# JFB Construction Holdings (JFB) 10-K/A SEC filing - FY2025
- Filed: Jul 2, 2026, 3:36 PM EDT
- Fiscal year: FY2025
- Accession: 0001493152-26-031856
- OpenCapital page: https://www.opencapital.sh/filings/0001493152-26-031856
- Markdown URL: https://www.opencapital.sh/filings/0001493152-26-031856.md
- Official SEC filing index: https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/0001493152-26-031856-index.htm
## Filing documents
- [10-K/A (form10-ka.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/form10-ka.htm)
- [EX-3.3 (ex3-3.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex3-3.htm)
- [EX-4.6 (ex4-6.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex4-6.htm)
- [EX-4.7 (ex4-7.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex4-7.htm)
- [EX-10.16 (ex10-16.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex10-16.htm)
- [EX-10.17 (ex10-17.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex10-17.htm)
- [EX-10.18 (ex10-18.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex10-18.htm)
- [EX-10.19 (ex10-19.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex10-19.htm)
- [EX-10.20 (ex10-20.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex10-20.htm)
- [EX-10.21 (ex10-21.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex10-21.htm)
- [EX-10.23 (ex10-23.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex10-23.htm)
- [EX-23.1 (ex23-1.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex23-1.htm)
- [EX-31.1 (ex31-1.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex31-1.htm)
- [EX-31.2 (ex31-2.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex31-2.htm)
- [EX-32.1 (ex32-1.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex32-1.htm)
- [EX-32.2 (ex32-2.htm)](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex32-2.htm)
---
## 10-K/A
SEC source: [form10-ka.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/form10-ka.htm)
**UNITED
STATES**
**SECURITIES
AND EXCHANGE COMMISSION**
**Washington,
D.C. 20549**
**FORM10-K/A**
**Amendment
No. 3**
**(Mark
One)**
**☒** **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
**For
the fiscal year ended DECEMBER 31, 2025**
**OR**
**☐** **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO**
**Commission
File Number 001-42538**
**JFB
CONSTRUCTION HOLDINGS**
**(Exact
name of Registrant as specified in its Charter)**
| Nevada | 99-2549040 |
| --- | --- |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 1300 S. Dixie Highway, Suite B Lantana, FL | 33462 |
| (Address of principal executive offices) | (Zip Code) |
**Registrant’s
telephone number, including area code: (561)582-9840**
Securities
registered pursuant to Section 12(b) of the Act:
**Title of each class** **Trading Symbol(s)** **Name of each exchange on which registered**
Class A Common Stock,par value $0.0001per share JFB The Nasdaq Capital Market
Securities
registered pursuant to Section 12(g) of the Act: **None**
Indicate
by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate
by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☒ No ☐
Indicate
by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The
aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, computed by reference to
the closing price as of June 30, 2025 of $6.70 per share, the last business day of the Registrant’s most recently completed
fourth quarter, was approximately $12,440,230.
The
number of shares of Registrant’s Common Stock outstanding as of July 2, 2026 was 17,521,630.
**Table
of Contents**
| PART I | | Page |
| --- | --- | --- |
| Item 1. | Business | 2 |
| Item 1A. | Risk Factors | 9 |
| Item 1B. | Unresolved Staff Comments | 25 |
| Item 1C. | Cybersecurity | 25 |
| Item 2. | Properties | 26 |
| Item 3. | Legal Proceedings | 26 |
| Item 4. | Mine Safety Disclosures | 26 |
| PART II | | |
| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 27 |
| Item 6. | [Reserved] | 28 |
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 29 |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 36 |
| Item 8. | Financial Statements and Supplementary Data | F-1 |
| Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 38 |
| Item 9A. | Controls and Procedures | 38 |
| Item 9B. | Other Information | 38 |
| PART III | | |
| Item 10. | Directors, Executive Officers and Corporate Governance | 39 |
| Item 11. | Executive Compensation | 45 |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 48 |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 49 |
| Item 14. | Principal Accounting Fees and Services | 51 |
| PART IV | | |
| Item 15. | Exhibits, Financial Statement Schedules | 52 |
| Item 16. | Form 10-K Summary | 52 |
**SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS**
This
Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements within the meaning of the federal securities
laws. All statements contained in this Annual Report, other than statements of historical fact, including statements regarding our future
operating results and financial position, our business strategy and plans, potential growth or growth prospects, future research and
development, sales and marketing and general and administrative expenses, and our objectives for future operations, are forward-looking
statements. Words such as “believes,” “may,” “will,” “estimates,” “potential,”
“continues,” “anticipates,” “intends,” “expects,” “could,” “would,”
“projects,” “plans,” “targets,” and variations of such words and similar expressions are intended
to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections
about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term
and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks,
uncertainties and assumptions, including those described in the “Risk Factors” in this Annual Report. Readers are urged to
carefully review and consider the various disclosures made in this Annual Report and in other documents we file from time to time with
the Securities and Exchange Commission (the “SEC”) that disclose risks and uncertainties that may affect our business. Moreover,
we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict
all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks,
uncertainties, and assumptions, the future events and circumstances discussed in this Annual Report may not occur and actual results
could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You
should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking
statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable,
we cannot guarantee future results, performance, or achievements. In addition, the forward-looking statements in this Annual Report are
made as of the date of this filing, and we do not undertake, and expressly disclaim any duty, to update such statements for any reason
after the date of this Annual Report or to conform statements to actual results or revised expectations, except as required by law.
You
should read this Annual Report and the documents that we reference herein and have filed with the SEC as exhibits to this Annual Report
with the understanding that our actual future results, performance, and events and circumstances may be materially different from what
we expect.
This
Annual Report also contains or may contain estimates, projections and other information concerning our industry, our business and the
markets for our products, including data regarding the estimated size of those markets and their projected growth rates. Information
that is based on estimates, forecasts, projections or similar methodologies is inherently subject to uncertainties and actual events
or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated,
we obtained these industry, business, market and other data from reports, research surveys, studies and similar data prepared by third
parties, industry and general publications, government data and similar sources. In some cases, we do not expressly refer to the sources
from which these data are derived.
1
**PART
I**
**Item
1. Business.**
**Company
Overview and History**
JFB
Construction Holdings (“JFB”, “we”, the “Company”) is a commercial and residential real estate construction
and development company. The Company’s management is dedicated to delivering high-quality services to commercial and residential
markets, such as retail corporate buildouts, multifamily community developments and luxury residential homes, with a focus on fostering
long-term relationships with clients, partners, and communities. Our comprehensive suite of services encompasses everything from initial
project planning and design to the final stages of construction and project management.
On
May 28, 2014, Mr. Joseph F. Basile, III formed JFB Construction & Development Inc., a Florida corporation (the “JFB Subsidiary”).
At the time of the formation, Mr. Basile held one hundred percent (100%) of the issued and outstanding shares of the JFB Subsidiary.
Our headquarters is located in Lantana, Florida.
On
April 9, 2024, Mr. Basile formed JFB Construction Holdings, a Nevada corporation, to create a parent holding company of the JFB Subsidiary,
which currently serves as the Company’s operational entity. On July 18, 2024, all shareholders of the JFB Subsidiary entered into
a Contribution and Exchange Agreement (the “Contribution and Agreement”) with JFB Construction Holdings to exchange their
shares in the JFB Subsidiary for shares of JFB Construction Holdings. 200 shares of the JFB Subsidiary’s common stock were exchanged
for 7,279,998 shares of our Class A Common Stock and 8,000,000 shares of our Class B Common Stock to JFB Subsidiary’s three shareholders.
As a result, JFB Subsidiary became a wholly owned subsidiary of JFB Construction Holdings (the foregoing transactions are collectively
referred to herein as the “Reorganization”).
Our
primary markets vary across our business segments.
Commercial
Contracting Segments
Our
commercial contracting segment has completed projects in 36 states, delivering over 2 million square feet of commercial retail and shopping
center space construction and improvements. This segment’s market is driven primarily by our ability to provide services to franchisees
and franchisors nationwide, regardless of project location because of our operational flexibility and established relationships with
franchisees and franchisors alike. While we have historically focused on the Southern Atlantic region, including Florida, Georgia, South
Carolina, and North Carolina, where we have established a strong reputation and network, our growth is increasingly tied to the strength
of our relationships with franchisees and the trust of franchisors who rely on us as preferred builders for multiple projects.
Real
Estate Development Segment
Our
real estate development segment is currently concentrated in South Florida, with plans to leverage our regional success to expand into
other southern and U.S. markets by identifying market opportunities and joint venture partners that align with our objectives. Our residential
construction segment is also focused on South Florida, with no current plans for expansion beyond this market.
Corporate
Growth and Expansion
Management
believes we will leverage our established industry relationships, experience operating in various jurisdictions and navigating complex
construction regulations to meet our growth objectives of continuing to expand our market throughout more of the United States and successfully
winning bids for larger construction projects. The Company intends to focus its business in states with increased population and GDP
growth, such as Florida, Texas and South Carolina. However, as we expand into new territories, our reputation for excellence will be
less known by new clients and we will need to compete with other construction companies that may have been operating in a given region
for years and already have built up reliable networks of clients, vendors, contractors, and other market participants. We believe our
ability to rely on our relationships within the franchise industry and more generally the real estate development industry should offset
some of this potential risk, however by continuing to build on our experience and proven track record.
Our
expansion and growth goals, some of which will come with more capital intensive projects, may expose the Company to greater risks related
to lack of performance, faltering relationships, improper investment of resources or otherwise. The Company also recognizes operations
are likely to fluctuate significantly and historical results should not be considered indicative of results for any future periods. While
taking into account the inherent risks, it is our intent to capitalize on our increased access to capital and credibility from this offering
to fund new projects and increase our bond-ability fueling our intended growth. Our ability to obtain surety bonds is important for expanding
our operations, as bonding is often required for bidding on public and large private projects. Increased bonding capacity allows us to
pursue more high-value contracts, particularly in government and infrastructure sectors, enhancing revenue opportunities and market diversification.
It also strengthens our credibility with clients and lenders, reflecting our financial stability. This credibility can lead to improved
financial terms and mitigate risks associated with contract defaults, enabling the company to confidently take on larger projects and
drive long-term growth.
2
We
have extensive experience building and remodeling hundreds of franchise locations for corporate franchisors and franchisees for national,
fast expanding brands, including Orange Theory Fitness, European Wax Center, Massage Envy, Planet Fitness, V/O Medspa, Arby’s,
Tropical Smoothie Cafe, Amazing Lash Studio, Starbucks, Swthz and Save-A-Lot. For our franchise clients, we offer interior remodeling,
space optimization, and the integration of advanced design to create functional and attractive retail environments. The Company expects
consistent and reliable revenue for this division based on established relationships and clients affiliated with reputable name brands.
Should such relationships be compromised or key individuals leave their positions with franchisors, our consistent revenue sources could
be adversely impacted. However, the departure of key individuals may create new opportunities with the franchisors these individuals
transition to. We intend to continue to utilize our commitment to quality craftsmanship, attention to detail, and customer satisfaction
to set us apart in this market. Should the quality of our workmanship suffer through poor project management or quality control, our
reputation may be impacted, reducing our ability to attract new clients or retain past clients. Payments are due within 30 days of invoice,
aligning with project milestones to ensure cash flow and maintain project pace. Management believes JFB Construction’s unique selling
proposition lies in our ability to tailor solutions to meet the specific needs of each client, familiarity of the needs of our clients
within the franchise construction niche, and delivering projects on time and within budget. Further, we attempt to offer efficient and
economical solutions for our client’s expanding franchisee and franchisor businesses by allowing them to utilize the same contractor
for many of their franchise locations.
Presently,
the Company has begun to expand its real estate development segment by being the general contractor on low rise apartment and townhome
developments projects. In the future, the Company also intends to invest directly or through joint ventures in real estate development
projects. While these investments present a pathway to generate additional revenues by selling completed projects at a premium, generating
rental income and/or to vertically integrate by securing valuable construction contracts associated with the projects, they also involve
considerable capital commitments and exposure to market volatility, project delays, and other risks associated with real estate development.
The illiquid nature of these investments further amplifies the challenges, as capital is often tied up for extended periods, limiting
the company’s flexibility to redeploy resources. We believe the Company’s integrated approach, combining investment with
the potential to secure construction contracts, will offset such risks by securing additional large-scale construction projects and potential
revenue generated from the investments. Presently, our focus is on apartment complexes and townhouses, with a potential shift to mixed-use
buildings, hotels and commercial properties in the future as our business expands and new opportunities are presented.
Residential
Construction Segment
Our
residential construction segment focuses on custom home builds, in addition to certain remodeling projects primarily in the South Florida
region with a focus on superior craftsmanship and attention to detail. Some of our luxury residential projects also include state of
the art equestrian facilities. In 2025, we focused more on growth of this segment to continue to diversify our service offerings. Our
relationships with architects, engineers and designers create opportunities for these projects and we will continue to foster these relationships
to continue growth in this division.
Strategic
Goals
In
addition to our expansion into key states such as Florida, Texas, and South Carolina, we have set forward-looking strategic milestones—including
targeted market penetration rates, phased rollouts, and revenue growth objectives over the next 12 to 24 months—to overcome regional
brand recognition challenges and establish a robust presence in these markets.
**Recent
Developments**
Pursuant
to a forward stock split (the “Forward Split”) announced on March 10, 2026, the total number of shares of Common Stock held
by each stockholder were converted automatically into the number of shares of Common Stock equal to the number of issued and outstanding
shares of Common Stock held by each such stockholder immediately prior to the Forward Split multiplied by two, with distribution occurring
on March 25, 2026.
On
February 17, 2026, we announced that we entered into a definitive Business Combination Agreement with XTEND Operating Systems Ltd. (“XTEND”),
an AI-driven, software-first defense technology company focused on human-guided autonomy for unmanned systems. Under the agreement, JFB
will combine with XTEND in an all-stock transaction and, following closing, the combined company is expected to operate under the name
XTEND AI Robotics and to trade on Nasdaq under the ticker “XTND.” The transaction was unanimously approved by the Boards
of Directors of both companies. Closing is subject to customary conditions, including stockholder approvals and regulatory clearances,
and is expected to occur in 2026. JFB and XTEND entered into an amendment to the Business Combination Agreement on March 21, 2026. Further
details, including the transaction structure, governance, and anticipated strategic benefits, are described in our Current Report on
Form 8-K (including the Business Combination Agreement filed as an exhibit) and our subsequent communication filed pursuant to Rule 425.
3
On
February 13, 2026, we entered into a private placement of our Class A common stock, issuing 1,604,000 shares at a price of $6.25 per
share for aggregate gross proceeds of approximately $10.025 million. The offering was made to accredited investors and was disclosed
in our Current Report on Form 8-K.
On
October 2, 2025, we closed a private investment in public equity (PIPE) financing with American Ventures LLC, Series XIV JFB, issuing
an aggregate of 4,389,500 shares of our Series C Convertible Preferred Stock (stated value $10.00 per share), together with two series
of warrants. Gross proceeds from the financing were approximately $43.9 million before fees and expenses, as described in our Current
Report on Form 8-K and accompanying press release furnished as an exhibit.
On
February 13, 2026, Bjarne Borg resigned from his position as a member of the Board of Directors of JFB Construction Holdings and from
all committees of the Board, effective immediately. Mr. Borg’s resignation was not because of any disagreement with management
or the Board on any matter relating to the Company’s operations, policies or practices.
On
February 13, 2026, the Board, upon the recommendation of the Nominating and Corporate Governance Committee, appointed Stefan Passantino
to replace Mr. Borg and serve as a member of the Board, effective immediately. The Board also appointed Mr. Passantino to serve on the
following committees of the Board: Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. In addition,
Mr. Passantino will serve as the Chairman of the Compensation Committee. The Board affirmatively determined that Mr. Passantino is an
independent director within the meaning of the Nasdaq listing standards.
Forward-looking
statements in this “Recent Developments” section are subject to risks and uncertainties, including those described under
“Risk Factors” and elsewhere in this Annual Report and in our SEC filings, including with respect to the timing and completion
of the proposed XTEND transaction, required approvals, integration risks, financing, market conditions, and other factors. Additional
information about the XTEND transaction, including important risk factors and the terms of the Business Combination.
**Corporate
History**
**Business
Segments**
We
provide a comprehensive range of services within the construction and development industries for both the residential and commercial
segments. Each segment offers distinct opportunities for growth and presents unique challenges that JFB Construction navigates. Currently,
we have twenty-four construction projects, which includes twenty projects actively under construction and another four under contract
awaiting permitting or similar impediments. More specifically, these projects consist of fifteen commercial projects and six residential
projects, which includes three larger scale real estate development projects.
***Commercial
Construction Segment***
From
ground-up developments to renovations and tenant improvements, we specialize in delivering high-quality commercial construction projects
across various commercial sectors. This segment encompasses a wide range of projects, including office buildings, retail centers, hospitality
establishments, and industrial facilities. The commercial segment, which includes two divisions, a franchise construction division and
a general commercial construction division, represents a significant portion of JFB Construction’s revenue including approximately
50% for year ending December 31,2025 and 78% for year ending December 31,2024. .
Franchise
industry construction build-outs were a key component of the past growth of JFB and will continue to be instrumental in our commercial
construction business. These projects range in size from approximately 1,500 square foot projects to over 30,000 and are generally completed
in less than four months. Leveraging years of experience, our team of professionals is adept at understanding the unique requirements
of numerous franchise systems and national brands for our clients. Our collaborative approach and dedication to client satisfaction have
positioned us as preferred builders within the franchise industry for highly valuable and recognizable corporate brands, allowing us
to build lasting partnerships with franchisees and national brands alike. We are, however, tied to the continued growth and success of
the national brands, and their respective franchisees, for continued projects of this nature. By prioritizing the unique needs and objectives
of each client, we attempt to deliver tailored solutions to meet the need of our franchise clients.
We
also build ground-up commercial buildings. This includes site evaluation, aiding in architectural design and engineering, and construction
of the building itself. Our approach ensures that the final product meets the functional and aesthetic requirements of modern businesses,
while also adhering to budget and timeline constraints. We began building for Sweathouz Corporation and successfully completed three
projects for them in 2025.
4
The
commercial construction industry, specifically focusing on franchise business buildouts, is highly competitive and influenced by various
market dynamics. Franchise business buildouts, such as restaurants, retail stores, fitness centers, and service-oriented businesses,
require specialized construction services that cater to brand standards, tight timelines, and cost efficiency. Many franchise brands
are expanding rapidly due to strong consumer demand, creating a substantial market for commercial construction services. Franchise buildouts
often have aggressive schedules to meet the franchisor’s timelines, requiring contractors, including JFB, to work efficiently and
minimize downtime. This fast-paced nature of the work means that contractors with streamlined processes, experienced project managers,
and strong subcontractor networks have a competitive edge. Our management believes we possess such attributes and, as a result, are well
positioned to continue being awarded contracts in this sector in the future.
Overall,
according to Construct Connect news, their experts predict that the Commercial Construction industry will have modest growth in 2026
and beyond Further, nonresidential construction spending is projected to increase by over 4% in 2026 according to the American Institute
of Architects. However, there is less encouraging information related to traditional office and retail sectors which are declining based
on consumer trends and work from home initiatives. JFB will continue to monitor these trends as they occur and will consider shifting
resources to adapt by focusing markets and regions where continued growth is projected.
Management
expects the continued expansion of our franchise construction division across numerous states throughout the U.S. where our current and
future clients require our services, with an emphasis on the Southeast. The Southeast, according to International Franchise Association,
is the largest franchise market in the country and is expected to grow by 3.5%, whereas the total national franchise market is only expected
to grow 1.9%. Our general commercial construction division will continue to focus on the Southern Atlantic region of the United States
in the short to mid-term, focusing on regions where we forecast continued state-to-state migration and expanding population growth. We
anticipate our franchise division growth to remain strong so long as we are able to continue to retain our current client base and continue
to receive referrals within the industry.
***Residential
Construction Segment***
With
a focus on quality craftsmanship, we undertake residential construction and development projects that prioritize modern living spaces
and contribute to vibrant communities. With the increasing demand for housing driven by population growth and urbanization, the residential
development segment presents business opportunities for JFB Construction. According to the U.S. Census Bureau, Florida was one of the
fastest-growing economies in the country. Florida has also been one of the fastest growing states in terms of population and migration,
with 22,517 added in 2025, according to a report issued by the Florida Times. JFB aims to capitalize on the increased GDP and population
migration in Florida, which is drawing new residents because of its warmer climate, robust labor market and lack of state income tax,
due to increased need for housing. In 2025, residential construction opportunities represent 33% of our revenues. Our expertise in residential
construction includes home remodels, luxury single-family homes and equestrian facilities. We are committed to meeting the evolving needs
of homeowners and developers by delivering innovative and sustainable housing solutions.
We
cater to affluent clients seeking bespoke residences and state of the art equestrian amenities in South Florida. Within this segment,
we excel at creating custom-designed homes and remodels that embody elegance, functionality, and the latest in luxury living standards.
In parallel, we create equestrian facilities that combine superior architectural design with practical considerations for horse stabling
and training. As we move forward, management believes the demand for contractors who specialize in this niche of luxury construction
will continue to grow in association with the population growth in this region. Six of our twenty-four current projects are residential
construction projects.
The
competitive state of the residential construction market in the Florida and the surrounding regions has been shaped in recent years due
to a number of factors. Florida’s population growth is forecasted to remain above the national average in the coming years as well,
according to the Demographic Estimating Conference. In turn, the demand for new or remodeled homes, has been beneficial to JFB and the
residential construction industry in the region. However, JFB’s ability to successfully capitalize on such demand has been balanced
by the need to identify a cost effective workforce, including its use of subcontractors, properly preparing for and mitigating the potential
harm of increased material costs and supply chain disruptions, and navigating strict building codes which may lead to permitting delays.
***Real
Estate Development Segment***
Management
believes that an increased focus on larger multi-family residential developments, such as condominiums and townhouses, will help JFB
to continue to grow and increase its revenue. Projects, such as our completed 44-unit multi-story residential apartment complex and our
recent agreement as the general contractor for a 79-unit townhome development with an additional community clubhouse, and our work to
expand the Desoto County High School and the Construction of the Courtyard Olive Branch hotel will be key to our future success because
such projects offer the opportunity to participate in larger construction projects that have an opportunity to yield greater revenues.
As discussed below, we believe being a public company, with increased access to capital and potentially debt financing, will help enable
our company to invest in real estate development projects that are more capital intensive. Further, with the potential to act as the
developer and general contractor for development projects, we believe there are opportunities to maximize profits for the Company though
efficient control of all aspects of construction projects through our in-house development team. Four of our twenty-four current projects
is a real estate development project.
5
While
still aspirational in nature, the Company’s strategic plan includes investing in real estate development projects directly as the
developer or through joint ventures, which offer both attractive opportunities and notable challenges. Such investment has the potential
to secure substantial returns on investment, as well as potentially being awarded the valuable construction contracts tied to these ventures.
Real estate development provides revenue opportunities for the Company through various channels, including the sale of developed properties,
leasing income, and property management fees. Upon the completion of a development project, the Company may generate revenue through
the sale of residential, commercial, or mixed-use properties to third-party buyers. In addition, leasing developed properties to tenants
provides a recurring revenue stream, contributing to long-term financial stability. The Company may also derive income from property
management services, ensuring efficient operation and maintenance of developed assets, but this service would likely be outsourced to
a third-party, at least in the early stages of this growth objective. Furthermore, real estate development projects may appreciate in
value over time, potentially generating additional revenue upon sale or refinancing.
In
addition to the revenue generated from property sales, leasing, and management, real estate development projects create opportunities
for the Company to provide construction services, further diversifying its income streams. As a vertically integrated company, the Company
is likely to be able to serve as both the developer and the general contractor on its projects, enabling it to capture additional revenue
from construction activities. By providing construction services for its own developments, the Company benefits from greater control
over project timelines, quality, and costs, improving overall project efficiency. Moreover, the Company may also offer construction services
to third-party developers, as it is presently, leveraging its expertise and resources to expand its client base. This dual role as developer
and contractor may enhance the Company’s ability to generate consistent revenues across multiple phases of a project, from initial
construction through long-term asset management.
Value-add
real estate development for shopping centers and similar commercial projects is another area of real estate development the Company intends
to invest into. By acquiring underperforming or outdated retail properties, the Company can implement strategic renovations, tenant repositioning,
and operational improvements to enhance the property’s value and attract higher-quality tenants. These enhancements can increase
rental income and occupancy rates, creating a more attractive asset for future sale or refinancing. Additionally, value-add projects
allow the Company to capitalize on trends in consumer behavior, such as incorporating mixed-use elements or adapting spaces for e-commerce
and experiential retail. This approach not only increases the asset’s long-term revenue potential but also strengthens the Company’s
market position in the competitive commercial real estate sector if the Company is able to properly assess risk and identify well positioned
properties.
The
Company recognizes real estate development projects require substantial capital investment and come with inherent risks, such as market
fluctuations, potential delays, and the complexities of managing real estate assets. The illiquidity of these investments further complicates
matters, as funds may be locked in for extended durations, restricting the company’s ability to reallocate resources quickly. Nonetheless,
by integrating its investment strategy with its construction capabilities, the Company aims to mitigate these risks and enhance project
outcomes. While these endeavors require careful management and thoughtful allocation of resources, the Company is optimistic that its
integrated approach will yield positive outcomes.
**Growth
from Influx of Capital**
With
increased capital, the Company can strategically hire additional employees, including project managers, an enhanced sales team and executive-level
professionals, to manage a growing portfolio of projects. This expansion of the workforce allows the company to increase its capacity
to bid on and complete more projects simultaneously, enhancing overall productivity and enabling the company to scale its operations
efficiently.
Access
to substantial capital also positions the Company to invest in real estate development projects that were previously out of reach. By
having the funds readily available, the Company can acquire land, cover initial construction costs, and navigate the often lengthy entitlement
process without the constraints of traditional financing. This ability to self-fund or provide substantial equity for projects can lead
to better financing terms and improved returns on investment, further fueling growth. Additionally, having capital for real estate development
enhances the company’s ability to diversify its revenue streams, generating income not only from construction services but also
from property sales and leasing activities.
The
influx of capital also opens up opportunities for strategic acquisitions. The Company can acquire complementary businesses to enhance
its service offerings, reduce costs through vertical integration, and enter new geographic markets. Acquisitions can also bring in new
talent, technology, and client relationships, further strengthening the Company’s competitive position and operational efficiency.
Moreover,
increased capital enhances the company’s bonding capacity, which is critical for securing larger and more complex construction
projects. Bonding companies assess a firm’s financial strength, and with a stronger balance sheet post-offering, audited financials
and visibility, the Company becomes more bondable and can qualify for higher bonding limits. This increased bonding capacity allows the
Company to bid on larger public and private sector contracts, further driving revenue growth. The improved bond-ability not only demonstrates
financial stability but also builds trust with clients, who view bonding as a sign of reliability and lower risk.
6
**Project
Delivery and Operational Framework**
For
its construction projects, the Company utilizes both cost-plus and fixed-price construction contracts to optimize project execution and
manage financial risk. For its residential construction, the Company typically employs cost-plus agreements, allowing for greater flexibility
in budgeting and accommodating changes in project scope. In contrast, the Company predominantly uses fixed-price contracts for its commercial
construction work, particularly with franchisees and franchisors, providing clients with cost certainty while ensuring efficiency in
project management.
In
a cost-plus construction contract, we are reimbursed for all project costs, including materials, labor, and overhead, plus an additional
fee or percentage for profit. This contract structure allows flexibility to accommodate unforeseen costs, making it suitable for complex
projects with potential scope changes. However, it may lead to increased costs for the client, as the Company has less incentive to control
expenses. Cost-plus contracts can reduce financial risk and ensure profitability, but they may also create uncertainty in cash flow due
to fluctuating project costs.
A
fixed-price construction contract, also known as a lump sum contract, establishes a set price for the entire project, regardless of the
actual costs incurred. This type of contract incentivizes us to manage expenses efficiently, as we bear the risk of cost overruns. For
our business, fixed-price contracts provide predictable revenue and streamline budgeting but can result in reduced profit margins if
project costs exceed initial estimates. The choice between contract types affects our financial performance, risk management, and client
relationships, depending on the nature of the project and market conditions. Additionally, we occasionally utilize fixed-unit price contracts
which are similar for fixed-price but involve setting a fixed price per unit of work (e.g., per square foot, per ton of material). The
final cost is determined by the actual quantity of units used in the project.
The
Company employs a comprehensive and structured bidding process for its construction contracts, ensuring transparency, fairness, and competitiveness
at every stage. This process is designed to identify the best partners and ensure that projects are delivered on time, within budget,
and to the highest quality standards. For commercial projects, particularly those involving fixed-price contracts, the Company often
engages in competitive bidding. This involves soliciting proposals from multiple subcontractors, vendors, and suppliers, creating an
open environment where all potential partners have an equal opportunity to submit their most competitive bids.
To
maintain the integrity and competitiveness of the process, the Company carefully evaluates each proposal based on a combination of factors,
including cost, qualifications, past performance, timeline adherence, and safety records. This ensures that only the most cost-effective
and qualified partners are selected for the job. The Company also places a strong emphasis on building long-term relationships with subcontractors
and vendors, fostering a network of trusted partners who share the Company’s commitment to quality and efficiency.
In
addition to competitive bidding, the Company also conducts thorough due diligence to assess the capabilities and financial stability
of each subcontractor, ensuring they are equipped to handle the scope and complexity of the project. The use of advanced bidding software
and project management tools further streamlines the process, enhancing accuracy and reducing the risk of errors.
For
larger and more complex projects, the Company may engage in prequalification processes, where only the most experienced and capable subcontractors
are invited to bid. This prequalification ensures that the selected partners have the necessary resources, expertise, and track record
to meet the project’s requirements. By maintaining a rigorous and transparent bidding process, the Company ensures that each project
is completed with the highest standards of quality, safety, and efficiency while optimizing cost and resource allocation.
In some cases, particularly with franchisees
and franchisors operating on expedited construction timelines, the Company negotiates contracts directly with clients, leveraging its
preferred builder status to bypass the formal bidding process. The Company adheres to strict prequalification criteria for subcontractors,
evaluating their experience, financial stability, and ability to meet the Company’s insurance and performance requirements. This
approach ensures the delivery of high-quality projects within established budgets and timelines.
7
Our
identification of potentially prosperous projects to bid upon and our ability to accurately bid such projects, primarily related to fixed
price contracts, is essential to generating profits as it establishes a realistic budget, protects profit margins, and manages risks
effectively. Proper bids ensure all costs, including materials, labor, and contingencies, are accounted for, minimizing the likelihood
of cost overruns and unexpected expenses. This precision helps avoid underbidding, which can erode profits, and overbidding, which can
lose projects to competitors. Accurate bids also enable efficient resource allocation, maintain cash flow stability, and foster client
trust, enhancing a company’s reputation and competitive position. If we are unable to accurately bid fixed price construction projects,
it may lead to significant financial losses, strained cash flow, and project delays as unforeseen costs emerge. This misalignment can
result in reduced profit margins, disputes with clients, and damage to the company’s reputation, ultimately affecting long-term
viability and competitiveness in the market.
The
Company enters into standardized agreements with subcontractors, suppliers, and vendors to ensure consistency, compliance, and risk mitigation
across all projects. Subcontractors are required to meet the Company’s insurance and bonding requirements, listing the Company
as additionally insured before commencing work. These agreements outline the scope of work, payment terms, and performance standards,
with strict adherence to project timelines and quality expectations. Subcontractors are typically responsible for procuring their own
materials, equipment, and labor, subject to the Company’s approval of quality and specifications. For suppliers and vendors, when
not managed by subcontractors, the Company typically negotiates fixed-price or bulk-purchasing arrangements to stabilize material costs
and manage supply chain risks. These relationships are managed closely to ensure timely delivery of materials and services, which is
critical for maintaining project schedules and cost controls.
We
frequently utilize subcontractors to complete various aspects of our projects. Subcontractors are hired by the Company to perform specific
tasks within a construction project. While we are capable to perform many of the specialized trades through our in-house staff, based
on our number of employees, the desire to optimize our completion of projects, and the potential for cost-effectiveness, subcontractors
provide us with flexibility for our current projects and scalability as we strive to meet our growth objectives. This reliance is not
without its downside where lack of performance by a subcontractor can adversely affect our profitability and reputation. Alternatively,
depending on workflow, we utilize in-house performance of trades rather than utilizing subcontractors that carry higher costs, and potentially
risk.
Our
Company operates in a dynamic and evolving market, where adapting to changing conditions is essential for sustained growth and success.
Inflationary pressures, rising interest rates, and fluctuating material costs have impacted both our operations and our clients’
ability to secure financing for construction projects. To mitigate these challenges, we must continually refine our cost management strategies,
bidding process, negotiate favorable terms with suppliers, and implement flexible budgeting practices that allow us to adjust to market
volatility. Additionally, the availability of skilled labor remains a concern, requiring us to foster strong relationships with subcontractors
while exploring innovative approaches to workforce development and retention.
8
**Item
1A. Risk Factors.**
*Investing
in our securities involves a high degree of risk. Careful consideration should be made of the following factors as well as other information
included in this Annual Report before deciding to invest in our securities. There are many risks that affect our business and results
of operations, some of which are beyond our control. Our business, financial condition or operating results could be materially harmed
by any of these risks. This could cause the trading price of our securities to decline, and you may lose all or part of your investment.
Additional risks that we do not yet know of or that we currently think are immaterial may also affect our business and the results of
operations.*
**Risks
Relating to Our Business and Strategy**
***We
have limited management and staff, and our continued success requires us to hire, train and retain qualified personnel and subcontractors
in a competitive industry.***
As
of July 2, 2026 we have a total of 22 full-time employees, and one independent contractor. The success of our business depends upon
our ability to attract, train and retain qualified, reliable personnel, including, but not limited to, our executive officers and key
management personnel. Additionally, the successful operation of our business depends upon engineers, project management personnel, other
employees and qualified subcontractors who possess the necessary and required experience and expertise and who will perform their respective
services at a reasonable and competitive rate. Competition for these and other experienced personnel is intense, and it may be difficult
to attract and retain qualified individuals with the requisite expertise and in the timeframe demanded by our clients. In certain geographic
areas, for example, we may not be able to satisfy the demand for our services because of our inability to successfully hire, train and
retain qualified personnel.
In
addition, the cost of providing our services, including the extent to which we utilize our workforce, affects our profitability. For
example, the uncertainty of contract award timing can present difficulties in matching our workforce size with our contracts. If an expected
contract award is delayed or not received, we could incur costs resulting from excess staff or redundancy of facilities that could have
a material adverse impact on our business, financial conditions and results of operations.
***Our
management team has limited experience operating a company with publicly traded shares.***
Mr.
Joseph F. Basile III, our founder and principal shareholder and the members of our senior management team have never operated a company
with shares traded in the public markets and, consequently, are not familiar with many of the requirements applicable to a public company
with shares listed on Nasdaq. Our management and other personnel will need to devote a substantial amount of time to ensure compliance
with these requirements and we anticipate that we may need to rely upon outside advisors, counsel, and consultants to ensure compliance
with applicable laws and regulations and undertaking various actions, such as implementing new internal controls and procedures. We anticipate
that compliance with these rules and regulations will increase our legal, accounting, and financial compliance costs substantially. Further,
there is a possibility we will need to expand or replace our senior management with individuals with public company experience.
***We
lack formalized policies and procedures to ensure adequate board and management oversight of financial reporting, risk management, and
regulatory compliance.***
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with GAAP. Our management is likewise required, every quarter, to evaluate the effectiveness of our internal controls and to disclose
any changes, deficiencies, or material weaknesses identified through such evaluation in those internal controls. A material weakness
is a deficiency, or a combination of deficiencies, in internal control over financial reporting, so there is a reasonable possibility
that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
We
have identified deficiencies in our internal controls related to board oversight, management review processes, and compliance monitoring.
Specifically, we lack formalized policies and procedures to ensure adequate board and management oversight of financial reporting, risk
management, and regulatory compliance. These deficiencies may result in delays in financial reporting, errors in disclosures, inadequate
risk assessment, and an inability to effectively oversee key corporate decisions. If we fail to implement and maintain proper internal
controls and governance structures, we may be unable to comply with SEC reporting obligations, which could lead to regulatory scrutiny,
litigation, or loss of investor confidence.
While
we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance these processes to evaluate
our research better and understand the nuances of the public company accounting standards that apply to our financial statements. To
address these issues, we intend to implement enhanced internal control measures and engage external advisors. However, there is no assurance
that these measures will be implemented effectively or that additional weaknesses will not emerge.
9
If
we are unable to establish effective internal controls over board and management oversight, our ability to operate as a public company
may be impaired, potentially resulting in delisting, penalties, or other adverse consequences that could materially affect our business
and stock price. We can give no assurance that the measures we have taken and plan to take in the future will remediate the deficiencies
identified or that any additional deficiencies or weaknesses will not arise in the future due to a failure to implement and maintain
adequate internal control over financial reporting or circumvention of these controls. In addition, even if we successfully strengthen
our controls and procedures, in the future, those controls and procedures may not be adequate to prevent or identify irregularities or
errors or to facilitate the fair presentation of our financial statements.
***Our
business depends on the continued contributions made by Mr. Joseph F. Basile III, our founder, Chairman and Chief Executive Officer.
The loss of his services may result in a severe impediment to our business.***
Our
success is dependent upon the continued contributions made by our founder, Chairman and Chief Executive Officer, Mr. Joseph F. Basile
III. If Mr. Basile cannot serve the Company or is no longer willing to do so, the Company does not have a secession plan in place and
may not be able to find alternatives in a timely manner or at all. Further, the Company presently has a limited senior management team,
increasing the reliance on Mr. Basile’s contributions. As a result, if Mr. Basile left the Company, it would likely result in severe
damage to our business operations and would have an adverse material impact on our financial position and operational results.
***We
will require additional capital in order to achieve commercial success and, if necessary, to finance future operations as we endeavor
to build revenue, but we cannot assure you that we will be able to obtain adequate capital as and when required.***
We
will require significant expenditures to fund future growth. We intend to fund our growth out of the proceeds of recent offerings and
internal sources of liquidity or through additional financing from external sources. Our ability to obtain external financing in the
future at a reasonable cost is subject to a variety of uncertainties, including our future financial condition, results of operations
and cash flows and the condition of the global and domestic financial markets.
If
we require additional funds and cannot obtain them on acceptable terms when required or at all, we may be unable to fulfill our working
capital needs, upgrade our existing facilities or expand our business and may have to reduce the level of our operations. These factors
may also prevent us from entering into transactions that would otherwise benefit our business or implementing our future strategies.
Any debt financing that we undertake may be expensive and might impose covenants that restrict our operations and strategic initiatives,
including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our capital stock, make investments
and engage in mergers, consolidations, and asset sale transactions. Equity financing may be on terms that are dilutive or potentially
dilutive to our shareholders, and the prices at which new investors would be willing to purchase our equity securities may be lower than
the trading prices of such equities. If new sources of financing are required, but are unattractive, insufficient, or unavailable, then
we could be required to modify our business plans or growth strategy which could have a material adverse effect on our business, results
of operations or financial condition.
***Our
future expansion plans are subject to uncertainties and risks.***
Our
strategic plans for future expansion into new geographical regions and business segments are subject to various uncertainties and risks
that could materially affect our business, financial condition, and results of operations. Expanding into new regions of the U.S. involves
significant challenges, including unfamiliarity with local market conditions, regulatory environments, and competitive landscapes. These
factors can lead to increased costs, delays, and operational inefficiencies, potentially impacting our profitability and growth. Our
success in new markets depends on our ability to effectively market our services and establish a strong presence. Failure to gain market
acceptance for our construction services, whether in commercial construction, franchise locations, luxury homes, or multi-family dwellings,
could result in lower-than-expected revenues and hinder our expansion efforts.
As
we expand our operations, we face the challenge of integrating new projects with our existing business. This includes aligning new projects
with our current operational standards, managing increased complexity, and ensuring consistent quality across all of our business segments.
Any failure in operational integration could disrupt our business and negatively impact on our financial performance. Furthermore, each
region and business segment may have distinct regulatory requirements. Ensuring compliance with varying local, state, and federal regulations
can be complex and costly. Non-compliance could result in legal penalties, project delays, and reputational damage, adversely affecting
our business.
***We
will experience significant risks while attempting to enter the real estate development market.***
The
Company’s entry into real estate development exposes it to a range of risks that could materially and adversely affect its financial
condition, results of operations, and growth prospects. Real estate development projects are capital intensive and typically involve
significant upfront costs, including land acquisition, construction, permitting, and financing expenses, which may not be recovered if
a project fails to meet its anticipated return on investment. Additionally, development projects are subject to various external factors
beyond the Company’s control, such as changes in local zoning laws, delays in permitting, fluctuations in construction costs, interest
rate volatility, and shifts in market demand for commercial and residential properties. These risks are exacerbated by the cyclical nature
of the real estate market, where downturns in the economy or disruptions in the credit markets may result in reduced project feasibility,
lower occupancy rates, or diminished property values. Any failure to accurately project development timelines, secure adequate financing,
or adapt to market conditions could impair the profitability of real estate development initiatives and negatively impact the Company’s
overall financial performance.
10
***We
will experience significant risks while attempting to enter the AI Autonomous Robotics market.***
Entering
the AI autonomous robotics market exposes the Company to substantial strategic, operational, and financial risk that differ meaningfully
from our traditional construction and development activities. This sector is characterized by rapid technological change, high R&D
costs, and intense competition from well-capitalized technology firms, making it difficult to achieve and maintain a competitive advantage.
The regulatory environment for autonomous system is still evolving, creating uncertainty around compliance, safety standards, and potential
liability exposure.
***If
we are unable to accurately estimate the overall risks, requirements or costs when we bid on or negotiate a contract that is ultimately
awarded to us, we may achieve a lower than anticipated profit or incur a loss on the contract.***
We
derive revenue from fixed unit price contracts, cost-plus contracts and lump sum contracts. The nature of our contracts, particularly
those that are fixed-price, subjects us to risks associated with cost overruns, operating cost inflation and potential claims for liquidated
damages. Fixed unit price contracts require us to provide materials and services at a fixed unit price based on approved quantities irrespective
of our actual per unit costs. Lump sum contracts require that the total amount of work be performed for a single price irrespective of
our actual per unit costs. Cost-plus contracts allow us to be reimbursed for all allowable costs plus a fixed fee. We realize a profit
on our contracts only if we accurately estimate our costs and then successfully control actual costs and avoid cost overruns, and our
revenue exceeds actual costs. If our cost estimates for a contract are inaccurate, or if we do not execute the contract within our cost
estimates, then cost overruns may cause us to incur losses or cause the contract not to be as profitable as we expected. The final results
under these types of contracts could negatively affect our business, financial condition, results of operations and cash flows.
The
costs incurred and gross margin realized on our contracts can vary, sometimes substantially, from our original projections due to a variety
of factors, including, but not limited to:
- on site conditions that differ from those assumed in the original bid or contract;
- failure to include required materials or work in a bid, or the failure to estimate properly the quantities or costs of materials needed
to complete a contract;
- contract or project modifications creating unanticipated costs not covered by change orders;
- failure by our suppliers, subcontractors, designers, engineers, joint venture partners, or clients to perform their obligations;
- delays in quickly identifying and taking measures to address issues which arise during contract execution;
- changes in availability, proximity and costs of materials, including steel, concrete, aggregates and other construction materials, as
well as fuel for our equipment;
- claims or demands from third parties for alleged damages arising from the design, construction or use and operation of a project of which
our work is part;
- difficulties in obtaining required governmental permits or approvals;
- availability and skill level of workers in the geographic location of a project;
- citations issued by any governmental authority, including OSHA;
- unexpected labor conditions, costs or work stoppages;
- changes in applicable laws and regulations;
- delays caused by weather conditions;
- fraud, theft or other improper activities by our suppliers, subcontractors, designers, engineers, joint venture partners or clients or
our own personnel; and
- mechanical problems with our machinery or equipment.
11
***We
currently maintain all our cash and cash equivalents with one financial institution, and, therefore, our cash and cash equivalents could
be adversely affected if the financial institutions in which we hold our cash and cash equivalents fail.***
We
currently maintain all our cash and cash equivalents with one (1) financial institution, Seacoast National Bank. As of July 2, 2026,
our cash balance in excess of Federal Deposit Insurance Corporation insurance (“FDIC Insurance”) limit was $9,602,999. Therefore,
we may not be able to recover a substantial portion of these cash and cash equivalents, in the event of the failure of any such financial
institutions. As a result of the recent inability of certain businesses with accounts at Silicon Valley Bank to gain access to their
deposits and the greater focus on the concerns of potential failures of other financial institutions in the future, we are considering
diversifying our investments by transferring cash not required for immediate use into short-term treasury bills and also considering
transferring a portion of our cash and cash equivalents to other financial institutions in order to reduce the risks associated with
maintaining all of our cash and cash equivalents at three financial institutions. Additionally, we intend to work with our current financial
institution to increase the amount of funds held there that are insured by FDIC Insurance. Notwithstanding these efforts, the failure
of our financial institutions in which our cash and cash equivalents are held, the resulting inability for us to obtain the return of
our funds from any of those financial institutions, or any other adverse condition suffered by any of those financial institutions, could
impact access to our invested cash or cash equivalents and could adversely impact our operating liquidity and financial performance.
***Increased
costs of labor and materials can materially and adversely affect our business, results of operations or financial condition.***
Higher
than expected costs of labor and materials, including transportation costs related to increased fuel pricing, may adversely affect our
ability to realize profits on our construction projects. Inflation, interest rate impacts on our suppliers’ pricing, and supply
chain failures are potential causes for such increased costs. It is difficult to accurately project these costs when bidding on a project,
and there is no guarantee that we will be able to pass these higher costs on to our customers. As a result, an increase in such costs
could have a material adverse effect on our business, results of operations, or financial condition.
Recent
inflationary pressures have materially impacted our operations and may continue to do so in the future. Specifically, we have experienced
delayed commencement dates on projects as we have had to revise budgets and proposals to account for the rising costs of labor and materials.
Inflation has caused the prices of key construction materials, such as steel, lumber, and concrete, to rise substantially. These increased
costs have made projects more expensive overall. Additionally, stronger lending requirements, elevated borrowing costs and increased
financing rates have delayed our clients in securing construction loans, further impacting project timelines. While most of these inflationary
costs are passed directly to the consumer as a pass-through cost, the cumulative effect of these delays and increased costs have and
may continue to have a significant adverse impact on our profitability and cash flow.
***Supply
chain disruptions could materially affect our business.***
Our
business operations rely heavily on a stable and efficient supply chain. Any disruptions, terminations, or interruptions in our supply
arrangements, as well as increases in the cost of materials and products, could have a material adverse effect on our business, financial
condition, and results of operations. We depend on a network of suppliers for the materials and products necessary for our construction
projects. Disruptions in this supply chain, whether due to natural disasters, geopolitical events, transportation issues, or other unforeseen
circumstances, can lead to delays in project timelines, increased costs, and reduced profitability. Our supply arrangements are critical
to maintaining a steady flow of materials. The termination or interruption of these arrangements, whether due to supplier bankruptcy,
contract disputes, or other reasons, could force us to seek alternative suppliers, potentially at higher costs and with longer lead times.
This could negatively impact our ability to complete projects on schedule and within budget. Fluctuations in the cost of materials and
products, driven by factors such as inflation, changes in market demand, or supply shortages, can significantly impact our operating
expenses. Increased costs for key materials like steel, concrete, and lumber can erode our profit margins and make it more challenging
to offer competitive pricing to our clients. Additionally, the quality and availability of materials are crucial to our construction
projects. Any decline in the quality of supplied materials or shortages in availability can lead to project delays, increased rework,
and higher costs. Ensuring consistent quality and availability is essential to maintaining our reputation and client satisfaction.
***The
recent imposition of tariffs by the U.S. government on imports from Canada, Mexico, and China presents several risks that could materially
and adversely affect our business operations and financial performance.***
Recent
tariffs and proposed tariffs, including the 25% tariffs on Canadian and Mexican imports and 20% tariffs on Chinese goods encompass essential
construction materials such as steel, aluminum, and lumber. While the Company does not purchase materials from these countries, the tariffs
may cause delays and shortages in obtaining necessary materials, potentially leading to project delays and increased costs. This could
adversely affect our ability to meet project deadlines and contractual obligations and may lead to higher expenses for our projects and
could negatively impact our profit margins.
12
In
response to U.S. tariffs, Canada and Mexico have announced plans for their own tariffs on American products. Such retaliatory actions
could further disrupt supply chains and increase costs for materials and goods essential to our operations.
The
tariffs have introduced significant uncertainty into the market, leading to volatility in material prices and potential delays in project
timelines. This uncertainty could affect our strategic planning and financial forecasting.
We
are actively monitoring the situation and exploring strategies to mitigate these risks, including seeking alternative suppliers, adjusting
project timelines, and exploring cost-saving measures. However, there can be no assurance that these efforts will fully offset the potential
negative impacts of the tariffs.
***Our
ability, or inability, to establish strategic partnerships and expand our operations may adversely affect our business and our plans.***
Our
ability to establish and maintain strategic partnerships is crucial for the expansion of our operations and overall business success.
Building strong relationships with our clients, especially franchise clients, is essential for securing repeat business and referrals
to new clients. However, if we are unable to effectively establish these partnerships, our growth plans may be adversely affected. The
success of our expansion efforts depends on our ability to foster trust and collaboration with our partners. Failure to do so could result
in missed opportunities for new projects and hinder our ability to penetrate new markets. Additionally, any disruptions or challenges
in our existing partnerships could negatively impact our reputation and limit our ability to attract new clients.
***Adverse
economic conditions that impact consumer spending may materially affect our business and our partners’ businesses.***
Our
business, as well as the businesses of our partners, is significantly influenced by general economic conditions. Economic downturns,
recessions, or periods of economic uncertainty can lead to reduced consumer spending, which may have a material adverse effect on our
construction and development projects. During economic downturns, consumers often reduce spending, including on new homes and commercial
properties. This reduction in consumer spending can lead to decreased demand for our construction and development services, resulting
in lower revenues and profitability.
Economic
conditions can also impact the availability and cost of financing for our projects. Tightened credit markets and higher interest rates
can make it more difficult and expensive for us and our partners to secure the necessary funding for ongoing and future projects. This
can delay or halt project development, further impacting our financial performance. Economic instability can lead to disruptions in the
supply chain, affecting the availability and cost of materials and labor. Increased costs and delays in obtaining necessary resources
can negatively impact project timelines and budgets, reducing our overall profitability. Economic conditions can also lead to increased
market volatility, affecting property values and investment returns. Fluctuations in real estate markets can impact the valuation of
our projects and the ability to sell or lease properties at favorable terms, further affecting our financial stability.
***The
failure of our IT systems or a security breach involving consumer or employee personal data could have a materially adverse effect on
our reputation and business, results of operations or financial condition.***
Our
business operations utilize a variety of cloud-based IT systems. We are dependent on these systems for all commercial transactions, and
supply chain and inventory management. Although we (i) have established a firewall for our network, (ii) conduct regular system updates
and employee training, (iii) regularly backup our data and (iv) have established appropriate contingency plans to mitigate the risks
associated with a failure of our IT systems or a security breach, if one of our key IT systems were to suffer a failure or security breach
this could have a material adverse effect on our business, results of operations or financial condition. Further, we rely on third parties
for certain IT services. If an IT service provider were to fail or the relationship with us were to end, we might be unable to find a
suitable replacement in a timely manner, and our business, results of operations or financial condition could be materially and adversely
affected. We continually modify and enhance our IT systems and technologies to increase productivity and efficiency. As new systems and
technologies are implemented, we could experience unanticipated difficulties resulting in unexpected costs and adverse impacts to our
manufacturing and other business processes. When implemented, the systems and technologies may not provide the benefits anticipated and
could add costs and complications to ongoing operations, which may have a material adverse effect on our business, results of operations
or financial condition.
We
receive and store personal information in connection with human resources operations, marketing efforts and other aspects of our businesses.
Additionally, we exchange information with numerous trading partners across all aspects of our operations. Any security breach of our
IT systems or those of our dealers, distributors and trading partners could result in disruptions to our operations or erroneous transactions.
To the extent that such a breach results in a loss or damage to our data, or an inappropriate disclosure of confidential or personal
information, it could cause significant damage to our reputation, affect our relationships with our clients, lead to claims against us
and ultimately materially and adversely affect our business, results of operations or financial condition.
As
of the date of this annual report, we have not experienced a material cyber security incident.
13
***Failure
to maintain safe work sites could result in significant losses, which could materially affect our business and reputation.***
Because
our employees and others are often in close proximity with mechanized equipment, moving vehicles, and chemical substances, our construction
and maintenance sites are potentially dangerous workplaces. Therefore, safety is a primary focus of our business and is critical to our
reputation and performance. Many of our clients require that we meet certain safety criteria to be eligible to work on the project. Unsafe
work conditions, including OSHA violations, also can increase employee and subcontractor turnover, which increases project costs and
therefore our overall operating costs. If we fail to implement safety procedures, implement ineffective safety procedures or fail to
have adequate insurance policies in place, our employees and subcontractors could be injured, and we could be exposed to investigations
and possible litigation. Our failure to maintain adequate safety standards through our safety programs could also result in reduced profitability
or the loss of projects or clients, and could have a material adverse impact on our financial position, results of operations, cash flows
or liquidity.
***Potential
lawsuits could expose us to substantial liabilities.***
Our
business operations expose us to the risk of litigation, which could result in substantial liabilities and adversely affect our financial
condition and results of operations. Legal claims and disputes related to contract performance, construction defects, workplace safety,
and environmental regulations can lead to significant legal expenses, settlements, or judgments. Even if we successfully defend against
these claims, the associated costs can strain our financial resources and negatively impact profitability. Additionally, litigation can
harm our reputation, disrupt operations, and divert management’s attention from core business activities. While we maintain insurance
coverage, it may not fully cover all potential liabilities, leading to significant out-of-pocket expenses.
***We
may be unable to obtain or maintain sufficient bonding capacity, which could materially and adversely affect our business.***
Some
of our contracts require performance and payment bonds. Our ability to obtain performance and payment bonds primarily depends upon our
capitalization, working capital, past performance, management expertise, reputation and certain external factors, including the overall
capacity of the surety market. If we are unable to renew or obtain a sufficient level of bonding capacity in the future, we may be precluded
from being able to bid for certain projects or successfully contract with certain clients. In addition, even if we are able to successfully
renew or obtain performance or payment bonds, we may be required to post letters of credit in connection with such bonds, which could
negatively affect our liquidity and results of operations.
It
is standard for sureties to issue or continue bonds on a project-by-project basis, and they can decline to do so at any time or require
the posting of additional collateral as a condition thereto. Events that adversely affect the insurance and bonding markets generally
may result in bonding becoming more difficult to or costly to obtain in the future. If we were to experience an interruption or reduction
in the availability of our bonding capacity as a result of these or any other reasons, or if bonding costs were to increase, we may be
unable to compete for certain projects that require bonding, which would materially and adversely affect our financial condition, results
of operations or liquidity.
***Our
insurance may not be sufficient.***
We
carry insurance that we consider adequate in regard to the nature of the covered risks and the costs of coverage, discussed in the “Insurance”
section. Nonetheless, we are not fully insured against all possible risks, nor are all such risks insurable. We may be forced to cover
the costs of certain realized risks which may have a material adverse effect on our business, results of operations or financial condition.
***Our
business requires us to pay contracting licensing fees for each state that we operate in. We may not be able to justify the cost of compliance
in a particular state or locality thus necessitating that we allow our license to expire. This may have a materially adverse effect on
our business, results of operations or financial condition.***
Each
state within the United States maintains its own licensing regime with respect to construction and development business. The applicable
fees and compliance rules may prove too costly for us and senior management may choose to permit our license-to-do-business in certain
states to expire. We may make such a decision based on the costs outweighing the benefits, although our judgment may prove incorrect,
and we may forfeit the possibility of significant profit by withdrawing from a certain state. Poor decision-making with respect to allowing
certain licenses to expire or to maintaining them indefinitely may have a materially adverse effect on our business, results of operations
or financial condition.
14
***We
depend on third parties for equipment and supplies essential to operate our business.***
We
rely on third parties to sell or lease equipment to us and to provide us with supplies including construction materials necessary for
our operations. We cannot assure you that our favorable working relationships with our suppliers will continue in the future. In addition,
there have historically been periods of supply shortages in our industry.
The
inability to purchase or lease equipment that is necessary for our operations could severely impact our business. If we lose our supply
contracts and receive insufficient supplies from third parties to meet our clients’ needs, or if our suppliers experience price
increases or disruptions to their business, such as labor disputes, supply shortages or distribution problems, our business, financial
condition, results of operations, liquidity and cash flows could be materially and adversely affected.
Many
times our subcontractors are responsible for purchasing supplies for our projects so their inability to adequately source materials impacts
our ability to operate. To help offset this risk, the Company has multiple trade accounts with suppliers to source supplies and materials
that our subcontractors are unable to procure.
***We
have not made use of confidentiality agreements in the past and, although we intend to rely on such agreements in future dealings with
our suppliers, employees, consultants, and other parties, the prior lack or the breach of such agreements could adversely affect our
business and results of operations.***
In
the past, we have not made use of confidentiality agreements with our employees, clients, consultants and other parties to protect proprietary
information or trade secrets. We intend to rely on such confidentiality agreements on a go-forward basis. Current and former employees
not covered under confidentiality agreements may divulge our proprietary information or trade secrets. The release of such proprietary
information or trade secrets could adversely affect our business and results of operations. Additionally, for individuals covered by
future confidentiality agreements, there can be no assurance that these agreements will not be breached, that we would have adequate
remedies for any such breach or that our proprietary information or trade secrets will not otherwise become known to or independently
developed by competitors. To the extent that consultants, key employees or other third parties apply technological information independently
developed by them or by others to our proposed projects, disputes may arise as to the proprietary rights to such information that may
not be resolved in our favor. We may be involved from time to time in litigation to determine the enforceability, scope and validity
of our rights. Any such litigation could result in substantial cost and diversion of effort by our management and technical personnel
at the expense of other tasks related to our business.
***Our
failure to meet the schedule or performance requirements of our contracts could adversely affect us.***
In
most cases, our contracts require completion by a scheduled acceptance date. Failure to meet any such schedule, unless the result of
non-fault issues such as force majeure, could result in additional costs, penalties or liquidated damages being assessed against us,
and these could exceed projected profit margins on the contract. Performance problems on existing and future contracts, such as material
shortages, changes to the scope of work or subcontractor performance, could cause actual results of operations to differ materially from
those anticipated by us and could cause us to suffer damage to our reputation within the industry and among our clients.
***We
may choose, or be required, to pay our subcontractors even if our clients do not pay, or delay paying us for the related services.***
We
use subcontractors to perform portions of our services. In some cases, we pay our subcontractors before our clients pay us for the related
services. We could experience a material decrease in profitability and liquidity if we choose, or are required, to pay our subcontractors
for work performed for clients that fail to pay, or delay paying us, for the related work.
***Our
subcontractors may fail to satisfy their obligations or we may be unable to maintain these relationships, which could have a material
adverse effect on our business.***
Our
business relies heavily on subcontractors to fulfill various aspects of our construction projects. If our subcontractors fail to satisfy
their obligations to us or other parties, it could lead to project delays, increased costs, and potential legal disputes. Such failures
can negatively impact our reputation, client relationships, and overall project outcomes. Maintaining strong relationships with our subcontractors
is crucial for our operational success. If we are unable to sustain these relationships, whether due to financial instability, performance
issues, or competitive pressures, it could disrupt our supply chain and project schedules. This disruption may result in higher costs
and reduced efficiency, adversely affecting our profitability and growth prospects.
***Intense
competition may adversely affect our business and financial condition.***
We
operate in a highly competitive industry, and we face significant competition from both established companies and new market entrants.
Some of our competitors have greater financial, technical, and marketing resources than we do, which may allow them to invest in expansion,
acquisitions, and other strategic initiatives and to respond more quickly to new opportunities, technological advancements, and changes
in consumer preferences. Our competitors may engage in aggressive pricing strategies, offer more attractive terms to clients, or invest
heavily in marketing and promotional activities. These actions can lead to reduced market share, lower sales volumes, and decreased profitability
for our business. Additionally, established competitors may have stronger brand recognition and customer loyalty, which can be difficult
for us to overcome. This can limit our ability to attract new clients and retain existing ones, impacting our growth and market position.
15
***We
may lose business to competitors that underbid us, and we may be unable to compete favorably in our highly competitive industry.***
Some
of our project awards are determined through a competitive bidding process in which price is the determining factor. We compete against
multiple competitors in all of the markets in which we operate, most of which are local or regional operators. Some of our competitors
are larger than we are, are vertically integrated and/or have similar or greater financial resources than we do. As a result, our competitors
may be able to bid at lower prices than we can due to the location of their plants or as a result of their size or vertical-integration
advantages. An increase in competition may result in a decrease in new project awards to us at acceptable profit margins.
***We
could incur material costs and losses as a result of claims that our materials do not meet regulatory requirements or contractual specifications.***
We
provide our customers with materials designed to comply with building codes or other regulatory requirements, as well as any applicable
contractual specifications. If our materials do not satisfy these requirements and specifications, material claims may arise against
us, our reputation could be damaged and, if any such claims are for an uninsured, non-indemnified or product-related matter, then resolution
of such claim against us could have a material adverse effect on our financial condition, results of operations or liquidity.
***Unionization
activities may disrupt our operations and increase our costs.***
Although
none of our employees are currently covered under collective bargaining agreements, our employees or those of our suppliers may elect
to be represented by labor unions in the future. If a significant number of our employees or that of our suppliers were to become unionized
and collective bargaining agreement terms were significantly different from our or our suppliers’ current compensation arrangements,
it could have a material adverse effect on our business, financial condition and results of operations. In addition, a labor dispute
involving some or all our or that of our suppliers or employees may harm our reputation, disrupt our operations and reduce our revenues,
and resolution of disputes could increase our costs. Further, if we enter into a new market with unionized construction companies, or
the construction companies in our current markets become unionized, construction and build-out costs for new projects in such markets
could materially increase.
***We
have a limited operating history upon which investors can evaluate our future prospects.***
We
have a limited operating history upon which an evaluation of our business plan or performance and prospects can be made. The business
and prospects of the Company must be considered in the light of the potential problems, delays, uncertainties and complications encountered
in connection with a newly established business and new industry. The risks include, but are not limited to, the possibility that we
will not be able to develop functional and scalable products and services, or that although functional and scalable, our products and
services will not be economical to market; that our competitors hold proprietary rights that preclude us from marketing such products;
that our competitors market a superior or equivalent product; that we are not able to upgrade and enhance our portfolio and to accommodate
new features and expanded service offerings; or the failure to receive necessary environmental clearances for our presence in certain
markets. To successfully introduce and market our services at a profit, we must establish brand name recognition and competitive advantages
for our services. There are no assurances that we can successfully address these challenges and if unsuccessful, we and our business,
financial condition and operating results could be materially and adversely affected.
The
current and future expense levels of our business are based largely on estimates of planned operations and future revenues rather than
experience. It is difficult to accurately forecast future revenues because our business is new and our market has not been developed.
If our forecasts prove incorrect, the business, operating results and financial condition of the Company may be materially and adversely
affected. Moreover, we may be unable to adjust our spending in a timely manner to compensate for any unanticipated reduction in revenues.
As a result, any significant reduction in planned or actual revenues may immediately and adversely affect our business, financial condition
and operating results.
16
***We
could be exposed to significant liability claims if we are unable to obtain insurance at acceptable costs and adequate levels or otherwise
protect ourselves against potential claims.***
Our
services entail the inherent risk of liability claims or product recalls. Liability insurance is expensive and, if available, may not
be available on acceptable terms at all periods of time. A successful liability claim or issue could inhibit or prevent the successful
commercialization of our services, cause a significant financial burden on the Company, or both, which in either case could have a material
adverse effect on our business and financial condition.
**Risks
Relating to Our Industry**
***Our
results of operations fluctuate from quarter to quarter and from year to year as they are affected, among other things, by the seasonal
nature of the construction industry.***
Our
results of operations experience substantial fluctuations from quarter to quarter and year to year. Any negative economic conditions
that occur during the months of traditionally higher sales of a given product could have a disproportionate effect on our results of
operations for the entire fiscal year. We may also make strategic decisions to deliver and invoice customers at certain dates to lower
costs or improve supply chain efficiencies or may be forced to do so because of supply chain issues or disruption. As a result, our results
of operations are likely to fluctuate significantly from period to period such that any historical results should not be considered indicative
of the results to be expected for any future period. In addition, we incur significant additional expenses in the periods leading up
to the beginning of new projects which may also result in fluctuations in our results of operations. Our annual and quarterly gross profit
margins are also sensitive to a number of factors, many of which are beyond our control. This seasonality in revenues, expenses and margins,
along with other factors that are beyond our control, including general economic conditions, changes in consumer preferences, weather
conditions, including major weather events such as hurricanes, geopolitical uncertainty, the cost or availability of raw materials or
labor, discretionary spending habits and currency exchange rate fluctuations, could materially and adversely affect our business, results
of operations or financial condition.
***We
are subject to laws, rules and regulations regarding safety, health, environmental and noise pollution and other issues that could cause
us to incur fines or penalties or increase our operating costs.***
We
are subject to federal, state local, and municipal laws, rules and regulations in the United States regarding product safety, health,
environmental and noise pollution and other issues that could cause us to incur fines or penalties or increase our operating costs, all
of which could have a material adverse effect on our business, results of operations or financial condition. Namely, we are required
to comply with the Occupational Safety and Health Act of 1970, which helps to ensure safe and healthy working conditions for workers
by setting and enforcing standards and by providing training, outreach, education, and assistance. A failure to comply with, or compliance
with, any such requirements or any new requirements could result in increased expenses to modify our products, or harm to our reputation,
which could have a material adverse effect on our business, results of operations or financial condition.
***Our
operations are subject to special hazards that may cause personal injury or property damage, subjecting us to liabilities and possible
losses which may not be covered by insurance.***
Operating
hazards inherent in our business, some of which may be outside our control, can cause personal injury and loss of life, damage to or
destruction of property, plant and equipment and environmental damage. We maintain insurance coverage in amounts and against the risks
we believe are consistent with industry practice, but this insurance may be inadequate or unavailable to cover all losses or liabilities
we may incur in our operations. Our insurance policies are subject to varying levels of deductibles. Losses up to our deductible amounts
are accrued based upon our estimates of the ultimate liability for claims incurred and an estimate of claims incurred but not reported.
However, liabilities subject to insurance are difficult to estimate due to unknown factors, including the severity of an injury, the
determination of our liability in proportion to other parties, the number of unreported incidents and the effectiveness of our safety
programs. If we were to experience insurance claims or costs above our estimates, we may be required to use working capital to satisfy
these claims rather than using working capital to maintain or expand our operations.
***The
construction services industry is highly schedule driven, and our failure to meet the schedule requirements of our contracts could adversely
affect our reputation and/or expose us to financial liability.***
In
some instances, we guarantee that we will complete a project by a certain date. Any failure to meet contractual schedule or completion
requirements set forth in our contracts could subject us to responsibility for costs resulting from the delay, generally in the form
of contractually agreed-upon liquidated damages, liability for our customer’s actual costs arising out of our delay, reduced profits
or a loss on that project, damage to our reputation and a material adverse impact to our financial position, results of operations, cash
flows and liquidity.
17
***Natural
disasters, unusually adverse weather, pandemic outbreaks, boycotts and geo-political events could materially and adversely affect our
business, results of operations or financial condition and the market for stocks globally.***
The
occurrence of one or more natural disasters, such as hurricanes and earthquakes, unusually adverse weather, pandemic outbreaks, boycotts
and geo-political events, such as civil unrest and acts of terrorism, upheavals in international relations, or similar disruptions could
materially and adversely affect our business, results of operations or financial condition. These events could result in physical damage
to one or more of our properties or construction projects, increases in fuel or other energy prices, temporary or permanent closure of
one or more of our projects, temporary lack of an adequate workforce in a market, temporary or long-term disruption in the supply of
raw materials or building supplies, and disruption to our information systems, and, ultimately, have a material adverse impact on our
business, results of operations or financial condition. Further, such events could materially and adversely affect the financial markets.
The price of our common stock may decline significantly if such an event were to occur. Our business operations are subject to interruption
by natural disasters, fire, power shortages, pandemics and other events beyond our control. Such events could make it difficult or impossible
for us to deliver our products and services to our customers and could decrease demand for our products and services.
***We
may not have sufficient resources to effectively introduce and market our services and products, which could materially harm our operating
results.***
Continuation
of market acceptance for our existing services and products requires substantial marketing efforts and will require our sales account
executives and contract partners to make significant expenditures of time and money. In some instances, we will be significantly or totally
reliant on the marketing efforts and expenditures of our contract partners, outside sales agents and distributors.
Commercialization
of our products and services require us to expand our own marketing and sales capabilities or consider collaborating with additional
third parties to perform these functions. We may, in some instances, rely significantly on sales, marketing and distribution arrangements
with collaborative partners and other third parties. In these instances, our future revenue will be materially dependent upon the success
of the efforts of these third parties.
Should
we determine that expanding our own marketing and sales capabilities continues to be required, we may not be able to attract and retain
qualified personnel to serve in our sales and marketing organization, to develop an effective distribution network or to otherwise effectively
support our commercialization activities. The cost of establishing and maintaining a more comprehensive sales and marketing organization
may exceed its cost effectiveness. If we fail to further develop our sales and marketing capabilities, if sales efforts are not effective
or if costs of increasing sales and marketing capabilities exceed their cost effectiveness, our business, results of operations and financial
condition would be materially and adversely affected.
***We
operate in a highly competitive industry.***
We
may encounter competition from local, regional, or national entities, some of which have superior resources or other competitive advantages
in the larger construction and real estate development space. Intense competition may adversely affect our business, financial condition,
or results of operations. These competitors may be larger and more highly capitalized, with greater name recognition. We will compete
with such companies on brand name, quality of services, level of expertise, advertising, product and service innovation and differentiation
of product and services. As a result, our ability to secure significant market share may be impeded.
***We
may require additional financing to sustain or grow our operations. Raising additional capital may cause dilution to our existing stockholders
and investors, or restrict our operations.***
We
may need to seek additional capital through a variety of means, including through private and public equity offerings and debt financings,
collaborations, or strategic alliances and acquisitions. To the extent that we raise additional capital through the sale of equity or
convertible debt securities, or through the issuance of shares under other types of contracts, the ownership interests of our stockholders
may be diluted, and the terms of such financings may include liquidation or other preferences, anti-dilution rights, conversion and exercise
price adjustments and other provisions that adversely affect the rights of our stockholders, including rights, preferences and privileges
that are senior to those of our holders of Common Stock in terms of the payment of dividends or in the event of a liquidation. In addition,
debt financing, if available, could include covenants limiting or restricting our ability to take certain actions, such as incurring
additional debt, making capital expenditures, entering into contractual arrangements, or declaring dividends and may require us to grant
security interests in our assets.
18
**Risks
Relating to Our Securities**
***The
existing market for our securities developed very recently, and we do not know whether it will provide you with adequate liquidity.***
Prior
to our recent offering, there had not been a public market for our securities. We cannot assure you that an active trading market for
our common stock will continue, having only developed recently. You may not be able to sell your shares quickly or at the market price
if trading in our common stock is not active. The initial public offering price for the shares was determined by negotiations between
us and representatives of the underwriters and may not be indicative of prices that will ultimately prevail in the trading market.
***JFB
Construction Holdings is a holding company.***
We,
JFB Construction Holdings, are a holding company and our only significant assets are the membership interest and capital stock of our
current or future subsidiaries. As a result, we are subject to the risks attributable to our subsidiaries. As a holding company, we conduct
substantially all of our business through its subsidiaries, which generate substantially all of our revenues. Consequently, our cash
flows and ability to complete current or desirable future enhancement opportunities are dependent on the earnings of our subsidiaries
and the distribution of those earnings to us. The ability of these entities to pay dividends and other distributions will depend on their
operating results and will be subject to applicable laws and regulations which require that solvency and capital standards be maintained
by such companies and contractual restrictions contained in the instruments governing their debt. In the event of a bankruptcy, liquidation
or reorganization of any of our subsidiaries, holders of indebtedness and trade creditors will generally be entitled to payment of their
claims from the assets of that subsidiary before any assets are made available for distribution to us.
***The
market price of our common stock is likely to be highly volatile, and you could lose all or part of your investment.***
Investing
in our stock involves substantial risk due to potential for rapid and unpredictable fluctuations in our stock price. The trading price
of our common stock is likely to be volatile and may experience rapid and unpredictable changes. This volatility can make it difficult
for investors to assess the rapidly changing value of our stock and may prevent you from being able to sell your shares at or above the
price you paid for them. Our stock price could be subject to wide fluctuations in response to a variety of factors, which include:
- actual or anticipated fluctuations in our quarterly or annual operating results;
- publication of research reports by securities analysts about us or our competitors or our industry;
- the public’s reaction to our press releases, our other public announcements and our filings with the Securities and Exchange Commission
(“SEC”);
- our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to
the market; additions and departures of key personnel;
- additions and departures of key personnel;
- strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or
changes in business strategy;
- the passage of legislation or other regulatory developments affecting us or our industry;
- speculation in the press or investment community;
- changes in accounting principles;
- terrorist acts, acts of war or periods of widespread civil unrest;
- natural disasters and other calamities; and
- changes in general market and economic conditions.
In
addition, instances of extreme stock price run-ups followed by rapid price declines and significant stock price volatility may occur,
and these fluctuations may be unrelated to our actual or expected operating performance, financial condition, or prospects. Broad market
and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. In the
past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price.
This type of litigation could result in substantial costs and divert our management’s attention and resources and could also require
us to make substantial payments to satisfy judgments or to settle litigation.
19
***Our
quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due
to seasonality and other factors, some of which are beyond our control, resulting in a decline in our stock price.***
Our
quarterly operating results may fluctuate significantly because of several factors, including:
- labor availability and costs for hourly and management personnel;
- changes in interest rates;
- macroeconomic conditions, both nationally and locally;
- changes in consumer preferences and competitive conditions;
- expansion to new markets;
- increases in infrastructure costs; and
- in commodity prices.
Unanticipated
fluctuations in our quarterly operating results could result in a decline in our stock price.
***Our
failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock.***
If,
we fail to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements or the minimum closing
bid price requirement, Nasdaq may take steps to delist our common stock. Such delisting would likely have a negative effect on the price
of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so. In the event of a de-listing,
we would take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such
action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common
stock, prevent our common stock from dropping below Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s
listing requirements.
***If
our shares are delisted from Nasdaq and become subject to the penny stock rules, it would become more difficult to trade our shares.***
The
SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized
for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions
in such securities is provided by the exchange or system. If we do not obtain or retain a listing on Nasdaq and if the price of our common
stock is less than $5.00, our common stock will be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction
in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information.
In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules,
a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive
(i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions
involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have
the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty
selling their shares.
***We
have no current plans to pay cash dividends on our common stock for the foreseeable future, and you may not receive any return on investment
unless you sell your common stock for a price greater than that which you paid for it.***
We
may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends
for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our Board of Directors
and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and
other factors that our Board of Directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants of
any existing and future outstanding indebtedness we or our subsidiaries incur, including our credit facility. As a result, you may not
receive any return on an investment in our common stock unless you sell our common stock for a price greater than that which you paid
for it and any potential investor who anticipates the need for current dividends should not purchase our securities. See the section
entitled “*Dividend Policy*.”
20
***We
cannot predict the effect our dual-class structure may have on the market price of our Class A Common Stock.***
We
cannot predict whether our dual-class structure will result in a lower or more volatile market price of our Class A common stock, adverse
publicity or other adverse consequences. The dual-class structure of our common stock may make us ineligible for inclusion in certain
indices and, as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices
would not invest in our Class A common stock. In addition, it is unclear what effect, if any, such policies will have on the valuations
of publicly-traded companies excluded from such indices, but it is possible that they may adversely affect valuations, as compared to
similar companies that are included. Due to the dual-class structure of our common stock, we may be excluded from certain indices and
we cannot assure you that other stock indices (including Nasdaq) will not take similar actions. Given the sustained flow of investment
funds into passive strategies that seek to track certain indices, exclusion from certain stock indices may preclude investment by many
of these funds and could make our Class A common stock less attractive to other investors. As a result, the market price of our Class
A common stock may be adversely affected.
***We
will incur significantly increased costs as a result of operating as a public company and our management will be required to devote substantial
time to new compliance initiatives.***
As
a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley
Act, as well as rules subsequently implemented by the SEC and Nasdaq, has imposed various requirements on public companies. Our management
and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, we anticipate that compliance
with these rules and regulations will increase our legal, accounting and financial compliance costs substantially. A number of those
requirements will require us to carry out activities we have not done previously. For example, we will create new board committees and
adopt new internal controls and disclosure controls and procedures. In addition, these rules and regulations may make our activities
related to legal, accounting and financial compliance more difficult, time-consuming and costly and may also place undue strain on our
personnel, systems and resources. Furthermore, if we identify any issues in complying with those requirements (for example, if we or
our auditors identify a material weakness or significant deficiency in our internal control over financial reporting), we could incur
additional costs rectifying those issues, and the existence of those issues could adversely affect us, our reputation or investor perceptions
of us. If these requirements divert the attention of our management and personnel from other business concerns, they could have a material
adverse effect on our business, financial condition and results of operations. For example, we expect these rules and regulations to
make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to incur
substantial costs to maintain our current levels of such coverage. These increased costs will require us to divert a significant amount
of money that we could otherwise use to expand our business and achieve our strategic objectives. Advocacy efforts by stockholders and
third parties may also prompt additional changes in governance and reporting requirements, which could further increase our costs.
***Unanticipated
changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect
our financial condition and results of operations.***
We
will be subject to income taxes in the United States, and our domestic tax liabilities will be subject to the allocation of expenses
in differing jurisdictions. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors,
including:
- changes in the valuation of our deferred tax assets and liabilities;
- expected timing and amount of the release of any tax valuation allowances;
- tax effects of stock-based compensation;
- costs related to intercompany restructurings;
- changes in tax laws, regulations or interpretations thereof; or
- lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings
in jurisdictions where we have higher statutory tax rates.
In
addition, we may be subject to audits of our income, sales and other transaction taxes by federal, state and local authorities. Outcomes
from these audits could have an adverse effect on our financial condition and results of operations.
***A
change in tax laws or regulations could increase our tax burden and adversely affect our business.***
Changes
in tax laws or regulations at the federal or state level could significantly impact our financial condition and results of operations.
Any increase in our tax burden due to new legislation or changes in existing tax policies could reduce our profitability and cash flows.
This includes potential changes in corporate tax rates, deductions, credits, and other tax-related provisions that could increase our
overall tax liability. Additionally, compliance with new tax regulations may require substantial time and resources, further straining
our financial and operational capacities. Uncertainty and complexity in the tax landscape can also complicate our financial planning
and forecasting, making it more challenging to manage our business effectively. These factors could collectively have a material adverse
effect on our business, financial condition, results of operations, and cash flows.
21
***Changes
to accounting rules or regulations may adversely affect the Company’s financial statements.***
Changes
to existing accounting rules or regulations may impact our financial statements, and in turn, impact the reporting of our future results
of operations, result in additional costs to the Company or cause negative perception of the Company’s financial outlook by investors
or analysts. Other new accounting rules or regulations and varying interpretations of existing accounting rules or regulations have occurred
and may occur in the future.
***Changes
to estimates related to our property, fixtures and equipment or operating results that are lower than our current estimates may cause
us to incur impairment charges on certain long-lived assets, which may adversely affect our results of operations.***
In
accordance with accounting guidance as it relates to the impairment of long-lived assets, we make certain estimates and projections with
regard to our operations, as well as our overall performance, in connection with our impairment analyses for long-lived assets. When
impairment triggers are deemed to exist for our operations, the estimated undiscounted future cash flows are compared to its carrying
value. If the carrying value exceeds the undiscounted cash flows, an impairment charge equal to the difference between the carrying value
and the fair value is recorded. The projections of future cash flows used in these analyses require the use of judgment and a number
of estimates and projections of future operating results. If actual results differ from our estimates, additional charges for asset impairments
may be required in the future. If future impairment charges are significant, this could have a material adverse effect on the results
of our operations.
***We
are an “emerging growth company,” and any decision on our part to comply with certain reduced disclosure requirements.***
We
are an “emerging growth company” as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company,
we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies including, but
(i) not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,
(ii) not being required to comply with any new requirements adopted by the Public Company Accounting Oversight Board (the “PCAOB”),
requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide
additional information about the audit and the financial statements of the issuer, (iii) not being required to comply with any new audit
rules adopted by the PCAOB after April 5, 2012 unless the SEC determines otherwise, (iv) reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements, and (v) exemptions from the requirements of holding a nonbinding advisory
vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
We
could remain an emerging growth company until the earlier of: (i) the last day of the fiscal year in which we have total annual gross
revenues of $1.24 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of our first sale
of common equity securities pursuant to an effective registration statement; (iii) the date on which we have issued more than $1.0 billion
in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer. We cannot
predict if investors will find our securities less attractive if we choose to rely on these exemptions. If some investors find our securities
less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our securities
and our stock price may be more volatile. Further, as a result of these scaled regulatory requirements, our disclosure may be more limited
than that of other public companies and you may not have the same protections afforded to stockholders of such companies.
Section
107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section
7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting
standards. We have opted for taking advantage of the extended transition period for complying with new or revised accounting standards
pursuant to Section 107(b) of the Jobs Act.
***We
are a smaller reporting company, and we cannot be certain if the reduced reporting requirements applicable to smaller reporting companies
will make our common stock less attractive to investors.***
We
are a smaller reporting company under Rule 12b-2 of the Securities Exchange Act of 1934. For as long as we continue to be a smaller reporting
company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are
not smaller reporting companies, including reduced disclosure obligations regarding executive compensation in our periodic reports and
proxy statements. We cannot predict if investors will find our common stock less attractive because we may rely on smaller reporting
company exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for
our common stock, and our stock price may be more volatile.
22
***As
an “emerging growth company” under applicable law, we will be subject to lessened disclosure requirements, which could leave
our stockholders with less information or fewer rights available to stockholders of more mature companies.***
For
as long as we remain an “emerging growth company”, we have elected to take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited
to:
- not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;
- taking advantage of an extension of time to comply with new or revised financial accounting standards;
- reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and
- exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden
parachute payments not previously approved.
We
expect to take advantage of these reporting exemptions until we are no longer an “emerging growth company.” Because of these
lessened regulatory requirements, our stockholders would be left without information or rights available to stockholders of more mature
companies.
***We
are a “controlled company” within the meaning of Nasdaq listing standards and, as a result, will qualify for exemptions from
certain corporate governance requirements.***
We
are a “controlled company” within the meaning of the Nasdaq listing standards. For so long as we remain a controlled company,
we technically qualify and are eligible to be exempted from the obligation to comply with certain Nasdaq corporate governance requirements,
however, we do not plan to take advantage of the exemptions provided to controlled companies, which include
- our Board of Directors is not required to be comprised of a majority of independent directors;
- our Board of Directors is not subject to the compensation committee requirements; and
- we are not subject to the requirements that director nominees be selected either by the independent directors or a nomination committee
comprised solely of independent directors.
- our Board of Directors is not required to be comprised of a majority of independent directors;
The
controlled company exemptions do not apply to the audit committee requirement or the requirement for executive sessions of independent
directors. We are required to disclose in our annual report that we are a controlled company and the basis for that determination. Although
we do not plan to take advantage of the exemptions provided to controlled companies, we may in the future take advantage of such exemptions.
Our status as a controlled company could cause our securities to be less attractive to certain investors or otherwise adversely affect
our securities’ trading price.
***If
securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they
change their recommendations regarding our common stock adversely, the price of our common stock and trading volume could decline.***
The
trading market for our common stock may be influenced by the research and reports that securities or industry analysts may publish about
us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding our common
stock adversely, or provide more favorable relative recommendations about our competitors, the price of our common stock would likely
decline. If any analyst who may cover us was to cease coverage of our company or fail to regularly publish reports on us, we could lose
visibility in the financial markets, which in turn could cause the price of our common stock or trading volume to decline.
***Anti-takeover
provisions in our Articles of Incorporation and Bylaws and Nevada law could discourage, delay or prevent a change in control of our company
and may affect the trading price of our common stock.***
The
anti-takeover provisions of the Nevada law may discourage, delay or prevent a change in control by prohibiting us from engaging in a
business combination with an interested stockholder for a period of three (3) years after the person becomes an interested stockholder,
even if a change in control would be beneficial to our existing stockholders. Our Articles of Incorporation and our Bylaws, may discourage,
delay or prevent a change in our management or control over us that stockholders may consider favorable. For example, our Board of Directors
has the right to issue preferred stock without stockholder approval that could be used to dilute a potential hostile acquirer. As a result,
you may lose your ability to sell your stock for a price in excess of the prevailing market price due to these protective measures, and
efforts by stockholders to change the direction or management of the Company may be unsuccessful.
23
***Failure
to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material
adverse effect on our business and stock price.***
To
comply with the requirements of being a public company, we may need to undertake various actions, such as implementing new internal controls
and procedures and hiring additional accounting or internal audit staff, all of which would is likely to add additional attention and
costs to the Company. In addition, we may identify material weaknesses in our internal control over financial reporting that we may not
be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404.
If
we identify weaknesses in our internal control over financial reporting, are unable to comply with the requirements of Section 404 in
a timely manner or to assert that our internal control over financial reporting is effective, or if our independent registered public
accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may
lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively
affected, and we could become subject to investigations by Nasdaq, once our securities are listed, the SEC or other regulatory authorities,
which could require additional financial and management resources.
***Liability
of directors for breach of duty is limited under Nevada law.***
Our
articles of incorporation limit the liability of directors to the maximum extent permitted by Nevada law. Nevada law provides that directors
of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability
for any:
- breach of their duty of loyalty to us or our stockholders;
- act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
- unlawful payments of dividends or unlawful stock repurchases or redemptions; or
- transaction from which the directors derived an improper personal benefit.
