner such that such Qualified Holder will not be in possession
of any material, non-public information, by the fifth (5th) Business Day following delivery of the Offer Notice. If by such
fifth (5th) Business Day, no public disclosure regarding a transaction with respect to the Offered Securities has been made,
and no notice regarding the abandonment of such transaction has been received by such Qualified Holder, such transaction shall be deemed
to have been abandoned and such Qualified Holder shall not be in possession of any material, non-public information with respect to the
Company or any of its Subsidiaries. Should the Company decide to pursue such transaction with respect to the Offered Securities, the Company
shall provide such Qualified Holder with another Offer Notice and such Qualified Holder will again have the right of participation set
forth in this Section 5. The Company shall not be permitted to deliver more than one such Offer Notice to such Qualified Holder in any
sixty (60) day period, except as expressly contemplated by the last sentence of Section 5(b).

 

i) The restrictions
contained in this Section 5 shall not apply in connection with the issuance of any Exempt Issuance. The Company shall not circumvent the
provisions of this Section 5 by providing terms or conditions to one Qualified Holder that are not provided to all Qualified Holders.

 

    15

     

    

 

Section 6. Reserved.

 

Section 7. Miscellaneous.

 

a) No Rights
as Stockholder until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or
other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth
in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to Section
2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, including if the Company is for any reason unable
to issue and deliver Warrant Shares upon exercise of this Warrant as required pursuant to the terms hereof, in no event shall the Company
be required to net cash settle an exercise of this Warrant or cash settle in any other form.

  

b) Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (including the posting of
any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a
new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

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

 

d) Authorized
Shares.

 

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

 

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

 

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

  

    16

     

    

 

e) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of
law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough
of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.
Each party hereby irrevocably waives personal service of process and consents to process being served in any such 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 Warrant and agrees that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted
by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in
such action, suit or 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. Notwithstanding the foregoing, nothing
in this paragraph shall limit or restrict the federal district court in which a Holder may bring a claim under the U.S. federal securities
laws.

 

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

 

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

 

h) Notices.
Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice
of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed
to the Company, at 3 Hanechoshet Street, Tel Aviv, Israel 6971068, Attention: Chief Executive Officer, email address: [●],
or such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent
by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing
on the books of the Company. 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 e-mail at the e-mail address set forth in this Section
prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication
is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any
notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company
shall simultaneously file such notice with the Commission pursuant to a Report on Form 6-K.

 

    17

     

    

 

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

  

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

 

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

 

l) Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and
the Holder, on the other hand.

 

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

 

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

 

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

 

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

 

(Signature Page Follows)

 

    18

     

    

 

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

 

	 	JEFFS’ BRANDS LTD
	 	 	 
	 	By:	 
	 	 	Viki Hakmon
	 	 	Chief Executive Officer

 

    19

     

    

 

ANNEX A

 

NOTICE OF EXERCISE

 

	To:	JEFFS’ BRANDS LTD

 

 

(1) The undersigned hereby elects
to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders
herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2) Payment shall take the form
of (check applicable box):

 

[  ] in lawful money of the
United States; or

 

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

 

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

 

_______________________________

 

 

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

 

_______________________________

 

_______________________________

 

_______________________________

 

[SIGNATURE
OF HOLDER]

 

Name of Investing Entity: _______________________________________________________________________

Signature of Authorized Signatory of Investing
Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: _______________________________________________________________________________________

 

    20

     

    

 

ANNEX B

 

ASSIGNMENT FORM

 

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

 

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

 

	Name:	 
	 	(Please Print)
	 	 
	Address:	 
	 	(Please Print)
	 	 
	Phone Number:	 
	 	 
	Email Address:	 
	 	 
	Dated: _______________ __, ______	 

 

	Holder’s Signature:	 	 
	 	 	 
	Holder’s Address:	 	 

 

	(Signature Guaranteed):	Date:	___________________, _____

 

Signature to be guaranteed by an authorized
officer of a chartered bank, trust company or medallion guaranteed by an investment dealer who is a member of a recognized stock exchange.

  

 

21restructureagreement

    CHAR1\1899805v81  MASTER RESTRUCTURE AGREEMENT    This MASTER RESTRUCTURE AGREEMENT (this “Agreement”) is entered into as of May  13, 2022 by and among Monarch National Insurance Company, a Florida corporation (“MNIC”),  FedNat Insurance Company, a Florida corporation (“FNIC”), FedNat Holding Company, a Florida  corporation and FNIC’s parent (“FNHC” and, together with FNHC, “FedNat”), Hale Partnership  Capital Management, LLC, a North Carolina limited liability company (“HPCM”) and the Hale Investors  (as defined in the Appendix) (collectively, all of the foregoing, the “Parties” and each, a “Party”).  Reference is made to the Appendix attached hereto for the meaning of certain capitalized terms  used herein.    RECITALS     A. FNIC owns 300,000 shares (the “Existing Shares”) of the common stock of MNIC,  par value $10 per share (“Common Stock”), being all of the currently-authorized, issued and  outstanding shares of capital stock of MNIC.  B. FNHC owns 100% of the authorized, issued and outstanding shares of capital stock of  FNIC and controls the boards of directors of both FNIC and MNIC.     C. Hale Partnership Capital Advisors, LLC, a North Carolina limited liability company, is  the general partner of each of the Hale Investors other than National Consumer Title Insurance  Company, a Florida corporation wholly owned by HG Holdings, Inc., a publicly listed corporation with  a common control person, Steven A. Hale, II, as chairman and Chief Executive Officer.    D. HPCM holds the dispositive power to vote all equity of any entity owned by the Hale  Investors other than National Consumer Title Insurance Company, where Steven A. Hale, II is  chairman and Chief Executive Officer.    E. FNIC is in the business of originating, underwriting, placing or selling property and  casualty insurance in respect of real property (including residential real property and commercial real  property) including for itself and through MNIC, in the State of Florida.    F. A recent downgrade in FNIC’s financial stability rating to “Substantial” by Demotech,  Inc. puts FNIC at risk of its policies not being allowed for mortgaged homes as well as reducing the  probability of FNIC’s ability to place reinsurance.    G. As part of an overall initiative by FNIC to regain and maintain a financial strength rating  acceptable to the secondary mortgage market and assure stability for the holders of its existing policies,  (i) its Board of Directors has approved, and the Parties have agreed upon, a restructuring of MNIC  pursuant to which the Hale Investors will invest $15,000,000 into MNIC in exchange for newly-issued  Common Stock to constitute at least 60% of the post-restructuring Common Stock, (ii) FNHC will  also invest $10,000,000 into MNIC in exchange for newly-issued Common Stock to constitute 40% of  the post-restructuring Common Stock and (iii) MNIC will redeem the Common Stock held by FNIC in  exchange for a note in principal amount equal to 15.0% of MNIC’s surplus at the closing of the  restructuring, all on the terms and subject to the conditions set forth herein and in the additional  agreements referenced herein.    

 

      CHAR1\1899805v81  2   NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of  which are hereby acknowledged, and in consideration of the agreements herein contained, the parties  hereby agree as follows:    ARTICLE I  RESTRUCTURING ACTIONS AND RELATED MATTERS    Section 1.1. Submission of “Form A”.  The Hale Investors have, prior to the date hereof,  submitted to the Florida Office of Insurance Regulation (“FOIR”) the “Form A” required in order to  acquire controlling stock of a Florida domestic insurer.  The Hale Investors covenant and hereby agree to  supplement the same by submission of this Agreement, the Shareholders Agreement, the Redemption  Note (each as defined below and in the Appendix) and such other material agreements as requested by  FOIR.    Section 1.2. Affiliate Agreement Review. The Parties acknowledge and agree that MNIC  has entered into a number of agreements with FNHC subsidiaries (the “Affiliate Service Agreements”),  including without limitation, Century Risk Services, Inc. (for certain brokerage services) and FedNat  Underwriters, Inc. (as managing general agent), which relationships the Parties intend to cause to  continue following the Closing; provided, however, that the Parties acknowledge and agree that that  certain Tax Allocation Agreement, dated February 4, 2013, by and between FNHC and FNIC, as  amended on May 11, 2018 and January 1, 2020 (the “Tax Allocation Agreement”), will be terminated  with respect to MNIC.  The currently-identified Affiliate Service Agreements are set forth on Schedule  1.2 attached hereto. Between the date hereof and the Closing, HPCM will review each Affiliate Service  Agreement (including any additional Affiliate Service Agreements identified beyond those on Schedule  1.2) and, to the extent such Affiliate Service Agreements do not accurately reflect current practice in  such relationships as described to HPCM by FNHC’s management team, or require additional detail (e.g.  surrounding the rate of reimbursement for services performed by employees of FedNat Underwriters,  Inc.), the Parties will, at Closing, cause MNIC and the applicable FNHC subsidiary to execute one or  more Affiliate Service Agreement amendments to ensure such contracts mirror current practice as so  described.    Section 1.3. Unsecured Notes Redemption. Between the date hereof and Closing, FNHC  shall negotiate with the noteholders currently holding outstanding FNHC unsecured notes in the  aggregate principal amount of $121,000,000 to allow the redemption of a portion of such unsecured  notes in the aggregate amount of not less than $75,000,000 on or before August 31, 2022 at a discount  of at least 85% to the par value thereof and to (a) waive any prepayment premium associated with  such redemption and all future prepayments under the associated indenture, (b) consent to the  transactions contemplated hereunder, and (c) waive all existing events of default under such indentures  (the “Noteholder Consent and Redemption Agreement”), such Noteholder Consent and Redemption  Agreement to be effective prior to Closing.   Section 1.4. Demotech Rating.  Between the date hereof and Closing, MNIC shall  confidentially share with Demotech, Inc. its intended assumption of policies as set forth in Section 1.8  below and the additional capitalization to come from FedNat and the Hale Investors as described in  Sections 1.6 and 1.7 below and shall confirm with Demotech, Inc. that the “A” Financial Stability Rating  currently assigned to MNIC will continue following such policy assumption.  