These
limitations of liability do not apply to liabilities arising under the federal or state securities laws and do not affect the availability
of equitable remedies such as injunctive relief or rescission.
Our
bylaws provide that we will indemnify for our directors and officers to the fullest extent permitted by law, and may indemnify employees
and other agents. Our bylaws also provide that we are obligated to advance expenses incurred by a director or officer in advance of the
final disposition of any action or proceeding.
We
entered into separate indemnification agreements with our directors and officers. These agreements, among other things, require us to
indemnify our directors and officers for any and all expenses (including reasonable attorneys’ fees, retainers, court costs, transcript
costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery
service fees) judgments, fines and amounts paid in settlement actually and reasonably incurred by such directors or officers or on his
or her behalf in connection with any action or proceeding arising out of their services as one of our directors or officers, or any of
our subsidiaries or any other company or enterprise to which the person provides services at our request provided that such person follows
the procedures for determining entitlement to indemnification and advancement of expenses set forth in the indemnification agreement.
We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors
and officers.
The
limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from
bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation
against directors and officers, even though an action, if successful, might provide a benefit to us and our stockholders. Our results
of operations and financial condition may be harmed to the extent we pay the costs of settlement and damage awards against directors
and officers pursuant to these indemnification provisions.
In
so far as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling
us, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable. At present, there is no pending litigation or proceeding involving any of our directors or officers
as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result
in a claim for indemnification.
24
**ITEM
1B. UNRESOLVED STAFF COMMENTS**
None.
**ITEM
1C. CYBERSECURITY**
**Cybersecurity
Risk Management and Strategy**
We
have developed and maintained a Cybersecurity risk management methodology intended to protect the confidentiality, integrity, and availability
of our critical systems and information. Our Cybersecurity risk management methodology is integrated into our overall enterprise risk
management, and shares common methodologies, reporting channels and governance processes that apply across the Company to other legal,
compliance, strategic, operational, and financial risk areas. As part of our overall risk management processes and procedures, we have
instituted a Cybersecurity awareness campaign designed to identify, assess and manage material risks from Cybersecurity threats, including
by engaging a third-party Cybersecurity service provider, which communicates directly with our management and compliance personnel. The
cyber risk management methodology involves risk assessments, implementation of security measures and ongoing monitoring of systems and
networks, including networks on which we rely. Through our Cybersecurity awareness, the current threat landscape is actively monitored
in an effort to identify material risks arising from new and evolving Cybersecurity threats. We may engage external experts, including
Cybersecurity assessors, consultants, and auditors to evaluate Cybersecurity measures and risk management processes as needed. We also
depend on and engage various third parties, including suppliers, vendors, and service providers in connection with our operations. Our
risk management, legal, and compliance personnel oversee and identify, including through a third-party Cybersecurity service provider,
material risks from Cybersecurity threats associated with our use of such entities.
Our
Cybersecurity risk management methodology includes:
- risk assessments designed to help identify material Cybersecurity risks to our critical systems, information, services, and our broader
enterprise IT environment;
- individuals, including employees and external third-party service providers, who are responsible for managing our Cybersecurity risk
assessment processes, our security controls, and our response to Cybersecurity incidents;
- the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls;
- Cybersecurity awareness training of our employees, incident response personnel, and senior management;
- a Cybersecurity incident response plan that includes procedures for responding to Cybersecurity incidents; and
- a third-party risk management process for service providers, suppliers, and vendors.
We
have not identified risks from known Cybersecurity threats, including as a result of any prior Cybersecurity incidents that have materially
affected us, including our operations, business strategy, results of operations, or financial condition. We face risks from Cybersecurity
threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations,
or financial condition.
**Cybersecurity
Governance**
Our
Board provides strategic oversight on Cybersecurity matters, including material risks associated with Cybersecurity threats. The Board
has delegated to the Audit Committee oversight of Cybersecurity and other information technology risks. The Audit Committee oversees
management’s implementation of our Cybersecurity risk management methodology. Our Board and the Audit Committee receive periodic
updates from our Chief Financial Officer and more frequently as needed, regarding the overall state of our Cybersecurity preparedness,
information on the current threat landscape, and material risks from Cybersecurity threats and Cybersecurity incidents. The Audit Committee
and our management team are informed about and monitor the prevention, detection, mitigation, and remediation of Cybersecurity incidents,
including through the receipt of notifications from third-party service providers and reliance on communications with our risk management,
legal, and/or compliance personnel.
The
Audit Committee reports to the full Board regarding Cybersecurity activities. The full Board also receives briefings from management
on cyber risk issues and best practices. Our management team is responsible for assessing and managing our material risks from Cybersecurity
threats. The team has primary responsibility for developing and maintaining our overall Cybersecurity risk methodology and supervises
both our internal Cybersecurity personnel and our retained external Cybersecurity consultants. Our management team supervises efforts
to prevent, detect, mitigate, and remediate Cybersecurity risks and incidents through various means, which may include briefings from
internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including
external consultants engaged by us; and alerts and reports produced by security tools deployed in the information technology environment.
25
**Item
2. Properties.**
Our
corporate headquarters are located at 1300 S. Dixie Highway, Suite B, Lantana, FL 33462 pursuant to a 7-year lease which commenced on
March 29, 2024. The monthly rent is $11,928 for approximately 4,473 square feet of office space. The base rent increases by two and one-half
percent (2.5%) each year of the lease. On June 1st, the Company amended the lease agreement to lease the entire building, totaling approximately
8,946 square feet, resulting in a total monthly rent obligation of $24,894. This new agreement commenced on January 1, 2026. The property
is in good condition and we believe it is sufficient for our business needs.
**Item
3. Legal Proceedings.**
There
are no actions, suits, proceedings, inquiries or investigation before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against
or affecting our Company, our Common Stock, any of our officers or directors in their capacities as such, in which an adverse decision
could have a material adverse effect.
In
addition, from time to time, we may be subject to various additional claims, lawsuits, and other legal and administrative proceedings
that may arise in the ordinary course of business. Some of these claims, lawsuits, and other proceedings may range in complexity and
result in substantial uncertainty; it is possible that they may result in damages, fines, penalties, non-monetary sanctions, or relief.
As
we continue to grow and develop our services, we anticipate that we will expend significant financial and managerial resources in the
defense of our products in the future. We also anticipate that we will expend significant financial and managerial resources to defend
against claims against our services.
**Item
4. Mine Safety Disclosures.**
Not
Applicable
26
**PART
II**
**Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.**
**Market
Information**
The
Common Stock began trading on the Nasdaq Capital Market under the symbol JFB on March 06,2025.
As
of March 31,2026, there were approximately 380 holders of record of our Common Stock. Since certain shares of our Common Stock are held
by brokers and other institutions on behalf of stockholders, the foregoing number of holders of our Common Stock is not representative
of the number of beneficial holders of our Common Stock.
The
last reported sales price for our Common Stock as reported on the Nasdaq Capital Market on June 15, 2026 was $5.05 per share.
**Dividend
Policy**
We
have not declared or paid any cash dividends on our Common Stock, and we do not anticipate declaring or paying cash dividends for the
foreseeable future. We are not subject to any legal restrictions respecting the payment of dividends, except that we may not pay dividends
if the payment would render us insolvent. Any future determination as to the payment of cash dividends on our Common Stock will be at
the discretion of our Board and will depend on our financial condition, operating results, capital requirements and other factors that
the Board considers to be relevant.
**Securities
Authorized for Issuance under Equity Compensation Plans**
See
the information incorporated by reference in “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Shareholder Matters” for information regarding shares of our common stock authorized for issuance under our stock compensation
plans, which information is incorporated herein by reference.
**Preferred
Stock**
As
of December 31, 2025, the Company had 4,389,500 shares of Series C Convertible Preferred Stock outstanding.
**Transfer
Agent**
The
transfer agent of our Common Stock is ClearTrust LLC 16540 Pointe Village Dr, Suite 210 Lutz, FL 33558
**Recent
Sales of Unregistered Securities**
During
the past three (3) years, we have issued the following common stock. We believe that each of the following issuances was exempt from
registration under the Securities Act pursuant to Section4(a)(2) of the Securities Act regarding transactions not involving a public
offering, or in reliance on Regulation S under the Securities Act regarding sales by an issuer in offshore transactions. No underwriters
were involved in these issuances of common stock.
On
April 30th, 2024. Joseph F. Basile III gifted 81.25 shares of Class A Common stock in the JFB Subsidiary to The Basile Family Irrevocable
Trust and 0.625 shares of common stock in the JFB Subsidiary to another individual.
To
effectuate the Reorganization, on July 18, 2024, Mr. Basile, The Basile Family Irrevocable Trust, and another shareholder
contributed their shares in JFB Construction & Development, Inc to JFB Construction Holdings in exchange for shares of common
stock of JFB Construction Holdings. As a result, JFB Construction Holdings issued (1) 730.000 shares of Class A Common Stock and
8,000,000 shares of Class B Common to Mr. Basile, (2) 500,000 shares of Class A Common Stock to The Basile Family Irrevocable Trust,
and 50,000 shares of Class A Common Stock to the other shareholder. Accordingly, immediately after the Reorganization, Mr. Basile
and Basile Family Irrevocable Trust owned approximately fifty-seven percent (57%) and forty-three percent (43%) of the Common Stock
of JFB Construction Holdings, respectively.
27
On
July 19, 2024 the Company issued 720,000 shares of the Company’s Class A common stock to Chartered Services for assisting the
company with various consulting services. These services included the Company’s nomination system for all directors and aid in
identifying qualified candidates, Review and advise the Company on all documents and accounting systems with GAAP compliance,
provide support as a liaison for the Company’s third party service providers, and provide business development services. Under
this agreement the shares have already been granted and cannot be reclaimed even if the agreement is cancelled with or without
cause. There are no required measurable deliverables or milestones as part of this agreement from Chartered Service. The agreement
contains customary confidentiality and non-solicitation provisions.
On
June 30, 2025, the Company issued a total of 292,800 of its Class A Common Stock to its directors and officers and key employees pursuant
to the Company’s 2024 Equity Incentive (ESOP) Plan. These awards were granted in recognition of continued service and performance
contributions and were issued in accordance with the terms and conditions of the ESOP. The issuance represents a component of the Company’s
long-term incentive program designed to align management and employee interest with those of shareholders and support the Company’s
ongoing growth objectives.
On
October 2, 2025 the Company entered into a Securities Purchase Agreement with American Ventures LLC, Series XIV JFB for a private investment
into public equity (PIPE) of 4,389,500 shares of its Series C convertible Preferred Stock par value $0.0001 per share, stated value of
$10.00 per share, convertible into 16,137,866 shares of Common Stock, par value $0.0001, at a conversion price of $2.72 per share of
Series C Preferred stock, an aggregate of 16,137,866 warrants to acquire up to 16,137,866 shares of Common Stock, and an aggregate of
16,137,866 warrants to acquire up to 16,137,866 shares of Common Stock.
On
December 2, 2025, the Company issued an aggregate 214,960 shares of its Common Stock as non-cash consideration for consulting services.
171,988 shares were issued to Brian Herman and 42,992 shares were issued to Kingswood Capital Partners LLC. The shares were issued book-entry
form with transfer restrictions and were valued based on fair market value of the Company’s Common Stock on the respective grant
dates. The related expense is included in general and administrative fees in the accompanying financial statements.
On
February 18,2026 American Ventures entered into a private investment in public equity (PIPE) transaction with the company. 1,604,000
shares of Class A Common Stock were issued at a purchase price of $6.25 per share.
**Item
6. [Reserved]**
28
**Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.**
*The
following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition,
liquidity and cash flows of our Company as of and for the periods presented below. The following discussion and analysis of our financial
condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included
in this Annual Report on Form 10-K and the audited financial statements and notes thereto as of and for the year ended December 31, 2024
and the related Management’s Discussion and Analysis of Financial Condition and Results of Operation. Unless the context requires
otherwise, references in this Annual Report on Form 10-K to “we,” “us,” and “our” refer to JFB Construction
Holdings.*
**Overview
of Company**
JFB
is a commercial and residential construction company specializing in retail buildouts, multifamily developments, luxury homes and general
commercial construction. We have strong relationships with franchisees and franchisors, which has been the foundation of driving steady
growth, especially in the Southern Atlantic region. Our expansion plans include vertically integrated real estate development projects
and securing larger, more complex construction projects that require higher bond capacity.
**Critical
Accounting Policies and Estimates**
Management’s
discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which
were prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The preparation of these consolidated
financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue, and expenses.
Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under different assumptions or conditions, and those differences may
be material.
While
our significant accounting policies are more fully described in *Note 2*—*Summary of Significant Accounting Policies* of
the Notes to Consolidated Financial Statements included in this annual report, we believe the following discussion addresses our most
critical accounting policies, which are those that are most important to our financial condition and results of operations and which
require our most difficult, subjective and complex judgments.
Principles
of Consolidation
The
consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly
owned subsidiaries. The Company consolidates entities where it has a controlling financial interest, as defined by ASC 810, “Consolidation”.
In
accordance with ASC 810-10, consolidation applies to:
- Entities with more than 50% voting interest, unless control is not with the Company; and
- Variable Interest Entities (VIEs), where the Company is the primary beneficiary, possessing both (i) power over significant activities
and (ii) the obligation to absorb losses or receive benefits.
All
intercompany transactions and balances are eliminated in consolidation per ASC 810-10-45. The Company continuously evaluates its investments
and relationships to assess consolidation requirements.
Use
of Estimates and Assumptions
The
preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP) requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements, and the recognition of revenues and expenses during the reporting period. Actual results may
differ from these estimates, and such differences could be material.
In
accordance with ASC 250-10-50-4, changes in estimates are recorded in the period in which they become known and are accounted for prospectively.
The Company bases its estimates on historical experience, industry trends, and other relevant factors, incorporating both quantitative
and qualitative assessments that it believes are reasonable under the circumstances.
29
Significant
estimates for the years ended December 31, 205, and 2024, respectively, include:
- Allowance for doubtful accounts and contract receivables
- Valuation of stock-based compensation
- Estimated useful lives of property and equipment
- Contract liabilities and Contract assets
- Implicit interest rate in right-of-use operating leases
- Uncertain tax positions
- Valuation allowance on deferred tax assets
Risks
and Uncertainties
The
Company operates in a highly competitive industry that is subject to intense market dynamics, shifting consumer demand, and economic
fluctuations. The Company’s operations are exposed to significant financial, operational, and strategic risks, including potential
business disruptions, supply chain constraints, and liquidity challenges.
In
accordance with ASC 275, “Risks and Uncertainties,” the Company evaluates and discloses risks that could materially affect
its financial condition, results of operations, and business outlook. Key factors contributing to variability in sales and earnings include:
1.
Industry Cyclicality (ASC 275-10-50-6) – The Company’s financial performance is affected by industry trends, seasonality,
and shifts in market demand.
2.
Macroeconomic Conditions (ASC 275-10-50-8) – Economic downturns, inflationary pressures, interest rate changes, and geopolitical
risks may impact consumer purchasing behavior and the Company’s revenue streams.
3.
Pricing Volatility (ASC 275-10-50-4) – The cost and availability of raw materials, supply chain disruptions, and competitive pricing
pressures can lead to fluctuations in gross margins and profitability.
Given
these uncertainties, the Company faces challenges in accurately forecasting financial performance and may experience material risks affecting
liquidity, business continuity, and long-term strategic growth. The Company continuously assesses these risks and implements measures
to mitigate their potential impact.
Revenue
from Contracts with Customers
Revenues
and related costs on equipment contracts are recognized as the performance obligations for work are satisfied over time in accordance
with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Under ASC 606, revenue and associated
profit will be recognized as the customer obtains control of the goods and services promised in the contract (i.e., performance obligations).
All un-allocable indirect costs and corporate general and administrative costs are charged to the periods as incurred. However, in the
event a loss on a contract is foreseen, the Company will recognize the loss as it is determined.
In
accordance with ASC 606-10-50-5, the Company identifies Revenue from Contracts with Customers using this 5- step model.
1.
Identifying the Contract(s) with a Customer. The Company enters into written contract with customers that create enforceable rights and
obligations. Contracts are assessed to ensure they meet criteria for being considered legally binding and capable of being accounted
for.
2.
Identify the Performance Obligations in the Contract. Performance obligations are identified as distinct promises to transfer goods or
services to a customer. The Company identifies their scope of work and creates a schedule of values (SOV) outlining each individual scope
of the project. Commercial construction performance obligations typically include delivering construction services for commercial construction
and recognized the entire contract as a single performance obligation, Residential Construction is typically delivering the new construction
of a residential construction or a remodel of an existing residential property, and we recognize the contract as a single performance
obligation.
3.
Determine the Transaction Price. The transaction price is the amount of considerations the Company expects to be entitled to in exchange
for transferring promised services. The transaction price may include fixed amounts or cost-plus percentage method.
30
4.
Allocate the Transaction Priced to Performance Obligations. The transaction price is allocated to each performance obligation (SOV) based
on its stand-alone selling price. The stand-alone selling price is the price which the Company would sell its service separately to a
customer.
5.
Recognize Revenue when (or as) the Company Satisfies a Performance Obligation. The Company recognizes revenue over time based on the
progress towards completion of performance obligation. Revenue recognized during this reporting period is derived from the total contract
value as allocated to performance obligations satisfied during that period. Commercial construction revenue is recognized over time,
using the cost-to cost method as we perform work on projects. Residential construction is similarly recognized over time for custom builds
and remodel using the cost-to cost method.
By
treating our contracts as a single performance obligation, we ensure that our revenue recognition process accurately reflects the economic
realities of our business operations across all segments. This approach provides clarity to stakeholders regarding our revenue-generating
activities, aligning with the guidance provided in ASC 606-10-55-89 through 55-91.
In
accordance with ASC 606-10-50-8, the Company has disclosed significant judgements and changes in judgements related to the recognition
of revenue from construction contracts. The application of ASC 606 requires the use of judgment in various aspects of revenue recognition,
particularly in the use of the cost-to-cost method. The Company applies the cost-to-cost method to measure progress toward completion.
This involves estimating the total contract cost and recognizing revenue based on the ration of cost incurred to the estimated total
cost. The Company makes judgements regarding the recognition of revenue related to change orders and claims. Revenue from change orders
is included in the transaction price when it is probable the customer will approve the change and the amount can be reliably estimated.
In
accordance with ASC 606-10-50-8, the Company recognizes contract assets and liabilities that reflect timing of revenue relative to the
amounts billed or paid. Contract balances are reported in the balance sheet as follows:
1.
Contract Assets. Contract Assets represent the Company’s right to consideration for work completed to date but not yet billed to
the customer. These amounts typically arise when revenue is recognized before an invoice is issued.
2.
Contract Liabilities. Contract Liabilities represent the Company’s obligation to transfer goods or service to a customer for which
it has received consideration or has the right to receive consideration before performing under the contract. Contract liabilities include
advance payments or progress billing received from customers before the Company has satisfied its performance obligations.
Contract
assets represent revenues recognized in excess of amounts billed on contracts in progress. Contract liabilities represent billings in
excess of revenues recognized on contracts in progress. Assets and liabilities related to long-term contracts are included in current
assets and current liabilities in the accompanying balance sheets, as they will be liquidated in the normal course of the contract completion.
The
Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings Per Share.” The calculation
of basic EPS follows the two-class method and is determined by dividing net earnings available to common shareholders by the weighted
average number of common shares outstanding, including certain other shares committed to be issued.
Basic
Earnings Per Share (EPS)
Basic
EPS is calculated using the two-class method, as prescribed by ASC 260-10-45-60, and is computed as follows:
- Net earnings available to common shareholders represent net earnings to common shareholders, adjusted for the allocation of earnings
to participating securities.
- Losses are not allocated to participating securities in accordance with ASC 260-10-45-61.
- The denominator includes common shares outstanding and certain other shares committed to be issued, such as restricted stock and restricted
stock units (“RSUs”), for which no future service is required.
31
Diluted
Earnings Per Share (EPS)
Diluted
EPS is calculated under both the two-class method and the treasury stock method, and the more dilutive result is reported, as required
by ASC 260-10-45-45.
- Diluted EPS is computed by taking the sum of:
○Net earnings available to common shareholders
○Dividends on preferred shares
○Dividends on dilutive mandatorily redeemable convertible preferred shares
○Divided by the weighted average number of common shares outstanding and certain other shares committed
to be issued, plus all dilutive common stock equivalents during the period, such as:
- Stock options
- Warrants
- Convertible preferred stock
- Convertible debt
- Preferred shares and unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether
paid or unpaid) qualify as participating securities under the two-class method, per ASC 260-10-45-62.
Net
Loss Per Share Considerations
In
computing net loss per share, unvested shares of common stock are excluded from the denominator, as required by ASC 260-10-45-48.
Participating
Securities & Share-Based Compensation
Restricted
stock and RSUs granted as part of share-based compensation contain nonforfeitable rights to dividends and dividend equivalents, respectively.
Therefore:
- Before the requisite service is rendered for the right to retain the award, these instruments meet the definition of a participating
security under ASC 260-10-45-59.
- RSUs granted under an executive compensation plan, however, are not considered participating securities because the rights to dividend
equivalents are forfeitable (ASC 718-10-25).
Related
Parties
The
Company defines related parties in accordance with ASC 850, “Related Party Disclosures,” and SEC Regulation S-X, Rule 4-08(k).
Related parties include entities and individuals that, directly or indirectly, through one or more intermediaries, control, are controlled
by, or are under common control with the Company.
Related
parties include, but are not limited to:
- Principal owners of the Company.
- Members of management (including directors, executive officers, and key employees).
- Immediate family members of principal owners and members of management.
- Entities affiliated with principal owners or management through direct or indirect ownership.
- Entities with which the Company has significant transactions, where one party has the ability to exercise control or significant influence
over the management or operating policies of the other.
A
party is considered related if it has the ability to control or significantly influence the management or operating policies of the Company
in a manner that could prevent either party from fully pursuing its own separate economic interests.
The
Company discloses all material related party transactions, including:
- The nature of the relationship between the parties.
- A description of the transaction(s), including terms and amounts involved.
- Any amounts due to or from related parties as of the reporting date.
- Any other elements necessary for a clear understanding of the transactions’ effects on the financial statements.
32
Disclosures
are made in accordance with ASC 850-10-50-1 through 50-6 and SEC Regulation S-X, Rule 4-08(k), which requires registrants to disclose
material related party transactions and their effects on the financial position and results of operations.
Recently
Issued Accounting Standards Not Yet Adopted
ASU
2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In
December 2023, the FASB issued ASU 2023-09, which enhances income tax disclosure requirements by:
- Standardizing and disaggregating rate reconciliation categories.
- Requiring disclosure of income taxes paid by jurisdiction.
This
ASU is effective for annual periods beginning after December 15, 2024, and may be applied on a prospective or retrospective basis. Early
adoption is permitted.
The
Company is currently assessing the impact of ASU 2023-09 on its income tax disclosures and reporting requirements.
Other
Accounting Standards Updates
The
FASB has issued various technical corrections and industry-specific updates that are not expected to have a material impact on the Company’s
consolidated financial position, results of operations, or cash flows.
**Results
of Operations**
***For
the Year Ended December 31, 2025 Compared to Year Ended December 31, 2024***
The
following table summarizes the results of condensed consolidated statements of operations and comprehensive income (loss) for the years
ended December 31, 2025 and 2024 in U.S. dollars, and provides information regarding the dollar and percentage increase or (decrease)
during such periods.
| Line item | Fiscal Year Ended December 31, 2025 | Fiscal Year Ended December 31, 2024 | Change / Amount |
| --- | --- | --- | --- |
| Revenues | $30,541,443 | $23,087,885 | $7,453,558 |
| Cost of revenues | 27,391,163 | 18,053,324 | 9,337,839 |
| Gross profit | 3,150,280 | 5,034,561 | (1,884,281) |
| Operating expenses: | | | |
| Selling and marketing expense | 1,011,092 | 51,635 | 959,457 |
| General and administrative | 7,373,892 | 4,836,781 | 2,537,111 |
| Depreciation and amortization expense | 251,913 | 179,649 | 72,264 |
| Total operating expenses | 8,804,847 | 5,068,065 | 3,736,782 |
| Income from operations | (5,654,567) | (33,504) | (5,621,063) |
| Other income (expense): | | | |
| Other income, net | (124,053) | (8,142) | (115,911) |
| Interest expense | (489) | (32,649) | 32,160 |
| Interest income | 506,558 | 193,300 | 313,258 |
| Total other income (expense), net | 382,016 | 152,509 | 229,507 |
| Net income | $(5,272,551) | $119,005 | $(5,391,556) |
***Revenues.***
Revenues
increased by $7,453,558, or 32.3%, to approximately $30.5 million in the year ended December 31, 2025 from approximately $23 million
for the year ended December 31, 2024. The increase in revenue was primarily driven by a higher volume of project completions and revenue
recognition in the second half of 2025, despite a slowdown in new contract awards earlier in the year. As is typical in the construction
industry, JFB experiences significant seasonality, with Q3 and Q4 historically representing the strongest periods for project execution
and closeout. Many clients aim to complete construction before year-end to maximize tax benefits, which results in a concentrated surge
of activity and revenue recognition during these quarters. Although inflation and elevated interest rates reduced the number of new contracts
awarded in the first nine months of 2025—due to higher material costs, increased financing costs, and client hesitancy to initiate
new projects—the company benefited from a robust backlog entering the year. This backlog, combined with improved operational efficiency
and timely project delivery, enabled JFB to convert a larger portion of its work-in-progress into recognized revenue during the latter
half of 2025. JFB continues to mitigate inflationary and financing pressures through strategic procurement initiatives, supplier diversification,
and the evaluation of alternative financing strategies to optimize its capital structure in the current market environment.
33
Cost
of revenues increased $9,337,839, or 51.7%, to approximately $27 million in the year ended December 31, 2025 from approximately $18 million
for the year ended December 31, 2024. The increase in cost of revenues was primarily driven by the overall increase in revenue during
the period, which resulted in a higher volume of project activity and corresponding direct costs. In addition, rising material prices—particularly
for key inputs such as steel, lumber, concrete, and other construction components—further contributed to the increase. Industry-wide
inflation and supply-chain pressures elevated procurement costs throughout the year, resulting in higher direct project expenditures
compared to the prior period.
***Gross
profit***
Our
gross profit decreased by $1,884,281, or 37%, to $3.1 million in the year ended December 31, 2025 from $5 million in the year ended December
31, 2024. The decline in gross profit was primarily driven by a significant increase in cost of revenues that outpaced the growth in
revenue. Although revenues increased year over year, the projects completed in 2025 carried lower gross margins due to elevated material
costs, industry-wide inflation, and higher pricing for key construction inputs such as steel, lumber, and concrete. These cost pressures
reduced the profitability of projects delivered during the period. In addition, the mix of work completed in 2025 included a greater
proportion of projects with inherently lower margin profiles, further contributing to the decline in gross profit. As a result, despite
higher revenue, the combination of rising direct costs and margin compression led to a reduction in overall gross profitability for the
year.
***Selling
and marketing expenses***
Our
selling and marketing expenses increased by $959,457, or 1,858%, to $1,011,092 in the year ended December 31, 2025 from $51,635 in the
year ended December 31, 2024. The increase was primarily attributable to significant investments made to enhance recognition and visibility
of the JFB stock symbol in the marketplace. During the year, the Company expanded its advertising efforts, implemented targeted investor-awareness
campaigns, and launched new marketing initiatives designed to strengthen brand presence and support capital-markets positioning. These
activities resulted in higher promotional, advertising, and outreach costs compared to the prior period.
***General
and administrative expenses***
Our
general and administrative expenses primarily include salaries and benefits, professional fees, office expenses, travel expenses, and
insurance expenses. General and administrative expenses increased by approximately $2.5 million, or 52%, to approximately $7.3 million
in the year ended December 31, 2025 from approximately $4.8 million in the year ended December 31, 2024. The increase was mainly due
to the enhancement of talent acquisition and retention. To support our growing operations and maintain high standards of service, we
have invested in recruiting and training top talent. We have also increased our administrative infrastructure which includes out IT systems,
increasing office staff, office space and investing in new software and tools to enhance efficiency and support our operations. Our general
and administrative expenses represented 24% and 21% of our total revenue for the years ended December 31, 2025 and 2024, respectively.
***Depreciation
and amortization expenses***
Depreciation
and amortization expenses increased by $72,264, or 40%, to $251,913 in the year ended December 31, 2025 from $179,649 in the year ended
December 31, 2024.The increase was primarily driven by the expansion of the Company’s asset base, including the acquisition of
additional Company vehicles and the depreciation associated with the new corporate headquarters leased beginning in 2025. The larger
facility and related leasehold improvements contributed to higher depreciation expense during the period. Overall, the increase in depreciation
and amortization reflects the Company’s continued investment in infrastructure and operational capacity, which management believes
is essential to supporting long-term growth and improved efficiency.
***Other
income, net***
Our
other income increased by $115,911, or 1,424%, to ($124,053) in the year ended December 31, 2025 from ($8,142) in year ended December
31, 2024.The increase was primarily due to the recognition of a bad debt write-off during the period, which increased other income compared
to the prior year. This adjustment reflects the Company’s assessment of uncollectible amounts and the corresponding impact on non-operating
income.
34
***Interest
expenses***
Our
interest decreased increased by $32,160, or 99%, to $489 in the year ended December 31, 2025 from $32,649 in the year ended December
31, 2024. The decrease was primarily attributable to a reduction in bank service charges recorded within interest expense during the
current period. Lower fees and reduced banking-related costs contributed to the significant decline in interest expense year over year.
***Interest
income***
Our
interest income increased by $313,258, or 162%, to $506,558 in the year ended December 31, 2025 from $193,300 in the year ended December
31, 2024. The increase in our interest income was the result of higher interest paid on bank balances. The improvement in these rates
has led to higher earnings on interest bearing deposits and cash balances held at Sea Coast Bank. The increase in interest income reflects
the Company’s successful efforts to capitalized on improved banking terms and optimize its cash management practices. We continue
to monitor interest rate trends and banking relationships to ensure sustained benefits from these favorable conditions.
***Net
income***
Our
net income decreased by $5,391,556, or 4,530%, to $(5,272,551) in the year ended December 31, 2025 from $119,005 in year ended December
31, 2024. The decrease in net income was primarily driven by a significant increase in cost of revenues, which outpaced the growth in
revenue due to higher material costs and margin compression on projects completed during the year. Additionally, increased depreciation
and amortization expense resulting from the expansion of the Company’s asset base—including new vehicles and the new corporate
headquarters—further contributed to the decline. Higher selling and marketing expenses, largely associated with initiatives to
increase recognition of the JFB stock symbol, also impacted profitability. Collectively, these factors led to a substantial reduction
in net income despite the overall increase in revenue.
***For
the Years Ended December 31, 2025 and 2024***
The
following table sets forth summary of our cash flows for the periods indicated:
| Line item | Years Ended December 31, 2025 | Years Ended December 31, 2024 |
| --- | --- | --- |
| Net cash provided by (used in) operating activities | $(11,789,888) | $3,481,850 |
| Net cash used in investing activities | (1,266,755) | (817,534) |
| Net cash provided by (used in) financing activities | 35,568,844 | (1,204,877) |
| Net (decreased) increase in cash | 22,512,201 | 1,459,439 |
| Cash, beginning of the period | 2,696,183 | 1,236,744 |
| Cash, end of the period | $25,208,384 | $2,696,183 |
***Operating
Activities***
Net
cash used in operating activities was ($11,789,888) in the year ended December 31, 2025, compared to cash provided in operating activities
of approximately $3,481,850 in the year ended December 31, 2024. This is a 439% decrease primarily driven primarily by a significant
rise in operational expenses associated with the Company’s initial IPO preparations and PIPE transaction activities during the
year. These costs included professional fees, legal and accounting services, regulatory readiness, and other transaction-related expenditures
that increased operating outflows. The concentration of these expenses in 2025 materially reduced cash generated from operations and
was the primary factor contributing to the overall decline in operating cash flow for the period.
***Investing
Activities***
Net
cash used in investing activities was $1,266,755 in the year ended December 31, 2025, compared to net cash used in investing activities
of $817,534 in the year ended December 31, 2024. The increase was primarily driven by real estate investments the Company has made as
part of its expanded development strategy. During 2025, the Company increased its deployment of capital into new real estate projects
and investment opportunities, resulting in higher cash outflows compared to the prior year.
35
***Financing
Activities***
Net
cash provided by financing activities was $35,568,844 in the year ended December 31, 2025, compared to net cash used by financing activities
of $(1,204,877) in the year ended December 31, 2024. The increase in net cash used in financing activities is attributed to the PIPE
transaction completed on October 2, 2025.
**Liquidity
and Capital Resources**
***Overview***
The
general objectives of our capital management strategy reside in the preservation of our capacity to continue operating, in providing
benefits to our stakeholders and in providing an adequate return on investment to our shareholders by selling our products at a price
commensurate with the level of operating risk assumed by us.
We
thus determine the total amount of capital required consistent with risk levels. This capital structure is adjusted on a timely basis
depending on changes in the economic environment and risks of the underlying assets. We are not subject to any externally imposed capital
requirements.
***Working
Capital***
As
of December 31, 2025, we had cash of approximately $25,208,384. Our current assets were approximately $37,300,878, including approximately
$9,243,354 million in accounts receivable, approximately $2,630,561 contract assets, $218,579 in prepaid expenses, and our current liabilities
were approximately $2,198,866, including $978,103 accounts payable, $383,869 contract liabilities, which resulted in a positive working
capital of $35,102,014.
Our
primary source of cash is currently generated from our business. In the coming years, we will be looking to other sources, such as raising
additional capital by issuing shares of stock, to meet our cash needs. While facing uncertainties regarding the size and timing of future
capital raises, we are reasonably confident that we can continue to meet operational needs solely by utilizing cash flows generated from
our operating activities.
**Off-balance
Sheet Commitments and Arrangements**
There
were no off-balance sheet arrangements for the years ended December 31, 2025 and 2024, that have, or that in the opinion of management
are likely to have, a current or future material effect on our financial condition or results of operations.
**Liquidity
Risk**
Liquidity
risk arises through the excess of financial obligations over available financial assets due at any point in time. Our objective in managing
liquidity risk is to maintain sufficient readily available reserves in order to meet our liquidity requirements at any point in time.
We achieve this by maintaining sufficient cash and banking facilities.
**Item
7A. Quantitative and Qualitative Disclosures About Market Risk.**
**Risks
Associated with Our Business**
Our
business is subject to a number of risk and uncertainties. We believe these factors include, but are not limited to, those more fully
described in “*Risk Factors*”, elsewhere in this annual report. We urge you to read “Risk Factors” beginning
on page 9 and this annual report in full. Or summary of significant risks includes, but is not limited, to the following:
- Our management team has no experience operating a company with publicly traded shares.
- We lack formalized policies and procedures to ensure adequate board and management oversight of financial reporting, risk management, and regulatory compliance.
- Economic conditions that impact consumer spending may have a material adverse effect on our business, and our partners’ business.
- We currently maintain all our cash and cash equivalents with one financial institution. As of July 2, 2026, our cash balance in excess of FDIC limit at Seacoast National Bank was $9,602,999.
- We face intense competition in our industry, including from some competitors that have greater financial and marketing resources.
- We will experience significant risks while attempting to enter the real estate development market.
- Our future expansion plans are subject to uncertainties and risks.
- Supply problems, termination or interruption of supply arrangements or increases in the cost of products could have a material adverse effect on our business.
36
- We may require additional capital which may not be available.
- Our business depends on the continued contributions made by Mr. Basile, our founder, Chairman and Chief Executive Officer.
- Our business depends on the efforts of our management, and our business may be severely disrupted if we lose their services.
- We are subject to laws, rules and regulations regarding product safety, health, environmental and noise pollution, and other issues.
- If lawsuits are brought against us, we may incur substantial liabilities.
- Our insurance may not be sufficient.
- We have not made use of confidentiality agreements in the past and, although we intend to rely on such agreements in future dealings with employees, consultants, and other parties, the prior lack or the breach of such agreements could adversely affect our business and results of operations.
- Natural disasters, unusually adverse weather, pandemic outbreaks, boycotts, and geo-political events could materially and adversely affect our business.
- Our ability, or lack thereof, to establish strategic partnerships and expand our operations may adversely affect our business and our plans.
- There is no existing market for our securities, and we do not know if one will develop.
- The market price of our common stock is likely to be highly volatile, and you could lose all or part of your investment.
- We have no current plans to pay cash dividends on our common stock for the foreseeable future.
- You may experience substantial dilution in the future.
- We will incur significantly increased costs as a result of operating as a public company and will be required to devote substantial time to compliance initiatives.
- As an “emerging growth company” under applicable law, we will be subject to lessened disclosure requirements, which could leave our stockholders with less information or fewer rights available to stockholders of more mature companies.
- If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our common stock adversely, the price of our common stock and trading volume could decline.
- Anti-takeover provisions in our Articles of Incorporation and Bylaws and Nevada law could discourage, delay, or prevent a change in control of our company and may affect the trading price of our common stock.
- Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.
- Our subcontractors may fail to satisfy their obligations to us or other parties, or we may be unable to maintain these relationships, either of which may have a material adverse effect on our business, financial condition, results of operations, profitability, cash flows and growth prospects.
- An inability to obtain bonding could limit the aggregate dollar amount of contracts that we are able to pursue.
- Our failure to comply with the regulations of Occupational Safety and Health Administration (“OSHA”) and state and local agencies that oversee transportation and safety compliance could adversely affect our business, financial condition, results of operations, profitability, cash flows and growth prospects.
- A change in tax laws or regulations of any federal or state jurisdiction in which we operate could increase our tax burden and otherwise adversely affect our business, financial condition, results of operations, and cash flows.
- Tariffs by the U.S. government on imports from Canada, Mexico, and China could materially and adversely affect our business operations and financial performance.
- We have broad discretion as to the use of the net proceeds from recent offerings and may not use them effectively.
- The nature of our contracts, particularly those that are fixed-price, subjects us to risks associated with cost overruns, operating cost inflation and potential claims for liquidated damages.
37
## Item 8. Financial Statements and Supplementary Data INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS**
[Report of Independent Registered Public Accounting Firm](#DB_001) PCAOB ID 2738 F-2
[Consolidated Balance Sheets as of December 31, 2025and 2024](#DB_004) F-4
[Consolidated Statements of Income for the Years ended December 31, 2025 and 2024](#DB_005) F-5
[Consolidated Statements of Changes in Shareholders’ Equity for the Years ended December 31, 2025and 2024](#DB_002) F-6
[Consolidated Statements of Cash Flows for the Years ended December 31, 2025and 2024](#DB_006) F-7
[Notes to Consolidated Financial Statements](#DB_003) F-8
F-1
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and
Stockholders
of JFB Construction Holdings
**Opinion
on the Financial Statements**
We
have audited the accompanying consolidated balance sheets of JFB Construction Holdings (the Company) as of December 31, 2025 and 2024,
and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for the years ended December
31, 2025 and 2024, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024,
and the results of its operations and its cash flows for the years ended December 31, 2025 and 2024, in conformity with accounting principles
generally accepted in the United States of America.
**Basis
for Opinion**
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit,
we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our
audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides
a reasonable basis for our opinion.
**Critical
Audit Matters**
The
critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material
to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication
of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are
not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or
disclosures to which it relates.
*Revenue
Recognition*
As
discussed in the footnotes to the consolidated financial statements, the Company recognizes revenue on construction projects in which
the performance obligation is satisfied over time.
Auditing
management’s evaluation of cost to complete v/s cost incurred on long term contracts involves significant judgment.
To
evaluate the appropriateness and accuracy of the assessment by management, we evaluated management’s past history with cost estimation,
completed job profitability, observation and or conformation of the progress related to certain jobs and testing of the underling inputs
and data.
/s/ M&K CPAS, PLLC
We have served as the Company’s auditor since 2023.
The Woodlands, TX
March 31, 2026
F-2
**JFB CONSTRUCTION HOLDINGS AND SUBSIDIARIES**
### CONSOLIDATED BALANCE SHEETS
| Line item | December 31, 2025 / Year Ended | December 31, 2024 / Year Ended |
| --- | --- | --- |
| ASSETS | | |
| Cash | $22,208,384 | $2,696,183 |
| Restricted Cash | 3,000,000 | |
| Contract Receivables | 9,243,354 | 3,047,255 |
| Contract Assets | 2,630,561 | 1,213,614 |
| Prepaid Expenses | 218,579 | 166,527 |
| Contract Assets- Related Party | - | — |
| Contract Assets | - | — |
| TOTAL CURRENT ASSETS | 37,300,878 | 7,123,579 |
| NET PROPERTY AND EQUIPMENT | 996,771 | 1,021,930 |
| Other Assets- Related Party | 50,000 | - |
| RIGHT-OF-USE ASSETS-RELATED PARTY | 686,053 | 819,529 |
| Investment in Class A Common Stock | 1,000,000 | - |
| TOTAL ASSETS | $40,033,702 | $8,965,038 |
| LIABILITIES | | |
| Accounts payable and other payables | $978,103 | $1,102,686 |
| Accrued expenses | 136,731 | 79,270 |
| Contract liabilities | 383,869 | 633,794 |
| Related Party Payables | - | — |
| Lease liability-related party | 700,161 | 819,529 |
| TOTAL CURRENT LIABILITIES | 2,198,864 | 2,635,279 |
| SHAREHOLDER’S EQUITY | | |
| Preferred stock, $0.0001 par value, 20,000,000 shares authorized; 4,389,500 shares issued and outstanding. | 439 | — |
| Class A Common stock, $0.0001 par value, 372,000,000 shares authorized; 12,603,900 and 8,000,000 issued and outstanding as of December 31,2025 and December 31,2024 | 1,260 | 800 |
| Class B Common stock, $0.0001 par value, 8,000,000 shares authorized; 0 shares issued and outstanding as of December 31, 2025 and 8,000,000 as of December 31,2024 | - | 800 |
| Common stock, value | - | 800 |
| Additional paid in Capital | 37,200,867 | 424,336 |
| Accumulated deficit | 632,272 | 5,903,823 |
| Total SHAREHOLDER’S EQUITY | 37,834,838 | 6,329,759 |
| TOTAL LIABILITIES AND SHAREHOLDER EQUITY | $40,033,702 | $8,965,038 |
The
accompanying notes are an integral part of these consolidated financial statements.
F-3
**JFB CONSTRUCTION HOLDINGS AND SUBSIDIARIES**
### CONSOLIDATED STATEMENTS OF INCOME
| Line item | December 31, 2025 / Year Ended | December 31, 2024 / Year Ended |
| --- | --- | --- |
| Sales | $24,639,491 | $22,183,871 |
| Sales – Related Parties | 5,901,952 | 904,014 |
| Sales | 5,901,952 | 904,014 |
| Cost of Goods Sold | 21,733,180 | 17,140,993 |
| Cost of Goods Sold – Related Parties | 5,657,983 | 912,331 |
| Cost of Goods Sold | 5,657,983 | 912,331 |
| Gross Profit | 3,150,280 | 5,034,561 |
| Operating Expenses | | |
| Selling and marketing expenses | 1,011,092 | 51,635 |
| General and administrative expense | 7,373,892 | 4,836,781 |
| Rent Expense-related party | 167,950 | |
| Depreciation and amortization expense | 251,913 | 179,649 |
| Total Operating Expense | 8,804,847 | 5,068,065 |
| Income(Loss) from Operations | (5,654,567) | (33,504) |
| OTHER INCOME (EXPENSE) | | |
| Other Income (Expenses) | (124,053) | (8,142) |
| Interest expense | (489) | (32,649) |
| Interest Income | 506,558 | 193,300 |
| TOTAL OTHER INCOME | 382,016 | 152,509 |
| NET INCOME (LOSS) | $(5,272,551) | $119,005 |
| Earnings Per Share | | |
| Basic and Diluted Common Share | $(0.31) | $0.01 |
| Weighted- Average Common Shares Outstanding, Basic and Diluted | 16,968,640 | 15,608,524 |
The
accompanying notes are an integral part of these consolidated financial statements.
F-4
**JFB
CONSTRUCTION HOLDINGS AND SUBSIDIARIES**
**CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY**
**For
the Years Ended December 31, 2025 and 2024**
| - | Shares / Class A Common Stock | Par Value / Class A Common Stock | Shares / Class B Common Stock | Par Value / Class B Common Stock | Shares / Class C Preferred Stock | Par Value / Class C Preferred Stock | Capital / Additional Paid-In | Retained Earnings | Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Balance, December 31, 2023 | 7,280,000 | $728 | 8,000,000 | $800 | - | - | $31,759 | $6,656,825 | $6,690,112 |
| Distributions 2024 | - | - | - | - | - | - | - | (872,007) | (872,007) |
| Issuance of Common stock for services | 720,000 | 72 | - | - | - | - | 359,928 | - | 360,000 |
| Imputed Interest | - | - | - | - | - | - | 32,649 | - | 32,649 |
| Net income 2024 | - | - | - | - | - | - | - | 119,005 | 119,005 |
| Balance, December 31, 2024 | 8,000,000 | $800 | 8,000,000 | $800 | - | - | $424,336 | $5,903,823 | $6,329,759 |
| Balance | 8,000,000 | $800 | 8,000,000 | $800 | - | - | $424,336 | $5,903,823 | $6,329,759 |
| Contributions 2025 | - | - | - | - | - | - | - | 1,000 | 1,000 |
| Proceeds from Issuance of Common stock, net | 2,500,000 | 250 | - | - | - | - | 4,667,386 | - | 4,667,636 |
| Proceeds from Exercise of Warrants | 1,223,094 | 122 | - | - | - | - | 3,363,386 | - | 3,363,508 |
| Shares issued for Service | 511,094 | 52 | - | - | - | - | 1,208,734 | - | 1,208,786 |
| Proceeds from Issuance of Preferred Stock C series,net | - | - | - | - | 4,389,500 | 439 | 39,536,261 | - | 39,536,700 |
| Repurchase & Retirement of Class B Common Stock | - | - | (8,000,000) | (800) | - | - | (11,999,200) | - | (12,000,000) |
| Cashless exercise of warrants | 369,712 | 36 | - | - | - | - | (36) | - | - |
| Net Loss 2025 | - | - | - | - | - | - | | (5,272,551) | (5,272,551) |
| Net Income (loss) | - | - | - | - | - | - | | (5,272,551) | (5,272,551) |
| Balance, December 31, 2025 | 12,603,900 | $1,260 | - | - | 4,389,500 | $439 | $37,200,867 | $632,272 | $37,834,838 |
| Balance | 12,603,900 | $1,260 | - | - | 4,389,500 | $439 | $37,200,867 | $632,272 | $37,834,838 |
The
accompanying notes are an integral part of these consolidated financial statements.
F-5
**JFB CONSTRUCTION HOLDINGS AND SUBSIDIARIES**
### CONSOLIDATED STATEMENTS OF CASH FLOWS
| Line item | December 31, 2025 / Year Ended | December 31, 2024 / Year Ended |
| --- | --- | --- |
| OPERATING ACTIVITIES | | |
| Net Income | (5,272,551) | 119,005 |
| Adjustments to reconcile Net Income (Loss) to Net Cash provided by operations: | | |
| Depreciation Expense | 251,913 | 179,649 |
| (Gain) loss on sale of fixed asset | (10,000) | |
| Shares issued for Services | 1,208,786 | 360,000 |
| Imputed Interest | — | 32,649 |
| Changes in assets and Liabilities (increase) decrease in : | | |
| Contracts Receivable | (6,196,099) | 4,087,836 |
| Contract Assets | (1,416,946) | (851,975) |
| Prepaid Expenses | (52,052) | (40,767) |
| Lease Liabilities, net | 14,108 | — |
| Accounts Payable | (124,582) | 382,382 |
| Accrued Expenses | 57,461 | (665,854) |
| Contract Liabilities | (249,925) | 121,075 |
| CASH PROVIDED BY ( used in) OPERATING ACTIVITIES | (11,789,888) | 3,481,850 |
| CASH FLOWS FROM INVESTING ACTIVITIES | | |
| Cash Paid for Deposit on Investment | (50,000) | — |
| Cash Received from sale of Fixed Asset | 10,000 | — |
| Cash Paid for Class A Common Stock | (1,000,000) | — |
| Cash Paid for purchased of Fixed Assets | (226,755) | (817,534) |
| Net cash used in investing activities | (1,266,755) | (817,534) |
| CASH FLOWS FROM FINANCING ACTIVITIES | | |
| Repayment on loan payable | — | (332,870) |
| Proceeds from Issuance of Common Stock A, net | 4,667,636 | — |
| Proceeds from Issuance of Common Stock C, net | 39,536,700 | — |
| Proceeds from Issuance of Common Stock, net | 39,536,700 | — |
| Proceeds from Exercise of Warrants | 3,363,508 | — |
| Redemption Of Class B Common Stock | (12,000,000) | — |
| Shareholder (Distributions) Contributions | 1,000 | (872,007) |
| CASH USED FOR FINANCING ACTIVITIES | 35,568,844 | (1,204,877) |
| NET INCREASE (DECREASE) IN CASH | 22,512,201 | 1,459,439 |
| CASH AND RESTRICTED CASH AT BEGINNING OF YEAR | 2,696,183 | 1,236,744 |
| Cash and restricted cash at end of period | $25,208,384 | $2,696,183 |
| Supplemental Disclosures of Cash Flow Information: | | |
| Interest Paid | — | — |
| Taxes Paid | — | — |
| Non-Cash Financing | | |
| Addition of lease during this period | — | $908,705 |
| Cashless exercise of warrants | $18 | — |
F-6
**JFB
Construction Holding**
**Notes
to the Audited Financial Statements**
### **Note 1 – Nature of the Business**
JFB
Construction & Development, Inc. (“JFB” or the “Company”) was incorporated in the State of Florida on May
28, 2014, and is based in Lantana, Florida. The Company offers more than 100 years of combined generational experience in residential
and commercial construction and development. JFB builds multifamily communities, exclusive estate & equestrian homes, and over 2 million square feet of commercial retail and shopping centers. The Company meets its customers’ needs through advanced scheduling,
deep construction expertise, innovative problem solving and continuous communication during construction.
On
April 09, 2024, JFB Construction Holdings was formed out of the state of Nevada to serve as the parent company of JFB Construction &
Development, Inc. The consolidated financial statements of JFB Construction Holdings reflect the financial position, results of operations
and cash flows of both JFB Construction Holdings and its subsidiaries from the date of consolidation.
**Basis
of Presentation**
The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”). The consolidated financial statements include the accounts of JFB Construction Holdings
and its wholly owned subsidiaries, including JFB Construction & Development, Inc. All intercompany balances and transactions have
been eliminated in consolidation.
The
consolidated financial statements have been prepared on the accrual basis of accounting and in accordance with the historical most convention,
except for certain financial instruments that may be recorded at the fair value as required by GAAP. Management has evaluated events
and transactions occurring subsequent to the balance sheet date for potential recognition or disclosure in the consolidated financial
statements.
### **Note 2 – Summary of Significant Accounting Policies**
This
summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements.
The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and
objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been
consistently applied in the preparation of the financial statements.
***Principles
of Consolidation***
JFB
Construction & Development, Inc. accounts are included on its Parent Company’s consolidated financial statements for the years
ended December 31, 2025 and 2024.
***Cash
and Restricted Cash***
The
Company’s cash is comprised of highly liquid investments with an original maturity of three (3) months or less, together with restricted
cash totaling $3,000,000, consisting of $3,000,000 pledge as collateral for the Desoto School Project performance bond.
***Concentration
Risk***
Cash
includes amounts deposited in financial institutions in excess of insurable Federal Deposit Insurance Company (FDIC) limits. At times
throughout the year, the Company may maintain cash balances in certain bank accounts in excess of FDIC limits. As of December 31, 2025
and 2024, the cash balance in excess of the FDIC limits was $21,862,085 and $2,196,183, respectively. The Company has not experienced
any losses in such accounts and believes it is not exposed to any significant credit risk in these accounts.
***Use
of Estimates***
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Certain accounting estimates
of the Company require a higher degree of judgment than others in their application. These include the recognition of revenue and earnings
from construction contracts over time, and the valuation of long-lived assets. Management evaluates all of its estimates and judgements
based on available information and experience; however, actual results could differ from those estimates.
F-7
***Revenue
Recognition***
We
recognize revenue when services are performed, provided that evidence of an arrangement exists, title and risk of loss have passed to
the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured.
Revenues
and related costs on construction contracts are recognized as the performance obligations for work are satisfied over time in accordance
with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Under ASC 606, revenue, and associated
profit, will be recognized as the customer obtains control of the goods and services promised in the contract (i.e., performance obligations).
All un-allocable indirect costs and corporate general and administrative costs are charged to the periods as incurred. However, in the
event a loss on a contract is foreseen, the Company will recognize the loss as it is determined.
Revisions
in cost and profit estimates during the course of the contract are reflected in the accounting period in which the facts for the revisions
become known. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes
in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final
contract settlements, may result in revisions to costs and income, which are recognized in the period the revisions are determined.
Contract
receivables are recorded on contracts for amounts currently due based upon progress billings, as well as retention, which are collectible
upon completion of the contracts. Accounts payable to material suppliers and subcontractors are recorded for amounts currently due based
upon work completed or materials received, as are retention due subcontractors, which are payable upon completion of the contract. General
and administrative expenses are charged to operations as incurred and are not allocated to contract costs.
Revisions
in cost and profit estimates during the course of the contract are reflected in the accounting period in which the facts for the revisions
become known. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes
in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final
contract settlements, may result in revisions to costs and income, which are recognized in the period the revisions are determined.
Contract
receivables are recorded on contracts for amounts currently due based upon progress billings, as well as retention, which are collectible
upon completion of the contracts. Accounts payable to material suppliers and subcontractors are recorded for amounts currently due based
upon work completed or materials received, as are retention due subcontractors, which are payable upon completion of the contract. General
and administrative expenses are charged to operations as incurred and are not allocated to contract costs.
To
determine proper revenue recognition for contracts, we evaluate whether two or more contracts should be combined and accounted for as
one single performance obligation or whether a single contract should be accounted for as more than one performance obligation. This
evaluation requires significant judgment and the decision to combine a group of contracts or separate a single contract into multiple
performance obligations could change the amount of revenue and profit recorded in a given period. For all of our contracts, we provide
a significant service of integrating a complex set of tasks and components into a single project. Hence, the entire contract is accounted
for as one performance obligation. Due to the nature of the work required to be performed on many of our performance obligations, the
estimation of total revenue and cost at completion is complex, subject to variables and requires significant judgment. We estimate variable
consideration at the most likely amount to which we expect to be entitled. We include estimated amounts in the transaction price to the
extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with
the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts
in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and
forecasted) that is reasonably available to us.
In
accordance with ASC 606-10-50-12, our revenue recognition policy reflects the nature of the goods and services promised to customers
across our three business segments: Commercial Construction, Residential Construction, and Real Estate Development. Commercial Construction
segment we provide construction services for commercial properties, including office buildings and retail spaces. Our performance obligation
typically consists of delivering a completed construction project within a contract term of approximately 8 to 13 weeks. Residential
Construction segment focuses on the construction of residential properties, including ground up development of single-family and multi-family
residential homes, and the remodeling of single-family and multi-family homes. Our residential contracts generally have a duration of8-12 months. In our Real Estate Development segment, we would undertake the acquisition and development of land for development, or value
add opportunities in real estate. This segment of the business would take approximately 6-24 months.
F-8
In
accordance with ASC 606-10-50-13 we disclose information regarding our remaining performance obligations for contracts with customers
in our business segments. The total remaining performance obligations under the Commercial Construction segment are expected to be satisfied
within the next 8-13 week reflecting the typical duration of these projects. Under the Residential Construction segment are expected
to be satisfied over the next 8-12 months as projects progress towards completion.
**Contract
Assets and Contract Liabilities**
Accounts
receivable is recognized in the period when the Company’s right to consideration is unconditional. Accounts receivable is recognized
net of an allowance for credit losses. A considerable amount of judgement is required in assessing the likelihood of realization of receivables.
The
timing of revenue may differ from timing of invoicing customers.
Contract
assets include unbilled amounts from long-term construction services when revenue recognized under the cost-to-cost measure of progress
exceeds the amounts invoiced to customers, as the amounts cannot be billed under the terms of the contracts. Such amounts are recoverable
from customers based upon various measures of performance, including achievement of certain milestones, completion of specified units
or completion of contract. Contracts assets are generally classified as current within the consolidated balance sheet.
Contract
liabilities from construction contracts occur when amounts invoiced to customers exceed revenues recognized under the cost-to-cost measures
of progress. Contract liabilities additionally include advance payments from customers on certain contracts. Contract liabilities decrease
as the Company recognizes revenue from the satisfaction of the related performance obligation. Contract liabilities are generally classified
as current within the consolidated balance sheet.
Although
the Company believes it has established adequate procedures for estimating costs to complete on open contracts, it is at least reasonably
possible that additional significant costs could occur on contracts prior to completion. The Company periodically evaluates and revises
its estimates and makes adjustments when they are considered necessary.
The
Company recognizes revenue by applying the following 5 step model:
1.
Identifying the Contract(s) with a Customer. The Company enters into written contract with customers that create enforceable rights and
obligations. Contracts are assessed to ensure they meet criteria for being considered legally binding and capable of being accounted
for.
2.
Identify the Performance Obligations in the Contract. Performance obligations are identified as distinct promises to transfer goods or
services to a customer. The Company identifies their scope of work and creates a schedule of values (SOV) outlining each individual scope
of the project.
3.
Determine the Transaction Price. The transaction price is the amount of considerations the Company expects to be entitled to in exchange
for transferring promised services. The transaction price may include fixed amounts or cost-plus percentage method.
4.
Allocate the Transaction Priced to Performance Obligations. The transaction price is allocated to each performance obligation (SOV) based
on its stand-alone selling price. The stand-alone selling price is the price which the Company would sell its service separately to a
customer.
5.
Recognize Revenue when (or as) the Company Satisfies a Performance Obligation. The Company recognizes revenue over time based on the
progress towards completion of performance obligation. Revenue recognized during this reporting period is derived from the total contract
value as allocated to performance obligations satisfied during that period.
In
accordance with ASC 280-10-50, our operations are organized into three primary business segments: Commercial Construction, Residential
Construction, and Real Estate Development. These segments are defined based on the nature of our services and the markets we serve.
Commercial
Construction: This segment includes all activities related to the construction of commercial properties such as office buildings, retail
spaces, and industrial facilities. Revenue is recognized using the cost-to cost method, reflecting the extent of work performed on contracts.
The Commercial segment of JFB Construction represents 78% and 89% of revenue for the years ended December 31, 2025 and December 31, 2024,
respectively.
F-9
Residential
Construction: This segment focuses on the construction of residential properties, including single-family homes and multi-family units.
Revenue recognition is similarly based on the cost-to cost method. The Residential segment of JFB Construction represents 22% and 11% of revenue for the years ended December 31, 2025 and December 31, 2024, respectively.
Real
Estate Development: This segment encompasses the acquisition, development, and sale of real estate properties. Revenue is recognized
upon the sale of developed properties and is influenced by market conditions and demand for residential and commercial properties. There
is no revenue recognized for this segment for the years ended December 31, 2025 and December 31, 2024.
The
financial performance of each segment is regularly reviewed with operational leaders in charge of these segments, the Chief Executive
Officer (CEO), the Chief Financial Officer (CFO) and others.
***Contract
Receivable***
Accounts
receivables are generally based on amounts billed to the customer in accordance with contractual provisions. They are uncollateralized
customer obligations due under normal trade terms, only recorded for those amounts deemed collectible, based upon experience with its
customers. No finance or interest charges are charged to accounts receivable. The Company uses the allowance method to account for uncollectible
accounts receivable. The Company records an allowance against uncollectible items for each customer after all reasonable means of collection
have been exhausted, and the potential for recovery is considered remote. The allowance for doubtful accounts was $135,236 and $0 as
of December 31, 2025 and 2024. The net contract receivable balance was $9,243,354 on December 31, 2025, and $3,047,255 on December 31,
2024.
***Advertising
Costs***
The
Company expenses the cost of advertising and promotional materials when incurred. The advertising costs were $1,011,092 for the year
ended December 31, 2025 and $51,635 and for the year ended December 31, 2024.
***Property
and Equipment***
Property
and equipment are recorded at cost and depreciated on a straight-line basis over their estimated useful lives, including vehicles, computers
and office equipment and field equipment. Gain or loss is recognized upon disposal of property and equipment, and the asset and related
accumulated depreciation are removed from the accounts. Expenditures for maintenance and repairs are charged to expense as incurred,
while expenditures for addition and betterment are capitalized. Property and Equipment include the following categories:
Schedule of Property and Equipment
| Estimated Life | |
| --- | --- |
| Office, Field, and Computer Equipment | 5 years |
| Vehicles | 5 years |
| Leasehold Improvements | 7 years |
| Line item | 2025 / 31-Dec | 2024 / 31-Dec |
| --- | --- | --- |
| Field Equipment | $114,206 | $114,206 |
| Computer Equipment | 6,911 | 6,911 |
| Vehicles | 837,230 | 819,599 |
| Leasehold Improvements | 771,841 | 589,525 |
| Office Equipment | 2,076 | 2,076 |
| Gross Property and Equipment | 1,732,264 | 1,532,317 |
| Less accumulated depreciation | (735,493) | (510,387) |
| Net Property and Equipment | $996,771 | $1,021,930 |
Long-lived
assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. In the event that the facts and circumstances indicate that the cost of any long-lived assets
may be impaired, an evaluation of recoverability would be performed following generally accepted accounting principles.
Depreciation
expense during the year ended December 31, 2025 and 2024, was $251,913 and $179,649, respectively.
F-10
***Fair
Value of Financial Instruments***
Fair
Value of Financial Instruments requires disclosure of the fair value information, whether or not to recognized in the balance sheet,
where it is practicable to estimate that value. As of December 31, 2025, the balances reported for cash, contract receivables, cost in
excess of billing, prepaid expenses, accounts payable, billing in excess of cost, and accrued expenses approximate the fair value because
of their short maturities.
We
adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established
a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures
about fair value measurements.
Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:
- Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets.
- Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and
- Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
***Work-in-Process***
The
Company recognizes as an asset the accumulated costs for work-in-process on projects expected to be delivered to customers. Work in Process
includes the cost price of materials and labor related to the construction of equipment to be sold to customers.
***Recently
Issued Accounting Pronouncements***
Management
reviewed currently issued pronouncements and does not believe that any other recently issued, but not yet effective, accounting standards,
if currently adopted, would have a material effect on the accompanying condensed financial statements.
### **Note 3 – Revenue from Contracts with Customers**
Revenues
and related costs on equipment contracts are recognized as the performance obligations for work are satisfied over time in accordance
with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Under ASC 606, revenue and associated
profit will be recognized as the customer obtains control of the goods and services promised in the contract (i.e., performance obligations).
All un-allocable indirect costs and corporate general and administrative costs are charged to the periods as incurred. However, in the
event a loss on a contract is foreseen, the Company will recognize the loss as it is determined.
In
accordance with ASC 606-10-50-5, the Company identifies Revenue from Contracts with Customers using this 5- step model.
1.
Identifying the Contract(s) with a Customer. The Company enters into written contract with customers that create enforceable rights and
obligations. Contracts are assessed to ensure they meet criteria for being considered legally binding and capable of being accounted
for.
2.
Identify the Performance Obligations in the Contract. Performance obligations are identified as distinct promises to transfer goods or
services to a customer. The Company identifies their scope of work and creates a schedule of values (SOV) outlining each individual scope
of the project. Commercial construction performance obligations typically include delivering construction services for commercial construction
and recognized the entire contract as a single performance obligation, Residential Construction is typically delivering the new construction
of a residential construction or a remodel of an existing residential property, and we recognize the contract as a single performance
obligation.
3.
Determine the Transaction Price. The transaction price is the amount of considerations the Company expects to be entitled to in exchange
for transferring promised services. The transaction price may include fixed amounts or cost-plus percentage method.
F-11
4.
Allocate the Transaction Priced to Performance Obligations. The transaction price is allocated to each performance obligation (SOV) based
on its stand-alone selling price. The stand-alone selling price is the price which the Company would sell its service separately to a
customer.
5.
Recognize Revenue when (or as) the Company Satisfies a Performance Obligation. The Company recognizes revenue over time based on the
progress towards completion of performance obligation. Revenue recognized during this reporting period is derived from the total contract
value as allocated to performance obligations satisfied during that period. Commercial construction revenue is recognized over time,
using the cost-to cost method as we perform work on projects. Residential construction is similarly recognized over time for custom builds
and remodel using the cost-to cost method.
By
treating our contracts as a single performance obligation, we ensure that our revenue recognition process accurately reflects the economic
realities of our business operations across all segments. This approach provides clarity to stakeholders regarding our revenue-generating
activities, aligning with the guidance provided in ASC 606-10-55-89 through 55-91.
In
accordance with ASC 606-10-50-8, the Company has disclosed significant judgements and changes in judgements related to the recognition
of revenue from construction contracts. The application of ASC 606 requires the use of judgment in various aspects of revenue recognition,
particularly in the use of the cost-to-cost method. The Company applies the cost-to-cost method to measure progress toward completion.
This involves estimating the total contract cost and recognizing revenue based on the ration of cost incurred to the estimated total
cost. The Company makes judgements regarding the recognition of revenue related to change orders and claims. Revenue from change orders
is included in the transaction price when it is probable the customer will approve the change and the amount can be reliably estimated.
In
accordance with ASC 606-10-50-8, the Company recognizes contract assets and liabilities that reflect timing of revenue relative to the
amounts billed or paid. Contract balances are reported in the balance sheet as follows:
1.
Contract Assets. Contract Assets represent the Company’s right to consideration for work completed to date but not yet billed to
the customer. These amounts typically arise when revenue is recognized before an invoice is issued.
2.
Contract Liabilities. Contract Liabilities represent the Company’s obligation to transfer goods or service to a customer for which
it has received consideration or has the right to receive consideration before performing under the contract. Contract liabilities include
advance payments or progress billing received from customers before the Company has satisfied its performance obligations.
Contract
assets represent revenues recognized in excess of amounts billed on contracts in progress. Contract liabilities represent billings in
excess of revenues recognized on contracts in progress. Assets and liabilities related to long-term contracts are included in current
assets and current liabilities in the accompanying balance sheets, as they will be liquidated in the normal course of the contract completion.
The contract assets for the years ending December 31, 2025, and 2024, was $2,630,561 and $1,213,614, respectively. The contract liability
for the years ended December 31, 2025, and 2024, was $383,869 and $633,794 respectively. We recognized $1,143,269 and $2,561,828 as revenue
from our contract liability balance at the beginning of the year at year end December 31, 2025 and 2024, respectively. The allowance
for doubtful accounts was $135,236 as of December 31, 2025 and December 31, 2024. The contract receivable balance was $9,243,354 as of December 31, 2025 and $3,047,255 as of December 31, 2024.
### **Note 4 – Business Segment Information**
***Commercial
Construction Segment***
From
ground-up developments to renovations and tenant improvements, we specialize in delivering high-quality commercial construction projects
across various commercial sectors. This segment encompasses a wide range of projects, including office buildings, retail centers, hospitality
establishments, and industrial facilities. The commercial segment, which includes two divisions, a franchise construction division and
a general commercial construction division, represents a significant portion of JFB Construction’s revenue including approximately50% for year ending December 31,2025 and 78% for year ending December 31,2024. .
Franchise
industry construction build-outs were a key component of the past growth of JFB and will continue to be instrumental in our commercial
construction business. These projects range in size from approximately 1,500 square foot projects to over 30,000 and are generally completed
in less than four months. Leveraging years of experience, our team of professionals is adept at understanding the unique requirements
of numerous franchise systems and national brands for our clients. Our collaborative approach and dedication to client satisfaction have
positioned us as preferred builders within the franchise industry for highly valuable and recognizable corporate brands, allowing us
to build lasting partnerships with franchisees and national brands alike. We are, however, tied to the continued growth and success of
the national brands, and their respective franchisees, for continued projects of this nature. By prioritizing the unique needs and objectives
of each client, we attempt to deliver tailored solutions to meet the need of our franchise clients.
F-12
We
also build ground-up commercial buildings. This includes site evaluation, aiding in architectural design and engineering, and construction
of the building itself. Our approach ensures that the final product meets the functional and aesthetic requirements of modern businesses,
while also adhering to budget and timeline constraints. We began building for Sweathouz Corporation and successfully completed three projects for them in 2025.
The
commercial construction industry, specifically focusing on franchise business buildouts, is highly competitive and influenced by various
market dynamics. Franchise business buildouts, such as restaurants, retail stores, fitness centers, and service-oriented businesses,
require specialized construction services that cater to brand standards, tight timelines, and cost efficiency. Many franchise brands
are expanding rapidly due to strong consumer demand, creating a substantial market for commercial construction services. Franchise buildouts
often have aggressive schedules to meet the franchisor’s timelines, requiring contractors, including JFB, to work efficiently and
minimize downtime. This fast-paced nature of the work means that contractors with streamlined processes, experienced project managers,
and strong subcontractor networks have a competitive edge. Our management believes we possess such attributes and, as a result, are well
positioned to continue being awarded contracts in this sector in the future.
Overall,
according to Construct Connect news, their experts predict that the Commercial Construction industry will have modest growth in 2026
and beyond Further, nonresidential construction spending is projected to increase by over 4% in 2026 according to the American Institute
of Architects. However, there is less encouraging information related to traditional office and retail sectors which are declining based
on consumer trends and work from home initiatives. JFB will continue to monitor these trends as they occur and will consider shifting
resources to adapt by focusing markets and regions where continued growth is projected.
Management
expects the continued expansion of our franchise construction division across numerous states throughout the U.S. where our current and
future clients require our services, with an emphasis on the Southeast. The Southeast, according to International Franchise Association,
is the largest franchise market in the country and is expected to grow by 3.5%, whereas the total national franchise market is only expected
to grow 1.9%. Our general commercial construction division will continue to focus on the Southern Atlantic region of the United States
in the short to mid-term, focusing on regions where we forecast continued state-to-state migration and expanding population growth. We
anticipate our franchise division growth to remain strong so long as we are able to continue to retain our current client base and continue
to receive referrals within the industry.
***Residential
Construction Segment***
With
a focus on quality craftsmanship, we undertake residential construction and development projects that prioritize modern living spaces
and contribute to vibrant communities. With the increasing demand for housing driven by population growth and urbanization, the residential
development segment presents business opportunities for JFB Construction. According to the U.S. Census Bureau, Florida was one of the
fastest-growing economies in the country. Florida has also been one of the fastest growing states in terms of population and migration,
with 22,517 added in 2025, according to a report issued by the Florida Times. JFB aims to capitalize on the increased GDP and population
migration in Florida, which is drawing new residents because of its warmer climate, robust labor market and lack of state income tax,
due to increased need for housing. In 2025, residential construction opportunities represent 22% of our revenues. Our expertise in residential
construction includes home remodels, luxury single-family homes and equestrian facilities. We are committed to meeting the evolving needs
of homeowners and developers by delivering innovative and sustainable housing solutions.
We
cater to affluent clients seeking bespoke residences and state of the art equestrian amenities in South Florida. Within this segment,
we excel at creating custom-designed homes and remodels that embody elegance, functionality, and the latest in luxury living standards.
In parallel, we create equestrian facilities that combine superior architectural design with practical considerations for horse stabling
and training. As we move forward, management believes the demand for contractors who specialize in this niche of luxury construction
will continue to grow in association with the population growth in this region. Six of our 24twenty-four current projects are residential construction projects.
The
competitive state of the residential construction market in the Florida and the surrounding regions has been shaped in recent years due
to a number of factors. Florida’s population growth is forecasted to remain above the national average in the coming years as well,
according to the Demographic Estimating Conference. In turn, the demand for new or remodeled homes has been beneficial to JFB and the
residential construction industry in the region. However, JFB’s ability to successfully capitalize on such demand has been balanced
by the need to identify a cost effective workforce, including its use of subcontractors, properly preparing for and mitigating the potential
harm of increased material costs and supply chain disruptions, and navigating strict building codes which may lead to permitting delays.
F-13
***Real
Estate Development Segment***
Management
believes that an increased focus on larger multi-family residential developments, such as condominiums and townhouses, will help JFB
to continue to grow and increase its revenue. Projects, such as our completed 44-unit
multi-story residential apartment complex and our recent agreement as the general contractor for a 79-unit
townhome development with an additional community clubhouse, and our work to expand the Desoto County High School and the Construction
of the Courtyard Olive Branch hotel will be key to our future success because such projects offer the opportunity to participate in larger
construction projects that have an opportunity to yield greater revenues. As discussed below, we believe being a public company, with
increased access to capital and potentially debt financing, will help enable our company to invest in real estate development projects
that are more capital intensive. Further, with the potential to act as the developer and general contractor for development projects,
we believe there are opportunities to maximize profits for the Company though efficient control of all aspects of construction projects
through our in-house development team. Four of our 24twenty-four current projects is a real estate development project.
While
still aspirational in nature, the Company’s strategic plan includes investing in real estate development projects directly as the
developer or through joint ventures, which offer both attractive opportunities and notable challenges. Such investment has the potential
to secure substantial returns on investment, as well as potentially being awarded the valuable construction contracts tied to these ventures.
Real estate development provides revenue opportunities for the Company through various channels, including the sale of developed properties,
leasing income, and property management fees. Upon the completion of a development project, the Company may generate revenue through
the sale of residential, commercial, or mixed-use properties to third-party buyers. In addition, leasing developed properties to tenants
provides a recurring revenue stream, contributing to long-term financial stability. The Company may also derive income from property
management services, ensuring efficient operation and maintenance of developed assets, but this service would likely be outsourced to
a third-party, at least in the early stages of this growth objective. Furthermore, real estate development projects may appreciate in
value over time, potentially generating additional revenue upon sale or refinancing.
In
addition to the revenue generated from property sales, leasing, and management, real estate development projects create opportunities
for the Company to provide construction services, further diversifying its income streams. As a vertically integrated company, the Company
is likely to be able to serve as both the developer and the general contractor on its projects, enabling it to capture additional revenue
from construction activities. By providing construction services for its own developments, the Company benefits from greater control
over project timelines, quality, and costs, improving overall project efficiency. Moreover, the Company may also offer construction services
to third-party developers, as it is presently leveraging its expertise and resources to expand its client base. This dual role as developer
and contractor may enhance the Company’s ability to generate consistent revenues across multiple phases of a project, from initial
construction through long-term asset management.
Value-add
real estate development for shopping centers and similar commercial projects is another area of real estate development the Company intends
to invest into. By acquiring underperforming or outdated retail properties, the Company can implement strategic renovations, tenant repositioning,
and operational improvements to enhance the property’s value and attract higher-quality tenants. These enhancements can increase
rental income and occupancy rates, creating a more attractive asset for future sale or refinancing. Additionally, value-add projects
allow the Company to capitalize on trends in consumer behavior, such as incorporating mixed-use elements or adapting spaces for e-commerce
and experiential retail. This approach not only increases the asset’s long-term revenue potential but also strengthens the Company’s
market position in the competitive commercial real estate sector, if the Company is able to properly assess risk and identify well positioned
properties.
The
Company recognizes real estate development projects require substantial capital investment and come with inherent risks, such as market
fluctuations, potential delays, and the complexities of managing real estate assets. The illiquidity of these investments further complicates
matters, as funds may be locked in for extended durations, restricting the company’s ability to reallocate resources quickly. Nonetheless,
by integrating its investment strategy with its construction capabilities, the Company aims to mitigate these risks and enhance project
outcomes. While these endeavors require careful management and thoughtful allocation of resources, the Company is optimistic that its
integrated approach will yield positive outcomes.
The
Company’s segment profit or loss is measured using gross profit, which is the primary performance metric utilized by management
to evaluate the financial results of each reportable segment. For segment reporting purposes, gross profit is calculated as the difference
between segment revenue and the direct costs associated with specific projects or contracts. These direct costs include materials, labor,
subcontractors, and other project-specific expenses directly attributable to the construction activities of each segment.
The
financial performance of each segment is regularly reviewed with operational leaders in charge of these segments, the Chief Executive
Officer (CEO), the Chief Financial Officer (CFO) and others. The CODM of the Company is Joseph Basile CEO. The Company’s segment
disclosures are presented in accordance with the guidance set forth in ASC 280, *Segment reporting*. Specifically, the disclosures
comply with the requirements outlined in ASC 280-10-50-22 through 50-26, which mandate that an entity disclose certain information about
its operating segments to enable users of the financial statements to understand the financial performance of different parts of the
business.
F-14
In
accordance with ASC 280-10-50-22, the Company discloses financial information for each reportable segment, including revenue, operating
profit or loss, and other significant items that are used by the chief operating decision maker (CODM) in assessing the performance and
making decisions about the allocation of resources. The Company identifies its reportable segments based on the internal management structure,
and all relevant information is disclosed in the segment footnote as required.
In
accordance with ASC 280-10-50-29, the disclosures also adhere to the requirements of which mandate that the financial information provided
for each segment should include items such as capital expenditures, depreciation, and amortization, when appropriate. The disclosures
reflect the performance and financial position of each segment, and a reconciliation of segment totals to the overall consolidated financial
results, including total segment profit or loss and other significant disclosures.
The
Company’s segment disclosures are presented in accordance with the requirements set forth in ASC 280-10-50-30(b) and (c), which
specify the need to disclose the total of reportable segments’ profit or loss, as well as the basis of measurement used to determine
the segment results.
In
accordance with ASC 280-10-50-30(b), the Company provides the total of profit or loss for all reportable segments, which reflects the
combined operating results for each reportable segment included in the financial statements. The total segment profit or loss represents
the aggregation of segment results before the allocation of corporate expenses and certain other items not attributable to specific segments.
As
required by ASC 280-10-50-30(c), the Company has also disclosed the basis of measurement for segment profit or loss. The measure used
to assess segment performance and allocate resources is operating income (or loss), which includes revenues, cost of sales, and directly
attributable operating expenses for each segment. The operating income (or loss) for each reportable segment is reviewed by the Company’s
chief operating decision maker (CODM) and serves as the primary performance metric used in resource allocation and operational decision-making.
**Segment
information is as follows:**
**Schedule
of Segment Information**
| For the year ended December 31, 2025 | Commercial | Residential | Real Estate Development | Consolidated |
| --- | --- | --- | --- | --- |
| Sales | $15,149,930 | $10,226,983 | $5,164,530 | $30,541,443 |
| Cost of Goods Sold | 15,621,923 | 7,273,349 | 4,495,891 | 27,391,163 |
| Gross Profit (Loss) | (471,993) | 2,953,634 | 668,639 | 3,150,280 |
| Operating Expenses | | | | |
| Selling & Marketing Expenses | 505,546 | 303,328 | 202,218 | 1,011,092 |
| General & Administrative Expenses | 3,686,946 | 2,212,168 | 1,474,778 | 7,373,892 |
| Rent expense-related party | 83,975 | 50,385 | 33,590 | 167,950 |
| Depreciation and amortization expense | 125,957 | 75,574 | 50,383 | 251,913 |
| Total Operating Expense | 4,402,424 | 2,641,454 | 1,760,969 | 8,804,847 |
| Income (Loss) From Operations | (4,874,417) | 312,180 | (1,092,330) | (5,654,567) |
| OTHER INCOME (EXPENSE) | | | | |
| Income (expense) | (62,027) | (37,216) | (24,811) | (124,053) |
| Interest expense | (245) | (147) | (98) | (489) |
| Interest Income | 253,279 | 151,967 | 101,312 | 506,558 |
| TOTAL OTHER INCOME | 191,008 | 114,605 | 76,403 | 382,016 |
| NET INCOME (LOSS) | $(4,683,409) | $426,785 | $(1,015,927) | $(5,272,551) |
F-15
| For the year ended December 31, 2024 | Commercial | Residential | Real Estate Development | Consolidated |
| --- | --- | --- | --- | --- |
| Sales | $18,008,550 | $5,079,335 | - | $23,087,885 |
| Cost of Goods Sold | 14,081,593 | 3,971,731 | — | 18,053,324 |
| Gross Profit (Loss) | 3,926,958 | 1,107,603 | — | 5,034,561 |
| Operating Expenses | | | — | |
| Selling & Marketing Expenses | 39,615 | 12,020 | — | 51,635 |
| General & Administrative Expenses | 3,772,869 | 1,063,912 | — | 4,836,781 |
| Depreciation and amortization expense | 140,126 | 39,523 | — | 179,649 |
| Total Operating Expense | 3,952,610 | 1,115,455 | — | 5,068,065 |
| Income From Operations | (25,652) | (7,852) | — | (33,504) |
| OTHER INCOME (EXPENSE) | | | — | |
| Income (expense) | (6,351) | (1,791) | — | (8,142) |
| Interest expense | (25,466) | (7,183) | — | (32,649) |
| Interest Income | 150,774 | 42,526 | — | 193,300 |
| TOTAL OTHER INCOME | 118,957 | 33,552 | — | 152,509 |
| NET INCOME (LOSS) | $92,824 | $26,181 | - | $119,005 |
The
total assets for each segments are presented in accordance with segment reporting requirements of ASC 280-10, which requires the disclosure
of total assets for each reportable segment.
Schedule
of Reconciliation of Assets from Segment to Consolidated
| As of December 31, 2025 | Commercial | Residential | Real Estate Development | Consolidated |
| --- | --- | --- | --- | --- |
| ASSETS | | | | |
| Cash | $11,104,192 | $7,328,767 | $3,775,425 | $22,208,384 |
| Restricted Cash | - | - | 3,000,000 | 3,000,000 |
| Contract Receivables | 4,621,677 | $3,050,307 | 1,571,370 | 9,243,354 |
| Contract Assets | 1,315,281 | 868,085 | 447,195 | 2,630,561 |
| Prepaid Expenses | 109,290 | 72,131 | 37,158 | 218,579 |
| Contract Assets-Related Party | | | | |
| TOTAL CURRENT ASSETS | 17,150,439 | 11,319,290 | 8,831,149 | 37,300,878 |
| NET PROPERTY AND ROU ASSET | 1,366,412 | 901,832 | 464,580 | 2,732,824 |
| TOTAL ASSETS | $18,516,851 | $12,221,122 | 9,295,729 | $40,033,702 |
| As of December 31, 2024 | Commercial | Residential | Real Estate Development | Consolidated |
| --- | --- | --- | --- | --- |
| ASSETS | | | | |
| Cash | $2,103,023 | $593,160 | — | $2,696,183 |
| Contract Receivables | 2,392,459 | 654,796 | — | 3,047,255 |
| Contract Assets | 946,619 | 266,995 | — | 1,213,614 |
| Prepaid Expenses | 129,891 | 36,636 | — | 166,527 |
| Contract Assets-Related Party | — | — | — | — |
| TOTAL CURRENT ASSETS | 5,572,132 | 1,551,447 | — | 7,123,579 |
| NET PROPERTY AND ROU ASSET | 1,616,634 | 224,825 | — | 1,841,459 |
| TOTAL ASSETS | $7,009,110 | $1,955,928 | — | $8,965,038 |
### **Note 5 – Lease Arrangements**
In
the ordinary course of business, the Company enters into lease arrangements, including operating and finance leases.
The
Company determines if an arrangement is a lease at inception. The operating lease right-of-use (“ROU”) assets are included
within the Company’s non-current assets and lease liabilities are included in current or non-current liabilities on the Company’s
Consolidated Balance Sheets. Finance leases are included in “Property and equipment,” “Current maturities of long-term
debt,” and “Long-term debt” on the Company’s Consolidated Balance Sheets. ROU assets represent the Company’s
right to use, or control the use of, a specified asset for the lease term. Lease liabilities are the Company’s obligation to make
lease payments arising from a lease and are measured on a discounted basis. Operating lease ROU assets and operating lease liabilities
are recognized based on the present value of the future minimum lease payments over the lease term on the commencement date. The operating
lease ROU asset includes any lease payments made and initial direct costs incurred and excludes lease incentives. The lease terms may
include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense
for minimum lease payments continues to be recognized on a straight-line basis over the lease term.
F-16
On January
1, 2022, we entered into a 2 two-year
lease with Loose Cannon, LLC pursuant to which we leased our previous corporate headquarters, with an option
for an additional two-year renewal 2 . Joseph F. Basile III, our Chief Executive, is an officer and member of Loose Cannon,
LLC. The lease provided for a base monthly rent of $3,210 at the beginning of the term of the lease which increased by 2.5%.
We occupied approximately 3,521 square feet of the building’s approximately 7,042 square feet. This lease was terminated December
1, 2024. Total rent expense under this related
party agreement was $35,310 for the year ended December 31, 2024.
In
accordance with the accounting standards under ASC 842, the Company has entered into a lease agreement with Aura Commercial LLC, a related
party, for office space. The total rental obligation under the lease amounts to $11,928 per month.
**Lease
Terms**: 7 years
**Monthly
Rent**: $11,928 and a 2.5 % adjustment increase per year.
We
lease our current corporate headquarters under a 7-year lease with Aura Commercial, LLC. Joseph F. Basile III, our Chief Executive Officer,
is President of Aura Commercial, LLC and owns 100% of the entity. The lease was effective on March 29, 2024, with rent commencing onJune 1, 2024, and provides for a base monthly rent of $11,928 with 2.5% adjustment increases per year. The lease grants an option to
renew this lease agreement for two terms of five years following the expiration of the initial term and first option term, as the case
may be. Total rent expense under this related party agreement was $167,950 for the year ended December 31, 2025.
The
Company accounts for its lease liabilities in accordance with ASC 842, recognizing the present value of future lease payments as a liability
on the balance sheet. The interest expense associated with the lease liability is recognized over the lease term. The company has a lease
liability of $700,161 at period ended December 31, 2025.
### **Note 6 – Income Taxes**
Effective
January 1, 2025 the Company revoked its election to be taxed as an “S” Corporation and elected to be taxed as a C Corporation
under the provision of the Internal Revenue Code. As a result of this change in tax status, the Company is now subsequent to federal
corporate income taxes on its taxable income.
Prior
to the revocation of its S-Corporation election, the Company was not subject to federal corporate income taxes, and its taxable income
for the year ended December 31, 2024 was reportable by its shareholder.
The
Company is subject to taxation in the United States.