 

      CHAR1\1899805v81  3  Section 1.5. Articles Amendment; Agreed Per Share Value.    (a) The Articles of Incorporation of MNIC shall (and FedNat shall ensure  that MNIC shall), immediately prior to the transactions contemplated below, be amended via a  filing with the Secretary of State of the State of Florida (the “Articles Amendment”) to (a)  change MNIC’s legal name to “FedNat Property and Casualty” and (b) increase the number of  authorized shares of Common Stock such that there will be sufficient authorized shares  available to issue to the Hale Investors and FHNC or FNIC, as applicable, in consideration of  their respective investments, that number of shares of Common Stock at the Agreed Per Share  Value to cause the Hale Investors to hold 60%, and the applicable FedNat entity, 40%, of the  outstanding MNIC Common following the closing of the transactions contemplated herein.   (b) The Parties acknowledge and agree that FOIR and, perhaps, the Florida  Department of Financial Services, approval of the fair market value of MNIC and the post- closing ownership of MNIC shall be a condition to Closing, and the Articles Amendment will  not be filed until such approval has been received.    (c) FNHC, as the owner of the federally registered trademark for “FedNat”  (USPTO Registration No. 4709044) and various trade names, trademarks and service marks  used in connection therewith (the “Proprietary Marks”), hereby grants to MNIC, its successor  and assigns, and MNIC hereby accepts, an exclusive, royalty-free, perpetual license to the  Proprietary Marks, including, for avoidance of doubt the “FedNat” word and design mark, in  each case for use in connection with the underwriting, issuance and administration of  insurance policies, the collection of insurance premiums and the processing and adjustment of  insurance claims; provided, however, that those FNHC subsidiaries using the “FedNat” name  and related Proprietary Marks as of the date hereof may continue to do so without violation of  such license.  Section 1.6. FedNat Capital Commitment and Subscription.  Effective as of the Closing,  FedNat hereby irrevocably agrees to contribute capital to MNIC in the aggregate amount of $10,000,000  in exchange for Common Stock to equal 40% of the outstanding Common Stock immediately following  the Closing, such funds to be wired by the FedNat entity electing to be or continue as a shareholder of  MNIC following the Closing.  FNHC or FNIC, as the holder of the Common Stock so received, shall,  pursuant to that certain Shareholders Agreement to be made effective as of (and as a condition to) the  Closing in the form attached hereto as Exhibit A (the “Shareholders Agreement”), have the right to  designate two (2) members of the Board of Directors of MNIC and be subject to the transfer restrictions  set forth therein. The Parties acknowledge and agree that the initial Directors designated by FedNat via  the Shareholders Agreement are David Michelson and Jennifer Kimbrough.  Section 1.7. Hale Investor Capital Commitment and Subscription. Effective as of the  Closing, but subject to the terms and conditions of that certain Stock Investment and Subscription  Agreement of even date herewith in the form of Exhibit B attached hereto (the “Hale Investment &  Subscription Agreement”), the Hale Investors hereby irrevocably agree to contribute capital to MNIC in  the aggregate amount of $15,000,000 in exchange for Common Stock to equal 60% of the outstanding  Common Stock immediately following the Closing.  Schedule 1.7 attached hereto indicates the  percentage contribution committed by each Hale Investor. Each Hale Investor shall wire such funds to  MNIC at Closing. Each Hale Investor is a party to the Shareholders Agreement, is subject to certain  transfer restrictions and has certain additional rights thereunder.  The Hale Investors have the right  

 

      CHAR1\1899805v81  4  collectively thereunder to designate three (3) members of the Board of Directors and, in the event the  holders of a majority of the Common Stock approve a sale of at least a majority of the Common Stock,  to require all other holders of Common Stock to sell such Common Stock to the proposed purchaser on  the terms agreed by the notifying majority.  The Parties acknowledge and agree that the initial directors  designated by the Hale Investors are Bradley G. Garner III, Anthony Sciacca and Peter Sherman.    Section 1.8. Policy Assignment and Cancellation. Effective as of Closing and with the  consent of FOIR, FNIC shall, pursuant to an assumption agreement to be entered into between FNIC  and MNIC substantially in the form of Exhibit C attached hereto (the “Assumption Agreement”), transfer  and assign to MNIC all contractual and other rights of approximately 77,000 FNIC in-force Florida  policies and MNIC shall take assignment of and perform all contractual promises made by FNIC with  respect to such policies, in each case, except for the liabilities associated with the periods prior to  assumption.  Under the Assumption Agreement, FNIC shall transfer to MNIC cash and premium  receivables equal to 100% of the amount of the gross liability for the amount of collected premium and  receivables for uncollected premium corresponding to the unexpired portion of such policies and shall  further agree to collect from any agent producer or broker those commissions due from such persons as  a result of returned premiums paid by MNIC. Furthermore, at Closing, MNIC shall, with the consent of  FOIR, cancel approximately 9,000 of the Florida in-force policies issued by MNIC.  Section 1.9. Replacement of Management Agreement.  Effective as of Closing, (a) that  certain Management Agreement dated March 1, 2018, by and between FNHC and MNIC is terminated  and replaced by (b) that certain Management Agreement by and between Hale Partnership Capital  Management, LLC, the investment advisor to those limited partnerships which are Hale Investors and  MNIC, substantially in the form of Exhibit D attached hereto.   Section 1.10. Termination of Investment Management Agreements. Effective as of Closing,  all asset management agreements to which MNIC is a party shall be terminated, including that certain  Investment Management Agreement dated September 13, 2018, by and between MNIC and Pacific  Investment Management Company LLC.  Section 1.11. Bylaws Amendment.  Effective as of Closing, Section III of the Bylaws of  MNIC, originally adopted March 6, 2015, shall be amended and restated in the form attached hereto as  Exhibit E.  Section 1.12. Redemption of Outstanding Stock Held by FNIC. Effective simultaneously with  or immediately following the transactions described in Sections 1.5 and 1.6, MNIC shall, pursuant to a  Stock Redemption Agreement in the form of Exhibit F attached hereto, redeem the Existing Shares from  FNIC in exchange for a surplus note substantially in the form of Exhibit G attached hereto (the  “Redemption Note”) in principal amount equal to 15% of the surplus of MNIC at Closing, such principal  amount not to exceed $2,798,408 (which the Parties acknowledge was 15% of the 3/31/21 estimated  surplus of MNIC).  Section 1.13. Right of First Refusal. Effective as of the Closing, MNIC shall have, and FNIC  hereby grants to MNIC, a right of first refusal to assume (a) FNIC’s flood book of business and (b)  FNIC’s commercial general liability book in runoff (each a “Book” and together, “Books”).  In the event  FNIC receives a bona fide offer for the purchase and assumption of all or part of a Book, it shall  promptly deliver written notice of the proposed sale and transfer to MNIC (a “ROFR Notice”), such  notice to include the name of the proposed purchaser, the Book, Books or portion thereof to be  

 

      CHAR1\1899805v81  5  transferred (the “Subject Book”) and the terms and conditions of the proposed purchase, sale, transfer  and assumption.  Within fifteen (15) days after receipt of such notice, MNIC shall give written notice (a  “Response Notice”) to FNIC stating whether or not it elects to exercise its option to purchase the  Subject Book on the terms and conditions described in the ROFR Notice.  Failure timely to provide a  Response Notice shall be deemed an election not to purchase the Subject Book. If MNIC does not elect  to purchase the Subject Book, FNIC shall have the right to sell and transfer the Subject Book to the  proposed third party purchaser on the terms and conditions originally described in the ROFR Notice.  If  MNIC elects to purchase the Subject Book on the terms and conditions described in the ROFR Notice,  then FNIC shall sell and transfer, and MNIC shall purchase and assume the Subject Book on such terms  and conditions at the date and time agreed between FNIC and MNIC, which shall be not more than  forty-five (45) days after delivery of the Response Notice.  Unless otherwise agreed between the parties,  the place of closing shall be the principal office of the Corporation.  For avoidance of doubt, if, after  MNIC declines to purchase the Subject Book, FNIC does not transfer the Subject Book to the proposed  third party purchaser, FNIC shall again be obligated to satisfy the terms of this Section 1.13 before  selling the Subject Book (or a Book containing such Subject Book) to another third party.    Section 1.14. Transfer of Unearned Premiums. For avoidance of doubt, as required under the  terms of the Assumption Agreement, FNIC will, effective as of Closing, transfer all unearned premiums  on policies assumed by MNIC directly to MNIC.    Section 1.15. Unearned Commission.  Effective as of Closing and consistent with that certain  Amended and Restated Managing General Agency and Claims Administration Agreement dated March 2,  2018 by and between FNIC and FedNat Underwriters, Inc., FedNat Underwriters, Inc. is responsible for  returning any unearned agent commissions to FNIC.  MNIC is in no way responsible for agent  commissions on policies assumed.   Section 1.16. Reinsurance.  On June 1, 2022, but effective June 30, 2022, MNIC shall have  placed reinsurance and the Florida Hurricane Catastrophe Fund (“FHCF”) will have agreed that the  Company’s policies will count towards MNIC’s exposure for FHCF reinsurance purposes at June 30,  2022.  ARTICLE II.  REPRESENTATIONS    Section 2.1. Investor Representations.  In connection with the capital commitment and  subscription set forth in Section 1.6 above and the redemption transaction described in Section 1.12  above, FNIC, with respect to the Redemption Note, and each of FNHC and FNIC (in recognition that  either entity could at Closing contribute the required $10,000,000 pursuant to Section 1.6 and receive in  exchange a commensurate number of MNIC’s newly-issued shares of Common Stock (the “Shares”; the  Shares and the Redemption Note collectively referred to herein as the “New Securities”) hereby  represents and warrants to the other Parties hereto, as of the date hereof and as of the Closing, as  follows:  (a) Such Person is acquiring the New Securities contemplated hereby for its own  account for investment only, and not with a view to the resale or distribution thereof.  

 

      CHAR1\1899805v81  6  (b) Such Person is an “accredited investor” as that term is defined in Rule 501  promulgated under the Securities Act of 1933, as amended (the “Act”) and such Person’s  status that qualifies such Person as an “accredited investor” is set forth below such Person’s  name on the signature page to this Agreement.  Such Person has such knowledge and  experience in financial and business matters that such Person is capable of evaluating the  merits and risks of the investment to be made by such Person hereunder.  Such Person  understands and has taken cognizance of all the risk factors related to the investment in the  New Securities.  (c) Such Person acknowledges that such Person is able to bear the economic risk  associated with the loss of any or all value of the New Securities.  Such Person understands  that the foregoing investment lacks liquidity and such Person is able to bear the economic risk  of holding such New Securities.  (d) Such Person understands that none of the New Securities is registered under  the Act or any applicable state securities or “blue sky” laws and may not be sold or otherwise  transferred or disposed of in the absence of an effective registration statement under the Act  and under any applicable state securities or “blue sky” laws (or exemptions from the  registration requirements thereof).  (e) Such Person understands that the Shares are subject to the provisions of the  Shareholders Agreement (as defined in Section 1.6), including, without limitation, restrictions  on transfer of the Shares.  Such Person acknowledges that as a result of such limitations and  restrictions, it might not be possible to liquidate an investment in such securities readily and  that it may be necessary to hold such investment for an indefinite period.  (f) Such Person has had a reasonable opportunity to obtain, and has received, all  information deemed necessary by such Person with respect to MNIC, including, without  limitation, financial statements and information respecting its current and contemplated assets,  liabilities, prospects, customers and vendors, in order to enter into this Agreement.  (g) The New Securities were not offered to such Person by means of any general  solicitation, publicly disseminated advertisement or sales literature.    (h) None of the “Bad Actor” disqualifying events described in Rule 506(d)(1)(i) to  (viii) promulgated under the Act (each, a “Disqualification Event”), including without limitation,  (a) criminal convictions occurring in the last ten (10) years or court injunctions or restraining  orders issued in the last five (5) years in connection with the purchase or sale of a security or a  false filing with the Securities and Exchange Commission (the “SEC”), (b) currently effective  SEC disciplinary orders relating to brokers, dealers, municipal securities dealers, investment  companies and investment advisors, (c) SEC cease-and-desist orders arising out of any  knowing anti-fraud violation or violation of Section 5 of the Act, (d) currently effective  suspension or expulsion from membership in a self-regulatory organization, (e) SEC stop  orders and orders suspending an exemption under Regulation A of the Act issued in the last  five (5) years and (f) final orders from state securities, insurance, banking, savings  associations or credit union regulators or federal banking agencies, the Commodity Futures  