The
Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2025, the Company
has not accrued any penalties or interest related to uncertain tax positions.
Since
converting to a C corporation, the Company has incurred losses and consequently recorded no provision for federal income tax for the
year ended December 31,2025. As of December 31, 2025 the Company had net operating loss (“NOL”) carryforwards for federal
income tax purposes. Federal NOL’s generated may be carried forward indefinitely, subject to an annual limitation equal to 80%
of taxable income in any future year under the Tax Cuts and Jobs Act.
Pursuant
to the provisions of the Accounting Standards Codification (“ASC”) 740-10, the Company records a liability for uncertain
tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. As of the years ended December
31, 2025, and 2024, the Company had no liabilities for uncertain tax positions. The Company continually evaluates expiring statutes of
limitations, audits, proposed settlements, changes in tax law and new authoritative rulings.
YEAR
ENDED DECEMBER 31, 2025
Schedule of Income Tax Reconciliation
| | | |
| --- | --- | --- |
| Federal statutory tax rate | (21.0 | )% |
| Impact of 70,000 NQSO Issuances (ASC 718 expense) | (21.1 | )% |
| Change in Valuation Allowance | 21.0% | % |
| Effective Tax Rate | (21.1 | )% |
F-17
YEAR
ENDED DECEMBER 31, 2025
Schedule of Deferred Tax Assets and Liabilities
| | | |
| --- | --- | --- |
| Net Operating Loss | 21% | 1,107,236 |
| Stock-based compensation | 21% | 253,845 |
| Depreciation | 21% | 52,902 |
| Total Deferred Tax Assets | | 1,413,983 |
| Deferred Tax Liabilities | - | - |
| Net Deferred Tax Asset | - | 1,361,081 |
| Less: Valuation Allowance | - | (1,361,081) |
| Deferred Tax Asset (Liability), Net | - | - |
The
Company’s federal income tax returns for 2025 and 2024 are subject to examination by the IRS, generally for three years after they
were filed. There are no ongoing examinations by taxing authority at this time.
### **Note 7 – Concentrations**
The
Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of its cash and accounts receivable.
The Company maintains its cash balances in bank deposit and money market accounts which, at times, may exceed federally insured limits.
***Cash
and Cash Equivalents***
The
Company maintains its cash in accounts at financial institutions, which may, at times, exceed federally insured limits. The Company has
not experienced any losses on such accounts and does not feel it is exposed to any significant risk with respect to cash. There were
amounts exceeding federally insured limits at December 31, 2025, and 2024 of $21,862,085 and $2,196183, respectively.
In
addition, the Company held $3,050,000 in restricted cash at December 31, 2025, which is included from federally insured limit calculations
and represent amounts held in escrow with construction project review and other contractual obligations.
***Sales
and Accounts Receivable***
During
the year ended December 31, 2025 one(1) franchise totaled 26% of sales, and two (2) customers totaled 18 % and 47% accounts receivable.
During
the years ended December 31, 2024 one (1) franchise totaled 41% of sales, and one (1) customer totaled 63% accounts receivable.
The
Company performs ongoing credit valuations of its customers and management believes that the financial viability of these customers is
sound.
***Purchases
and Payables***
There
was no concentration of purchases or payables for the Company for the years ended December 31, 2025, and 2024.
### **Note 8 – Related Party Transactions**
On
December 17, 2019, JFB received a loan from Capo 7, LLC. The balance is due on demand and does not contain an interest rate. The current
balance on the loan is $0. Joseph F. Basile III, our Chief Financial Officer, owns Capo 7, LLC. This balance was due on demand and does
not contain an interest rate. The loan balance was repaid on December 23, 2024.
On
August 4, 2021 we entered into an agreement to build a 2-story commercial building for Aura Commercial LLC, which is now the Company’s
headquarters. Joseph F. Basile III, our Chief Executive Officer, is the president of Aura Commercial LLC and owns 100% of the entity.
The contract was a cost plus 5% model. We incurred $912,331 . in billable expenses as of December 31,2024. We received $904,014 as of
December 31,2024 in construction income from Aura Commercial LLC.
F-18
On January
1, 2022, we entered into a 2 two-year
lease with Loose Cannon, LLC pursuant to which we leased our previous corporate headquarters, with an option
for an additional two-year renewal 2 .
Joseph F. Basile III, our Chief Executive, is an officer and member of Loose Cannon, LLC. The lease provided for a base monthly rent
of $3,210 at
the beginning of the term of the lease which increased by 2.5%.
We occupied approximately 3,521 square
feet of the building’s approximately 7,042 square
feet. This lease was terminated December
1, 2024.
Total rent expense under this related party agreement was $35,310 for
the year ended December 31, 2024.
On
March 14, 2024 we were awarded a $21mm project with Rare Capital Partners LLC to build a 79-unit-townhome rental community with an additional
community clubhouse in Port Salerno FL. Our Chief Executive Officer Joseph F. Basile III owns 42.25% of Rare Capital Partners and co-manages
Rare Capital Partners through Basile Family Investments LLC. Jamie Zambrana on the board of directors owns 8.54% of Rare Capital Partners
and co-manages Rare Capital Partners through Sebastian Pail Investments, Inc. Nelson Garcia, a board of directors owns 8.54% through
NBG Investments, Inc. Nelson Garcia does not, individually or through an entity, control the day-to-day operations of Rare Capital Partners
LLC and is solely a minority owner. This project is under permitting and has not begun construction. However, on or about September 1,
2021, in accordance with an oral agreement, JFB paid for engineering fees related to this project, in association with its general contracting
services being rendered, in the amount of $120,696. Rare Capital Partners paid the $120,696 balance on September 30,2024. Construction
on the project commence on June 1, 2025, with sire preparation underway. The project is currently under vertical construction. As of
December 31, 2025 the Company has recorded $4,468,064 in related party sales associated with this project, along with $4,245,041 in related
party cost of goods sold.
We
lease our current corporate headquarters under a 7-year lease with Aura Commercial, LLC. Joseph F. Basile III, our Chief Executive Officer,
is President of Aura Commercial, LLC and owns 100% of the entity. The lease was effective on March 29, 2024, with rent commencing onJune 1, 2024, and provides for a base monthly rent of $11,928 with 2.5% adjustment increases per year. We presently occupy approximately4,473 square feet of the building’s approximately 8,991 square feet. We have an option to purchase the entire property for $4,250,000 until December 1, 2024. The building was never acquired. Total rent expense under this related party agreement was $167,950 and $47,912 for the years ended December 31,2025 and December 31,2024, respectively.
On
April 30, 2024, Joseph F. Basile III gifted 81.25 shares of common stock in the JFB Subsidiary to The Basile Family Irrevocable Trust
and 0.625 shares of common stock in the JFB Subsidiary to another individual. Lisa Ann Basile, Joseph F. Basile III’s mother, is
the trustee with control over The Basile Family Irrevocable Trust.
On
May 1, 2025, the Company entered into a Construction agreement as general contractor and co-developer for a new Courtyard by Marriott
hotel in Olive Branch, Mississippi. The project includes the development of a 117- room hotel. As of December 31, 2025, the Company recognized
revenue of $1,433,888 and associated cost of goods sold of $1,412,942 related to this project.
The
CEO of the Company, Joseph Basile, has at times taken distributions from the JFB Subsidiary. For the year ended December 31, 2025 and
December 31,2024, the distributions were $0 and $872,007, respectively. At times, the CEO of the Company makes contributions to the company.
For the year ended December 31,2025 the contributions were $1,000. There were $0 Contributions for the year ended December 31,2024.
On
September 5, 2025, the Company deposited $25,000 into an escrow account to facilitate a 45-day review period for a potential construction
project involving a related party. The funds were intended to allow the Company sufficient time to evaluate the scope of work and obtain
approval from the Audit Committee. On October 9,2025 the Company deposited $25,000 into the same escrow account for an additional 45
day review extension. The deposit is fully refundable should the project not proceed. This transaction is considered a related party
arrangement as one of the Company’s directors owns the land on which the proposed project would be developed.
On
June 30, 2025, the Company issued 120,000 shares of its Class A Common Stock to Joseph Basile III pursuant to the Company’s 2024
Equity Incentive (ESOP) Plan. The issuance was made in recognition of Mr. Basile’s continued service and performance contributions
and was granted in accordance with the terms and conditions of the ESOP. The shares were issued as fully paid, and are reflected in the
accompanying financial statements for the period ended December 31, 2025.
On
June 30, 2025, the Company issued 50,000 shares of its Class A Common Stock to Ruben Calderon pursuant to the Company’s 2024 Equity
Incentive (ESOP) Plan. The issuance was made in recognition of Mr. Calderon’s continued service and performance contributions and
was granted in accordance with the terms and conditions of the ESOP. The shares were issued as fully paid, and are reflected in the accompanying
financial statements for the period ended December 31, 2025. In addition, during the year ended December 31, 2025, the Company issued
an aggregate of 3,334 shares of Common Stock to Mr. Calderon as part of his bonus compensation under his 2025 Executive Employment Agreement.
These shares were issued in two tranches: 1,694 shares on October 14, 2025, and 1,640 shares on December 15, 2025. The issuances were
approved by the Board of Directors and represent non-cash compensation earned upon achievement of the performance milestones specified
in his agreement.
F-19
### **Note 9 – Commitments and Contingencies**
***Litigation***
From
time to time, the Company is party to various claims or actions arising out of the ordinary course of business. While any proceeding
or litigation contains an element of uncertainty, management believes no matter exists that would have a material impact on the Company’s
financial position, liquidity, or results of operations.
As
of December 31, 2024, there was on-going litigation relating to a residential remodel whereby the customer has not paid their final
invoice and the Company has filed a lien on the property and is awaiting a court date to proceed with foreclosure on the property. However,
the case was settled on March 19, 2025, and the company has received a settlement amount of $39,138.
As
of December 31, 2025, the Company had no pending litigation matters.
### **Note 10 – Equity**
The
Company is authorized to issue up to 400,000,000 shares of all classes of stock. 20,000,000 shares shall be Preferred Stock with
a par value of $0.0001 and 380,000,000 shares as Common Stock with a par value of $0.0001. Further, we are authorized to issue two (2)
classes of common stock, with 372,000,000 shares of the common stock designated as “Class A Common Stock” and 8,000,000 shares
of the common stock designated as “Class B Common Stock”. After giving effect for the Reorganization (as defined below),
in accordance with ASC 505-10-S99-4 (SAB Topic 4:C) and ASC 260- 10-55-12, as of December 31, 2025 and 2024 respectively, 12,603,900 and 8,000,000 shares of Class A Common Stock was issued, and 8,000,000 shares of Class B Common Stock was issued and subsequently repurchased
and fully redeemed pursuant to a redemption agreement executed on October 3, 2025. Following the redemption agreement 0 Class B Common
Stock remain outstanding.
On
July 19, 2024, the Company issued 720,000 shares of the Company’s Class A common stock for a total fair value of $360,000 to Chartered
Services for assisting the company with various consulting services. These services included the Company’s nomination system for
all directors and aid in identifying qualified candidates, Review and advise the Company on all documents and accounting systems with
GAAP compliance, provide support as a liaison for the Company’s third party services providers, and provide business development
services. In accordance with ASC 718 The Company prepared a DCF (Discounted Cash Flow model) to determine the fair value of the shares
granted and using the DCF module determined the shares had an approximate fair value of $360,000. The Company used a discount rate of14.5% and period of five years including a terminal year. Under this agreement the shares have already been granted and cannot be reclaimed
even if the agreement is cancelled with or without cause. There are no required measurable deliverables or milestones as part of this
agreement from Chartered Services and as a result the full value of the shares have been expensed in the current period.
The
CEO of the Company, Joseph Basile, has at times taken distributions from the JFB Subsidiary. For the period ended December 31, 2025 and
December 31, 2024, the distributions were $0 and $872,007, respectively. At times, the CEO of the Company, makes contributions to the
company. For the year ended December 31 ,2025 the contributions were $1,000. There were $0 Contributions for the year ended December
31 ,2024.
On
March 7,2025, the Company consummated its initial public offering of 2,500,000 units of the Company’s Class A common stock at a
public offering price of $2.07 per unit, generating gross proceeds of $5,156,250. In connection with the offering, the company also sold277,200 option warrants at a price of $0.01 per warrant, generating additional gross proceeds of $1,386 for total gross proceeds
of $5,157,636. Pursuant to the underwriting agreement with Kingswood Capital Partners, LLC, the Company incurred $490,000 in expenses,
resulting in net proceeds of $4,667,636.
On
June 25, 2025, the Company’s Board of Directors approved the adoption of an Equity Incentive Plan designed to attract, retain,
and motivate qualified directors, officers, and employees by aligning their interest with those of the Company. Pursuant to the plan,
the Board authorized the issuance of an aggregate of 292,800 shares of Class A common stock to eligible participants, including board
members and employees, for a total fair value of $910,608. The issuance of these equity awards was accounted for in accordance with ASC
718.
On
October 2,2025, the Company closed on a securities purchase agreement with American Ventures LLC, Series XIV as the sole investor for
a private investment in public equity (PIPE) financing that has resulted in gross proceeds to the Company of approximately $43,895,000,
before deducting placement agent fees and offering expenses. The Company has used $12,000,000 of the net proceeds from the offering to
retire the Company’s Class B Common Stock, par value $0.0001, owned by Joseph F. Basile III, the Company’s Chief Executive
Officer, pursuant to a Share Redemption Agreement. Pursuant to the terms of the securities purchase agreement, the Company has sold an
aggregate of 4,389,500 shares of its Series C Convertible Preferred Stock, par value $0.0001 per share, stated value $5 per share,
convertible into 24,206,799 shares of common stock par value$0.0001, at a conversion price $2.72 per share of Series C Convertible
Preferred Stock, 24,206,799 Common Warrant A exercisable price of $2.88, 16,137,866 Common Warrant B exercisable price of $3.125.
The Company received gross proceeds of $27.5 million from the PIPE transaction after deducting placement agent fees and offering expenses.
F-20
As
of December 31, 2025, the Company had 4,389,500 shares of Series C Convertible Preferred Stock (“Series C Preferred Stock”)
issued and outstanding. Each share of Series C Preferred Stock was issued as part of a unit consisting of one share of Series C Preferred
Stock and accompanying Common Stock purchase warrants. The Series C Preferred Stock carries a stated value of $10.00 per share and is
convertible at the option of the holder into shares of the Company’s Common Stock at a conversion price of $2.72 per share, subject
to customary anti-dilution adjustments for stock splits, stock dividends, recapitalizations, and certain dilutive issuances. Based on
the conversion price, the outstanding Series C Preferred Stock is convertible into 16,137,866 shares of Common Stock.
Holders
of Series C Preferred Stock are entitled to receive dividends on an as-converted basis if and when dividends are declared on the Company’s
Common Stock. Dividends are non-cumulative. The Series C Preferred Stock votes together with the Common Stock on an as-converted basis,
except for matters requiring a separate class vote under applicable law or the Certificate of Designation. The Series C Preferred Stock
includes customary protective provisions, including approval rights over amendments to the Certificate of Incorporation that adversely
affect the Series C, the creation of senior or pari pass preferred stock, and certain corporate actions.
Upon
any liquidation, dissolution, or winding up of the Company, holders of Series C Preferred Stock are entitled to receive, prior to any
distribution to holders of Common Stock, an amount equal to the stated value per share plus any declared but unpaid dividends. After
payment of the liquidation preference, Series C holders may participate on an as-converted basis to the extent provided in the Certificate
of Designation. The Series C Preferred Stock is not mandatorily redeemable, and any optional redemption by the Company is subject to
the terms and limitations set forth in the Certificate of Designation. Conversion and exercise rights associated with the Series C units
may be subject to beneficial ownership limitations (e.g., 4.99% or 9.99%) unless waived by the holder.
On
October 14, 2025, the Company issued 1,694 shares of its Common Stock to Ruben Calderon as compensation pursuant to his 2025 Employment
Agreement. On December 15, 2025, the Company issued an additional 1,640 shares of Common Stock under the same agreement. In total, 3,334 shares were issued to Mr. Calderon during the year ended December 31, 2025. All shares were issued as fully paid, and represent a portion
of Mr. Calderon’s annual compensation package approved by the Board of Directors.
On
December 2, 2025, the Company issued an aggregate 214,960 shares of its Common Stock as non-cash consideration for consulting services.
OF this total, 171,968 shares were issued to Brian Herman and 42,992 shares were issued to Kingswood Capital Partners LLC. The shares
were issued in book-entry form with transfer restrictions and were valued based on the fair market value of the Company’s Common
Stock on the respective issuance dates. The related expense is recorded in General & Administrative expense in the accompanying statements
of operations.
During
the year ended December 31, 2025, the Company issued a total of 36,343,962 warrants, each entitling the holder to purchase one share
of the Company’s Common Stock. Of these warrants, 1,592,806 were exercised during the year, resulting in 34,751,156 warrants outstanding
as of December 31, 2025. The exercise generated $3,363,508 in cash proceeds to the Company.
The
Company estimated the fair value of the warrants issued during the year using the Black-Scholes option pricing model. The 1,388,600 warrants
issued in connection with earlier financing activities had an aggregate estimated fair value of $440,304 at the time of issuance. The16,783,381 warrants issued in connection with the October 2, 2025 PIPE transaction had an aggregate Black-Sholes estimated fair value
of $47,993,543 at the time of issuance.
Summary
of Warrants
| Total Warrants outstanding as of December 31, 2024 | - |
| --- | --- |
| Total Warrants issued | 36,343,962 |
| Total warrants Exercised | (1,592,806) |
| Total Warrants Outstanding as of December 31, 2025 | 34,751,156 |
Pursuant
to a forward stock split (the “Forward Split”) announced on March 10, 2026, the total number of shares of Common Stock held
by each stockholder were converted automatically into the number of shares of Common Stock equal to the number of issued and outstanding
shares of Common Stock held by each such stockholder immediately prior to the Forward Split multiplied by two, with distribution occurring
on March 25, 2026.
F-21
### **Note 11 – Private Placement**
OnApril 24, 2025, JFB Construction Holdings invested $1,000,000 in CM OB Hotel Owner, LLC, a Delaware limited liability company formed
to acquire, develop, and operate a 117-room Courtyard by Marriott hotel in Olive Branch, Mississippi. The investment was made through
a private placement offering of up to $5,000,000 in Class A Membership Interests at $1,000 per unit, pursuant to Regulation D, Rule
506(c). The minimum investment was $100,000, with proceeds designated for the acquisition, development, and operation of the hotel.
JFB
holds a 19.5% ownership interest in the Class A Membership Interests of CM OB Hotel Owner, LLC. This ownership percentage is below
the 20% threshold required for equity method accounting under U.S. GAAP; therefore, the investment is currently being carried at cost
basis, as the entity is private.
Class
A Members are entitled to an 8% cumulative, non-compounding preferred return (beginning upon hotel operations), a return of capital,
and a share of distributable cash as outlined in the offering subscription agreement. Pursuant to a side agreement dated April 24, 2025,
JFB Construction Holdings is exempt from the standard promote structure. The Company does not possess ownership or majority voting rights
due to minimal investment in CM OB Hotel Owner, LLC. Furthermore, the Company does not exercise control over the activities that significantly
influence the economic performance of CM OB Hotel Owner, LLC
### **Note 12 – Subsequent Event**
On
February 17, 2026, the Company announced that it has entered into a definitive agreement to combine with XTEND, a software-first defense
technology company anchored by its AI XTEND Operating System (XOS) in an all-stock transaction.
On
February 18, 2026, the Company closed on a PIPE financing agreement with American Ventures, LLC, Series XIV JFB totaling $10,025,000.
American Ventures, LLC Series XIV JFB, following negotiations with Dominari Securities and the Company, received 1,604,000 shares of
JFB Class A Common Stock at a price of $6.25 per share.
Date
of Management Review
The
Company evaluates events and transactions occurring subsequent to the date of the financial statements for matters requiring recognition
or disclosure in the financial statements. The accompanying financial statements consider events through March 31, 2026, the date that
the financial statements were available to be issued.
F-22
**Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.**
None
**Item
9A. Controls and Procedures.**
*Evaluation
of Disclosure Controls and Procedures*
Disclosure
controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed
under the Exchange Act, such as this annual report, is recorded, processed, summarized, and reported within the time period specified
in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated
and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely
decisions regarding required disclosure.
Management
has carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures.
Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures
were not effective at a reasonable assurance level as of December 31, 2025.
We
do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and
procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the
disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there
are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure
controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all
our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions.
As
of December 31, 2025, we conducted an evaluation, under supervision and with the participation of management, including the chief executive
officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant
to Rules 13a-15 and 15d-15 of the Exchange Act. Based upon that evaluation, our chief executive officer and chief financial officer concluded
that our disclosure controls and procedures were not effective at a reasonable assurance level as of December 31, 2025.
*Management’s
Report on Internal Control Over Financial Reporting*
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange
Act Rules 13a-15(f) and 14d-14(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles.
All
internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore,
even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability and
financial statement preparation and presentation. In addition, projections of any evaluation of effectiveness to future periods are subject
to risk that controls become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures
may deteriorate.
Management
assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025. In making the assessment,
management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO – 2013) in Internal
Control-Integrated Framework. Based on its assessment, management concluded that, as of December 31, 2025, our Company’s internal
control over financial reporting was not effective.
The
matters involving internal controls over financial reporting that may be considered material weaknesses included the small size of the
Company and the resulting lack of segregation of duties. Specifically, the Company’s system of internal controls failed to identify
multiple journal entries that were subsequently identified by the Company’s external auditor. Additionally, multiple errors within
the Company’s draft Form 10-K were noted by the external auditor, further highlighting weakness in the control environment.
***Changes
in Internal Control over Financial Reporting***
There
have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under
the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
**Item
9B. Other Information.**
(b)
During the fiscal quarter ended December 31, 2025, none of our officers or directors informed us of the adoption, modification or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in
Item 408 of Regulation S-K.
38
**PART
III**
**Item
10. Directors, Executive Officers and Corporate Governance.**
**Directors
and Executive Officers**
The
following table sets forth information concerning our executive officers and directors and their ages as of the date of this annual report:
| Name | Age | Position(s) |
| --- | --- | --- |
| Joseph F. Basile III | 47 | President/Chief Executive Officer, Secretary and Chairman of the Board of Directors |
| Ruben Calderon | 43 | Treasurer/Chief Financial Officer |
| Stefan Passantino | 60 | Independent Director |
| David Clukey | 50 | Independent Director |
| Nelson Garcia | 39 | Independent Director |
| Christopher Melton | 54 | Independent Director |
| Miklos “John” Gulyas | 49 | Director |
| Jamie Zambrana Jr. | 49 | Director |
Biographies
of Executive Officers and Directors
The
following is a brief account of the business experience during the past five years (and, in some instances, for prior years) of each
director, executive officer, and director nominees of our Company.
***Joseph
F. Basile III –Chief Executive Officer, Secretary and Chairman of the Board of Directors***
***Joseph
F. Basile III*** is a third generation developer and general contractor with over a decade of experience in construction and development,
land acquisition and other entrepreneurial ventures. He founded JFB Construction & Development Inc. in 2014 and has overseen the
company’s growth from its inception, gaining extensive experience by performing various roles within the organization. Mr. Basile
has led business development initiatives and ensured operational efficiency by collaborating with specialists in accounting, legal matters,
and various other trades. Mr. Basile has been a state certified general contractor in over 31 states, including Florida, Georgia, North
Carolina and Tennessee. As a licensed general contractor in multiple states, he has demonstrated his capability and reliability in navigating
through complex systems such as logistics, compliance, and regulatory frameworks. His leadership is characterized by a pragmatic approach
and a commitment to continuous improvement.
Mr.
Basile owns and manages Capo 7 LLC, Aura Commercial, LLC, and Loose Cannon, LLC, all real estate holding companies. Mr. Basile beneficially
owns The Laundry Tub LLC, Basile Aviation LLC and Basile Hospitality LLC, all Florida limited liability companies. Mr. Basile also beneficially
owns 42.25% of Rare Capital Partners LLC, a real estate holding company, and co-manages Rare Capital Partners through Basile Family Investments
LLC, a holding company. All of the foregoing entities are considered affiliates of the Company due to being under common control, but
are not otherwise parents, subsidiaries, or stakeholders of the Company.
***Ruben
Calderon – Chief Financial Officer***
***Ruben
Calderon*** is a certified public accountant with over a decade of experience in accounting, bookkeeping, payroll and tax services.
Beginning in November 2022, Mr. Calderon became the Chief Financial Officer of the JFB Subsidiary, and he became the Chief Financial
Officer of the Company upon its formation. From 2014 to 2020, he was the co-owner of RC Tax Services, which provides tax preparation
and filing, bookkeeping, and payroll services. Mr. Calderon has been treasurer of the Town of Poughkeepsie Cal Ripken baseball league
and is currently co-treasurer of the Okeeheelee Cal Ripken baseball league. He also offers tax services, tax consulting, bookkeeping
and payroll services to clients in his community. Mr. Calderon received his bachelor’s in accounting from the City University of
New York in 2006 and his master’s in accounting from Baruch College in 2012.
***David
Clukey – Director***
***David
Clukey*** is the Sr. Director of Business Development at Immersive Wisdom, Inc., which provides a remote collaborative operations
center software platform for diverse industries including government, financial services, and logistics, since 2023. From February 2022
to 2023, he was a Senior Enterprise Account Executive at ServiceNow, Inc., a company that offers a cloud-based platform that automates
and optimizes workflows across IT, customer service, HR, security, and other industries, where he generated over $10M in new business.
Beginning in 1999, before moving to the private sector, David led and advised U.S. joint, combined, foreign partner forces, and intergovernmental
and interagency elements as a Special Forces Officer. He directed national programs and drove strategic initiatives and development of
long-term plans for organizations with $3 to $12 million budgets, $250M - $17B in material assets, and personally managed a $1B and a
$48B US national defense program. David is a published thought leader and a graduate of the Naval Postgraduate School with an MS in Defense
Analysis, an Executive MBA from Arizona State University’s W. P. Carey School of Business, a BA from Georgia Southern University,
and is a certified a Lean Six Sigma Black Belt. David’s extensive experience in strategic leadership, business development, and
project management is a valuable asset. He has a track record of generating significant new business, managing large-scale budgets and
assets, and driving long-term strategic initiatives, which demonstrates his capability to handle complex projects and provide substantial
value to the Company.
39
***Nelson
Garcia – Director***
***Nelson
Garcia*** co-founded RARE CRE, LLC, a capital markets advisory firm focused on providing tailored capital solutions and investment
sales services to commercial real estate entrepreneurs, in 2017 and is currently a Managing Partner. As a Florida-licensed real estate
broker and board member of the non-profit organization P.A.T.H. Housing Solutions, Mr. Garcia champions expanding home ownership opportunities
for disadvantaged households. He also owns and manages NBG Investments Inc., a Florida corporation formed in 2018 as an investment holdings
company. Prior to RARE CRE, Mr. Garcia co-founded G2 Industries LLC, a consulting and integration services company specializing in the
areas of wireless communications, security, and infrastructure, in 2014, and Bon WiFi LLC, a company that was developing, operating and
franchising commercial community WiFi networks in the Caribbean, with a focus on cruise ship destinations, in 2016. Mr. Garcia also worked
for CGI Merchant Group, a commercial real estate investment banking and investment management company, and afterwards, as an independent
consultant for Renovation Advisor, LLC, a company focused on consulting on commercial real estate transactions. He has a bachelor’s
degree from Florida International University and a background in software development. Mr. Garcia’s career in real estate, private
equity and investment banking saw him lead acquisitions, developments, and financings of over 2 million square feet of commercial, multifamily,
and hospitality projects. His diverse experience in capital markets, real estate finance, and investment banking will provide valuable
insight as a director of our Company.
***Christopher
Melton – Director***
***Christopher
Melton*** has served as a specialist land acquisition advisor with SVN, a national commercial brokerage services transacting large
land parcels to homebuilders and multifamily developers, since 2019 and is a licensed real estate salesperson in the State of South Carolina
and Georgia. Mr. Melton co-founded Callegro Investments, LLC in 2012 to invest in distressed master-planned communities. Mr. Melton also
serves on the board of directors and audit committees for Safe and Green Development Corporation (OTCM: SGD), a real estate development
company, Safety Shot, Inc. (formerly Jupiter Wellness Inc.) (Nasdaq: SHOT), a beverage and dietary supplement company, SRM Entertainment,
Inc. (Nasdaq: SRM), a toy and souvenir designer and developer, and Safe & Green Holdings Corp. (Nasdaq: SGBX), a developer, designer
and fabricator of modular structures. From 2008 to 2012 Mr. Melton capitalized various media and retail ventures including Bestival Ltd.
and Any Old Iron. From 2000 to 2008, Mr. Melton was a Portfolio Manager for Kingdon Capital Management (“Kingdon”) in New
York City, where he ran an $800 million book in media, telecom and Japanese investment. Mr. Melton opened Kingdon’s office in Japan,
where he set up a Japanese research company. From 1997 to 2000, Mr. Melton served as a Vice President at J.P. Morgan Investment Management
Inc. as an equity research analyst, where he helped manage $500 million in REIT funds under management. Mr. Melton was a Senior Real
Estate Equity Analyst at RREEF Funds in Chicago from 1995 to 1997. RREEF Funds is the real estate investment management business of Deutsche
Bank’s Asset Management division. Mr. Melton earned a Bachelor of Arts in Political Economy of Industrial Societies from the University
of California, Berkeley in 1995. Mr. Melton earned Certification from University of California, Los Angeles’s Anderson Director
Education Program in 2014, a certificate in Cybersecurity for managers from MIT in 2021 and certificate in AI strategy from Cornell in
2023. Mr. Melton’s extensive experience in land acquisition, real estate investment and development, as well as to his experience
serving on the board and committees of other public companies, makes him an excellent asset to our board of directors.
***Miklos
“John” Gulyas –Director***
***Miklos
“John” Gulyas***, with over 13 years of experience as an entrepreneur and business leader, he has knowledge across numerous
sectors including the franchise, business consulting and beverage industries. Since 2015, he has served as the owner and CEO of 2v Consulting
LLC, a business consulting company, leveraging his expertise to provide strategic guidance to various businesses. In February 2024, Mr.
Gulyas became the Chairman of the board of Safety Shot, Inc. (formerly Jupiter Wellness Inc.) (Nasdaq: SHOT), where he currently is driving
innovation in the beverage sector. Previously, from October 2018 to September 2021, he was the co-founder and Vice President of Franchise
Development at V/o Med Spa LLC, a medical spa franchise. Mr. Gulyas began his career at European Wax Center, a chain of hair removal
salons, where he held the role of Site Development Coordinator from June 2007 to March 2017, demonstrating a longstanding commitment
to the franchise industry. Mr. Gulyas’s extensive experience in entrepreneurship, business consulting, and franchise development
makes him highly qualified to help assess and meet the Company’s needs.
40
***Jamie
Zambrana Jr. –Director***
***Jamie
Zambrana Jr.*** serves as an Executive Managing Partner of RARE CRE LLC, overseeing a boutique commercial real estate investment
sales and capital markets advisory firm, specializing in tailored solutions for private and institutional owners and developers. He co-founded
RARE CRE in 2014. With a track record of managing over $3 billion in closed real estate transactions and overseeing multiple closed-end
funds, Mr. Zambrana’s expertise spans capital markets, CRE investments, and commercial note sales. Currently, he manages residential
communities and NNN properties, drawing from previous roles as Managing Director at US Debt Ventures, LLC, where he directed funds acquiring
real estate holdings and mortgages nationwide, and as Managing Director of Veriloquent Family Offices, LLC. Mr. Zambrana’s career
began in investment banking, offering services to emerging publicly traded companies for capital growth, followed by roles as a Nasdaq
Market Maker and portfolio manager for Merrill Lynch and Wachovia Securities. His extensive background in capital markets, commercial
real estate investments, and managing substantial real estate transactions makes him well suited for our Company.
***Stefan
Passantino –Director***
Stefan
Passantino combines experience in logistics and manufacturing senior management as a part of a 35-year career as an attorney advertising
clients in private sector compliance and litigation. Mr. Passantino is currently an equity partner at Elections, LLC.,where he has worked
in such capacity since 2019. Beginning in 2000, Mr. Passantino has been an equity partner in several law firms including Amall, Golden
& Gregory, Dentons USA and Michael Best, LLP. From January, 2017 through September, 2018, Mr. Passantino served as Deputy White House
Counsel in the Trump Administration. Mr. Passantino is currently also a director of the Gingrich Foundation, New America Acquisition
I Corp., and Mercantile Ports & Logistics, Ltd. He has an undergraduate degree from Drew University and a law degree from Emory Law
School.
**Family
Relationships and Other Arrangements**
There
are no family relationships among our directors and executive officers. Other than as set forth above, there are no arrangements or understandings
between or among our executive officers and directors pursuant to which any director or executive officer was or is to be selected as
a director or executive officer.
**Involvement
in Certain Legal Proceedings**
To
our knowledge, during the last ten years, none of our directors or executive officers (including those of our subsidiaries) have:
- had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at
the time of the bankruptcy or within two years prior to that time;
- been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor
offenses;
- been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or
banking activities;
- been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission, or SEC, or the Commodities
Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed,
suspended or vacated; and
- been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization,
any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members
or persons associated with a member.
**Board
of Directors and Committees**
Our
Board of Directors consists of seven (7) directors, including four (4) independent directors. We have also established an Audit Committee,
a Nominating and Corporate Governance Committee, and a Compensation Committee under the Board of Directors. We have adopted a charter
for each of the three (3) committees. Each of the committees of our Board of Directors has the composition and responsibilities described
below.
41
**Board
Leadership Structure**
Our
Board believes it is important to retain flexibility in allocating the responsibilities of the CEO and Chairman of the Board in any way
that is in the best interests of our Company based on the circumstances existing at a particular point in time. Accordingly, we do not
have a strict policy on whether these roles should be served independently or jointly. Currently, we do not have anyone service as Chairman
of the Board.
We
do not have a separate Lead Independent Director.
**Meetings
and Committees of the Board of Directors**
Our
business, property and affairs are managed under the direction of our Board of Directors. Our Board of Directors provides management
oversight, helps guide the Company on strategic planning and approves the Company’s operating budgets. Our independent directors
meet regularly in executive sessions. Members of our Board are kept informed of our business through discussions with our Chief Executive
Officer and other officers and employees, by reviewing materials provided to them, by visiting our offices and by participating in meetings
of the Board and its committees.
Our
Board holds regularly scheduled quarterly meetings. In addition to the quarterly meetings, typically there is at least one other regularly
scheduled meeting and other communication each year.
**Director
Independence**
Our
Board of Directors has determined that Stefan Passantino, David Clukey, Nelson Garcia, and Christopher Melton, as well as Bjarne Borg,
who served as a director through February 13, 2026, do not have any relationships that would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director and such directors are “independent” as that term is defined
under the rules of Nasdaq and Rule 10A-3, described below.
Audit
committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities and Exchange Act of 1934,
as amended (the “Exchange Act”) subject to the transition rule that is applicable to a newly public company. In order to
be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or
her capacity as a member of the audit committee, the Board of Directors, or any other board committee, accept, directly or indirectly,
receive any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or be an affiliated person
of the listed company or any of its subsidiaries.
Each
of our Board members who serve on a committee of the Board is “independent” within the meaning of Nasdaq Rule 5605(b)(1).
**Controlled
Company Status**
A
controlled company is a company of which more than 50% of the voting power for the election of directors is held by an individual, a
group or another company. We are a controlled company because The Basile Family Irrevocable Trust holds more than 50% of our voting power.
Therefore,
for so long as we remain a controlled company, we technically qualify and are eligible to be exempted from the obligation to comply with
certain Nasdaq corporate governance requirements, however, we do not currently plan to take advantage of the exemptions provided to controlled
companies, which include:
- our Board of Directors is not required to be comprised of a majority of independent directors;
- our Board of Directors is not subject to the compensation committee requirement; and
- we are not subject to the requirements that director nominees be selected either by the independent directors or a nomination committee
comprised solely of independent directors.
The
controlled company exemptions do not apply to the audit committee requirement or the requirement for executive sessions of independent
directors. We are required to disclose in our annual report that we are a controlled company and the basis for that determination. Although
we do not currently plan to take advantage of the exemptions provided to controlled companies, we may in the future take advantage of
such exemptions.
42
**Role
of the Board of Directors in Risk Oversight**
The
Board of Directors is responsible for assessing the risks facing our company and considers risk in every business decision and as part
of our business strategy. The Board of Directors recognizes that it is neither possible nor prudent to eliminate all risk, and that strategic
and appropriate risk-taking is essential for us to compete in our industry and in the relevant markets, and to achieve our growth and
profitability objectives. Effective risk oversight, therefore, is an important priority of the Board of Directors.
While
the Board of Directors oversees our risk management, management is responsible for day-to-day risk management processes. Our Board of
Directors expects management to consider risk and risk management in each business decision, to proactively develop and monitor risk
management strategies and processes for day-to-day activities and to effectively implement risk management strategies that are adopted
by the Board of Directors. The Board of Directors expects to review and adjust our risk management strategies at regular intervals following
the completion of the offering, or as needed.
**Code
of Business Conduct**
Our
Board of Directors has adopted a code of business conduct and ethics (the “Code of Business Conduct”) to ensure that our
business is conducted in a consistently legal and ethical manner. Our policies and procedures cover all major areas of professional conduct,
including employee policies, conflicts of interest, protection of confidential information, and compliance with applicable laws and regulations.
The Code of Business Conduct will be available at our website at www.jfbconstruction.net/services-4. The reference to our website address
in this annual report does not include or incorporate by reference the information on our website into this annual report. We intend
to disclose future amendments to certain provisions of our code of conduct, or waivers of these provisions, on our website or in public
filings.
**Board
Committees**
Our
Board of Directors has appointed an Audit Committee, Compensation Committee, and a Nominating and Corporate Governance Committee, and
has adopted charters for each of these committees.
*Audit
Committee*
The
Audit Committee consists of Christopher Melton, Stefan Passantino, and Nelson Garcia, with Christopher Melton serving as Chairman. The
Audit Committee assists the Board of Directors in discharging its responsibilities relating to the financial management of our company
and oversight of our accounting and financial reporting, our independent registered public accounting firm and its audits, our internal
financial controls and the continuous improvement of our financial policies and practices. In addition, the Audit Committee is responsible
for reviewing and discussing with management our policies with respect to risk assessment and risk management. The responsibilities of
the Audit Committee, which are set forth in its charter, include:
- appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm;
- pre-approving audit and permissible non-audit services, and the terms of such services, to be provided by our independent registered
public accounting firm;
- reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements
and related disclosures;
- coordinating the oversight and reviewing the adequacy of our internal control over financial reporting;
- establishing policies and procedures for the receipt and retention of accounting-related complaints, whistleblowers, and concerns; and
- reviewing and approving any related party transactions.
The
composition of our Audit Committee complies with all applicable requirements of the SEC and the listing requirements of Nasdaq. We intend
to comply with future requirements to the extent they become applicable to us.
43
*Compensation
Committee*
The
Compensation Committee consists of Nelson Garcia, Christopher Melton, and David Clukey with Nelson Garcia serving as Chairman. The Compensation
Committee assists the Board of Directors in setting and maintaining our compensation philosophy and in discharging its responsibilities
relating to executive and other human resources hiring, assessment and compensation, and succession planning. The responsibilities of
the Compensation Committee, which are set forth in its charter, include:
- reviewing and approving corporate goals and objectives relevant to compensation of our chief executive officer;
- evaluating the performance of our chief executive officer in light of such corporate goals and objectives and determining the compensation
of our chief executive officer;
- determining the compensation of all our other officers and reviewing periodically the aggregate amount of compensation payable to such
officers;
- overseeing and making recommendations to the Board of Directors with respect to our incentive-based compensation and equity plans; and
- reviewing and making recommendations to the Board of Directors with respect to director compensation.
The
composition of our Compensation Committee complies with all applicable requirements of the SEC and the listing requirements of Nasdaq.
We intend to comply with future requirements to the extent they become applicable to us.
*Nominating
and Corporate Governance Committee*
The
Nominating and Corporate Governance Committee consists of David Clukey, Nelson Garcia, and Stefan Passantino, with David Clukey serving
as Chairman. The responsibilities of the Nominating and Corporate Governance Committee, which are set forth in its charter, include:
- making recommendations to the Board of Directors regarding the size and composition of the Board of Directors;
- recommending qualified individuals as nominees for election as directors;
- reviewing the appropriate skills and characteristics required of director nominees;
- establishing and administering a periodic assessment procedure relating to the performance of the Board of Directors as a whole and its
individual members; and
- periodically reviewing the corporate governance guidelines and supervising the management representative charged with implementing our
corporate governance procedures.
The
composition of our Nominating and Corporate Governance Committee complies with all applicable requirements of the SEC and the listing
requirements of Nasdaq. We intend to comply with future requirements to the extent they become applicable to us.
**Compensation
Committee Interlocks and Insider Participation**
None
of the members of the Compensation Committee will or has at any time been an officer or employee. None of our executive officers serve
or in the past fiscal year has served as a member of the board of directors or compensation committee of any other entity that has one
or more executive officers serving as a member of our Board of Directors or expected to serve on the Compensation Committee.
**Delinquent
Section 16(a) Reports**
Section
16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent of a registered class
of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and
other equity securities. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file.
Based
solely on our review of copies of such reports furnished to us and written representations from our reporting persons, we believe that
all such filing requirements were satisfied in fiscal 2025, except that: Joseph F. Basile III filed one Form 4 late reporting a transaction
dated June 30, 2025; Ruben Calderon filed one Form 4 late reporting a transaction dated June 30, 2025; John Gulyas filed one Form 4 late
reporting a transaction dated June 30, 2025; Christopher Melton filed one Form 3 late and filed one Form 4 late reporting a transaction
dated June 30, 2025; Jamie Zambrana filed one Form 4 late reporting a transaction dated June 30, 2025; Bjarne Borg filed one Form 4 late
reporting a transaction dated June 30, 2026; Nelson Garcia filed one Form 4 late reporting a transaction dated June 30, 2025; and on
April 9, 2026, David Clukey filed one Form 3 and one Form 4 reporting a transaction dated June 30, 2025.
44
**Item
11. Executive Compensation.**
This
section discusses the material components of the executive compensation program for our named executive officers for the years ended
December 31, 2025 and 2024. Individuals we refer to as our “named executive officers” include our Chief Executive Officer,
Chief Financial Officer and any other highly compensated executive officers whose salary and bonus for services rendered in all capacities
equaled or exceeded $100,000 during the fiscal years ended December 31, 2025 and 2024.
*Executive
Compensation Objectives and Practices*
We
designed our executive officer compensation program to attract, motivate and retain key executives who drive our success. We strive to
have pay reflect our performance and align with the interests of long-term stockholders, which we achieve with compensation that:
- Provides executives with competitive compensation that maintains a balance between cash and stock compensation, encouraging our executive
officers to act as owners with an equity stake in our company;
- Ties a significant portion of total compensation to achievement of the Company’s business goals such as revenue, and Adjusted EBITDA
targets;
- Enhances retention by having equity compensation subject to multi-year vesting; and
- Does not encourage unnecessary and excessive risk taking.
We
evaluate both performance and compensation to ensure the Company maintains its ability to attract and retain superior employees in key
positions and compensation provided to key employees remains competitive relative to the compensation paid to similarly situated executives
of other companies our size.
*Elements
of Executive Compensation*
Our
compensation for senior executive officers generally consists of the following elements: base salary; performance-based incentive compensation
determined primarily by reference to objective financial operating criteria; long-term equity compensation in the form of stock options
and restricted stock; and employee benefits that are generally available to all our employees.
*Base
Salary*
The
Company provides named executive officers and other employees with base salary to compensate them for services rendered during the fiscal
year. It is our policy to set base salary levels taking into account a number of factors, such as annual revenue, the nature of the mobile
fueling business, the structure of other comparable companies’ compensation programs and the availability of compensation information.
When setting base salary levels, in a manner consistent with the objectives outlined above, the Board considers our performance, the
individual’s breadth of knowledge and performance and levels of responsibility. In determining salaries, we did not engage compensation
consultants.
*Annual
Performance-Based Incentive Compensation*
Our
performance-based incentive compensation program is designed to compensate executives when financial performance goals are achieved.
Executives have the opportunity to earn annual cash compensation equal to a percentage of their base salary.
*Long-Term
Incentive Compensation – Equity Compensation*
Our
executive officers are eligible for stock awards. We believe that stock awards give executives a significant, long-term interest in our
success, help retain key executives in a competitive market, and align executive interests with stockholder interests and long-term performance
of the Company. We have granted options as well as restricted stock under our 2022 plan and 2020 Stock Incentive Plan. Stock awards also
provide each individual with an added incentive to manage the Company from the perspective of an owner with an equity stake in the business.
Moreover, the vesting schedule (which is generally three years for employees and one year for non-employee directors, although this may
vary at the discretion of the Compensation Committee) encourages a long-term commitment to the Company by our executive officers and
other participants. Each year the Compensation Committee reviews the number of shares owned by, or subject to options held by, each executive
officer, and additional awards are considered based upon the executive’s past performance, as well as anticipated future performance,
of the executive officer. The Compensation Committee continues to believe that equity compensation should be an important element of
the Company’s compensation package.
Typically,
we have awarded stock options and restricted stock to executives upon joining the Company and thereafter grants may be at the discretion
of the Board, a role that will be assumed by our compensation committee on a going forward basis. Generally, options are priced at the
closing price of the Company’s common stock on the date of each grant, or, in the case of new employees, on such later date as
the employee joins the Company. We also have granted restricted stock to members of the Board of Directors and executive officers from
time to time.
45
We
do not have a formal written policy relating to the timing of equity awards. We encourage, but we do not require, that our executive
officers own stock in the Company.
*Retirement
and Other Benefits*
All
eligible employees in the United States are automatically enrolled in our 401(k) plan.
*Perquisites
and Other Personal Benefits*
Limitation
on Deduction of Compensation Paid to Certain Executive Officers Section 162(m) of the Internal Revenue Code, or Section 162(m) limits
the Company deduction for federal income tax purposes to no more than $1 million of compensation paid to each of the named executive
officers in a taxable year.
The
following table sets forth the aggregate compensation paid to our Chief Executive Officer and each of our other executive officers whose
aggregate salary and bonus exceeded $100,000 for services rendered in all capacities for the fiscal years December 31, 2025 and 2024.
**Summary
Compensation Table**
| Name and Principal Position | Year | Salary $ | Bonus $ | Stock Awards $ | Other Compensation $ | Total $ |
| --- | --- | --- | --- | --- | --- | --- |
| Joseph Basile | 2025 | $389,992 | $600,000 | $373,200 | | |
| Chief Executive Officer(1) | 2024 | $282,307 | $600,000 | | $872,846 | $1,755,153 |
| Ruben Calderon | 2025 | $263,952 | $25,000 | $155,500 | - | $288,952 |
| Chief Financial Officer(2) | 2024 | $126,395 | $20,000 | - | - | $146,395 |
| Bill Dyer | 2025 | $67,693 | - | - | - | |
| Chief Operation Officer(3) | 2024 | - | - | - | - | - |
(1) The compensation in the table includes the compensation paid to Mr. Basile by JFB Construction & Development Inc. The Company declared and paid cash dividends of $0 and $872,007 in 2024 and 2025, respectively.
(2) The compensation in the table includes the compensation paid to Mr. Calderon by JFB Construction & Development Inc. Mr. Calderon first became the Company’s Chief Financial Officer on October 31, 2022.
(3) The Compensation in the table includes the compensation paid to Mr. Dyer by JFB Construction & Development Inc. Mr. Dyer first became the Company’s Chief Operating Officer on September 22,2025.
*Joseph
F. Basile III*
On
July 18, 2024, the Company entered into an employment agreement with our Chief Executive Officer, Joseph F. Basile III (the “2024
Basile Employment Agreement”). Pursuant to the 2024 Basile Employment Agreement, Mr. Basile shall receive a base salary of $300,000
per year. For fiscal year 2024, Mr. Basile shall receive (i) a cash bonus of $200,000 if the Company, including its subsidiaries, has
Gross Revenue between $10,000,00 to $15,000,000; (ii) an additional cash bonus of $200,000 if the Company, including its subsidiaries,
has Gross Revenue between $15,000,00 to $20,000,000; and (iii) an additional cash bonus of $200,000 if the Company, including its subsidiaries,
has Gross Revenue over $20,000,000. The 2024 Basile Employment Agreement also mistakenly purported to grant Mr. Basile stock options
to purchase up to 150,000 shares of the Company’s Class A Common Stock. The 2024 Basile Employment Agreement was terminated on
February 1, 2025 and replaced with an amended and restated employment agreement to correct the scriveners’ error. All other terms
of the 2025 Basile Employment Agreement remain the same as the 2024 Basile Employment Agreement.
On
February 1, 2025, the Company entered into an amended and restated employment agreement with our Chief Executive Officer, Joseph F. Basile
III (the “2025 Basile Employment Agreement”). Pursuant to the 2025 Basile Employment Agreement, Mr. Basile shall receive
a base salary of $350,000 per year. For fiscal year 2025, Mr. Basile shall receive (i) a cash bonus of $200,000 if the Company, including
its subsidiaries, has Gross Revenue between $10,000,00 to $15,000,000; (ii) an additional cash bonus of $200,000 if the Company, including
its subsidiaries, has Gross Revenue between $15,000,00 to $20,000,000; and (iii) an additional cash bonus of $200,000 if the Company,
including its subsidiaries, has Gross Revenue over $20,000,000. The Company may award Mr. Basile additional cash bonuses in 2025 and
beyond in its discretion. Mr. Basile and the Company may negotiate bonus terms, including option awards, in the future. In addition,
Mr. Basile shall be entitled to participate in employee benefit plans. The 2025 Basile Employment Agreement may be terminated by the
Company at will with or without cause. Furthermore, the 2025 Basile Employment Agreement will terminate upon Mr. Basile’s death.
Upon termination of the 2025 Basile Employment Agreement, Mr. Basile shall receive all sums due to him under the 2025 Basile Employment
Agreement as compensation or expense reimbursements.
46
*Ruben
Calderon*
On
July 18, 2024, the Company entered into an employment agreement with our Chief Financial Officer, Ruben Calderon (the “2024 Calderon
Employment Agreement”). Pursuant to the 2024 Calderon Employment Agreement, Mr. Calderon shall receive a base salary of $130,000
per year. For fiscal year 2024, Mr. Calderon shall receive (i) a cash bonus of $20,000 if the Company, including its subsidiaries, has
Gross Revenue, with a minimum net profit of eight percent (8%), between $15,000,00 to $35,000,000; (ii) an additional cash bonus of $10,000
if the Company, including its subsidiaries, has Gross Revenue, with a minimum net profit of eight percent (8%), between $35,000,00 to
$50,000,000; and (iii) an additional cash bonus of $10,000 if the Company, including its subsidiaries, has Gross Revenue, with a minimum
net profit of eight percent (8%), over $50,000,000. The 2024 Calderon Employment Agreement also mistakenly purported to grant Mr. Calderon
stock options to purchase up to 150,000 shares of the Company’s Class A Common Stock. The 2024 Calderon Employment Agreement was
terminated on February 1, 2025 and replaced with an amended and restated employment agreement to correct the scriveners’ error.
All other terms of the 2025 Calderon Employment Agreement remain the same as the 2024 Calderon Employment Agreement.
On
February 1, 2025, the Company entered into an amended and restated employment agreement with our Chief Financial Officer, Ruben Calderon
(the “2025 Calderon Employment Agreement”). Pursuant to the 2025 Calderon Employment Agreement, Mr. Calderon shall receive
a base salary of $225,000 per year. For fiscal year 2025, Mr. Calderon shall receive (i) a cash bonus of $25,000 if the Company, including
its subsidiaries, has Gross Revenue, with a minimum net profit of eight percent (8%), between $15,000,00 to $35,000,000; (ii) an additional
cash bonus of $10,000 if the Company, including its subsidiaries, has Gross Revenue, with a minimum net profit of eight percent (8%),
between $35,000,00 to $50,000,000; and (iii) an additional cash bonus of $10,000 if the Company, including its subsidiaries, has Gross
Revenue, with a minimum net profit of eight percent (8%), over $50,000,000. The Company may award Mr. Calderon additional cash bonuses
in 2024 and beyond in its discretion. Mr. Calderon and the Company may negotiate bonus terms, including option awards, in the future.
In addition, Mr. Calderon shall be entitled to participate in employee benefit plans. The 2025 Calderon Employment Agreement may be terminated
by the Company at will with or without cause. Furthermore, the Calderon’s Employment Agreement will terminate upon Mr. Calderon’s
death. Upon termination of the 2025 Calderon Employment Agreement, Mr. Calderon shall receive all sums due to him under the 2025 Calderon
Employment Agreement as compensation or expense reimbursements.
***Other
Benefits***
All
employees are eligible to participate in employee benefit programs. The Company is continuing to consider offering medical, dental, vision,
life and disability insurance. In addition, we sponsor a 401(k) plan whereby we match participants’ contributions up to 6% of a
participant’s compensation, subject to the IRS’ annual contribution limit and the Company matches up to 3%. Our named executive
officers are eligible to participate in these plans generally on the same basis as our other employees*.*
**Compensation
of Directors**
For
the fiscal year ended December 31, 2025 and December 31. 2024, The members of the board received 20,000 and 0 shares as compensation
for their services.
**Equity
Incentive Plan**
On
July 18, 2024, the Company implemented an equity incentive plan (“Equity Incentive Plan”), which is attached hereto as Exhibit
10.4. The Equity Incentive Plan is intended to provide for awards to attract, motivate, retain, and reward selected key employees and
other eligible persons, including our consultants. We obtain approval of the Incentive Plan from our shareholders on the same date. A
summary of the Incentive Plan is set out below.
***Number
of Shares***
Two
million shares of our Class A Common Stock will be reserved for grant or issuance under the Equity Incentive Plan. Shares issuable under
the Incentive Plan may be authorized, but unissued, or reacquired shares.
Any
shares of our Class A Common Stock that are represented by awards under the Equity Incentive Plan that are forfeited, expire, or are
cancelled or settled in cash without delivery of shares, or that are forfeited back to us or reacquired by us after delivery for any
reason, or that are tendered to us or withheld to pay the exercise price or related tax withholding obligations in connection with any
award under the Incentive Plan, will again be available for awards under the Incentive Plan. Only shares of our Class A Common Stock
actually issued under the Incentive Plan will reduce the share reserve.
47
**Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.**
Based
solely upon information made available to us, the following table sets forth information as of the date of this annual report regarding
the beneficial ownership of our common stock by:
- each person known by us to be the beneficial owner of more than 5% of our outstanding shares of Common Stock;
- each of our named executive officers, directors and directors nominees; and
- all our executive officers and current and proposed directors as a group.
Beneficial
ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities.
In computing the number and percentage of shares beneficially owned by a person, shares that may be acquired by such person (for example,
upon the exercise of options or warrants) within 60 days of the date of this annual report are counted as outstanding, while these shares
are not counted as outstanding for computing the percentage ownership of any other person. Except as otherwise indicated, each person
or entity named in the table has sole voting and investment power with respect to all shares of our capital shown as beneficially owned,
subject to applicable community property laws.
The
address of each holder listed below, except as otherwise indicated, is c/o JFB Construction Holdings, 1300 S. Dixie Highway, Suite B,
Lantana, FL 33462.
The
following table provides the total compensation for each person who served as a non-employee member of our Board of Directors during
fiscal year 2025 and 2024, including all compensation awarded to, earned by or paid to each person who served as a non-employee director
for some portion or all of fiscal year 2025 and 2024 :
| Name | Title | Class A Common Stock / Number | Class A Common Stock / % | Voting / Power %(4) |
| --- | --- | --- | --- | --- |
| Directors and Executive Officers | | | | |
| Joseph F. Basile III | President/CEO,Secretary and Chairman | 861,800 | 6.87% | 6.87% |
| Ruben Calderon | Treasurer/CFO | 55,614 | — | — |
| Stefan Pasantino | Independent Director | 20,000 | — | — |
| David Clukey | Independent Director | 40,000 | — | — |
| Nelson Garcia | Independent Director | 40,000 | — | — |
| Christopher Melton | Independent Director | 40,000 | — | — |
| Miklos “John” Gulyas | Director | 40,000 | — | — |
| Jamie Zambrana Jr. | Director | 40,000 | — | — |
| All current executive officers and directors as a group (8 persons) | | 1,137,414 | 6.87% | 6.87% |
| 5% Shareholders | | | | |
| Basile Family Investments LLC (1) | Shareholder | 6,500,000 | 51.50% | 51.50% |
| Chartered Services, LLC | Shareholder | 720,000 | 5.70% | 5.70% |
| Total of 5% Shareholders | | 7,220,000 | 57.20% | 57.20% |
(1) Lisa Ann Basile is the trustee with control over The Basile Family Irrevocable Trust which her both voting and dispositive control of the Company’s securities owned by the trust and, as such, is considered the beneficial owner of the above-reference shares for the purposes of Section 16 of the Securities Act. Her address is 200 Hypoluxo Rd #204, Lantana, FL 33462. These shares were subsequently transferred to Basile Family Investments LLC, an entity in which Joe Basile and Lisa Basile are the controlling parties.
(2) Based upon information provided by American Ventures LLC, Series XIV JFB (“American Ventures”), American Ventures is the beneficial owner of (i) 4,389,500 shares of Series C Preferred Stock, convertible into 8,068,933 shares of Common Stock; (ii) 8,068,933 Common A Warrants to purchase up to an aggregate of 8,068,933 shares of Common Stock; and (iii) 8,068,933 Common B Warrants to purchase an aggregate of 8,068,933 shares of Common Stock. American Ventures has a limitation on the amount of its beneficial ownership pursuant to the Common A Warrant and Common B Warrant pursuant to which American Ventures will not exercise its Common A and Common B Warrants if, following such exercise, American Ventures would own more that 4.99% of the Company’s issued and outstanding shares of Common Stock. Eric Newman, the manager of American Ventures, exercises voting and dispositive power over the shares. The address of American Ventures is 110 Front Street, Suite 300, Jupiter, FL 33477.
48
(3) Based upon information provided by Dominari Securities LLC (“Dominari”), Dominari is the beneficial owner of Placement Agent Warrants to purchase 645,515 shares of Common Stock. Dominari has a limitation on the amount of its beneficial ownership pursuant to the placement agent common stock purchase warrant agreement with the Company pursuant to which Dominari will exercise its Placement Agent Warrants if, following such exercise, Dominari would own more that 4.99% of the Company’s issued and outstanding shares of Common Stock. Soo Yu, the Chief Operating Officer of Dominari, exercises voting and dispositive power over the shares being offered. The address of Dominari is 725 5th Ave 23 Floor, New York, NY 10022.
**Item
13. Certain Relationships and Related Transactions, and Director Independence.**
The
Company has established policies and other procedures regarding approval of transactions between the Company and any employee, officer,
director, and certain of their family members and other related persons. These policies and procedures are generally not in writing but
are evidenced by long standing principles adhered to by our Board. The disinterested members of the Board review, approve and ratify
transactions that involve “related persons” and potential conflicts of interest. Related persons must disclose to the disinterested
members of the Board any potential related person transactions and must disclose all material facts with respect to such transaction.
All such transactions will be reviewed by the disinterested members of the Board and, in their discretion, approved or ratified. In determining
whether to approve or ratify a related person transaction the disinterested members of the Board will consider the relevant facts and
circumstances of the transaction, which may include factors such as the relationship of the related person with the Company, the materiality
or significance of the transaction to the Company and the related person, the business purpose and reasonableness of the transaction,
whether the transaction is comparable to a transaction that could be available to the Company on an arms-length basis, and the impact
of the transaction on the Company’s business and operations.
**CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS**
The
following includes a summary of transactions from December 31, 2021 through the date of this 10K, in which the amount involved in the
transaction exceeds the lesser or $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years,
between us and enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under
common control with: (a) us, (b) our directors; (c) individuals owning, directly or indirectly, an interest in the voting power of the
Company that gives them significant influence over the Company, and close members of any such individual’s family; (d) key management
personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of the Company,
including senior management of companies and close members of such individuals’ families; and (e) enterprises in which a substantial
interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able
to exercise significant influence. Except as disclosed herein, we are not otherwise a party to a current related party transaction, and
no transaction is currently proposed, in which the amount of the transaction exceeds the lesser of $120,000 or 1% of the average of our
total assets at year-end for the last two completed fiscal years and in which a related person had or will have a direct or indirect
material interest.
On
August 4, 2021 we entered into an agreement to build a 2-story commercial building for Aura Commercial LLC, which is now the Company’s
headquarters. Joseph F. Basile III, our Chief Executive Officer, is the president of Aura Commercial LLC and owns 100% of the entity.
The contract was a cost plus 5% model. We incurred $912,331 . in billable expenses as of December 31,2024. We received $904,014 as of
December 31,2024 in construction income from Aura Commercial LLC.
On
January 1, 2022, we entered into a two-year lease with Loose Cannon, LLC pursuant to which we leased our previous corporate headquarters,
with an option for an additional two-year renewal. Joseph F. Basile III, our Chief Executive, is an officer and member of Loose Cannon,
LLC. The lease provided for a base monthly rent of $3,210 at the beginning of the term of the lease which increased by 2.5%. We occupied
approximately 3,521 square feet of the building’s approximately 7,042 square feet. This lease was terminated December 1, 2024.
Total rent expense under this related party agreement was $35,310 for the year ended December 31, 2024.
On
March 14, 2024 we were awarded a $21million project with Rare Capital Partners LLC to build a 79-unit-townhome rental community with
an additional community clubhouse in Port Salerno FL. Our Chief Executive Officer Joseph F. Basile III owns 42.25% of Rare Capital Partners
and co-manages Rare Capital Partners through Basile Family Investments LLC. Jamie Zambrana on the board of directors owns 8.54% of Rare
Capital Partners and co-manages Rare Capital Partners through Sebastian Pail Investments, Inc. Nelson Garcia, a board of directors owns
8.54% through NBG Investments, Inc. Nelson Garcia does not, individually or through an entity, control the day-to-day operations of Rare
Capital Partners LLC and is solely a minority owner. This project is under permitting and has not begun construction. However, on or
about September 1, 2021, in accordance with an oral agreement, JFB paid for engineering fees related to this project, in association
with its general contracting services being rendered, in the amount of $120,696. Rare Capital Partners paid the $120,696 balance on September
30,2024. Construction on the project commence on June 1, 2025, with sire preparation underway. The project is currently under vertical
construction. As of December 31, 2025 the Company has recorded $4,468,064 in related party sales associated with this project, along
with $4,245,041 in related party cost of goods sold.
49
We
lease our current corporate headquarters under a 7-year lease with Aura Commercial, LLC. Joseph F. Basile III, our Chief Executive Officer,
is President of Aura Commercial, LLC and owns 100% of the entity. The lease was effective on March 29, 2024, with rent commencing on
June 1, 2024, and provides for a base monthly rent of $11,928 with 2.5% adjustment increases per year. We presently occupy approximately
4,473 square feet of the building’s approximately 8,991 square feet. We have an option to purchase the entire property for $4,250,000
until December 1, 2024. The building was never acquired. Total rent expense under this related party agreement was $167,950 and $47,912
for the years ended December 31,2025 and December 31, 2024, respectively.
On
April 30, 2024, Joseph F. Basile III gifted 81.25 shares of common stock in the JFB Subsidiary to The Basile Family Irrevocable Trust
and 0.625 shares of common stock in the JFB Subsidiary to another individual. Lisa Ann Basile, Joseph F. Basile III’s mother, is
the trustee with control over The Basile Family Irrevocable Trust.
On
July 18, 2024, all shareholders of the JFB Subsidiary entered into the Contribution and Exchange Agreement with JFB Construction Holdings
to exchange their shares in the JFB Subsidiary for shares of JFB Construction Holdings. 200 shares of the JFB Subsidiary’s common
stock were exchanged for 7,280,000 shares of our Class A Common Stock and 8,000,000 shares of our Class B Common Stock to JFB Subsidiary’s
three shareholders. After the Reorganization, JFB Construction and Development Inc., a Florida corporation, is now a 100% owned subsidiary
of JFB Construction Holdings, a Nevada corporation, and Mr. Joseph F. Basile III and the Basile Family Irrevocable Trust owned 57% (8,730,000
shares) and 43% (6,500,000 shares) of equity interest in JFB Construction Holdings, respectively.
On
May 1, 2025, the Company entered into a Construction agreement as general contractor and co-developer for a new Courtyard by Marriott
hotel in Olive Branch, Mississippi. The project includes the development of a 117- room hotel. As of December 31, 2025, the Company recognized
revenue of $1,433,888 and associated cost of goods sold of $1,412,942 related to this project.
The
CEO of the Company, Joseph Basile, has at times taken distributions from the JFB Subsidiary. For the year ended December 31, 2025 and
December 31, 2024, the distributions were $0 and $872,007, respectively. At times, the CEO of the Company makes contributions to the
company. For the year ended December 31,2025 the contributions were $1,000. There were $0 Contributions for the year ended December 31,2024.
On
September 5, 2025, the Company deposited $25,000 into an escrow account to facilitate a 45-day review period for a potential construction
project involving a related party. The funds were intended to allow the Company sufficient time to evaluate the scope of work and obtain
approval from the Audit Committee. On October 9, 2026, the Company deposited $25,000 into the same escrow account for an additional 45
day review extension. The deposit is fully refundable should the project not proceed. This transaction is considered a related party
arrangement as one of the Company’s directors owns the land on which the proposed project would be developed.
On
June 30, 2025, the Company issued 120,000 shares of its Class A Common Stock to Joseph Basile III pursuant to the Company’s 2024
Equity Incentive (ESOP) Plan. The issuance was made in recognition of Mr. Basile’s continued service and performance contributions
and was granted in accordance with the terms and conditions of the ESOP. The shares were issued as fully paid, and are reflected in the
accompanying financial statements for the period ended December 31, 2025.
On
June 30, 2025, the Company issued 50,000 shares of its Class A Common Stock to Ruben Calderon pursuant to the Company’s 2024 Equity
Incentive (ESOP) Plan. The issuance was made in recognition of Mr. Calderon’s continued service and performance contributions and
was granted in accordance with the terms and conditions of the ESOP. The shares were issued as fully paid, and are reflected in the accompanying
financials statements for the period ended December 31, 2025. In addition, during the year ended December 31, 2025, the Company issued
an aggregate of 3,334 shares of Common Stock to Mr. Calderon as part of his bonus compensation under his 2025 Executive Employment Agreement.
These shares were issued in two tranches: 1,694 shares on October 14, 2025, and 1,6400 shares on December 15, 2025. The issuances were
approved by the Board of Directors and represent non-cash compensation earned upon achievement of the performance milestones specified
in his agreement.
To
the best of our knowledge, during the past two fiscal years, other than as set forth above, there were no material transactions, or series
of similar transactions, or any currently proposed transactions, or series of similar transactions, to which we were or are to be a party,
in which the amount involved exceeds $120,000, and in which any director or executive officer, or any security holder who is known by
us to own of record or beneficially more than 5% of any class of our common stock, or any member of the immediate family of any of the
foregoing persons, has an interest (other than compensation to our officers and directors in the ordinary course of business).
50
**Indemnification
Agreements**
We
have entered or intend into indemnification agreements with each of our directors and executive officers. These indemnification agreements
provide the directors and executive officers with contractual rights to indemnification and expense advancement that are, in some cases,
broader than the specific indemnification provisions contained under Nevada law or under relevant employment agreements.
**Related
Persons Transaction Policy**
Prior
to December 2, 2024, we did not have a formal policy regarding approval of transactions with related parties. We adopted a related person
transaction policy on December 2, 2024 that sets forth our procedures for the identification, review, consideration and approval or ratification
of related person transactions. For purposes of our policy only, a related person transaction is a transaction, arrangement or relationship,
or any series of similar transactions, arrangements, or relationships, in which we and any related person are, were or will be participants
in which the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end. Transactions involving
compensation for services provided to us as an employee or director are not covered by this policy. A related person is any executive
officer, director, or beneficial owner of more than 5% of any class of our voting securities, including any of their immediate family
members and any entity owned or controlled by such persons.
Under
the policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person
transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to
consummation, our management must present information regarding the related person transaction to our audit committee, or, if audit committee
approval would be inappropriate, to another independent body of our board of directors, for review, consideration and approval or ratification.
The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related
persons, the benefits to us of the transaction and whether the transaction is on terms that are comparable to the terms available to
or from, as the case may be, an unrelated third party or to or from employees generally. Under the policy, we will collect information
that we deem reasonably necessary from each director, executive officer and, to the extent feasible, significant stockholder to enable
us to identify any existing or potential related-person transactions and to effectuate the terms of the policy. In addition, under the
Code of Business Conduct , our employees and directors will have an affirmative responsibility to disclose any transaction or relationship
that reasonably could be expected to give rise to a conflict of interest. In considering related person transactions, our audit committee,
or other independent body of our board of directors, will take into account the relevant available facts and circumstances including,
but not limited to:
- the risks, costs and benefits to us;
- the impact on a director’s independence in the event that the related person is a director, immediate family member of a director
or an entity with which a director is affiliated;
- the availability of other sources for comparable services or products; and
- the terms available to or from, as the case may be, unrelated third parties or to or from employees generally.
The
policy requires that, in determining whether to approve, ratify or reject a related person transaction, our audit committee, or other
independent body of our board of directors, must consider, in light of known circumstances, whether the transaction is in, or is not
inconsistent with, our best interests and those of our stockholders, as our audit committee, or other independent body of our board of
directors, determines in the good faith exercise of its discretion.
**Item
14. Principal Accounting Fees and Services.**
Based
on the Company’s evaluation and determination that M&K CPAs, PLLC (“M&K”) is independent, we have engaged such
firm as our independent registered public accounting firm for fiscal year 2025. In making this determination, the Company is requesting
its stockholders to ratify the appointment of M&K at its next Annual Stockholder Meeting. In the event the stockholders fail to ratify
such appointment, the Audit Committee will consider in its direction to select other auditors for the subsequent year. Even if the selection
is ratified, the Audit Committee, in its discretion, may select a new independent registered public accounting firm at any time during
the year if it feels that such a change would be in the best interest of the Company and its stockholders. Representatives of M&K
will be present at the 2026 Annual Stockholders’ Meeting and will have the opportunity to make a statement and be available to
answer questions.
**Audit
Fees**
Audit
fees consist of fees for professional services rendered for the audit of the Company’s consolidated financial statements included
in the Company’s Annual Report on Form 10-K, the review of financial statements included in the Company’s Quarterly Reports
on Form 10-Q, and for services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements.
The aggregate fees billed for professional services rendered by our independent public accounting firm, M&K CPAs, PLLC, Houston,
TX, for audit and review services for the fiscal year ended December 31, 2024 and December 31, 2025 were approximately $106,175 and $108,685.
**Tax
Fees**
Fees
paid to M&K CPAs, PLLC associated with tax compliance services were $0 in 2024 and $0 in 2025.
Fees
paid to M&K CPAs, PLLC associated with tax consultation services were $0 in 2024 and $0 in 2025.
**Administration
of the Engagement; Pre-Approval of Audit and Permissible Non-Audit Services**
The
Company’s Audit Committee Charter requires that the Audit Committee establish policies and procedures for pre-approval of all audit
or permissible non-audit services provided by the Company’s independent auditors. Our Audit Committee approved, in advance, all
work performed for the years ended December 31, 2025 and December 31, 2024, by our principal accountant, M&K CPAs, PLLC. The Audit
Committee may establish, either on an ongoing or case-by-case basis, pre-approval policies and procedures providing for delegated authority
to approve the engagement of the independent registered public accounting firm, provided that the policies and procedures are detailed
as to the particular services to be provided, the Audit Committee is informed about each service, and the policies and procedures do
not result in the delegation of the Audit Committee’s authority to management. In accordance with these procedures, the Audit Committee
pre-approved all services performed by M&K CPAs, PLLC.
51
**PART
IV**
**Item
15. Exhibits, Financial Statement Schedules.**
1) Financial statements for our Company are listed in the index under Item 8 of this document.
2) All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the financial statements or notes thereto.
**Item
16. Form 10-K Summary**
Registrants
may, at their option, include a summary of information required by this form, but only if each item in the summary is presented fairly
and accurately and includes a hyperlink to the material contained in this form to which such item relates, including to materials contained
in any exhibits fi led with the form.
*Instruction*:
The summary shall refer only to Form 10-K disclosure that is included in the form at the time it is filed. A registrant need not update
the summary to reflect information required by Part III of Form 10-K that the registrant incorporates by reference from a proxy or information
statement filed after the Form 10-K, but must state in the summary that the summary does not include Part III information because that
information will be incorporated by reference from a later filed proxy or information statement involving the election of directors.
52
**Exhibit
Index**
| Exhibit Number | Description |
| --- | --- |
| 1.1** | Form of Underwriting Agreement |
| 2.1** | Agreement and Plan of Merger, dated as of February 13, 2026, by and among JFB Construction Holdings, Xtend AI Robotics, Inc., XT Merger sub 2, Inc. and Xtend Reality Expansion Ltd. |
| 2.2** | Amendment No. 1 to Agreement and Plan of Merger, dated as of March 21, 2026, by and among JFB Construction Holdings, Xtend AI Robotics, Inc., XT Merger Sub 2, Inc. and Xtend Reality Expansion Ltd. |
| 3.1** | Amended and Restated Articles of Incorporation of the Company dated September 30, 2024 |
| 3.2** | Bylaws of the Company dated September 26, 2024 |
| 3.3* | Certificate of Designation of Series C Convertible Preferred Stock. |
| 3.4** | Certificate of Change for JFB Construction Holdings. |
| 3.5** | Certificate of Correction for JFB Construction Holdings |
| 4.1** | Specimen Stock Certificate evidencing the shares of Class A Common Stock |
| 4.3** | Form of Representative’s Warrants |
| 4.4** | Form of Representative’s Warrants |
| 4.5** | Form of Offering Warrants |
| 4.6* | Common Stock Purchase Warrant A |
| 4.7* | Common Stock Purchase Warrant B |
| 10.1** | Contribution and Shares Exchange Agreement dated July 18, 2024, by and among JFB Construction Holdings and the shareholders of JFB Construction & Development, Inc |
| 10.2** | Employment Agreement dated July 18, 2024 between the Company and Joseph F. Basile III |
| 10.3** | Employment Agreement dated July 18, 2024 between the Company and Ruben Calderon |
| 10.4** | 2024 Equity Incentive Plan |
| 10.5** | Loose Cannon Lease Agreement dated March 29,2024 by and between the Company and Aura Commercial, LLC |
| 10.6** | Construction Agreement dated July 18, 2024 by and between the Company and Chartered Services, LLC |
| 10.7** | Aura Commercial Lease Agreement dated March 29, 2024 by and between the Company and Aura Commercial ,LLC |
| 10.8** | Construction Agreement dated July 18, 2024 and between the Company and Rare Capital Partners, LLC |
| 10.9** | Consulting Agreement with Chartered Services, LLC dated July 17, 2024 by and between the Company and Chartered Services, LLC |
| 10.10** | Form Construction Contract |
| 10.11** | Form Officer and Director Indemnification Agreement |
| 10.12** | Amendment to Lease Agreement by and between the Company and Aura Commercial, LLC |
| 10.13** | Amendment to Consulting Agreement with Chartered Services, LLC |
| 10.14** | Amended and Restated Employment Agreement dated February 1, 2025 between the Company and Joseph F. Basile III |
| 10.15** | Amended and Restated Employment Agreement dated February 1,2025 between the Company and Ruben Calderon |
| 10.16* | Subscription Agreement between JFB Construction Holdings and CM OB Hotel Owner, LLC |
| 10.17* | Side Letter Agreement between JFB Construction Holdings and CM OB Hotel Owner, LLC |
| 10.18* | Cost-Plus 5% Construction Management Contract between JFB Construction Holdings and Onyx OB Hotel Owner LLC, dated May 1, 2025 |
| 10.19* | Employment Agreement, dated September 22, 2025, between JFB Construction Holdings and William Dyer |
| 10.20* | Securities Purchase Agreement |
| 10.21* | Placement Agency Agreement |
| 10.22** | Registration Rights Agreement |
| 10.23* | Share Redemption Agreement |
| 10.24** | Form of Securities Purchase Agreement dated February 13, 2026 |
| 10.25** | Support Agreement, dated as of February 13, 2026, by and between XTEND Reality Expansion Ltd. and American Ventures LLC, Series XIV JFB. |
| 10.26** | Support Agreement, dated as of February 13, 2026 by and among XTEND Reality Expansion Ltd., Joseph F. Basile III and the Basile Family Irrevocable Trust. |
| 10.27** | Form of Xtend Support Agreement. |
| 10.28** | Simple Agreement for Future Equity, dated as of February 13,2026, by and between JFB Construction Holdings and Xtend Reality Expansion Ltd. |
| 10.29** | Indemnification Agreement, dated as of February 13, 2026, by and between JFB Construction Holdings and Joseph F. Basile, III. |
| 14.1** | Code of Conduct |
| 21.1** | List of Subsidiaries |
| 23.1* | Independent Registered Public Accounting Firm’s Consent |
| 31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1* | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2* | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101.INS* | Inline XBRL Instance Document |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase |
| 101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase |
| 104* | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
*
Filed herewith.
**
Previously Filed
53
**SIGNATURES**
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized**.**
JFB Construction Holdings
Date: July 2, 2026 By: */s/ Joseph F. Basile III*
**Joseph F. Basile III**
**Chief Executive Officer**
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on
behalf of the Registrant in the capacities and on the dates indicated.
**Name** **Title** **Date**
*/s/ Joseph F. Basile III* Chief Executive Officer and Director July 2, 2026
**Joseph F. Basile III** (Principal Executive Officer)
*/s/ Ruben Calderon* Chief Financial Officer July 2, 2026
**Ruben Calderon** (Principal Financial Officer, Principal Accounting Officer)
*/s/ Nelson Garcia* Director July 2, 2026
**Nelson Garcia**
*/s/ Stefan Passantino* Director July 2, 2026
**Stefan Passantino**
*/s/ Christopher Melton* Director July 2, 2026
**Christopher Melton**
*/s/ David Clukey* Director July 2, 2026
**David Clukey**
*/s/ Miklos Gulyas* Director July 2, 2026
**Miklos Gulyas**
*/s/ Jamie Zambrana Jr.* Director July 2, 2026
**Jamie Zambran, Jr**
54
---
## EX-3.3
SEC source: [ex3-3.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex3-3.htm)
**Exhibit
3.3**
**Certificate
of Designation of
Series C Convertible Preferred Stock of
JFB Construction Holdings**
Pursuant
to Section 78.1955 of the
Nevada Revised Statutes
JFB
Construction Holdings, a Nevada corporation (the “Corporation”), does hereby certify that, pursuant to the authority
contained in its Articles of Incorporation (“Articles”), as amended, and in accordance with the provisions of Section
78.1955 of the Nevada Revised Statutes (the “NRS”), the Corporation’s Board of Directors has duly adopted the following
resolutions creating a series of Preferred Stock designated as Series C Convertible Preferred Stock:
RESOLVED,
that the Corporation hereby designates and creates a series of the authorized Preferred Shares of the Corporation, designated as Series
C Convertible Preferred Stock, as follows:
FIRST:
that, of the 10,000,000 Preferred Shares, having a par value of $0.0001 per share (“Preferred Stock”) authorized to
be issued by the Corporation, 4,400,000 shares are hereby designated as “Series C Convertible Preferred Stock.” The rights,
preferences and limitations granted to and imposed upon the Series C Convertible Preferred Stock are as set forth below:
Section
1. Definitions. For the purposes hereof, the following terms shall have the following meanings:
“Common
Stock” means the Corporation’s common stock, par value $0.0001 per share.
“Conversion”
shall have the meaning set forth in Section 5.
“Conversion
Date” shall have the meaning set forth in Section 5(a).
“Conversion
Period Commencement Date” means the Closing Date (as defined in the Private Purchase Agreement).
“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of the Series C Preferred Stock
in accordance with the terms hereof.
“Governmental
Entity” means any foreign governmental authority, the United States of America, any state of the United States and any political
subdivision of any of the foregoing, and any agency, instrumentality, department, commission, board, bureau, central bank, authority,
court or other tribunal, in each case whether executive, legislative, judicial, regulatory or administrative, having jurisdiction over
the Buyers, a Seller or the Company, any of the Company’s Subsidiaries or their respective property.
“Holder”
means holder of the Series C Preferred Stock.
“Notice
of Conversion” shall have the meaning set forth in Section 5(a).
“Original
Issue Date” means the date of the first issuance of any shares of the Series C Preferred Stock under the terms of the Private
Purchase Agreement.
“Private
Purchase Agreement” means the Securities Purchase Agreement, dated September 26, 2025, between the buyer and seller named therein,
as amended, modified or supplemented from time to time in accordance with its terms.
“Series
C Preferred Stock” means the Corporation’s Series C Convertible Preferred Stock, par value $0.0001 per share.
“Stated
Value” means the stated value of the Series C Convertible Preferred Stock, which shall be $10.00 per share, subject to adjustment
for stock splits, dividends, combinations and related transactions as set forth herein.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange, the OTCQB, OTCQX, Pink Open Market (or any successors to any of the foregoing).
“Triggering
Event” shall have the meaning set forth in Section 7(a).
“Triggering
Redemption Amount” means, the sum of (x) 100% of the consideration paid for the Series C Preferred Stock pursuant to the Private
Purchase Agreement (y) all accrued but unpaid dividends thereon (if any), and (z) all other costs, expenses or amounts due in respect
of the Preferred Stock including, but not limited to legal fees and expenses of legal counsel to the Holder in connection with, related
to and/or arising out of a Triggering Event.
“Triggering
Redemption Payment Date” shall have the meaning set forth in Section 7(b).
Section
2. Designation and Amount. Four Million Four Hundred Thousand (4,400,000) shares of Preferred Stock of the Corporation are hereby
designated as “Series C Convertible Preferred Stock.”
Section
3. Dividends. So long as any shares of Series C Preferred Stock are outstanding, the Corporation shall not, directly or indirectly,
redeem, or declare or pay any cash dividend or distribution on, any securities of the Corporation without the prior express written consent
of the Holders (defined below). In the event that dividends are consented to by the Holders, then the Holders shall be entitled to receive,
and the Corporation shall pay, dividends on shares of Series C Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to
and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the
Common Stock. No other dividends shall be paid on shares of Series C Preferred Stock.
Section
4. Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”),
the entire remaining assets and funds of the Corporation legally available for distribution, if any, shall be distributed first, to the
holders of the Series C Preferred Stock in proportion to the shares of Series C Preferred Stock owned by them, and applied toward the
payment of the Triggering Redemption Amount, and thereafter, any remainder shall then be distributed to the holders of other Preferred
Stock and Common Stock in proportion of the number of such shares then held by them.
Section
5. Conversion. Holders of Series C Preferred Stock shall have the following rights with respect to the conversion (“Conversion”)
of the Series C Preferred Stock into shares of Common Stock:
(a) Conversions at Option of Holder. Subject to and in compliance with the provisions of this Section 5, upon the Conversion Period
Commencement Date, each share of Series C Preferred Stock may, at the option of the Holder, be converted into fully paid and non-assessable
shares of Common Stock, as set forth herein, upon notice (a “Notice of Conversion”) to the Corporation. The Holders
shall effect conversions by providing the Corporation with a Notice of Conversion that shall specify the Conversion Price, the number
of shares of Series C Preferred Stock to be converted, the number of shares of Series C Preferred Stock owned prior to the conversion
at issue, the number of shares of Series C Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion
is to be effected, which date may not be prior to the date the Holder delivers such Notice of Conversion to the Corporation (the “Conversion
Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice
of Conversion to the Corporation is deemed delivered hereunder. To effect conversions, as the case may be, of shares of Series C Preferred
Stock, a Holder shall not be required to surrender the certificate(s) representing such shares of Series C Preferred Stock to the Corporation
unless all of the shares of Series C Preferred Stock represented thereby are so converted, in which case the Holder shall deliver the
certificate representing such shares of Series C Preferred Stock promptly following the Conversion Date at issue. The Corporation shall
issue certificates representing the Conversion Shares promptly, but in no event more than five (5) business days following surrender
by a Holder of the certificate(s) representing the converted shares of Series C Preferred Stock to the Corporation (such date that the
Corporation is required to deliver such certificate(s), the “Delivery Date”).
(b) Conversion Price; Conversion Share*s*. The “Conversion Price” of the Series C Preferred Stock shall be
$5.44. Each share of Series C Preferred Stock shall be convertible into approximately 1.838 shares of Conversion Shares, subject to adjustment
as set forth hereunder, being the result of dividing the Stated Value by the Conversion Price.
(c) Limitations of Conversion. Notwithstanding anything to the contrary herein, the Holders of Series C Preferred Stock may not effectuate
any Conversion and the Corporation may not issue any shares of Common Stock in connection therewith that would be in excess of that number
of shares of Common Stock equivalent to 4.99% of the number of shares of Common Stock (the “Maximum Percentage”); provided, however, that the Holders may effectuate any Conversion and the Corporation shall be obligated to issue shares
of Common Stock in connection therewith that would not trigger such a requirement. To the extent the above limitation applies, the determination
of whether the Series C Preferred Stock held by such Holder shall be convertible (vis-à-vis other convertible, exercisable or
exchangeable securities owned by such Holder or any of its affiliates) and of which such securities shall be convertible, exercisable
or exchangeable (as among all such securities owned by such Holder and its affiliates) shall, subject to such Maximum Percentage limitation,
be determined on the basis of the first submission to the Company for conversion, exercise or exchange (as the case may be). No prior
inability of a Holder to convert Series C Preferred Stock, or of the Company to issue shares of Common Stock to such Holder, pursuant
to this Section 5(c) shall have any effect on the applicability of the provisions of this Section 5(c) with respect to any subsequent
determination of convertibility or issuance (as the case may be). For purposes of this Section 5(c), beneficial ownership and all determinations
and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. The provisions of this Section 5(c) shall
be implemented in a manner otherwise than in strict conformity with the terms of this Section 5(c) (or any portion hereof) which may
be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained, or to make changes
or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this
Section 5(c) shall apply to a successor holder of Series C. Preferred Stock For any reason at any time, upon the written or oral request
of a Holder, the Company shall within one Business Day confirm orally and in writing to such Holder the number of shares of Common Stock
then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock,
including, without limitation, pursuant to this Certificate of Designation.