 

      CHAR1\1899805v81  7  Trading Commission or the National Credit Union Administration barring association with a  regulated entity, engagement in the business of securities, insurance or banking, engagement in  savings association or credit union activities or, if issued in the last ten (10) years, which are  based on fraudulent, manipulative or deceptive conduct, is applicable to the Investor or any of  such Investor’s Rule 506(d) Related Parties, except, if applicable, for a Disqualification Event  as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) of the Act is applicable.  For purposes of this  subpart (h), a “Rule 506(d) Related Party” is, with respect to any Person acquiring New  Securities, a Person that is a beneficial owner of such New Securities for purposes of Rule  506(d) of the Act.    (g) Such Person’s principal place of business is in the state set forth after the  Person’s name on the signature page to this Agreement.   (h) Such Person has the requisite corporate power and authority to execute and  deliver this Agreement, to perform its obligations hereunder and to consummate the  transactions contemplated hereby.  This Agreement has been duly authorized, executed and  delivered by such Person and represents the legal, valid and binding obligation of such Person,  enforceable against such Person in accordance with its terms, subject to applicable  bankruptcy, insolvency, reorganization, moratorium, liquidation, fraudulent conveyance and  other similar laws and principles of equity affecting creditors’ rights and remedies generally.   None of the execution and delivery by such Person of this Agreement, the performance by  such Person of its obligations hereunder or the consummation by such Person of the  transactions contemplated hereby will violate or conflict with such Person’s  organizational  documents or any applicable contractual obligation, law or order, except for such violations or  conflicts as will not materially and adversely affect the validity of this Agreement or any of the  transactions contemplated hereby.  No consent, approval or authorization of any governmental  authority or third party is required in connection with the execution and delivery by such  Person of this Agreement, the performance by such Person of its obligations hereunder or the  consummation by such Person of the transactions contemplated by this Agreement, except for  such consents, approvals or authorizations as have been obtained and are in full force and  effect or the failure of which to obtain will not materially and adversely affect the validity of  this Agreement or any of the transactions contemplated hereby.  (i) (1) Except as expressly provided for in this Agreement, no representations or  warranties have been made to such Person by MNIC, its existing direct or indirect owners, or  by any director, officer, agent, employee or affiliate thereof, or any other Person with respect  to such Person’s investment in the New Securities, (2) except for this Agreement, the  Shareholders Agreement and the Redemption Note, as applicable, there are no agreements,  contracts, understandings or commitments between such Person on the one hand and MNIC  or any manager, director, officer, agent, employee or affiliate of MNIC on the other hand, with  respect to such Person’s investment in the New Securities, and (3) such Person’s investment  in the Shares is subject to dilution by the issuance of additional equity of MNIC and such  Person is not entitled to any preemptive, tag-along, information or other minority investor  rights with respect to the Shares, other than as expressly set forth in the Shareholders  Agreement.    

 