(d) Stock Splits. If the Corporation, at any time after the Original Issue Date and while at least one share of Series C Preferred
Stock is outstanding: (i) subdivides outstanding shares of Common Stock into a larger number of shares, (ii) combines (including by way
of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iii) issues by reclassification of shares
of Common Stock any shares of capital stock of the Corporation, then in each case the Conversion Price shall be multiplied by a fraction
of which (x) the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately
before such event and (y) the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to this Section shall become effective immediately after the effective date of the applicable event described
in subsections (i) through (iii) above.
(e) Subsequent Rights Offering*s*. In addition to any adjustments pursuant to Section 5(e) above, if at any time the Corporation
grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to
the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired as
if the Holder had held the number of shares of Common Stock convertible from Series C Preferred Stock held by such Holder (without regard
to any limitations on exercise hereof) immediately before the date on which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined
for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the Holder’s right to participate
in any such Purchase Right would result in the Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate
in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto
would not result in the Holder exceeding the Maximum Percentage).
(f) Lower Price Issuances. For a period (a) commencing on the applicable issuance date of the Series C Preferred Stock and (b) ending
on the date that is eighteen months after such issuance date, if the Company issues or sells any securities, including options, warrants
or convertible securities at a price of or with an exercise or conversion price of, or an exchange at, less than the Conversion Price,
then upon such issuance or sale, the Conversion Price shall be reduced to the sale price or the exercise or conversion price of the securities
issued or sold; *provided, however*, that in no event shall the Conversion Price be adjusted to less than $2.77
(as adjusted for stock splits, combinations, recapitalizations and similar events, the “Floor Price”); *provided, further*, that if the Conversion Price is reduced as the result of the issuance of convertible or derivative securities, and
all of such convertible or derivative securities lapse without the issuance of Common Stock, then the Conversion Price shall be re-adjusted
to what it would be but for the issuance of the convertible or derivative securities. Whenever the Conversion Price is adjusted pursuant
to any provision of this Section, the Company shall promptly give notice to the Holder setting forth the Conversion Price after such
adjustment and any resulting adjustment to the number of Conversion Shares and setting forth a statement of the facts requiring such
adjustment (the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive
Issuance Notice pursuant to this Section, upon the occurrence of any Dilutive Issuance or other reduction of the Conversion Rate, the
Holder is entitled to receive a number of Conversion Shares based upon the reduced Conversion Price regardless of whether the Holder
accurately refers to the Conversion Price in the Notice of Exercise. In order to comply with the Rules of the Nasdaq, in no event shall
the adjusted Conversion Price in this Section 5(f) be below the Floor Price set forth in this Section 5(f).
(g) Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be.
(h) Reservation of Shares. The Corporation covenants and agrees that any Conversion Shares issued upon the conversion of the Series
C Preferred Stock will, upon issuance, be validly issued and outstanding, fully paid and non-assessable, and free from all taxes, liens
and charges with respect to the issuance thereof. The Corporation further covenants and agrees that the Corporation will at all times
have authorized and reserved a sufficient number of shares of its Common Stock to provide for issuance of the Conversion Shares upon
the conversion of the Series C Preferred Stock.
(i) Payment of Taxes. The Corporation and its paying agent shall be entitled to withhold taxes on all payments on the Series C Preferred
Stock and Conversion Shares to the extent required by law. Prior to the date of any such payment, each Holder shall deliver to the Corporation
or its paying agent a duly executed, valid, accurate and properly completed Internal Revenue Service Form W-9 or Internal Revenue Service
Form W-8, as applicable. The Corporation shall pay any and all documentary, stamp and similar issue or transfer tax due on (A) the issue
of the Series C Preferred Stock and (B) the issue of Conversion Shares; provided, however, in the case of any conversion of Series C
Preferred Stock, the Corporation shall not be required to pay any tax or duty that may be payable in respect of any transfer involved
in the issue and delivery of Conversion Shares in a name other than that of the Holder of the shares to be converted, and no such issue
or delivery shall be made unless and until the person requesting such issue has paid to the Corporation the amount of any such tax or
duty, or has established to the satisfaction of the Corporation that such tax or duty has been paid.
(j) Buy-In. If the Corporation fails, prior to the applicable Delivery Date, to, at its option, (i) deliver to such Holder the applicable
certificate or certificates or (ii) cause its transfer agent to credit the account of such Holder or such Holder’s broker with
the Depository Trust Company through its Deposit Withdrawal Agent Commission system, and if after such Delivery Date such Holder is required
by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm is required to purchase,
shares of Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares which such Holder was entitled to
receive upon the conversion relating to such Delivery Date (a “Buy-In”), then the Corporation shall (A) pay in cash
to such Holder the amount by which (x) such Holder’s total purchase price (including any brokerage commissions) for the shares
of Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such Holder was entitled
to receive from the conversion at issue (or, if less, the number of shares actually delivered in satisfaction of such sale) multiplied
by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions)
and (B) at the option of such Holder, either reissue (if surrendered) the shares of Series C Preferred Stock equal to the number of shares
of Series C Preferred Stock submitted for conversion or deliver to such Holder the number of shares of Common Stock that would have been
issued if the Corporation had timely complied with its delivery requirements. For example, if a Holder purchases shares of Common Stock
having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Series C Preferred Stock
with respect to which the actual sale price (including any brokerage commissions) giving rise to such purchase obligation was a total
of $10,000 under clause (A) of the immediately preceding sentence, the Corporation shall be required to pay such Holder $1,000. The Holder
shall provide the Corporation written notice indicating the amounts payable to such Holder in respect of the Buy-In and, upon request
of the Corporation, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief
with respect to the Corporation’s failure to timely deliver certificates representing shares of Common Stock upon conversion of
the shares of Series C Preferred Stock as required pursuant to the terms hereof.
(k) Partial Liquidated Damages*.* If the Corporation fails to deliver to a Holder shares of Common Stock by the Delivery Date,
the Corporation shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $5,000 of Stated Value of Series
C Preferred Stock being converted, $50 per business day (increasing to $100 per business day on the third business day and increasing
to $200 per business day on the sixth business day after such damages begin to accrue) for each business day after the Delivery Date
until such shares are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue actual
damages for the Corporation’s failure to deliver the shares or pay the cash within the period specified herein and such Holder
shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit a Holder from seeking to enforce damages
pursuant to any other Section hereof or under applicable law.
Section
6. Reacquired Shares. Any shares of Series C Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of preferred stock to be created by resolution
or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.
Section
7. Redemption Upon Triggering Event.
(a)
“Triggering Event” means, wherever used herein, (i) the objection or rejection by the Trading Market, any Governmental
Entity, or any regulatory or self-regulatory agency of any of the Transactions (as defined in the Private Purchase Agreement) on or before
December 31, 2025, or (ii) the failure of any regulatory or self-regulatory agency to approve all of the Transactions, if any such approval
is required, on or before December 31, 2025.
(b)
Upon the occurrence and continuance of a Triggering Event and following a ten (10) day opportunity to cure following written notice from
the Holders to the Corporation, each Holder shall (in addition to all other rights it may have hereunder or under applicable law) have
the right, exercisable at the sole option of such Holder, to require the Corporation to redeem all or any portion of the Series C Preferred
Stock then held by such Holder for a redemption price equal to the full (for fully redemption) or pro rata (for portion redemption) Triggering
Redemption Amount. The Triggering Redemption Amount shall be due and payable within ten (10) Trading Days of the date on which the notice
for the payment therefor is provided by a Holder (the “Triggering Redemption Payment Date”). If the Corporation fails
to pay in full the Triggering Redemption Amount hereunder on the date such amount is due in accordance with this Section, the Corporation
will pay interest thereon at a rate equal to the lesser of ten percent (10%) per annum or the maximum rate permitted by applicable law,
from such date until the Triggering Redemption Amount, plus all such interest thereon, is paid in full.
SECOND:
That such determination of the designation, rights, preferences and limitations relating to the Series C Preferred Stock, was duly made
by the Board of Directors pursuant to the provisions of the Articles of the Corporation, and in accordance with the provisions of NRS
78.1955.
IN
WITNESS WHEREOF, the Corporation has caused this Designation to be duly executed to be effective September 26, 2025.
JFB Construction Holdings, a Nevada corporation
By: */s/ Joseph F. Baile III*
Joseph F. Basile III
Chief Executive Officer
---
## EX-4.6
SEC source: [ex4-6.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex4-6.htm)
**Exhibit
4.6**
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON
STOCK PURCHASE WARRANT A
JFB CONSTRUCTION HOLDINGS
Warrant Shares: 8,068,933 Issue Date: October 1, 2025
THIS
COMMON STOCK PURCHASE WARRANT A (the “Warrant”) certifies that, for value received, [ ] or its assigns (the “Holder”)
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on
or after the Issue Date (the “Exercise Date”) and on or prior to 5:00 p.m. (New York, New York time) on October 1,
20281 (the “Termination Date”) but not thereafter, to subscribe for and purchase from JFB Construction
Holdings, a Nevada corporation (the “Company”), up to 8,068,933 shares (as subject to adjustment hereunder, the
“Warrant Shares”) of the Company’s Common Stock (as defined below). The purchase price of one share of Common Stock
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 or in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated as of September
26, 2025, among the Company and the purchasers signatory thereto:
“Adjustment
Period” has the meaning set forth in Section 3(b).
“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.
“Alternate
Consideration” has the meaning set forth in Section 3(e).
“Applicable
Price” has the meaning set forth in Section 3(b).
“Base
Share Price” has the meaning set forth in Section 3(b).
“Black
Scholes Value” has the meaning set forth in Section 3(e).
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or other
day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Convertible
Securities” has the meaning set forth in Section 3(b)(1).
“Convertible
Securities Shares” has the meaning set forth in Section 3(b)(1).
“Dilutive
Issuance” has the meaning set forth in Section 3(b).
“Distribution”
has the meaning set forth in Section 3(d).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Floor
Price” means a price equal to $2.72, which shall be appropriately adjusted for any stock dividend, stock split, stock combination,
reclassification or similar event or transaction.
“Fundamental
Transaction” has the meaning set forth in Section 3(e).
“Nasdaq
Minimum Price” means the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding
the execution of the SPA, or (ii) the average Nasdaq Official Closing Price of the Common Stock (as reflected on Nasdaq.com) for the
five trading days immediately preceding the signing of the SPA.
“New
Exercise Price” has the meaning set forth in Section 3(b).
“New
Issuance Price” has the meaning set forth in Section 3(b).
“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.
“Primary
Security” has the meaning set forth in Section 3(b)(4).
“Purchase
Rights” has the meaning set forth in Section 3(c).
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary”
means any subsidiary of the Company required to be listed pursuant to Item 601(b)(21) of Regulation S-K.
“Successor
Entity” has the meaning set forth in Section 3(e).
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, the New York Stock
Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
“Transfer
Agent” means ClearTrust Transfer, LLC, the current transfer agent of the Company, with a mailing address of 16540 Pointe Village
Drive, Suite 210, Lutz, FL 33558 and a phone number of (813) 235-4490, and any successor transfer agent of the Company.
“Unit”
has the meaning set forth in Section 3(b)(4).
“Valuation
Event” has the meaning set forth in Section 3(b)(4).
Section
2. Exercise.
a) Exercise of Warrant. 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 Exercise Date and on or before the Termination Date by delivery to the Company (and solely for informational
purposes, to Dominari Securities LLC) 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 Exhibit A (the “Notice of Exercise”). Within the earlier of (i) first (1st) 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 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. **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.**
b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $5.75, subject to adjustment hereunder
(the “Exercise Price”).
c) Cashless Exercise. If at any time after the Exercise Date, there is no effective registration statement registering, as required
pursuant to the terms and conditions of the Registration Rights Agreement, or the prospectus contained therein is not available for the
resale of the Warrant Shares by 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 Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) 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.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York, New York time) to 4:02 p.m. (New York, New York time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market
(or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common
Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
If
Warrant Shares are issued in such a cashless exercise, the parties hereto acknowledge and agree that in accordance with Section 3(a)(9)
of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of
the Warrant Shares being issued may be tacked on to the holding period of this Warrant. Assuming (i) the Holder is not an Affiliate of
the Company, and (ii) either (A) all of the applicable conditions of Rule 144 promulgated under the Securities Act with respect to Holder
and the Warrant Shares are met in the case of such a cashless exercise or (B) the sale of the Warrant Shares is covered by an effective
registration statement and the prospectus is current, the Company agrees that the Company will cause the removal of the legend from such
Warrant Shares (including by delivering an opinion of the Company’s counsel to the Company’s transfer agent at its own expense
to ensure the foregoing), and the Company agrees that the Holder is under no obligation to sell the Warrant Shares issuable upon the
exercise of the Warrant prior to removing the legend. 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
the sale of, 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.
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 the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale
limitations pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate or
book-entry statement, 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 by the Warrant Share
Delivery Date. Notwithstanding anything herein to the contrary, upon delivery of the Notice of Exercise, the Holder shall be deemed for
purposes of Regulation SHO under the Exchange Act to have become the holder of the Warrant Shares irrespective of the date of delivery
of the Warrant Shares. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise
by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each
$1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise),
$10 per Trading Day (increasing to $20 per Trading Day on the third Trading Day after the Warrant Share Delivery Date) for each Trading
Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees
to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As
used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days,
on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of
Exercise.
ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise; 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).
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, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon
such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x)
the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds
(y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection
with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B)
at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise
was not honored and return any amount received by the Company in respect of the Exercise Price for those Warrant Shares (in which case
such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had
the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall
be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise
of the Warrant as required pursuant to the terms hereof.
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, 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.
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 shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised 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
nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock 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 shares of Common Stock, a Holder may rely on
the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed
with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of
a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date
as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
f) Issuance Limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant. Notwithstanding
the foregoing and for avoidance of doubt, to comply with the rules of The Nasdaq Stock Market LLC, 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, to the to the extent that after giving
effect to such issuance after exercise as set forth on the applicable Notice of Exercise such Holder or any of its affiliates would beneficially
own in excess of 19.99% of the Common Stock or such lesser percentage required by The Nasdaq Stock Market LLC without first obtaining
stockholder approval in accordance with the listing rules of The Nasdaq Stock Market LLC.
Section
3. Certain Adjustments. Notwithstanding anything to the contrary in this Warrant, the adjustment provisions of this Warrant
are subject to the Nasdaq Minimum Price.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares
of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the
Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of
shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Equity Sales. If, at any time while this Warrant is outstanding (such period, the “Adjustment Period”),
the Company issues, sells, enters into an agreement to sell, or grants any option to purchase, or sells, enters into an agreement to
sell, or grants any right to reprice, or otherwise disposes of or issues (or announces any offer, sale, grant, or any option to purchase
or other disposition), or, in accordance with this Section 3(b), is deemed to have issued or sold, any shares of Common Stock or Common
Stock Equivalents 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 simultaneously with the
consummation (or, if earlier, the announcement) of such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount
(the “New Exercise Price”) equal to the lower of (A) the New Issuance Price and (B) the lowest VWAP during the five
(5) consecutive Trading Days immediately following the Dilutive Issuance (such lower price, the “Base Share Price”)
and the number of Warrant Shares issuable hereunder shall be proportionately increased such that the aggregate Exercise Price of this
Warrant on the Issuance Date for the Warrant Shares then outstanding shall remain unchanged; provided that the Base Share Price shall
not be less than the Floor Price. If the Company enters into a Variable Rate Transaction (as defined in the Purchase Agreement); *provided,
that*, with respect to a Variable Rate Transaction that is an equity line of credit or an “at-the-market offering”, this
Section 3(b) shall apply to any issuances of Common Stock or Common Stock Equivalents thereunder rather than the entry into the agreement
with respect thereto), the Company shall be deemed to have issued shares of Common Stock or Common Stock Equivalents at the lowest possible
price, conversion price, or exercise price at which such securities may be issued, converted, or exercised. For the avoidance of doubt,
in the event the Exercise Price has been adjusted pursuant to this Section 3(b) and the Dilutive Issuance that triggered such adjustment
does not occur, is not consummated, is unwound, or is canceled after the facts for any reason whatsoever, in no event shall the Exercise
Price be readjusted to the Exercise Price that would have been in effect if such Dilutive Issuance had not occurred or been consummated.
For all purposes of the foregoing, the following shall be applicable:
(1) Issuance of Options. If, during the Adjustment Period, the Company in any manner grants or sells any Options and the lowest price
per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise, or exchange
of any convertible securities (“Convertible Securities”) issuable upon exercise of any such Option (such shares of
Common Stock 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 shares of Common Stock shall be deemed to be outstanding and
to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes
of this Section 3(i)(1), the “lowest price per share for which one share of Common Stock 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.
(2) Issuance of Convertible Securities. If, during the Adjustment Period, the Company in any manner issues or sells any Convertible
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(b)(2), 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(b)(2),
except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issue or sale.
(3) 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 shares of Common Stock 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(i)(3), 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 Share 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(i)(3) shall be made
if such adjustment would result in an increase of the Exercise Price then in effect.
(4) 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 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 share of Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in
accordance with Section 3(i)(1) or 3(i)(2) above and (z) the lowest VWAP of the shares of Common Stock on any Trading Day during the
five (5) consecutive Trading Days immediately following the consummation (or, if applicable, the announcement) of such Dilutive Issuance
(for the avoidance of doubt, if such public announcement, if applicable, is released prior to the opening of the Principal Market on
a Trading Day, such Trading Day shall be the first Trading Day in such five (5) Trading Day period and if this Warrant is exercised on
any given Exercise Date during any such period, the Holder may elect to earlier end such period (including, solely with respect to such
portion of this Warrant exercised on such applicable Exercise Date)). If any shares of Common Stock, Options, or Convertible Securities
are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount
of cash received by the Company therefor. If any shares of Common Stock, Options, or Convertible Securities are issued or sold for a
consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration,
except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company
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 shares of Common Stock, Options, or Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed
to be the fair market value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares
of Common Stock, Options or Convertible Securities (as the case may be). The fair 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.
(5) Record Date. If, during the Adjustment Period, the Company takes a record of stockholders for the purpose of entitling them (A)
to receive a dividend or other distribution payable in shares of Common Stock, Options, or in Convertible Securities or (B) to subscribe
for or purchase shares of Common Stock, Options, or Convertible Securities, then such record date will be deemed to be the date of the
issue or sale of shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had
held the number of shares of Common Stock acquirable upon complete 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 shares
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that to the
extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) Pro Rata Distributions. During such time as this 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 holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this 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 shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date 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 shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in
the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation). 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.
e) Fundamental Transaction. If, at any time while the Warrants are outstanding:
1)
the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into
another person;
2)
the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions;
3)
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 shares of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property
and has been accepted by the holders of 50% or more of the Company’s shares of Common Stock or 50% or more of the total voting
power of the Company’s shares of Common Stock;
4)
the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization
of shares of Common Stock or any compulsory share exchange pursuant to which the shares of Common Stock are effectively converted into
or exchanged for other securities, cash or property; or
5)
the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other
business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with
another person or group of persons whereby such other person or group acquires 50% or more of the Company’s shares of Common
Stock or 50% or more of the total voting power of the Company’s shares of Common Stock (each a “Fundamental
Transaction”); then, upon any subsequent exercise of a Warrant, the Holder shall have
the right to receive, for each share of Common Stock 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 shares of capital stock 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 shares of Common Stock 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 share of Common Stock in such
Fundamental Transaction and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any
choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental
Transaction.
Notwithstanding
anything to the contrary, in the event of a Fundamental Transaction, other than a merger where the primary purpose is to the change the
Company’s domicile, 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 shares of Common Stock 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 shares of Common Stock
are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided,
further, that if holders of shares of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction,
such holders will be deemed to have received common stock 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 contemplated 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 contemplated 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 public announcement of the applicable contemplated 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(e) and (D) a remaining option time equal to the time between the date of the public announcement of the applicable
contemplated 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(e) 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
shares of Common Stock 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 shares of Common Stock prior 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 be added to the term “Company” under this Warrant (so that from
and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer
instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally with the Company), and may exercise
every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations
of the Company prior thereto under this Warrant with the same effect as if the Company and such Successor Entity or Successor Entities,
jointly and severally, had been named as the Company herein.
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 shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding. For the avoidance
of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless of (i) whether the Company has
sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs
prior to the Exercise Date.
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 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 Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is 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 email to the Holder at its last 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 stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled
to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to
deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to
be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. 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.
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 of the Company.
i) Shareholder Approval. If required, the Company shall hold a special meeting of shareholders (which may also be at the annual meeting
of shareholders) at the earliest practicable date after the date hereof, but in no event later than forty five (45) after the applicable
date for the purpose of obtaining shareholder approval with the recommendation of the Board of Directors that such proposal be approved,
and the Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals
in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal. The Company shall
use its reasonable best efforts to obtain such shareholder approval, and officers, directors and shareholders shall cast their proxies
in favor of such proposal. If the Company does not obtain shareholder approval at the first meeting, the Company shall call a meeting
every three (3) months thereafter to seek shareholder approval until the earlier of the date shareholder approval is obtained or the
Warrants are no longer outstanding. Notwithstanding the foregoing, the Company may, in lieu of holding a special meeting of shareholders
as aforesaid, obtain the written consent of a majority of its shareholders covering the shareholder approval so long as prior to forty
five (45) days after the applicable date such written consents are obtained and in accordance with Exchange Act Rule 14c-2 at least twenty
(20) days shall have transpired from the date on which a written information statement containing the information specified in Schedule
14C detailing such shareholder approval shall have been filed with the Commission and delivered to shareholders of the Company.
Section
4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof
and to the provisions of Section 4.1 of the Purchase Agreement, 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. 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 Issue 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 Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company 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.
d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer
of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under
applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public
information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or
transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.
e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant
and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to
or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities
law, except pursuant to sales registered or exempted under the Securities Act.
Section
5. 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 the rights of a Holder to receive Warrant Shares on a “cashless exercise,” and to
receive the cash payments contemplated pursuant to Sections 2(d)(i) and 2(d)(iv), in no event will the Company be required to net cash
settle an exercise of this Warrant.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading
Day.
d) Authorized Shares.
The
Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with
the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants
that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly
issued, fully paid and nonassessable (which means that no further sums are required to be paid by the holders thereof in connection with
the issue thereof) and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and 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.
e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined
in accordance with the provisions of the Purchase Agreement.
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, notwithstanding the fact that
the right to exercise this Warrant terminates on the Termination Date. No provision of this Warrant shall be construed as a waiver by
the Holder of any rights which the Holder may have under the federal securities laws and the rules and regulations of the Commission
thereunder. Without limiting any other provision of this Warrant or the Purchase Agreement, 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 notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall
be delivered in accordance with the notice provisions of the Purchase Agreement.
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 Common Stock 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 of this Warrant, 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.
*(Signature
Page Follows)*
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.
**JFB CONSTRUCTION HOLDINGS**
By: Joseph F. Basile III
Chief Executive Officer
[SIGNATURE
PAGE FOR WARRANT A]
EXHIBIT
A
NOTICE
OF EXERCISE
TO: **JFB CONSTRUCTION HOLDINGS**
(1)
The undersigned hereby elects to purchase Warrant Shares of the Company pursuant to the terms of the attached Warrant dated October
1, 2025 (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, payable to the Company; 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:
(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the
Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name
of Investing Entity:
Signature
of Authorized Signatory of Investing Entity:
Name
of Authorized Signatory:
Title
of Authorized
Signatory:
Date:
EXHIBIT
B
ASSIGNMENT
FORM
*(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant 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:
---
## EX-4.7
SEC source: [ex4-7.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex4-7.htm)
**Exhibit
4.7**
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON
STOCK PURCHASE WARRANT B
JFB CONSTRUCTION HOLDINGS
Warrant Shares: 8,068,933 Issue Date: October 1, 2025
THIS
COMMON STOCK PURCHASE WARRANT B (the “Warrant”) certifies that, for value received, [ ] or its assigns (the “Holder”)
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on
or after the Issue Date (the “Exercise Date”) and on or prior to 5:00 p.m. (New York, New York time) on October 1,
20281 (the “Termination Date”) but not thereafter, to subscribe for and purchase from JFB Construction
Holdings, a Nevada corporation (the “Company”), up to 8,068,933 shares (as subject to adjustment hereunder, the
“Warrant Shares”) of the Company’s Common Stock (as defined below). The purchase price of one share of Common Stock
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 or in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated as of September
26, 2025, among the Company and the purchasers signatory thereto:
“Adjustment
Period” has the meaning set forth in Section 3(b).
“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.
“Alternate
Consideration” has the meaning set forth in Section 3(e).
“Applicable
Price” has the meaning set forth in Section 3(b).
“Base
Share Price” has the meaning set forth in Section 3(b).
“Black
Scholes Value” has the meaning set forth in Section 3(e).
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or other
day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Convertible
Securities” has the meaning set forth in Section 3(b)(1).
“Convertible
Securities Shares” has the meaning set forth in Section 3(b)(1).
“Dilutive
Issuance” has the meaning set forth in Section 3(b).
“Distribution”
has the meaning set forth in Section 3(d).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Floor
Price” means a price equal to $2.72, which shall be appropriately adjusted for any stock dividend, stock split, stock combination,
reclassification or similar event or transaction.
“Fundamental
Transaction” has the meaning set forth in Section 3(e).
“Nasdaq
Minimum Price” means the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding
the execution of the SPA, or (ii) the average Nasdaq Official Closing Price of the Common Stock (as reflected on Nasdaq.com) for the
five trading days immediately preceding the signing of the SPA.
“New
Exercise Price” has the meaning set forth in Section 3(b).
“New
Issuance Price” has the meaning set forth in Section 3(b).
“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.
“Primary
Security” has the meaning set forth in Section 3(b)(4).
“Purchase
Rights” has the meaning set forth in Section 3(c).
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary”
means any subsidiary of the Company required to be listed pursuant to Item 601(b)(21) of Regulation S-K.
“Successor
Entity” has the meaning set forth in Section 3(e).
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, the New York Stock
Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
“Transfer
Agent” means ClearTrust Transfer, LLC, the current transfer agent of the Company, with a mailing address of 16540 Pointe Village
Drive, Suite 210, Lutz, FL 33558 and a phone number of (813) 235-4490, and any successor transfer agent of the Company.
“Unit”
has the meaning set forth in Section 3(b)(4).
“Valuation
Event” has the meaning set forth in Section 3(b)(4).
Section
2. Exercise.
a) Exercise of Warrant. 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 Exercise Date and on or before the Termination Date by delivery to the Company (and solely for informational
purposes, to Dominari Securities LLC) 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 Exhibit A (the “Notice of Exercise”). Within the earlier of (i) first (1st) 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 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. **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.**
b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $6.25, subject to adjustment hereunder
(the “Exercise Price”).
c) Cashless Exercise. If at any time after the Exercise Date, there is no effective registration statement registering, as required
pursuant to the terms and conditions of the Registration Rights Agreement, or the prospectus contained therein is not available for the
resale of the Warrant Shares by 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 Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) 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.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York, New York time) to 4:02 p.m. (New York, New York time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market
(or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common
Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
If
Warrant Shares are issued in such a cashless exercise, the parties hereto acknowledge and agree that in accordance with Section 3(a)(9)
of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of
the Warrant Shares being issued may be tacked on to the holding period of this Warrant. Assuming (i) the Holder is not an Affiliate of
the Company, and (ii) either (A) all of the applicable conditions of Rule 144 promulgated under the Securities Act with respect to Holder
and the Warrant Shares are met in the case of such a cashless exercise or (B) the sale of the Warrant Shares is covered by an effective
registration statement and the prospectus is current, the Company agrees that the Company will cause the removal of the legend from such
Warrant Shares (including by delivering an opinion of the Company’s counsel to the Company’s transfer agent at its own expense
to ensure the foregoing), and the Company agrees that the Holder is under no obligation to sell the Warrant Shares issuable upon the
exercise of the Warrant prior to removing the legend. 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
the sale of, 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.
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 the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale
limitations pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate or
book-entry statement, 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 by the Warrant Share
Delivery Date. Notwithstanding anything herein to the contrary, upon delivery of the Notice of Exercise, the Holder shall be deemed for
purposes of Regulation SHO under the Exchange Act to have become the holder of the Warrant Shares irrespective of the date of delivery
of the Warrant Shares. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise
by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each
$1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise),
$10 per Trading Day (increasing to $20 per Trading Day on the third Trading Day after the Warrant Share Delivery Date) for each Trading
Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees
to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As
used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days,
on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of
Exercise.
ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise; 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).
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, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon
such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x)
the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds
(y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection
with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B)
at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise
was not honored and return any amount received by the Company in respect of the Exercise Price for those Warrant Shares (in which case
such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had
the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall
be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise
of the Warrant as required pursuant to the terms hereof.
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, 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.
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 shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised 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
nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock 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 shares of Common Stock, a Holder may rely on
the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed
with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of
a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date
as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
f) Issuance Limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant. Notwithstanding
the foregoing and for avoidance of doubt, to comply with the rules of The Nasdaq Stock Market LLC, 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, to the to the extent that after giving
effect to such issuance after exercise as set forth on the applicable Notice of Exercise such Holder or any of its affiliates would beneficially
own in excess of 19.99% of the Common Stock or such lesser percentage required by The Nasdaq Stock Market LLC without first obtaining
stockholder approval in accordance with the listing rules of The Nasdaq Stock Market LLC.
Section
3. Certain Adjustments. Notwithstanding anything to the contrary in this Warrant, the adjustment provisions of this Warrant
are subject to the Nasdaq Minimum Price.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares
of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the
Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of
shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Equity Sales. If, at any time while this Warrant is outstanding (such period, the “Adjustment Period”),
the Company issues, sells, enters into an agreement to sell, or grants any option to purchase, or sells, enters into an agreement to
sell, or grants any right to reprice, or otherwise disposes of or issues (or announces any offer, sale, grant, or any option to purchase
or other disposition), or, in accordance with this Section 3(b), is deemed to have issued or sold, any shares of Common Stock or Common
Stock Equivalents 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 simultaneously with the
consummation (or, if earlier, the announcement) of such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount
(the “New Exercise Price”) equal to the lower of (A) the New Issuance Price and (B) the lowest VWAP during the five
(5) consecutive Trading Days immediately following the Dilutive Issuance (such lower price, the “Base Share Price”)
and the number of Warrant Shares issuable hereunder shall be proportionately increased such that the aggregate Exercise Price of this
Warrant on the Issuance Date for the Warrant Shares then outstanding shall remain unchanged; provided that the Base Share Price shall
not be less than the Floor Price. If the Company enters into a Variable Rate Transaction (as defined in the Purchase Agreement); *provided,
that*, with respect to a Variable Rate Transaction that is an equity line of credit or an “at-the-market offering”, this
Section 3(b) shall apply to any issuances of Common Stock or Common Stock Equivalents thereunder rather than the entry into the agreement
with respect thereto), the Company shall be deemed to have issued shares of Common Stock or Common Stock Equivalents at the lowest possible
price, conversion price, or exercise price at which such securities may be issued, converted, or exercised. For the avoidance of doubt,
in the event the Exercise Price has been adjusted pursuant to this Section 3(b) and the Dilutive Issuance that triggered such adjustment
does not occur, is not consummated, is unwound, or is canceled after the facts for any reason whatsoever, in no event shall the Exercise
Price be readjusted to the Exercise Price that would have been in effect if such Dilutive Issuance had not occurred or been consummated.
For all purposes of the foregoing, the following shall be applicable:
(1) Issuance of Options. If, during the Adjustment Period, the Company in any manner grants or sells any Options and the lowest price
per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise, or exchange
of any convertible securities (“Convertible Securities”) issuable upon exercise of any such Option (such shares of
Common Stock 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 shares of Common Stock shall be deemed to be outstanding and
to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes
of this Section 3(i)(1), the “lowest price per share for which one share of Common Stock 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.
(2) Issuance of Convertible Securities. If, during the Adjustment Period, the Company in any manner issues or sells any Convertible
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(b)(2), 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(b)(2),
except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issue or sale.
(3) 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 shares of Common Stock 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(i)(3), 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 Share 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(i)(3) shall be made
if such adjustment would result in an increase of the Exercise Price then in effect.
(4) 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 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 share of Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in
accordance with Section 3(i)(1) or 3(i)(2) above and (z) the lowest VWAP of the shares of Common Stock on any Trading Day during the
five (5) consecutive Trading Days immediately following the consummation (or, if applicable, the announcement) of such Dilutive Issuance
(for the avoidance of doubt, if such public announcement, if applicable, is released prior to the opening of the Principal Market on
a Trading Day, such Trading Day shall be the first Trading Day in such five (5) Trading Day period and if this Warrant is exercised on
any given Exercise Date during any such period, the Holder may elect to earlier end such period (including, solely with respect to such
portion of this Warrant exercised on such applicable Exercise Date)). If any shares of Common Stock, Options, or Convertible Securities
are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount
of cash received by the Company therefor. If any shares of Common Stock, Options, or Convertible Securities are issued or sold for a
consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration,
except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company
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 shares of Common Stock, Options, or Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed
to be the fair market value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares
of Common Stock, Options or Convertible Securities (as the case may be). The fair 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.
(5) Record Date. If, during the Adjustment Period, the Company takes a record of stockholders for the purpose of entitling them (A)
to receive a dividend or other distribution payable in shares of Common Stock, Options, or in Convertible Securities or (B) to subscribe
for or purchase shares of Common Stock, Options, or Convertible Securities, then such record date will be deemed to be the date of the
issue or sale of shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had
held the number of shares of Common Stock acquirable upon complete 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 shares
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that to the
extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) Pro Rata Distributions. During such time as this 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 holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this 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 shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date 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 shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in
the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation). 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.
e) Fundamental Transaction. If, at any time while the Warrants are outstanding:
1)
the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into
another person;
2)
the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions;
3)
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 shares of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property
and has been accepted by the holders of 50% or more of the Company’s shares of Common Stock or 50% or more of the total voting
power of the Company’s shares of Common Stock;
4)
the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization
of shares of Common Stock or any compulsory share exchange pursuant to which the shares of Common Stock are effectively converted into
or exchanged for other securities, cash or property; or
5)
the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other
business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with
another person or group of persons whereby such other person or group acquires 50% or more of the Company’s shares of Common
Stock or 50% or more of the total voting power of the Company’s shares of Common Stock (each a “Fundamental
Transaction”); then, upon any subsequent exercise of a Warrant, the Holder shall have
the right to receive, for each share of Common Stock 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 shares of capital stock 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 shares of Common Stock 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 share of Common Stock in such
Fundamental Transaction and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any
choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental
Transaction.
Notwithstanding
anything to the contrary, in the event of a Fundamental Transaction, other than a merger where the primary purpose is to the change the
Company’s domicile, 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 shares of Common Stock 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 shares of Common Stock
are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided,
further, that if holders of shares of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction,
such holders will be deemed to have received common stock 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 contemplated 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 contemplated 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 public announcement of the applicable contemplated 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(e) and (D) a remaining option time equal to the time between the date of the public announcement of the applicable
contemplated 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(e) 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
shares of Common Stock 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 shares of Common Stock prior 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 be added to the term “Company” under this Warrant (so that from
and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer
instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally with the Company), and may exercise
every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations
of the Company prior thereto under this Warrant with the same effect as if the Company and such Successor Entity or Successor Entities,
jointly and severally, had been named as the Company herein.
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 shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding. For the avoidance
of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless of (i) whether the Company has
sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs
prior to the Exercise Date.
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 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 Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is 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 email to the Holder at its last 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 stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled
to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to
deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to
be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. 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.
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 of the Company.
i) Shareholder Approval. If required, the Company shall hold a special meeting of shareholders (which may also be at the annual meeting
of shareholders) at the earliest practicable date after the date hereof, but in no event later than forty five (45) after the applicable
date for the purpose of obtaining shareholder approval with the recommendation of the Board of Directors that such proposal be approved,
and the Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals
in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal. The Company shall
use its reasonable best efforts to obtain such shareholder approval, and officers, directors and shareholders shall cast their proxies
in favor of such proposal. If the Company does not obtain shareholder approval at the first meeting, the Company shall call a meeting
every three (3) months thereafter to seek shareholder approval until the earlier of the date shareholder approval is obtained or the
Warrants are no longer outstanding. Notwithstanding the foregoing, the Company may, in lieu of holding a special meeting of shareholders
as aforesaid, obtain the written consent of a majority of its shareholders covering the shareholder approval so long as prior to forty
five (45) days after the applicable date such written consents are obtained and in accordance with Exchange Act Rule 14c-2 at least twenty
(20) days shall have transpired from the date on which a written information statement containing the information specified in Schedule
14C detailing such shareholder approval shall have been filed with the Commission and delivered to shareholders of the Company.
Section
4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof
and to the provisions of Section 4.1 of the Purchase Agreement, 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. 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 Issue 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 Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company 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.
d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer
of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under
applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public
information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or
transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.
e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant
and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to
or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities
law, except pursuant to sales registered or exempted under the Securities Act.
Section
5. 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 the rights of a Holder to receive Warrant Shares on a “cashless exercise,” and to
receive the cash payments contemplated pursuant to Sections 2(d)(i) and 2(d)(iv), in no event will the Company be required to net cash
settle an exercise of this Warrant.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading
Day.
d) Authorized Shares.
The
Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with
the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants
that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly
issued, fully paid and nonassessable (which means that no further sums are required to be paid by the holders thereof in connection with
the issue thereof) and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and 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.
e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined
in accordance with the provisions of the Purchase Agreement.
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, notwithstanding the fact that
the right to exercise this Warrant terminates on the Termination Date. No provision of this Warrant shall be construed as a waiver by
the Holder of any rights which the Holder may have under the federal securities laws and the rules and regulations of the Commission
thereunder. Without limiting any other provision of this Warrant or the Purchase Agreement, 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 notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall
be delivered in accordance with the notice provisions of the Purchase Agreement.
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 Common Stock 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 of this Warrant, 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.
*(Signature
Page Follows)*
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.
**JFB CONSTRUCTION HOLDINGS**
By: Joseph F. Basile III
Chief Executive Officer
[SIGNATURE
PAGE FOR WARRANT B]
EXHIBIT
A
NOTICE
OF EXERCISE
TO: **JFB CONSTRUCTION HOLDINGS**
(1)
The undersigned hereby elects to purchase Warrant Shares of the Company pursuant to the terms of the attached Warrant dated October
1, 2025 (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, payable to the Company; 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:
(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the
Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name
of Investing Entity:
Signature
of Authorized Signatory of Investing Entity:
Name
of Authorized Signatory:
Title
of Authorized
Signatory:
Date:
EXHIBIT
B
ASSIGNMENT
FORM
*(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant 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:
---
## EX-10.16
SEC source: [ex10-16.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex10-16.htm)
**Exhibit
10.16**
**CONFIDENTIAL**
**OFFERING
SUBSCRIPTION PACKAGE**
*for*
**CM
OB Hotel Owner, LLC**
*A
Delaware Limited Liability Company*
**Effective
Date: April 24, 2025**
**Confidential
Private Placement Memorandum**
*for*
**CM
OB Hotel Owner, LLC**
**Summary**
**Offering:**
Up
to **$5,000,000** in Class A Limited Liability Company Interests1
Price
Per Interest: $1,000
| Line item | Minimum Purchase | | |
| --- | --- | --- | --- |
| Class A | 100 Units | N/A | $100,000 |
**Offering
Period:**
Until
successfully closed, terminated, or 12 months, subject to extension by the Manager (defined below).
**Sale
Exemption:**
Private
placement conducted pursuant to the
Securities
Act of 1933, Sec. 4(a)(2); Regulation D Safe Harbor, R. 506(c)
-
This
private placement memorandum (this “**Memorandum**”) is being furnished by the Manager solely for use by prospective investors
on an invite-only basis in evaluating the Company and this Offering (defined below) of Interests.
**THE
INVESTMENT OPPORTUNITY DESCRIBED IN THIS MEMORANDUM IS A REAL ESTATE INVESTMENT OPPORTUNITY WHICH INVOLVES RISK OF LOSS – NOTHING
IN THIS MEMORANDUM SHOULD BE CONSIDERED INVESTMENT OR FINANCIAL ADVICE. THERE MAY BE CONFLICTS OF INTEREST INVOLVING TRANSACTIONS BETWEEN
THE COMPANY AND THE SPONSORS. THE VALUE OF THE SECURITIES OFFERED HEREUNDER ARE SPECULATIVE IN NATURE AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OR JURISDICTION IN RELIANCE
OF AN EXEMPTION FROM REGISTRATION THEREUNDER.**
1 This is a “*best efforts*” Offering meaning the Sponsors will raise as much
of the target amount as possible to undertake the Project, but is not required to raise any
particular amount prior to deploying capital and conducting operations.
2 Neither the Manager nor any principals thereof are receiving commission for the sale of the Interests described herein. The Manager currently
does not intend to engage a registered broker-dealer, though it retains the right to do so in its sole discretion and pay such fees required
by such broker-dealer.
3 “Proceeds to the Company” are calculated before deducting organization costs and ongoing offering expenses, including, without
limitation, legal and accounting expenses, reproduction costs, selling expenses and filing fees.
I.
Introduction
CM
OB Hotel Owner, LLC (the “**Company**”) is a newly formed Delaware limited liability company previously formed to acquire,
develop, operate, manage, and ultimately sell real estate as described herein. The Company is managed by CM OB Hotel MGR, LLC, a Delaware
limited liability company (the “**Manager**”).
To
finance its objectives, the Company is offering (the “**Offering**”) up to 50,000 Class A (which may be comprised of one
or several subclasses) limited liability company interests (collectively, the “**Interests**” or the “**Units**”
and specifically for Class A, the “**Class A Interests**” or “**Class A Units**” as applicable) at $1,000
per Unit to prospective investors who meet the suitability requirements outlined herein (each an “**Investor**”; when
subscribing, a “**Subscriber**”; and once subscribed, a “**Member**”). The $1,000 per Unit price was determined
by the Manager and may not reflect the underlying value of the Company or its assets.
The
Company’s operating agreement (the “**Operating Agreement**”) and the subscription agreement between a Subscriber
and the Company (the “**Subscription Agreement**”) will govern the rights, preferences, privileges, restrictions, management
responsibilities, and terms of (i) the Units, (ii) the Manager and each Member, and (iii) this Offering. This Private Placement Memorandum,
along with its Exhibits (the Operating Agreement, Subscription Agreement, and the Subscription Execution Package) constitute the “**Subscription
Documents**” of this private placement Offering.
The
actual terms in the final Operating Agreement and Subscription Agreement may vary from those described in this Memorandum due to negotiations
with prospective Investors and formal amendments from time to time. In the event of any inconsistency between this Memorandum and the
final Operating Agreement and Subscription Agreement, the terms of the latter documents will supersede this Memorandum and govern the
investment transaction. The Operating Agreement and Subscription Agreement will contain more detailed terms that may not be fully summarized
here.
Investing
in these Interests involves substantial risks including possible complete loss of capital. This investment is only suitable for persons
who meet the suitability standards described herein and persons of adequate financial means who have no need for liquidity and can afford
to lose their entire investment without it affecting their livelihood. There is no public trading market for the Units, and the Manager
does not expect one to develop. The Manager does not plan to register the Units with the SEC to allow resales. Therefore, Investors should
be prepared to hold the Units long-term without liquidity expectations. Investors are strongly advised to consult their own professional
advisors and carefully review the risk factors in Section IX. Investment Considerations, below.
An
Investor’s rights to access or receive any information about the Company or its business is conditioned on the Investor’s
assurance that the information will be used solely by the Investor for purposes of monitoring its Interest, and that the information
will not become publicly available as a result of the Investor’s right to access or receive that information, both before and after
subscription. Each Investor (and later each Member) is required to maintain information provided to it about the Company or its business
in confidence and not to disclose the information except in certain limited circumstances. The Manager will be entitled to withhold certain
information from Members that the Manager deems to be in the best interest of the Company to keep confidential. In accepting receipt
of the Subscription Documents, each Investor agrees to in fact keep all such information in strict confidence.
Please
review all sections of this Memorandum closely for important details about the Company, its business plans, risk factors and the about
the Interests offered. If you have any questions or need additional information, please contact please contact Sameet Patel, CEO at:
sameet@onyxhospitality.com; 561-990-2222; 5740 Getwell Rd, Ste 5D, Southaven MS 38672.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Introduction**
Table *of* Contents
| IMPORTANT Notices to Investors | i |
| --- | --- |
| I. Summary of Principal Terms | 1 |
| II. Company Objectives and Project Description | 6 |
| III. Sources and USES of Funds for the Project | 7 |
| IV. Offering Compliance | 8 |
| Securities Act Compliance | 8 |
| Investment Company and Investment Adviser Act Compliance | 9 |
| Securities and Exchange Act Compliance | 10 |
| Reliance on Subscriber Information | |
| V. Subscription Procedure | 11 |
| VI. Details Regarding Management of the Project | 12 |
| Management Fees and Charges | 13 |
| Conflicts of Interest | 13 |
| Sponsors are Not Presently Bad Actors | 15 |
| Exculpation and Indemnification | 15 |
| VII. Reports to Investors | 16 |
| VIII. CLIENT PORTAL; ELECTONIC DELIVERY | 17 |
| IX. Investment Considerations | 17 |
| Real Estate Risks | 18 |
| Real Estate Financing Risks | 23 |
| Operating Risks | 25 |
| Securities Risks | 30 |
| Tax Risks | 32 |
| X. Tax Matters | 34 |
| XI. Access to Information | 38 |
| XII. Privacy Policy | 38 |
**Exhibit
Schedule**
- Exhibit A: Project Materials (Offering Memorandum)
- Exhibit B: Company’s Operating Agreement
- Exhibit C: Subscription Agreement
- Exhibit D: Subscription Execution Package
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **ToC**
II.
IMPORTANT Notices to Investors
Registration
Exemption
This
Interests offered are “securities” defined under applicable securities law but have not been registered with the SEC under
the Securities Act, as amended, or the securities laws of any state or any other jurisdiction, nor is such registration contemplated.
The Interests will be only sold in accordance with the exemption provided by Section 4(a)(2) of the Securities Act, and specifically
Regulation D promulgated thereunder, and other exemptions of similar import in the laws of the states where this Offering is (or will
be) made. Specifically, this Offering is (or will be) made in reliance of an exemption from registration of securities provided for under **Rule 506(c) of Regulation D**.
There
is no public market for the Interests and no public market is expected to develop in the future. The Interests sold hereunder are “**Restricted
Securities**” and may not be sold or transferred unless they are registered under the Securities Act *or* an exemption from
that registration under the Securities Act and under any other applicable securities law registration requirements is available. All
Interests must be acquired for an Investor’s own account. Furthermore, there are additional limitations on the transfer of Interests
as contained in the Operating Agreement. Every Investor should be aware that the Company has no obligation to repurchase the Interests
from Investors in the event that, for any reason, an Investor wishes to terminate the investment after subscribing, including by reason
of its failure to read this Memorandum, its failure to seek independent counsel or advice, or for any other reason.
THIS
MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL TO OR A SOLICITATION OF AN OFFER TO BUY FROM ANYONE IN ANY STATE OR IN ANY OTHER JURISDICTION
WITHIN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED.
Suitability
Standards
The
Company will accept subscriptions only from investors who at minimum qualify as accredited investors, as defined in Rule 501(a) of Regulation
D (“**Accredited Investors**”), a regulation issued by the SEC.
Investors
should read this Memorandum carefully and completely, as an investment in the Company requires a high level of financial ability and
willingness to accept the various risks associated with this opportunity as outlined throughout this Memorandum. An investment in the
Company also requires an ability and willingness to accept a lack of liquidity inherent to such opportunities; Investors must be prepared
to bear all such risks for an indefinite period of time, noting that they may have no ability to withdraw or receive a return of their
investment throughout the duration of this Investment, and noting further that no assurance can be given that the Company’s investment
objectives will be achieved.
In
subscribing for Interests, eligible Investors will be required to represent their status and eligibility, along with their acknowledgement
and acceptance of these risks. Investors will be required to confirm and represent that the Interests are being acquired for their own
account, without any present or foreseeable need to dispose of or liquidate the Interests. The suitability standards defined herein are
only minimum standards; the Manager will have final authority to admit or reject any eligible subscription for any reason.
Additional
Important Notices
This
Memorandum is furnished on a private placement basis only to certain persons to provide relevant information about a potential investment
in equity Interests of the Company. This Memorandum is to be used ***only*** by the person to whom it has been delivered, and
solely in connection with the consideration of the purchase of the Interests described in this Memorandum. The information contained
in the Memorandum should be treated in a confidential manner and may not be reproduced, transmitted, or used in whole or in part for
any other purpose, nor may it be disclosed to any third party without the prior written consent of the Manager. By accepting this Memorandum,
each Prospective Investor agrees to return it to the Manager, along with any copies (and destroy any electronic copies), promptly upon
request.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **i**
All
documents relevant to this Offering and any additional information that is requested by an Investor, and which is reasonably available
or that can be obtained without unreasonable expense or delay shall be made available by the Manager upon request, subject to considerations
of applicable laws, confidentiality, trade secrets, and proprietary information. Each Subscriber is invited to meet with a representative
of the Company and to ask questions or discuss matters concerning the terms and conditions of this Offering. Note however, other than
the Sponsors or as expressly authorized by the Manager, no other Person has been authorized to give any information or make any representations
regarding this Offering, the Company, the Manager, or the Sponsors. Any representation or information not contained in this Memorandum
and supporting documentation (including all Exhibits hereunder) or expressly given by a Sponsor must **not** be relied on as having
been authorized by the Manager. Any prospective investor who receives information or representations from any other source about the
Company, this Offering, or any other matter relevant to an investment decision, should contact the Company immediately to determine the
accuracy of such information.
The
information contained in this Memorandum is given as of the date on the cover page above unless another time is specified. Investors
(or Subscribers, as the case may be) should not infer from either the delivery of this Memorandum or any sale of Interests that there
have been no changes in the facts, circumstances, or terms described since that date. The Manager reserve the right to modify the terms
of this Offering and of the Interests described in this Memorandum. Notice of these changes may not be given to any prospective Investor,
Subscriber, or Member until after the fact.
Prospective
investors are not to construe the contents of the Subscription Documents or any prior or subsequent communications from the Manager or
the Sponsors as legal, financial, or tax advice. Each Investor must rely on their own representative as to legal, financial, tax, estate
planning, and related matters concerning this investment opportunity. **THEREFORE**, **PROSPECTIVE INVESTORS ARE URGED TO CONSULT
WITH THEIR OWN LEGAL, FINANCIAL, AND INVESTMENT ADVISORS WITH RESPECT TO THESE MATTERS PRIOR TO MAKING AN INVESTMENT IN THE COMPANY.
INVESTORS SHOULD ONLY SUBSCRIBE AFTER CONDUCTING THEIR OWN DUE DILIGENCE SATISFACTORY TO THEMSELVES AND THEIR ADVISORS.**
EVERY
INVESTOR SHOULD BE AWARE THAT THE COMPANY HAS NO OBLIGATION TO REPURCHASE THE INTERESTS FROM INVESTORS IN THE EVENT THAT, FOR ANY REASON,
AN INVESTOR WISHES TO TERMINATE THE INVESTMENT AFTER SUBSCRIPTION, FAILS TO READ THIS MEMORANDUM, FAILS TO SEEK INDEPENDENT ADVICE, OR
OTHERWISE WANTS TO TERMINATE ITS SUBSCRIPTION AFTER EXECUTION.
Forward
Looking Statements
Certain
information contained in this Memorandum and accompanying exhibits constitutes “**Forward-looking Statements**,” which
can be identified by the use of forward-looking terminology such as “project,” “projected,” “may,”
“will,” “should,” “expect,” “anticipate,” “estimate,” “intend,”
“continue,” or “believe,” or the negatives or other variations or comparable terminology, though not exclusively
so. Due to various risks and uncertainties that are outside of the control of the Manager or the Company, including those set forth in
various parts of this Memorandum, actual events or results may differ materially from those reflected in the Forward-looking Statements.
Any Forward-looking Statements or information contained in this Memorandum or supporting documentation should be considered with these
risks and uncertainties in mind. Neither the Company nor the Manager will be obligated to revise or publicly release the results of any
revision to any Forward-looking Statements, except as required by applicable law. Accordingly, undue reliance should not be placed on
any Forward-looking Statements and information.
Certain
information contained in this Memorandum and accompanying exhibits is regarding the prior performance of the Manager, the Sponsor, their
principals, or their Affiliates, and Investors should keep in mind that past or projected performance is not necessarily indicative of
future results, and there can be no assurance that the Company will achieve comparable results or that the Company will be able to implement
its investment strategy successfully or achieve its investment objectives.
IN
VIEW OF THE FOREGOING PARAGRAPHS, IN MAKING AN INVESTMENT DECISION ABOUT THE OPPORTUNITY PRESENTED IN THIS OFFERING, INVESTORS MUST RELY
ON THEIR OWN EXAMINATION AND DILIGENCE OF THE COMPANY AND ITS BUSINESS AND INVESTMENT PLANS AND OBJECTIVES, THE BACKGROUND AND QUALIFICATIONS
OF THE SPONSORS, AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **ii**
Legends
THIS
MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY IN ANY STATE OR OTHER JURISDICTION TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH STATE OR JURISDICTION. THE INTERESTS OFFERED HEREBY HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE “**SEC**”) OR BY THE SECURITIES REGULATORY AUTHORITY OF
ANY STATE OR ANY OTHER JURISDICTION, NOR HAS THE SEC OR ANY SUCH SECURITIES REGULATORY AUTHORITY PASSED ON THE ACCURACY OR ADEQUACY OF
THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. THIS MEMORANDUM IS NOT, AND UNDER ANY CIRCUMSTANCES TO
BE CONSTRUED AS A PROSPECTUS OR ADVERTISEMENT FOR A PUBLIC OFFERING OF THE SECURITIES REFERRED TO IN THIS MEMORANDUM.
THE
PRESENCE OF A LEGEND FOR ANY GIVEN STATE REFLECTS ONLY THAT A LEGEND MAY BE REQUIRED BY THAT STATE AND SHOULD NOT BE CONSTRUED TO MEAN
AN OFFER OR SALE MAY BE MADE IN A PARTICULAR STATE. IF YOU ARE UNCERTAIN AS TO WHETHER OR NOT OFFERS OR SALES MAY BE LAWFULLY MADE IN
ANY GIVEN STATE, YOU ARE HEREBY ADVISED TO CONTACT THE COMPANY. THE SECURITIES DESCRIBED IN THIS MEMORANDUM HAVE NOT BEEN REGISTERED
UNDER ANY STATE SECURITIES LAWS (COMMONLY CALLED “BLUE SKY” LAWS). THESE SECURITIES MUST BE ACQUIRED FOR INVESTMENT PURPOSES
ONLY AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OF SUCH SECURITIES UNDER SUCH LAWS, OR AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
--
***State
specific legends are contained at the end of this Memorandum*.**
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **iii**
I.
Summary of Principal Terms
The
following information is presented as a summary of principal terms of the offer and sale of the Interests only and is qualified in its
entirety by the terms and conditions of the Operating Agreement and the Subscription Agreement, copies of which are attached to this
Memorandum as exhibits. Capitalized words that are used but not defined herein have the meaning given to them in the Operating Agreement.
Unless otherwise expressly noted, all references to monetary values are in United States dollars. Prior to making any investment in the
Company, all of the Subscription Documents should be reviewed carefully.
**The Issuer:** The Company is *CM OB Hotel Owner, LLC*, a Delaware limited liability company that was formed to acquire the Property by way of ownership of the SPE (defined below).
**The Offering:** The Company is offering its Class A Interests (the holders thereof collectively referred to as “**Class A Members**”) on a private placement basis to Investors who satisfy the eligibility standards described in this Memorandum. At present, the Company anticipates selling its Interests to raise up to $5,000,000 in subscriptions, though the Manager may raise more or less within its discretion.
The Offering shall commence as of the Effective Date of this Memorandum, April 24, 2025, and shall terminate on the earliest of: (i) the date the Manager, in its discretion, elects to terminate, (ii) the date upon which Subscription funds for at least a minimum amount necessary to undertake the Project have been procured (such amount determined within the discretion of the Manager), or (iii) twelve (12) months from the Effective Date (initially and as may be extended by the Manager, the “**Offering Period**”).
**Investment Opportunity:** In 2020, the Sponsor acquired certain real property located at 8386 Camp Creek Blvd, Olive Branch, MS 38654 (the “**Property**”). Thereafter, the Sponsor (by and through a certain Onyx OB Hotel LLC, a Florida limited liability company and herein referred to as the “**SPE**”) began developing the Property into a hospitality real estate asset to be flagged as a *Courtyard by Marriot* hotel (the “**Project**”).
This Company is now conducting this Offering in order to a) acquire ownership of the SPE from the Sponsor in order to have beneficial ownership of the Property, 2) thereafter continue to fund ongoing development and see the Project completed through fruition, and 3) ultimately operate and sell the same.
Note that the Company has undertaken the Project by and through the SPE that will, pursuant to an equity rollover to be conducted in connection with, be wholly owned by the Company. In effect, the SPE is the listed owner of the Property, though profits and losses flow to this Company as its sole owner. Therefore, all references in this PPM and in accompanying documents to the Company undertaking the Project and its various operations should be read as if the Company is doing so *by and through the SPE*.
Moreover, the equity rollover means that the Sponsor will be receiving a direct economic reimbursement and benefit for its initial takedown of the Property. Proceeds from this Offering will be utilized toward acquiring the asset from the Sponsor.
*See* Section II. “Company Objectives and Project Description.”
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 1 of 45**
**Commitment Term:** The current “**Commitment Term”** for Members is projected to be five (5) years. The Manager may elect to extend the Commitment Term twice, each for two years, if, in good faith, it deems such extension(s) to be in the best interest of the Company. Therefore, this investment may be illiquid, and Investors should be prepared to leave their investment in the Company until the completion of the Project.
**Use of Proceeds:** Proceeds of this Offering will be used by the Company to continue to 1) pay for all Operating and Organizational Expenses of the Company (as defined in the Operating Agreement) and the Manager (including all fees due to the Manager or its Affiliates and other service providers), and 2) recapitalize equity placed by the Sponsor when the Sponsor acquired the Property, noting that development has already begun at the expense of the Sponsor. For specific details, please see Section III. “Sources and Use of Funds.”
**Investor Suitability:** The Company will accept subscriptions from Investors who at minimum qualify as Accredited Investors. *See* Section IV. “Offering Compliance – Eligible Investors and Suitability Standards.”
Investments from non-U.S. Persons are permitted only with the express consent of the Manager, and if admitted the Company will perform standard withholdings as required or advisable.
**Investment Classes:** The specific Class A Membership Interests currently offered are Class A, Membership Interests, and when together with Class B Membership Interests, are collectively defined as the “**Membership Interests**” or simply the “**Interests**” of the Company. With respect to any minimum investment amount for Class A Membership, the Manager may accept a lesser amount within its discretion.
- **Class A Members.** The minimum investment amount for Class A Membership Interests is $100,000. Class A Members will be entitled to a **Preferred Return Rate of 8%** (beginning as of the date the Property is operational) and will share in upside distributable proceeds, as outlined in the distribution mechanism below.
- Class B Members. Class B will consist solely of the Sponsors and other Persons within the sole discretion of the Key Persons. Class B will also be entitled to a share in upside distributable proceeds, as outlined in the distribution mechanism below.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 2 of 45**
**Capital Contributions & Calls** In subscribing to the Company, each Member shall make a capital contribution of the total amount such Member is willing to invest (its “**Capital Contributions**”). A Member’s Capital Contributions (as adjusted to reflect the allocation of income and losses of the Company) may **not** be withdrawn except as set forth in the Operating Agreement.
If the Company requires additional capital for the sake of the Project, the Manager may (i) issue and sell additional Interests, (ii) accept Member, Sponsor, or third-party loans, and/or (iii) request additional capital from Members through a capital call (each a “**Capital Call**”).
Capital Calls are anticipated *if and only if* the Project faces a material need but will be binding on all Members and a failure to contribute pursuant to a duly noticed Capital Call may result in the dilution of that Member’s Interests in the Company and may additionally result in penalties set forth in the Operating Agreement within the judgement of the Manager.
**Distributions; Allocations:** The Preferred Return
The Company will provide all Class A, Class A-2, and Class A-3 Members with a **Preferred Return at a rate commensurate with their Membership Class** annually (and prorated for years in which a Subscriber is a Member for only a portion of the year). The Preferred Return will be cumulative and non-compounded, accruing on Unrecovered Capital Contributions as of the date the Property receives a certificate of occupancy to begin hospitality services or on the date the Member actually provides such Capital Contributions, whichever occurs later. The Preferred Return Accounting Period (period of time in which the account is crystalized) shall be annual, though the Preferred Return itself is likely to be paid out quarterly. The Preferred Return will not count toward a return of Capital Contributions and is not a guaranteed payment.
Distributions
Prior to making any distributions, the Company will first use available cash and assets to pay obligations and Organizational/Operating Expenses, including fees to the Manager and other parties, and including any expenses related to a Capital Event. The Company may also set aside a reasonable contingency reserve should the Manager determine it to be necessary. The amount available to the Members will be net of those items (“**Distributable Cash**”).
Distributable Cash resulting from the Project shall be paid out as follows:
(i) **First**, 100% to all Class A Members *pro rata* in accordance with their Unrecovered Capital Contributions until they have received distributions equal to their accrued and unpaid Preferred Returns; then
(ii) **Second**, if 100% to the Class A Members *pro rata* in accordance with their Unrecovered Capital Contributions until they have zero Unrecovered Capital Contributions; then
(iii) **Third and Finally**, all remaining Distributable Cash shall be distributed 70% to the Class A Members *pro rata* in accordance with their respective Membership Interest Percentages and 30% to the Class B Members *pro rata* in accordance with their Membership Interest Percentages *until* the Class A Members achieve an IRR of fifteen percent (15.00%), then 60% to the Class A Members (*pro rata* as above) and 40% to the Class B Members (*pro rata* as above) thereafter.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 3 of 45**
Allocations
The Company’s recognized items of income and gain will be allocated to the Members’ Capital Accounts in a manner generally consistent with the distribution procedures stated above and qualified by the allocation rules as stated in the Operating Agreement. The Company’s recognized items of loss or credit will be allocated *pro rata* amongst all Members in accordance with the total Unrecovered Capital Contributions remaining with the Company, *except, however*, that at the discretion of the Manager the Company may endeavor to pass along certain losses related to depreciation expenses and other taxable impacts of a similar nature in a manner other than as described above; within the good faith and reasonable discretion of the Manager, these items may instead be allocated in specific proportion between the Class A Members on the one hand, and the Class B Members on the other hand.
**Loan Financing:** The Company has already secured a senior loan for the development and construction of the Project (in this context, the Company is referred to as the “**Borrower**” and the “**Loan**” from a “**Lender**”).
**Manager; Sponsors:** The Manager is *CM OB Hotel MGR, LLC*, a Delaware limited liability company. The Manager will be materially governed by its Key Persons, Sameet Patel and Nilesh Patel (collectively, the “**Key Persons**”).
The Key Persons, by and through their own respective entities or otherwise, are also the **“Sponsors”**, though from time-to-time additional Sponsors who are not also Key Persons may be added within the discretion of the Manager. The Sponsors are granted Class B Membership Interests and may also invest in the Company (directly or indirectly) by purchasing Class A Interests on the same terms as other Investors but are not obligated to do so.
**Management of the Project:** All management decisions regarding the business of the Company will be made by the Manager alone. The Manager will have sole authority to, without limitation, bind the Company to any agreement it deems necessary to accomplish the business purpose of the Company, hire vendors, and incur debt on behalf of the Company. The Members will have no control over the day-to-day operations of the Company and will be permitted to vote only 1) to remove or replace the Manager if it has engaged in certain removable conduct or 2) if the Manager proposes to amend the economic rights of the Members or on any other matters specifically set forth in the Operating Agreement. No Investor should invest unless they feel comfortable entrusting full management of the Fund to the Manager and its Key Persons pursuant to the Operating Agreement, to which they will be legally bound.
**Management Compensation & Services:** The Manager (or a Sponsor directly, as applicable) is entitled to the following fees in connection with its services to the Company:
- A **Development Fee equal to $250,000**, paid out in installments at the discretion of the Manager related to the development of the Property
**Fiduciary Duties:** The Manager, for as long as it remains the Manager, will owe the common law fiduciary duties of care and of loyalty to the Company and its Members. The Manager will devote time to the Company as is reasonably necessary in its discretion to effectively manage its affairs. The Manager and the Sponsors are **not** otherwise precluded from engaging in or pursuing, directly or indirectly, any interest in other business ventures of any kind, nature or description, independently or with others – including ventures that may compete with the Company. *See* Section V. “Details Regarding the Management of the Project.”
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 4 of 45**
**Transfer Restrictions and Redemptions:** The transfer of any Interests is subject to several restrictions, including applicable securities laws and the consent of the Manager. Note that, specifically, the Interests will be deemed “*restricted securities*” under the Securities Act and may not be sold or transferred to third-parties for at least twelve (12) months following their purchase. Additionally and above, the Manager’s consent shall also be required for all transfers, though the Manager will allow transfers for estate planning purposes provided beneficial ownership and governance is unchanged and the same complies with applicable securities laws. Members may not withdraw from the Company prior to its termination and dissolution, and no Member has the right to require the Company to redeem its Interest. The transferee of any Interests must meet all investor suitability standards, complete subscription documents and comply with any applicable securities, anti-terrorism, “KYC”, and anti-money laundering requirements.
However, the Manager may cause the Company to redeem a Member’s Interests at Fair Market Value (less expenses) if it reasonably deems the Member poses compliance risks under securities laws, anti-money laundering regulations, anti-terrorism financing regulations, or other applicable laws and regulations. Such redemption may occur on terms the Manager believes to be, in good faith, fair and reasonable and may take into account facts and circumstances associated with the cause of redemption.
**Side Letter Agreements:** The Manager anticipates that certain Investors may invest substantial amounts in the Company or may be members or Affiliates of the Sponsors. These Investors may be offered certain additional economic rights and other terms of their investment in the Company that differ from other Members. Pursuant to the authority under the Operating Agreement, the Manager may enter into “side” agreements with these Investors which provide that such Investors may receive more favorable investment terms. These agreements will always be allowable within the sole discretion of the Manager.
**Risk Factors; Important Misc. Items:** An investment in the Company and the Company’s investment strategy involves significant risks, including those associated with investments in the Company’s targeted industry, market, and particular type of contemplated real estate investment; certain Members may even be subject to additional ERISA standards or additional tax risks as well. A Member could lose all or a substantial amount of their investment in the Company. *See* Section IX. “Investment Considerations” below in this Memorandum for a detailed (but non-exhaustive) list of risk factors.
***End
of Section. Memorandum continues on the following page.***
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 5 of 45**
III.
Company Objectives and Project Description
***Company
Objectives***
The
Company has already acquired the Property and begun construction/development. Ultimately, the Company’s objectives are to (i) preserve
and protect the Company’s original invested capital, and (ii) produce investment returns for its Members.
The
Company will be wound up at the earliest of (i) the occurrence of a sale of all or substantially all of the Company’s assets in
a manner determined by the Manager in its sole discretion (likely at the end of the Commitment Term); or (ii) entry of a judicial decree
of dissolution or the occurrence of a nonwaivable event requiring dissolution pursuant to Delaware law.
Of
course, there can be no assurance that any of the foregoing objectives will be met or that the Property once acquired, will ever be sold,
or sold on terms advantageous to the Company. In view thereof, Investors should approach an investment opportunity in this Company as
illiquid and should be prepared to leave their investment in the Company until, at minimum, the Property is sold, and the Company wound
down. *See* Section IX. “Investment Considerations.”
A
more detailed discussion of the business plan the Manager intends to implement is set forth in Exhibit A – Project Materials.
***Investment
Strategy; Project Plan***
The
Sponsor has identified and acquired approximately 3 acres of land available for purchase in Olive Branch, Mississippi suitable for development
of a hospitality real estate asset. The Project is classified as a “new development” or “new build” project.
The Sponsor has already funded both the initial acquisition, the securing of the Loan, and the beginning of the development, and this
Offering is intended to provide liquidity and recapitalization for the Project on an on-going basis.
In
sum, the Sponsor, Onyx Hospitality, aims to capitalize on the sustained growth and strong market fundamentals in Olive Branch, Mississippi,
by developing a 117-room Courtyard by Marriott that caters to both business and leisure travelers. Positioned in one of the fastest-growing
cities in the Mid-South and minutes from Memphis, Tennessee, this project seeks to fill the gap in upscale lodging offerings in an undersupplied
market. Onyx Hospitality leverages its extensive experience in developing premium-branded hotels to maximize returns through operational
efficiency and brand loyalty. The Project is expected to generate a stabilized Net Operating Income (NOI) of $2.3 million by Year 6,
with an anticipated exit sale price of $27 million, offering investors a projected 23.1% IRR and a 2.5x return on equity multiple. By
aligning its strategy with demographic trends, corporate expansions, and surging demand for upscale accommodations, the Sponsor is well-positioned
to deliver attractive risk-adjusted returns.
The
Project Plan is currently as follows:
- **Q1
2024 – Project Initiation (COMPLETE):**
-
- Land
acquisition completed.
-
- Soft
costs and permitting processes initiated.
- **Q2
2024 – Construction Mobilization (COMPLETE):**
-
- Site
preparation and foundation work begins.
-
- Coordination
with contractors and suppliers secured.
- **Q3
2024/25 – Vertical Construction (ONGOING):**
-
- Structure
erection, including framing and building envelope.
-
- Plumbing,
electrical, and HVAC installation underway.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 6 of 45**
- **Q2
2025 – Interior Finishes:**
-
- Installation
of FF&E (Furniture, Fixtures, and Equipment) and OS&E (Operating Supplies and Equipment).
-
- Final
inspections and quality control.
- **Q1
2026 – Completion & Opening:**
-
- Final
walk-through and punch list resolution.
-
- Grand
opening and transition to operational management.
- **Year
1 – Stabilization Phase:**
-
- Focus
on increasing occupancy and ADR (Average Daily Rate).
-
- Marketing
to key demand generators such as corporate travelers and logistics hubs.
- **Years
2–5 – Optimization & Growth:**
-
- Continuous
improvement of operational efficiencies and revenue maximization.
- **Year
6 – Exit Strategy:**
-
- Targeted
disposition of the asset at an anticipated price of $27 million, yielding an attractive return profile for investors. Of course, the
above plan is anticipated, but not guaranteed. The Manager will have the authority to undertake other customary and necessary activities
associated with, and incidental to, the Project. More information can be found in the attached Exhibit A – Project Materials,
and the plan referenced above with respect to the Project is collectively referred to as the “**Project Plan**”. However,
prospective investors should be aware that market conditions, viability of the Project Plan, and such other factors as outlined in
this Memorandum, may greatly affect the Company’s currently contemplated strategy (*see* Section IX. “Investment
Considerations” for a non-exhaustive list of potential risk factors). The Company cannot, and does not, guarantee the results
of the Project Plan, and may modify the same in material ways without prior notice to Members.
IV.
Sources and USES of Funds for the Project
The
presently contemplated sources and uses of capital for this Project are set forth below. *All prospective Investors are advised that
the sources and uses figures presented are merely estimates and are subject to material change without notice to any Member.*
Anticipated
total Project cost: $[]
***Sources
of Funds***
| Debt | 71.85 |
| --- | --- |
| Equity (from the proceeds of this Offering) | 28.15% |
| Total | 100% |
***Uses
of Funds***
| Acquisition of the Property, including Closing Costs (ALREADY COMPLETE) | 8.95 |
| --- | --- |
| Soft Costs | 9.74% |
| Hard costs (including Developer Fee) | 53.17% |
| FF&E/OS&E | 20.43% |
| Financing Costs | 1.28% |
| Reserves | 6.43% |
| Total | 100% |
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 7 of 45**
V.
REGULATORY Compliance
Securities
Act Compliance
The
Interests offered are considered “securities” as defined by securities law. The Securities Act requires that securities be
registered with the SEC unless an exemption from registration is available. The Interests will **not** be registered under the Securities
Act. Offers of Interests will be made in reliance on an exemption from registration pursuant to **Rule 506(c)** under Regulation D
of the Securities Act. Other than filing the requisite notices with federal and state securities agencies on behalf of the Company, the
Manager does not intend, nor will Members be entitled to require the Company, to qualify or register the Interests with any state or
federal governmental securities agency. No reports will be made to any governmental agency under any federal or state securities laws
other than informational reports and notices of the sale of securities as may be required pursuant to the applicable exemption.
The
Interests will be considered “*restricted securities*” and may not be resold unless and until the Interests are subsequently
registered under the Act and applicable state securities laws or unless appropriate exemptions from registration are available. In any
event, Investors may not resell the Class A Shares for twelve (12) months from the date of purchase (and acceptance by the Company) pursuant
to Rule 144 of the Securities Act. Further restrictions to resale and/or transfer are set forth in the Operating Agreement.
***Eligible
Investors and Suitability Standards***
Interests
are offered only to certain Accredited Investors.
In
addition to the net worth, income, and investments standards described herein, each Member must have separate funds (other than their
investment in this Company) adequate to (i) meet their own personal needs and contingencies, (ii) must have no need for prompt liquidity
from their investment in the Company, (iii) can bear complete loss of their investment, and (iv) must purchase Interests for long-term
investment for their own account only and not with a view to resale or distribution.
Each
Subscriber, whether alone or with a purchaser representative, must also have sufficient knowledge and experience in financial and business
matters generally, and in particular, commercial real estate, to be capable of evaluating the merits and risks of investing in the Company.
Because of the restrictions on withdrawing funds from the Company and the risks of investment (some of which are discussed under Section
IX. “Investment Considerations” below, an investment in the Company is not suitable for an investor that does not meet
the suitability standards as outlined herein. A prospective Investor may not, however, rely on the Manager or the Sponsor to determine
the suitability of its investment in the Company; they must consult with their own legal and financial advisors regarding the same. **The
Manager and the Sponsors assume no liability for a Subscriber’s decision to invest in the Company**.
Representations
and requests for information regarding the satisfaction of investor suitability standards are included in the Subscription Agreement
as an accompanying Investor Suitability Questionnaire that each Subscriber must complete at the time of subscription. To ensure Investors
meet the suitability requirements set forth herein and before selling Interests to any Investor, the Manager may make all inquiries reasonably
necessary to satisfy itself that each Investor is so eligible.
Subscribers
may also be required to provide additional evidence as deemed necessary by the Manager to substantiate information or representations
contained in their respective Subscription Agreements. The standards set forth above are only minimum standards. The Manager reserves
the right, in its exclusive discretion, to reject any Subscription Agreement for any reason, regardless of whether a Subscriber meets
the suitability standards contained in this Memorandum. In addition, the Manager reserves the right, in its exclusive discretion, to
waive minimum suitability standards *not* imposed by law. The Manager will impose suitability standards comparable to those contained
in this Memorandum in connection with any resale or other Transfer of Interests permitted under the Operating Agreement.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 8 of 45**
***Restrictions
on Bad Actors***
Pursuant
to Rule 506(d) of the Act, the Company may be prohibited from relying on Rule 506 exemptions if certain Persons including the Sponsors
and any Investor who purchases 20% or more of the Company’s voting equity have been subject to certain disqualifying events (as
defined by the SEC) including being convicted of, or are subject to court or administrative sanctions for securities fraud and/or misrepresentation,
other violations regarding financial matters, and other specified laws (“**Bad Actors**”). Therefore, such Bad Actors
who have been subject to such disqualifying events may not purchase more than 20% of the Company’s equity and may not participate
in management or fundraising for the Fund.
***Non-U.S.
Investors***
The
Company may accept Investors under this Offering who are Non-U.S. Persons. However, the Company will take reasonable steps to ensure
it does not sell to any prospective Investors found on the United States Department of Treasury’s Office of Foreign Assets Control
(“**OFAC**”) “**Specially Designated Nationals**” or “**Blocked Persons**” lists. Furthermore,
the Company will prohibit any resales or transfers to such designated individuals.
Additionally,
no Interests shall be offered or sold to any Person who (i) is a person residing in a sanctioned country, (ii) is an organization controlled
by a sanctioned country, (iii) is an agency of a sanctioned country, (iv) has 15% of its assets in the aggregate in a sanctioned country,
and/or (v) derives more than 15% of its operating income from investments in, or transactions with sanctioned countries or persons on
OFAC’s Specially Designated Nationals or Blocked Persons lists.
**Investment
Company Act and Investment Adviser Act Compliance**
Under
the Investment Company Act, companies engaged in the business of investing in securities are required to register with the SEC unless
an exemption from registration is available. The Company expects to be definitionally exempt from the requirements of the Investment
Company Act because it is in the business of owning, operating, and managing real estate, and not investing in securities. Thus, as an
operating company and not an investment company, its activities do not subject the Company to the requirements of the Investment Company
Act. However, in the event a regulatory body disagrees with this interpretation, the Company intends to secondarily rely on the exemption
specified in Section 3(c)(5), which, pursuant to SEC guidance, is available to companies investing real estate-related assets and whose
securities are not redeemable in the ordinary course.
Likewise,
under the Investment Advisers Act, any Person in the business of and compensated for providing investment advice with respect to investment
in securities must register as an investment adviser unless an exemption from registration is available. As the Company’s investments
consist primarily of interest in real estate assets and not securities, neither the Manager nor any Sponsors are in the business of nor
are compensated for providing advice with respect to investment in securities. Therefore, the Manager is not, and does not intend to
become, a registered investment adviser or an exempt reporting adviser under the Investment Advisers Act, or under any state regulatory
authority.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 9 of 45**
**Securities
and Exchange Act Compliance**
Interests
are being offered and will be sold directly by the Manager on behalf of the Company. Under the Securities and Exchange Act of 1934 (the
“**Exchange Act**”) no Person other than a broker-dealer registered with the Financial Industry Regulatory Authority (“**FINRA**”)
may induce or attempt to induce a sale or purchase of securities unless an exemption from registration is available. The Manager and
the Sponsors are not and do not intend to register as broker-dealers in reliance on Rule 3a4-1 of the Exchange Act (the “**Issuer
Exemption**”), which provides an exemption to associated persons of the issuer of securities provided that such associated persons,
among other things, (i) are not Bad Actors, (ii) perform significant duties for the issuer after the Offering’s conclusion, and
(iii) do not receive compensation in any form based directly or indirectly on securities transactions.
***Plan
of Distribution***
Presently,
no underwriters, brokers, dealers, or finders have been engaged by the Manager to offer or sell Interests. However, this does not preclude
the Manager from engaging such third parties for this service in the future, always in the sole discretion of the Manager. In such an
instance, commissions may be payable to these third parties and the current representations above in this Memorandum may change accordingly,
and without notice.
**Corporate
Transparency Act Compliance**
The
Corporate Transparency Act (“**CTA**”), enacted by Congress in January 2021, imposes new beneficial ownership reporting
requirements on newly formed and smaller existing domestic corporate entities. Such entities are also known as “**reporting companies**.”
The CTA aims to combat money laundering, terrorist financing, and other illicit activities by requiring these entities to disclose information
about their beneficial owners to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“**FinCEN**”).
Under
the CTA, a “**beneficial owner**” is defined as an individual who, directly or indirectly, (i) exercises substantial control
over the entity, or (ii) holds, directly or indirectly, at least 25% of the equity interests in the entity. Certain entities, such as
publicly traded companies, regulated financial institutions, and governmental authorities, are exempt from the reporting requirements.
However, the Manager does not believe the Company is eligible to rely on such exemptions. Therefore, the Company may be deemed a reporting
company and will thus be required to submit a report to FinCEN that includes the name, date of birth, current address, and unique identifying
number (*e.g.,* driver’s license number, passport number, FinCEN ID) of each beneficial owner.
Failure
to comply with the CTA’s reporting requirements may result in civil and criminal penalties, including fines and, for ongoing significant
violations, imprisonment. Investors should be aware that the Company will collect and maintain beneficial ownership information in accordance
with the CTA and may be required to disclose such information to FinCEN or other regulatory authorities upon request. The Manager will
be responsible for ensuring the Company’s compliance with the CTA’s reporting requirements. Any Investor who is or becomes
a beneficial owner of the Company will be required to provide the necessary information to the Manager to facilitate the Company’s
compliance with the CTA. In the event an Investor fails to provide such necessary information to the Manager, the subscription of such
Investor may be refused or, alternatively, the applicable Investor may be redeemed by the Company.
Investors
should note that the foregoing is only a summary of the CTA’s key provisions and requirements. Investors should consult their own
legal and tax advisors to understand the full implications of the CTA on their investment in the Company and any additional reporting
obligations they may have as Members of the Company.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 10 of 45**
VI.
Subscription Procedure
The
Interests available hereunder will be sold on a “*best efforts*” basis within the discretion of the Manager. This means
that the Company is not likely to close on any single Investor’s subscription until it receives aggregate commitments for a minimum
amount determined by the Manager to be sufficient to undertake the Project. At that time, likely just prior to (or commensurate with)
the closing of the purchase of the Property, the Manager will close on all reserved subscriptions it has received at once, and thereafter
in several additional closings on a rolling basis (each a “**Subscription Closing**”).
To
subscribe for Interests, a Subscriber must complete in full, execute and deliver to the Company a fully completed, dated and signed Operating
Agreement and Subscription Agreement, together with (i) exhibits (including the Investor Suitability Questionnaire) (ii) any other documents
requested by the Manager for the purpose of satisfying the Manager’s due diligence obligations and (iii) its Capital Contributions
consistent with its subscription. Any Subscription Agreement that is submitted to the Company without all applicable submissions (or
submissions otherwise contain incomplete information) will not be processed by the Company until submitted by the Subscriber. The delay
could result in a Subscriber not being admitted to the Company.
Under
the terms of the Subscription Documents, Subscribers and Members may, from time to time, at the discretion of the Manager, be required
to provide representations, documentation, instruments, or information to facilitate their subscription, satisfy applicable anti-money
laundering requirements, accredited investor status, investor sophistication, and for certain other purposes as may be reasonable or
necessary.
The
Manager reserves the right to accept or reject any subscription, in whole or in part, for any reason, including from eligible Subscribers.
In the event the Manager refuses to accept a Subscriber’s subscription, any subscription funds received will be returned without
interest or accrued profit/loss allocation. If in the judgement of the Manager the Company is unable to meet a sufficient amount sought
under the Offering prior to acquiring the Property, then this Offering may terminate and any Subscriber funds received shall be returned,
without interest, and no Interests shall be deemed sold.
Persons
whose subscriptions are accepted by the Company will be admitted as Members of the Company and will have an equity interest therein.
Each Interest includes the right of that Member to all benefits to which a Member may be entitled pursuant to the Operating Agreement
and under applicable law, together with all obligations of the Member to comply with the terms and provisions of the Operating Agreement
and applicable law.
In
connection with completing the subscription procedures described above, each Subscriber must deposit their subscription amount into an
account set up by the Manager in the Company’s name, or, if determined by the Manager, to a title company for purposes of closing
on an investment transaction on behalf of, and in the name of, the Company. The Manager may maintain accounts at any bank or banks of
their choosing, in its sole discretion. Prior to the closing or termination of the Offering, subscription amounts will be held in the
account for the benefit of the Company and the applicable Subscribers.
***Subsequent
Offerings***
The
Manager also has the authority to admit additional Members in a Subsequent Offering at a later time, provided that such additional Members,
in joining the Company, comply with the added terms as outlined in the Operating Agreement, which may include the payment of additional
“true up” sums to capture the market-value change of the Company.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 11 of 45**
VII.
Details Regarding Management of the Project; SPONSORS
The
Manager is responsible for the management and day-to-day administration and operations of the Company and the Project at-large. As discussed
previously in this Memorandum, the Manager retains sole and exclusive authority to govern the Company and the Project. Absent express
removable conduct on the part of the Manager, or an amendment which would adversely impact the economic rights of the Members, no Member
shall be permitted, in their capacity as a Member, to participate in the business and affairs of the Company or the Project.
***Key
Persons of the Manager***
The
Company has no board of directors, officers, or employees but will be managed by the Manager. The Key Persons, which are the principal
governing persons of the Manager and are Sponsors, are identified on a “look-through” basis (that is to say, each Key Person
may have an entity in place for their position, but on a look-through basis, each Key Person, as an individual, is identified) in the
table below and will act in similar roles to those of directors, executive officers, and significant employees of a corporation. Such
Key Persons shall devote such time to the Company as is required to fulfill the Manager’s fiduciary obligation to the Company and
its Members but are not obligated to devote their exclusive time. This list is current as of the date of this Memorandum, although the
Manager may admit additional members to the Manager at any time.
Because
the Company is newly formed, there is no financial reporting with respect to compensation during the previous fiscal year. The Manager
will earn compensation as discussed below. The exact amounts that each Key Person may earn listed below cannot be determined at this
time.
**Name** **Look-through position (within the Manager)**
Sameet Patel Managing Member
Nilesh Patel Managing Member
***Key
Person Backgrounds***
Background
information on each of the Key Persons is included in the attached Exhibit A, including prior histories relevant to the Project.
However, Investors should be aware that prior results are NOT indicative of future performance or future results, which may vary significantly;
Investors are encouraged to conduct due diligence satisfactory to themselves with respect to each Key Person.
***Third
Party Professional Service Providers***
*M&W
Law, PLLC* is the counsel for the Company and the Manager (“**Company Counsel**”) but has **not** provided
(and will **not** provide) any advisory or investment opinions regarding the Project, its offered terms, or the Property, and
is NOT (and will NOT be) counsel for any prospective Investor. All prospective Investors are entitled to independent legal counsel in
connection with their potential investment hereunder and are encouraged to engage with the same.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 12 of 45**
The
Manager will timely select an appropriate CPA (the “**Accountant**”) to service the Company and its tax and financial
needs. The Manager will also timely select an appropriate fund administrator (an “**Administrator**”) whose purpose will
be to ensure administrative tasks necessary for the responsible management of Investor’s and their capital are handled. The Manage
may also elect to handle the same in-house. The Administrator is likely to utilize the Company Portal to help facilitate its administrative
services.
The
Manager has the right, in its sole discretion, to change the Company Counsel, Accountant, or Administrator at any time. The Members may
be required, from time to time, to provide the Company Counsel, Accountant, or Administrator (if a third party) with such information
as reasonably requested, including contact information, tax identification information, banking information, and other information reasonably
required for the proper administration of the Company.
Each
of the aforementioned providers to the Company shall provide and perform such services as are desired by the Company and/or as may be
customary for such provider, including, without limitation, the preparation and filing of legal documents, tax returns, quarterly and
annual reports, and other such services. As such, these providers are likely to receive and access confidential information provided
to the Manager pertaining to Investor personal information. The Administrator shall also assist with the onboarding of all Investors.
Further
and as discussed above, the Manager is engaging the services of an outsourced property manager (a “**Property Manager**”)
to manage the Property on the ground, once operational. This means that the Manager will be relying heavily on the Property Manager to
perform its services satisfactorily. The Manager will oversee the Project, provide oversight with respect to the Property Manager, and
will take commercially reasonable steps to ensure satisfactory service, but it must be noted that the same cannot be guaranteed. Moreover,
the Manager also has the authority to change Property Managers, engage in this role itself, or even hire another Affiliate to takeover
the role of Property Manager.
**Management
Fees and Charges**
The
Manager will be entitled to the fees described in Section I of this Memorandum regardless of the success or profitability of the
Company. **None of the compensation described herein was determined by arm’s length negotiations**. As a result, the Company
may pay higher fees to the Manager and its Affiliates than it might otherwise pay to an independent third-party manager. Such compensation
may create a conflict of interest. **All Investors are advised to review and familiarize themselves with any fees payable to the Manager
or Sponsors/Affiliates, and only invest if they approve of the same.**
***Reimbursement
of Expenses***
The
Company will reimburse the Manager (or an Affiliate of the Manager) for any Operational and Organizational expenses the Manager or its
Affiliate(s) incur in the conduct or management of the Project. However, the Company will not reimburse the Manager for the Manager’s
general overhead expenses or for expenses the Manager incurs in the conduct or operation of its own business (as opposed to the Company’s
business).
Note,
again, that as the Property has already been acquired and development has commenced, all funded by the Sponsor and its associates. Thus,
proceeds of this Offering will be utilized to recapitalize expenses placed by the Sponsor, as a reimbursement of the same.
**Conflicts
of Interest**
IMPORTANT:
The conflicts described below and in various parts of this Memorandum and any accompanying Exhibits and materials, and all future unknown
conflicts, **shall not** be the basis of a violation of fiduciary responsibility by the Manager or the Sponsors to the Company
and the Members. This Memorandum does not purport to identify all potential or certain conflicts of interest. All Members, in subscribing
to the Company, will be required to waive claims against the Manager and the Sponsors related to conflicts in the Operating Agreement.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 13 of 45**
For
example, the Manager may hire personnel or engage third parties to run the operations of the Company or its assets who may be Affiliates
of the Manager or the Sponsors. These Persons will be vetted and hired solely by the Manager and the other Members will not be active
in the hiring process. This may cause a conflict of interest when the Manager is determining which service providers to use. Such Persons
may receive salaries, wages, or fees for those services which may be commensurate with rates charged by local providers of such services,
and those fees will be retained by those Persons, even if those Persons are Affiliates, and those fees will not offset fees or other
expenses of the Company, including express fees outlined in the Operating Agreement due to the Manager. Neither the Company nor any Member
shall be entitled to any interest or compensation for such Affiliate’s services.
***Competition***
The
Manager and its principals, members, managers, officers, agents or Affiliates may be owners, managers, investors, partners, or employees
of other businesses, including businesses with similar purposes and objectives to the Company, and which may engage in capital raising
activities. The Manager may create and manage other investment funds or companies that have similar investment strategies and objectives.
It
is possible that these other businesses will own and/or manage real estate in the same geographic location as the Property and may compete
for tenants. Furthermore, it is possible that these other businesses will have funds to invest at the same time as the Company and may
compete for the assets such funds are invested in. There will then exist conflicts of interest on the part of the Manager between the
Company and the other businesses of the Manager. The Manager and/or its Affiliates may also acquire or develop real estate for their
own accounts.
However,
and in view of the foregoing, Investors are urged to take note that the Manager and its principals, members, managers, officers, agents
or Affiliates will not be prohibited from engaging in business that so compete, or from providing other services (such as, for example,
management or consulting) to other companies that may compete with the Company. Neither the Company nor any of the Members shall have
any rights in such independent businesses, and the Manager and its principals, members, managers, officers, agents or Affiliates are
under no obligation, legal or otherwise, to offer the Company or any Member the opportunity of operating, managing or investing in any
other enterprises or services.
The
Manager and its principals believe that each principal and/or employee will have sufficient time to discharge fully their respective
responsibilities to the Company and to other business activities (including other investment entities) in which they are or may become
involved. However, the Manager and its and its principals, members, managers, officers, agents or Affiliates need devote only so much
time to the Company as is reasonably required within their discretion. Therefore, conflicts may arise in the allocation of the Manager’s
or its members’ time among its other business activities.
***Investment
by the Sponsors***
Some
of the Sponsors may, but are not obligated to, invest in the project *outside of the* Manager entity. In other words, while the
Manager entity is not itself investing capital, it being a non-Member Manager, some or all the Sponsors may be investing directly and
personally (or through their own separate entities) as Class A Members in the Company. This is done to help align interests between the
Investors and the Sponsors, and because the Sponsors have a high degree of confidence in the investment.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 14 of 45**
If
the Sponsors do invest as Class A Members, they will do so on the same terms and conditions as other Class A Members *except* that a) that the Manager may, in its sole discretion, allow a purchase of less than the minimum amount required to become a Class A Member,
and b) the Sponsors may not be subject to promote/profit splits on themselves; that is to say, if a Sponsor is also a Member of the Manager,
for tax purposes it may not make logical sense to have them split profits with themselves. However, the Sponsors do not have a legal
obligation to do so and may ultimately not invest personally within their discretion. Investors should inquire about this point with
the Manager directly.
**Sponsors
are Not Presently Bad Actors**
As
of the Effective Date of this Memorandum, with respect to all Sponsors, none of the following events have occurred that would have any
material impact on the ability of those persons to serve in such position for the Company and the Manager:
**1.** None of the beneficial members of the Manager are disqualified from conducting an Offering under Regulation D of the Securities Act;
**2.** In the past 5 years, no beneficial member of management has been a debtor in a bankruptcy proceeding or had a receiver or similar
person appointed to oversee the business or property of such individual;
**3.** In the past 2 years, no beneficial member of management was a partner in a partnership or an executive officer in a corporation or
business association that was a debtor in a bankruptcy proceeding;
**4.** In the past 5 years, no beneficial member of management has been convicted in a felony criminal proceeding, or any other criminal
proceeding related to financial crimes or fraud (excluding traffic violations and other minor offenses), nor has any beneficial member
of management been found guilty by a civil, administrative, or agency ruling of violations of fiduciary responsibilities; and
**5.** As of the date of this Memorandum, neither the Company nor the Manager are involved in or subject to any pending litigation or claims
that would have a material impact upon their ability to discharge their obligations as Manager to the Company.
In
addition, neither the Company nor the Manager are currently involved in any litigation material to the Project. However, though certainly
not intended, as time progresses the Sponsors cannot guarantee that they will become subject to any of the actions above. Should such
events come to pass, the Manager will take reasonable steps to remove or correct those acts.
**Fiduciary
Duties; Exculpation and Indemnification**
The
Manager and the Sponsors will only be bound by the common law fiduciary duties of care and of loyalty. Investors should take particular
note that the Manager will not be further held to any heightened or specific duties by operation of law or otherwise, the same being
effectively waived by each Member when executing the Operating Agreement. Investors, therefore, should only invest in this Company if
they understand, acknowledge, and agree to the same.
Neither
the Manager, the Sponsors (including and especially the Key Persons), the Partnership Representative (as defined in the Operating Agreement),
nor any of the foregoing’s respective members, managers, shareholders, partners, employees, directors, officers, advisors, consultants,
personnel or agents or affiliates (collectively, “**Indemnified Persons**”) will be liable to the Company or any Member
for any losses, liability, claims, damages or expense (“**Losses**”) so long as (i) that Indemnified Person acted in good
faith and believed that conduct was in the best interests of the Company and (ii) that conduct did not constitute gross negligence, willful
misconduct, bad faith, or fraud. The Indemnified Persons will also not be liable for any act or omission of third parties, except to
the extent that any losses or damages caused by such third parties are primarily attributable to the Indemnified Persons’ gross
negligence, willful misconduct, bad faith or fraud. In addition, the Company shall advance and pay the expenses incurred by the Indemnified
Person in defending an actual or threatened civil or criminal action in advance of the final disposition of that action, *provided* that the Indemnified Person agrees to repay those expenses if found by final adjudication not to be entitled to indemnification. The
Company may obtain insurance (at the Company’s expense) for the Indemnified Persons for any Losses except those attributable to
conduct in the foregoing clause (ii).
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 15 of 45**
As
a result of such indemnification Members may have a more limited right of action than they would have absent these provisions in the
Operating Agreement. Any such indemnification shall only be recoverable out of the assets of the Company and not from any Member individually.
A successful claim for such indemnification would deplete the Company’s assets by the amount paid.
VIII.
Reports to Investors
***Progress
Reports***
The
Company is newly formed and does not have audited financial statements to provide as off the Effective Date. However, the Company’s
fiscal year will end on December 31. Following the close of each fiscal year, within 90 days the Manager shall provide relevant financial
statements (which may be audited or unaudited as applicable law requires) and a summary report regarding the Company’s previous
fiscal year (subject, however, to extensions filed by the Manager of the Company’s tax returns which would also cause such reports
to be delayed as reasonably necessary, or delays in the receipt of any information which the Manager requires to complete such reports).
Following
the close of each fiscal quarter, the Manager will, within a reasonable time, also provide a summary report regarding the Company’s
previous fiscal quarter and plans for the upcoming fiscal quarter. Note that these reports may not include financial statements.
***Tax
Reports***
As
a limited liability company (taxed as a partnership), the Company generally will not be subject to U.S. federal income tax, and each
Member subject to U.S. income tax will be required to include in computing its U.S. federal income tax liability its allocable share
of the items of income, gain, loss, and deduction of the Company, regardless of whether and to what extent distributions are made by
the Company to that Member.
Within
90 days after the end of each fiscal year, or as soon as practicable thereafter by extension and discretion of the Manager, the Company
expects to furnish to each Member sufficient information in the form of Schedule K-1s and related documents as is necessary for each
Member to complete U.S. federal and state income tax returns with respect to its Interest, along with any other tax information required
by law, *provided, however*, that the Manager may, within its discretion, elect to extend the Company’s tax filings, and consequently
such Schedule K-1s may be delayed to the Members accordingly and as reasonably necessary.
Tax
returns, Company reports, summaries, financials, and other relevant documents due to the Member may only be provided electronically by
the Administrator or through the Company Portal. Notwithstanding the foregoing, the Manager may be excused from providing reports within
the timeframe outlined above if it is delayed by acts or events outside of its control (*e.g.*, force majeure events, as that term
is commonly used).
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 16 of 45**
IX.
COMPANY PORTAL; ELECTrONIC DELIVERY
***Company
Portal***
The
Company may, but is not obligated to, establish an online investor portal, website, or data room (the “**Company Portal**”
or “**Portal**”) to provide investment updates, documents, and notices related to the offering. This may include, without
limitation, business and financial updates, business plans, financial projections, capital calls, amendments to the Operating Agreement,
and other investment-related information. Pursuant to the Operating and Subscription Agreements, Investors must consent to electronic
delivery of documents through the Company Portal or other authorized methods, which consent may be withdrawn with advance written notice
only.
Any
information provided through the Portal or other authorized Company communication channels will be considered delivered to and received
by the investor upon posting or delivery. Such information will be deemed accepted unless the investor objects in writing within the
timeframe specified. Members are responsible for regularly checking the Portal and maintaining accurate contact information to receive
electronic communications from the Company.
***Electronic
Delivery***
By
purchasing the Securities, investors consent to receive documents (including progress reports, financials, updates, tax return documents,
and all other formal, informal, and official documents) electronically through the Company Portal or other authorized electronic delivery
methods within the discretion of the Manager. Investors may withdraw consent for electronic delivery by providing advanced written notice
to the Company, effective prospectively only.
X.
Investment Considerations
An
investment in the Company involves a significant amount of risk and is suitable only for Persons who, at minimum, meet the eligibility
requirements specified in this Memorandum, who are of substantial means and have no immediate need for liquidity in the amount invested,
and who understand and can afford a risk of loss of all or a substantial part of the investment. There can be no assurance that any returns
will be realized or that a Member will receive a return of its capital. Accordingly, potential investors should carefully consider the
following factors, among others, before making an investment in the Company.
The
below listed items do not purport to be an all-inclusive or all-exhaustive list of risk factors associated with this Project and Offering.
Prospective Investors should evaluate the merits and risks of an investment into the Company themselves, based on factors that are uniquely
important to themselves. These risks may include certain risks relating to regulatory, operating, tax and investment matters, and each
Investor should consult with their own professional advisor(s) (legal, financial, tax, or otherwise) to consider carefully the following
factors.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 17 of 45**
**Real
Estate Risks**
***Risks
in the Real Estate Industry, Generally***
Investment
in real estate involves various risks which the Manager has little or no control of. Such risks could materially and adversely impact
the value of the Company’s investments. Such risks include, without limitation: (i) failures in implementation of the Project Plan;
(ii) downturns in national or local economic conditions which can result from a slowdown in the national or local economic growth and
a longer than normal recovery; (iii) an increase in unemployment, a decline in population growth in the locality in which the investment
is located, a change in the characteristics of the area in which the real property is located, restrictive governmental regulation, an
oversupply of the asset class in which the Company invests and/or a decline in popularity of such asset class; (iv) changes in prospective
tenant’s or prospective purchaser’s financial condition; (v) floods, fires, and other “acts of God” and other
casualty risks, some of which are uninsurable; (vi) changing laws including environmental laws and changing state and local regulations;
(v) changes in local and national governmental policies; (vii) changes in interest rates established by the Federal Reserve; and international
crises; (viii) environmental contamination or liabilities; (ix) competition from new and existing properties which may result in lower
occupancy levels; and (x) the continuing effects of the COVID-19 pandemic and other future pandemics.
***Risks
Associated with this Project, Specifically***
The
Property is in Olive Branch, Mississippi. While strategically located in one of the fastest-growing cities in the Mid-South, carries
several geographic risks that Investors should consider. Although Olive Branch benefits from its proximity to Memphis, Tennessee, which
drives demand from business and leisure travelers, any oversupply of hotel inventory in the greater Memphis area could exert downward
pressure on occupancy rates and Average Daily Rates (ADR) at the Olive Branch location. The local economy of Olive Branch is heavily
influenced by the logistics and manufacturing industries, with major employers such as FedEx, Williams-Sonoma, and Niagara Bottling.
A downturn in these sectors or corporate relocations away from the region could significantly impact hotel demand. As part of the Southeastern
United States, the region is vulnerable to severe weather events, including tornadoes, heavy storms, and flooding, which could disrupt
operations, increase insurance premiums, and necessitate costly repairs. Changes in local zoning ordinances, building codes, or tax structures
in Olive Branch or DeSoto County could impact the project’s cost structure and operating environment. While Olive Branch is experiencing
rapid growth, demographic changes or shifts in travel patterns could affect the long-term sustainability of demand in the region. Given
these geographic factors, maintaining strong brand affiliation and aligning with local economic trends will be critical in mitigating
these risks and securing the project’s long-term success.
Moreover,
as of the Effective Date of this Memorandum the general market conditions economy-wide are quite volatile, especially in real estate.
A fluctuation in interest rates and other macro-economic factors will undoubtedly have an impact on the outlook of the Project. However,
this Project has a specific time horizon during which time it is hoped that market conditions will stabilize or move in positive territory.
Note of course, this cannot be guaranteed and will be entirely outside of the hands of the Manager.
More
broadly speaking, cost increases and broader market and economic pressures would, of course, have a significant impact on the overall
projected viability of the Project, and such factors are almost impossible to predict. Ultimately, prospective Investors should be well
aware of the risks associated with the thesis contemplated by this Project prior to investing. Amongst these risks, and in no way exhaustively,
is the strong reliance on an effective marketing plan and an effective team to implement the same. While the Manager will be overseeing
the Project Plan, the Manager cannot guarantee that those the Manager hires to implement the plans will be effective in their services.
A large part of the success of the Project will be attributable to the Manager’s ability to successfully implement the Project
Plan and to raise revenues and generate value.
***Risks
Relating to Investments in Hospitality Real Estate, Generally***
Investing
in hospitality real estate can offer attractive returns, but it is inherently associated with a variety of risk factors that investors
should carefully consider.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 18 of 45**
The
hospitality industry is highly sensitive to macroeconomic conditions. During economic downturns, corporate travel, tourism, and discretionary
spending often decline, resulting in reduced occupancy rates, lower Average Daily Rates (ADR), and diminished revenue per available room
(RevPAR). Conversely, while the industry can rebound during economic upswings, the timing and pace of recovery may be unpredictable.
Hospitality assets often experience seasonal demand variations, with peak periods generating strong revenue and off-seasons seeing declines.
Markets reliant on specific seasons (e.g., beach resorts or ski destinations) may suffer significant revenue dips during off-peak periods,
creating cash flow instability.
The
success of a hospitality asset hinges on the efficiency of day-to-day operations, including guest satisfaction, cost controls, and brand
consistency. Poor management can lead to lower customer satisfaction, negative reviews, and declining occupancy. Franchised properties
further rely on adherence to brand standards, and failure to meet these can result in termination of franchise agreements. Moreover,
many hospitality properties operate under franchise agreements with well-known brands such as Marriott, Hilton, or Hyatt. While these
brands provide access to reservation systems, marketing channels, and customer loyalty programs, failure to adhere to brand standards
may result in the termination of the franchise agreement. Losing brand affiliation can severely impact revenue and asset value. Hospitality
properties require continuous reinvestment to maintain their competitive edge, meet evolving customer preferences, and comply with franchise-mandated
Property Improvement Plans (PIPs). Failure to allocate sufficient capital for upgrades and maintenance may erode asset value and reduce
long-term revenue potential. Public health crises, such as pandemics, can cause widespread cancellations, reduced travel, and prolonged
business disruptions. Such events may result in long-term changes to consumer travel patterns and business models, creating uncertainty
for investors.
***Risk
of Development/Renovation Costs Increases***
The
Company’s business plan requires development and construction undertakings. The estimated cost for such improvements may increase
due to unforeseen circumstances including but not limited to labor shortages or unrest and productivity issues, inclement weather, health
and safety hazards, subcontractor default and change orders, and subcontractor supplies and equipment price increases. The cost of labor,
supplies, parts, and resources may also significantly affect the outcome of the Project.
***Title
Risks***
The
Company plans to acquire the Property in fee simple, meaning it will hold full title and ownership rights (subject to any liens in favor
of a lender, if applicable, and subject to any joint venture structures). However, a title company search could uncover defects, liens,
or encumbrances impeding clean title transfer. Undiscovered easements or other third-party rights may also exist, limiting the Company’s
control and use. While the title company will issue a title insurance policy, it may contain exceptions resulting in inadequate protection.
To the Manager’s current knowledge, no material title defects or limitations exist. However, the possibility remains of undiscovered
flaws preventing full marketability. If adverse title issues emerge, it could impair the Property’s value, limit financing options,
and lead to potential litigation costs to resolve disputes. The Manager aims to mitigate risks by conducting thorough title due diligence
prior to closing. However, latent title risks persist that could result in uninsurable losses.
***Risks
Associated with Environmental Concerns***
When
investing in real estate assets, potential environmental hazards and liabilities require consideration. Environmental hazards may be
present naturally, or from prior land uses, improvements, or adjacent properties that are not discoverable even with commercially reasonable
due diligence. Common concerns include asbestos, lead paint, mold, soil contamination, underground storage tanks, dangerous elemental
presence, and buried hazardous materials. While the Manager intends to perform commercially reasonable environmental due diligence, including
obtaining a Phase I Environmental Study Assessment (a Phase I ESA) if required by the Lender, real estate investments inherently carry
potential environmental liabilities that cannot be easily eliminated (if at all). Investors should be aware of and prepared to accept
risks from undiscovered contamination issues that may be costly to address. Even with insurance and risk management, environmental liabilities
can affect returns.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 19 of 45**
At
present, the Manager does not have any indication of a material defect on the Property related to environmental hazards, however, this
does not mean none exist. Depending on severity, environmental issues can negatively impact property value, development potential, revenues,
ability to lease or sell, and suitability as collateral for financing. In the worst cases, environmental contamination can render a property
unusable or require complete loss of the asset.
Moreover,
real estate owners and operators may also be subject to a range of federal, state and local laws relating to environmental protection
and health/safety. These laws impose responsibilities for site conditions regardless of fault or knowledge of contamination. As an owner,
the Company could incur substantial costs for non-compliance, property damage, investigation, monitoring, removal and ongoing site remediation.
***Due
Diligence Risks***
The
Manager or its Affiliates will perform a level of due diligence on the Property it deems appropriate under the circumstances but cannot
guarantee any standard thereof. In making the assessment and otherwise conducting customary due diligence, the Manager will rely on the
resources available and, in some cases, investigations by third parties. There can be no assurance that all of the information the Manager
reviews will be accurate or complete in all respects. Therefore, there can be no assurance that the due diligence processes the Manger
undertakes will be sufficient, or that it will uncover all material facts that would be necessary to the Manager’s decision to
acquire the Property or that the Manager will reach accurate conclusions about the information it reviews. Accordingly, all Investors
should endeavor to undertake a level of due diligence that they feel appropriate for their own investment decision making calculus.
***Lack
of Diversification***
The
Company intends to invest in a single asset located in a single market. The risks the Company is exposed to from any potential events
listed above may therefore be more pronounced due to a lack of diversified investments. If any of the above listed risks were to occur,
the value of the Company and its asset may face a steeper decline than if the Company were to invest in more assets and/or diversify
the geographic regions in which it invests.
***Actions
by Competitors***
The
Company will be in competition with other real estate owners, some of whom may have greater resources, including private and public REITS
and other investment companies. Factors such as location, design, age, and quality of construction will influence this competition. If
rivals offer lower rental rates, the Company could lose potential tenants and may need to lower its own rates to keep current tenants,
which could negatively impact the Company’s financial performance and cash flow. Moreover, if competitors sell similar assets at
lower valuations, it may hamper the Company’s ability to sell its assets at favorable prices or terms, or possibly at all.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 20 of 45**
***Risks
from Operating Expenses and Inflation***
The
Company’s Operating Expenses, which include fees payable to the Manager and all third parties (including any Affiliates) may increase
faster than income growth or may deplete budgeted reserves, reducing profitability. Factors such as economic downturns, poor property
management, and deteriorating social conditions could reduce demand, increase vacancies, and prevent rental rate increases. Meanwhile,
expenses including utilities, taxes, insurance, maintenance, and management costs may rise faster than revenues or reserves, especially
under inflationary pressures. Inflation could also increase development and/or renovation costs needed for capital improvements and force
the Company to increase capital expenditure. Higher interest rates on variable debt in an inflationary environment could also raise the
Company’s debt servicing costs. If revenues fail to keep pace with rising costs, the Company may suffer declining profit margins
over time which could lead to financial shortfalls. Moreover, insufficient cash flows could force the Company to inject additional equity,
secure new financing, or liquidate assets earlier than planned. While keeping costs low and astutely executing the Project Plan helps
mitigate risks, economic forces largely beyond the Company’s control may lead to a significant mismatch between revenues or projected
values and expenses. Investors should be cognizant of inherent risks from inflation and the correlating rise of Operating Expenses outpacing
revenues and/or reserves.
***Insurance
and Casualty Loss Risks***
The
Manager will determine appropriate insurance coverage, if any, for assets of this nature and location. However, certain risks may be
uninsurable or available coverage insufficient. The Manager may ultimately decline to carry insurance coverage for the assets of the
Company. If obtained, insurance for catastrophic losses from events like earthquakes, floods, hurricanes, and terrorist attacks may be
either uninsurable or prohibitively expensive, therefore the Company could be underinsured for such losses. Even with adequate coverage,
changing building or zoning codes, construction costs, and inflation may result in repair/replacement costs that exceed insurance claim
proceeds. Certain risks like mold infestations, riots, criminal acts, and property devaluation over time may not be covered at all under
insurance policies.
Insurance
policies may have an overall cap on coverage, and insurable events may occur sequentially in time while subject to a single overall cap.
To the extent insurance proceeds for one event are applied towards a cap and the Company experiences an insurable loss after the event,
the Company’s receipts from an insurance policy may be diminished or the Company may not receive any insurance proceeds. Insurers
may also deny claims or limit payouts for disputed amounts. In such cases, the Company may initiate lengthy and costly legal proceedings
to compel insurers to pay, which may not result in an award of damages. Additionally, insurance companies experiencing financial distress
may be unable to pay claims as expected or may leave the Company uninsured. This could force the Company to find alternative coverage
at greater cost. Furthermore, the Manager or an insurance company, through insufficient oversight measures, may inadvertently allow a
policy to lapse, which could leave the Company exposed to substantial uninsured losses.
***Risk
of Eminent Domain***
Municipalities
and other government subdivisions may, in certain circumstances, seek to acquire the Property through eminent domain proceedings. While
the Company may seek to contest these proceedings, which may be costly and may divert the attention of management from the operation
of the Project, there can be no assurance that a municipality or other government subdivision will not succeed in acquiring the Property.
There is a risk that the Company will not receive adequate compensation for Property, or that the Property will not be able to recover
all charges associated with divesting the Property, meaning in turn, the Company will not recover its investment. If the government acquires
the real estate owned by the Company through eminent domain, the compensation paid may be inadequate in several respects: (i) the amount
may fail to fully reimburse the capital invested by the Company, (ii) the compensation may not cover reasonable costs and losses associated
with the forced divestment, such as relocation expenses or lost revenues during the transition period, and (iii) the amount may fail
to compensate the Company for anticipated economic returns, expenditures, lost opportunities, profit, or appreciation had the taking
not occurred.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 21 of 45**
***Risks
Due to Force Majeure Events***
Real
estate owners such as the Company face unpredictable risks from events broadly referred to as “*force majeure*.” Such
uncontrollable events include natural disasters, severe weather, fires, flooding, wars, riots, civil unrest, labor stoppages, supply
chain disruptions, “acts of God”, and global health crises. Force majeure events can significantly impair a real estate project’s
viability in multiple ways. Such impacts will almost always be material, and may include (but are not limited to) impacts to labor and
employment (including contractors the Company may engage), the closure of non-essential businesses (which may include businesses the
Company engages in to implement its business plan), the delay and closure of foreclosure/default/eviction proceedings with respect to
real estate holdings and lending ventures, and total loss of property, assets, operations, and values. The effects often have long-lasting
economic consequences that may not be fully experienced until months or years later. Recent examples such as the COVID-19 pandemic demonstrate
how global health pandemics can lead to widespread loss of livelihoods and prolonged financial turmoil across many industries. While
the outcomes and responses related to specific events like health crises cannot be predicted, Investors should be cognizant of the inherent
risks major exogenous shocks pose to the Company’s success.
Even
with insurance, changing building codes and construction costs may result in repair/replacement expenses above claim payouts for such
catastrophic events. Properties rendered unusable or value-impaired by disasters may continue generating negative cash flows from ongoing
expenses and debt service obligations. Loss of rents and diminished property value from such events can have significant adverse effects
on the financial performance and condition of real estate investments.
***Liquidity
and Disposition Risks***
Real
estate assets tend to be less liquid than financial instruments such as stocks and bonds. Factors constraining disposition opportunities
include, without limitation, a lack of potential buyers, asset condition, geographic location, macroeconomic environment, and regulatory
issues. These variables make it difficult to sell properties quickly or at optimal valuations. The Manager intends to sell the Property
based on market factors, but economic shifts could require an unexpectedly prolonged and possibly indefinite holding period. Carrying
costs including taxes, maintenance, and repairs accumulate during lengthy marketing periods, eroding returns. The Manager may also be
forced to sell below projected valuations. Despite the Manager’s targeted exit strategy, investors should be prepared to have capital
tied up for an indefinite period as opportunities to sell on acceptable terms may be limited. While the Manager aims to maximize returns,
inherent illiquidity risks beyond its control could result in lower-than-expected proceeds upon disposition. There is also no secondary
market for the Securities sold under this Offering, and transferability and redemption are highly restricted to the Manager’s discretion.
Ultimately,
when disposing of real estate assets, sellers often must make representations and warranties concerning a property’s finances and
condition. If the Company sells the Property, it may have to make statements about factors such as cash flows, expenses, contracts, compliance,
tenants, environmental status, and condition of improvements. If any representations turn out to be inaccurate or incomplete in a material
way – even inadvertently – the Company may be liable to a buyer for damages related to the mismatch between statements and
actual circumstances. The Company may need to hold back sale proceeds in escrow or reserves to cover potential legal and indemnity claims
emerging post-closing. Contingent liabilities also include indemnities if the Company retains any operating obligations after disposition.
Such latent issues could lead to legal liabilities reducing sale proceeds and returns to Investors, if not also delayed final liquidation
returns. The possibility of unknown contingent liabilities complicates efforts to maximize disposition proceeds in a timely manner and
distribute the highest share to Investors.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 22 of 45**
**Real
Estate Financing Risks**
***Failing
to Initially Raise Enough Equity Capital***
This
Offering is being conducted on a “*best efforts*” basis. No guarantee can be given that sufficient capital will be raised
to meet the Company’s objectives, even initially to acquire the Property. If the Company fails to raise enough capital, the Manager
may, in its sole discretion, return the funds to the Investors, without interest or accrued returns, in which case, Investors would have
lost the ability to invest funds elsewhere during that time.
***Need
for Additional Capital – Equity or Financing; Capital Calls***
Even
if this Offering is successful in raising sufficient capital for the Company’s anticipated needs, the Company might later require
more capital, whether to finance cost overruns, to cover cash flow shortfalls, or otherwise. There is no assurance that additional capital
will be available at the times or in the amounts needed, or that if capital is available it will be available on acceptable terms. For
example, if capital is available in the form of a loan, the loan might bear interest at very high rates, or if capital is available in
the form of equity, new investors might have rights superior to those of existing Members and may cause dilution; the Company does not
presently offer pre-emptive rights.
Moreover,
if the Manager elects to issue a Capital Call for property protection expenses, it will be binding on existing Members. This means that
a) Investors should be prepared that this investment may require follow on capital beyond what they originally intended to invest, and
b) Investors should be aware that a failure to participate in the duly noticed Capital Call will result in existing Members being diluted,
at the least, and subject to additional punitive penalties at the most (including but not limited to default fees assessed against distributions
owed, forced loans in favor of non-defaulting participating Members, and relegation of distribution rights behind non-defaulting Members).
These items are properly stated in the Operating Agreement and all Investors should review the same before committing to an investment
in the Company.
Ultimately,
however, if the Company requires additional capital and is unable to properly or timely source it in any capacity, it may have a significant
negative impact on the value of the Company’s investment and the Project Plan may ultimately fail, resulting in a loss of investment
for all participants.
***Risks
of Using Debt as Leverage***
In
addition to the equity funds raised in this Offering, the Manager anticipates obtaining financing from private or institutional Lenders
(*i.e.*, debt) as leverage to purchase the Property and/or complete the Project Plan. All debt service obligations (*e.g.*,
payment of principal, interest, fees, and other obligations) are considered Operating Expenses of the Company and will be paid before
any profits are calculated or distributed. In other words, all debt repayment (including interest and fees), comes before distributions
to Members. In this case, any Lender the Company engages with will require the Company pledge, as a first position priority lien, the
Property as security in favor of the Lender. Should the Company default on any of its obligations to a Lender for any reason (including,
non-exhaustively, due to any of the risks disclosed in this Memorandum), such Lender would have a right to foreclose on the Property
and take it away from the Company to sell or keep for itself. For example, a decrease in the revenues of the Property may materially
and adversely affect the Property’s cash flow such that future cash flows may be insufficient to make debt service payments on
the debt and also cover other Operating Expenses. If the revenue from the Property is insufficient to pay any debt payments and operating
expenses, the Company would have to use working capital or seek additional funds, and there can be no assurances that additional funds
would be available if needed, or, if such funds were available, that they would be available on acceptable terms. If the Company cannot
make debt payments, a lender could foreclose on the Property and Investors would be likely to lose some or all of their investment. In
such an event, there is no assurance or guarantee that the Lender will itself be made whole and may then come after any guarantor for
deficiencies, or that any proceeds of an ultimate third-party sale by the Lender would be sufficient to make the Company’s investment
in the Property whole let alone generate a profit back to the Company. In an instance of foreclosure, it is highly likely that the Project
will fail entirely, and all investment will be lost.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 23 of 45**
Moreover,
there is no guarantee that the terms of such debt financing will ultimately be favorable to the Company but may nevertheless be deemed
necessary by the Manager to achieve the Company objectives. There is also a risk that a lender may not provide additional draws, provide
due reimbursements, or otherwise uphold its contractual obligations timely. A Lender may also elect to hold back funds for reasons of
its own volition or may increase reserve requirements of the Company. If the Lender does not properly release funds as and when required,
or if greater reserves are required, the Project’s cash flows and operational budgets can be adversely affected, resulting in delays
or other serious detriments to the outcome of the Project. There is also the risk that at the time of sale of the Property, the sales
proceeds may be less than the amount needed to pay off the total remaining balance of the debt.
***Risk
of Loss of Control in Debt Financing***
A
Lender may require the Company to agree to various control provisions in favor of the Lender should the Company default on its obligations
under a Loan (and the accompanying loan documents). Such controls may include the following:
**1.** A Deposit Account Control Agreement (a “**DACA**”). The Loan may require the Company to enter into a DACA or
similar cash control provisions between the Company’s bank and the Lender. A DACA generally provides that should the Borrower (the
Company) default on its obligations under the Loan, the Lender will have the ability to take control of the operating accounts of the
Borrower, which includes rent rolls and other Project income. In such an event, the Lender and not the Manager would be in control of
the Company’s accounts and operational management. While a DACA will more than likely provide that the Lender must only offset
amounts owed to it with the rest still due to the Company, it is not guaranteed as the terms of a DACA may not be finalized until the
day of the takeover of the Property, or possibly even thereafter. All investors should be aware of this “cash trap” potential
as it may negatively and adversely affect and impact the success of the Project.
**2.** Loan Agreement Controls. In obtaining the Loan, the Company will have to agree to additional Loan Agreements, which are likely
to provide for general control provisions providing for management takeover, governance, and operational control of the Property should
the Company default on its Loan obligations. None of these terms are likely to be finalized until the closing of a Loan, and so cannot
be shared with specificity until final.
***Risk
of Increased Interest Rates***
Many
commercial loans in the present market require variable as opposed to fixed interest rates. With a variable rate loan, the interest rates
can increase substantially due to market conditions beyond the control of the Manager. The Manager can therefore give no assurance that
interest rates on the loans it obtains will not rise substantially. A rise in interest rates may increase the working capital needed
to make its debt service payments, harming the budget and overall Project Plan and anticipated returns. Additionally, higher interest
rates could negatively impact the market value of the Property and the ability of prospective purchasers to finance the acquisition of
the Property from the Company, thus causing the holding period to be longer than projected and negatively impacting Investors’
overall returns. Even on fixed interest rates, if economic conditions worsen and the Company is forced to extend, refinance, or otherwise
modify a Loan, the same interest rates may not apply and instead the Company may be left with higher rates. In such an event, all of
the aforementioned issues will be present, and the Project may be at risk.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 24 of 45**
***Refinance
Risk***
The
Manager may elect, for strategic reasons, that a refinance of its present debt (if any by such time) is necessary. It is also possible
that by such time, the Company may have only repaid a small portion of the principal of the Company’s prior debt, meaning a large
portion of refinanced funds may not be available to pay down Member investments, but rather the prior debt. Moreover, at the time the
debt must be paid off if the customary capitalization rate used for valuing a Property is substantially higher than today, then the Property
might be valued substantially lower, and the debt to value ratio allowed by Lenders might not allow a new Loan amount sufficient to pay
off the existing debt. The Company may either (i) not be able to refinance existing debt, or (ii) the terms of any refinancing may not
be as favorable as the terms of its existing debt. This risk may be exacerbated by continued lagging growth and future adverse economic
conditions. If the Company is unable to refinance or extend principal payments due at maturity, then the Company may not be able to repay
all such maturing debt which could result in the Company prematurely selling its assets and not being able to make distributions to the
Members. Furthermore, if prevailing interest rates or other factors at the time of refinancing result in higher interest rates upon refinancing,
then the interest expense relating to that refinanced indebtedness would increase and the Project’s financial forecast could be
materially and adversely affected.
**Operating
Risks**
***Reliance
on the Manager***
The
Manager will exercise full control over all activities relating to the Company and the Project, and Members will have no control of the
day-to-day operations or fundamental/major decisions of the Company, including Project investment and disposition decisions. Members
will only be afforded participation where expressly allowed under the Operating Agreement, which generally only involves amendments adversely
impacting a Member’s economic interests, or to remove and replace the Manager for Cause or upon its resignation. The Members will
also not receive the same detailed financial or Project-level information that is typically available to the Manager. Accordingly, Investors
will have to rely almost exclusively upon the judgment of the Manager (by and through the Key Persons and/or the Sponsors) regarding
every aspect of the Project and should invest only if they are confident in the Manager’s ability to undertake the Project.
In
this regard, the Manager and the Sponsors cannot give, and expressly do not give, any assurance that the Company will operate profitably
or achieve targeted returns, or that the Project will achieve any level of success. The Manager is a small company with few Sponsors;
the loss of a key team member could significantly damage the Company’s operations and investment strategy execution. There may
also be unknown facts or circumstances about the Manager or the Sponsors that are not disclosed to Investors or the public. The information
provided by the Manager may not include all the details that an Investor may want in order to properly evaluate the Manager’s abilities,
experience, and qualifications to manage the Company profitably. In short, the Company’s success depends largely on the Manager’s
continued service and ability to properly evaluate investments and manage operations. If the Manager fails to fulfill its obligations,
it could materially and adversely impact the Company. Therefore, Investors should, if they feel so inclined, conduct thorough due diligence
independently and not rely solely on information provided by the Manager in assessing the Manager’s capabilities. All prospective
Investors should *only* invest if they believe in the good faith integrity of the Sponsors.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 25 of 45**
The
Operating Agreement also provides for indemnification of the Manager and their affiliates and the advancement of certain expenses for
any losses for which the Manager is absolved from liability under the terms of the Operating Agreement. While the Manager would be required
to reimburse the Company for any advanced expenses incurred if the Manager is found to have committed Cause, such a process can take
a significant amount of time and resources to fully adjudicate, during which time the Company will be responsible for such expenses.
***Risks
of Relying on Third Parties***
As
mentioned above in this Memorandum, The Company may engage third parties (such as property managers, accountants, attorneys, administrators,
construction companies, etc.) to provide material and significant services necessary to a successful Project outcome. While the Manager
intends to oversee all third-party service providers, it cannot guarantee the results satisfactory performance of their services as it
may not actively govern and be responsible for them. Even if a third-party is an Affiliate of a Sponsor, that Sponsor may not directly
govern or control the operations of that third-party. Accordingly, if such third party performs poorly or becomes unable to fulfill its
obligations timely or with satisfaction, the Company’s business could be disrupted. Disputes between the Company and such third-party
service providers could also disrupt the business and may result in litigation or other forms of legal proceedings, which could require
the Company to expend significant time, money, and other resources. In the event of a dispute, the third party may even – with
or without merit – place a mechanics or workman’s lien on the Property, affecting the Company’s ability to later sell
or market the Property without first settling such disputes. The Company might also be subject to, or become liable for, legal claims
by tenants or other parties relating to work performed by the third-party service providers, even if the Company has sought to limit
or disclaim its liability for such claims or have sought to insure itself against such claims. The Company may or may not carry insurance
sufficient to cover any of these circumstances and the Company’s overall performance may significantly be harmed or delayed by
such disruptions.
***Lack
of Operating History; Limited Information to Prospective Investors and Future Members***
The
Company was recently formed and has no operating history, meaning there is less historical performance data, third-party evaluations,
comprehensive operations data, and other detailed information available compared to other investments. This could restrict the Investor’s
ability to fully assess the risks and potential of the investment and Investors cannot evaluate the merits of this investment based on
the past performance of the Company. All Investors are invited to request any available (to the extent any at all exists) operating history
and financial documentation regarding the Company and the Project from the Manager. The Manager will endeavor to provide what information
it deems feasible, subject to any confidentiality and protective measures within its discretion.
Prospective
Investors will need to make an investment decision with limited information compared to other investment opportunities. Accordingly,
an investment decision to purchase the Interests must be made based solely on an Investor’s own assessment of the Project, the
Sponsors, the Company, and the Property utilizing information available, which may not include information that in the context of other
investment decisions might be a necessary part of an Investor’s appraisal of the investment’s suitability. The information
provided may not include the same level of detail on operations, financials, management, and risks that may be available in other investment
opportunities such as publicly traded stocks, assets, or commodities.
As
a result of the limited information, Investors take on additional risks and uncertainty. With incomplete data, there is heightened potential
that actual investment performance will differ from Investor expectations. Therefore, Investors must be prepared to make an investment
decision despite imperfect information compared to alternative investment opportunities. The Manager encourages Investors to perform
in-depth due diligence to gather supplementary data that may allow for a more informed decision. However, Investors must be comfortable
with the risk that unknown factors could still lead to unexpected losses.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 26 of 45**
While
the Company will provide Investors with periodic statements concerning the Company and its business, it will not provide nearly all of
the information that would be required of a public reporting company, which means Members will not receive such periodic updates as they
may expect in other investment opportunities. More reliance and trust must be placed on the Manager when investing in such private opportunities.
***Accuracy
of Information; Forward-Looking Statements and Projections Could Be Wrong***
Certain
of the factual statements made in this Memorandum and its Exhibits, any diligence information requested and provided, and any supplemental
information are based upon information from various sources believed by the Manager to be reliable. However, the Manager may not have independently verified any of the information and will have no liability for any inaccuracy or inadequacy of the information. No
independent third-party professionals have been engaged to provide: (i) advisory opinions on the outlook and anticipated future performance
of the Company or its investments; (ii) to provide any opinion on, or verify any statements relating to, the experience, track record,
skills, contacts, or other attributes of the Manager or the Sponsors; or (iii) the veracity or completeness of projected returns. While
all the information in this Memorandum is presented by the Manager in good faith, there can be no assurance that explicit or implicit
valuations of any Interests or of the Company provided under this Memorandum reflect true fair market value.
Prior
to deploying capital, the Manager will make significant estimates and assumptions, including the time it will take to make an acquisition
and the time between acquisition and having it fully developed, improved, operated (including leased), and ultimately sold and liquidated.
Other assumptions may be made concerning the annual Operating Expenses, estimated future sales price, rental rates, and tenant default
rates. Over time, assumptions the Manager makes may prove to have been incorrect, and unanticipated events and circumstances may occur.
A variety of factors could cause results to differ materially from projections and could cause the Company to overpay for a Property,
surcharge its working capital budget, or overvalue a Property. Therefore, there are likely to be differences between projected results
and actual results, and the differences could be material and not in favor of investment success.
While
the Manager may make such financial projections available to prospective investors and may (but is not obligated to) provide updated
or accurate information during the course of the Project, INVESTORS MUST NOTE THAT ALL SUCH FINANCIAL AND PROJECT PROJECTIONS AND ANALYSIS
ARE PROVIDED “AS IS” AND ARE FORWARD-LOOKING STATEMENTS. THE COMPANY, THE MANAGER, AND THE SPONSORS DO NOT, AND CANNOT,
GUARANTEE THE ACCURACY, COMPLETENESS, OR VIABILITY OF SUCH PROJECTIONS AND CALCULATIONS – INVESTORS MUST NOT UNDULY RELY ON SUCH
INFORMATION BUT SHOULD INSTEAD CONDUCT THEIR OWN DUE DILLIGENCE AND REFLECT ON THE UNDERLYING ASSUMPTIONS IN THOSE PROJECTIONS TO A DEGREE
SATISFACTORY TO THEMSELVES PRIOR TO MAKING AN INVESTMENT DECISION HEREUNDER. The Manager will not be liable for any inaccuracies or incompleteness
in its projections regarding the Project.
***Limited
Financial Updates***
Specifically
in-line with the aforementioned risk of forward-looking statements, the Company will endeavor to provide financial and other updates
regarding the Company and the Project’s performance to the Members in accordance with the Operating Agreement on an ongoing basis.
In large part, the Company will only have information to report when the same is received by it from its underlying service providers.
The Manager cannot guarantee the frequency, content, accuracy, completeness, or materiality of any information it receives and similarly
delivers to the Members. Neither the Company, the Manager, nor any of their Affiliates may be able to verify the veracity or completeness
of any information that is made available, whether before the Project commences or during the investment period. Additionally, neither
the Company, the Manager, the Sponsors, nor any of their Affiliates make any representation or warranty that the data or information
provided is complete, correct, or accurately reflective of the Company or its investment’s performance.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 27 of 45**
***No
Assurance of Profit or Distributions***
There
is no assurance that the Company’s investments will be profitable or that any distributions will be made to the Members at all.
Distributions during operations are likely only to be available to the extent revenue exceeds expenses (which may include unforeseen
expenses that may arise). Additionally, even if there is available cash from operations, the Manager may in its sole discretion cause
the Company to retain some or all of such funds for working capital purposes, further renovations, reserves, or any other purpose the
Manager deems necessary to carry out the Project. Therefore, there can be no assurance as to if or when there will be any distributions
available from operations.
Additionally,
distribution of proceeds resulting from a Capital Event will only be available after all obligations (including any debts) are satisfied
by the Company and after all expenses related to the Capital Event are paid. In the event obligations and expenses exceed proceeds from
a Capital Event, Members may not receive distributions from such an event. Accordingly, there can be no guarantee that Members will receive
a return of their Capital Contributions or any profits resulting from a Capital Event.
***Risks
in Utilizing SPEs***
Within
the discretion of the Manager, the Property may not be directly owned by the Company, but instead by an SPE, which the Company would
be the 100% owner of *unless* a Co-Ownership opportunity is offered by the Manager. The utilization of an SPE has many advantages,
including the ability to separate the borrower (as a borrower) and the Property owner, from the “investment fund” arm of
the Project (*i.e.,* the Company). However, this also means that there may be multiple layers of ownership and corporate structuring
between a Member and the Property itself. Though an SPE would be owned by the Company and managed directly by the Manager (absent Co-Ownership
circumstances), legally speaking it would be an independent going concern. An SPE would also be subject to further restrictions and potential
liabilities due to the nature of it being the borrower, which risks will be imputed from an SPE to this Company.
***Risk
of Co-Investing; Side-Cars, Joint Ventures, and Preferred Equity Partners***
While
it is not presently contemplated, the Company may structure the purchase of the Property as a joint venture (side-car), which may involve
“preferred equity” or “mezzanine equity” partners in a drop-down co-ownership structure, or may elect to acquire
the Property via a “tenants in common” structure, the participants of any of the foregoing, including this Company, referred
to as “**Co-Owners**.” Any co-ownership structure is likely to be in the form of an SPE or by way of a Tenants in Common
Agreement (a “**TIC Agreement**”), except instead of the Company owning an SPE or the Property outright, it would only
be owned in part by the Company and in-part by other Co-Owners. This means that profits and losses of the Project would not originate
within the Company or a wholly owned SPE, but rather at the Co-Owner entity level of which the Company may be but one Co-Owner. The risks
associated with such co-investing include, without limitation, the following:
**1.** Any Co-Owner vehicle is likely to have its own terms regarding management and distribution of profits/losses; the Manager may not
retain exclusive governance but may have to share at least major decision making with all Co-Owners on a majority-vote or consent basis,
and distributions may not be on a pro rata basis where some Co-Owners may be entitled to priority distribution before the Company itself
is;
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 28 of 45**
**2.** The Company’s interests may be subordinate to both general and secured creditors of the Company’s assets. This subordination
could increase the Company’s risk of loss;
**3.** The Company’s, and therefore the Members’ interests and rights in the Project may be subordinate to the rights of some
or all Co-Owners.
**4.** Any agreement entered into between the Company and the Co-Owners may limit the Company’s control with respect to the management
of the Project including, without limitation, when to sell or refinance the Property.
**5.** Co-Owners might have economic and/or other business interests or goals which are inconsistent with the business interests or goals
of the Company.
**6.** In certain circumstances, the Company may be liable for the actions of the Co-Owners. Actions taken by the Co-Owners may subject
the Company to liabilities in excess of or other than those contemplated by the Manager.
**7.** In the event of bankruptcy, insolvency, disability or dissolution of the Co-Owners, the Company may be required to purchase the interests
of the Co-Owners. The Company may have insufficient funds or otherwise be unable to finance such a buy-out and may be required to liquidate
some or all of the Company’s assets to finance such a purchase.
**8.** Conflicts, disputes, or deadlocks may arise between the Company/Manager and the Co-Owners. The Company may incur significant costs
to resolve such disputes.
**9.** The Co-Owners may receive additional compensation in connection with the joint-venture which could decrease the revenue the Company
receives.
**10.** The Company may not be able to sell the Company’s interest in an asset on a timely basis or on acceptable terms if an exit
from the venture is desired for any reason, particularly if the interest is subject to the right of first refusal of the Co-Owners.
***Litigation
Risks***
The
Company, its assets, and key personnel may be subject to various litigation risks for reasons such as injuries sustained by persons on
the premises (including tenants, if any) or other third-parties, or other disputes. The Company, its affiliates, or principles may be
named as defendants in legal actions. Even if unsuccessful or without merit, litigation can be costly, time-consuming, and divert management
resources. Beyond direct costs, litigation involving the Company could harm business relationships, Company reputation, and investor
confidence. If an adverse judgment is awarded, the Company’s assets – including the Property – may be used to satisfy
liabilities and obligations, negatively impacting Investors. All businesses are susceptible to litigation, and this risk should be carefully
evaluated by potential Investors along with other risks associated with the Company.
***Digital
Security & Data Risks***
The
Company and its operations may also be subject to numerous digital and cyber security risks. Increasingly across all industries and sectors,
hacking, malicious cyber-ware, malware, ransomware, and other forms of digital crime are on the rise and poses a risk to all companies.
While the Company will take reasonable steps to safeguard its digital information, which includes the storage of data pertaining to the
Company, this Offering, and even Member/Subscriber data, it cannot guarantee that such data will remain safe at all times. The data collected
and stored by the Company may be hacked, stolen, or held for ransom by malicious actors beyond the control of the Company or any of the
third-party data providers the Company may elect to utilize from time to time. Investors should carefully consider these risks –
risks that pertain to every industry – prior to subscribing and providing data to the Company and the Manager (which will ultimately
be shared with the Company’s duly authorized third-party service providers as necessary).
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 29 of 45**
***Banking
Risks***
Members
will likely be required to deposit their subscription amount into an account set up by the Manager in the Company’s name, or, if
determined by the Manager, directly to a title company for purposes of closing on an investment transaction on behalf of, and in the
name of, the Company or its SPE. While the Manager may maintain accounts at any bank or banks of its choosing in its sole discretion
that are insured under the Federal Deposit Insurance Corporation (“**FDIC**”), it cannot and does not guarantee the safety
of those funds other than what is guaranteed to the Company by the FDIC. Banks, even the most reputable ones, may crash; market conditions
may result in significant liquidity strains, and other factors may occur beyond the control of the Manager.
Moreover,
the Manager may elect to place certain contingency funds in high yield savings accounts (such as a money market account or certificate
of deposit), treasury bonds, or other non-FDIC insured holdings to ensure that inflation or other economic factors are not adversely
affecting Company funds that remain undeployed or held in reserve. In those situations, the Manager cannot guarantee the security of
those funds, as the same may be subject to market volatility. Note that any such funds invested in this manner will not, and do not,
constitute a material component of the Project Plan and is not intended to create a managed investment portfolio on behalf of any Investor.
**Securities
and Structure Risks**
***Long-term
Investment***
An
investment in the Company is a long-term commitment. There is not now, and there is not expected to later be, a public or secondary market
for the Interests. Note that specifically the Interests will be deemed “*restricted securities*” under the Securities
Act, and at a minimum may not be sold or transferred for at least twelve (12) months. Moreover, Interests may not be assigned, transferred
or encumbered without a valid exemption from registration under the Securities Act, and in most cases, additionally with the prior written
consent of the Manager, which may withhold, condition, or delay such consent in its sole discretion.
Accordingly,
a Member may not be able to liquidate its investment and must be prepared to bear the risks of owning its Interest for an extended and
potentially indefinite period of time. The inability to transfer Interests in the Company may limit the availability of estate planning
strategies. However, the Manager has discretion in unilaterally exercising its right of redemption over a Member’s Interests. Investors
face involuntary withdrawal risk if deemed high risk by the Manager’s standards, which include for compliance purposes.
***Arbitrary
and Speculative Unit Price***
The
price of the Interests has been arbitrarily determined by the Manager based primarily on the overall capital requirement to undertake
the Project, including as a result of this Offering, the cost of organizing the Company, the amount the Manager anticipates the Company
needs to meet the Company’s investment objectives, and other financial considerations. The Offering price of Interests is not necessarily
indicative of the value of the Company, the Interests, or any or all of the Company’s asset(s) and are extremely speculative in
nature. The Company cannot assure that any Interests, if transferable, can be sold for the Offering price or any amount.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 30 of 45**
***Risks
Associated with Different Membership Classes; Side Letter Agreements***
Having
different Membership Classes is fairly common to such investment opportunities, but prospective Investors should be well aware of such
structure and inherent risks involved. In this case, each Class has separate economic rights (and in some instances, additional governance
rights) governed by the terms of each Membership Class. Note further that certain Investors may negotiate for and receive additional
and preferential economic, governance, or inspection rights that other Members generally are not entitled to. The Manager is permitted
to enter into such “*side letter agreements*” if it determines it in the best interests of the Company and need not
offer the same additional benefits to any other Investor.
***Interests
Not Registered, Company Not Registered; Manager and Sponsor not Registered***
The
Fund is not expected to be registered under the Investment Company Act because it is definitionally an operating company in the business
of owning, operating, and managing real estate assets and investing in securities. However, the Manager cannot guarantee that applicable
regulatory authorities will agree with this interpretation. As a secondary precaution in the event it is determined that the Company
might otherwise be subject to the Investment Company Act, the Company would then take the position that it is exempt from registration
under the Investment Company Act by way of the exemption specified in Section 3(c)(5), which, pursuant to SEC guidance, is available
to companies investing in real estate related assets and not securities. Moreover, in either instance, neither the Manager, nor the Sponsors,
nor any of their respective affiliates are in the business of advising the Company on investments in securities and thus are not, and
are not expected to be, state or federal registered investment advisers (or exempt reporting advisors) under the Investment Advisers
Act, nor do they intend to become so. The Investment Company Act and the Investment Advisers Act provides certain protection to Investors
and imposes certain restrictions on registered investment companies and advisors (including, for example, limitations on the ability
of registered investment companies to incur debt or provide additional disclosures), none of which will be applicable to the Company
or the Manager and Investors must be fully aware of these circumstances.
Additionally,
the Manager is not registered as a broker/dealer under the Securities Exchange Act of 1934, as amended, or with FINRA and is consequently
not subject to the record keeping and specific business practice provisions of the Exchange Act and the rules of FINRA. The Manager and
the Sponsors are permitted to solicit investments on behalf of the Company by way of the “issuer” exemption thereof.
The
Manager believes the Company and this offering are in compliance with applicable securities laws and regulations. However, regulatory
interpretations may evolve over time. The Company has not sought a formal legal opinion or explicit regulatory approval of the structure
and Offering, whether from Company Counsel or otherwise. If the SEC or a court later determines the Manager should have registered as
an Investment Adviser or broker-dealer, or the Company should have registered as an investment company, the Company could incur substantial
costs for legal defense fees, penalties, and coming into compliance. Additional consequences could include SEC injunctions against further
violations, investor lawsuits to recover damages, rights of rescission, and unenforceability of Company contracts. These outcomes would
negatively impact the Company and Members in material ways.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 31 of 45**
**Tax
Risks**
***FEDERAL,
STATE AND LOCAL INCOME TAX RISKS GENRALLY***
THERE
ARE VARIOUS RISKS ASSOCIATED WITH THE FEDERAL, STATE AND LOCAL INCOME TAX ASPECTS OF AN INVESTMENT IN THE COMPANY. IN VIEW OF THE COMPLEXITY
OF THE TAX ASPECTS OF THIS OFFERING, PARTICULARLY IN LIGHT OF CHANGES IN THE LAW AND THE FACT THAT CERTAIN OF THE TAX ASPECTS OF THIS
OFFERING WILL NOT BE THE SAME FOR ALL MEMBERS, EACH PROSPECTIVE INVESTOR IS STRONGLY URGED TO CONSULT HIS, HER, OR ITS OWN LEGAL
AND TAX ADVISOR CONCERNING THE EFFECTS OF FEDERAL, STATE AND LOCAL INCOME TAX LAWS ON AN INVESTMENT IN THE INTEREST AND ON THIER INDIVIDUAL
TAX SITUATION. NO ATTEMPT IS MADE HEREIN TO DISCUSS OR EVALUATE THE TAX CONSEQUENCES UNDER ANY FEDERAL LAW, STATE OR LOCAL TAX LAW AS
TO ANY TYPE OF SPECIFIC INVESTOR.
***Absence
of IRS Ruling or Opinion***
The
Company will not seek a ruling from the IRS or an opinion of counsel with respect to any tax matters described in this Memorandum. The
IRS, in an audit, may determine the tax liability to the Company to be greater than anticipated (*e.g.*, if the IRS determines that
the Company is a corporation for tax purposes) which could adversely impact the Company.
***Risks
Related to Changes in Tax Law***
The
existence and amount of particular credits and deductions, if any, claimed by the Company may depend upon various determinations and
allocations, characterizations of payments, and other matters which are subject to potential controversy on factual as well as legal
grounds. Changes in the tax code and official interpretations thereof after the date of this Memorandum may eliminate or reduce any perceived
tax benefits from an investment in Interests. There can be no assurance that regulations having an adverse effect on the Company or Investors
will not be issued in the future and enforced by the courts. Any modification or change in the tax code or the regulations promulgated
thereunder, or any judicial decision, could be applied retroactively to any investment in the Company. In view of this uncertainty, prospective
Investors are urged to consider ongoing developments in this area and consult their advisors concerning the effects of such developments
on an investment in the Company in light of their own personal tax situations.
Additionally,
a shortfall in tax revenues for states and local jurisdictions in which the Company conducts business or holds assets may lead to an
increase in the frequency and size of changes to the tax the state or local codes which may adversely affect the Company. If such changes
occur, the Company may be required to pay additional state and local taxes. These increased tax costs could adversely affect the Company’s
financial condition.
***Personal
Tax Risks***
An
investment in the Company may involve complex U.S. federal income tax considerations that will differ for each Member. Under certain
circumstances, the Members could be required to recognize taxable income in a taxable year for U.S. federal income tax purposes, even
if the Company either has no net profits in that year or has an amount of net profits in that year that is less than that amount of taxable
income.
Furthermore,
the Members could incur U.S. federal income tax liabilities without receiving from the Company sufficient distributions to defray those
tax liabilities, often referred to as “*phantom tax*.” Members subject to taxes associated with the Company’s
activities will be liable to pay taxes on their allocable shares of the Company’s taxable income, regardless of any distributions
made or not made. There can be no assurances the Company will have available cash or that timely Company distributions will be made to
cover those taxes. Accordingly, a Member may be required to use cash from sources other than the Company to pay that Member’s allocable
share of the Company’s taxable income.
In
addition, tax reporting requirements may be imposed on Members under the laws of the jurisdictions in which Members are liable for taxation
or in which the Company makes investments in the Project. Furthermore, the Company’s returns in respect of its investments may
be reduced by withholding or other taxes.
These
risks and others may not be fully apparent through this Memorandum, and all prospective subscribers are encouraged to discuss the risks
associated with an investment in the Company with their own respective financial advisors BEFORE joining the Company.
***Risks
of Late Filing***
In
the event that the Company does not receive all the underlying tax information necessary to prepare the Form 1065 and Schedule K-1 on
a timely basis, the Company will be unable to provide timely final tax information to the Members and will file an extension with the
IRS. Each Member will be responsible for the preparation and filing of that Member’s own income tax returns, and Members should
expect to file for extensions for the completions of their U.S. federal, state, local, non-U.S. and other income tax returns. In some
instances, Members could face a tax penalty associated with extended tax return filings and the Company will not cover such penalties.
***Risk
of Audit***
Information
returns filed by the Company are subject to audit by the federal, state or local tax authority. An audit of the Company’s returns
may lead to adjustments of a Member’s return with respect to items other than those relating to the Member’s investment in
the Company, the costs of which would be borne by the affected Members. The tax treatment of items of partnership income, loss, deductions,
and credits will be determined at the partnership level in a unified partnership proceeding, and the Company’s tax matters representative
(as determined by the provisions set forth in the Operating Agreement), who may, under certain circumstances, represent and bind all
of the Members. Any adjustment made to the Company’s or a Member’s return could result in the affected Members being subject
to an imposition of interest, additional taxes, and penalties. An audit of the Company may also result in an audit of a Member which
could also result in interest, additional taxes, and penalties.
***Risk
of Tax Burden Due to Entity Structure***
The
Manager intends to structure the Company and its investments in a manner that is intended to achieve the Company’s investment objectives.
Notwithstanding anything contained in this Memorandum to the contrary, there can be no assurance that the structure of any investment
will be tax efficient for any particular Investor or that any particular tax result will be achieved. All Investors must determine if
an investment in the Company is suitable for their own individual tax planning objectives before investing in the Company.
***Disallowance
of Deductions***
The
availability, timing and amount of deductions or allocations of income of the Company will depend not only upon general tax principles
but also upon various determinations that are subject to potential controversy on factual and other grounds. Such determinations could
include, among other things, whether fees paid to the Manager or its Affiliates are deductible on the ground that such payments are excessive
or constitute nondeductible distributions to the Manager or an Affiliate or otherwise and the allocation of basis to Company real and
personal property. If the IRS were successful, in whole or in part, in challenging the Company on these issues, the federal income tax
benefits of an investment in the Company could be materially reduced.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 32 of 45**
***Capital
Gains Tax Risk***
Although
some portion of income generated by Members hereunder is intended to be characterized as capital gains, certain proceeds from investment
and/or liquidation of Company assets, or the operational revenue received from the Project generally, may be taxed by the U.S. Government
as ordinary income and not as capital gains. Accordingly, a distribution pursuant to a sale of real and/or personal property of the Company
and ultimately a distribution by the Company thereof, may be taxed as ordinary income, though intended to be capital gains. No assurance
can be given that the Internal Revenue Service (the “**IRS**”) will concur with the tax consequences set forth herein.
Each prospective Investor is advised to consult their own tax counsel as to the specific U.S. federal income tax consequences of an investment
in the Company and as to applicable foreign, state, estate and local taxes. Also, *see* the discussion of tax matters under “Investment
Considerations” below. Prospective investors should confer with their tax advisors regarding the tax consequences of investment
in the Company, including the impact of state, local and foreign tax laws, considering the prospective investors’ particular circumstances
and the particular nature and purpose of the Company, chiefly its undertaking of the Project. The Manager assumes no responsibility for
the tax consequences of its transactions to any Member.
--
THE
FOREGOING LIST OF RISK FACTORS DOES NOT PURPORT TO BE A COMPLETE EXPLANATION OF THE RISKS INVOLVED IN THIS OFFERING OR WITH THIS PROJECT.
PROSPECTIVE INVESTORS ARE URGED TO READ THIS ENTIRE MEMORANDUM AND CONDUCT INDEPENDENT DUE DILIGENCE SATISFACTORY TO THEMSELVES BEFORE
DETERMINING WHETHER TO INVEST IN THE COMPANY.
***End
of Section. Memorandum continues on the following page.***
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 33 of 45**
XI.
Tax Matters
***General***
The
following is a brief summary of certain U.S. federal income tax considerations that may be relevant to an investment in the Company and
should be read in conjunction with risk factors associated with tax above in this Memorandum. This summary does not contain a comprehensive
discussion of all U.S. federal income tax consequences that may be relevant to a Member in view of that Member’s particular circumstances
or (unless otherwise indicated) to certain Members subject to special treatment under U.S. federal income tax laws – such as regulated
investment companies, personal holding companies, brokers or dealers in securities, banks and certain other financial institutions, tax-exempt
organizations, trusts and insurance companies – nor does it address any state, estate, local, foreign or other tax consequences
of an investment in the Company, except as otherwise provided in this Memorandum. This summary is based on the assumptions that (i) each
Member (and each of its beneficial owners, as necessary under U.S. federal income tax withholding and backup withholding rules) will
provide all appropriate certifications to the Company in a timely fashion to minimize withholding (or backup withholding) on each Member’s
distributive share of the Company’s gross income and (ii) each Member will hold its Interest as a capital asset for U.S. federal
income tax purposes. Each Subscriber should also note that, except as otherwise provided in this Memorandum, this summary does not address
the interaction of U.S. federal tax laws and any income or estate tax treaties between the U.S. and any other jurisdiction.
As
used in this Memorandum, the term “**U.S. Person**” generally means any U.S. citizen or resident individual, any corporation,
limited liability company, or partnership organized under U.S. law, any estate (other than an estate the income of which, from sources
outside the U.S. that is not effectively connected with a trade or business within the U.S., is not includible in its gross income for
U.S. federal income tax purposes), and any trust if a court within the U.S. is able to exercise primary supervision over the administration
of the trust and one or more U.S. Persons have the authority to control all substantial decisions of the trust. The term “**U.S.
Member**” means any Member that is a U.S. Person and, unless the context otherwise requires, includes any U.S. Person that holds
an equity Interest through one or more partnerships or other entities treated as transparent for U.S. federal income tax purposes. The
term “**Non-U.S. Member**” means a Member that is not a U.S. Person.
***Non-U.S.
Investors***
Non-U.S.
Members generally should not be subject to taxation by the United States (other than certain withholding taxes) with respect to their
investment in the Company so long as they do not spend more than a certain number of days in the United States during its taxable year,
do not otherwise have a substantial connection with the United States, and are not engaged, or deemed to be engaged, in a U.S. trade
or business. Non-U.S. Members who are resident alien individuals of the United States (generally, individuals lawfully admitted for permanent
residence, or who have a substantial presence, in the United States) or for whom their allocable share of Company income and gain, and
the gain realized on the sale or disposition of a Company interest is otherwise effectively connected with their conduct of a U.S. trade
or business will be subject to U.S. federal income taxation on the income and gains. NOTE: Non-U.S. Members should be advised that the
Company shall conduct all required withholdings from Non-U.S. Members as required by the IRS or is advisable by Company Counsel.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 34 of 45**
***IRS
Sec. 1031 Exchange Funds***
The
Interests being offered are considered by the IRS to be personal/partnership property which are not suitable for 1031 exchange. Investors
wishing to invest proceeds from a 1031 exchange should not purchase Interests in the Company. The Manager may, in its sole discretion,
cause the Company to accept investments through a tenancy in common (a “**TIC**”) to facilitate a like kind exchange,
which would be similar to a Co-Investment structure. Pursuant to a future disposition, the Manager has the authority to cause the Company
to exchange the Property for another investment property by way of an IRS Section 1031 Exchange. In the event the Manager elects to do
so, Members will be required to participate, but can withdraw after the exchange has been completed or immediately before upon the advice
of Company Counsel
***Cost
Segregation and Depreciation.***
The
Manager may elect to use the cost segregation method of depreciation for any personal property associated with real property the Company
acquires, and, if possible, elect an accelerated depreciation option if appropriate for the Company. It must be noted that the laws in
place that may allow for this mechanism are always subject to change by the IRS, and in some instances the Company may even refrain from
doing so if reasons exist that, in the discretion of the Manager, would not be beneficial to the Company. To the extent possible, the
Company may endeavor to pass along all of the cost segregation depreciation benefits directly to all Members, in a manner consistent
with distributions of Distributable Cash made to Investors.
The
tax aspects of the Company summarized above are general in nature, and this discussion is not intended to include a complete explanation
of the federal income tax results of investing in the Company. Each prospective investor should consult with its own tax advisor for
detailed information.
To
ensure compliance with IRS Circular 230, Investors are hereby notified that (i) any discussion of federal tax issues in this Memorandum
is not intended or written to be relied on, and cannot be relied on by any investor or any other person, for the purpose of avoiding
penalties that may be imposed under the Code; (ii) that discussion is written to support the promotion or marketing (within the meaning
of IRS Circular 230) of the transactions or matters addressed herein; and (iii) each Investor should seek advice based on the Investor’s
particular circumstances from an independent tax advisor.
***Certain
ERISA and other Tax-Exempt Considerations***
Employee
benefit plans that are subject to the fiduciary provisions of ERISA (including, without limitation, pension and profit-sharing plans),
plans that are subject to Section 4975 of the Code (including, without limitation, individual retirement accounts (“**IRAs**”)
and Keogh plans) and entities deemed to hold “plan assets” of any of the foregoing (each, a “**ERISA Investor**”),
as well as governmental plans, foreign plans and other employee benefit plans, accounts or arrangements that are not subject to the fiduciary
provisions of ERISA or Section 4975 of the Code, and trusts or other entities supporting or holding the assets of any of the foregoing
(collectively, with ERISA Investors, referred to as “**Plans**”), may generally invest in the Company, subject to the
following considerations.
*General
Fiduciary Considerations for Investment in the* Company *by Plan Investors*. The fiduciary provisions of ERISA, and the fiduciary
provisions of pension codes applicable to governmental, foreign or other employee benefit plans or retirement arrangements that are not
subject to ERISA may impose limitations on investment in the Company. Fiduciaries of Plans, in consultation with their advisors, should
consider, to the extent applicable, the impact of such fiduciary rules and regulations on an investment in the Company. Among other considerations,
the fiduciary of a Plan should take into account the composition of the Plan’s portfolio with respect to diversification; the cash
flow needs of the Plan and the effects thereon of the illiquidity of the investment; the economic terms of the Plan’s investment
in the Company; the Plan’s funding objectives; the tax effects of the investment and the tax and other risks described in the sections
of this Memorandum discussing tax considerations and risk factors; the fact that the investors in the Company are expected to consist
of a diverse group of investors (including taxable, tax-exempt, domestic and foreign entities) and the fact that the management of the
Company will not take the particular objectives of any investors or class of investors into account.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 35 of 45**
Plan
fiduciaries should also take into account the fact that, while the Manager will have certain general fiduciary duties to the Company,
the Manager will not have any direct fiduciary relationship with or duty to any investor, either with respect to its investment in interests
or with respect to the management and investment of the assets of the Company. Similarly, it is intended that the assets of the Company
will not be considered plan assets of any Plan or be subject to any fiduciary or investment restrictions that may exist under pension
codes specifically applicable to such Plans. Each Plan will be required to acknowledge and agree in connection with its investment in
interests to the foregoing status of the Company, and the Manager and that there is no rule, regulation or requirement applicable to
such investor that is inconsistent with the foregoing description of the Company, and the Manager.
Plan
fiduciaries may be required to determine and report annually the fair market value of the assets of the Plan. Since it is expected that
there will not be any public market for the interests, there may not be an independent basis for the Plan fiduciary to determine the
fair market value of such interests.
*ERISA
and Other ERISA Investors.* A fiduciary acting on behalf of an ERISA Investor, in addition to the matters described above, should
take into account the following considerations in connection with an investment in the Company.
*ERISA
Restrictions if the* Company *Holds Plan Assets.* If the Company is deemed to hold plan assets of the investors that are ERISA
Investors, the investment in the Company by each such ERISA Investor could constitute an improper delegation of investment authority
by the fiduciary of such ERISA Investor. In addition, any transaction the Company enters into would be treated as a transaction with
each such ERISA Investor and any such transaction (such as a property lease, acquisition, sale or financing) with certain “**parties
in interest**” (as defined in ERISA) or “**disqualified persons**” (as defined in Section 4975 of the Code) with
respect to an ERISA Investor could be a “**prohibited transaction**” under ERISA or Section 4975 of the Code. If the Company
were subject to ERISA, certain aspects of the structure and terms of the Company could also violate ERISA.
*ERISA
Plan Assets.* Under ERISA and regulations issued thereunder by the U.S. Department of Labor (the “**Regulation**”),
generally, an ERISA Investor’s assets would be deemed to include an undivided interest in each of the underlying assets of the
Company unless investment in the Company by ERISA Investors is not “significant” or another exception from holding plan assets
is available.
*Significant
Investment by ERISA Investors.* Investment by ERISA Investors would not be “significant” if less than 25% of the value
of each class of equity interests in the Company (excluding the interests of the Manager, the Manager and any other person who has sole
and absolute discretionary authority or control, or provides investment advice for a fee (direct or indirect) with respect to the assets
of the Company, and affiliates (other than an ERISA Investor) of any of the foregoing persons (a “**Management Affiliate**”),
is held by ERISA Investors. A commingled vehicle that is subject to ERISA will generally count as an ERISA Investor for this purpose
only to the extent of investment in such entity by ERISA Investors. The Manager currently intends to limit investment in the Company
by ERISA Investors so that participation by such investors is not “significant” with respect to any class of the Company’s
equity interests. However, if there is no other exception available from holding plan assets, the Manager reserves the right to allow
unlimited investment by ERISA Investors in the future, provided that the Manager, in consultation with the investors subject to ERISA
or Section 4975 of the Code, will make the necessary amendments to the Company documents and take such other actions as may be necessary
to comply with ERISA and Section 4975 of the Code.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 36 of 45**
Each
investor and each transferee will be required to represent and warrant whether it is an ERISA Investor or a Management Affiliate, and
the Manager reserves the right to reject subscriptions in whole or in part for any reason, including that the investor is an ERISA Investor.
The Manager also has the authority to restrict transfers of Membership Interests and may require a full or partial withdrawal of any
ERISA Investor to the extent it deems appropriate to avoid having the assets of the Company be deemed to be plan assets of any ERISA
Investor – see discussion in the sections in this Memorandum on transfers and withdrawals. In addition, the Manager has broad authority
to take any action to maintain the no plan asset status of the Company or remedy a plan asset problem.
*Prohibited
Transaction Considerations.* Fiduciaries of ERISA Investors should also consider whether an investment in the Company could involve
a direct or indirect transaction with a “party in interest” or “disqualified person” as defined in ERISA and
Section 4975 of the Code, and if so, whether such prohibited transaction may be covered by an exemption. ERISA contains a statutory exemption
that permits an ERISA Investor to enter into a transaction with a person who is a party in interest or disqualified person solely by
reason of being a service provider or affiliated with a service provider to the ERISA Investor, provided that the transaction is for
“adequate consideration.” There are also a number of administrative prohibited transaction exemptions that may be available
to certain fiduciaries acting on behalf of an ERISA Investor. Fiduciaries of ERISA Investors should also consider whether investment
in the Company could involve a conflict of interest. In particular, a prohibited conflict of interest could arise if the fiduciary acting
on behalf of the ERISA Investor has any interest in or affiliation with the Company or the Manager.
*Governmental
Plans.* Government sponsored plans are not subject to the fiduciary provisions of ERISA, and are also not subject to the prohibited
transaction provisions under Section 4975 of the Code. However, federal, state or local laws or regulations governing the investment
and management of the assets of such plans may contain fiduciary and prohibited transaction requirements similar to those under ERISA
and the Code discussed above and may include other limitations on permissible investments. Accordingly, fiduciaries of governmental plans,
in consultation with their advisors, should consider the requirements of their respective pension codes with respect to investments in
the Company, as well as the general fiduciary considerations discussed above.
The
fiduciary of each prospective investor that is a governmental plan will be required to represent and warrant that investment in the Company
is permissible, complies in all respects with applicable law and has been duly authorized.
*Individuals
Investing With IRA Assets.* Membership Interests sold by the Company may be purchased or owned by investors who are investing assets
of their IRAs. The Company’s acceptance of an investment by an IRA should not be considered to be a determination or representation
by the Manager or any of its respective affiliates that such an investment is appropriate for an IRA. In consultation with its advisors,
each prospective investor that is an IRA should carefully consider whether an investment in the Company is appropriate for, and permissible
under the terms of its IRA governing documents. Investors that are IRAs should consider in particular that the Membership Interests will
be illiquid and that it is not expected that a significant market will exist for the resale of the Membership Interests, as well as the
other general fiduciary considerations described above.
Although
IRAs are not generally subject to ERISA, they are subject to the provisions of Section 4975 of the Code, prohibiting transactions with
“disqualified persons” and investments and transactions involving fiduciary conflicts. A prohibited transaction or conflict
of interest could arise if the fiduciary making the decision to invest has a personal interest in or affiliation with the Company, the
Manager, or any of their respective affiliates. In the case of an IRA, a prohibited transaction or conflict of interest that involves
the beneficiary of the IRA could result in disqualification of the IRA. A fiduciary for an IRA who has any personal interest in or affiliation
with the Company, the Manager, or any of their respective affiliates, should consult with his, her or its tax and legal advisors regarding
the impact such interest or affiliation may have on an investment in Partnership Interests with assets of the IRA.
Investors
that are IRAs should consult with their counsel and advisors as to the prohibited transaction, conflict of interest and other provisions
of the Code applicable to an investment in the Company.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 37 of 45**
XII.
Access to Information TC “X. ACCESS TO INFORMATION” \f C \l “1”
Investors
are invited to contact the Manager to review any written materials or documents relating to the Offering or the Company, including any
financial information available concerning the Project, Property, the Company, or the Manager. The Manager will endeavor to answer all
inquiries from Investors relative to the Offering and will aim to provide additional information (to the extent that the Manager possesses
such information or can acquire it without unreasonable effort or expense) necessary to verify the accuracy of any representations or
information set forth in this Memorandum, though, of course, and in-line with the investment considerations mentioned throughout, cannot
guarantee the accuracy or completeness of any information it provides.
XIII.
Privacy Policy TC “XI. PRIVACY POLICY” \f C \l “1”
The
Company collects nonpublic, personal data about Subscribers from (i) information it receives from Subscription Agreements/Operating Agreements,
(ii) information disclosed to the Manager through conversations or correspondence and (iii) any additional information the Manager may
request from Subscribers. All information regarding the personal identity, account balance, financial status and other financial information
of Subscribers (“**Personal Information**”) will be kept strictly confidential to the Manager and its agents so authorized.
The Company maintains physical, electronic and operational safeguards to protect this information. Some of these safeguards include information
technology infrastructure protections, the use of account aliases on records and physical security measures taken to secure the Manager’s
offices.
In
the normal course of business, it is sometimes necessary for the Company to provide Personal Information about Subscribers to the Manager,
the Company’s attorneys, accountants, administrators, and auditors in furtherance of the Company’s business, as well as to
entities that provide a service on behalf of the Company, such as banks or title companies. The Manager will only disclose Personal Information
to these third parties if required, and if the use of the Personal Information is limited to the purpose of providing such services to
the Company.
Other
than for the purposes discussed above, the Company does not disclose any nonpublic, Personal Information of its Subscribers unless the
Company is directed by the Subscriber to provide it, or the Company is legally required to provide it to a governmental agency. Notwithstanding
the foregoing, the Company may disclose Personal Information to the Manager, which may use that information in connection with any explanation
of services rendered to professional organizations to which the Manager or its affiliated persons belong.
***End
of Section. Memorandum continues on the following page.***
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 38 of 45**
XIV.
State Notices to U.S. And Non-U.S. Persons
**FOR
INVESTORS IN THE UNITED STATES:**
IN
MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE
THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
**FOR
ALABAMA RESIDENTS**: THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE ALABAMA SECURITIES ACT. A REGISTRATION
STATEMENT RELATING TO THESE SECURITIES HAS NOT BEEN FILED WITH THE ALABAMA SECURITIES COMMISSION. THE COMMISSION DOES NOT RECOMMEND OR
ENDORSE THE PURCHASE OF ANY SECURITIES, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF THIS MEMORANDUM ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THE PURCHASE PRICE OF THE INTEREST ACQUIRED BY A NON-ACCREDITED INVESTOR RESIDING IN THE STATE OF ALABAMA
MAY NOT EXCEED 20% OF THE PURCHASER’S NET WORTH.
**FOR
ALASKA RESIDENTS**: THE SECURITIES OFFERED HAVE NOT BEEN REGISTERED WITH THE ADMINISTRATOR OF SECURITIES OF THE STATE OF ALASKA UNDER
PROVISIONS OF 3 AAC 08.500-3 AAC 08,506. THE INVESTOR IS ADVISED THAT THE ADMINISTRATOR HAS MADE ONLY A CURSORY REVIEW OF THE REGISTRATION
STATEMENT AND HAS NOT REVIEWED THIS DOCUMENT SINCE THE DOCUMENT IS NOT REQUIRED TO BE FILED WITH THE ADMINISTRATOR. THE FACT OF REGISTRATION
DOES NOT MEAN THAT THE ADMINISTRATOR HAS PASSED IN ANY WAY UPON THE MERITS, RECOMMENDED, OR APPROVED THE SECURITIES. ANY REPRESENTATION
TO THE CONTRARY IS A VIOLATION OF A.S. 45.55.170. THE INVESTOR MUST RELY ON THE INVESTOR’S OWN EXAMINATION OF THE PERSON OR ENTITY
CREATING THE SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED, IN MAKING AN INVESTMENT DECISION ON THESE
SECURITIES.
**FOR
ARIZONA RESIDENTS**: THE SECURITIES OFFERED HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF ARIZONA, AS AMENDED, AND ARE OFFERED
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION PURSUANT TO A.R.S. SECTION 44-1844(1). THE SECURITIES CANNOT BE RESOLD UNLESS REGISTERED
UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION.
**FOR
ARKANSAS RESIDENTS**: THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER SECTION 14(b)(14) OF THE ARKANSAS SECURITIES
ACT AND SECTION 4(a)(2) OF THE SECURITIES ACT OF 1933. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS NOT BEEN FILED WITH
THE ARKANSAS SECURITIES DEPARTMENT OR WITH THE SECURITIES AND EXCHANGE COMMISSION. NEITHER THE DEPARTMENT NOR THE COMMISSION HAS PASSED
UPON THE VALUE OF THESE SECURITIES, MADE ANY RECOMMENDATIONS AS TO THEIR PURCHASE, APPROVED OR DISAPPROVED THE OFFERING, OR PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE PURCHASE PRICE OF THE INTEREST ACQUIRED
BY AN UNACCREDITED INVESTOR RESIDING IN THE STATE OF ARKANSAS MAY NOT EXCEED 20% OF THE PURCHASER’S NET WORTH.
**FOR
CALIFORNIA RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
CALIFORNIA CORPORATE SECURITIES ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED
OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 39 of 45**
**FOR
COLORADO RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE COLORADO SECURITIES
ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATIONIS
AVAILABLE.
**FOR
CONNECTICUT RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER SECTION 36-485 OF THE CONNECTICUT UNIFORM SECURITIES ACT AND
THEREFORE CANNOT BE RESOLD UNLESS THEY ARE REGISTERED UNDER SUCH ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
**FOR
DELAWARE RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE DELAWARE SECURITIES ACT AND ARE OFFERED PURSUANT TO A CLAIM
OF EXEMPTION UNDER SECTION 7309(b)(9) OF THE DELAWARE SECURITIES ACT AND RULE 9(b)(9)(I) THEREUNDER. THESE SECURITIES CANNOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
**FOR
DISTRICT OF COLUMBIA RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE DISTRICT OF COLUMBIA SECURITIES ACT SINCE SUCH
ACT DOES NOT REQUIRE REGISTRATION OF SECURITIES ISSUES. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY
PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED UNDERTHE SECURITIES ACT OF 1933, AS AMENDED, OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
**FOR
FLORIDA RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE FLORIDA SECURITIES
ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE. THE SECURITIES REFERRED TO HEREIN WILL BE SOLD TO, AND ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061
OF THE FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA. IN ADDITION, ALL FLORIDA
RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH
PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED
TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
**FOR
GEORGIA RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECTION 10-5-5 OF THE
GEORGIA SECURITIES ACT OF 1973 AND ARE BEING SOLD IN RELIANCE UPON EXEMPTIONS THEREFROM. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED,
OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THE INVESTMENT IS SUITABLE IF IT DOES NOT EXCEED 20% OF THE INVESTOR’S NET WORTH.
**FOR
HAWAII RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE HAWAII UNIFORM SECURITIES
ACT (MODIFIED), BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT
BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
**FOR
IDAHO RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE IDAHO SECURITIES ACT (THE “ACT”) AND MAY BE TRANSFERRED
OR RESOLD BY RESIDENTS OF IDAHO ONLY IF REGISTERED PURSUANT TO THE PROVISIONS OF THE ACT OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THE INVESTMENT IS SUITABLE IF IT DOES NOT EXCEED 10% OF THE INVESTOR’S NET WORTH.
**FOR
ILLINOIS RESIDENTS**: THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECRETARY OF STATE OF ILLINOIS OR THE STATE OF
ILLINOIS, NOR HAS THE SECRETARY OF STATE OF ILLINOIS OR THE STATE OF ILLINOIS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 40 of 45**
**FOR
INDIANA RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER SECTION 3 OF THE INDIANA BLUE SKY LAW AND ARE OFFERED PURSUANT
TO AN EXEMPTION PURSUANT TO SECTION 23-2-l-2(b)(10) THEREOF AND MAY BE TRANSFERRED OR RESOLD ONLY IF SUBSEQUENTLY REGISTERED OR IF AN
EXEMPTION FROM REGISTRATION IS AVAILABLE. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME. INDIANA REQUIRES INVESTOR SUITABILITY STANDARDS OF A NET WORTH (EXCLUSIVE OF HOME, FURNISHINGS, AND
AUTOMOBILES) OF THREE TIMES THE INVESTMENT BUT NOT LESS THAN $75,000 OR A NET WORTH (EXCLUSIVE OF HOME, FURNISHINGS, AND AUTOMOBILES)
OF TWICE THE INVESTMENT BUT NOT LESS THAN $30,000 AND GROSS INCOME OF $30,000.