      CHAR1\1899805v81  8  (i) With respect to the redemption transaction, FNIC owns the Existing Shares  that it is exchanging pursuant to this Agreement free and clear of all claims, liens or  encumbrances.  Section 2.2. Hale Investor Representations.  Each Hale Investor hereby represents and  warrants to the other Parties hereto, as of the date hereof and as of the Closing, as follows:  (a) Such Person has the requisite corporate power and authority to execute and  deliver this Agreement, to perform its obligations hereunder and to consummate the  transactions contemplated hereby.  This Agreement has been duly authorized, executed and  delivered by such Person and represents the legal, valid and binding obligation of such Person,  enforceable against such Person in accordance with its terms, subject to applicable  bankruptcy, insolvency, reorganization, moratorium, liquidation, fraudulent conveyance and  other similar laws and principles of equity affecting creditors’ rights and remedies generally.    (b) None of the execution and delivery by such Person of this Agreement, the  performance by such Person of its obligations hereunder or the consummation by such Person  of the transactions contemplated hereby will violate or conflict with such Person’s  organizational documents or any applicable contractual obligation, law or order, except for  such violations or conflicts as will not materially and adversely affect the validity of this  Agreement or any of the transactions contemplated hereby.  No consent, approval or  authorization of any governmental authority or third party is required in connection with the  execution and delivery by such Person of this Agreement, the performance by such Person of  its obligations hereunder or the consummation by such Person of the transactions  contemplated by this Agreement, except for such consents, approvals or authorizations as have  been obtained and are in full force and effect or the failure of which to obtain will not  materially and adversely affect the validity of this Agreement or any of the transactions  contemplated hereby.  The Parties acknowledge that the Hale Investors are making parallel securities representations in the  Hale Investment & Subscription Agreement.  Section 2.3. Issuer Representations.  In connection with the subscriptions and exchanges  contemplated above, MNIC hereby represents and warrants to FedNat and the Hale Parties as of the date  hereof and as of the Closing as follows:  (a) MNIC is a corporation duly incorporated, validly existing and in good standing  under the laws of the State of Florida.  (b) MNIC has the requisite corporate power and authority to execute and deliver  this Agreement, to perform its obligations hereunder and to consummate the transactions  contemplated hereby, including, the issuance of the Redemption Note and the New Shares.    (c) This Agreement has been duly authorized, executed and delivered by MNIC  and represents the legal, valid and binding obligation of MNIC, enforceable against MNIC in  accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization,  moratorium, liquidation, fraudulent conveyance and other similar laws and principles of equity  affecting creditors’ rights and remedies generally.  

 

      CHAR1\1899805v81  9  (d) None of the execution and delivery by MNIC of this Agreement, the  performance by MNIC of its obligations hereunder or the consummation by MNIC of the  transactions contemplated hereby will violate or conflict with MNIC’s organizational  documents or any applicable contractual obligation, law or order, except for such violations or  conflicts as will not adversely affect the validity of this Agreement or any of the transactions  contemplated hereby and will not have or reasonably be expected to have, individually or in the  aggregate, a material adverse effect on the business, financial condition or results of operations  of MNIC.   (e) Except for FOIR approval, noteholder approval and, potentially the approval of  the Florida Department of Financial Services, no consent, approval or authorization of any  governmental authority or third party is required in connection with the execution and delivery  by MNIC of this Agreement, the performance by MNIC of its obligations hereunder or the  consummation by MNIC of the transactions contemplated by this Agreement, except for such  consents, approvals or authorizations as have been obtained and are in full force and effect or  the failure of which to obtain will not adversely affect the validity of this Agreement or any of  the transactions contemplated hereby and will not have or reasonably be expected to have,  individually or in the aggregate, a material adverse effect on the business, financial condition or  results of operations of MNIC.  (f) There are no judicial or administrative actions, proceedings or investigations  pending or, to the knowledge of MNIC, threatened against MNIC that question the validity of  this Agreement or any of the transactions contemplated hereby.  (g) As of Closing and after giving effect to the transactions contemplated hereby,  the Hale Investors will hold 60% of the outstanding Common Stock of MNIC and either FNHC  or FNIC will hold the other 40% of the outstanding Common Stock of MNIC.  As of Closing,  MNIC will not have issued or granted any outstanding options, warrants, rights or other  securities convertible into or exchangeable or exercisable for shares of Common Stock or any  other securities of MNIC or entered into any outstanding commitment to issue or grant any  such options, warrants, rights or other securities.  (h) Upon the issuance of the Shares pursuant to this Agreement and the shares of  Common Stock pursuant to the Hale Investment and Subscription Agreement, such shares will  be duly authorized, validly issued and fully paid and nonassessable and free and clear of all  liens, charges, encumbrances, rights or claims of any kind other than those provided in or  contemplated by the Shareholders Agreement.  (i) MNIC has not granted preemptive, registration or similar rights with respect to  its shares of capital stock or any other MNIC security to any person or entity.     ARTICLE III.  CLOSING    Section 3.1. Closing.  The closing of the transactions contemplated hereby (the “Closing”)  and, specifically, the investments in MNIC and the issuance of shares of Common Stock in exchange  

 

      CHAR1\1899805v81  10  therefor described in Sections 1.6 and 1.7, the assignment and cancellation of policies described in  Section 1.8 and the redemption of the Existing Shares in exchange for the Redemption Note described in  Section 1.12 shall occur three (3) Business Days after the date on which the third parties whose  agreement or action is required pursuant to Sections 1.3, 1.4 and 1.8 have provided such agreement or  taken such action, and the Parties hereto shall have duly executed, and provided to the counterparties  thereto each of the agreements described in Article I or at such other time and place as the Parties may  mutually agree in writing.  The Parties acknowledge and agree that the intended date of Closing is June 1,  2022.  The date on which the Closing actually occurs is referred to in this Agreement as the “Closing  Date” and shall be deemed effective as of 12:01 a.m. on the Closing Date.  ARTICLE IV.  RELEASES    Section 4.1. Release of MNIC.  Effective as of the Closing, each of FNIC and FNHC, on  behalf of itself and each of its subsidiaries, hereby releases MNIC and its officers, directors, employees,  representatives and agents from any and all actions, causes of action, claims, demands, damages and  liabilities of whatever kind or nature, in law or in equity, now known or unknown, suspected or  unsuspected to the extent arising from any action or failure to act of MNIC prior to the Closing Date,  including, without limitation, any breach or alleged breach under any Affiliate Service Agreement and any  claim arising out of the payment or non-payment of dividends with respect to the Existing Shares.     ARTICLE V.  MISCELLANEOUS    Section 5.1. Counterparts/Electronic Signature.  This Agreement and each additional  agreement contemplated herein may be executed in any number of counterparts, each of which when so  executed and delivered shall be an original, but all of which shall constitute one and the same instrument.   Delivery of an executed signature page by facsimile or other electronic transmission (e.g. “pdf” or “tif”  format) shall be effective as delivery of a manually executed counterpart hereof and may be used in lieu  of the original agreement for all purposes.  Without limiting the foregoing, the words “execution,”  “execute,” “signed,” “signature,” and words of like import in or related to this Agreement shall be  deemed to include electronic signatures (e.g., through DocuSign© or other similar electronic e-signature  application), each of which shall be of the same legal effect, validity or enforceability as a manually  executed signature, to the extent and as provided for in any applicable law, including the Federal  Electronic Signatures in Global and National Commerce Act or any other similar state laws based on the  Uniform Electronic Transactions Act.  Section 5.2. GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND  CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF  FLORIDA WITHOUT REFERENCE TO ANY CONFLICTS OF LAW PRINCIPLES THEREOF.  Section 5.3. Entirety.  This Agreement and the documents referred to herein embody the  entire agreement between the Parties and supersede all prior agreements and understandings, if any,  relating to the subject matter hereof.  These documents represent the final agreement between the Parties  

 

      CHAR1\1899805v81  11  and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of  the Parties.  There are no oral agreements between the Parties.  Section 5.4. Severability of Provisions.  Each provision of this Agreement shall be severable  from every other provision of this Agreement for the purpose of determining the legal enforceability of  any specific provision.  Section 5.5. Successors and Assigns.  This Agreement shall be binding upon and inure to  the benefit of each of the Parties and their respective successors and assigns.  Section 5.6. No Third-Party Beneficiaries. This Agreement is for the benefit only of the  Parties hereto, and there are no third-party beneficiaries of this Agreement.  Section 5.7. Headings.  The headings of the sections, paragraphs and subsections of this  Agreement are inserted for convenience only and shall not affect the interpretation hereof.  Section 5.8. Tax Consequences.  None of the Parties hereto shall be liable or responsible in  any way for the tax consequences to any other Party to this Agreement of the transactions contemplated  by this Agreement.  Each Party to this Agreement agrees to determine and be responsible for any and all  tax benefits or consequences to such Party related to such transactions.  [Signature pages follow] 

 

  MASTER RESTRUCTURE AGREEMENT     CHAR1\1899805v81   IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their  respective authorized officers as of the day and year first above written.    FEDNAT INSURANCE COMPANY      By:         /s/ Michael Braun      Name:   Michael Braun       Title:     President                         In accordance with Section 2.1(b) and 2.1(g) of this Agreement, upon execution of this Agreement,  the above-named Person further represent and warrant to each other Party to this Agreement that such  Person (please check all applicable boxes):    ☒ Is an insurance company as defined in Section 2(a)(13) of the Act.   Is an investment company registered under the Investment Company Act of 1940, as amended  (the “Investment Company Act”).   Has total assets in excess of $5,000,000, was not formed for the specific purpose of acquiring  New Securities and is one or more of the following:  (a) an organization described in  Section 501(c)(3) of the Internal Revenue Code, (b) a corporation or a limited liability  company, (c) a Massachusetts or similar business trust or (d) a partnership.   Is a corporation with total assets exceeding $5,000,000, which was not formed for the specific  purpose of acquiring New Securities and whose purchase is directed by a person who has  such knowledge and experience in financial and business matters that he or she is capable of  evaluating the merits and risks of the investment in the New Securities.    Such Person’s principal place of business is located in the State of Florida.  

 

  MASTER RESTRUCTURE AGREEMENT     CHAR1\1899805v81   IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their  respective authorized officers as of the day and year first above written.            FEDNAT HOLDING COMPANY      By:       /s/ Bruce F. Simberg      Name:  Bruce F. Simberg      Title:     Chairman of the Board                    In accordance with Section 2.1(b) and 2.1(g) of this Agreement, upon execution of this Agreement,  the above-named Person further represent and warrant to each other Party to this Agreement that such  Person (please check all applicable boxes):     Is an insurance company as defined in Section 2(a)(13) of the Act.   Is an investment company registered under the Investment Company Act of 1940, as amended  (the “Investment Company Act”).   Has total assets in excess of $5,000,000, was not formed for the specific purpose of acquiring  New Securities and is one or more of the following:  (a) an organization described in  Section 501(c)(3) of the Internal Revenue Code, (b) a corporation or a limited liability  company, (c) a Massachusetts or similar business trust or (d) a partnership.  ☒ Is a corporation with total assets exceeding $5,000,000, which was not formed for the specific  purpose of acquiring New Securities and whose purchase is directed by a person who has  such knowledge and experience in financial and business matters that he or she is capable of  evaluating the merits and risks of the investment in the New Securities.    Such Person’s principal place of business is located in the State of Florida.        