**FOR
IOWA RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE IOWA UNIFORM SECURITIES ACT (THE “ACT”) AND ARE OFFERED
PURSUANT TO A CLAIM OF EXEMPTION UNDER SECTION 502.203(9) OF THE ACT. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED
OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. INVESTORS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
**FOR
KANSAS RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE KANSAS SECURITIES
ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
**FOR
KENTUCKY RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES ACT
OF KENTUCKY, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT
BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
**FOR
LOUISIANA RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE LOUISIANA SECURITIES
LAW, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE. THE INVESTMENT IS SUITABLE IF IT DOES NOT EXCEED 25% OF THE INVESTOR’S NET WORTH.
**FOR
MAINE RESIDENTS**: THESE SECURITIES ARE BEING SOLD PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE BANK SUPERINTENDENT OF THE STATE
OF MAINE UNDER SECTION 10502(2)(R) OF TITLE 32 OF THE MAINE REVISED STATUTES. THESE SECURITIES MAY BE DEEMED RESTRICTED SECURITIES AND
AS SUCH THE HOLDER MAY NOT BE ABLE TO RESELL THE SECURITIES UNLESS PURSUANT TO REGISTRATION UNDER STATE OR FEDERAL SECURITIES LAWS OR
UNLESS AN EXEMPTION UNDER SUCH LAWS EXISTS.
**FOR
MARYLAND RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE MARYLAND SECURITIES
ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT BE SOLD
TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
**FOR
MASSACHUSETTS RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE MASSACHUSETTS
UNIFORM SECURITIES ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES
CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE.
**FOR
MICHIGAN RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER SECTION 451.701 OF THE MICHIGAN UNIFORM SECURITIES ACT (THE “ACT”)
AND MAY BE TRANSFERRED OR RESOLD BY RESIDENTS OF MICHIGAN ONLY IF REGISTERED PURSUANT TO THE PROVISIONS OF THE ACT OR IF AN EXEMPTION
FROM REGISTRATION IS AVAILABLE. THE INVESTMENT IS SUITABLE IF IT DOES NOT EXCEED 10% OF THE INVESTOR’S NET WORTH.
**FOR
MINNESOTA RESIDENTS**: THE SECURITIES REPRESENTED BY THIS MEMORANDUM HAVE NOT BEEN REGISTERED UNDER CHAPTER 80A OF THE MINNESOTA SECURITIES
LAWS AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO REGISTRATION, OR AN EXEMPTION THEREFROM.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 41 of 45**
**FOR
MISSISSIPPI RESIDENTS**: THESE SECURITIES ARE OFFERED PURSUANT TO A CERTIFICATE OF REGISTRATION ISSUED BY THE SECRETARY OF STATE OF
MISSISSIPPI PURSUANT TO RULE 477, WHICH PROVIDES A LIMITED REGISTRATION PROCEDURE FOR CERTAIN OFFERINGS. THE SECRETARY OF STATE DOES
NOT RECOMMEND OR ENDORSE THE PURCHASE OF ANY SECURITIES, NOR DOES THE SECRETARY OF STATE PASS UPON THE TRUTH, MERITS OR COMPLETENESS
OF ANY OFFERING MEMORANDUM FILED WITH THE SECRETARY OF STATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
**FOR
MISSOURI RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE MISSOURI UNIFORM
SECURITIES ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT
BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
**FOR
MONTANA RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES ACT
OF MONTANA, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT
BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
**FOR
NEBRASKA RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES ACT
OF NEBRASKA, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT
BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
**FOR
NEVADA RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE NEVADA SECURITIES
ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT
BE
SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
**FOR
NEW HAMPSHIRE RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE NEW HAMPSHIRE
UNIFORM SECURITIES ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES
CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE. THE INVESTMENT IS SUITABLE IF IT DOES NOT EXCEED 10% OF THE INVESTOR’S NET WORTH.
**FOR
NEW JERSEY RESIDENTS**: THE ATTORNEY GENERAL OF THE STATE OF NEW JERSEY HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING.
THE FILING OF THE WITHIN OFFERING WITH THE BUREAU OF SECURITIES DOES NOT CONSTITUTE APPROVAL OF THE ISSUE OR THE SALE THEREOF BY THE
BUREAU OF SECURITIES OR THE DEPARTMENT OF LAW AND PUBLIC SAFETY OF THE STATE OF NEW JERSEY. ANY REPRESENTATION TO THE CONTRARY ISUNLAWFUL.
**FOR
NEW MEXICO RESIDENTS**: THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES BUREAU OF THE NEW MEXICO DEPARTMENT
OF REGULATION AND LICENSING, NOR HAS THE SECURITIES BUREAU PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
**FOR
NEW YORK RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE NEW YORK FRAUDULENT
PRACTICES (“MARTIN”) ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE NEW YORK FRAUDULENT PRACTICES (“MARTIN”) ACT, IF SUCH REGISTRATION IS REQUIRED.
THIS PRIVATE OFFERING MEMORANDUM HAS NOT BEEN FILED WITH OR REVIEWED BY THE ATTORNEY GENERAL PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY
GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
PURCHASE OF THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. THIS PRIVATE OFFERING MEMORANDUM DOES NOT CONTAIN AN UNTRUE STATEMENT OF
A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS MADE, IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH
THEY WERE MADE, NOT MISLEADING. IT CONTAINS A FAIR SUMMARY OF THE MATERIAL TERMS OF DOCUMENTS PURPORTED TO BE SUMMARIZED HEREIN.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 42 of 45**
**FOR
NORTH CAROLINA RESIDENTS**: THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE NORTH CAROLINA SECURITIES ACT.
THE NORTH CAROLINA SECURITIES ADMINISTRATOR NEITHER RECOMMENDS NOR ENDORSES THE PURCHASE OF ANY SECURITY, NOR HAS THE ADMINISTRATOR PASSED
UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION PROVIDED HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE INVESTMENT
IS SUITABLE IF IT DOES NOT EXCEED 10% OF THE INVESTOR’S NET WORTH.
**FOR
NORTH DAKOTA RESIDENTS**: THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES COMMISSIONER OF THE STATE OF NORTH
DAKOTA, NOR HAS THE COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
**FOR
OHIO RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE OHIO SECURITIES ACT,
BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED,
OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
**FOR
OKLAHOMA RESIDENTS**: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE OKLAHOMA SECURITIES ACT. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED FOR VALUE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OF THEM UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND/OR THE OKLAHOMA SECURITIES ACT,
OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR ACTS.
**FOR
OREGON RESIDENTS**: THE SECURITIES HAVE NOT BEEN REGISTERED WITH THE CORPORATION COMMISSIONER OF THE STATE OF OREGON UNDER PROVISIONS
OF O.A.R. 815 DIVISION 36. THE INVESTOR IS ADVISED THAT THE COMMISSIONER HAS NOT REVIEWED THE REGISTRATION STATEMENT AND HAS NOT REVIEWED
THIS DOCUMENT SINCE THE DOCUMENT IS NOT REQUIRED TO BE FILED WITH THE COMMISSIONER. THE INVESTOR MUST RELY ON THE INVESTOR’S OWN
EXAMINATION OF THE COMPANY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED IN MAKING AN
INVESTMENT DECISION ON THESE SECURITIES.
**FOR
PENNSYLVANIA RESIDENTS**: THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER SECTION 201 OF THE PENNSYLVANIA SECURITIES ACT
OF 1972 (THE “ACT”) AND MAY BE RESOLD BY RESIDENTS OF PENNSYLVANIA ONLY IF REGISTERED PURSUANT TO THE PROVISIONS OF THAT
ACT OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE. EACH PERSON WHO ACCEPTS AN OFFER TO PURCHASE SECURITIES EXEMPTED FROM REGISTRATION
BY SECTION 203(d), (f), (p), or (r), DIRECTLY FROM AN ISSUER OR AFFILIATE OF AN ISSUER, SHALL HAVE THE RIGHT TO WITHDRAW HIS ACCEPTANCE
WITHOUT INCURRING ANY LIABILITY TO THE SELLER, UNDERWRITER (IF ANY), OR ANY OTHER PERSON WITHIN TWO BUSINESS DAYS FROM THE DATE OF RECEIPT
BY THE ISSUER OF HIS WRITTEN BINDING CONTRACT OF PURCHASE OR, IN THE CASE OF A TRANSACTION IN WHICH THERE IS NO WRITTEN BINDING CONTRACT
OF PURCHASE, WITHIN TWO BUSINESS DAYS AFTER HE MAKES THE INITIAL PAYMENT FOR THE SECURITIES BEING OFFERED. NEITHER THE PENNSYLVANIA SECURITIES
COMMISSION NOR ANY OTHER AGENCY HAS PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING, AND ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
PENNSYLVANIA SUBSCRIBERS MAY NOT SELL THEIR SECURITIES INTERESTS FOR ONE YEAR FROM THE DATE OF PURCHASE IF SUCH A SALE WOULD VIOLATE
SECTION 203(d) OF THE PENNSYLVANIA SECURITIES ACT.
**FOR
RHODE ISLAND RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE BLUE SKY LAW
OF RHODE ISLAND, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT
BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 43 of 45**
**FOR
SOUTH CAROLINA RESIDENTS**: IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE PERSON OR ENTITY CREATING
THE SECURITIES AND TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY
OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
**FOR
SOUTH DAKOTA RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER CHAPTER 47-31 OF THE SOUTH DAKOTA SECURITIES LAWS AND MAY
NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF FOR VALUE EXCEPT PURSUANT TO REGISTRATION, EXEMPTION THEREFROM, OR OPERATION OF LAW.
EACH SOUTH DAKOTA RESIDENT PURCHASING ONE OR MORE WHOLE OR FRACTIONAL SECURITIES MUST WARRANT THAT HE HAS EITHER (1) A MINIMUM NET WORTH
(EXCLUSIVE OF HOME, FURNISHINGS AND AUTOMOBILES) OF $30,000 AND A MINIMUM ANNUAL GROSS INCOME OF $30,000 OR (2) A MINIMUM NET WORTH (EXCLUSIVE
OF HOME, FURNISHINGS AND AUTOMOBILES) OF $75,000. ADDITIONALLY, EACH INVESTOR WHO IS NOT AN ACCREDITED INVESTOR OR WHO IS AN ACCREDITED
INVESTOR SOLELY BY REASON OF HIS NET WORTH, INCOME OR AMOUNT OF INVESTMENT, SHALL NOT MAKE AN INVESTMENT IN THE PROGRAM IN EXCESS OF
20% OF HIS NET WORTH (EXCLUSIVE OF HOME, FURNISHINGS AND AUTOMOBILES).
**FOR
TENNESSEE RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE TENNESSEE SECURITIES
ACT OF 1800, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT
BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
**FOR
DELAWARE RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE DELAWARE SECURITIES
ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE. THE INVESTMENT IS SUITABLE IF IT DOES NOT EXCEED 10% OF THE INVESTOR’S NET WORTH.
**FOR
UTAH RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE UTAH UNIFORM SECURITIES
ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
**FOR
VERMONT RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE VERMONT SECURITIES
ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
**FOR
VIRGINIA RESIDENTS:** THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE VIRGINIA SECURITIES
ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
**FOR
WASHINGTON RESIDENTS**: THIS OFFERING HAS NOT BEEN REVIEWED OR APPROVED BY THE WASHINGTON SECURITIES ADMINISTRATOR, AND THE SECURITIES
OFFERED HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT (THE “ACT”) OF WASHINGTON CHAPTER 21.20 RCW AND MAY BE TRANSFERRED
OR RESOLD BY RESIDENTS OF WASHINGTON ONLY IF REGISTERED PURSUANT TO THE PROVISIONS OF THE ACT OR IF AN EXEMPTION FROM REGISTRATION IS
AVAILABLE. THE INVESTOR MUST RELY ON THE INVESTOR’S OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS
OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED, IN MAKING AN INVESTMENT DECISION ON THESE SECURITIES.
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 44 of 45**
**FOR
WEST VIRGINIA RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE WEST VIRGINIA
UNIFORM SECURITIES ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES
CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO, ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE.
**FOR
WISCONSIN RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE WISCONSIN UNIFORM
SECURITIES LAW, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT
BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE.
**FOR
WYOMING RESIDENTS**: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE WYOMING UNIFORM
SECURITIES ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT
BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATIONIS
AVAILABLE. WYOMING REQUIRES INVESTOR SUITABILITY STANDARDS OF A $250,000 NET WORTH (EXCLUSIVE OF HOME, FURNISHINGS, AND AUTOMOBILES),
AND AN INVESTMENT THAT DOES NOT EXCEED 20% OF THE INVESTOR’S NET WORTH.
**PROSPECTIVE
FOREIGN INVESTORS SHOULD CAREFULLY CONSIDER THE APPLICABLE LEGENDS STATED BELOW PRIOR TO DECIDING WHETHER OR NOT TO INVEST IN THE COMPANY.**
**FOR
ALL NON-U.S. INVESTORS GENERALLY**
NO
ACTION HAS BEEN OR WILL BE TAKEN IN ANY JURISDICTION OUTSIDE THE UNITED STATES OF AMERICA THAT WOULD PERMIT AN OFFERING OF THE INTERESTS,
OR POSSESSION OR DISTRIBUTION OF OFFERING MATERIAL IN CONNECTION WITH THE ISSUE OF THE INTERESTS, IN ANY COUNTRY OR JURISDICTION WHERE
ACTION FOR THAT PURPOSE IS REQUIRED. IT IS THE RESPONSIBILITY OF ANY PERSON WISHING TO PURCHASE THE INTERESTS TO SATISFY HIMSELF OR HERSELF
AS TO FULL OBSERVANCE OF THE LAWS OF ANY RELEVANT TERRITORY OUTSIDE THE UNITED STATES OF AMERICA IN CONNECTION WITH ANY SUCH PURCHASE,
INCLUDING OBTAINING ANY REQUIRED GOVERNMENTAL OR OTHER CONSENTS OR OBSERVING ANY OTHER APPLICABLE FORMALITIES.
YOUR
INVESTMENT WILL BE DENOMINATED IN UNITED STATES DOLLARS ($) AND, THEREFORE, WILL BE SUBJECT TO ANY FLUCTUATION IN THE RATE OF EXCHANGE
BETWEEN UNITED STATES DOLLARS ($), THE CURRENCY OF YOUR OWN JURISDICTION AND THE CURRENCY OF THE JURISDICTION IN WHICH ANY COMPANY PROJECT
OPERATES OR GENERATES INVESTMENT PROCEEDS, AS APPLICABLE. SUCH FLUCTUATIONS MAY HAVE AN ADVERSE EFFECT ON THE VALUE, PRICE OR INCOME
OF YOUR INVESTMENT.
**PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER THE APPLICABLE LEGENDS STATED HEREIN PRIOR TO DECIDING WHETHER OR NOT TO INVEST IN THE COMPANY.**
***End
of Memorandum. Exhibit(s) follow.***
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Pg. 45 of 45**
**Exhibit
A to PPM**
*for*
**CM
OB Hotel Owner, LLC**
*Project
Materials:*
*All
official pitch/marketing materials, financial projections, and information concerning the Sources and Uses of Funds in connection with
this Offering are provided separately by the Manager.*
*If
you did **not** receive this information alongside this Memorandum, please request it immediately as it contains vital information
that relates to this Offering.*
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Ex. A**
**Exhibit
B to PPM**
*for*
**CM
OB Hotel Owner, LLC**
*Company
Operating Agreement follows this Cover Sheet.*
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Ex. B**
**AMENDED
AND RESTATED**
**OPERATING
AGREEMENT**
*for*
**CM
OB Hotel Owner, LLC**
*A
Delaware Limited Liability Company*
Effective
Date:
**April
24, 2025**
NEITHER
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE LIMITED LIABILITY
COMPANY INTERESTS PROVIDED FOR HEREIN. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THE
SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED
UNDER ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS REGISTERED
AND QUALIFIED UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, SUCH
REGISTRATION AND QUALIFICATION IS NOT REQUIRED. ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS AGREEMENT IS FURTHER SUBJECT TO OTHER
RESTRICTIONS, THE TERMS AND CONDITIONS OF WHICH ARE SET FORTH IN THIS AGREEMENT.
PURCHASERS
OF SECURITIES REPRESENTED BY THIS AGREEMENT SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THEIR INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME.
**OPERATING
AGREEMENT**
*for*
**CM
OB Hotel Owner, LLC**
*A
Delaware Limited Liability Company*
This
Operating Agreement (this “**Agreement**”) of *CM OB Hotel Owner, LLC*, a Delaware limited liability company (the
“**Company**”), is dated effective as of April 24, 2025 (the “**Effective Date**”) by and among the Company,
the Initial Members executing this Agreement as of the date hereof, the Manager (as defined herein), and each other Person who after
the date hereof becomes a Member or Manager of the Company. This Agreement expressly amends, restates, and supersedes all Operating Agreements
of prior dates.
**RECITALS**
*Whereas***,** the Company was formed under the laws of the State of Delaware by the filing of certain organizational and formation documents with the
Delaware Secretary of State on or about April 24, 2025 (the “**Organizational Documents**”) for the purposes set forth
in Section 2.05 of this Agreement; and
*Whereas***,** the Initial Members, the Manager, and all other Members desire to enter into this Agreement, setting forth the terms and conditions governing
the operation and management of the Company henceforth.
**Now,
Therefore**, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by all Parties, the Parties hereto agree as follows:
**ARTICLE
ITC “ARTICLE I DEFINITIONS” \l 1**
**Definitions**
**Section
1.01 TC “Section 1.01 Definitions.” \l 2Definitions.** Capitalized terms used in this Agreement and not otherwise defined
shall have the meanings set forth in this Section 1.01:
“**Adjusted
Capital Account Deficit**” means, with respect to any Member, the deficit balance, if any, in such Member’s Capital Account
as of the end of the relevant Fiscal Year, after giving effect to the following adjustments:
(a)
crediting to such Capital Account any amount that such Member is obligated to restore or is deemed to be obligated to restore pursuant
to Treasury Regulations Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i); and
(b)
debiting to such Capital Account the items described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
“**Adjusted
Taxable Income**” of a Member for a Fiscal Year (or portion thereof) with respect to the Membership Interest held by such Member
means the federal taxable income allocated by the Company to the Member with respect to its Membership Interest (as adjusted by any final
determination in connection with any tax audit or other proceeding) for such Fiscal Year (or portion thereof); provided, that such taxable
income shall be computed (i) minus any excess taxable loss or excess taxable credits of the Company for any prior period allocable to
such Member with respect to its Membership Interest that were not previously taken into account for purposes of determining such Member’s
Adjusted Taxable Income in a prior Fiscal Year to the extent such loss or credit would be available under the Code to offset income of
the Member (or, as appropriate, the direct or indirect owners of the Member) determined as if the income, loss, and credits from the
Company were the only income, loss, and credits of the Member (or, as appropriate, the direct or indirect owners of the Member) in such
Fiscal Year and all prior Fiscal Years, and (ii) taking into account any special basis adjustment with respect to such Member resulting
from an election by the Company under Code Section 754.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 1 of 40**
“**Affiliate**”
means, with respect to any Person, any other Person who, directly or indirectly (including through one or more intermediaries), controls,
is controlled by, or is under common control with, such Person (as applicable). For purposes of this definition, “control,”
when used with respect to any specified Person, shall mean the power, direct or indirect, to direct or cause the direction of the meaningful
management and policies of such Person, whether through ownership of voting securities or partnership or other ownership interests, by
contract or otherwise; and the terms “controlling” and “controlled” shall have correlative meanings.
“**Applicable
Law**” means all applicable provisions of (a) constitutions, treaties, statutes, laws (including the common law), rules, regulations,
decrees, ordinances, codes, proclamations, declarations, or orders of any Governmental Authority; (b) any consents or approvals of any
Governmental Authority; and (c) any orders, decisions, advisory or interpretative opinions, injunctions, judgments, awards, decrees of,
or agreements with, any Governmental Authority.
“**Book
Depreciation**” means, with respect to any Company asset for each Fiscal Year, the Company’s depreciation, amortization,
or other cost recovery deductions determined for federal income tax purposes, except that if the Book Value of an asset differs from
its adjusted tax basis at the beginning of such Fiscal Year, Book Depreciation shall be an amount which bears the same ratio to such
beginning Book Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such Fiscal Year bears
to such beginning adjusted tax basis; provided, that if the adjusted basis for federal income tax purposes of an asset at the beginning
of such Fiscal Year is zero and the Book Value of the asset is positive, Book Depreciation shall be determined with reference to such
beginning Book Value using any permitted method selected by the Manager in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g)(3).
“**Book
Value**” means, with respect to any Company asset, the adjusted basis of such asset for federal income tax purposes, except as
follows:
(a)
the initial Book Value of any Company asset contributed by a Member to the Company shall be the gross Fair Market Value of such Company
asset as of the date of such contribution;
(b)
immediately before the distribution by the Company of any Company asset to a Member, the Book Value of such asset shall be adjusted to
its gross Fair Market Value as of the date of such distribution;
(c)
the Book Value of all Company assets may, in the sole discretion of the Manager, be adjusted to equal their respective gross Fair Market
Values, as reasonably determined by the Manager, as of the following times:
(i)
the acquisition of an additional Membership Interest in the Company by a new or existing Member in consideration for more than a *de
minimis* Capital Contribution;
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 2 of 40**
(ii)
the distribution by the Company to a Member of more than a *de minimis* amount of property (other than cash) as consideration for
all or a part of such Member’s Membership Interest in the Company; and
(iii)
the liquidation of the Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g);
(d)
the Book Value of each Company asset shall be increased or decreased, as the case may be, to reflect any adjustments to the adjusted
tax basis of such Company asset pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments
are taken into account in determining Capital Account balances pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m); provided,
that Book Values shall not be adjusted pursuant to this paragraph (d) to the extent that an adjustment pursuant to paragraph (c) above
is made in conjunction with a transaction that would otherwise result in an adjustment pursuant to this paragraph (d); and
(e)
if the Book Value of a Company asset has been determined pursuant to paragraph (a) or adjusted pursuant to paragraphs (c) or (d) above,
such Book Value shall thereafter be adjusted to reflect the Book Depreciation taken into account with respect to such Company asset for
purposes of computing Net Income and Net Losses.
“**Business
Day**” means a day other than a Saturday, Sunday, or other day on which commercial banks in the State of Delaware are authorized
or required to close.
“**Capital
Contribution**” means, for any Member, the total amount of cash and cash equivalents and the Book Value of any property or services
actually contributed to the Company by such Member.
“**Capital
Event**” means the consummation of a sale, transfer, conveyance, refinance, or disposition of the Property or other substantial
assets of the Company (or substantial portions of the Property or other assets) resulting in cash proceeds to the Company.
“**Cause**”
means a final, non-appealable determination by either a) a court of competent jurisdiction; b) an independent arbitrator under the American
Arbitration Association; or c) a government body with appropriate jurisdiction, that a Person has committed an act that constitutes a
felony criminal act or wrongdoing, breach of fiduciary duties as outlined in Article 9 of this Agreement (if applicable to such Person),
bad faith, gross negligence, fraud, or willful misconduct involving moral turpitude against the Company or one of its Members or Managers.
“**Certificate
of Termination**” means a certificate to be filed upon completion of the winding up and liquidation of the Company as set forth
in Section 11.04, which certificate shall be in the form required by the DLLCA.
“**Change
of Control**” mean the occurrence of any of the following events: (i) a sale or other disposition (whether by death, divorce,
bankruptcy, or otherwise) of all or substantially all of a Person’s ownership interests or transfer of the governing rights of
a Member by/to another Person by means of any transaction or series of related transactions (including, without limitation, any reorganization,
merger or consolidation but excluding any merger effected exclusively for the purpose of changing the domicile of the Member), or (ii)
a sale of all or substantially all of the assets of the Member (both i and ii collectively for purposes of this definition, a “Change”),
such that in either case (i or ii) the Member’s equity holders of record immediately prior to such Change will, immediately after
such Change, hold less than a controlling influence and/or less than 50% of the interests of the surviving or acquiring Member.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 3 of 40**
“**Code**”
means the Internal Revenue Code of 1986.
“**Commitment
Term**” means the period of time beginning as of the date of the closing of the purchase of the Property and continuing 5 (5)
years, provided however that the same may be extended by the Manager twice, each for up to two (2) additional years if the Manager determines,
in good faith, that such extension(s) is reasonably necessary to effectuate a successful completion of the Project.
“**Company
Minimum Gain**” means “partnership minimum gain” as defined in Treasury Regulations Section 1.704-2(b)(2), substituting
the term “Company” for the term “partnership” as the context requires.
“**DLLCA**”
means the Delaware Limited Liability Company Act, in effect as of the Effective Date of this Agreement, and as may be revised from time
to time in the future.
“**Divorce**”
means any legal proceeding to terminate or dissolve, or separate the Marital Relationship of a Member, and includes an action for annulment,
legal separation, or similar proceeding that involves a judicial division of joint or marital property of the Member and his or her Spouse.
“**Electronic
Transmission**” means any form of communication not directly involving the physical transmission of paper that creates a record
that may be retained, retrieved, and reviewed by a recipient thereof and that may be directly reproduced in paper form by such a recipient
through an automated process.
“**Equity
Multiple Return**” means the total cash distributions received from by a Member, divided by the total Capital Contributions given
by that Member as a product of total return on investment. An Equity Multiple Return of less than 1.0x means a Member is getting back
less cash than it contributed. An Equity Multiple Return of more than 1.0x means a Member is getting back more cash than it contributed.
By way of pure example, an Equity Multiple Return of 1.5x means that for every $1.00 of Capital Contributions given by a Member, that
Member could be expected to receive distributions totaling $1.50.
“**Equity
Securities**” means any and all Membership Interests of the Company and any securities of the Company convertible into, exchangeable
for, or exercisable for, such Membership Interests, and warrants or other rights to acquire such Membership Interests.
“**Estimated
Tax Amount**” of a Member for a Fiscal Year means the Member’s Tax Amount for such Fiscal Year as estimated in good faith
from time to time by the Manager. In making such estimate, the Manager shall take into account amounts shown on Internal Revenue Service
Form 1065 filed by the Company and similar state or local forms filed by the Company for the preceding taxable year and such other adjustments
as the Manager reasonably determines are necessary or appropriate to reflect the estimated operations of the Company for the Fiscal Year.
“**Excluded
Securities**” means Equity Securities issued in connection with:
(a)
a grant to any existing or prospective consultants, employees, or officers pursuant to any profits interest plan or similar equity-based
plans or other compensation agreement;
(b)
the conversion or exchange of any securities of the Company into Membership Interests, or the exercise of any warrants or other rights
to acquire Membership Interests;
(c)
any acquisition by the Company of any equity interests, assets, properties, or business of any Person;
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 4 of 40**
(d)
any merger, consolidation, or other business combination involving the Company;
(e)
the commencement of any initial public offering/qualified public offering or any transaction or series of related transactions involving
a Change of Control;
(f)
an equity split, payment of distributions, or any similar recapitalization; and
(g)
any private placement of warrants to purchase Membership Interests to lenders or other institutional investors (excluding the Members)
in any arm’s length transaction providing debt financing to the Company (the “**Financing Warrants**”) where such
Financing Warrants, together with all the then outstanding Financing Warrants, are not equal to and not convertible into an aggregate
of more than 5% of the outstanding Equity Securities on a fully diluted basis at the time of the issuance of such Financing Warrants,
in each case, approved in accordance with the terms of this Agreement.
“**Fair
Market Value**” of any asset as of any date means the purchase price that a willing buyer having all relevant knowledge would
pay a willing seller for such asset in an arm’s length transaction as determined by a qualified Independent Third Party appraiser
engaged by the Manager in good faith and upon commercially reasonable terms.
“**Fiscal
Year**” means the calendar year, unless the Company is required to have a taxable year other than the calendar year, in which
case Fiscal Year shall be the period that conforms to its taxable year.
“**Governmental
Authority**” means any federal, state, local, or foreign government or political subdivision thereof, or any agency or instrumentality
of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental
authority (to the extent that the rules, regulations, or orders of such organization or authority have the force of law), or any arbitrator,
court, or tribunal of competent jurisdiction.
“**Independent
Third Party**” means, with respect to any Member, Manager or the Company, any Person who is not an Affiliate or other Permitted
Transferee of such Member, Manager, or the Company.
“**Initial
Member(s)**” means the Sponsor(s), directly or indirectly.
“**Initial
Offering**” means the certain initial offering of Membership Interests of the Company to Persons other than the Initial Member
pursuant to a certain Private Placement Memorandum (the “**PPM**”) dated effective and launching on or about April 24,
2025.
“**IRR**”
means the cumulative *internal rate of return* on Capital Contributions (for each Member) calculated using the *“XIRR”* function in *Microsoft Excel™*, taking into account all Capital Contributions given and distributions made over time.
“**Key
Persons**” means certain principals of the Manager who are, or will be, principally charged with the governance of the Manager
and the Company above and beyond other Sponsors.
“**Lien**”
means any mortgage, pledge, security interest, option, right of first offer, encumbrance, or other restriction or limitation of any nature
whatsoever, including as those imposed by any loans to the Company, an SPE, or the Property.
“**Loan**”
means a certain loan to be obtained by an SPE (or the Company) for the primary purpose of undertaking the Project.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 5 of 40**
“**Majority**”
means one or more Members having among them more than fifty percent (50%) of the Membership Interests of all Members.
“**Manager**”
means *CM OB Hotel MGR, LLC*, a Delaware limited liability company, or such other Person as may be designated or become a manager
of the Company pursuant to the terms of this Agreement. The Manager shall constitute a “manager” of the Company as that term
is defined in the DLLCA.
“**Manager
Representative**” means either a) an Independent Third Party designated by the Manager and kept in the written records of the
Company on file with Company Counsel or b) in the absence of the former, Company Counsel itself. The Manager has the authority to change
the Manager Representative at any time within its discretion, provided that such change is immediately provided for in the written records
of the Company as stated above
“**Marital
Relationship**” means a civil union, domestic partnership, marriage, or any other similar relationship that is legally recognized
in any jurisdiction.
“**Member**”
means (a) each Person identified on the Members Schedule as of the date hereof as a Member and who has executed this Agreement or a counterpart
thereof (each, a “**Member**”), including the Initial Members; and (b) each Person who is hereafter admitted as a Member
in accordance with the terms of this Agreement and the DLLCA, in each case so long as such Person is shown on the Company’s books
and records as the owner of Membership Interests. The Members shall constitute “members” of the Company as that term is defined
in the DLLCA.
“**Member
Nonrecourse Debt**” means “partner nonrecourse debt” as defined in Treasury Regulations Section 1.704-2(b)(4), substituting
the term “Company” for the term “partnership” and the term “Member” for the term “partner”
as the context requires.
“**Member
Nonrecourse Debt Minimum Gain**” means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum
Gain that would result if the Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Treasury
Regulations Section 1.704-2(i)(3).
“**Member
Nonrecourse Deduction**” means “partner nonrecourse deduction” as defined in Treasury Regulations Section 1.704-2(i),
substituting the term “Member” for the term “partner” as the context requires.
“**Membership
Class**” or “**Member Class”** or “**Class**” means the class designation of Membership Interests
each Member holds, with each Class representing different rights and entitlements as stated in this Agreement. At present, the Classes
are as follows:
- **Class A**, whose Members will be entitled to a “**Preferred Return Rate**” **equal to 8.00%** and will be entitled to share additional profits beyond its Preferred Return, subject to the distribution mechanism outlined below (the “**Class A Members**”).
- **Class B,** whose Members will consist solely of some or all of the Sponsors (though not all Sponsors may hold such interests) and other Persons within the sole discretion of the Key Persons and will share in the profits of the Company (the “**Class B Members**”).
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 6 of 40**
“**Membership
Interest**” or “**Member Interest**” or simply “**Interest**” means an interest in the Company
owned by a Member, which may be expressed as a “**Membership Unit(s)**” or as a “**Membership Interest Percentage**”,
including such Member’s right (a) to its distributive share of Net Income, Net Losses, and other items of income, gain, loss, and
deduction of the Company; (b) to its distributive share of the assets of the Company; (c) to vote on, consent to, or otherwise participate
in any decision of the Members as provided in this Agreement; and (d) to any and all other benefits to which such Member may be entitled
as provided in this Agreement or the DLLCA. The Membership Interest of each Member is likely to be the same proportion of such Member’s
total Capital Contribution, though may not necessarily be so. The sum of the Members’ Membership Interests as a percentage shall,
at all times, be one hundred percent (100%).
“**Net
Income**” and “**Net Loss**” mean, for each Fiscal Year or other period specified in this Agreement, an amount
equal to the Company’s taxable income or taxable loss, or particular items thereof, determined in accordance with Code Section
703(a) (where, for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section
703(a)(1) shall be included in taxable income or taxable loss), but with the following adjustments:
(a)
any income realized by the Company that is exempt from federal income taxation, as described in Code Section 705(a)(1)(B), shall be added
to such taxable income or taxable loss, notwithstanding that such income is not includable in gross income;
(b)
any expenditures of the Company described in Code Section 705(a)(2)(B), including any items treated under Treasury Regulations Section
1.704-1(b)(2)(iv)(I) as items described in Code Section 705(a)(2)(B), shall be subtracted from such taxable income or taxable loss, notwithstanding
that such expenditures are not deductible for federal income tax purposes;
(c)
any gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for federal income
tax purposes shall be computed by reference to the Book Value of the property so disposed, notwithstanding that the adjusted tax basis
of such property differs from its Book Value;
(d)
any items of depreciation, amortization, and other cost recovery deductions with respect to Company property having a Book Value that
differs from its adjusted tax basis shall be computed by reference to the property’s Book Value (as adjusted for Book Depreciation)
in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g);
(e)
if the Book Value of any Company property is adjusted as provided in the definition of Book Value, then the amount of such adjustment
shall be treated as an item of gain or loss and included in the computation of such taxable income or taxable loss; and
(f)
to the extent an adjustment to the adjusted tax basis of any Company property pursuant to Code Sections 732(d), 734(b) or 743(b) is required,
pursuant to Treasury Regulations Section 1.704 1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of
such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases such basis).
“**Nonrecourse
Deductions**” has the meaning set forth in Treasury Regulations Section 1.704-2(b).
“**Nonrecourse
Liability**” has the meaning set forth in Treasury Regulations Section 1.704-2(b)(3).
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 7 of 40**
“**Operating
Expenses**” means, collectively, all expenses related to the operations and management of the Company, an SPE, the Property,
the Project as a whole, the business of the Company, or the administration of the Company and an SPE, including, non-exhaustively: all
costs and expenses of maintaining the operations and investments of the Company, including all fees payable to the Manager or Affiliate/third
party service providers; advisory fees payable to any investment adviser; appraising and valuing, acquiring, maintaining, financing,
hedging and disposing of Property; taxes, fees and other governmental charges levied against the Company; insurance; administrative and
research fees; expenses of custodians, outside advisors, counsel (including Company Counsel), accountants, auditors, administrators and
other consultants and professionals; expenses associated with forming and operating holding vehicles related to the Project; technological
expenses; interest on and fees, costs and expenses arising out of all financings entered into by the Company; travel expenses; custodial
expenses; litigation expenses (including the amount of any judgments or settlements paid in connection therewith); winding up and liquidation
expenses; expenses incurred in connection with any financial or tax audit, investigation, settlement or review; expenses associated with
meetings of the Members or the Managers and the preparation and distribution of reports, financial statements, tax returns and K-1s to
the Members; indemnification and other unreimbursed expenses; and any extraordinary expenses to the extent not reimbursed or paid by
insurance.
**“Organizational
Expenses**” means all out-of-pocket expenses incurred in connection with the organization and formation of the Manager and the
Company and any related investment vehicle, and other related entities organized by the Manager or its Affiliates in connection with
the Project and for the benefit of the Members, including, without limitation, legal and accounting fees and expenses, printing costs,
and filing fees.
“**Permitted
Transfer**” means a Transfer of Membership Interests carried out pursuant this Agreement.
“**Permitted
Transferee**” means a recipient of a Permitted Transfer.
“**Person**”
means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization,
trust, association, or other entity.
“**Preferred
Return**” means, with respect to each Class A Member, an amount calculated like interest on such Member’s Unrecovered Capital
Contributions at a rate equal that Member’s Preferred Return Rate (commensurate with such Member’s Membership Class) per
annum, cumulative and non-compounded. The Preferred Return shall begin to accrue as of the date the Property receives a certificate of
occupancy by a qualified governmental authority or on the date the Member actually provides such Capital Contributions, whichever occurs
later. For financial and income tax reporting purposes, neither accrual nor payment of the Preferred Return shall be treated as a guaranteed
payment under Section 707(c) of the Code.
“**Preferred
Return Accounting Period**” means each Fiscal Year, prorated for any partial years in which the Initial Offering commences and
when the Company terminates.
“**Preferred
Return Rate**” means the percentage rate utilized in calculating the Preferred Return for each Member, which is designated by
Membership Class as defined above under the definition of “**Membership Class**”.
“**Project**”
means acquiring, developing, and ultimately selling the Property. Notwithstanding the foregoing, the Manager has the sole and exclusive
authority to adjust or otherwise modify, amend, or alter the definition of the Project if it reasonably determines to be in the best
interests of the Company, provided, however, that the Project shall always concern the Property as its single material asset.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 8 of 40**
“**Property**”
means a certain real property located at 8386 Camp Creek Blvd, Olive Branch, MS 38654, and is intended to be developed (new construction)
into a Courtyard by Marriot hotel.
“**Recovered
Capital Contributions**” shall mean such total amount of distributions made to a Member, counted against their total Capital
Contributions provided.
“**Related
Party Agreement**” means any agreement, arrangement, or understanding between the Company and any Manager, Member, Officer (or
other employee) of the Company or any Affiliate of a Manager, Member, Officer (or other employee) of the Company; in each case, as such
agreement may be amended, modified, supplemented, or restated in accordance with the terms of this Agreement.
“**Representative**”
means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants,
and other agents of such Person.
“**Securities
Act**” means the Securities Act of 1933 and the rules and regulations thereunder, which shall be presently in effect.
“**SPE**”
means a certain Onyx OB Hotel LLC, which pursuant to an equity rollover, is (or will be) a subsidiary company that is broadly classified
as a “single purpose entity” or “special purpose vehicle” organized and governed by the Manager and (is or will
be) wholly owned by the Company for the sole purpose of owning and operating the Property (except wherein co-investment opportunities
are offered by the Manager in its sole discretion.
“**Sponsor(s)**”
means all beneficial owners of the Manager, including but not limited to, the Key Persons.
“**Spouse**”
means a spouse or spousal equivalent, a party to a civil union, a domestic partner, a same-sex spouse or partner, or any person in a
Marital Relationship with a Member.
“**Subscription
Agreement**” means a certain agreement in connection with the Initial Offering (or a Subsequent Offering, as applicable) between
the Company and each Member by which the Member subscribes to, and becomes a Member of, the Company.
“**Subsidiary**”
means, with respect to any Person, any other Person of which a majority of the outstanding shares or other equity interests having the
power to vote for directors or comparable managers are owned, directly or indirectly, by the first Person.
“**Super
Majority**” means one or more Members having among them at least sixty-six percent (66.00 %) of the Membership Interests of all
Members.
“**Tax
Amount**” of a Member for a Fiscal Year means the product of (a) the Tax Rate for such Fiscal Year and (b) the Adjusted Taxable
Income of the Member for such Fiscal Year with respect to its Membership Interest.
“**Tax
Rate**” of a Member, for any period, means the highest effective marginal combined federal, state, and local tax rate applicable
to an individual residing in Memphis, Tennessee (or, if higher, a corporation doing business in Memphis, Tennessee), taking into account
(a) the character (for example, long-term or short-term capital gain, ordinary, or exempt) of the applicable income and (b) if applicable,
the deduction under IRC Section 199A.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 9 of 40**
“**Transfer**”
means to, directly or indirectly, sell, transfer, assign, gift, pledge, encumber, hypothecate, or similarly dispose of, either voluntarily
or involuntarily, by operation of law or otherwise, or to enter into any contract, option, or other arrangement or understanding with
respect to the sale, transfer, assignment, gift, pledge, encumbrance, hypothecation, or similar disposition of, any Membership Interests
owned by a Person or any interest (including a beneficial interest) in any Membership Interests owned by a Person. “**Transfer**”
when used as a noun shall have a correlative meaning. “**Transferor**” and “**Transferee**” mean a Person
who makes or receives a Transfer, respectively.
“**Treasury
Regulations**” means the final or temporary regulations issued by the United States Department of Treasury pursuant to its authority
under the Code, and any successor regulations.
“**Unrecovered
Capital Contributions**” shall mean the total Capital Contributions provided by a Member, reduced by distributions made to such
Member pursuant to Article 6 of this Agreement (expressly excluding the Preferred Return, if applicable).
**Section
1.02 TC “Section 1.02 Interpretation.” \l 2Interpretation.**
(a)
For purposes of this Agreement: (a) the words “include,” “includes,” and “including” shall be deemed
to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) unless otherwise
expressly stated, the words “herein,” “hereof,” “hereby,” “hereto,” and “hereunder”
refer to this Agreement as a whole.
(b)
The definitions given for any defined terms in this Agreement shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine, and neuter forms.
(c)
Unless the context otherwise requires, references herein: (x) to Articles, Sections, Exhibits, and Schedules mean the Articles and Sections
of, and Exhibits and Schedules attached to, this Agreement; (y) to an agreement, instrument, or other document means such agreement,
instrument, or other document as amended, supplemented, and modified from time to time to the extent permitted by the provisions thereof;
and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations
promulgated thereunder.
(d)
This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party
drafting an instrument or causing any instrument to be drafted.
(e)
The Exhibits and Schedules referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent
as if they were set forth verbatim herein.
(f)
Any terms expressly defined elsewhere in this Agreement shall be as defined therein.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 10 of 40**
**ARTICLE
IITC “ARTICLE II ORGANIZATION” \l 1
Organization**
**Section
2.01 TC “Section 2.01 Formation.” \l 2Formation.**
(a)
The Company was formed on or about January 3, 2024, pursuant to the provisions of the DLLCA, upon the filing of the Organizational Documents
with the Secretary of State of the State of Delaware.
(b)
This Agreement, as revised, shall constitute the “operating agreement” (as that term is used in the DLLCA) of the Company.
The rights, powers, duties, obligations, and liabilities of the Members and the Manager shall be determined pursuant to the DLLCA and
this Agreement. To the extent that the rights, powers, duties, obligations, and liabilities of any Member or the Manager are different
by reason of any provision of this Agreement than they would be under the DLLCA in the absence of such provision, this Agreement shall,
to the extent permitted by the DLLCA, control.
**Section
2.02 TC “Section 2.02 Name.” \l 2Name.** The name of the Company is “*CM OB Hotel Owner, LLC*”, or such
other name or names as may be designated by the Manager; provided, that the name shall always contain the words “Limited Liability
Company” or “Limited Company” or an abbreviation of one of those phrases. Amendments to the Organizational Documents
or this Agreement to reflect any such name change may be made by the Manager without the consent of the Members. The Manager shall give
prompt notice to the Members of any change to the name of the Company and any related amendment to the Organizational Documents or this
Agreement. The Company may conduct business under any assumed or fictitious name required by Applicable Law or otherwise deemed desirable
by the Manager.
**Section
2.03 TC “Section 2.03 Principal Office.” \l 2Principal Office.** The principal office of the Company is as stated in the
Organizational Documents, or such other place as may from time to time be determined by the Manager. The Manager shall give prompt notice
of any such change to each of the Members.
**Section
2.04 TC “Section 2.04 Registered Office; Registered Agent.” \l 2Registered Office; Registered Agent.**
(a)
The registered office of the Company shall be the office of the initial registered agent named in the Organizational Documents or such
other office (which need not be a place of business of the Company) as the Manager may designate from time to time in the manner provided
by the DLLCA and Applicable Law.
(b)
The registered agent for service of process on the Company in the State of Delaware shall be the initial registered agent named in the
Organizational Documents or such other Person or Persons as the Manager may designate from time to time in the manner provided by the
DLLCA and Applicable Law.
**Section
2.05 TC “Section 2.05 Purpose; Powers.” \l 2Purpose; Powers.**
(a)
The sole purpose of the Company is to undertake the Project, and to engage in any lawful acts or activities necessary or incidental thereto.
Pursuant to this Agreement, the Company shall have all the powers necessary or convenient to carry out the purposes for which it is formed,
including the powers granted by the DLLCA.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 11 of 40**
(b)
The Manager shall also have the right to structure one or several SPEs as Subsidiaries in furtherance of the Project, or to undertake
the Project by way of a co-invest structure such as a tenants in common (a “**TIC**”) or similar structure. In each case,
within the discretion of the Manager, this may include outside third-party investor-members or co-owners, in which case ownership of
the Property or an SPE, as applicable, may not be wholly vested in the Company but partially owned in conjunction with such other third
parties (with third parties, each SPE or TIC referred to as a “**Side Car Investment**”). Each Side Car Investment shall
be responsible for its own organizational and operational expenses, and the Company will be responsible for its pro rata share of those
costs and expenses alongside third parties therein. No Member has an automatic right to provide additional investment into any Side Car
Investment without the Manager’s consent, except, however, the Sponsors (or their Affiliates) shall be permitted to participate
in any Side Car Investment and to directly (or indirectly) own an interest in such Side Car Investment. The ownership of any equity or
beneficial interests in a Side Car Investment by the Sponsors (or their Affiliates) shall not, by itself, form the basis of an impermissible
conflict between the Sponsor and the Company (or the Manager), and shall not, by itself, form the basis of a claim against the Sponsor,
the Key Persons, or the Manager for a breach or violation of its fiduciary duties, such claims being affirmatively waived by all Members
(to the fullest extent permitted by Applicable Law) as it pertains to these contemplated transactions.
(c)
The Manager shall have the right to enter into side-letter agreements with one or more Members upon terms agreed to by the Manager in
its sole and absolute discretion, and such side-letter agreement may provide additional rights, economic incentives, or other terms to
such Members. The Manager is not required to disclose the existence or terms of any such side-letter agreements with any other Member.
No Member shall have a right to participate in, or be the beneficiary of, any side-letter agreement to which it is not expressly a party
to. The terms of this Section 2.05(c) shall be permissible to the maximum extent permitted under Applicable Law.
(d)
The Manager shall also have the right, within its sole and absolute but reasonable discretion, to deploy reserve capital that is not
otherwise currently required for the Project (or that may simply be held in reserve) into certain stable savings or investment holdings
such as CDs, bonds, and other low-risk opportunities, provided, however, that such actions do not result in a loss of securities exemptions
currently relied upon by the Company, and provided further, that these deployments do not constitute the Company’s primary investments.
**Section
2.06 TC “Section 2.06 Term.” \l 2Term.** The term of the Company commenced on the date the Organizational Documents was
filed with the Secretary of State of the State of Delaware and shall continue in existence perpetually until the Company is terminated
in accordance with the provisions of this Agreement.
**ARTICLE
IIITC “ARTICLE III CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS” \l 1
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS**
**Section
3.01 TC “Section 3.01 Initial Capital Contributions.” \l 2 Capital Contributions.** Contemporaneously with the execution
of this Agreement and pursuant to the Initial Offering (or any Subsequent Offering) each Member has made (or will presently make) a Capital
Contribution to the Company and is thereby deemed to own Membership Interests as Membership Interest Units in the amounts set forth opposite
such Member’s name on the Members’ Schedule herein (Schedule I attached hereto). The Manager shall maintain, keep
in confidence, and update the Members’ Schedule upon the issuance or Transfer of any Membership Interests to any new or existing
Member in accordance with this Agreement. The Manager expressly reserves the right, for the benefit of the Company, to increase or decrease
the total number of Membership Interests available for purchase in its sole discretion. The Members, other than the Sponsors holding
Class B Membership Interests, shall not be entitled to see the Membership Interest Percentages of any of the other Members except as
required for meetings of the Members validly called.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 12 of 40**
**Section
3.02 TC “Section 3.02 Additional Capital Contributions.” \l 2 Capital Calls; TC “Section 3.02 Additional Capital Contributions.”
\l 2Additional Capital Contributions.**
(a) **Capital Calls.** Additional Capital Contributions may be (1) called at the sole discretion of the Manager for the benefit of the
Company *if and only if* the Company requires additional capital to meet a liability with respect to the Property or the Project
such that, without the additional Capital Contributions, the success of the Project would be in jeopardy (each a “**Capital Call**”)
or (2) made voluntarily by a Member with the express written consent of the Manager, provided, however that the Manager may only require
that the Sponsors alone participate (“**Sponsor Call Contributions**”). Unless otherwise determined by the Manager in
its sole discretion, all Members shall be required to participate in a Capital Call on a pro rata basis of their Capital Contributions
in proportion to the aggregate Capital Contributions of all Members (each Member’s “**Call Amounts**”). A Capital
Call, when issued, shall be issued by the Manager in writing to all the Members and shall provide for a funding/participation deadline
of at least THIRTY (30) days from the date of the notice (the “**Capital Call Notice**”).
(b) **Failure to Fund Capital Call.** Failure of a Member to participate in any Capital Call shall result in a reduction of the defaulting
Member’s Membership Interest Percentage to a percentage determined by calculating the defaulting Member’s total Capital Contributions
in proportion to the total Capital Contributions of all the Class A Members immediately following the conclusion of a Capital Call (but
adjusted to take into account Class B’s unmitigated Membership Interest, overall), and correspondingly increasing non-defaulting
Members’ Membership Interest Percentages accordingly pursuant to the same calculation. Further, a failure to fund a Capital Call
shall result in a default by that Member and shall authorize the Manager in its sole discretion (and without obligation), to take any,
all, or none of the following additional actions against the defaulting Member:
(i)
Restrict the defaulting Member’s right to receive distributions owed to them (less all amounts contemplated under 3.02(c) below)
under Article 6 of this Agreement until after all non-defaulting Members have zero Unrecovered Capital Contributions;
(ii)
Charge the defaulting Member a penalty fee of 5.00% payable to the Company (and not re-distributable to the defaulting Member), as annual
and compounding interest, on all defaulted and outstanding amounts due, and offset the same against all distributions owed to such defaulting
Member until the default amounts plus all penalty fees, interest, and expenses related to enforcement of this Section 3.02 are paid in
full; and/or
(iii)
Permit non-defaulting Member(s), in accordance with their relative Membership Interest Percentages (or in such other percentages as the
Manager may determine) (the “**Lending Members**”, whether one or more), to advance the portion of any defaulting Member’s
proportionate share of the defaulting Member’s Call Amount which such defaulting Member failed to contribute to the Company (the
“**Default Member Call Amount**”), with such advancement to be treated as a loan by the Lending Member(s) to the defaulting
Member(s), carrying an interest rate equal to the maximum non-usurious amount allowed by Applicable Law (the “**Default Call Loan**”).
Such loan is repayable by the following provisions which are consented to by the defaulting Member: (i) the defaulting Member consents
to the making of the Default Call Loan in favor of the Lending Member(s) and certifies that it is receiving adequate consideration; (ii)
it further consents to the assignment to the Lending Members of all distributions otherwise payable to it until payments to the Lending
Members equal the repayment of the Default Call Loan principal balance plus all accrued and unpaid interest and any fees or expenses
related to the enforcement and collection of the Default Call Loan; and (iii) following payment of Default Call Loan and all associated
interest and fees, the Default Call Loan shall be deemed repaid and the defaulting Member shall thereafter continue receive all distributions
it is otherwise due. By execution of this Agreement, such defaulting Member hereby authorizes the Manager and the Company to pay the
amounts consented to above directly to the Lending Members. Exercise of this penalty, however, shall then not result in a dilution of
the defaulting Member’s Interests above in 3.02(b), but shall still be subject to other impacts associated with defaulting Member.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 13 of 40**
(c) **Defaulting Member Expenses.** A defaulting Member under this Section 3.02 shall be solely responsible for its defaulting amounts
due, and the expenses, interest, fees, costs, and liabilities associated with its default and the Company’s enforcement of any
of its rights hereunder, and the same shall be offset against distributions owed to such defaulting Member, without notice. The defaulting
Member shall never be entitled to distributions of Distributable Cash (defined below) comprised of default fees, interests, or remedies
charged to them.
**Section
3.03 Member/Sponsor Loans.** At the discretion of the Manager, in the event that additional capital is required for the business of
the Company and the Manager foregoes a Capital Call or other mechanism for acquiring capital, the Company may accept loans from Members,
including the Sponsors (“**Member Loans”**). Such Member Loans shall bear interest that may be +/- the current prime rate,
and always within the discretion of the Manager. Repayment of Member Loans shall be treated as expenses of the Company, but subordinate
to any senior loans given to the Company by primary lenders. Loans by any Member to the Company shall not be considered Capital Contributions
and shall not affect the maintenance of such Member’s Capital Account, other than to the extent provided in Section 3.03(a), if
applicable. No Member may provide a loan to the Company except with the written approval of the Manager.
**Section
3.04 TC “Section 3.03 Maintenance of Capital Accounts.” \l 2Maintenance of Capital Accounts.** The Company shall establish
and maintain for each Member a separate capital account (a “**Capital Account**”) on its books and records in accordance
with this Section 3.03. Each Capital Account shall be established and maintained in accordance with the following provisions:
(a)
Each Member’s Capital Account shall be increased by the amount of:
(i)
such Member’s Capital Contributions, including such Member’s initial Capital Contribution and any additional Capital Contributions
pursuant to a duly noticed Capital Call; and
(ii)
any Net Income or other item of income or gain allocated to such Member pursuant to ARTICLE V.
(b)
Each Member’s Capital Account shall be decreased by:
(i)
the cash amount or Book Value of any property distributed to such Member pursuant to ARTICLE VI and Section 11.03(d);
(ii)
the amount of any Net Loss or other item of loss or deduction allocated to such Member pursuant to ARTICLE V;
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 14 of 40**
(iii)
the amount so required in Section 3.02 pursuant to a failure to contribute to a duly noticed Capital Call; and
(iv)
the amount of any liabilities of such Member assumed by the Company or that are secured by any property contributed by such Member to
the Company.
**Section
3.05 TC “Section 3.04 Succession Upon Transfer.” \l 2Succession Upon Transfer.** In the event that any Membership Interests
are Transferred in accordance with the terms of this Agreement, the Transferee shall succeed to the Capital Account of the Transferor
to the extent it relates to the Transferred Membership Interests and, subject to Section 5.07, shall receive allocations and distributions
pursuant to ARTICLE V, ARTICLE VI, and ARTICLE XI in respect of such Membership Interests.
**Section
3.06 TC “Section 3.05 Negative Capital Accounts.” \l 2Negative Capital Accounts.** In the event that any Member shall have
a deficit balance in its Capital Account, such Member shall have no obligation, during the term of the Company or upon termination or
liquidation thereof, to restore such negative balance or make any Capital Contributions to the Company by reason thereof, *except* as may be required by a Capital Call, Applicable Law, or in respect of any negative balance resulting from a withdrawal of capital or
termination in contravention of this Agreement.
**Section
3.07 TC “Section 3.06 No Withdrawals From Capital Accounts.” \l 2No Withdrawals From Capital Accounts.** No Member shall
be entitled to withdraw any part of its Capital Account or to receive any distribution from the Company, except as otherwise provided
in this Agreement. No Member shall receive any interest, salary, or drawing with respect to its Capital Contributions or its Capital
Account, except as otherwise provided in this Agreement. The Capital Accounts are maintained for the sole purpose of allocating items
of income, gain, loss, and deduction among the Members and shall have no effect on the amount of any distributions to any Members, in
liquidation or otherwise.
**Section
3.08 TC “Section 3.08 Modifications.” \l 2Modifications.** The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted
and applied in a manner consistent with such Treasury Regulations. If the Manager determines that it is prudent to modify the manner
in which the Capital Accounts, or any increases or decreases to the Capital Accounts, are computed in order to comply with such Treasury
Regulations, the Manager may authorize such modifications without the consent of any Member.
**ARTICLE
IVTC “ARTICLE IV MEMBERS” \l 1
MEMBERS**
**Section
4.01 Membership Classes Established; Management Reserved to the Manager.**
(a) **Membership Classes Established.** The Company hereby establishes the Membership Classes, and the Manager may from time to time establish
additional Membership Classes, subject to amendment procedures and requirements in this Agreement. Membership Interests of each Class
will be entitled to all rights as stated in this Agreement in various parts, and as defined in Article 1 herein. The Membership Interest
Percentages for each Membership Class as an aggregate percentage shall be established by the Manager and reflected on Schedule I attached to this Agreement but held in confidence by the Manager for the benefit of the Company.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 15 of 40**
(b) **Management Reserved to the Manager.** Except as provided elsewhere in this Agreement, by Side Letter, or other contractual right,
no Member that shall take any part in the control of any aspect of the Company’s business, including an SPE, the Project, or transact
any business in the Company’s name, or have the power to sign documents for or otherwise bind or act on behalf of the Company in
any way, to pledge credit, to execute any instrument on the Company’s behalf or to render it liable for any purpose. No Member,
acting solely in the capacity of a Member, is an agent of the Company. For the avoidance of any doubt, it is expressly the Members’
intention to give the Manager (the Sponsor) broad discretion in the operations, governance, and management of the Company and of the
Project and Members who are not Managers expressly acknowledge and agree that they shall have no power to participate in the management
of the Company except as expressly detailed in this Agreement.
(c) **No Meetings of the Members.** Except upon the affirmative consent of the holders of at least a Super Majority of Class A Membership
Interests or for the express purpose of removing or replacing the Manager pursuant Section 7.03 of this Agreement and to thereafter carry
forward the business of the Company, no meetings of the Members, annual or special or otherwise, shall be required or held, it being
understood that the Manager has exclusive discretion to operate the Company and shall provide periodic reporting and updating to the
Members pursuant to Article 10 of this Agreement. If meetings are to be held, written notice of not less than thirty (30) days and not
more than ninety (90) days must be given to all Members and Managers, stating the time, place, and method of conducting the meeting,
as well as the subject matter and agenda therein proposed. At any meeting validly noticed, in order for Members to conduct business,
a quorum of at least a Majority of Membership Interests (or in the case of a meeting to remove and replace the Manager, a Majority of
Class A Membership Interests) must be present at the meeting, and the Manager (or the Manager Representative) shall be responsible for
maintaining, to the best of their ability, a roster in accordance with Schedule I, including contact information for all Members,
and distributing the same to all Members just prior to a meeting. All actions proposed to be taken at any meeting of the Members –
unless expressly stated otherwise in this Agreement – shall be approved only upon the affirmative consent of the holders of at
least a Majority of Membership Interests, excluding any defaulting Members generally, and excluding Class B Membership Interests if the
vote is concerning actions under Section 7.03 of this Agreement.
**Section
4.02 TC “Section 4.01 Admission of New Members.” \l 2Admission of New Members.** The Manager is hereby permitted to admit
new Members to the Company in accordance with the terms of the Initial Offering. Additional new Members may be admitted from time to
time at the sole discretion of the Manager, including the terms of such admission. This includes with respect to the Initial Offering
or additional or subsequent offerings of Membership Interests. The Manager may cause the Company to conduct a subsequent offering at
any time upon such terms as the Manager determines appropriate in its sole discretion (each a “**Subsequent Offering**”
and an accompanying close of that offering a “**Subsequent Offering Closing**”) and admit additional Members pursuant
to the same (each an “**Additional Member**”). At any Subsequent Offering Closing, the Manager may, but is not obligated
to, charge Additional Members a fee to “true up” or “catch up” the value of its Capital Contributions with respect
to previously funded Capital Contributions (such fees referred to as “**Catchup Contributions**”). The terms and amounts
of such fees shall be within the sole discretion of the Manager. In order for any Person not already a Member of the Company to be admitted
as a Member, whether pursuant to an issuance or Transfer (including a Permitted Transfer) of Membership Interests, such Person shall
have executed and delivered to the Company a written undertaking substantially in the form of a Subscription Agreement or any other document(s)
that the Manager may deem necessary or appropriate, and if being charged by the Manager, pay additional “true up” fees. Upon
the amendment of the Members Schedule by the Manager and the satisfaction of any other applicable conditions, including the receipt by
the Company of payment for the issuance of Membership Interests, such Person may be admitted as a Member and deemed listed as such on
the books and records of the Company. The Manager shall also adjust the Capital Accounts of the Members as necessary in accordance with
Section 3.03.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 16 of 40**
**Section
4.03 TC “Section 4.02 No Personal Liability.” \l 2No Personal Liability.** Except as otherwise provided in the DLLCA, by
Applicable Law, or expressly in this Agreement, no Member will be liable or obligated personally for any debt, obligation, or liability
of the Company or other Members, the Property, whether arising in contract, tort, or otherwise, including a debt, obligation, or liability
under a judgment, decree, or order of a court, solely by reason of being a Member.
**Section
4.04 TC “Section 4.03 No Withdrawal.” \l 2Withdrawal and Redemption.** Except as expressly provided elsewhere in this Agreement,
no Member shall have the right to withdraw or resign as a Member prior to expiration of the Commitment Term and any such withdrawal or
resignation or attempted withdrawal or resignation by a Member prior to the winding up and termination of the Company shall be null and
void. As soon as any Person who is a Member ceases to hold a Membership Interest, such Person shall no longer be a Member. A Member may,
however, be withdrawn and redeemed pursuant to Section 3.02 or 8.09 of this Agreement.
**Section
4.05 TC “Section 4.04 No Interest in Company Property.” \l 2No Member Interest in Property.** No real or personal property
of the Company, including the Property, shall be deemed to be owned by any Member individually, but shall be owned by, and title shall
be vested solely in, the Company. Without limiting the foregoing, each Member hereby irrevocably waives during the term of the Company
any right that such Member may have to maintain any action for partition with respect to the property of the Company.
**Section
4.06 TC “Section 4.05 Certification of Membership Interests.” \l 2Certification of Membership Interests.** The Manager
shall not be required to issue certificates to the Members representing the Membership Interests held by such Member. Membership Interests
shall be evidenced this Agreement. In the event that the Manager elects to issue certificates representing Membership Interests in accordance
with this Section, then the Manager shall ensure such certificates include all required legends under Applicable Law, including, without
limitation, legends that articulates rules and restrictions applicable to the Membership Interests as restricted securities under Applicable
Law.
**Section
4.07 TC “Section 4.09 Similar or Competitive Activities; Business Opportunities.” \l 2Similar or Competitive Activities;
Business Opportunities.** Nothing contained in this Agreement shall prevent Manager, any Member or any of its Affiliates from engaging
in any other activities or businesses, regardless of whether those activities or businesses are similar to or competitive with the Company.
None of the Members nor any of their Affiliates shall be obligated to account to the Company or to the other Members for any profits
or income earned or derived from such other activities or businesses. None of the Members nor any of their Affiliates shall be obligated
to inform the Company or the other Member of a business opportunity of any type or description, whether similar to or competitive with
the Company.
**Section
4.08 Member Representations and Warranties.** Each Member represents and warrants to, and covenants with, the Company that:
(a)
The Member understands that the Membership Interests have not been registered under the Securities Act of 1933, as amended, or any under
any other applicable securities laws, nor has any governmental or regulatory authority passed an opinion regarding the Membership Interests;
(b)
The Member warrants, certifies, and represents that it is subscribing to the Membership Interests with a view to investments for its
own account, and not with a view to resell the same;
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 17 of 40**
(c)
The Member understands that the Company is not currently required to register and will not register as an Investment Company under the
Investment Company Act of 1940 by way of exemption from definition provided under Section 3(c)1 and/or 3(c)5 of the Investment Company
Act;
(d)
The Member has all requisite authority (and in the case of an individual, the capacity) to purchase the Membership Interests, enter into
this Agreement, and to perform all the obligations required to be performed by the Member hereunder, and such purchase will not contravene
any law, rule, or regulation binding on the Member or any investment guideline or restriction applicable to the Member;
(e)
The Member understands and accepts that the purchase of the Membership Interests involves various risks, including the risks that there
may be no open market for the Membership Interests, or that Subscribers entire investment may be lost. The Member represents that it
is able to bear any loss associated with an investment in the Membership Interests;
(f)
The Member is an “**Accredited Investor**” as defined under the Securities Act and has such knowledge, skill and experience
in business, financial and investment matters that the Member is capable of evaluating the merits and risks of this specific investment
in the Membership Interests. With the assistance of the Member’s own professional advisors, to the extent that the Member has deemed
appropriate, the Member has made its own legal, tax, accounting, and financial evaluation of the merits and risks of an investment in
the Membership Interests and the consequences of this Agreement. The Member has considered the suitability of the Membership Interests
as an investment in light of its own circumstances and financial condition and the Member is able to bear the risks associated with an
investment in the Membership Interests and its authority to invest in the Membership Interests; and
(g)
The Member agrees to furnish any additional information requested by the Company or any of its affiliates to assure compliance with applicable
U.S. federal and state securities laws in connection with the purchase and sale of the Membership Interests. Any information that has
been furnished or that will be furnished by the Member to evidence its status as an accredited investor is accurate and complete, and
does not contain any misrepresentation or material omission.
**ARTICLE
VTC “ARTICLE V ALLOCATIONS” \l 1
ALLOCATIONS**
**Section
5.01 TC “Section 5.01 Allocation of Net Income and Net Loss.” \l 2Allocation of Net Income and Net Loss.**
(a) **Allocations of Net Income**. For each Fiscal Year or Fiscal Quarter, as applicable, the Company’s items of Net Income or other
gains recognized by the Company will first be allocated to the Class A Members, each on a pro rata basis of their total Capital Contributions.
From there, such allocations shall be further adjusted to match, as closely as possible, how actual distributions of Distributable Cash
would have been (or were) made and, where applicable, shared with the Class B Members pursuant to Section 6.02 below if the Company were
to winddown, liquidate, and make (or has made) a final distribution of all Net Income presently available.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 18 of 40**
(b) **Allocations of Net Losses.** For each Fiscal Year or Fiscal Quarter, as applicable, the Company’s items of Net Losses, if
any, recognized by the Company will be allocated first between all Class A Members on a pro rata basis of their total Capital Contributions
until their Capital Accounts reach zero, thereafter, any excess to the Class B Members pro rata in accordance with their Membership Interests.
Notwithstanding the foregoing, at the discretion of the Manager the Company may, to the extent possible, endeavor to pass along certain
losses and depreciation expenses and other taxable impacts of a similar nature in a manner other than as described above; within the
good faith and reasonable discretion of the Manager, these items may instead be allocated in specific and different proportion between
the Class A Members on the one hand, and also shared with the Class B Members on the other hand.
**Section
5.02 Allocation Rules.** In the event that Members are issued Membership Interests on different dates, the Net Income or Net Loss allocated
to the Members for each Fiscal Year during which Members receive Membership Interests will be allocated among the Members in accordance
with Section 706 of the Internal Revenue Code, using any convention permitted by law and selected by the Manager. For purposes of determining
the Net Income, Net Loss and individual items of income, gain, loss credit, deduction and expense allocable to any period, Net Income,
Net Loss and any other items will be determined on a daily, monthly or other basis, as determined by the Manager using any method that
is permissible under Section 706 of the Code and the Treasury Regulations. Except as otherwise provided in this Agreement, all individual
items of Company income, gain, loss and deduction will be divided among the Members in the same proportions as they share Net Incomes
and Net Loss for the Fiscal Year or other period in question.
**Section
5.03 Limitation on Allocation of Net Losses.** Except for Class B Members and/or within the discretion of the Manager, there will be
no allocation of Net Losses to any Member to the extent that the allocation would create a negative balance in the Capital Account of
that Member (or increase the amount by which that Member’s Capital Account balance is negative).
**Section
5.04 General Tax Allocations.** Except as otherwise provided in this Section 5.4, the taxable income or loss of the Company will be
allocated pro rata among the Members in the same manner as the corresponding items of Net Income, Net Loss and separate items of income,
gain, loss, credit, deduction and expense (excluding items for which there are no related tax items) are allocated among the Member for
Capital Account purposes.
**Section
5.05 TC “Section 5.02 Regulatory and Special Allocations.” \l 2Regulatory and Special Allocations.** Notwithstanding the
provisions of Section 5.04:
(a) **Minimum Gain Chargeback***.* In the event there is a net decrease in the Company Minimum Gain during any Fiscal Year, the minimum
gain chargeback provisions described in Sections 1.704-2(f) and (g) of the Treasury Regulations will apply.
(b) **Member Minimum Gain Chargeback***.* In the event there is a net decrease in Member Minimum Gain during any Fiscal Year, the
partner minimum gain chargeback provisions described in Section 1.704-2(i) of the Treasury Regulations will apply.
(c) **Qualified Income Offset***.* In the event a Member unexpectedly receives an adjustment, allocation or Distribution described
in of Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury Regulations, which adjustment, allocation or Distribution creates or
increases a deficit balance in that Member’s Capital Account, the “qualified income offset” provisions described in
Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations will apply.
(i) **Nonrecourse Deductions***.* Nonrecourse Deductions will be allocated in accordance with and as required in the Treasury Regulations.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 19 of 40**
(ii) **Member Nonrecourse Deductions***.* Member Nonrecourse Deductions will be allocated to the Members as required in Section 1.704-2(i)(1)
of the Treasury Regulation.
(iii) **Intention***.* An SPEcial allocations in this Section 5.05 are intended to comply with certain requirements of the Treasury
Regulations and will be interpreted consistently. It is the intent of the Members that any special allocation pursuant to this Section
will be offset with other special allocations pursuant to this Section. Accordingly, special allocations of Company income, gain, loss
or deduction will be made in such manner so that, in the reasonable determination of the Manager, taking into account likely future allocations
under this Section, after those allocations are made, each Member’s Capital Account is, to the extent possible, equal to the Capital
Account it would have been were this Section not part of this Agreement.
(d) **Recapture Items*.*** In the event that the Company has taxable income in any Fiscal Year that is characterized as ordinary
income under the recapture provisions of the Code, each Member’s distributive share of taxable gain or loss from the sale of Company
assets (to the extent possible) will include a proportionate share of this recapture income equal to that Member’s share of prior
cumulative depreciation deductions with respect to the assets which gave rise to the recapture income.
(e) **Tax Credits and Similar Items***.* Allocations of tax credits, tax credit recapture, and any items related thereto will be
allocated in those items as determined by the Manager considering the principles of Treasury Regulation Section 1.704-1(b)(4)(ii).
(f) **Consistent Treatment***.* All items of income, gain, loss, deduction and credit of the Company will be allocated among the
Members for federal income tax purposes in a manner consistent with the allocation under this Section. Each Member is aware of the income
tax consequences of the allocations made by this Agreement and hereby agrees to be bound by the provisions of this Agreement in reporting
its share of Company income and loss for income tax purposes. No Member will report on its tax return any transaction by the Company,
any amount allocated or distributed from the Company or contributed to the Company inconsistently with the treatment reported (or to
be reported) by the Company on its tax return nor take a position for tax purposes that is inconsistent with the position taken by the
Company.
(g) **Modifications to Preserve Underlying Economic Objectives***.* If, in the opinion of counsel or other advisor to the Company,
there is a change in the Federal income tax law (including the Code as well as the Treasury Regulations, rulings, and administrative
practices thereunder) which makes modifying the allocation provisions of this Section necessary or prudent to preserve the underlying
economic objectives of the Members as reflected in this Agreement, the Manager will make the minimum modification necessary to achieve
that purpose.
**Section
5.06 TC “Section 5.03 Tax Allocations.” \l 2Allocation of Excess Nonrecourse Liabilities.** “Excess nonrecourse liabilities”
of the Company as used in Section 1.752-3(a)(3) of the Treasury Regulations will first be allocated among the Member pursuant to the
“additional method” described in that section and then in accordance with the manner in which the Manager expects the nonrecourse
deductions allocable to those liabilities will be allocated.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 20 of 40**
**Section
5.07 TC “Section 5.04 Allocations in Respect of Transferred Membership Interests.” \l 2Allocations in Respect of Transferred
Membership Interests.** In the event of a Transfer of Membership Interests during any Fiscal Year made in compliance with the provisions
of ARTICLE VIII, Net Income, Net Losses, and other items of income, gain, loss, and deduction of the Company attributable to such Membership
Interests for such Fiscal Year shall be determined using the interim closing of the books method.
**Section
5.08 Allocations in Year of Completion of Project or Capital Event.** Notwithstanding anything else in this Agreement to the contrary,
the Parties intend for the allocation provisions of this Article V to produce final Capital Account balances of the Members that will
permit final Distributions to be made pursuant to the order set forth in this Agreement under “Capital Event” distributions
below in Section 6.02. To the extent that the allocation provisions of this Article V would fail to produce the final Capital Account
balances, the Manager may elect, in its sole discretion, to (a) amend those provisions if and to the extent necessary to produce that
result and (b) reallocate income and loss of the Company for prior open years (including items of gross income and deduction of the Company
for those years) among the Members to the extent it is not possible to achieve that result with allocations of items of income (including
gross income) and deduction for the current year and future years, as approved by the Manager. This Section 5.08 will control notwithstanding
any reallocation or adjustment of taxable income, taxable loss, or related items by the Internal Revenue Service or any other taxing
authority. The Manager will have the power to amend this Agreement without the Consent of the other Members, as it reasonably considers
advisable, to make the allocations and adjustments described in this Section 5.08. To the extent that the allocations and adjustments
described in this Section 5.08 result in a reduction in the Distributions that any Member will receive under this Agreement compared
to the amount of the Distributions that Member would receive if all those Distributions were made pursuant to the order set forth in
this Agreement, the Company may make a guaranteed payment (within the meaning of Section 707(c) of the Code) to that Member (to be made
at the time that Member would otherwise receive the Distributions that have been reduced) to the extent that payment does not violate
the requirements of Sections 704(b) and 514(c)(9)(E) of the Code or may take other action as reasonably determined by the Manager to
offset that reduction.
**Section
5.09 TC “Section 13.01 Expenses.” \l 2Expenses.** Except as otherwise expressly provided elsewhere in this Agreement, all
Operating Expenses and Organizational Expenses shall be borne by the Company or an SPE, as applicable, provided, however, that Organizational
Expenses shall be limited to $50,000, and any excess shall be the sole responsibility of the Manager. In this regard, all Operating and
Organizational Expenses shall be allocated to the Members’ Capital Accounts on a pro rata basis of their total Capital Contributions.
Expenses incurred by each Member related to the Project, individually, however, will be borne by each Member incurring such costs (including
their respective attorneys’ and accountants’ fees). The Company will not, however, reimburse the Manager for the Manager’s
general overhead expenses or for expenses the Manager incurs in the conduct or operation of its own business (as opposed to the Company’s
business).
**ARTICLE
VITC “ARTICLE VI DISTRIBUTIONS” \l 1
DISTRIBUtions**
**Section
6.01 General Reserve for Operations; Preferred Return Balances**.
(a)
The Company will first use available assets and cash to repay outstanding debts (including the Loan or any Member Loans), obligations,
and all authorized Organizational and Operational Expenses as well as establishing a sufficient contingency reserve for anticipated and
projected Operational Expenses (such sufficiency to be determined by the Manager in its reasonable and good faith determination) prior
to making any distributions.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 21 of 40**
(b)
For each Member, Preferred Returns shall accrue pursuant to a “*per Preferred Return Accounting Period basis*” as opposed
to a daily basis, such that the Preferred Return shall be considered paid and current (not outstanding) once the total amount for each
applicable Preferred Return Accounting Period has been allocated and then distributed to a Member pursuant to Section 6.02 below.
**Section
6.02 Distribution Mechanism.** From time to time the Manager shall determine in its sole reasonable judgment to what extent (if any)
the Company’s cash on hand exceeds its current and anticipated needs, including, without limitation, for existing and forthcoming
expenses and the maintenance of a reasonable contingency reserve as described in Section 6.01 above. If such an excess exists and has
been allocated pursuant to Section 5.01 above (“**Distributable Cash**”), the Manager, in intervals and at times in its
discretion, shall make distributions as follows:
(a) **First**, 100% to all Class A Members pro rata in accordance with their Unrecovered Capital Contributions until they have received
distributions equal to their accrued and unpaid Preferred Returns; then
(b) **Second**, if 100% to the Class A Members pro rata in accordance with their Unrecovered Capital Contributions until they have zero
Unrecovered Capital Contributions; then
(c) **Third and Finally**, all remaining Distributable Cash shall be distributed 70% to the Class A Members pro rata in accordance with
their respective Membership Interest Percentages and 30% to the Class B Members pro rata in accordance with their Membership Interest
Percentages until the Class A Members achieve an IRR of fifteen percent (15.00%), then 60% to the Class A Members (pro rata as above)
and 40% to the Class B Members (pro rata as above) thereafter
**Section
6.03 Distribution Rules**. Nothing in this Agreement shall obligate the Manager to cause a distribution to any Member. Notwithstanding
any provision to the contrary contained in this Agreement, the Company shall not make any distributions to the Members if such distribution
would violate the DLLCA or other Applicable Law. The Manager also has the right to circumvent the distribution mechanism outlined in
Section 6.02 above for the sole purpose of effectuating any Catchup Contributions or withdrawals and redemptions of Members not related
to a termination of the Company. Lastly, a defaulting Member under Section 3.02(b) shall not, within the discretion of the Manager, be
entitled to receive any distributions under 6.02 above until all non-defaulting Members first have received distributions equal to their
Capital Contributions; for the avoidance of doubt, the Distribution Mechanism under 6.02 above shall, for purposes of defaulting Members,
read as if the defaulting Members will be entitled to a “catchup” distribution (less their default sums) immediately after
all other non-defaulting Members have zero Unrecovered Capital Contributions.
**Section
6.04 TC “Section 6.03 Tax Withholding; Withholding Advances.” \l 2Tax Withholding; Withholding Advances.** The Company
shall not withhold or advance tax payments to the Members, except to the extent required by law (for example, for Non-U.S. Persons);
each Member shall be solely responsible for its own tax liabilities arising out of or accrued in connection with this Agreement or its
Membership Interest in Company.
**Section
6.05 No Creditor Status.** A Member will not have the status of, and is not entitled to the remedies available to, a creditor of the
Company with regard to its Capital Contributions or Distributions that a Member may be entitled to receive pursuant to this Agreement,
the DLLCA, or the Uniform Commercial Code, as amended and in effect in any given state.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 22 of 40**
**ARTICLE
VIITC “ARTICLE VII MANAGEMENT” \l 1
MANAGEMENT**
**Section
7.01 TC “Section 7.01 Management of the Company.” \l 2Management of the Company.** Except as otherwise provided elsewhere
in this Agreement, by Side Letter, or other contractual right, the business and affairs of the Company including an SPE, management of
the Project, any related investment vehicles/Side Car Investments, and the Property, shall be managed, operated, and controlled by and
under the sole direction of the Manager, who shall be permitted to act alone on behalf of the Company. The Manager shall have, and is
hereby granted, sole, full, and complete power, authority, and discretion for, on behalf of, and in the name of the Company, to take
such actions as it may deem necessary or advisable to carry out any and all of the objectives and purposes of the Company, including
with respect to the Project and the Property to the full extent permissible under the law.
**Section
7.02 TC “Section 7.02 Number and Term of Managers.” \l 2Number and Term of Managers.** The Company shall be managed by
one Manager, identified in Article I hereunder. Each Manager, including the initial Manager named in this Agreement, shall serve until
a successor has been elected and qualified or until the Manager’s earlier death, resignation, or removal.
**Section
7.03 TC “Section 7.03 Removal; Resignation, Vacancies.” \l 2Removal; Resignation, Vacancies.**
(a)
The Manager may not be removed except by a) its own voluntary resignation hereunder b) for Cause or c) if it undergoes a Change of Control
(each a “**Manager Removal Event**”). The Manager may resign as Manager at any time by giving ten (10) days’ written
notice to the Company. Any such resignation shall be effective upon receipt thereof unless it is specified to be effective at some other
time or upon the occurrence of some other event. The Company’s acceptance of a resignation shall not be necessary to make it effective.
(b)
Upon the occurrence of a Manager Removal Event, the Manager Representative shall access Schedule I and shall call for a meeting
of all the Members pursuant to Section 4.01(c) of this Agreement for the purpose of voting to remove the Manager for Cause or Change
of Control, and thereafter (including upon the Manager’s resignation), to nominate and elect a replacement Manager. The Manager
Representative shall have no authority to vote, speak on behalf of the Manager, or otherwise participate *except* to chair
the meeting of the Members consistent with the terms of this Agreement, to carry out the approved actions of the Members at such meeting,
and to perform secretarial functions and to record the minutes of such meeting for the Company’s record books. The Manager Representative
may resign at any time by giving written notice to the Manager or the Members at-large. The Manager Representative shall not be liable
for any actions of any Member or Manager, or for the debts, obligations, liabilities, or other matters of the Company, it being understood
that the Manager Representative is, and shall always be, purely a third party, independent procedural functionary.
**Section
7.04 TC “Section 7.04 Actions Requiring Approval of Members.” \l 2No Member Participation.** Except as expressly provided
otherwise in this Agreement or by operation of law, the Members shall have no rights or powers to take part in the management and control
of the Company and its business and affairs, and shall have no power or authority to act for or on behalf of the Company, or bind the
Company under agreements or arrangements with third parties. For the avoidance of any doubt, the Members shall have the right to vote
only on matters explicitly set forth on this Agreement. Meetings of the Manager shall also not be required, save but at least once per
calendar year; meetings may be held informally by means of telephonic conference.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 23 of 40**
**Section
7.05 TC “Section 7.05 Compensation and Reimbursement of Manager.” \l 2Fees and Reimbursement of Manager and Sponsor/Affiliate
Principals.**
(a)
The Manager (or Sponsors or other Persons designated by the Manager, as appropriate) is (or are) entitled to **the following fees** in connection with its (or their) services to the Company:
(i)
A Development Fee equal to $250,000, payable in installments at the discretion of the Manager.
(b)
The Manager is entitled to reimbursement of all Operating and Organizational Expenses, as well as all other reasonable out-of-pocket
costs incurred on behalf of the Company or the Project. Specifically, the Manager is entitled to a reimbursement of all expenses it has
incurred in connection with the acquisition of the Property as well as in connection with securing the senior loan.
(c)
The Manager also has the right to assign its interests in any of the foregoing fees to any third party, Affiliate or otherwise, in its
sole discretion.
**Section
7.06 Fees and Reimbursement of Third Parties.** The Company may engage, in the sole discretion of the Manager, general contractors,
and other service providers (including property managers), which may or may not be Affiliated with the Sponsors. These additional service
providers may be compensated by Company upon such terms as agreed to by the Manager in its sole discretion under a Related Party Agreement.
So long as such engagement and Related Party Agreement is on commercially reasonable terms, such affiliation shall not (1) constitute
a basis for an impermissible conflict, (2) form any basis of a claim of violation of fiduciary duties by the Manager or the Sponsor,
it being understood such duties are affirmatively waived by all Members specifically regarding this matter, and (3) shall not void the
engagement of such Affiliate nor the terms of such engagement.
**Section
7.07 TC “Section 7.06 Officers.” \l 2Officers.** The Manager may appoint individuals as officers of the Company (the “**Officers**”)
as it deems necessary or desirable to carry on the business of the Company and the Manager may delegate to the Officers such power and
authority as the Manager deems advisable. No Officer need be a Member of the Company. Any individual may hold two or more offices of
the Company. Each Officer shall hold office until his successor is designated by the Manager or until his earlier death, resignation,
or removal. Any Officer may resign at any time upon written notice to the Manager. Any Officer may be removed by the Manager, with or
without cause, at any time. A vacancy in any office occurring because of death, resignation, removal, or otherwise, may, but need not,
be filled by the Manager.
**Section
7.08 TC “Section 7.07 No Personal Liability.” \l 2No Personal Liability; Conflicts.**
(a)
Except as otherwise provided in the DLLCA, by Applicable Law, or expressly in this Agreement, the Manager will not be obligated personally
for any debt, obligation, or liability of the Company, whether arising in contract, tort, or otherwise, including a debt, obligation,
or liability under a judgment, decree, or order of a court, solely by reason of being or acting as a Manager. The Manager shall also
not be obligated to devote all of its time or business efforts to the affairs of the Company, provided, however, that the Manager shall
devote such time, effort, and skill as it determines in its sole discretion may be necessary or appropriate for the proper operation
of the Company. The Manager may have other business interests and may engage in other activities in addition to those related to the
Company, and the Manager and their Affiliates may engage in or possess any interest in other business ventures of any kind, nature, or
description, independently or with others, whether such ventures are directly or indirectly competitive with the Company or otherwise,
and neither the Company nor any Member shall have the right to share or participate in such other investments or activities or to the
income delivered therefrom, solely by virtue of this Agreement.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 24 of 40**
(b)
Specifically, the role of the Manager as manager to an SPE shall not constitute a basis for an impermissible conflict or the basis of
a claim for breach of any fiduciary duties and shall not void any actions of the Manager therewith.
(c)
Specifically, it is expressly understood, acknowledged, and agreed that the Manager has the power and authority to acquire, sell, transfer,
or otherwise dispose of any of the Company Assets, including the Property, in any manner it determines, in its sole discretion, to be
in the best interests of the Company provided that such terms, in keeping with its fiduciary obligations to the Company under Article
9 of this Agreement, are in good faith commercially reasonable and fair to the Company. In accordance of the preceding sentence and provided
the same is satisfied, the acquisition or disposition of the Property from or to the Sponsors or an Affiliate of the Sponsors shall not
constitute a basis for an impermissible conflict and shall not void the engagement of such Sponsor/Affiliate nor the terms of such engagement
**ARTICLE
VIIITC “ARTICLE IX TRANSFER” \l 1
TRANSFER**
**Section
8.01 TC “Section 9.01 General Restrictions on Transfer.” \l 2General Restrictions on Transfer.**
(a)
Except as otherwise expressly provided in this Article, no Member may Transfer all or any portion of its Membership Interests without
(i) providing the Manager with a written opinion of counsel regarding the compliance of the proposed Transfer with all applicable securities
laws and (ii) obtaining prior written approval of the Manager, which approval may be withheld, conditioned, or delayed in the Manager’s
sole and absolute discretion. Any attempted Transfer in violation of this Article will be null and void *ab initio*, and will not
bind the Company.