 

  MASTER RESTRUCTURE AGREEMENT     CHAR1\1899805v81    IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their  respective authorized officers as of the day and year first above written.    HPCM:    HALE PARTNERSHIP CAPITAL MANAGEMENT, LLC    By: /s/ Steven A. Hale II         Steven A. Hale II, Manager        HALE INVESTORS:    HALE PARTNERSHIP FUND, LP    By:  Hale Partnership Capital Management, LLC, its  Investment Advisor    By: /s/ Steven A. Hale II             Steven A. Hale II, Manager      MGEN II – HALE FUND, LP    By:  Hale Partnership Capital Management, LLC, its  Investment Advisor    By: /s/ Steven A. Hale II             Steven A. Hale II, Manager      CLARK – HALE FUND, LP    By:  Hale Partnership Capital Management, LLC, its  Investment Advisor    By: /s/ Steven A. Hale II             Steven A. Hale II, Manager          

 

  MASTER RESTRUCTURE AGREEMENT     CHAR1\1899805v81  IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their  respective authorized officers as of the day and year first above written.    HALE INVESTORS:    SMITH – HALE FUND, LP    By:  Hale Partnership Capital Management, LLC, its   Investment Advisor    By: /s/ Steven A. Hale II             Steven A. Hale II, Manager    DICKINSON – HALE FUND, LP    By:  Hale Partnership Capital Management, LLC, its  Investment Advisor      By: /s/ Steven A. Hale II             Steven A. Hale II, Manager      THE VANDERBILT UNIVERSITY “VUA HALE SMA”    By:  Hale Partnership Capital Management, LLC, its  Investment Advisor      By: /s/ Steven A. Hale II             Steven A. Hale II, Manager      HALE ICFG FUND, LP    By:  Hale Partnership Capital Management, LLC, its  Investment Advisor    By: /s/ Steven A. Hale II             Steven A. Hale II, Manager      NATIONAL CONSUMER TITLE INSURANCE  COMPANY      

 

  MASTER RESTRUCTURE AGREEMENT     CHAR1\1899805v81  By:  /s/ Steven A. Hale II       Name:  Steven A. Hale II       Title:  Chairman and CEO      

 

  MASTER RESTRUCTURE AGREEMENT     CHAR1\1899805v81  IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their  respective authorized officers as of the day and year first above written.      MNIC:    MONARCH NATIONAL INSURANCE COMPANY      By:  /s/ Michael Braun       Name:  Michael Braun       Title:  President        

 

      CHAR1\1899805v81  Appendix  Act is defined in Section 2.1(b).  Agreed Per Share Value means (a) the fair market value of MNIC as approved by the FOIR  (determined at 10% of book value of its surplus less any debt of MNIC) divided by the number of  shares of Common Stock required to be authorized to enable the issuances to the Hale Investors and  FedNat of MNIC Common Stock on the terms and in the amounts set forth herein.  Affiliate Service Agreements is defined in Section 1.2.  Articles Amendment is defined in Section 1.5.  Assignment Agreement is defined in Section 1.8.  Book is defined in Section 1.13.  Business Day means a day other than a Saturday, Sunday or other day on which the Federal Reserve  Bank of New York is closed.  Closing is defined in Section 3.1.  Closing Date is defined in Section 3.1.  Common Stock is defined in Recital A.  Existing Shares is defined in Recital A.  FedNat  is defined in the Preamble.  FNHC is defined in the Preamble.  FNIC is defined in the Preamble.  Hale Investment & Subscription Agreement is defined in Section 1.7.  Hale Investors means Hale Partnership Fund, LP; MGEN II – Hale Fund, LP; Clark - Hale Fund, LP;  Smith - Hale Fund, LP, Dickinson - Hale Fund, LP; The Vanderbilt University “VUA Hale SMA”; Hale  ICFG Fund, LP and National Consumer Title Insurance Company.  MNIC is defined in the Preamble.  New Securities is defined in Section 2.1.  Person means any natural person, corporation, limited liability company, trust, joint venture  association, company, partnership, governmental authority or other entity.  Redemption Agreement is defined in Section 1.12.  Redemption Note is defined in Section 1.12.  

 

      CHAR1\1899805v81  Response Notice is defined in Section 1.13.    ROFR Notice  is defined in Section 1.13.    Shareholders Agreement is defined in Section 1.6.  Shares is defined in Section 2.1.  Subject Book is defined in Section 1.13.  

 

      CHAR1\1899805v81  Schedule 1.2    Omitted pursuant to Item 601(a)(5) of Regulation S-K.        

 

      CHAR1\1899805v81  Schedule 1.7    Omitted pursuant to Item 601(a)(5) of Regulation S-K.            

 

      CHAR1\1899805v81  EXHIBIT A  Shareholders Agreement      Omitted pursuant to Item 601(a)(5) of Regulation S-K.    

 

      CHAR1\1899805v81  EXHIBIT B  Hale Investment & Subscription Agreement      Omitted pursuant to Item 601(a)(5) of Regulation S-K.      

 

      CHAR1\1899805v81  EXHIBIT C  Assumption Agreement      Omitted pursuant to Item 601(a)(5) of Regulation S-K.  

 

      CHAR1\1899805v81  EXHIBIT D  Management Agreement      Omitted pursuant to Item 601(a)(5) of Regulation S-K.    

 

      CHAR1\1899805v81  EXHIBIT E  Restated Bylaws      Omitted pursuant to Item 601(a)(5) of Regulation S-K.        

 

      CHAR1\1899805v81  EXHIBIT F  Redemption Agreement      Omitted pursuant to Item 601(a)(5) of Regulation S-K.    

 

      CHAR1\1899805v81  EXHIBIT G  Redemption Note      Omitted pursuant to Item 601(a)(5) of Regulation S-K.

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