(b)
Notwithstanding the foregoing, the Manager and the Organizer will be allowed to Transfer its Membership Interests to an Affiliate, *provided* that the principals of the Manager or Organizer, as applicable, continue to control the Membership Interests. In addition, the Organizer
will be allowed to re-organize its structure, including dissolving its entity structure and distributing its Membership Interests in
the Company to its principals, without approval of the Manager or other Members, *provided, however*, that the same principals continue
to control the Membership Interests thereafter.
**Section
8.02 Further Restrictions on Transfers.** Notwithstanding anything in this Agreement to the contrary, in addition to any other restrictions
on a Transfer of an Membership Interest, no Membership Interest may be Transferred (a) without compliance with the Securities Act and
any other applicable securities or “blue sky” laws, (b) if, in the determination of the Manager, the Transfer could result
in the Company not being classified as a partnership for federal income tax purposes, (c) if, in the determination of the Manager, the
Transfer could cause the Company to become subject to the Investment Company Act of 1940, as amended (the “**Investment Company
Act**”), (d) if, in the determination of the Manager, the Transfer would cause a termination of the Company under any applicable
law, or (e) the transferee is a minor or incompetent.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 25 of 40**
**Section
8.03 Permitted Transfers**. Except for the requirement to receive approval from the Manager, all other restrictions upon Transfer specified
in Section 8.1 will not apply to any Transfer (a) by a Member who is an individual to (i) that Member’s spouse, ex-spouse or domestic
partner; (ii) that Member’s or Member’s spouse’s lineal descendants; (iii) any family limited partnership or other
entity controlled (which for this purpose shall require that the Member own more than 50% of the equity securities of that entity) by
that Member, (iv) a trust established solely for the benefit of that Member, Member’s spouse or lineal descendants without regard
to age, and (v) from any trust to the beneficiaries of that trust; or (b) by a Member to another Member (each transferee, a “**Permitted
Transferee**”); provided, however, that the Permitted Transferee (other than a Person who is already a Member) pursuant to the
foregoing clauses (a) and (b) agrees in writing to become a party to this Agreement and to be subject to the terms and conditions of
this Agreement. Notwithstanding the foregoing in this Section 8.3, any permitted Transfer must be approved by the Manager, which approval
will not be unreasonably withheld.
**Section
8.04 Admission of Transferee as a Member.** A Transfer permitted by the Manager will only transfer the rights of an assignee as set
forth in Section 8.6 unless (a) the transferee is a Member or is admitted as a Member and (b) payment to the Company of a transfer fee
in cash which is sufficient, in the Manager’s sole determination, to cover all reasonable expenses incurred by the Company in connection
with the Transfer and admission of the transferee as a Member.
**Section
8.05 Involuntary Transfer of Interests.** In the event of any involuntary transfer of Membership Interests to a Person, that Person
will have only the rights of an assignee set forth in Section 8.06 with respect to those Membership Interests.
**Section
8.06 Rights of an Assignee.** An assignee has no right to vote, receive information concerning the business and affairs of the Company
and is entitled only to receive Distributions and allocations attributable to the Membership Interest held by the assignee as determined
by the Manager and in accordance with this Agreement.
**Section
8.07 Enforcement.** The restrictions on Transfer contained in this Agreement are an essential element in the ownership of a Membership
Interest. Upon application to any court of competent jurisdiction, a Manager will be entitled to a decree against any Person violating
or about to violate those restrictions, requiring their specific performance, including those prohibiting a Transfer of all or a portion
of its Membership Interests.
**Section
8.08 Death or Disability of a Member.** Upon the Disability or death of a Member, that Member will cease to be a member of the Company
and that disabled Member or the legal representative of that deceased Member’s estate (or the trustee of a living trust established
by that deceased Member if that Member’s Membership Interests have been transferred to a trust) will have the rights only of an
assignee.
**Section
8.09 Compulsory Redemption.**
(a)
The Manager may, by notice to any Member, force the sale of all or a portion of that Member’s Membership Interests on terms as
the Manager determines to be fair and reasonable, or take other action as it determines to be fair and reasonable in the event that the
Manager determines or has reason to believe that: (i) that Member has attempted to effect a Transfer of, or a Transfer has occurred with
respect to, any portion of that Member’s Membership Interests in violation of this Agreement; (ii) continued ownership of that
Membership Interests by that Member is reasonably likely to cause the Company to be in violation of securities laws of the United States
or any other relevant jurisdiction or the rules of any self-regulatory organization applicable to the Manager, Organizer or its Affiliates;
(iii) continued ownership of that Membership Interests by that Member may be harmful to the business or reputation of the Company or
the Manager or the Organizer, or may subject the Company or any Members to a risk of adverse tax or other fiscal consequence, including
adverse consequences under ERISA; (iv) any of the representations or warranties made by that Member under this agreement or under any
Subscription Agreement signed by that Member in connection with the acquisition of Membership Interests was not true when made or has
ceased to be true; (v) any portion of that Member’s Membership Interests has vested in any other Person by reason of the bankruptcy,
dissolution, incompetency or death of that Member; or (vi) the Member has committed an act constituting Cause. The Company shall indemnify
Managers for any costs and expenses related to the violations of such Act by Member.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 26 of 40**
(b)
A Member’s Membership Interests shall be automatically withdrawn and redeemed per the terms of Section 4.04 of this Agreement.
**ARTICLE
IXTC “ARTICLE X EXCULPATION AND INDEMNIFICATION” \l 1
EXCULPATION AND INDEMNIFICATION**
**Section
9.01 TC “Section 10.01 Exculpation of Covered Persons.” \l 2Exculpation of Covered Persons.**
(a) **Covered Persons.** As used herein, the term “**Covered Person**” shall mean (i) each Member, including the Sponsor(s);
(ii) each manager, member, officer, director, shareholder, partner, Affiliate, employee, agent, or Representative of each Member, and
each of their Affiliates; and (iii) each Manager and any Manager Representative (including their agents, principals, and beneficial owners),
Officer, employee, agent, or Representative of the Company.
(b) **Standard of Care.** No Covered Person shall be liable to the Company or any other Covered Person for any loss, damage, or claim
incurred by reason of any action taken or omitted to be taken by such Covered Person in good faith reliance on the provisions of this
Agreement, *so long as* such action or omission does not constitute Cause by such Covered Person.
(c) **Good Faith Reliance.** A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon
such information, opinions, reports, or statements (including financial statements and information, opinions, reports, or statements
as to the value or amount of the assets, liabilities, Net Income, or Net Losses of the Company or any facts pertinent to the existence
and amount of assets from which distributions might properly be paid) of the following Persons or groups: (i) another Member; (ii) one
or more Officers or employees of the Company; (iii) any attorney, independent accountant, appraiser, or other expert or professional
employed or engaged by or on behalf of the Company; or (iv) any other Person selected in good faith by or on behalf of the Company, in
each case as to matters that such relying Person reasonably believes to be within such other Person’s professional or expert competence.
The preceding sentence shall in no way limit any Person’s right to rely on information to the extent provided in the DLLCA.
**Section
9.02 TC “Section 10.02 Liabilities and Duties of Covered Persons.” \l 2Liabilities and Duties of Covered Persons.**
(a) **Limitation of Liability.** This Agreement is not intended to, and does not, create or impose any fiduciary duty on any Covered Person *except* common law fiduciary duties of care and loyalty on the Manager. Furthermore, and except as expressly outlined in
the preceding sentence, each of the Members and the Company hereby waives any and all other fiduciary duties not stated above that, absent
such waiver, may be implied by Applicable Law, and in doing so, acknowledges and agrees that the duties and obligations of each Covered
Person to each other and to the Company are only as expressly set forth in this Agreement. The provisions of this Agreement, to the extent
that they restrict the duties and liabilities of a Covered Person otherwise existing at law or in equity, are agreed by the Members to
replace such other duties and liabilities of such Covered Person.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 27 of 40**
(b) **Duties.** Whenever in this Agreement a Covered Person is permitted or required to make a decision (including a decision that is
in such Covered Person’s “discretion” or under a grant of similar authority or latitude), the Covered Person shall
be entitled to consider all factors as such Covered Person desires or considers relevant and in keeping with 9.02(a) above. Whenever
in this Agreement a Covered Person is permitted or required to make a decision in such Covered Person’s “good faith,”
the Covered Person shall act under such express standard and shall not be subject to any other or different standard imposed by this
Agreement or any other Applicable Law.
**Section
9.03 TC “Section 10.03 Indemnification.” \l 2Indemnification.**
(a) **Indemnification.** To the fullest extent permitted by the DLLCA, as the same now exists or may hereafter be amended, substituted
or replaced (but, in the case of any such amendment, substitution, or replacement, only to the extent that such amendment, substitution,
or replacement permits the Company to provide broader indemnification rights than the DLLCA permitted the Company to provide prior to
such amendment, substitution, or replacement), the Company shall indemnify, hold harmless, defend, pay, and reimburse any Covered Person
against any and all losses, claims, damages, judgments, fines, or liabilities, including reasonable legal fees or other expenses incurred
in investigating or defending against such losses, claims, damages, judgments, fines, or liabilities, and any amounts expended in settlement
of any claims (collectively, “**Losses**”) to which such Covered Person may become subject by reason of:
(i)
any act or omission or alleged act or omission performed or omitted to be performed on behalf of the Company, any Member, or any direct
or indirect Subsidiary of the foregoing in connection with the business of the Company; or
(ii)
such Covered Person being or acting in connection with the business of the Company as a member, shareholder, Affiliate, manager, director,
officer, employee, or agent of the Company, any Member, or any of their respective Affiliates, or that such Covered Person is or was
serving at the request of the Company as a member, manager, director, officer, employee, or agent of any Person including the Company;
provided,
that (x) such Covered Person acted in good faith and in a manner believed by such Covered Person to be in, or not opposed to, the best
interests of the Company and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful, and
(y) such Covered Person’s conduct did not constitute fraud or willful misconduct, in either case as determined by a final, nonappealable
order of a court of competent jurisdiction. In connection with the foregoing, the termination of any action, suit, or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the
Covered Person did not act in good faith or, with respect to any criminal proceeding, had reasonable cause to believe that such Covered
Person’s conduct was unlawful, or that the Covered Person’s conduct constituted fraud or willful misconduct.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 28 of 40**
(b) **Control of Defense.** Upon a Covered Person’s discovery of any claim, lawsuit, or other proceeding relating to any Losses
for which such Covered Person may be indemnified pursuant to this Section 9.03, the Covered Person shall give prompt written notice to
the Company of such claim, lawsuit, or proceeding, provided, that the failure of the Covered Person to provide such notice shall not
relieve the Company of any indemnification obligation under this Section 9.03, unless the Company shall have been materially prejudiced
thereby. Subject to the approval of the disinterested Members, the Company shall be entitled to participate in or assume the defense
of any such claim, lawsuit, or proceeding at its own expense. After notice from the Company to the Covered Person of its election to
assume the defense of any such claim, lawsuit, or proceeding, the Company shall not be liable to the Covered Person under this Agreement
or otherwise for any legal or other expenses subsequently incurred by the Covered Person in connection with investigating, preparing
to defend, or defending any such claim, lawsuit, or other proceeding. If the Company does not elect (or fails to elect) to assume the
defense of any such claim, lawsuit, or proceeding, the Covered Person shall have the right to assume the defense of such claim, lawsuit,
or proceeding as it deems appropriate, but it shall not settle any such claim, lawsuit, or proceeding without the consent of the Company
(which consent shall not be unreasonably withheld, conditioned, or delayed).
(c) **Reimbursement.** The Company shall promptly reimburse (and/or advance to the extent reasonably required) each Covered Person for
reasonable legal or other expenses (as incurred) of such Covered Person in connection with investigating, preparing to defend, or defending
any claim, lawsuit, or other proceeding relating to any Losses for which such Covered Person may be indemnified pursuant to this Section
9.03; provided, that if it is finally judicially determined that such Covered Person is not entitled to the indemnification provided
by this Section 9.03, then such Covered Person shall promptly reimburse the Company for any reimbursed or advanced expenses.
(d) **Entitlement to Indemnity.** The indemnification provided by this Section 9.03 shall not be deemed exclusive of any other rights
to indemnification to which those seeking indemnification may be entitled under any agreement or otherwise. The provisions of this Section
9.03 shall continue to afford protection to each Covered Person regardless of whether such Covered Person remains in the position or
capacity pursuant to which such Covered Person became entitled to indemnification under this Section 9.03 and shall inure to the benefit
of the executors, administrators, legatees, and distributees of such Covered Person.
(e) **Insurance.** To the extent available on commercially reasonable terms, the Company may purchase, at its expense, insurance to cover
Losses covered by the foregoing indemnification provisions and to otherwise cover Losses for any breach or alleged breach by any Covered
Person of such Covered Person’s duties in such amount and with such deductibles as the Manager may reasonably determine; provided,
that the failure to obtain such insurance shall not affect the right to indemnification of any Covered Person under the indemnification
provisions contained herein, including the right to be reimbursed or advanced expenses or otherwise indemnified for Losses hereunder.
If any Covered Person recovers any amounts in respect of any Losses from any insurance coverage, then such Covered Person shall, to the
extent that such recovery is duplicative, reimburse the Company for any amounts previously paid to such Covered Person by the Company
in respect of such Losses.
(f) **Funding of Indemnification Obligation.** Notwithstanding anything contained herein to the contrary, any indemnity by the Company
relating to the matters covered in this Section 9.03 shall be provided out of and to the extent of Company assets only, and no Member
(unless such Member otherwise agrees in writing) shall have personal liability on account thereof or shall be required to make additional
Capital Contributions to help satisfy such indemnity by the Company.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 29 of 40**
(g) **Savings Clause.** If this Section 9.03 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction,
then the Company shall nevertheless indemnify and hold harmless each Covered Person pursuant to this Section 9.03 to the fullest extent
permitted by any applicable portion of this Section 9.03 that shall not have been invalidated and to the fullest extent permitted by
Applicable Law.
(h) **Amendment.** The provisions of this Section 9.03 shall be a contract between the Company, on the one hand, and each Covered Person
who served in such capacity at any time while this Section 9.03 is in effect, on the other hand, pursuant to which the Company and each
such Covered Person intend to be legally bound. No amendment, modification, or repeal of this Section 9.03 that adversely affects the
rights of a Covered Person to indemnification for Losses incurred or relating to a state of facts existing prior to such amendment, modification
or repeal shall apply in such a way as to eliminate or reduce such Covered Person’s entitlement to indemnification for such Losses
without the Covered Person’s prior written consent.
**Section
9.04 TC “Section 10.04 Survival.” \l 2Survival.** The provisions of this Article shall survive the dissolution, liquidation,
winding up, and termination of the Company.
**ARTICLE
XTC “ARTICLE XI ACCOUNTING; TAX MATTERS” \l 1
ACCOUNTING; TAX MATTERS**
**Section
10.01 TC “Section 11.01 Financial Statements.” \l 2Company Reports.**
(a)
As soon as reasonably and practically available following the end of each Fiscal Year but in no case later than 90 days thereafter, a
progress statement and consolidated (and audited if required by Applicable Law) annual balance sheets and itemized profit and loss statements
of the Company as at the end of each such Fiscal Year and consolidated annual statements of income, cash flows, and Members’ equity
for such Fiscal Year, shall be prepared and distributed to the Members.
(b)
In addition thereof, the Company shall provide quarterly updates regarding the progress of the Project, including summary (unaudited)
financials the Manager determines customarily and commercially relevant to the Members, such quarterly reports to be prepared and distributed
as soon as reasonably practical following the end of each fiscal quarter.
**Section
10.02 TC “Section 11.02 Inspection Rights.” \l 2Inspection Rights.** Upon reasonable notice from a Member, and subject
to the restrictive covenants and terms of Section 12.03, the Company shall afford each Member and its Representatives access during normal
business hours to the corporate, financial, and similar records, reports, and documents of the Company, including all books and records,
minutes of proceedings, reports of operations, reports of adverse developments, and to permit each Member and its Representatives to
examine such documents and make copies thereof, provided, however, that a) internal communications between the Manager and another Member
and details and confidential information regarding another Member may not inspected b) the cost associated with an inspection shall be
borne by the Member making the request, and c) such requests are made in good faith and not with a view to overly burden or harass the
Company and the Manager.
**Section
10.03 TC “Section 11.03 Income Tax Status.” \l 2Income Tax Status.** It is the intent of the Company and the Members that
the Company shall be treated as a partnership for U.S., federal, state, and local income tax purposes. Neither the Company nor any Member
shall make an election for the Company to be classified as other than a partnership pursuant to Treasury Regulations Section 301.7701-3.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 30 of 40**
**Section
10.04 TC “Section 11.04 Tax Matters Representative.” \l 2Tax Matters Representative.**
(a) **Appointment.** The Members hereby appoint the Manager as “partnership representative” as provided in Code Section 6223(a)
(the “**Tax Matters Representative**”). The Tax Matters Representative may not be removed, but may voluntarily resign,
and shall resign if it is no longer a Member. In the event of the resignation of the Tax Matters Representative, the Manager shall select
a replacement Tax Matters Representative.
(b) **Tax Examinations and Audits.** The Tax Matters Representative is authorized and required to represent the Company (at the Company’s
expense) in connection with all examinations of the Company’s affairs by Taxing Authorities, including resulting administrative
and judicial proceedings, and to expend Company funds for professional services and costs associated therewith. The Tax Matters Representative
shall have sole authority to act on behalf of the Company in any such examinations and any resulting administrative or judicial proceedings,
and shall have sole discretion to determine whether the Company (either on its own behalf or on behalf of the Members) will contest or
continue to contest any tax deficiencies assessed or proposed to be assessed by any Taxing Authority.
(c) **US Federal Tax Proceedings.** Within the discretion of the Manager, the Tax Matters Representative may cause the Company to annually
elect out of the partnership audit procedures set forth in Subchapter C of Chapter 63 of the Code (the “**Revised Partnership
Audit Rules**”) to the extent permitted by applicable law and regulations. For any year in which applicable law and regulations
do not permit the Company to elect out of the Revised Partnership Audit Rules, then within forty-five (45) days of any notice of final
partnership adjustment, the Tax Matters Representative will cause the Company to elect the alternative procedure under Code Section 6226,
and furnish to the Internal Revenue Service and each Member during the year or years to which the notice of final partnership adjustment
relates a statement of the Member’s share of any adjustment set forth in the notice of final partnership adjustment.
(d) **Tax Consistencies.** Each Member agrees that such Member shall not treat any Company item inconsistently on such Member’s
federal, state, foreign or other income tax return with the treatment of the item on the Company’s return. Any deficiency for taxes
imposed on any Member (including penalties, additions to tax or interest imposed with respect to such taxes and taxes imposed pursuant
to Code Section 6226) shall be paid by such Member and if required to be paid (and actually paid) by the Company, will be recoverable
from such Member as provided in this Agreement.
(e) **Section 754 Election.** The Tax Matters Representative may make an election under Code Section 754, if requested in writing by the
Sponsor.
(f) **Indemnification**. The Company shall defend, indemnify, and hold harmless the Tax Matters Representative against any and all liabilities
sustained as a result of any act or decision concerning Company tax matters and within the scope of such Member’s responsibilities
as Tax Matters Representative, so long as such act or decision was done or made in good faith and does not constitute gross negligence
or willful misconduct.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 31 of 40**
**Section
10.05 TC “Section 11.05 Tax Returns.” \l 2Tax Returns.**
(a)
At the expense of the Company, the Manager (or any Officer that it may designate pursuant to Section 7.06) shall endeavor to cause the
preparation and timely filing (including extensions) of all tax returns required to be filed by the Company pursuant to the Code as well
as all other required tax returns in each jurisdiction in which the Company owns property or does business. As soon as reasonably possible
after the end of each Fiscal Year, the Manager or designated Officer will cause to be delivered to each Person who was a Member at any
time during such Fiscal Year, IRS Schedule K-1 to Form 1065 and such other information with respect to the Company as may be necessary
for the preparation of such Person’s federal, state, and local income tax returns for such Fiscal Year. Notwithstanding anything
to the contrary herein, the Manager shall have the right, at its sole discretion, to file an extension for the filing of the Company’s
tax returns in any fiscal year, and in such event, the distribution of K-1’s may also be delayed to the Members until such time
as the Company makes its tax filing.
(b)
The Member understands that the Company and the Manager expect to deliver all tax return information, including Schedule K-1s (each,
a “**K-1**”) to the Members by either electronic mail or some other form of electronic delivery, and accordingly, each
Member hereby expressly understands, consents to, and acknowledges such electronic delivery of tax returns and related information as
the only method of transmission, unless the Member expressly, in writing, informs the Manager of its request for paper copies of the
same.
**Section
10.06 TC “Section 11.06 Company Funds.” \l 2Company Funds.** All funds of the Company shall be (initially, prior to making
the investment in the Property) deposited in its name, or in such name as may be designated by the Manager, in such checking, savings,
or other accounts, or held in its name in the form of such other investments as shall be designated by the Manager including being directly
given and held by an SPE or to a title/escrow company for purpose of closing on the Property. The funds of the Company shall not be commingled
with the funds of any other Person, save and except for SPE investments or Side Car Investments as applicable. All withdrawals of such
deposits or liquidations of such investments by the Company shall be made exclusively upon the signature or signatures of such Officer
or Officers as the Manager may designate.
**ARTICLE
XITC “ARTICLE XII WINDING UP AND TERMINATION” \l 1
DISSOLUTION; WINDING UP AND TERMINATION**
**Section
11.01 TC “Section 12.01 Events Requiring Winding Up.” \l 2Events Requiring Dissolution Winding Up.** The Company shall
begin to wind up its business and affairs only upon the occurrence of any of the following events:
(a)
At the expiry of the Commitment Term, as may be extended;
(b)
The occurrence of a nonwaivable event under the terms of the DLLCA which requires the Company to be terminated; or
(c)
The entry of a final, non-appealable judicial decree ordering winding up and termination of the Company.
**Section
11.02 TC “Section 12.02 Effectiveness of Termination.” \l 2Effectiveness of Termination.** The Company shall begin to wind
up its business and affairs and cause a Capital Event that is a disposition with respect to the Property as soon as reasonably practicable
upon the occurrence of an event described in Section 11.01 (if such event has not been revoked or cancelled), but the Company shall not
terminate until the winding up of the Company has been completed, the assets of the Company have been liquidated and distributed as provided
in Section 11.03, and the Certificate of Termination shall have been filed as provided in Section 11.04.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 32 of 40**
**Section
11.03 TC “Section 12.03 Liquidation.” \l 2Liquidation.** If the Company is to be terminated pursuant to Section 11.01,
the Company shall be liquidated (a Capital Event that is a disposition of the Property) and its business and affairs wound up in accordance
with the DLLCA and the following provisions:
(a) **Liquidator.** The Manager or other Person designated by the Manager shall act as liquidator to wind up the Company (the “**Liquidator**”).
The Liquidator shall have full power and authority to sell, assign, and encumber any or all of the Company’s assets and to wind
up and liquidate the affairs of the Company in an orderly and business-like manner.
(b) **Accounting.** As promptly as possible after the event requiring winding up and again after final liquidation, the Liquidator shall
cause a proper accounting to be made by a recognized firm of certified public accountants of the Company’s assets, liabilities,
and operations through the last day of the calendar month in which such event occurs or the final liquidation is completed, as applicable.
(c) **Notice.** The Liquidator shall deliver to each known claimant of the Company the notice required by the DLLCA.
(d) **Distribution of Proceeds.** The Liquidator shall liquidate the assets of the Company and distribute the proceeds of such liquidation
in the following order of priority, unless otherwise required by mandatory provisions of Applicable Law:
(i)
First, to the payment of all of the Company’s debts and liabilities to its creditors (except Member Loans) and the expenses of
liquidation (including sales commissions incident to any sales of assets of the Company);
(ii)
Second, to the payment of all Member Loans and expenses therewith associated;
(iii)
Third, to the establishment of and additions to reserves that are determined by the Manager to be reasonably necessary for any contingent
unforeseen liabilities or obligations of the Company; and
(iv)
Fourth, to the Members in accordance with the distribution mechanism outlined in Section 6.02 (and subject to Section 6.03) of this Agreement.
(e) **Discretion of Liquidator.** Notwithstanding the provisions of Section 11.03(d) that require the liquidation of the assets of the
Company, but subject to the order of priorities set forth in Section 11.03(d), if upon winding up of the Company the Liquidator reasonably
determines that an immediate sale of part or all of the Company’s assets would be impractical or could cause undue loss to the
Members, the Liquidator may defer the liquidation of any assets except those necessary to satisfy Company liabilities and reserves, and
may distribute to the Members, in lieu of cash, as tenants in common and in accordance with the provisions of Section 11.03(d), undivided
interests in such Company assets as the Liquidator deems not suitable for liquidation. Any such distribution in kind shall be subject
to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and
to any agreements governing the operating of such properties at such time. For purposes of any such distribution, any property to be
distributed will be valued at its Fair Market Value.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 33 of 40**
**Section
11.04 TC “Section 12.04 Certificate of Termination.” \l 2Certificate of Termination.** Upon completion of the distribution
of the assets of the Company as provided in Section 11.03(d) hereof, the Manager shall execute and cause to be filed a Certificate of
Termination (or equivalent document) in the State of Delaware and shall cause the cancellation of all qualifications and registrations
of the Company as a foreign limited liability company in jurisdictions other than the State of Delaware and shall take such other actions
as may be necessary to terminate the Company. Upon acceptance of the Certificate of Termination by the Delaware Secretary of State, the
Company shall be terminated.
**Section
11.05 TC “Section 12.05 Survival of Rights, Duties, and Obligations.” \l 2Survival of Rights, Duties, and Obligations.** Dissolution,
liquidation, winding up, or termination of the Company for any reason shall not release any party from any Loss that at the time of such
dissolution, liquidation, winding up, or termination already had accrued to any other party or thereafter may accrue in respect of any
act or omission prior to such dissolution, liquidation, winding up, or termination. For the avoidance of doubt, none of the foregoing
shall replace, diminish, or otherwise adversely affect any Member’s right to indemnification pursuant to Section 9.03.
**Section
11.06 TC “Section 12.06 Recourse for Claims.” \l 2Recourse for Claims.** Each Member shall look solely to the assets of
the Company for all distributions with respect to the Company, such Member’s Capital Account, and such Member’s share of
Net Income, Net Loss, and other items of income, gain, loss, and deduction, and shall have no recourse therefor (upon termination or
otherwise) against the Liquidator, the Manager, or any other Member.
**Section
11.07 1031 Exchange.** The Manager has the authority in its sole discretion to cause the Company to exchange the Property for another
investment property by way of an IRS Section 1031 Exchange. In the event the Manager elects to do so, Members shall be required to participate,
but may withdraw after the exchange has been completed, subject to the other terms of this Agreement.
**ARTICLE
XIITC “ARTICLE XIII MISCELLANEOUS” \l 1
MISCELLANEOUS**
**Section
12.01 TC “Section 13.02 Further Assurances.” \l 2Further Assurances.**
(a)
General Assurance. In connection with this Agreement and the transactions contemplated hereby, the Company and each Member hereby agrees,
at the request of the Company or any other Member, to execute and deliver such additional documents, instruments, conveyances, and assurances
and to take such further actions as may be required to carry out the provisions hereof and give effect to the transactions contemplated
hereby.
(b) **Corporate Transparency Act Compliance**. The Members acknowledge and agree that the Company may be subject to the reporting requirements
under the Corporate Transparency Act (the “**CTA**”). The Company shall comply with all applicable CTA reporting requirements
and maintain accurate and up to date beneficial ownership information of each Member (“**BOI**”), which shall include
all required information under the CTA, including but not limited to, the full legal name, date of birth, current residential or business
address, and a unique identifying number from an acceptable identification document for each Member (in this context, each a “**Beneficial
Owner**”). The Members agree to provide their required BOI to the Company promptly upon request to ensure compliance with the
CTA. The Manager shall cause the Company to submit the required BOI to the Financial Crimes Enforcement Network (“**FinCEN**”)
within the required time period allotted under the CTA and to update such information in a timely manner upon any changes to the beneficial
ownership structure. In that regard, each Member agrees to promptly and immediately update the Manager of any changes in its BOI previously
submitted to the Company. If the Company qualifies for any exemptions under the CTA, it shall maintain supporting documentation to substantiate
its eligibility and provide this documentation to FinCEN upon request. BOI shall be treated as confidential and only disclosed to FinCEN,
authorized government authorities, or as required by law. The Members agree to cooperate fully with any CTA-related requests, inquiries,
or investigations. The Company and the Members shall indemnify and hold harmless each other for any losses, damages, or liabilities arising
from the Company’s failure to comply with the CTA on the one hand, and a Member’s failure to provide accurate and timely
BOI on the other hand. Any fines or penalties levied against the Company for failures associated with BOI reporting shall be borne by
the Company unless a Member is responsible for such failure, in which case the offending Member shall promptly reimburse the Company
for all such damages.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 34 of 40**
**Section
12.02 TC “Section 13.03 Confidentiality.” \l 2Confidentiality.**
(a)
Each Member acknowledges that during the term of this Agreement, it may have access to and may become acquainted with trade secrets,
proprietary information, and confidential information belonging to the Company and its Affiliates including Schedule I –
Schedule of Members, that are not generally known to the public, including, but not limited to, information concerning business plans,
financial statements, and other information provided pursuant to this Agreement, operating practices and methods, expansion plans, strategic
plans, marketing plans, contracts, customer lists, or other business documents that the Company treats as confidential, in any format
whatsoever (including oral, written, electronic, or any other form or medium) (collectively, “**Confidential Information**”).
In addition, each Member acknowledges that: (i) the Company has invested, and continues to invest, substantial time, expense, and specialized
knowledge in developing its Confidential Information; (ii) the Confidential Information provides the Company with a competitive advantage
over others in the marketplace; and (iii) the Company would be irreparably harmed if the Confidential Information were disclosed to competitors
or made available to the public. Without limiting the applicability of any other agreement to which any Member is subject, no Member
shall, directly or indirectly, disclose or use (other than solely for the purposes of such Member monitoring and analyzing its investment
in the Company) at any time, including, without limitation, use for personal, commercial, or proprietary advantage or profit, any Confidential
Information of which such Member is or becomes aware. Each Member in possession of Confidential Information shall take all appropriate
steps to safeguard such information and to protect it against disclosure, misuse, espionage, loss, and theft.
(b)
Notwithstanding the above of Section 12.02(a), if the Manager, in its sole but reasonable judgement, determines in the best interests
of the Company and/or the Project that some Confidential Information should not be disclosed even to the Members (other than the Sponsor),
then the Manager may withhold such particular Confidential Information and elect not to disclose, make available, or otherwise share
or distribute such Confidential Information to any of the Members (except the Sponsor), including pursuant to a Member’s rights
of inspection.
(c)
Nothing contained in Section 12.02(a) shall prevent any Member from disclosing Confidential Information: (i) upon the order of any court
or administrative agency; (ii) upon the request or demand of any regulatory agency or authority having jurisdiction over such Member;
(iii) to the extent compelled by legal process or required or requested pursuant to subpoena, interrogatories, or other discovery requests;
(iv) to the extent necessary in connection with the exercise of any remedy hereunder; (v) to the other Members; (vi) to such Member’s
Representatives who, in the reasonable judgment of such Member, need to know such Confidential Information and agree to be bound by the
provisions of this Section 12.02 as if a Member; or (vii) to any potential Permitted Transferee in connection with a proposed Transfer
of Membership Interests from such Member, as long as such potential Permitted Transferee agrees in writing to be bound by the provisions
of this Section 12.02 as if a Member before receiving such Confidential Information; provided, that in the case of clause (i), (ii),
or (iii), such Member shall notify the Company and other Members of the proposed disclosure as far in advance of such disclosure as practicable
(but in no event make any such disclosure before notifying the Company and other Members) and use reasonable efforts to ensure that any
Confidential Information so disclosed is accorded confidential treatment satisfactory to the Company, when and if available.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 35 of 40**
(d)
The restrictions of Section 12.02(a) shall not apply to Confidential Information that: (i) is or becomes generally available to the public
other than as a result of a disclosure by a Member in violation of this Agreement; (ii) is or has been independently developed or conceived
by such Member without use of Confidential Information; or (iii) becomes available to such Member or any of its Representatives on a
non-confidential basis from a source other than the Company, the other Members, or any of their respective Representatives, provided,
that such source is not known by the receiving Member to be bound by a confidentiality agreement regarding the Company.
(e)
The obligations of each Member under this Section 12.02 shall survive (i) the termination, dissolution, liquidation, and winding up of
the Company; (ii) the withdrawal of such Member from the Company; and (iii) such Member’s Transfer of its Membership Interests.
**Section
12.03 TC “Section 13.04 Notices.” \l 2Notices.** All notices, requests, consents, claims, demands, waivers, and other communications
hereunder shall be in writing and shall be deemed to have been given:
(a)
when delivered by hand (with written confirmation of receipt);
(b)
when received by the addressee if sent by a nationally recognized overnight courier (receipt requested);
(c)
by Electronic Transmission upon confirmation of delivery; or
(d)
on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.
Such
communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section):
**If to the Company or the Manager:** 5740 Getwell Rd, Ste 5D, Southaven MS 38672, USA
Attention: CM OB Hotel MGR, LLC, the Manager
Email: sameet@onyxhospitality.com
with a copy to: **M&W Law, PLLC**
5001 LBJ Fwy., Suite 830
Dallas, TX 75244
Email: adnan@mwfirm.com
Attention: Adnan Merchant
**If to a Member**: To the Member’s respective mailing address as set forth on the Member’s Signature Page.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 36 of 40**
**Section
12.04 TC “Section 13.05 Headings.” \l 2Headings.** The headings in this Agreement are inserted for convenience or reference
only and are in no way intended to describe, interpret, define, or limit the scope, extent, or intent of this Agreement or any provision
of this Agreement.
**Section
12.05 TC “Section 13.06 Severability.” \l 2Severability.** If any term or provision of this Agreement is held to be invalid,
illegal, or unenforceable under Applicable Law in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect
any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
Except as provided in Section 9.03(g), upon such determination that any term or other provision is invalid, illegal, or unenforceable,
the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely
as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated
to the greatest extent possible.
**Section
12.06 TC “Section 13.07 Entire Agreement.” \l 2Entire Agreement.** This Agreement, together with the Organizational Documents
and all related Exhibits and Schedules, constitutes the sole and entire agreement of the parties to this Agreement with respect to the
subject matter contained herein and therein, and supersedes all prior and contemporaneous understandings, agreements, representations,
and warranties, both written and oral, with respect to such subject matter.
**Section
12.07 TC “Section 13.08 Successors and Assigns.” \l 2Successors and Assigns.** Subject to the restrictions on Transfers
set forth herein, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors, and assigns.
**Section
12.08 TC “Section 13.09 No Third-Party Beneficiaries.” \l 2No Third-Party Beneficiaries.** Except as provided in this Agreement
which shall be for the benefit of and enforceable by Covered Persons as described therein, this Agreement is for the sole benefit of
the parties hereto (and their respective heirs, executors, administrators, successors, and assigns) and nothing herein, express or implied,
is intended to or shall confer upon any other Person, including any creditor of the Company, any legal or equitable right, benefit, or
remedy of any nature whatsoever under or by reason of this Agreement.
**Section
12.09 TC “Section 13.10 Amendment.” \l 2Amendment.** The Organizational Documents and this Agreement may be amended, supplemented,
or restated by the Manager alone, in its sole discretion, *provided, however*, that the Manager may not amend Sections 5.01,
6.02, or 7.05 of this Agreement, including the definitions of any defined terms applicable thereto, or the specific definition of the
“Commitment Term” if such amendment would materially and adversely affect a Member’s economic interests without the
consent of the holders of at least a Majority of the Class A Membership Interests of the Company. Any amendment validly made pursuant
to this Section, whether by the Manager alone or as required upon the consent of the holders of certain Membership Interests, shall be
binding upon the Company and all Members and the Manager.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 37 of 40**
**Section
12.10 Power of Attorney.**
(a) **Function of Power of Attorney.** Each Member, by its execution of this Agreement, hereby irrevocably makes, constitutes and appoints
each of the Manager and the (each is referred to as the “**Attorney-in-Fact**”), as its true and lawful agent and attorney-in-fact,
with full power of substitution and full power and authority in its name, place and stead, to make, execute, sign, acknowledge, swear
to, record and file (i) this Agreement and any amendment to this Agreement that has been adopted as provided in this Agreement; (ii)
the original Organizational Documents and all amendments required or permitted by law or the provisions of this Agreement; (iii) all
instruments or documents required to effect a transfer of Membership Interest; (iv) all certificates and other instruments deemed advisable
by the Manager to carry out the provisions of this Agreement, and applicable law or to permit the Company to become or to continue as
a limited liability company wherein the Members have limited liability in each jurisdiction where the Company may be doing business;
(v) all instruments that the Manager deems appropriate to reflect a change, modification or termination of this Agreement or the Company
in accordance with this Agreement including, the admission of additional Members or substituted members pursuant to the provisions of
this Agreement, as applicable; (vi) all fictitious or assumed name certificates required or permitted to be filed on behalf of the Company;
(vii) all conveyances and other instruments or papers deemed advisable by the Manager including, those to effect the dissolution and
termination of the Company (including a Certificate of Cancellation ); (viii) all other agreements and instruments necessary or advisable
to consummate any purchase or sale of the Property or the Project; and (ix) all other instruments or papers that may be required or permitted
by law to be filed on behalf of the Company, including with respect to the Property.
(b) **Additional Functions.** The foregoing power of attorney:
(i)
is coupled with an interest, is irrevocable and will survive the subsequent death, disability or Incapacity of any Member or any subsequent
power of attorney executed by a Member;
(ii)
may be exercised by the Attorney, either by signing separately as attorney-in-fact for each Member or by a single signature of the Attorney,
acting as attorney-in-fact for all of them;
(iii)
will survive the delivery of an assignment by a Member of all or any portion of its Membership Interest; except that, where the assignee
of all of that Member’s Interest has been approved by the Manager for admission to the Company, as a Substituted Member, the power
of attorney of the assignor will survive the delivery of that assignment for the sole purpose of enabling the Attorney to execute, swear
to, acknowledge and file any instrument necessary or appropriate to effect that substitution; and
(iv)
is in addition to any power of attorney that may be delivered by a Member in accordance with its Subscription Agreement entered into
in connection with its acquisition of Membership Interests.
(c) **Delivery of Power of Attorney.** Each Member must execute and deliver to the Manager within 5 days after receipt of the Manager’s
request, any further designations, powers-of-attorney and other instruments as the Manager reasonably deems necessary to carry out the
terms of this Agreement.
**Section
12.11 TC “Section 13.11 Waiver.” \l 2Waiver.** No waiver by any party of any of the provisions hereof shall be effective
unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a
waiver in respect of any failure, breach, or default not expressly identified by such written waiver, whether of a similar or different
character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power,
or privilege arising from this Agreement shall operate or be construed as a waiver thereof, nor shall any single or partial exercise
of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right,
remedy, power, or privilege.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 38 of 40**
**Section
12.12 TC “Section 13.12 Governing Law.” \l 2Governing Law.** All issues and questions concerning the application, construction,
validity, interpretation, and enforcement of this Agreement shall be governed by and construed in accordance with the internal laws of
the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Delaware.
**Section
12.13 TC “Section 13.13 Submission to Jurisdiction.” \l 2Submission to Jurisdiction.** The parties hereby agree that any
suit, action, or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement
or the transactions contemplated hereby, whether in contract, tort, or otherwise, shall be brought in the federal courts of the United
States of America or the courts of the State of Tennessee. Each of the parties hereby irrevocably consents to the jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit, action, or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action, or proceeding
in any such court or that any such suit, action, or proceeding that is brought in any such court has been brought in an inconvenient
forum. Service of process, summons, notice, or other document by registered mail to the address set forth in Section 12.04 shall be effective
service of process for any suit, action, or other proceeding brought in any such court.
**Section
12.14 TC “Section 13.14 Waiver of Jury Trial.” \l 2Waiver of Jury Trial; Dispute Resolution**
(a) **EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY**.
(b)
Any dispute, claim, or controversy arising out of or relating to this Agreement, including the negotiation, breach, validity or performance
of the Agreement, the rights and obligations contemplated by the Agreement, any claims of fraud or fraud in the inducement, fiduciary
duties imposed on the Manager, and any claims related to the scope or applicability of this agreement to arbitrate, shall be resolved
at the request of any party to this Agreement through a two-step dispute resolution process administered by the American Arbitration
Association at a location of the Manager’s choosing, first as mediation, then followed if necessary, by final and binding arbitration
administered by a panel of three (3) arbitrators (the “**Arbitrator**”). The fees and expenses of the Arbitrator shall
be borne by the parties bringing the dispute advanced by them from time to time as required; provided that 1) the responding party shall
escrow the same amount of fees pro rata, and 2) at the conclusion of the arbitration, the Arbitrator shall award costs and expenses (including
the costs of the arbitration previously advanced and the reasonable fees and expenses of attorneys, accountants and other experts) to
the prevailing party. No pre-arbitration discovery shall be permitted, except that the Arbitrator shall have the power in his sole discretion,
on application by any party, to order pre-arbitration examination solely of those witnesses and documents that any other party intends
to introduce in its case-in-chief at the arbitration hearing. The parties shall instruct the Arbitrator to render such arbitrator’s
award within thirty (30) calendar days following the conclusion of the arbitration hearing. The Arbitrator shall not be empowered to
award to any party any damages of the type not permitted to be recovered under this Agreement in connection with any dispute between
or among the parties arising out of or relating in any way to this Agreement or the transactions arising hereunder, and each party hereby
irrevocably waives any right to recover such damages. If any bona fide claims are brought against the Manager asserting a breach of fiduciary
duties, then, beginning immediately upon the filing of such arbitration matter and continuing until the resolution of such claims, the
Manager shall promptly notify the Manager Representative within three (3) days of the same, the Manager shall be temporarily suspended
in its role as Manager, and the Manager Representative shall promptly call for a meeting of the Members in accordance with Section 4.01(c)
to elect a temporary Manager. If the Manager is the prevailing party, it shall immediately and automatically resume its role as Manager
and the temporary Manager shall be relieved, and if the Manager is not the prevailing party, the temporary Manager shall call for a second
meeting of the members wherein the Members shall elect a replacement Manager forthwith.
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 39 of 40**
**Section
12.15 TC “Section 13.15 Equitable Remedies.” \l 2Equitable Remedies.** Each party hereto acknowledges that a breach or
threatened breach by such party of any of its obligations under this Agreement would give rise to irreparable harm to the other parties,
for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by
such party of any such obligations, each of the other parties hereto shall, in addition to any and all other rights and remedies that
may be available to them in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction,
specific performance, and any other relief that may be available from a court of competent jurisdiction (without any requirement to post
bond).
**Section
12.16 TC “Section 13.16 [Attorney’s Fees.” \l 2Attorney’s Fees.** In the event that any party hereto institutes
any legal suit, action, or proceeding, including arbitration, against another party in respect of a matter arising out of or relating
to this Agreement, the prevailing party in the suit, action, or proceeding shall be entitled to receive, in addition to all other damages
to which it may be entitled, the costs incurred by such party in conducting the suit, action, or proceeding, including reasonable attorneys’
fees and expenses and court costs.
**Section
12.17 Attorney Disclaimer.** All Members and Managers acknowledge that M&W Law, PLLC and its attorneys (“**Company Counsel**”)
have been engaged on behalf of the Company to draft this Agreement and other documents pertaining to the Company and may even act as
the Manager Representative. Each Member individually understands that it has a right to its own independent legal counsel in connection
with this Agreement and other documents drafted by Company Counsel. Each Member consents to the engagement of Company Counsel on behalf
of the Company hereunder, *recognizing* that Company Counsel is also the counsel for the Sponsor and the Manager. All Members
and Managers acknowledge that Company Counsel has not provided any opinions – legal, financial, investment or otherwise –
with respect to the Project and the business terms of the Company. In its capacity as Manager Representative, the Company Counsel and
its representatives/agents shall not be responsible for the conduct and operations of the Company, merely to execute its express duties
pursuant to this Agreement, which, chiefly and for the avoidance of doubt, is to ensure transition of management authority, and nothing
else.
**Section
12.18 TC “Section 13.17 Remedies Cumulative.” \l 2Remedies Cumulative.** The rights and remedies under this Agreement are
cumulative and are in addition to and not in substitution for any other rights and remedies available at law or in equity or otherwise,
except to the extent expressly provided in Section 9.02 to the contrary.
**Section
12.19 TC “Section 13.18 Counterparts.” \l 2TC “Section 13.18 Counterparts.” \l 2Counterparts; Omnibus Signature;
Electronic Signatures.** This Agreement is intended to be executed by omnibus signature, containing an execution to multiple documents
simultaneously one of which is this Agreement, and which omnibus signature page, when executed, shall be as if attached to this Agreement
as a validly binding execution of this Agreement by its signatory. In view thereof, this Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of the
omnibus signature executing this Agreement delivered by facsimile, email, or other means of Electronic Transmission (including electronic
signature and delivery methods such as DocuSign, Adobe Sign, etc.) shall be deemed to have the same legal effect as delivery of an original
signed copy of this Agreement. All Members and Managers hereby consent to execution of this Agreement via such methods and utilizing
such instruments.
***This
space intentionally left blank. Signature Page follow.***
**CM OB Hotel Owner, LLC\_Operating Agreement** **Pg. 40 of 40**
**IN
WITNESS WHEREOF**, the parties hereto have caused this Agreement to be executed as of the Effective Date:
**By:** **CM OB Hotel MGR, LLC the Manager**
By:
Sameet Patel, its Authorized Representative
**CM OB Hotel Owner, LLC\_Operating Agreement** **Manager Signature Page**
**Class
A Member Joinder Signature Page**
*for*
**CM
OB Hotel Owner, LLC**
*A
Delaware Limited Liability Company*
*This
page acts as a placeholder only;*
*Class
A Member Joinder executed by Omnibus Signature*
*incorporated
by reference herein upon valid execution.*
**CM OB Hotel Owner, LLC\_Operating Agreement** **Class A Member Joinder Signature Page**
**Class
B Member Joinder Signature Page**
*for*
**CM
OB Hotel Owner, LLC**
*A
Delaware Limited Liability Company*
**IN
WITNESS WHEREOF**, the undersigned Member (or their respective officers thereunto duly authorized), having read, reviewed, understood,
and agreed to the terms of the Operating Agreement for CM OB Hotel Owner, LLC (the “**Agreement**”), and intending for
the Member to be legally bound by the same, caused this Agreement to be executed as of the date first written below:
**By the Member:**
**Class B Member Name (Entity or Individual)**
**By**:
**(Signature)**
**Printed Name and (if entity) Authority of Signatory**
**Date Signed**
**CM OB Hotel Owner, LLC\_Operating Agreement** **Class B Member Joinder Signature Page**
**Schedule
I**
**Schedule
of Members**
*This
Schedule is kept in confidence by the Manager.*
**CM OB Hotel Owner, LLC\_Operating Agreement** **Sch. I**
**Exhibit
C to PPM**
*for*
**CM
OB Hotel Owner, LLC**
*Subscription
Agreement follows this Cover Sheet.*
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Ex. C**
**Subscription
Agreement**
*for*
**CM
OB Hotel Owner, LLC**
*A Delaware Limited Liability Company*
(The
undersigned (“**Purchaser**” or the “**Subscriber**”) understands that CM OB Hotel Owner, LLC, a limited
liability company organized under the laws of the state of Delaware (the “**Company**”), is offering for purchase to the
undersigned a certain number of Class A Membership Interest Units of the Company (the “**Securities**” and each Unit a
“**Unit**”) in this private placement offering with up to $5,000,000 sought in total subscriptions (the “**Offering**”).
The Offering shall commence as of April 24, 2025 and shall terminate on the earlier of (a) the date the Manager, in its discretion, elects
to terminate, (b) the date upon which all Subscription funds for the maximum aggregate offering have been procured, or (c) twelve months
(the “**Offering Period**”). The undersigned further understands that this offering is being made without registration
of the Securities under the Securities Act of 1933, as amended (the “**Securities Act**”), or any securities law of any
state of the United States or of any other jurisdiction and is being offered pursuant to an exemption thereof. Notwithstanding the foregoing,
the Company reserves the right to increase or decrease the maximum amount sought under this offering or to terminate this Offering at
any time and without notice or to take less than the minimum subscription at its discretion*.*
Acknowledging
the above, the undersigned, desiring to purchase the Securities specified herein, agrees as follows:
1. Subscription; Investor Suitability Questionnaire. Subject to the terms and conditions hereof and under this Offering the undersigned
hereby irrevocably subscribes to and for the specific number of Units set forth on the Signature Page hereto for the aggregate purchase
price set forth on the Signature Page hereto, which is payable as described in **Section 4** hereof (the “**Subscription**”).
The undersigned acknowledges that the Securities will be subject to restrictions on transfer as set forth in this subscription agreement
(the “**Subscription Agreement**”), the Company’s operating agreement controlling the governance of the Company,
as in effect as of the date of this Subscription Agreement and as may be later amended from time to time (the “**Operating Agreement**”),
and under applicable law. Further, the undersigned hereby agrees and acknowledges that it must complete the attached “**Investor
Suitability Questionnaire**” in order for the Company to accept the subscription hereunder.
2. Acceptance of Subscription and Issuance of Securities. It is understood and agreed that the Company shall have the sole right,
at its complete discretion, to accept or reject this subscription, in whole or in part, for any reason and that the same shall be deemed
to be acceptable by the Company ***only if***: 1) it is signed by the undersigned (or a duly authorized representative of the
undersigned) and delivered to the Company at or before the Closing (defined below); 2) the same is counter-signatured by the Manager;
3) the undersigned executes the Company’s Operating Agreement; and 4) the undersigned pays the subscription price indicated (or
that amount as initially called for by the Company) on or before the Closing (defined below).
**CM OB Hotel Owner, LLC\_Subscription Agreement** **Pg. 1 of 11**
3. The Closing; Extension or Termination of Offering Period. Beginning as of the Effective Date herein and continuing through the
Offering Period, the Company may accept reservations for subscriptions hereunder on a “rolling basis”, “first come
first serve” basis, or all at once or all at once on a “best efforts” basis, within the discretion of the Manager.
The closing of the purchase and sale of all Securities for the undersigned (each a “**Subscription Closing**”) under this
Offering shall take place remotely, coordinated by the Manager on a date and time within the discretion and choosing of the Manager (the
“**Subscription Closing Date**”) pursuant to the terms of Section 2 above. Subsequent Subscription Closings may continue
to occur throughout the Offering Period until the Company has raised the total amount of capital it deems appropriate. In accordance
with Section 4 below, on or before the Subscription Closing Date, the undersigned shall deliver its requisite subscriber funds to the
Company. However, should the Company not raise a sufficient amount in the reasonable judgement of the Manager sought under this Offering
before the Company’s first Subscription Closing, or for any other reason within the sole judgement of the Manager, the Company
may elect terminate this Offering, void this Subscription Agreement, and return all subscription funds pursuant to the terms of this
Subscription Agreement, without interest or accrued profit/loss allocation, and no Securities will be deemed sold.
4. Payment for Securities. Payment for the Securities shall be received by the Company from the undersigned by wire transfer of immediately
available funds or other means approved by the Company at or prior to the Subscription Closing or within fifteen (15) days after notice
by the Company that the payment for the securities is due, in the amount as set forth on the Signature Page hereto. The Company may,
but is not obligated to, deliver certificates representing the Securities to the undersigned at the Subscription Closing bearing an appropriate
legend referring to the fact that the Securities were sold in reliance upon an exemption from registration under the Securities Act.
In lieu of certificates, this completed Subscription Agreement, together with the addition of the undersigned as a named “Member”
in the Operating Agreement, shall be sufficient evidence of the undersigned’s admission to the Company.
5. Representations and Warranties of the Company. As of the Closing, the Company represents and warrants that:
(a)
The Company is duly formed and validly existing under the laws of Delaware, with full power and authority to conduct its business as
it is currently being conducted and to own its assets.
(b)
The Securities have been duly authorized and, when issued, delivered, and paid for in the manner set forth in this Subscription Agreement,
will be validly issued, fully paid, and nonassessable. Based in part upon the representations of the undersigned below in this Subscription
Agreement and subject to the completion of the filings referenced in Section 6 below, the Securities will be issued in compliance with
all applicable federal and state securities laws.
**CM OB Hotel Owner, LLC\_Subscription Agreement** **Pg. 2 of 11**
6. Representations and Warranties of the Undersigned. The undersigned hereby represents and warrants to and covenants with the Company
that:
(a) **General**.
(i)
The undersigned has all requisite authority (and in the case of an individual, the capacity) to purchase the Securities, enter into this
Subscription Agreement, and to perform all the obligations required to be performed by the undersigned hereunder, and such purchase will
not contravene any law, rule, or regulation binding on the undersigned or any investment guideline or restriction applicable to the undersigned.
(ii)
The undersigned is not acquiring the Securities as a nominee or agent or otherwise for any other person.
(iii)
The undersigned will comply with all applicable laws and regulations in effect in any jurisdiction in which the undersigned purchases
or sells Securities and obtain any consent, approval or permission required for such purchases or sales under the laws and regulations
of any jurisdiction to which the undersigned is subject or in which the undersigned makes such purchases or sales, and the Company shall
have no responsibility therefor.
(iv)
Neither undersigned, nor any of undersigned’s beneficial owners, appears on an SPEcially Designated Nationals and Blocked Persons
List of the Office of Foreign Assets Control of the United States Department of the Treasury (“**OFAC**”), nor are they
otherwise a party with which the Company is prohibited to deal under the laws of the United States; undersigned further represents the
monies used to fund the investment in the Securities are not derived from, invested for the benefit of, or related in any way to, the
governments of, or persons within: (i) any country under a U.S. embargo enforced by OFAC; (ii) which have been designated as a “non-cooperative
country or territory” by the Financial Action Task Force on Money Laundering; or; (iii) which has been designated by the U.S. Secretary
of the Treasury as a “primary money laundering concern”. Undersigned further represents and warrants that undersigned: (i)
has conducted thorough due diligence with respect to all of its beneficial owners; (ii) has established the identities of all beneficial
owners and the source of each of the beneficial owner’s funds; and, (iii) will retain evidence of any such identities, any such
source of funds and any such due diligence; undersigned further represents in the event undersigned receives deposits from, makes payments
to, or conducts transactions, relating to a non-U.S. banking institution (a “Non-U.S. Bank”) in connection with undersigned’s
investment in the Securities, such Non-U.S. Bank: (i) has a fixed address, other than an electronic address or a post office box, in
a country in which it is authorized to conduct banking activities; (ii) employs one or more individuals on a full-time basis; (iii) maintains
operating records related to its banking activities; (iv) is subject to inspection by the banking authority which licensed it to conduct
banking activities; and, (v) does not provide banking services to any other Non-U.S. Bank which does not have a physical presence in
any country and which is not a registered Affiliate. Undersigned further represents that it does not know or have any reason to suspect:
(i) the monies used to fund the investment in the Securities have been or shall be derived from or related to any illegal activities,
including but not limited to, money laundering activities; and, (ii) the proceeds from undersigned’s investment in the Securities
shall be used to finance any illegal activities. Undersigned further represents and warrants undersigned has conducted appropriate due
diligence of any beneficial owner who is: (i) a senior foreign political figure, (as used herein, a senior foreign political figure means:
(1) a current or former senior official in the executive, legislative, administrative, military, or judicial branches of a foreign government
(whether elected or not); (2) a senior official of a major foreign political party; (3) a senior executive of a foreign government-owned
commercial enterprise; or, (4) a corporation, business or other entity that has been formed by or for the benefit of an individual described
in (1), (2) or (3) (“**SFPF**”); (ii) an immediate family member of the SFPF; or, (iii) a person who is widely and publicly
known (or is actually known by undersigned) to be a close associate of any such individual; undersigned further represents and warrants
to the extent a beneficial owner is a bank, including a branch, agency or office of a bank, which is not physically located in the United
States, the undersigned has taken and will take reasonable measures to establish the bank has a physical presence or is an affiliate
of a regulated entity. Undersigned further agrees and acknowledges, among other remedial measures: (i) Company may be obligated to “freeze
the account” of such undersigned, either by prohibiting additional investments by the undersigned and/or segregating assets of
undersigned in compliance with governmental regulations and/or if the Manager(s) of the Company determine in its/their sole discretion
such action is in the best interests of the Company; and, (ii) Company may be required to report such action or confidential information
relating to undersigned (including, without limitation, disclosing undersigned’s identity) to the regulatory authorities.
**CM OB Hotel Owner, LLC\_Subscription Agreement** **Pg. 3 of 11**
(b) **Information Concerning the Company**.
(i)
The undersigned acknowledges and certifies that it has received the certain Private Placement Memorandum in connection with these securities
and that it understands the terms and disclosures contained therein, that it has had full opportunity to request any additional information
regarding the Company, its business, and its projected plans that it so reasonably requests, that the undersigned is familiar with the
principals of the issuer, and acknowledges that it has consulted with his or her own advisors and consultants prior to entering into
this Subscription Agreement. The undersigned further acknowledges and certifies that it has also received the Operating Agreement and
that it understands the terms contained therein. The Private Placement Memorandum, together with this Agreement, the accompanying Investor
Suitability Questionnaire, and the Operating Agreement, constitute the “**Offering Documents**”. **THE UNDERSIGNED REPRESENTS
THAT IT HAS SOUGHT THE ADVICE OF ITS OWN INDEPENDENT LEGAL COUNSEL IN CONNECTION WITH THE OFFERING DOCUMENTS AND THE SECURITIES OFFERED
HEREUNDER**.
(ii)
The undersigned understands that the Company is not currently required to register and will not register as an Investment Company under
the Investment Company Act of 1940 by way of exemption from definition thereof as a real estate operating company, or, in the alternative,
by way of exemption provided under Section 3(c)1 and/or 3(c)5 of the Investment Company Act, as applicable.
(iii)
The undersigned understands and accepts that: (i) the purchase of the Securities involves various risks, including the risks that there
may be no open market for the Securities, or that Subscribers entire investment may be lost; (ii) the Company has no operating history;
and (iii) the undersigned may not be able to liquidate his, her or its investment. The undersigned represents that it is able to bear
any loss associated with an investment in the Securities.
(iv)
The undersigned confirms that it is not relying on any communication (written or oral) from the Company or any of its affiliates, as
investment advice or as a recommendation to purchase the Securities. It is understood that information and explanations related to the
terms and conditions of the Securities provided in the Offering Documents or otherwise by the Company or any of its affiliates shall
not be considered investment advice or a recommendation to purchase the Securities, and that neither the Company nor any of its affiliates
is acting or has acted as an advisor to the undersigned in deciding to invest in the Securities. The undersigned acknowledges that neither
the Company nor any of its affiliates has made any representation regarding the proper characterization of the Securities for purposes
of determining the undersigned’s authority to invest in the Securities. The undersigned is entering into this Agreement of its
own volition, and after its own proper due diligence.
**CM OB Hotel Owner, LLC\_Subscription Agreement** **Pg. 4 of 11**
(v)
The undersigned is familiar with the business and financial conditions, projections, and operations of the Company. The undersigned has
had access to such information concerning the Company and the Securities as it deems necessary to enable it to make an informed investment
decision concerning the purchase of the Securities.
(vi)
The undersigned understands that, unless the undersigned notifies the Company in writing to the contrary at or before the Closing, each
of the undersigned’s representations and warranties contained in this Subscription Agreement will be deemed to have been reaffirmed
and confirmed as of the Closing, taking into account all information received by the undersigned.
(vii)
The undersigned acknowledges that the Company has the right in its sole and absolute discretion to abandon this private placement or
to alter the terms of offering at any time prior to the completion of the offering. If the Company should abandon this private placement,
this Subscription Agreement shall thereafter have no force or effect and the Company shall return the previously paid subscription price
of the Securities, without interest thereon, to the undersigned.
(viii)
The undersigned understands that no federal or state agency has passed upon the merits or risks of an investment in the Securities or
made any finding or determination concerning the fairness or advisability of this investment.
(c) **Non-reliance**.
(i)
The undersigned represents that it is **NOT** relying on (and will not at any time rely on) any communication (written or oral) of
the Company, as investment advice or as a recommendation to purchase the Securities, it being understood that information and explanations
related to the terms and conditions of the Securities, the Offering Documents, and the other transaction documents that may have been
provided to the undersigned shall **NOT** be considered investment advice or a recommendation to purchase the Securities and is provided
“as is” without any warranties. The undersigned is providing this investment after conducting its own due diligence.
(ii)
The undersigned confirms that the Company has **NOT** (A) given any guarantee or representation as to the potential success, return,
effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Securities or (B) made
any representation to the undersigned regarding the legality of an investment in the Securities under applicable legal investment or
similar laws or regulations. In deciding to purchase the Securities, the undersigned is not relying on the advice or recommendations
of the Company and the undersigned has made its own independent decision that the investment in the Securities is suitable and appropriate
for the undersigned.
**CM OB Hotel Owner, LLC\_Subscription Agreement** **Pg. 5 of 11**
(d) **Status of Undersigned**.
(i)
The undersigned has such knowledge, skill and experience in business, financial and investment matters that the undersigned is capable
of evaluating the merits and risks of an investment in the Securities. With the assistance of the undersigned’s own professional
advisors, to the extent that the undersigned has deemed appropriate, the undersigned has made its own legal, tax, accounting, and financial
evaluation of the merits and risks of an investment in the Securities and the consequences of this Subscription Agreement. The undersigned
has considered the suitability of the Securities as an investment in light of its own circumstances and financial condition and the undersigned
is able to bear the risks associated with an investment in the Securities and its authority to invest in the Securities. The undersigned
hereby represents and warrants that the undersigned, either by reason of the undersigned’s business or financial experience or
the business or financial experience of the undersigned’s professional advisors (who are unaffiliated with and who are not compensated
by the Company or any affiliate of the Company, directly or indirectly) has the capacity to protect the undersigned’s own interests
in connection with the transaction contemplated hereby.
(ii)
The undersigned is an “**Accredited Investor**” as that term is defined under the Securities Act. The undersigned agrees
to furnish any additional information requested by the Company or any of its affiliates to assure compliance with applicable U.S. federal
and state securities laws in connection with the purchase and sale of the Securities. Any information that has been furnished or that
will be furnished by the undersigned to evidence its status as an accredited investor is accurate and complete and does not contain any
misrepresentation or material omission**.**
(e) **Restrictions on Transfer or Sale of Securities**. As applies to the Purchaser:
(i)
The undersigned is acquiring the Securities solely for the undersigned’s own beneficial account, for investment purposes, and not
with a view to, or for resale in connection with, any distribution of the Securities. The undersigned understands that the Securities
have not been registered under the Securities Act or any State Securities Laws by reason of specific exemptions under the provisions
thereof which depend in part upon the investment intent of the undersigned and of the other representations made by the undersigned in
this Subscription Agreement. The undersigned understands that the Company is relying upon the representations and agreements contained
in this Subscription Agreement (and any supplemental information) for the purpose of determining whether this transaction meets the requirements
for such exemptions.
**CM OB Hotel Owner, LLC\_Subscription Agreement** **Pg. 6 of 11**
(ii)
The undersigned understands that the Securities are “restricted securities” under applicable federal securities laws and
that the Securities Act and the rules of the U.S. Securities and Exchange Commission (the “**Commission**”) provide in
substance that the undersigned may dispose of the Securities ***only*** pursuant to an effective registration statement under
the Securities Act or an exemption therefrom (and in any case not before one (1) year from the date of subscription hereof), and the
undersigned understands that the Company, at this time, has no obligation or intention to register any of the Securities, or to take
action so as to permit sales pursuant to the Securities Act (including Rule 144 thereunder). Accordingly, the undersigned understands
that under the Commission’s rules, the undersigned may dispose of the Securities principally only in “private placements”
which are exempt from registration under the Securities Act, in which event the transferee will acquire “restricted securities”
subject to the same limitations as in the hands of the undersigned. Consequently, the undersigned understands that the undersigned must
bear the economic risks of the investment in the Securities for an indefinite period of time. The undersigned agrees to hold the Company
and its members, manager, officers, employees, controlling persons and agents and their respective heirs, representatives, successors
and assigns harmless and to indemnify them against all liabilities, costs and expenses incurred by them as a result of any misrepresentation
made by the undersigned contained in this Subscription Agreement or any sale or distribution by the undersigned in violation of the applicable
federal securities law, including but not limited to, the Securities Act. The undersigned understands and agrees that in addition to
restrictions on transfer imposed by applicable securities laws, the transfer of the Securities will be restricted by the terms of the
Offering Documents.
(iii)
The undersigned agrees: (A) that the undersigned will not sell, assign, pledge, give, transfer, or otherwise dispose of the Securities
or any interest therein, or make any offer or attempt to do any of the foregoing, except pursuant to a registration of the Securities
under the Securities Act and all applicable State Securities Laws, or in a transaction which is exempt from the registration provisions
of the Securities Act and all applicable State Securities Laws; (B) that the certificates representing the Securities will bear a legend
making reference to the foregoing restrictions; and (C) that the Company and its affiliates shall not be required to give effect to any
purported transfer of such Securities except upon compliance with the foregoing restrictions.
(f) **Further Rights of Redemption and Repurchase of Securities.** The undersigned understands and agrees that the Securities sold hereunder
may also be subject to certain rights or redemption or repurchase as may be provided for in the Operating Agreement, and the undersigned
understands that it must agree to such terms in subscribing to the Company hereunder.
7. Conditions to Obligations of the Undersigned and the Company. The obligations of the undersigned to purchase and pay for the Securities
as specified on the Signature Page hereto and of the Company to sell the Securities are subject to the satisfaction at or prior to the
Closing of the following conditions precedent: the representations and warranties of the Company contained in **Section 5** hereof
and of the undersigned contained in **Section 6** hereof shall be true and correct as of the Closing in all respects with the same
effect as though such representations and warranties had been made as of the Closing.
**CM OB Hotel Owner, LLC\_Subscription Agreement** **Pg. 7 of 11**
8. Electronic Delivery of Disclosures and Schedule K-1.
(a)
The undersigned understands that the Company expects to deliver tax return information, including Schedule K-1s (each, a “**K-1**”)
to the undersigned by either electronic mail or some other form of electronic delivery. Pursuant to IRS Rev. Proc. 2012-17 (Feb. 13,
2012), the Undersigned hereby expressly understands, consents to, and acknowledges such electronic delivery of tax returns and related
information. Federal law prohibits the Company, the Manager, or their affiliates and designees from disclosing, without consent, undersigned’s
tax return information to third parties or use of that information for purposes other than the preparation of the Subscriber’s
tax return. As part of subscription to this offering, the Company, the Manager, or their designees may disclose undersigned’s income
tax return information to certain other affiliated entities or third-party service providers for tax return preparation and data aggregation
purposes. The Company, the Manager, and their designees covenant they will keep and maintain undersigned’s information in strict
confidence, using such degree of care as is appropriate to avoid unauthorized access, use or disclosure, and will not use such information
in violation of law. In executing this Agreement, the undersigned authorizes the Company and the Manager to disclose tax return information
to certain third-party entities, their respective successors, affiliates and, or such other third-party service providers as the undersigned
may request or as may be required by the Company or the Manager for purposes of completing tax return preparation and K-1 delivery pursuant
to this agreement.
(b)
The Subscriber’s consent to electronic delivery will apply to all future K–1s unless such consent is withdrawn by the Subscriber.
(c)
If for any reason the Subscriber would like a paper copy of the K-1 after the Subscriber has consented to electronic delivery, the Subscriber
may submit a request via email to the Manager or send a written request to the same*.* Requesting a paper copy of the Subscriber’s
K-1 will not be treated as a withdrawal of consent
(d)
If the Subscriber in the future determines that it no longer consents to electronic delivery, the Subscriber will need to notify the
Company so that it can arrange for a paper K-1 to be delivered to the address that the Company then currently has on file. The Subscriber
may submit notice via email to the Manager or send a written request to the same. The Subscriber’s consent is considered withdrawn
on the date the Company receives the written request to withdraw consent. The Company will confirm the withdrawal and its effective date
in writing. A withdrawal of consent does not apply to a K-1 that was emailed to the Subscriber before the effective date of the withdrawal
of consent.
(e)
The Company (or the Manager) will cease providing statements to the Subscriber electronically if the Subscriber provides notice to withdraw
consent, if the Subscriber ceases to be a Member of the Company, or if regulations change to prohibit the form of delivery.
(f)
Subscribers shall be responsible for maintaining and/or updating personal and tax related contact information in the Company’s
secure online portal, as it may exist from time to time, or for updating and maintaining their information in any other way designated
by the Manager from time to time. The Subscriber will be notified if there are any changes to the contact information of the Company.
(g)
The Subscriber’s K-1 may be required to be printed and attached to a federal, state, or local income tax return.
9. Banking Disclosure. The Company shall open and maintain a bank account (or accounts) at an FDIC insured banking institution in
the United States, in which all Subscriber funds shall be collected. However, Purchaser acknowledges, understands, and agrees that the
Company cannot and will not guarantee the safe deposit and keeping of all funds outside of reasonably due care, which generally entails
ensuring correct receipts and deposits into the account(s) of the Company. Purchaser agrees that the Company is not responsible for the
actions (or omissions) or events that occur with the banking institutions in which the Company’s funds are deposited.
**CM OB Hotel Owner, LLC\_Subscription Agreement** **Pg. 8 of 11**
10. Privacy Policy. The Company shall collect personal information about Purchaser in connection with this transaction, and such personal
information shall be governed by the Company’s then in effect “Privacy Policy”, a copy of which is on file with the
Company, contained within the Company’s private placement memorandum concerning this Offering, and may be requested by Purchaser
for review. In executing this Agreement and subscribing to the Company’s Securities, Purchaser 1) acknowledges receipt and review
of the Company’s Privacy Policy, 2) agrees to the terms of the same, and 3) understands and acknowledges that the Company shall
not be liable for breaches of private information occurring outside the ordinary course of business and if such breach occurred by means
other than the Company’s negligence.
11. Obligations Irrevocable. The obligations of the undersigned shall be irrevocable.
12. Legend. The Company shall not be required to issue certificates to the Subscriber representing the Securities sold under this
Agreement; Securities held shall be evidenced this Agreement. In the event that the Company elects to issue certificates representing
Securities in accordance, then the Company shall ensure such certificates include all required legends under applicable law, including,
without limitation, legends that articulates rules and restrictions applicable to the Securities as restricted securities under applicable
law:
13. Waiver, Amendment. Neither this Subscription Agreement nor any provisions hereof shall be modified, changed, discharged or terminated
except by an instrument in writing, signed by the party against whom any waiver, change, discharge or termination is sought.
14. Assignability. Neither this Subscription Agreement nor any right, remedy, obligation or liability arising hereunder or by reason
hereof shall be assignable by either the Company or the undersigned without the prior written consent of the other party.
15. Waiver of Jury Trial; Dispute Resolution.
(a)
THE UNDERSIGNED IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS
CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT.
(b)
Any dispute, claim, or controversy arising out of or relating to this Agreement, including the negotiation, breach, validity or performance
of the Agreement, the rights and obligations contemplated by the Agreement, any claims of fraud or fraud in the inducement, and any claims
related to the scope or applicability of this agreement to arbitrate, shall be resolved at the request of any party to this Agreement
through a two-step dispute resolution process administered by the American Arbitration Association at a location of the Manager’s
choosing, first as mediation, then followed if necessary, by final and binding arbitration administered by a panel of three arbitrators
(the “**Arbitrator**”). The fees and expenses of the Arbitrator shall be borne by the parties bringing the dispute advanced
by them from time to time as required; provided that at the conclusion of the arbitration, the Arbitrator shall award costs and expenses
(including the costs of the arbitration previously advanced and the reasonable fees and expenses of attorneys, accountants and other
experts) to the prevailing party. No pre-arbitration discovery shall be permitted, except that the Arbitrator shall have the power in
his sole discretion, on application by any party, to order pre-arbitration examination solely of those witnesses and documents that any
other party intends to introduce in its case-in-chief at the arbitration hearing. The parties shall instruct the Arbitrator to render
such arbitrator’s award within thirty (30) calendar days following the conclusion of the arbitration hearing. The Arbitrator shall
not be empowered to award to any party any damages of the type not permitted to be recovered under this Subscription Agreement in connection
with any dispute between or among the parties arising out of or relating in any way to this Subscription Agreement or the transactions
arising hereunder, and each party hereby irrevocably waives any right to recover such damages.
**CM OB Hotel Owner, LLC\_Subscription Agreement** **Pg. 9 of 11**
16. Submission to Jurisdiction. With respect to any suit, action or proceeding relating to any offers, purchases or sales of the Securities
by the undersigned (“**Proceedings**”), the undersigned irrevocably submits to the jurisdiction of the federal or state
courts located in the State of Tennessee, which submission shall be exclusive unless none of such courts has lawful jurisdiction over
such Proceedings.
17. Governing Law. This Subscription Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.
18. Section and Other Headings. The section and other headings contained in this Subscription Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Subscription Agreement.
19. Notices. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given
if delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid to the following addresses
(or such other address as either party shall have specified by notice in writing to the other):
**If to the Company:** 5740 Getwell Rd, Ste 5D, Southaven MS 38672, USA
Attention: CM OB Hotel MGR, LLC, its Manager
Email: Sameet@onyxhospitality.com
**with a copy to:** **M&W Law, PLLC**
5001 LBJ Fwy, Suite 830
Dallas, TX 75244
E-mail: adnan@mwfirm.com
Attention: Adnan Merchant
**If to the Purchaser:** **Address listed on the Purchaser’s information page.**
20. Binding Effect. The provisions of this Subscription Agreement shall be binding upon and accrue to the benefit of the parties hereto
and their respective heirs, legal representatives, successors and assigns.
**CM OB Hotel Owner, LLC\_Subscription Agreement** **Pg. 10 of 11**
21. Survival. All representations, warranties and covenants contained in this Subscription Agreement shall survive (i) the acceptance
of the subscription by the Company and the Closing, (ii) changes in the transactions, documents and instruments described in the Offering
Documents which are not material or which are to the benefit of the undersigned and (iii) the death or disability of the undersigned.
Notwithstanding the foregoing, the warranties, representations and covenants of the Company contained in or made pursuant to this Subscription
Agreement shall survive the execution and delivery of this Subscription Agreement and the Closing for a period of one (1) year following
the last Closing.
22. Acceptance of Operating Agreement. The undersigned agrees that, in addition to the execution and acceptance of this Subscription
Agreement, the undersigned must also execute the Operating Agreement, accepting and agreeing to all terms therein.
23. Notification of Changes. The undersigned hereby covenants and agrees to notify the Company upon the occurrence of any event prior
to the closing of the purchase of the Securities pursuant to this Subscription Agreement which would cause any representation, warranty,
or covenant of the undersigned contained in this Subscription Agreement to be false or incorrect.
24. Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such
term or provision in any other jurisdiction.
25. Counterparts; Electronic Signature. This Agreement is intended to be executed by omnibus signature, containing an execution to
multiple documents simultaneously one of which is this Agreement, and which omnibus signature page, when executed, shall be as if attached
to this Agreement as a validly binding execution of this Agreement by its signatory. In view thereof, this Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement.
A signed copy of the omnibus signature executing this Agreement delivered by facsimile, email, or other means of Electronic Transmission
(including electronic signature and delivery methods such as DocuSign, Adobe Sign, etc.) shall be deemed to have the same legal effect
as delivery of an original signed copy of this Agreement. Subscriber hereby consents to execution of this Agreement via such methods
and utilizing such instruments.
***This
space intentionally left blank. Signature page executed by Omnibus signature incorporated by reference herein upon valid execution.***
**CM OB Hotel Owner, LLC\_Subscription Agreement** **Pg. 11 of 11**
**Exhibit
D to PPM**
*for*
**CM
OB Hotel Owner, LLC**
*Subscription
Execution Package*
*(Investor
Suitability Questionnaire, Subscriber Information Sheet, Omnibus Signature Page, Blank W9)*
*follows
this Cover Sheet.*
**CM OB Hotel Owner, LLC\_Private Placement Memorandum** **Ex. D**
**M&W
Law, PLLC**
5001
LBJ Fwy. Suite 830
Dallas,
TX 75244
O:
972.460.8353
info@mwfirm.com
**Subscription
Execution Package***in connection with a subscription for Interests in***CM OB Hotel Owner, LLC***a Delaware limited liability company*
To
Subscriber:
Attached
to this cover page please find the Subscription Execution Package containing the Investor Suitability Questionnaire, Subscriber Information
Sheet, Omnibus Signature Page, and blank W9 for *CM OB Hotel Owner, LLC* (the “**Company**”). The omnibus signature
page will acknowledge receipt of the Company’s Private Placement Memorandum and execute the Company’s Operating Agreement,
Subscription Agreement, Questionnaire, and Subscriber Information Sheet (collectively, the “**Subscription Documents**”).
Instructions
for the questionnaire follow this cover letter. If you have received these documents in error, please notify us immediately and discard
or return these documents. Thank you.
Sincerely,
**Adnan Merchant**
**M&W Law, PLLC**
Counsel for the Company
5001 LBJ Fwy,
Suite 830
Dallas, TX 75244
972-460-8353
adnan@mwfirm.com
**CM OB Hotel Owner, LLC\_ISQ; Subscription Execution Pkg.** **Cover Letter**
**CM
OB Hotel Owner, LLC**
**Investor
Suitability Questionnaire**
The
purpose of the questionnaire is to assure the Company that all persons being offered the Interests will, at minimum, meet the suitability
standards required by the Securities Act of 1933, as amended, and applicable state securities laws. All answers will be kept confidential
by the Manager of the Company (as defined in the Company’s governing documents). However, by executing this package, the recipient
agrees that this information may be provided by the Company to its legal, compliance, administrative, and financial advisors, and the
Company and such advisors may rely on the information set forth in this package for purposes of complying with applicable securities
laws and may present or disclose this completed questionnaire to such parties as it reasonably deems appropriate if called upon to establish
its compliance with such securities laws.
**Instructions**.
In order to subscribe for Interests in *CM OB Hotel Owner, LLC*, you must complete this Investor Suitability Questionnaire by filling
in the information requested, checking the appropriate boxes, and if applicable, providing necessary verification documents. If you have
any questions, please contact the Manager directly at Sameet@onyxhospitality.com.
**Acknowledgements;
Certification & Execution by Omnibus**. By completing the questions required herein and by executing the omnibus signature page
as it is applied to this questionnaire, you certify, represent, and warrant to the Company and its Manager that all information and responses
provided by you herein are true, accurate, and complete. You further agree that you will notify the Company of any material change to
such responses as soon as possible, and, if required, will provide such additional documentation as required to independently verify
your responses.
1. **Accredited Investor Certification.** Please check one of the following regarding your status as an investor:
☐ I **am** an (or the organization on behalf of which I am executing these documents **is**) an Accredited Investor as defined in *17 CFR § 230.501* (the definition is set forth below).
☐ I **am not** (or the organization on behalf of which I am executing these documents **is not**) an Accredited Investor as defined below.\*
\* *if you do NOT qualify as an Accredited Investor, stop this subscription process immediately and contact the Manager prior to proceeding.*
Accredited
Investor Definition.
As
of the Effective Date, for *individuals*, an accredited investor is one of the following:
- an individual with a net worth or joint net worth with a spouse or spousal equivalent of at least $1,000,000, not including the value of their primary residence;
- an individual with income exceeding $200,000 in each of the two most recent calendar years or joint income with a spouse or spousal equivalent exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year;
- a director, executive officer, or general partner of the Company, or any director, executive officer, or general partner of a general partner of the Company;
- an SEC-registered broker-dealer, SEC or state-registered investment adviser, or exempt reporting adviser, or the holder of a qualifying FINRA license in good standing (FINRA Series 7, 65, or 82 licenses); or
- a knowledgeable employee of the issuer, as defined in rule 3c-5(a)(4) under the Investment Company Act, of the issuer of securities where that issuer is a 3(c)(1) or 3(c)(7) private fund.
**CM OB Hotel Owner, LLC\_Investor Questionnaire** **Pg. 1 of 3**
As
of the Effective Date, for *entities and organizations*, an accredited investor is one of the following:
- an enterprise (*e.g.* a company, partnership, organization) in which all of the equity owners are Accredited Investors;
- an organization that owns investments in excess of $5,000,000 and was not formed for the specific purpose of investing in this Company;
- a family office and its family clients if the family office has assets under management in excess of $5,000,000 and whose prospective investments are directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment;
- a bank, savings and loan association, insurance company, registered investment company, business development company, or small business investment company or rural business investment company;
- a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000;
- an employee benefit plan (within the meaning of the Employee Retirement Income Security Act) if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5,000,000;
- a tax-exempt charitable organization, corporation, limited liability corporation, or partnership with assets in excess of $5,000,000; or
- a trust with assets exceeding $5,000,000, not formed only to acquire the securities offered, and whose purchases are directed by a person who meets the legal standard of having sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the prospective investment.
**CM OB Hotel Owner, LLC\_Investor Questionnaire** **Pg. 2 of 3**
**NOTICE
TO SUBSCRIBER:** *The suitability standards established by this questionnaire are merely minimums; the satisfaction of such standards
does not mean that an investment in the Company is a suitable investment for an investor. Investors may be required to provide additional
representations or certifications if requested by the Manager. The Manager may accept or reject your subscription based on the answers
provided, or for any reason or no reason at all. A subscriber who qualifies as either Accredited or sophisticated may nevertheless be
rejected as not suitable for an investment in this Company; acceptance of any subscription is within the sole discretion of the Manager.*
***End
of Questionnaire;
execution contained on omnibus signature page and affixed hereto.***
**CM OB Hotel Owner, LLC\_Investor Questionnaire** **Pg. 3 of 3**
**Subscriber
Information Sheet**
*for*
**CM
OB Hotel Owner, LLC**
*a
Delaware limited liability company*
**Name of Subscriber (individual or entity):**
**Memb. Class(es) Subscribing to:** Class A
**No. of Units Subscribing to (1 Unit = $1,000):**
**Total Investment Amount:** $
**Email Address:**
**Phone Number:**
**Mailing Address:**
**Do you consent to electronic delivery of all documents and notices?** ☐ Yes
☐ No
**USA PATRIOT ACT & KYC COMPLIANCE**
**Country of Citizenship of Subscriber:**
**Name of Bank Payment is being Wired From:**
**Is the Wiring Bank located in the United States or another “FATF Country”**4**?** ☐ Yes
☐ No
Is Purchaser a customer of Wiring Bank?
☐ Yes
☐ No
4 The current list of countries that are members of the Financial Action Task Force on Money Laundering (each an “**FATF Country**”)
may be found here: https://www.fatf-gafi.org/countries/. The list of FATF Countries may be expanded to include future FATF members
and FATF compliant countries, as appropriate.
**CM OB Hotel Owner, LLC\_Subscriber Information Sheet** **Pg. 1 of 1**
**Omnibus
Signature Page**
*for*
**Subscription
Documents**
*CM
OB Hotel Owner, LLC*
**IN
WITNESS WHEREOF**, the undersigned Member (or their respective officers thereunto duly authorized), having read, reviewed, understood,
and agreed to the terms of the below listed documents, and intending for the Member to be legally bound by the same, caused this **Omnibus
Signature Page** to be executed as of the date first written below. Execution of this instrument, whether by hand or electronically,
constitutes execution, collectively, of all below listed documents:
- Operating Agreement of *CM OB Hotel Owner, LLC*;
- Subscription Agreement between the Undersigned and *CM OB Hotel Owner, LLC* to purchase securities;
- Investor Suitability Questionnaire; and
- Subscriber Information Sheet.
By
executing this Omnibus Signature Page, the undersigned 1) acknowledges receipt of the Company’s Private Placement Memorandum,
and 2) acknowledges and agrees that the undersigned is accepting, adopting and agreeing to all terms, conditions, representations,
warranties, acknowledgements, covenants and other provisions contained in the above-referenced documents, with the same force and effect
as if the undersigned had executed and delivered a counterpart signature page to each such document.
**By the Member:**
**Investor Name (Entity or Individual)** **Spousal Signature (*if required*)**
**By**: **By**:
**(Signature)**
**Printed Name and (if entity)** **Printed Name of Spouse**
**Authority of Signatory**
**Date Signed**
**Date Signed** The offer to purchase securities as set forth above is **confirmed and accepted by the Company:**
**By: CM OB Hotel MGR, LLC, its Manager**
**By**: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,
its Authorized Representative
**CM OB Hotel Owner, LLC\_Omnibus Signature Page** **Pg. 1 of 1**
---
## EX-10.17
SEC source: [ex10-17.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex10-17.htm)
**Exhibit 10.17**
**CM OB Hotel Owner, LLC**
561-990-2222
5740
Getwell Rd, Ste 5D, Southaven MS 38672
April
24, 2025
**To:** **[INVESTOR NAME]**
[ADDRESS1]
[ADDRESS2]
*Delivered via e-mail to*: [email]
***Re:*** Side Letter Agreement to Subscription Agreement and Operating Agreement of CM OB Hotel Owner, LLC
Dear
[NAME],
We, *CM OB Hotel MGR, LLC*, are pleased to present to you, the undersigned, this side letter in which we both mutually agree to certain
additional terms concerning your subscription for equity interests (your “**Investment**”) in *CM OB Hotel Owner, LLC* (the “**Fund**”). This letter serves as a side letter agreement (this “**Letter**”) between us, the terms
of which are agreed to be in addition to, and incident to, that certain Subscription Agreement governing your Investment into the Fund
dated effective on or about even date with this Letter (the “**Subscription Agreement**” and the “**Effective Date**”
respectively) and the execution by the you of that certain Operating Agreement for the Fund, as may be amended from time to time (the
“**Operating Agreement**”). Capitalized terms used in this Side Letter and not defined herein shall have the meanings
ascribed to them in the Operating Agreement.
It
is acknowledged by both of us that the Fund is presently offering its [Class A] equity interests (the “**Interests**”)
for purchase and investment pursuant to a private placement offering commencing on or about [initial offering date]. By this Letter,
and to further induce you to enter into the Subscription Agreement, we both mutually agree to the following additional terms regarding
your Investment:
1. Additional Terms; No Promote Charge. It is agreed that for purposes of distributions owed to you, and only to you, under the Company’s Operating Agreement, Section 6.02(c) shall instead read and be construed to operate as follows:
*Third
and Finally, all remaining Distributable Cash shall be distributed 100% to the Class A Members (pro rata as above) thereafter.*
For
the avoidance of doubt, it is the intention of the Parties to not charge a “promote” or “profit share” on distributions
otherwise owed to you.
2. Other Terms. The terms of this Letters shall be deemed to be “in addition to” the terms of the Subscription Agreement and the Operating Agreement. In the event of a conflict between this Letter and the Operating Agreement and/or the Subscription Agreement, the terms of this Letter shall control. All other terms as between the you and the Fund shall be governed by the Subscription Agreement and the Operating Agreement, as appropriate.
3. Anticipated Project cost $18,000,000.00
*This
space intentionally left blank; Letter concludes with signature page on the next page.*
**CM OB Hotel Owner, LLC\_Side Letter** **Pg. 1 of 1**
We
trust these additional terms as outlined in this Letter are agreeable to you. If so, please indicate your agreement with your signature
below. We look forward to a mutually beneficial partnership in this endeavor.
Sincerely,
Sameet Patel, on behalf of CM OB Hotel MGR, LLC
The
terms of this Letter are hereby acknowledged, understood, agreed to, and accepted as of the Effective Date by the undersigned, as a purchaser
of the Interests stated above:
By:
(Subscriber Name and, if applicable, Title of Signatory)
**CM OB Hotel Owner, LLC\_Side Letter** **Signature Page**
---
## EX-10.18
SEC source: [ex10-18.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex10-18.htm)
**Exhibit
10.18**
**COST
PLUS 5% CONSTRUCTION MANAGEMENT CONTRACT**
(STANDARD
FORM)
DATE: Aprill 28, 2025
NAME OF PROJECT: Courtyard by Marriot / Olive Branch
CONTRACT AMOUNT: See Section 5.1
OWNER: Onyx OB Hotel Owner LLC
OWNER’S REPRESENTATIVE: Samet Patel
Telephone No.: 954-594-6864 / 561-887-1082
Email Address: Sameet@onyxhospitality.com
OWNER’S ADDRESS:
PROJECT: Courtyard by Marriot / Olive Branch, Ms
SITE: Full Address: 8386 Camp Creek BVD, Olvie Branch MS 38654
CONTRACTOR: JFB Construction & Development, Inc.
A Florida Corporation
(STATE) (corporation, limited liability company, sole proprietorship, general partnership, etc.)
CONTRACTOR’S REPRESENTATIVE: Joe Basile
Telephone No.: 561.582.9840
Email Address : joe@jfbconstruction.net
CONTRACTOR’S LICENSE NO.: CGC 1522607 / MS
CONTRACTOR’S ADDRESS: 1300 S Dixie, Lantana, FL 33462
ARCHITECT:
ARCHITECT :
Email address.:
**CONSTRUCTION
CONTRACT**
STANDARD
FORM)
This
Construction Contract (this “Contract”) is made this 28th day of April 2025 (the “Effective Date”) by and between Onyx OB Hotel Owner LLC, a limited liability company (“Owner”) and JFB CONSTRUCTION & DEVELOPMENT, INC., a Florida
corporation licensed in Mississippi (“Contractor”). Each of Owner and Contractor is a “Party” and collectively,
the “Parties.” Notwithstanding the designation of parties hereof, Contractor acknowledges the Site may be owned by a third
party, as landlord of Owner (“Property Owner”).
**I.
PROJECT.** The “Project” is the total construction of which the Work (as defined herein) performed under this Contract
and the other Contract Documents (as defined herein) may be the whole or a part.
**II.
CONTRACT DOCUMENTS.** The “Contract Documents” consist of the following: (A) this Contract (including the cover page of
this Contract), (B) the Construction Plans (as defined herein), (C) all Exhibits and Addenda to this Contract, (D) any Change Orders
(as defined herein) executed after the Effective Date of this Contract, (E) any amendment to this Contract executed by Owner and Contractor
after the Effective Date of this Contract, and (F) Bid walk notes.
**III.** **WORK.**
**3.1. Scope of Work.** The “Work” is defined as the Construction Management of the remaining construction required by
the Contract Documents, and Construction Plans. Without limiting the foregoing, a general description of the Work is contained in the
Construction Plans and the Contract Documents.
**3.2 Construction Plans.** The “Construction Plans” will be provided to JFB Construction and will consist of the diagrammatic
and graphic drawings showing the design, location and dimensions of the Work, including plans, elevations, sections, details, schedules
and diagrams and the specifications of such drawings consisting of the written requirements for materials, equipment, construction systems,
standards and workmanship for the Work. The Construction Plans have been prepared by the project engineer or architect engaged by Owner.
Set forth on Exhibit A attached hereto is a description of the Construction Plans.
**IV.** **CONTRACT TIME.**
**4.1 Commencement Date and Completion.** The Work to be performed under this Contract shall be commenced upon the applicable Building
Permit for the Work being issued (the “Commencement Date”), the actual date to be confirmed by the notice to proceed from
Owner to Contractor. Contractor shall perform the Work at a rate of progress to achieve Substantial Completion and Turnover.
Page 1 of 17
**V.** **CONTRACT SUM.**
**5.1 Contract Sum.** Owner agrees to pay Contractor for completion of its Work the following sum**: Five percent (5.0%)** of the
“Cost of Construction” (the “Contract Sum”) including all costs associated with this project as well as general
conditions and overhead, subject only to additions and deductions by Change Order as specifically provided in this Contract or the other
Contract Documents. As used herein, the term “Cost of Construction” shall mean the actual cost to construct and complete
the Work, as may be modified by Change Orders including, without limitation, materials, supplies, labor costs, tools, equipment, management
and supervision costs, fees, transportation, and facilities furnished, used or consumed, Contractor’s
overhead and profit, permit costs and fees, inspection fees, tap and use fees, legal,
accounting, insurance and subcontractor costs.
**VI.** **CONTRACTOR’S DUTIES.**
**6.1 Inspection of Site.** Contractor has inspected the Site and is generally acquainted with the actual conditions thereof. Owner
represents and warrants to Contractor that, to its knowledge, there are no hazardous materials on, under or at the Site.
**6.2 Permits and Notices.** Contractor shall give notices pertaining to the Work to the proper authorities, if required, and to any
landlord or other entity required by Owner in writing and shall secure and invoice for reimbursement all necessary licenses, permits,
tap and use fees to perform and complete the Work. Contractor shall prepare and maintain at the Site, or as otherwise required, all plans
and other documentation in accordance with requirements of federal, state and local laws, regulations, statutes, ordinances, codes and
directives (“Laws”) as pertaining to stormwater discharges or potential pollution associated with construction activities
for pollution prevention programs (the “SWPPP Requirements” or “Storm Water Pollution Prevention Plan Requirement”),
including any SWPPP Requirements of Owner delivered to Contractor.
**6.3 Authorization.** Contractor represents and warrants that (A) its execution of this Contract and its performance is within its
duly authorized powers; (B) it is authorized to do business in the State in which the Project is located; and (C) it is properly licensed
by all necessary authorities.
**6.4 Taxes.** Contractor shall be responsible for informing itself of tax Laws, requirements, regulations and interpretations as
they apply to the Contractor. The Contract Sum includes all taxes applicable under tax Laws and which are applicable to the Work.
**6.5 Substitutions.** Materials are to be specified by reference standard, and/or by manufacturer’s name and model number or
trade name. Substitutions of materials or methods will only be considered if presented in writing to Owner for Owner’s prior approval,
which approval shall not be unreasonably withheld or delayed.
**6.6 Work.** Contractor shall perform the Work in substantial accordance with the Construction Plans and the Contract Documents.
Contractor shall coordinate all portions of the Work under the Contract, including any coordination required with utility companies for
new (non-preexisting) services brought to Site and other contractors performing work at the Project.
Page 2 of 17
**6.7 Providing the Means to Perform.** Contractor agrees to furnish at all times all workmen, labor, equipment and materials needed
for the Project and to perform and complete the Work. Contractor shall provide and pay for all labor, materials, and all facilities and
services necessary for the completion of the Work, whether temporary or permanent and whether or not incorporated or to be incorporated
in the Work. All manufactured articles, materials and equipment shall be installed and handled as directed by the manufacturer. Contractor
shall pay all royalties and license fees required for the Work which shall be included in the Cost of Construction.
**6.8 Shop Drawings.** Upon Owner Representative’s written request**,** Contractor shall furnish to Owner’s Representative,
shop drawings, manufacturer’s data, templates, schedules, reports or any other data that may be necessary for the Work including
distribution among other contractors.
**6.9 Correction and Protection of Work.** Contractor shall correct, repair or replace all damage or loss to any person, property,
materials or Work caused by Contractor or anyone for whose acts Contractor may be liable, except such portion of any damage or loss attributable
to the negligence, acts or omissions of Owner. Contractor shall use reasonable efforts to protect the Work and all labor, materials,
supplies, tools and equipment against any damage, injury, or destruction.
**6.10 Clean Project.** Upon completion of the Work**,** Contractor shall remove from the Site any accumulation of waste materials
or rubbish caused by its operations. Contractor shall maintain all areas in and around the Site in a clean condition as reasonably feasible;
provided, however, Owner recognizes that there shall be materials and rubbish on the Site during the course of construction.
**6.11 Required Testing.** If Owner, the Contract Documents or applicable Law requires any portion of the Work to be inspected, tested,
or approved, Contractor shall conduct or arrange for such inspection, test or approval at the appropriate time and shall give advance
written notice of the test inspection so that Owner may observe such inspection, testing or approval. Contractor shall provide copies
of all testing results to Owner. If any inspection or testing reveals a failure of the Work to conform to Contract Documents and Laws
caused by acts or omissions of Contractor, Contractor shall pay for all costs thereof and subsequent correction of the Work.
**6.12 Utilities.** Contractor shall exercise care in executing subsurface work in proximity of known subsurface utilities, improvements
and easements, and shall determine the location of unknown subsurface utilities, improvements and easements prior to commencing Work.
Before commencing any Work in areas which may involve existing utility lines, Contractor shall notify the utility company possibly affected
of the planned Work and instruct the utility company to mark or designate the location (and depth) of their lines, or temporarily move
the line(s).
**6.13 Coordination with Others.** Contractor shall be responsible for coordinating the Work to be performed hereunder with all other
contractors, suppliers, and others employed in connection with the Project, including any contractors or vendors of Owner, so that all
such work shall be completed in a timely fashion. In the event of any dispute, Contractor shall notify Owner of same.
Page 3 of 17
**VII.** **PAYMENT.**
**7.1 Payment Applications.** Contractor shall submit monthly applications to Owner showing all costs incurred by Contractor on account
of the Work performed to date. Each such application for payment (“Application”) shall identify the percentage of Work completed
during the application period and shall identify each subcontractor that performed any portion of the Work for which payment is requested
in such Application and shall be certified by Contractor. The following documentation shall be submitted by Contractor with each Application:
(A) Contractor’s executed waiver of lien for the portion of the Work in the current Application, contingent only upon receipt of
payment for the amount requested in the current Application, in the form attached hereto as Exhibit B-1; (B) Contractor’s unconditional
waiver of lien in the form attached hereto as Exhibit B-2 for the amount requested in the previous Application and paid by Owner; (C)
unconditional lien waivers from all subcontractors, suppliers and materialmen in the form attached hereto as Exhibit B-2 for all amounts
requested from the preceding Application; (D) executed waivers of lien from all subcontractors, suppliers and materialmen for the portion
of the Work in the current Application, contingent only upon receipt of payment for the amount requested in the current Application,
in the form attached hereto as Exhibit B-1 and (E) such additional documentation reasonably requested by Owner.
**7.2 Release of Liens.** Contractor shall satisfy and cause to be released all liens, recorded notices, claims for nonpayment or
lis pendens filed of record by its subcontractors, sub-subcontractors and material suppliers of any tier provided that the Owner shall
have disbursed funds to Contractor to pay such subcontractors, sub-subcontractors and material suppliers. This obligation shall survive
termination of this Contract or final completion of the Project.
**7.3 Periodic Payments to Contractor.** Owner will remit payment within twenty (20) days after receipt of the Application with all
required documentation. Owner may decline to approve any payment, in whole or in part, requested in an Application if Work has not been
performed in substantial accordance with the Contract Documents. When any deficient Work has been corrected, payment shall promptly be
made to Contractor for amounts withheld because of them. Subject to Section 5.1, Owner shall make payment for the amount of labor and
materials delivered and installed in the Project, less any previous payments. If payment is not made within five (5) days after the expiration
of the twenty (20) day period, the Contractor may exercise all rights and remedies under this Contract.
Page 4 of 17
**7.4 Conditions for Turnover.** “Turnover” is the last date on which both Substantial Completion (as defined herein)
is obtained and all of the requirements in Contract Documents are substantially completed and accepted by Owner. At such time as Contractor
considers that the Work is Substantially Complete, Owner and Architect shall promptly review the Work. Representatives of the Contractor
shall accompany Owner and Architect in making such review. Based upon review and upon the Contractor’s lists, Contractor, Owner
and Architect shall compile a list of items to be completed or corrected. Items which require correction or completion and which are
minor, non-material aspects of the Work, and which the completion, repair or correction of do not have a material, adverse effect or
prevent or unreasonably interfere with Owner’s ability to commence any and all of its pre-opening activities, including by way
of example, but not limitation: fixturing; stocking, training employees, and opening for business with the public, shall be defined as
“Punch List Work”. Work “in-progress” and/or materials “on order”, which are major or material aspects
of the Work shall not be considered Punch List Work; such matters constitute incomplete work. “Substantial Completion” or
the date the Work is “Substantially Complete” is the date certified by Owner’s Representative when all of the following
are satisfied: (A) the Work is substantially complete in accordance with the Contract Documents that Owner can occupy and utilize the
Project pursuant to a temporary certificate of occupancy / an unconditional and final certificate of occupancy, (B) all governmental
approvals required by Law have been obtained for each portion of the improvements in the Project, (C) if applicable, all conditions precedent
to or required for the release of any and all bonds have been achieved, including the written consent of any surety, and (D) the estimated
cost of all Punch List Work does not exceed five percent (5%) of the Contract Sum (the “Maximum Punch List Amount”).
**7.5 Final Payment.** Final payment, constituting the entire unpaid balance of the Contract Sum, shall be paid by Owner to Contractor
when the Work has been completed, and the Contract fully performed, including resolution of all Punch List items. Contractor shall provide
to Owner all documents (including, but not limited to, Owner having been furnished and accepted within thirty (30) days following Substantial
Completion a set of final As-Built Drawings) and final unconditional lien waivers and supporting documentation, together with any other
documentation requested by Owner from Contractor and all subcontractors, suppliers and materialmen for the entire Work and Project if
required by the terms of this Contract. Contractor shall submit its request for final payment within ten (10) days after satisfactory
completion and final acceptance of the Work by the Owner. Final payment shall be paid no later than 20 days after the closeout package
has been received by Owner. If payment is not made within five (5) days after the expiration of the twenty (20) day period, the Contractor
may exercise all rights and remedies under this Contract.
**7.6 No Waiver by Owner.** The making of any payment, including final payment, shall not constitute a waiver of any claims by Owner
under the terms of any warranties.
**VIII.
CHANGE ORDERS.** Contractor may be directed in writing by Owner to make changes in the Work. Claims for extra or changed work will
be allowed only upon prior written authorization of a change order (“Change Order”) signed by Owner or Owner’s Representative
and by Contractor. Changes will be made on an agreed upon lump sum or based upon daily work sheets showing a breakdown of the cost of
materials, labor rates and the hours worked, all as approved in writing by Owner or Owner’s Representative which approval shall
not be unreasonably withheld or delayed. All Change Orders shall be performed under applicable conditions of the Contract Documents.
The Change Order shall not be implemented until the parties agree on the adjustments to Contract Sum and, if applicable, the Contract
time. In the event that any additional work is desired by the Owner and it is so indicated in writing, other than that as above described
or indicated on the Drawings and Specifications, the cost of same shall be determined either by: (1) itemized estimate and acceptance
or (2) on a time and material basis with cost limited to actual cost of labor, materials, insurance and taxes plus 10% for combined overhead
and profit on work performed by the Contractor’s own labor. On work performed by subcontractor labor, the Contractor’s percentage
markup for combined overhead and profit shall be 5%. A Change Order shall include any necessary extension of time for completion.
Page 5 of 17
**IX.
SUBCONTRACTORS..** Prior to commencement of the Work, Contractor shall received a list of contractors that is currently on site and
those that will be hired. If requested by Owner, Contractor shall furnish copies of any or all material subcontracts bearing the signatures
of the parties thereto. Each subcontract shall contain an “assignment of contract” provision, which allows for assignment
to Owner of such subcontract, if requested in writing by Owner and upon default hereunder by Contractor not cured within any grace period.
All subcontractors shall be experienced and capable of performing all duties delegated to them. In the event any lien or other similar
document pertaining to a subcontractor’s lien is filed or delivered by a subcontractor pertaining to the Work or Project, Contractor
shall within 15 days of such lien, notice of intent or claim of lien, either, at the election of Owner, pay in full all amounts claimed
by the subcontractor (provided that the Owner has provided sufficient funds therefor) and secure a full release from such subcontractor
of such lien, or, if allowed by statute in the jurisdiction of the Site, obtain a surety bond or other payment security that has the
legal effect of staying all rights of the subcontractor to foreclose, obtain a judgment or otherwise execute on such lien and Contractor
shall thereafter obtain a full release of such lien reasonably satisfactory to Owner.
**X.** **INSURANCE.**
**10.1 Contractor’s Insurance.** Prior to starting any Work, Contractor, at its expense, shall obtain and maintain in force,
on all operations, insurance in accordance with the requirements listed below. The policies of insurance shall be in such form and shall
be issued by such company licensed to do business in the State in which the Project is located and reasonably satisfactory to Owner.
Certificates of insurance and duly executed endorsements to policies shall be delivered to Owner prior to commencement of the Work.
**10.2 Insurance Requirements.** The insurance required by Contractor shall be written for not less than the following limits, or greater
if required by Law:
(A) *Worker’s Compensation*:
i. Applicable State Statutory Limit
ii. Employer’s Liability: $1,000,000 per Accident
(B) *Commercial General Liability* (Including Premises-Operations; Independent Vendor’s Protective; Products and Completed Operation
for at least 2 years after final payment; Broad Form Property Damage and Indemnification obligations of Contractor):
i. Bodily Injury and Property Damage: $1,000,000 Combined Single Limit (CSL) Each Occurrence; Minimum $2,000,000 Aggregate or Per Project Endorsement
ii. Liability Insurance shall include all major divisions of coverage and be on a comprehensive basis.
(C) *Contractual Liability*:
i. Same coverage as (B)i. above; such insurance must cover all claims for contractual obligations of Contractor under the Contract Documents, including Contractor’s obligations for indemnification under **Article XI** herein.
(D) *Business Auto Liability* (including owned, non-owned and hired vehicles):
i Bodily Injury and Property Damage: Minimum $2,000,000 Aggregate or Per Project Endorsement
Owner
shall be responsible to obtain from an insurance company lawfully authorized to do business in the state where the Project is located,
property insurance written on a builder’s risk, “all risks” completed value sufficient to cover the total values of
the entire Project on a replacement cost basis.
Page 6 of 17
**10.3 Policies.** Each policy of commercial general liability insurance must be endorsed to:
(B)
Name Owner and the Property Owner as Additional Insureds using Insurance Services Office (“ISO”) Forms (CG 20 10 10 01) and
(CG 20 37 10 01).
(C)
Stipulate that such insurance is primary and is not additional to, or contributing with, any other insurance carried by or for the benefit
of any of the Additional Insureds.
(D) Waive any and all right of subrogation against any of the Additional Insureds.
(E) Contain cross liability or severability endorsement.
**10.4 Subrogation.** Notwithstanding anything to the contrary contained herein, neither Owner nor Contractor shall be liable to the
other Party or any insurer or other person or entity claiming by or through such Party if any property is damaged or destroyed or there
is any bodily injury or death as a result of any peril required to be insured by such Party hereunder or otherwise insured by such party,
whether or not the damage, destruction, bodily injury, death or property damage was caused by the negligence of such Party. All policies
of insurance shall contain a provision providing: (A) that the insurer waives its right of subrogation against the other Party hereto
with respect to the insured damage, destruction, bodily injury, death or property damage amount, and (B) that the waiver by the insurer
of its right of subrogation shall not affect the right of the insured to recover under any insurance policies, provided, however, that
if such waiver is not available to Contractor, Contractor shall give notice to Owner prior to commencing the Work.
**XI.** **INDEMNITY.**
**11.1 Indemnification by Contractor.** To the fullest extent permitted by Law, Contractor shall indemnify and hold harmless Owner,
Owner’s parent companies and their subsidiaries, Architect, if any, and their agents, employees, officers and attorneys (the “Indemnified
Parties”) from and against any and all claims, damages, losses, liabilities or expenses of any kind (including, without limitation,
reasonable legal fees and expenses in connection with any investigative, administrative or judicial proceeding, whether or not designated
a party thereto) which may be suffered by, incurred by or threatened against an Indemnified Party on account of, in connection with,
or resulting from (A) the performance or nonperformance of the Work; (B) Contractor’s default under this Contract or the Contract
Documents which is not cured within any applicable grace period; (C) the act, omission, negligence or willful misconduct of Contractor
or anyone employed by Contractor or for whose acts or omissions Contractor is liable; (D) any assertion of claims for mechanics’
or other liens or any security interest for which Contractor is responsible; (E) any injury, illness or death of any employee or subcontractor
of Contractor engaged or participating in the performance of the Work; (F) any infringement of any patent, copyright or trade secret
in performing the Work; (G) any injury, illness or death or property damage arising from the Work; or (H) any failure of the Work to
comply with Laws. The obligations of Contractor under this indemnification shall apply to all matters except those arising solely from
the negligence or the acts or omissions of Owner.
**11.2 Defense of Claims.** Contractor shall promptly advise Owner in writing of any action, administrative or legal proceeding or
investigation as to which Contractor’s indemnification may apply, and Contractor, at Contractor’s expense, provided that
the indemnification applies, shall assume on behalf of Owner and conduct with due diligence and in good faith the defense thereof with
counsel reasonably satisfactory to Owner; provided, that if the defendants in any such action include both Contractor and Owner and Owner
shall have reasonably concluded that there may be legal defenses available to it which are different from or additional to, or inconsistent
with, those available to Contractor, Owner shall have the right to select separate counsel to participate in the defense of such action
on its own behalf at Contractor’s expense.
**XII.
COMPLIANCE WITH LAWS AND SAFETY.** All Work to be furnished by Contractor must comply with all applicable Laws now in force or hereafter
in effect. Without limiting the foregoing, Contractor is responsible for all OSHA compliance. Contractor shall comply in all material
respects with all applicable safety Laws established during the progress of the Work.
**XIII.** **WARRANTIES.**
**13.1 Warranty by Contractor.** Contractor represents and warrants that all Work, materials and services furnished pursuant to the
Contract are and shall be free from liens, claims, security interests, encumbrance, and defects, in conformity with the Contract Documents
and are of merchantable quality and new. Contractor further represents and warrants that all Work shall be substantially in accordance
with the requirements of the Contract Documents and applicable Laws. All Work not conforming to the foregoing shall be considered defective.
If within one (1) year after the date of Substantial Completion, any Work is found not to be in accordance with the Contract Documents,
the Owner shall notify Contractor of any deficiency with specificity prior to the expiration of the one (1) year period, and it shall
be corrected by the Contractor after receipt of written notice from the Owner. Contractor shall have no obligation to perform any warranty
work should Owner not notify the Contractor of any deficiencies within the one (1) year period. Subject to the one (1) year warranty,
neither the final payment nor any provision of the Contract Documents nor partial or entire occupancy of the Project by the Owner shall
relieve the Contractor of liability under either any warranties or Contractor’s responsibility for faulty materials or workmanship.
Contractor’s warranty described in this Section shall continue for a longer period if specified in the Contract Documents for special
warranties. The foregoing specific warranties are in addition to warranties furnished by all manufacturers and suppliers to Contractor
which shall be assigned to, and enforced by, Owner. Notwithstanding the foregoing, in no event shall the Contractor be required to correct
any deficiencies caused by the misuse, negligence, acts or omissions of Owner, its employees, agents, invitees or contractors.
Page 7 of 17
**13.2 Correction of Work Damaged by Contractor.** Subject to the one (1) year warranty**,** Contractor shall promptly remedy all
damage or loss to any person, property, materials or Work caused in whole or in part by Contractor or anyone for whose acts Contractor
may be liable, except such portion of any damage or loss solely attributable or arising solely from the negligence or the acts or omissions
of Owner.
**XIV.** **PERFORMANCE.**
**14.1 Contractor Default.** In the event of a default by Contractor in the performance of its obligations hereunder which is not cured
within fifteen (15) days after written notice from Owner to Contractor, Owner shall be entitled to all rights and remedies specified
for such default as set forth below; should the default be incapable of being cured within fifteen (15) days, the cure period shall be
extended for such time period as necessary to cure the default provided that the Contractor commences the cure of the default within
the fifteen (15) day period. No rights or remedies of Owner shall be in the alternative or exclusive, and all such rights and remedies
shall be cumulative with each other and with those available at law or equity or both.
**14.2 Correction of Work.** The existence of any defective Work or breach of Contractor’s warranty shall be a default subject
to the notice and cure period specified in Section 14.1. Contractor shall correct any such Work which is defective or fails to conform
to the Contract Documents whether observed before or after Substantial Completion or final completion and whether or not fabricated,
installed or completed, and Contractor shall bear all costs of correcting such defective or rejected Work including costs incidental
thereto, subject to the one (1) year warranty. Contractor shall remove from the Site all portions of the Work which are defective or
nonconforming and which have not been corrected unless removal is waived in writing by Owner.
**14.3 Curing By Owner.** If Contractor fails to cure the default within the period specified in Section 14.1, Owner may, without further
notice to Contractor: (A) take any action Owner deems necessary to make good such deficiencies; (B) order the Work stopped; (C) remove
the non- conforming Work at Contractor’s expense; or (D) terminate this Contract. In such case, an appropriate Change Order shall
be issued deducting from the payments then or thereafter due Contractor the actual cost of correcting such deficiencies, including materials,
equipment or supplies and other services made necessary by such default, neglect or failure. If the payments then or thereafter due Contractor
are not sufficient to cover such amount, Contractor shall pay the difference to Owner within ten (10) days of Owner’s written demand.
Nothing contained herein shall, however, require Owner to take such action as herein provided or shall waive or release Contractor from
any of its obligations.
**14.4 Bankruptcy.** If Contractor is adjudged a bankrupt, or if it makes a general assignment for the benefit of its creditors, or
if a receiver is appointed on account of its insolvency, or (B) if Contractor refuses or fails to supply enough properly skilled workmen
or proper materials, Owner may elect to terminate this Contract.
Page 8 of 17
**14.5 Termination,** Should Owner terminate this Contract in accordance with the foregoing provisions, upon such termination, Owner
may take possession of the Site and of all materials, equipment, tools, and construction equipment and machinery thereon owned by Contractor
and may finish the Work. The provisions of Section 14.5 shall not be modified by the terms of any bond. Upon a termination under this
Contract, Owner shall pay Contractor for all Work performed in accordance with the Contract Documents as of the date of termination,
to be paid after completion of the Work and subject to the remainder of this Section. If the amount incurred by Owner to finish the Work
without using Contractor, plus all reasonable related costs thereto incurred by Owner, (collectively, “Owner’s Costs”)
exceed the Contract Sum, Contractor shall pay the difference to Owner within fifteen (15) days after Owner’s written demand.
**14.6 Owner Defaults.** In the event of a default by Owner under the Contract Documents which is not cured within ten (10) days after
written notice from Contractor to Owner, Contractor shall be entitled, in addition to all other rights and remedies, to the following
rights. If Owner defaults hereunder or does not pay any payments to Contractor when and as required under the Contract, then Contractor
may stop the Work until payment of the amount owing has been received. Owner shall grant a reasonable adjustment to the construction
schedule and Contract Sum following Contractor’s stopping the Work pursuant to this Section. If payment is not received by Contractor
within fifteen (15) days of such Work stoppage, then Contractor shall have the right to terminate this Contract. If Contractor terminates
the Contract, Contractor may recover from Owner the sum of: (A) payment for all Work performed including profit earned and that which
would be earned if no default had occurred, for any loss sustained upon any materials, equipment, tools, and construction equipment and
machinery (provided that the amount in Subsection (A) shall not exceed the Contract Sum less a reasonable estimate of the cost to complete
the Work), minus(B) the portion of the Contract Sum previously paid.
**14.7 Owner’s Right to Suspend Work.** Owner may, with or without cause and in its sole discretion, order Contractor in writing
to suspend, delay or interrupt the Work in whole or in part for a period not to exceed fifteen (15) days. Nothing in this provision shall
give Contractor any right to a termination or to an adjustment in Contract Sum, provided that the construction schedule shall be equitably
adjusted.
**XV** **DISPUTE RESOLUTION**
**15.1 Application of Resolution Provisions.** The mediation and arbitration provisions of this Contract set forth below shall apply
to disputes between Owner and Contractor related to or arising out of this Contract or any Contract Documents.
**15.2 Mediation and Arbitration.** Any controversy, claim, or dispute of whatever nature arising between the Parties, including any
issues of arbitrability (a “Dispute”) shall be resolved by mediation or, failing mediation, by binding arbitration. This
agreement to mediate and, if necessary, arbitrate shall continue in full force and effect despite the expiration, rescission, or termination
of this Contract.
Either
Party may begin the mediation process by giving a written notice to the other Party setting forth the nature of the Dispute. The Parties
shall attempt in good faith to resolve the Dispute by mediation within 30 days of receipt of that notice. If the Dispute has not been
resolved by mediation as provided above, or if a Party fails to participate in a mediation, then the Dispute shall be resolved by binding
arbitration in the City and State where the Site is situated. The arbitration shall be undertaken pursuant to the substantive laws of
the State where the Site is situated and the Federal Arbitration Act, and the decision of the arbitrator(s) shall be enforceable in any
court of competent jurisdiction. The Parties knowingly and voluntarily waive their rights to have their dispute tried and adjudicated
by a judge or jury.
Page 9 of 17
Any
Party may demand arbitration as provided above by sending written notice to the other Party. The arbitration and the selection of the
arbitrator(s) shall be conducted in accordance with such rules as may be agreed upon by the parties, or, failing agreement within thirty
(30) days after arbitration is demanded, under the Commercial Arbitration Rules of the American Arbitration Association, as such rules
may be modified by this Agreement. In any Dispute that involves more than one million dollars in damages, three arbitrators shall be
used; the decision of a majority of the arbitrators shall be binding on the Parties. Unless the Parties agree otherwise, they shall be
limited in their discovery to directly relevant documents. The arbitrator(s) shall resolve any discovery disputes.
The
arbitrator(s) shall have the authority to award actual money damages (with interest on unpaid amounts from the date due), specific performance,
and temporary injunctive relief, but the arbitrator(s) shall not have the authority to award exemplary or punitive damages, and the Parties
expressly waive any claimed right to receive money damages in excess of its actual compensatory damages. The costs of arbitration, but
not the costs and expenses of the parties, shall be shared equally by the Parties. If a Party fails to proceed with arbitration, unsuccessfully
challenges the arbitration award, or fails to comply with the arbitration award, the other Party is entitled to costs, including reasonable
attorneys’ fees, for having to compel arbitration or defend or enforce the award. Except as otherwise required by law, the Parties
agree to maintain as confidential all information or documents obtained during the arbitration process, including the resolution of the
Dispute.
Notwithstanding
the above, the Parties recognize that certain business relationships could give rise to the need for one or more of the Parties to seek
emergency, provisional, or summary relief to repossess and sell or otherwise dispose of goods and/or fixtures, to prevent the sale or
transfer of goods and/or fixtures, or to protect real or personal property from injury, and for injunctive relief. Immediately following
the issuance of any such relief, the Parties agree to the stay of any judicial proceedings pending mediation or arbitration of all underlying
Disputes.
The
agreement to arbitrate shall continue in full force and effect despite the expiration, rescission or termination of this Contract.
The
award rendered by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable Law
in any court having jurisdiction thereof.
**XVI** **OTHER PROVISIONS.**
**16.1 Entire Agreement.** It is understood and agreed by the parties hereto that this Contract together with the Contract Documents
incorporates and constitutes the full, final and complete understanding of the parties hereto. No discussions concerning the drafting
hereof or prior drafts of this Contract shall be admissible as evidence of the intent of the parties to this Contract. This Contract
may not be modified or altered except by the express written consent of the parties hereto. Both parties participated significantly in
the mutual drafting of this Contract, and in the event of any ambiguity in the meaning of any provision, it shall be construed fairly,
and neither for nor against either Party as drafter. The intent of the Contract Documents is to include all items necessary for the proper
execution and completion of the Work. Except as otherwise provided in the Contract, the Contract Documents are intended to be, and shall
be read and construed as if they are, complementary, and Work required by any one shall be as binding as if required by all.
Page 10 of 17
**16.2 Assignment.** It is the intent of Owner to employ the specific skills, talents and abilities of Contractor and its principals
for the purpose of effecting the completion of the Project. Contractor shall not assign its interest in the Contract or any Contract
Document or transfer any of its obligations under the Contract or any Contract Documents, except that the Contractor shall be entitled
to retain subcontractors to perform the Work. It is expressly understood that any voluntary or involuntary filing of bankruptcy or preference,
or assignment for the benefit of creditors shall be considered a transfer hereunder and shall also be considered a default under this
Contract.
**16.3 Notices.** All notices shall be deemed to have been duly served if delivered in person to an officer of the corporation for
whom it was intended, or if delivered at or sent by registered or certified mail, return receipt requested, or by overnight delivery
or by email to the following address or at such other address or to such other Party which any Party entitled to receive notice hereunder
designates to the others in writing.
(A) If intended for Contractor, to:
1300
S Dixie Highway
Lantana,
FL 33462
Attn:
Joseph Basile
Email:
joe@jfbconstruction.net
(B) If intended for Owner, to:
3340
SE Federal Hwy #286
Stuart,
FL 34997
Attn:
Todd Marshall / Greg Babij
Email:
todd@autoclubhouse.com
**16.4 No Waivers.** Nothing herein contained shall be construed to limit: (A) any legal, equitable or administrative rights or remedies
(including but not limited to procedures, options or waivers incidental to effecting those rights or remedies) available to the parties
hereto under applicable Law for the purpose of enforcing the terms, provisions and conditions of this Contract; or (B) the manner or
order in which such remedies are effected; or (C) the election of remedies available to the parties whether under, by virtue of or through
this Contract or by virtue of applicable Law. No action or failure to act by Owner or Contractor shall constitute a waiver of a right
of duty afforded them under this Contract, nor shall such action or failure to act constitute approval of or acquiescence to a breach
hereunder, except as may be specifically agreed in writing.
**16.5 Force Majeure.** Owner and Contractor shall each be excused for the period of any delay in the performance of any obligations
hereunder when prevented from doing so by a cause or causes beyond such party’s reasonable control which shall include, without
limitation, all labor disputes, riots, civil commotion, war, pandemics, war-like operations, acts of terrorism, invasion, rebellion,
hostilities, military or usurped power, sabotage, governmental regulations or controls, fire or other casualty, or through acts of God
(collectively herein called “Force Majeure”); provided, however, that no act of Force Majeure shall excuse or delay any payments
due from Owner to Contractor.
Page 11 of 17
**16.6 Severability.** In the event any terms or provisions of the Contract Documents are determined by a final decree of a court of
competent jurisdiction to be illegal, invalid or unenforceable; the illegality, invalidity or unenforceability of such provisions shall
not in any manner affect the force and effect, or the validity of any of the remaining provisions of the Contract Documents.
**16.7 Successors and Assigns.** Owner and Contractor respectively bind themselves, their successors, permitted assigns and legal representatives
to the other Party hereto and to successors, assigns and legal representatives of such other Party in respect to covenants, agreements
and obligations contained in the Contract Documents. Contractor may not assign the Contract or any of its rights or obligations under
the Contract including payments without the advance written consent of Owner, except, however, as identified in this Contract, Contractor
may delegate certain elements of the Work to its subcontractors, subject to the provisions of this Contract. If Contractor attempts to
make such an assignment without such consent, Contractor shall nevertheless remain legally liable and responsible for all obligations
under the Contract. Owner may assign its rights and obligations hereunder to its lender, if any, or to any other person or entity and
Contractor agrees to enter into an agreement with such lender, person or entity pursuant to which, at such lender’s, person’s
or entity’s request, Contractor will complete the Work upon appropriate provision for payment of the balance of the Contract Sum.
Any such entity which shall succeed to the rights of Owner shall be entitled to enforce its rights hereunder and shall also be bound
to perform Owner’s obligations hereunder.
**16.8 Survival.** The provisions of this Contract, which by their nature survive final acceptance of the Work, shall remain in full
force and effect after such termination to the extent provided in such provisions.
**16.9 Attorneys’ and Other Fees.** Should any Party institute any action or proceeding or arbitration to enforce or interpret
this Contract or any provision hereof, for damages by reason of any alleged breach of this Contract or of any provision hereof, or for
a declaration of rights hereunder, the prevailing party in any such action or proceeding as determined by the arbitrators shall be entitled
to receive from the other Party all attorneys’ and other fees, incurred by the prevailing party in connection with such action
or proceeding. If any Party files for protection under, or voluntarily or involuntarily becomes subject to, any chapter of the United
States Bankruptcy Code or similar state insolvency Laws, the other Party shall be entitled to any and all attorneys’ and other
fees incurred to protect such Party’s interest and other rights under this Contract, whether or not such action results in a discharge.
The term “attorney’s and other fees” shall mean and include actual attorneys’ fees (whether by retainer, salary
or otherwise), accountants’ fees, expert witness fees, and any and all other similar fees, costs and expenses incurred in connection
with the action or proceeding and preparations therefor (which actual fees may be in excess of what a court would determine to be reasonable,
had such issue been presented to the court). The term “action or proceeding” shall mean and include actions, proceeds, suits,
arbitrations, appeals and other similar proceedings and other non-judicial dispute resolution mechanisms.
**16.10 Applicable Law.** This Contract shall be governed by and interpreted in accordance with the law of the State in which the Project
is located.
**16.11 Exhibits.** Each exhibit attached to and referred to in this Contract is hereby incorporated by reference as though set forth
in full here referred to herein.
**16.12 Contractor’s Relationship with Property Owner.** Contractor acknowledges that the scope of work performed under this Agreement
is for the benefit of Owner. Contractor warrants and represents that it shall not perform any work on behalf of Property Owner at the
Site without the written authorization and consent of Owner. Owner agrees to promptly grant said written consent upon receipt of (A)
adequate proof that Contractor and Property Owner have entered into their own, separate, written agreement or contract; and (B) a written
statement from Contractor acknowledging that all work to be performed by Contractor on behalf of Property Owner shall be performed pursuant
to a written agreement between Contractor and Property Owner, that said work and agreement are separate and apart from this Agreement,
and that said work shall be performed at the sole direction of Property Owner, independent of Owner.
**[Remainder
of page intentionally left blank.]**
Page 12 of 17
IN
WITNESS WHEREOF, the parties have caused this Contract to be executed as of the Effective Date.
THIS
CONTRACT CONTAINS A BINDING ARBITRATION CLAUSE, WHICH MAY BE ENFORCED BY THE PARTIES.
**CONTRACTOR:** **OWNER:**
JFB CONSTRUCTION & DEVELOPMENT, INC., a Florida corporation Onyx OB Hotel Owner LLC
By: By:
Name: Joseph Basile Name:
Title: President Title:
Page 13 of 17
**EXHIBIT
A**
**List
of Construction Plans**
TBD
EXHIBIT A-1
Page 14 of 17
**EXHIBIT
B-1**
**Partial
or Conditional Lien Waiver Form**
STATE
OF ____ )
)
SS.
COUNTY OF ______ )
**PARTIAL
WAIVER OF MECHANICS’ OR**
**SUBCONTRACTORS’
OR MATERIALMANS’ LIEN**
**Owner:**
**Claimant:_________** (*insert name of contractor*)
**Project: _________** (*insert property address)*
1. Contract: On _____ (*date of construction contract*), I, ________ (*name of contractor*), entered into an agreement
with ________ (*name of other party to contract; e.g. owner, original contractor, sub-contractor, etc.*) to furnish labor and/or
materials (which materials may include specially fabricated or manufactured materials) for the construction, improvement, or repair of
a building on property at the above-referenced address, which property is more particularly described on the attached Exhibit A.
2. Conditional Waiver – Current Payment Application: Upon receipt of $________ *[NOTE: ENTER AMOUNT OF CURRENT PAYMENT]* and
other good and valuable consideration, Claimant hereby waives and releases any mechanic’s or materialman’s lien, or claim
or right of such lien, on the described premises and on improvements now or hereafter located thereon and which now exist or might otherwise
arise because of the labor or materials furnished (including specially manufactured or fabricated materials) or to be furnished by the
undersigned pursuant to the agreement described above.
3. Unconditional Waiver – Prior Payment Application(s): Claimant acknowledges receipt of $ _______ *[NOTE: ENTER TOTAL OF ALL PREVIOUS PAYMENTS]* and other good and valuable consideration, as a previous progress payment(s) for labor or materials furnished (including specially manufactured or fabricated materials) through __ *[NOTE: ENTER DATE OF LAST CONDITIONAL WAIVER]* by the undersigned pursuant to the agreement described above. Claimant hereby waives and releases any mechanic’s or materialman’s lien, or claim or right of such lien, on the described premises and on improvements now or hereafter located thereon and which now exist or might otherwise arise because of the labor or materials furnished (including specially manufactured or fabricated materials) by the undersigned pursuant to the agreement described through _______ *[NOTE: ENTER DATE OF LAST CONDITIONAL WAIVER]*.
4.
Exception: This waiver and release does not cover retention held, labor, materials, equipment or other services furnished after ___ (*insert
date*).
EXHIBIT B-1
Page 15 of 17
I
have executed this waiver voluntarily and with full knowledge of my rights under the laws of the jurisdiction where the Project is located.
By:
Executed on Name:
Title:
Subscribed
and sworn to before me this ____ day of ____, 20 .
My
Commission Expires: Notary Public
EXHIBIT B-1
Page 16 of 17
**EXHIBIT
B-2**
**Final
and Unconditional Lien Waiver Form**
STATE OF _______ ) Title:
)
SS. COUNTY OF _____ )
**FINAL
UNCONDITIONAL LIEN WAIVER**
**Owner:**
**Claimant:
__________** (*insert name of contractor*)
**Project:
__________** (*insert property address)*
(hereinafter “Claimant”) has been employed or contracted to furnish labor and/or materials for the real property and improvements
at the above-referenced address as more fully described on the attached Exhibit A (hereinafter referred to as the “Property”).
In
consideration of $ and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Claimant
hereby FINALLY, UNCONDITIONALLY, AND COMPLETELY WAIVES AND RELEASES any and all mechanic’s or other liens or claims or rights to
liens on the Property, or any other claims for the labor and/or materials furnished (including any and all specially manufactured materials)
for the for, to, or for the benefit of, the Property, at any time – past, present, or future. This waiver includes all lien rights
Claimant may have, if any, for or related to retainage. Claimant acknowledges and agrees that the Owner or the Owner’s agent has
relied, and has a right to rely, on this Final Lien Waiver in disbursing funds, and that the Owner has materially altered its position
in reliance on this Final Lien Waiver in disbursing funds. This Lien Waiver is FINAL upon the Claimant’s signature below. By signing
this FINAL LIEN WAIVER, Claimant acknowledges and agrees that it shall not file any claim, or file a lien, notice of intent to file a
lien, or file a petition to enforce a lien or other claim against the Owner or the Property for any work Claimant performed or shall
perform on this Project – past, present, or future. If Claimant does so in violation of this provision, Claimant shall pay all
damages incurred by the Owner of the Property, including the Owner’s attorney fees, costs, and expenses, regardless of who prevails
in the claim or litigation.
Executed
on___.
Subscribed
and sworn to before me this _____ day of__, 20__ .
My
Commission Expires: Notary Public
EXHIBIT B-2
Page 17 of 17
---
## EX-10.19
SEC source: [ex10-19.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex10-19.htm)
**Exhibit
10.19**
**EXECUTIVE
EMPLOYMENT AGREEMENT**
**THIS
EXECUTIVE EMPLOYMENT AGREEMENT** (this “**Agreement**”) is made and is effective as of January 1, 2026 (“**Effective
Date**”), and entered into by and between JFB Construction Holdings, a Nevada corporation (the “**Company**”),
and Bill Dyer, an individual (the “**Executive**”), each a “**Party**,” or, collectively, the “**Parties**.”
**WHEREAS**,
the Company wishes to employ Executive on the terms set forth in this Agreement; and
**WHEREAS**,
Executive wishes to become employed on the terms set forth herein;
**NOW,
THEREFORE,** in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency
of which are acknowledged, the Parties agree as follows:
**1. Employment Term.**
**a) Employment Term.** Executive’s employment is at-will, meaning that either party may terminate the employment at any time
for any reason or no reason. Nothing in this Agreement is intended to create a promise or representation of continued employment or employment
for a fixed period of time. The period of time between the Effective Date and the termination of the Executive’s employment shall
be referred as the “**Term**.”
**2. Position and Duties.**
**a) Title.** The Company hereby agrees to employ the Executive to serve as Chief Operating Officer (“COO”) of the Company.
**b) Duties.** Executive shall report to the Board of Directors. Executive shall perform all duties and have all powers incident
to the COO position and have overall supervision of the operations of the Company. During the Term, the Executive shall be employed by
the Company on a full-time basis and shall perform such duties and responsibilities on behalf of the Company and all persons and entities
directly or indirectly controlling, controlled by, or under common control with, the Company. Executive’s duties shall include
setting strategic direction, making decisions on corporate level issues, overseeing operations, financial stewardship, and representing
the company externally. Executive shall perform such other duties and may exercise such other powers as may be assigned by Board of Directors
from time to time.
**c) Board Service.** If the Company’s Shareholders nominate Executive serve on the Board or the board of director, any Company
affiliate or subsidiary, Executive agrees, for no additional compensation, to serve on the Board or such boards of directors. Upon the
end of the Term for any reason, Executive agrees to immediately resign from the Board and from all other board positions and offices
Executive holds with the Company or with any Company parent, subsidiary or affiliate.
**d) Full-Time Commitment/Policies.** Throughout the Executive’s employment, the Executive shall devote substantially all of
his professional time to the performance of his duties of employment with the Company (except as otherwise provided herein) and shall
faithfully and industriously perform such duties. The Executive will be required to comply with all Company policies as may exist and
be in effect from time to time.
**e) Executive Representations.** The Executive represents and warrants to the Company that he is under no obligation or commitments,
whether contractual or otherwise, that are inconsistent with his obligations under this Agreement. The Executive represents and warrants
that he will not use or disclose, in connection with his employment by the Company, any trade secrets or proprietary information or intellectual
property in which any other person or entity has any right, title or interest and that his employment by the Company as contemplated
by this Agreement will not infringe or violate the rights of any other person.
**3. Compensation and Benefits.**
**a) Base Salary/Deferral of Payment.** In consideration for his work under the terms of this Agreement, the Executive shall earn
a base salary in the gross amount of $275,000 USD (Two Hundred Seventy Five Thousand Dollars) per year (“**Base Salary**”).
Executive’s Base Salary shall be paid in equal installments on the last day of each calendar month of the Term, or more frequently,
in accordance with the regular payroll practices of the Company. If the Term ends other than on the last day of a month the last salary
payment shall be pro-rated based on the number of days in the month that have passed as of the date of termination.
**b) Equity Grant.** Executive’s total compensation shall include a grant of stock options for the Company’s Class A
Common Stock (the “Stock”) under the terms of the equity incentive plan the Company adopted (the “Plan”) and
any award agreement the Plan requires, attached here as Addendum A.
**c) Annual
Cash Bonus.** The Executive’s eligibility for any annual or special bonus shall be determined at a later date, at
the sole discretion of the Board of Directors. The amount, timing, and conditions of any such bonus shall be established by the Board,
and no entitlement to a bonus shall be implied unless and until formally approved by the Board.
**d) Benefits and Perquisites.** Executive shall be eligible for any fringe benefits offered by the Company on at least the same
terms and conditions as other executives. Such benefits may include group health benefits, dental and vision benefits, 401k retirement
plan, disability insurance benefits, life insurance benefits, and director and officer insurance benefits. The Company reserves the right,
in its sole discretion, to amend or terminate any employee benefit plan in accordance with applicable law.
**e) Paid Time Off.** Executive shall be entitled to fifteen (15) days’ paid vacation and five (3) paid sick days in accordance
with the Company’s policies. Executive may not take more than two consecutive weeks of vacation without written permission of the
Chief Executive Officer. Executive shall also be entitled to paid time off on holidays recognized by the Company. The Company shall not
pay Executive for accrued and unused vacation or sick days when Executive’s employment terminates for any reason, unless required
by law.
**f) Board Service Compensation.** Executive shall not be entitled to receive additional compensation for service on the Board or
on the board of directors of any parent, subsidiary, or affiliate of the Company.
**g) Taxes-Withholdings.** All compensation paid or provided under this Agreement shall be subject to such deductions and withholdings
for taxes and such other amounts as are required by law or elected by the Executive.
**4. Business Expenses.** Upon presentation of reasonable substantiation and documentation as the Company may specify from time to
time, the Executive shall be reimbursed in accordance with the Company’s expense reimbursement policy, for all reasonable out-of-pocket
business expenses incurred and paid by the Executive during the Term and in connection with the performance of the Executive’s
duties hereunder. If the Executive is provided with the use of the Company’s credit or charge card for purposes of business expenses,
such credit or charge card shall not be used to incur any personal (non-business-related) expenses; any personal expenses inadvertently
charged to such card shall be reimbursed immediately by the Executive to the Company.
**5. Termination of Employment.** A party may terminate Executive’s employment by giving written notice of such termination
in accordance with the notice provisions of this Agreement. Termination will become effective upon a party’s receipt of notice
of termination.
a.) **Severance**, In the event Executive’s employment with the Company is terminated for termination without cause, or change
of control, the Company shall pay to the Executive severance compensation equal to twelve (12) months of Executive’s then-current
Base Salary. Such severance shall be paid in accordance with the Company’s regular payroll practices, commencing within thirty
(30) days following the effective date of termination. Payment of severance shall be conditioned upon Executive’s execution and
non-revocation of a general release of claims in favor of the Company in a form reasonably acceptable to the Company. All severance payments
shall be subject to applicable tax withholdings and deductions.
**6. Confidentiality and Intellectual Property.**
**a) Confidential Information.** The Executive acknowledges that the Executive will occupy a position of trust and confidence. The
Company, from time to time, may disclose to the Executive, and the Executive will require access to and may generate confidential and
proprietary information (no matter how created or stored) concerning the business practices, products, services, and operations of the
Company which is not known to its competitors or within its industry generally and which is of great competitive value to it, including,
but not limited to: (i) Trade Secrets (as defined herein), inventions, mask works, ideas, concepts, drawings, materials, documentation,
procedures, diagrams, specifications, models, processes, formulae, source and object codes, data, software, programs, other works of
authorship, know-how, improvements, discoveries, developments, designs and techniques; (ii) information regarding research, development,
products, marketing plans, market research and forecasts, bids, proposals, quotes, business plans, budgets, financial information and
projections, overhead costs, profit margins, pricing policies and practices, accounts, processes, planned collaborations or alliances,
licenses, suppliers and customers; (iii) operational information including deployment plans, means and methods of performing services,
operational needs information, and operational policies and practices; and (iv) any information obtained by the Company from any third
party that the Company treats or agrees to treat as confidential or proprietary information of the third party (collectively, “**Confidential
Information**”). The Executive acknowledges and agrees that Confidential Information includes Confidential Information disclosed
to the Executive prior to entering into this Agreement.
**b) Trade Secrets.** “**Trade Secrets**” means any information, including any data, plan, drawing, specification,
pattern, procedure, method, computer data, system, program or design, device, list, tool, or compilation, that relates to the present
or planned business of the Company and which: (i) derives economic value, actual or potential, from not being generally known to, and
not readily ascertainable by proper means to, other persons who can obtain economic value from their disclosure or use; and (ii) is the
subject of efforts that are reasonable under the circumstances to maintain their secrecy. To the extent that the foregoing definition
is inconsistent with a definition of “trade secret” under applicable law, the latter definition shall control.
**c) Restrictions On Use and Disclosure of Confidential Information.** The Executive recognizes that the Company’s business
interests require the full protection of its Confidential Information. The Executive agrees during his employment and after his employment
ends, the Executive will hold the Confidential Information in strict confidence and will neither use the information nor disclose it
to anyone, except to the extent necessary to carry out the Executive’s responsibilities as an employee of the Company or as specifically
authorized in writing by a duly authorized officer of the Company. The Parties agree that the restrictions in this Section will not apply
to any portion of the Confidential Information which: (i) was known to the public prior to its disclosure to the Executive; (ii) becomes
generally known to the public subsequent to disclosure to the Executive through no wrongful act of the Executive; or (iii) the Executive
is required to disclose by applicable law, regulation or legal process (provided, if permitted, that the Executive provides the Company
with prior notice of the contemplated disclosure and cooperates with the Company at its expense in seeking to protect such information).
Nothing in this Agreement shall be deemed to prohibit the Executive from disclosing any concerns about suspected unlawful conduct to
any proper government authority subject to proper jurisdiction. This provision shall survive the termination of the Executive’s
employment for so long as the Company maintains the secrecy of the Confidential Information and the Confidential Information has competitive
value; and to the extent such information is otherwise protected by statute for a longer period, for example and not by way of limitation,
the Defend Trade Secrets Act of 2016 (“**DTSA**”), then until such information ceases to have statutory protection.
**d) Defend Trade Secrets Act.** Misappropriation of a Trade Secret of the Company in breach of this Agreement may subject the Executive
to liability under the DTSA, entitle the Company to injunctive relief, and require the Executive to pay compensatory damages, double
damages, and attorneys’ fees to the Company. Notwithstanding any other provision of this Agreement, the Executive hereby is notified
in accordance with the DTSA that the Executive will not be held criminally or civilly liable under a federal or state law for the disclosure
of a trade secret that is made in confidence to a federal, state or local government official, either directly or indirectly, or to an
attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or is made in a complaint or other document
filed in a lawsuit or other proceeding, if such filing is made under seal. If the Executive files a lawsuit for retaliation by the Company
for reporting a suspected violation of law, the Executive may disclose the trade secret to the Executive’s attorney and use the
trade secret information in the court proceeding, provided that the Executive must file any document containing the trade secret under
seal, and must not disclose the trade secret, except pursuant to court order.
**e) Ownership of Inventions.** All ideas, data, deliverables, reports, work products, innovations, improvements, know-how, inventions,
designs, developments, techniques, methods and other results of the Executive’s employment with the Company (in draft and final
forms), and all related documentation (such as, but not limited to, notes, records, documents, drawings, and designs), which the Executive
makes, conceives, reduces to practice, or develops in whole or in part, either alone or jointly with others, in connection with his services
to the Company or which relate to any Confidential Information (collectively, the “**Inventions**”) will be the sole and
exclusive property of the Company , and will be considered “**works made for hire**” pursuant to the United States Copyright
Act (17 U.S.C. Section 101). The Executive hereby assigns to the Company or its designees all of the Executive’s right, title and
interest in and to all of the foregoing without compensation. To the extent the Executive has any “moral rights” in the Inventions
which are not assignable by law, the Executive hereby waives any such moral rights relating to the Inventions, including any and all
rights of identification of authorship and any and all rights of approval, restriction or limitation on use or subsequent modifications.
The Executive further represents that, to the best of the Executive’s knowledge and belief, none of the Inventions that the Executive
creates will violate or infringe upon any right, patent, copyright, trademark or right of privacy, or constitute libel or slander against
or violate any other rights of any person, firm or corporation, and that the Executive will use the Executive’s commercially reasonable
efforts to prevent any such violation.
**7. Covenants Not to Solicit or Compete.**
**a) Non-Solicitation of Personnel.** During the Executive’s employment with the Company and for a period of twelve (12) months
following the termination of the Executive’s employment (the “**Restricted Period**”), the Executive shall not,
directly, or indirectly, solicit, induce, recruit, or encourage any Protected Personnel of the Company to leave their employment, or
end their engagement with the Company, to provide services for the Executive or any other person, business, or organization. “**Protected
Personnel**” means: (i) any person currently employed or engaged as an independent contractor by the Company; and (ii) any former
employee or independent contractor of the Company, for a period of three (3) months after termination of such employee’s employment,
or independent contractor’s engagement, with the Company.
**b) Non-Competition.** During the Term, and during the Restricted Period, Executive shall not, anywhere within the United States,
either as principal, agent, employee, consultant, partner, officer, director, shareholder, or in any other individual or representative
capacity, own (more than 1%), manage, finance, operate, control or otherwise engage or participate in any manner or fashion in any business
engaged in the same or similar business as the Company, including those engaged in the business of real estate and development, without
explicit written approval and review of the Company’s conflict of interest policy.
**8. Survival of Provisions.** The obligations contained in Sections 6, 7, 8, 9 and 10 shall survive the termination of the Executive’s
employment with the Company and shall be fully enforceable thereafter.
**9. Return of Property/Post-Employment Representations.** On the date of the Executive’s termination of employment with the
Company for any reason (or at any time prior thereto at the Company’s request), the Executive shall return all property belonging
to the Company and not retain any copies, including, but not limited to, any keys, access cards, badges, laptops, computers, cell phones,
wireless electronic mail devices, USB drives, other equipment, documents, reports, files, and other property provided by or belonging
to the Company. Executive shall provide all usernames and passwords to all electronic devices, documents, and accounts, including any
social media accounts. Upon request made within thirty days after the Executive’s employment terminates, Executive shall make any
cellular phone he has used for business purposes available upon request to allow for Company-related documents and data to be retrieved
and saved at Company’s expense. The Company shall not be responsible for any personal data, information or photographs that may
be lost or rendered inaccessible by the Company or its vendors. Executive shall return the Company automobile, if provided for his use,
in a clean condition and emptied of personal belongings with the registration and manual in the glove box. On the Termination Date, Executive
shall no longer represent to anyone that he remains employed by the Company and shall take affirmative action to amend any statements
to the contrary on any social media sites, including but not limited to Linked-in and Facebook.
**10. Non-Disparagement.** During the Executive’s employment and following termination of employment for whatever reason, the
Executive shall not, directly, or indirectly, make or publish denigrating or derogatory remarks, comments, or statements (whether written
or oral) in any forum or through any medium of communication regarding the Company, its services and operations, or any of its owners,
managers, officers, employees, or consultants. Notwithstanding the foregoing, nothing in this section shall, or shall be deemed to, prevent
or impair the Executive from making truthful statements in any legal or administrative proceeding or from otherwise complying with legal
requirements.
**11. Indemnification/Insurance.** The Company shall defend, indemnify, and hold Executive harmless to the fullest extent permitted
by law against and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including advancement
of reasonable attorney’s fees and expenses), losses, and damages resulting from the good faith performance of Executive’s
duties and obligations under this Agreement. This promise of defense, indemnity and advancement of expenses is in addition to, and not
in substitution of, any such rights Executive has under the company’s articles of incorporation, bylaws, additional indemnification
agreement, or pursuant to applicable law. During the Term, the Company or any successor to the Company shall purchase and maintain, at
its own expense, directors’ and officers’ liability insurance providing coverage to the Executive on terms that are no less
favorable than the coverage provided to other directors and similarly situated executives of the Company or any successor and at a level
no lower than the amount of coverage in place within six (6) months of the Effective Date.
**12. Notices.** For the purposes of this Agreement, notices, demands and all other communications provided for in the Agreement shall
be in writing and shall be deemed to have been given when delivered by email with return receipt requested, upon the obtaining of a valid
return receipt from the recipient, by hand or mailed by nationally recognized overnight delivery service, addressed to the Parties’
addresses specified below or to such other address as any Party may have furnished to the other in writing in accordance herewith, except
that notices of change of address shall be effective only upon receipt:
To
the Company:
JFB
Construction Holdings
Attn:
Executive Office
130
S. Dixie Highway, Suite B
Lantana,
FL 33462
Email: Ruben@jfbconstruction.net
To
the Executive:
Bill
Dyer
Email: bill.dyer@jfbconstruction.net
**13. Tax Matters.** The Company may withhold from any and all amounts payable under this Agreement or otherwise such federal, state
and local taxes as may be required to be withheld pursuant to any applicable law or regulation.
**14. Assignment.** The Executive may not assign any part of the Executive’s rights or obligations under this Agreement. The
Executive agrees and hereby consents that the Company may assign this Agreement to a third party that acquires or succeeds to the Company’s
business, that the provisions hereof are enforceable against the Executive by such assignee or successor in interest, and that this Agreement
shall become an obligation of, inure to the benefit of, and be assigned to, any legal successor or successors to the Company.
**15. Headings.** Titles or captions of sections or paragraphs contained in this Agreement are intended solely for the convenience
of reference, and shall not serve to define, limit, extend, modify, or describe the scope of this Agreement or the meaning of any provision
hereof. The language used in this Agreement is deemed to be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction will be applied against any person.
**16. Severability.** The provisions of this Agreement are severable. The unenforceability or invalidity of any provision or portion
of this Agreement in any jurisdiction shall not affect the validity, legality, or enforceability of the remainder of this Agreement,
it being intended that all rights and obligations of the Parties hereunder shall be enforceable to the full extent permitted by applicable
law.
**17. Governing Law; Venue.** This Agreement, the rights and obligations of the Parties hereto, and any claims or disputes relating
thereto, shall be governed by, and construed in accordance with the laws of the State of Nevada (without regard to its conflicts of laws
provisions), provided, however, that the arbitration provisions of this Agreement shall be governed solely by the Federal Arbitration
Act, 9 U.S.C. §§ 1-16. Except as provided in Section 18 (Arbitration) of this Agreement, the Parties consent to the personal
jurisdiction of the State of Florida and further agree to the exclusive jurisdiction of the courts of the State of Florida, County of
Palm Beach and the United States District Court for the Southern District of Florida, as applicable, in connection with, or incident
to, any dispute, claim, case, controversy or matter arising out of or relating to Executive’s employment or this Agreement, to
the exclusion of the courts of any other state, territory or country. The Parties knowingly, willingly, and voluntarily, **WAIVE ALL
RIGHT TO TRIAL BY JURY** in any such proceedings.
**18. Arbitration.** Any dispute, controversy or claim arising out of or relating to this Agreement, its enforcement, arbitrability
or interpretation, or because of an alleged breach, default, or misrepresentation in connection with any of its provisions, and Employee’s
employment with the Company, including any alleged violation of statute, common law or public policy shall be submitted to final and
binding arbitration before the American Arbitration Association (“**AAA**”) to be held in Palm Beach County, Florida,
before a single arbitrator, in accordance with then-current AAA Employment Arbitration and Mediation Rules. The arbitrator shall issue
a written opinion stating the essential findings and conclusions on which the arbitrator’s award is based. Employer will pay the
arbitrator’s fees and arbitration expenses and any other costs unique to the arbitration hearing (recognizing that each side bears
its own deposition, witness, expert and attorney’s fees and other expenses to the same extent as if the matter were being heard
in court). If, however, any party prevails on a statutory claim that affords the prevailing party attorneys’ fees and costs, then
the arbitrator may award reasonable attorneys’ fees and costs to the prevailing party. Any determination of which party is the
prevailing party and the reasonableness of any fee or costs shall be resolved by the arbitrator. Employee is not required to arbitrate
any claim of sexual harassment or sexual assault pursuant to this arbitration clause.
By initialing here, Executive acknowledges he has read this paragraph and agrees with the arbitration provision herein. indemnity
**19. Waiver; Modification.** No provision of this Agreement may be modified, waived, or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by the Executive and a duly authorized officer of the Company. No waiver by either Party
hereto at any time of any breach by the other Party hereto of, or compliance with, any condition or provision of this Agreement to be
performed by such other Party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
**20. Recitals; Entire Agreement.** The Recitals are hereby incorporated into this Agreement. This Agreement sets forth the entire
agreement of the Parties with respect to the subject matter contained herein and supersedes any and all prior agreements or understandings
between the Executive and the Company with respect to the subject matter hereof. No agreements, inducements, or representations, oral
or otherwise, express, or implied, with respect to the subject matter hereof have been made by either Party which are not expressly set
forth in this Agreement.
**21. Counterparts.** This Agreement may be executed in counterparts, and each executed counterpart shall have the efficacy of a signed
original and may be transmitted by facsimile or email. Each copy, facsimile copy, or emailed copy of any such signed counterpart may
be used in lieu of the original for any purpose.
**IN
WITNESS WHEREOF,** the Parties hereto have executed this Executive Employment Agreement effective as of the date first written above.
**JFB CONSTRUCTION HOLDINGS**
By:
Ruben Calderon
Chief Financial Officer
**EXECUTIVE**
By:
Bill Dyer
---
## EX-10.20
SEC source: [ex10-20.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex10-20.htm)
Exhibit
10.20
SECURITIES
PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is entered into and made effective as of September 26, 2025, by and
between JFB Construction Holdings, a Nevada corporation (the “Company”), and each purchaser identified on the signature
pages hereto (each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant an effective registration statement under the Securities
Act of 1933, as amended (the “Securities Act”), the Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this
Agreement.
RECITALS
WHEREAS,
the Company has authorized a new series of convertible preferred stock of the Company designated as Series C Convertible Preferred Stock,
$0.0001 par value, the terms of which are set forth in the certificate of designation for such series of Preferred Stock (the “Certificate
of Designation”) in the form attached hereto as Exhibit C (the “Series C Preferred Stock”), which Series
C Preferred Stock shall be convertible into shares of common stock, par value $0.0001 per share, of the Company (“Common Stock”)
in accordance with the terms of the Certificate of Designation;
WHEREAS,
each Purchaser wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, of $43,895,000
of (i) such aggregate number of shares of Series C Preferred Stock (collectively for all Purchasers, the “Shares”),
as set forth on the signature page of such Purchaser attached hereto, (ii) a warrant with a $5.75 exercise price and 3-year term to initially
acquire up to that aggregate number of additional shares of Common Stock set forth on the signature page of such Purchaser attached hereto,
substantially in the form attached hereto as Exhibit A-1 (the “Common A Warrants “) (iii) a warrant with a
$6.25 exercise price and 3-year term to initially acquire up to that aggregate number of additional shares of Common Stock set forth
on the signature page of such Purchaser attached hereto, substantially in the form attached hereto as Exhibit A-2 (the “Common
B Warrants” and, together with the Common A Warrants , the “Warrants”) (the shares of Common Stock underlying
the Warrants, collectively, the “Warrant Shares”); and
WHEREAS,
Dominari Securities LLC (the “Placement Agent”), a U.S.-registered broker-dealer, has been engaged by the Company
as the Company’s exclusive placement agent, on a reasonable “best efforts” basis, for this offering (the “Offering”).
The Placement Agent will be paid at the Closing, a total cash commission of eight percent (8%) of the aggregate proceeds of the Offering
and will receive warrants to purchase a total number of shares of Common Stock equal to eight percent (8%) of the aggregate number of
securities sold in this offering (the “Placement Agent Warrants”). The terms of the Placement Agent Warrants shall
be identical to those of the Common Warrants A, except that the Placement Agent Warrants will have an exercise price of $5.44 and a term
of five (5) years.
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE
I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms
have the meanings set forth in this Section 1.1:
“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.5.
“Action”
shall have the meaning ascribed to such term in Section 3.1(j).
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Agreement”
shall have the meaning ascribed to such term in the Preamble.
“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 New York, New York are authorized
or required by law to remain closed.
“Certificate
of Designation” shall have the meaning given such term in the Recitals.
“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.
“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties
thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Securities, in each case, have been satisfied or waived, but in no event later than the first (1st)
Trading Day following the date of this Agreement (or the second (2nd) Trading Day following the date of this Agreement if
this Agreement is executed on a day that is not a Trading Day or after 4:00pm (New York City time) and before midnight (New York City
time) on a Trading Day).
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Common
A Warrants “ shall have the meaning given such term in the Recitals.
“Common
B Warrants “ shall have the meaning given such term in the Recitals.
“Company
Counsel” means with respect to U.S. federal securities Laws, Nevada, and New York law, Lucosky Brookman LLP, with offices located
at 101 S. Wood Ave., Iselin, New Jersey 08830.
“Conversion
Shares” means the shares of Common Stock issuable upon conversion of the Shares, pursuant to the terms of the Certificate of
Designation.
“Disclosure
Schedules” refer to the Schedules attached to this Agreement.
“Disclosure
Time” means, (i) if this Agreement is executed on a day that is not a Trading Day or after 9:00 a.m. (New York City time) and
before midnight (New York, New York time) on any Trading Day, 9:01 a.m. (New York, New York time) on the Trading Day immediately following
the date of this Agreement, unless otherwise instructed as to an earlier time by the Placement Agent, and (ii) if this Agreement is executed
between midnight (New York, New York time) and 9:00 a.m. (New York, New York time) on any Trading Day, no later than 9:01 a.m. (New York,
New York time) on the date of this Agreement, unless otherwise instructed as to an earlier time by the Placement Agent.
“Effective
Date” means the earliest of the date that (a) the initial Registration Statement registering for resale all Conversion Shares
and Warrant Shares has been declared effective by the Commission, (b) all of the Conversion Shares and Warrant Shares have been sold
pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current
public information required under Rule 144 and without volume or manner-of-sale restrictions, (c) following the one (1) year anniversary
of the Closing Date; *provided that* a holder of Conversion Shares or Warrant Shares is not an Affiliate of the Company, or (d)
all of the Conversion Shares and Warrant Shares may be sold pursuant to an exemption from registration under Section 4(a)(1) of the Securities
Act without volume or manner-of-sale restrictions and Company Counsel has delivered to such holders a standing written unqualified opinion
that resales may then be made by such holders of the Conversion Shares and Warrant Shares pursuant to such exemption which opinion shall
be in form and substance reasonably acceptable to such holders.
“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(s).
“Environmental
Laws” shall have the meaning ascribed to such term in Section 3.1(m).
“Escrow
Agent” means an escrow agent that is mutually acceptable to the Placement Agent and the Company.
“Escrow
Agreement” means the escrow agreement substantially attached hereto as Exhibit E to be entered into by and among the
Company, the Escrow Agent, and the Placement Agent pursuant to which, among other things, the Purchasers shall deposit monies with the
Escrow Agent for the purchase of the Securities pursuant to this Agreement.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).
“Governmental
Authority” means any federal, state, county, local, municipal or other government or political subdivision thereof, whether
domestic or foreign, and any agency, authority, commission, ministry, instrumentality, regulatory body, court, tribunal, arbitrator,
central bank or other Person exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of
or pertaining to any such government.
“Hazardous
Materials” shall have the meaning ascribed to such term in Section 3.1(m).
“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(p).
“Key
Executives” means all of the Company’s executive officers and directors as of the date of this Agreement.
“Laws”
with respect to a Person means any federal, state, local, municipal, or other laws, common law, statutes, constitutions, ordinances,
rules, regulations, codes, orders, or legally enforceable requirements enacted, issued, adopted, promulgated, enforced, ordered, or applied
by any Governmental Authority applicable to such Person or any of its Subsidiaries, including its respective business and operations.
“Lock-Up
Agreement” means the Lock-Up Agreement, dated as of the Closing Date, by and among the Company and the directors and executive
officers, in the form of Exhibit B attached hereto.
“Liens”
means a lien, charge pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).
“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(n).
“Offering”
shall have the meaning ascribed to such term in the Recitals.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Placement
Agent” means Dominari Securities LLC.
“Placement
Agent Agreement” means the placement agent agreement, dated on or about the date of this Agreement, between the Company and
the Placement Agent.
“Placement
Agent Warrant” means the warrants issued to the Placement Agent pursuant to the Placement Agent Agreement as compensation for
the services of the Placement Agent in connection with the Offering.
“Placement
Agent Warrant Shares” means the shares underlying the Placement Agent Warrant.
“Preferred
Stock” means (i) the Company’s blank check preferred stock, $0.0001 par value per share, the terms of which may be designated
by the board of directors of the Company in a certificate of designation and (ii) any capital stock into which such preferred stock shall
have been changed or any share capital resulting from a reclassification of such preferred stock (other than a conversion of such preferred
stock into Common Stock in accordance with the terms of such certificate of designation).
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
“Purchase
Price” equals $5.44, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other
similar transactions of the Common Stock that occur after the date of this Agreement.
“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.8.
“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the Closing Date, by and between the Company and the
Purchaser(s), in the form attached hereto as Exhibit D, pursuant to which the Company has agreed to provide certain registration
rights with respect to the securities, as may be amended, restated, supplemented, or otherwise modified from time to time.
“Registration
Statement” means the Registration Statement relating to the registration of the shares underlying the Shares, the Warrants,
and the Placement Agent Warrants.
“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.
“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.
“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means the Shares, the Conversion Shares, the Warrants, and the Warrant Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Series
C Preferred Stock” means the Company’s Series C Convertible Preferred Stock, $0.0001 par value per share.
“Shares”
means the shares of Series C Preferred Stock issued or issuable to each Purchaser pursuant to this Agreement.
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be
deemed to include locating and/or borrowing shares of Common Stock).
“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares and Warrants purchased hereunder as specified
below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds.
“Subsidiary”
means any subsidiary of the Company as set forth in the SEC Reports and shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date of this Agreement.
“to
the Knowledge of the Company,” “to the Company’s Knowledge,” and similar words and phrases relating
to the Company’s “Knowledge” means the actual knowledge of any of the Key Executives of the Company upon reasonable
investigation, except as otherwise specified.
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange, the OTCQB, OTCQX, Pink Open Market (or any successors to any of the foregoing).
“Transaction
Documents” means this Agreement, the Registration Rights Agreement, the Warrants, the Certificate of Designation, the Placement
Agent Agreement, the Placement Agent Warrants, the Lock- Up Agreements, the Escrow Agreement, and all exhibits and schedules thereto
and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.
“Transfer
Agent” means ClearTrust Transfer, LLC, the current transfer agent of the Company, with a mailing address of 16540 Pointe Village
Drive, Suite 210, Lutz, FL 33558 and a phone number of (813) 235-4490, and any successor transfer agent of the Company.
“Variable
Rate Transaction” means means a transaction in which the Company or any Subsidiary (i)
issues or sells any securities convertible into Common Stock, either (A) at a conversion, exercise or exchange rate or other price that
is based upon and/or varies with the trading prices of or quotations for the Common Stock at any time after the initial issuance of such
convertible securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after
the initial issuance of such convertible securities or upon the occurrence of specified or contingent events directly or indirectly related
to the business of the Company or the market for the Common Shares, other than pursuant to a customary “weighted average”
anti-dilution provision; or (ii) enters into any agreement (including, without limitation, an equity line of credit or an “at-the-market”
offering) whereby the Company or any Subsidiary may sell securities at a future determined price (other than standard and customary “preemptive”
or “participation” rights).
“Warrants”
shall have the meaning ascribed to such term in the Recitals.
“Warrant
Shares” shall have the meaning ascribed to such term in the Recitals.
ARTICLE
II.
**PURCHASE
AND SALE OF SHARES AND WARRANTS**
2.1 Closing. On the Closing Date, subject to the satisfaction (or waiver) of the conditions set forth herein, the Company shall issue
and sell to each Purchaser, and each Purchaser severally, but not jointly, agrees to purchase from the Company on the Closing Date the
aggregate number of Shares as is set forth opposite set forth on the signature page of such Purchaser attached hereto, along with Warrants
to initially acquire up to that aggregate number of Warrant Shares as is set forth on the signature page of such Purchaser attached hereto.
The aggregate purchase price for the Shares and the Warrants to be purchased by each Purchaser (the “Purchase Price”)
shall be the amount set forth on the signature page of such Purchaser attached hereto, which in the aggregate shall be up to approximately
$43,895,000 of Shares and Warrants, at a combined cash purchase price equal to the Purchase Price for each Share. At the Closing, the
Purchasers shall deliver to the Escrow Agent via wire transfer of immediately available funds equal to each of the Purchasers’
aggregate purchase amount as set forth on their respective signature pages hereto executed by each of the Purchasers to the Escrow Agent
and the Company shall deliver the applicable deliverables to the Transfer Agent, of which the Escrow Agent shall release the monies to
the Company, and the Company shall deliver to each Purchaser its respective Warrants, as determined pursuant to Section 2.2(a), and the
Transfer Agent shall register the Shares in book-entry form in the Purchasers’ names and addresses provided in the applicable signature
pages attached hereto, upon the instruction of the Company and the Placement Agent, and the Company and each Purchaser shall deliver
the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections
2.2 and 2.3, the Closing shall take place remotely by electronic transfer of the Closing documentation.
2.2 Deliveries.
(a)
On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:
(i)
this Agreement duly executed by the Company;
(ii)
a legal opinion of Company Counsel, in a form reasonably acceptable to the Placement Agent and Purchasers;
(iii)
a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent (the “Irrevocable Transfer Agent
Instructions”) to deliver, on an expedited basis, a certificate (or at the request of the Purchaser, book entry statement)
evidencing a number of Shares equal to such Purchaser’s Subscription Amount divided by the Purchase Price, registered in the name
of such Purchaser;
(iv)
a certificate or other reasonably acceptable evidence of the Company’s qualification as a foreign corporation and good standing
issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business and is required to
so qualify, as of a date within twenty (20) days of the Closing Date, and (ii) a certified copy of the Certificate of Designation, as
certified by the Secretary of State of the Company’s jurisdiction of incorporation;
(v)
a Common A Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to one hundred
percent (100%) of the Purchaser’s Shares, listed on such Purchaser’s signature page, with an exercise price equal to $5.75,
subject to adjustment as provided therein;
(vi)
a Common B Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to one hundred
percent (100%) of the Purchaser’s Shares, listed on such Purchaser’s signature page, with an exercise price equal to $6.25,
subject to adjustment as provided therein;
(vii)
the Company’s wire instructions, on Company letterhead and executed by the Chief Executive Officer or Chief Financial Officer of
the Company;
(viii)
a duly executed and delivered Officers’ Certificate, in customary form reasonably satisfactory to the Placement Agent and its counsel;
(ix)
a duly executed and delivered Secretary’s Certificate, in customary form reasonably satisfactory to the Placement Agent and its
counsel;
(x)
a Chief Financial Officer certificate from the Chief Financial Officer of the Company, addressed to the Placement Agent in form and substance
reasonably satisfactory to the Placement Agent and its counsel;
(xi)
the Lock-Up Agreements, duly executed by each of the officers, directors, and five percent (5%) or greater shareholders of the Company;
(xii)
the Registration Rights Agreement, duly executed by the Company; and
(xiii)
the Escrow Agreement, duly executed by the Company.
(b)
On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company or the Escrow Agent, as applicable,
the following:
(ix)
to the Company, this Agreement duly executed by such Purchaser;
(x)
to the Escrow Agent, such Purchaser’s Subscription Amount by wire transfer to the account specified in writing by the Escrow Agent;
and
(xi)
to the Company, the Registration Rights Agreement, duly executed by such Purchaser.
2.3 Closing Conditions.
(a)
The obligations of the Company under this Agreement in connection with the Closing are subject to the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse
Effect, in all respects) on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a
specific date therein in which case they shall be accurate as of such date);
(ii)
all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been
performed; and
(iii)
the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b)
The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse
Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein (unless
as of a specific date therein in which case they shall be accurate as of such date);
(ii)
all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
(iii)
the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv)
there shall have been no Material Adverse Effect with respect to the Company since the date of this Agreement;
(v)
the Company shall have filed an additional listing application with the principal Trading Market with respect to the Conversion Shares
and Warrant Shares; and
(vi)
from the date of this Agreement to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the
Company’s principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades
are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international
calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable
judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall
be deemed a part of this Agreement and shall qualify any representation or otherwise made herein to the extent of the disclosure contained
in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each
Purchaser which shall be true and correct as of the date of this Agreement and the Closing Date:
(a) Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth in the SEC Reports. The Company owns, directly
or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued
and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive
and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other references to the Subsidiaries
or any of them in the Transaction Documents shall be disregarded.
(b) Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any
Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned
by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could
not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction
Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise)
of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in
any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material
Adverse Effect”); *provided* that a change in the market price or trading volume of the Common Stock alone shall not be
deemed, in and itself, to constitute a Material Adverse Effect, and no Proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
(c) Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations
under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms of this Agreement and
of the Transaction Documents. The execution and delivery of this Agreement and the other Transaction Documents by the Company, and the
consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Shares
and the reservation for issuance and issuance of the Conversion Shares issuable upon conversion of the Shares and the issuance of the
Warrants and the reservation for issuance and issuance of the Warrant Shares issuable upon exercise of the Warrants) have been duly authorized
by the Company’s board of directors or other governing body, as applicable, and no further filing, consent or authorization is
required by the Company, its Subsidiaries, their respective boards of directors or their stockholders or other governing body in connection
herewith or therewith other than in connection with the Required Approvals. This Agreement has been, and the other Transaction Documents
to which it is a party will be prior to the Closing, duly executed and delivered by the Company, and each constitutes the legal, valid
and binding obligations of the Company, enforceable against the Company in accordance with its respective terms, except as such enforceability
may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to
indemnification and to contribution may be limited by federal or state securities law. The Certificate of Designation in the form attached
hereto as Exhibit C has been filed with the Secretary of State of the State of Nevada and is in full force and effect, enforceable
against the Company in accordance with its terms and has not have been amended.
(d) No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby
do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles
of incorporation, bylaws, or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or
assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, anti-dilution, or similar adjustments,
acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict
with or result in a violation of any Law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or
Governmental Authority to which the Company or a Subsidiary is subject (including federal and state securities Laws and regulations),
or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal, state, local or other Governmental Authority or other
Person in connection with the execution, delivery, and performance by the Company of the Transaction Documents, other than: (i) the filings
required pursuant to Section 4.4 of this Agreement, (ii) the filing(s) with the Commission pursuant to the Registration Rights Agreement,
(iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing
of the Conversion Shares and Warrant Shares for trading thereon in the time and manner required thereby and (iv) such filings as are
required to be made under applicable state securities Laws (collectively, the “Required Approvals”).
(f) Issuance of the Securities. The issuance of the Securities are duly authorized and upon issuance in accordance with the terms
of the Transaction Documents shall be validly issued, fully paid, and non- assessable and free from all preemptive or similar rights,
mortgages, defects, claims, Liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests, and other encumbrances
with respect to the issuance thereof. As of the Closing, the Company shall have reserved from its duly authorized capital stock not less
than the sum of (i) the maximum number of Conversion Shares issuable upon conversion of the Shares and (ii) the maximum number of Warrant
Shares initially issuable upon exercise of the Warrants (without taking into account any limitations on the exercise of the Warrants
set forth therein). Upon issuance or conversion in accordance with the Shares or exercise in accordance with the Warrants (as the case
may be), the Conversion Shares and the Warrant Shares, respectively, when issued, will be validly issued, fully paid and nonassessable
and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of Common Stock. Subject to the accuracy of the representations and warranties of the Purchasers in this Agreement,
the offer and issuance by the Company of the Securities is exempt from registration under the 1933 Act.
(g) Capitalization. The capitalization of the Company is substantially as set forth in Schedule 3.1(g). The Company has not issued
any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee
stock options, the issuance of shares of Common Stock to employees or grants of restricted stock pursuant to the Company’s 2024
Equity Incentive Plan and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most
recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase
and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person
any right to subscribe for or acquire, any shares of Common Stock or the capital stock of any Subsidiary, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock
or Common Stock Equivalents or capital stock of any Subsidiary. The issuance and sale of the Securities will not obligate the Company
or any Subsidiary to issue shares of Series C Preferred Stock or other securities to any Person (other than the Purchasers). There are
no outstanding securities or instruments of the Company or any Subsidiary with any provision that adjusts the exercise, conversion, exchange
or reset price of such security or instrument upon an issuance of securities by the Company or any Subsidiary. There are no outstanding
securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem a security of the
Company or such Subsidiary. The Company does not have any stock appreciation rights or “phantom stock” plans or agreements
or any similar plan or agreement. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued,
fully paid and nonassessable, have been issued in compliance with all federal and state securities Laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval
or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There
are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which
the Company is a party or, to the Knowledge of the Company, between or among any of the Company’s stockholders, which knowledge
is without investigation.
(h) SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
two years preceding the date of this Agreement (or such shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein being collectively
referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing
and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied
in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has
never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing, except as provided on Schedule 3.1(b). Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and
its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(i) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result
in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with past practice (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission and (C) Indebtedness disclosed
in SEC Reports,, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares
of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant
to the Company’s 2024 Equity Incentive Plan. The Company does not have pending before the Commission any request for confidential
treatment of information. Except for the issuance of the Securities contemplated by this Agreement, no event, liability, fact, circumstance,
occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries
or their respective businesses, prospects, properties, operations, assets or financial condition that would be required to be disclosed
by the Company under applicable securities Laws at the time this representation is made or deemed made that has not been publicly disclosed
at least one (1) Trading Day prior to the date that this representation is made.
(j) Litigation. To the Knowledge of the Company, there is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an
“Action”) the outcome of which, if against the Company, would reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, to the Company’s Knowledge, nor any director or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability under federal or state securities Laws or a claim of breach
of fiduciary duty. There has not been, and to the Knowledge of the Company, there is not pending or contemplated, any investigation by
the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop
order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.
(k) Labor Relations. No labor dispute exists or, to the Knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the Knowledge of the Company, no executive officer of the Company or any Subsidiary
is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary
information agreement or non- competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third
party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability
with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local
and foreign Laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours,
except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(l) Compliance. To the Knowledge of the Company, neither the Company nor any Subsidiary: (i) is in default under or in violation of
(and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company
or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is
in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or
any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree,
or order of any court, arbitrator or other Governmental Authority or (iii) is or has been in violation of any statute, rule, ordinance
or regulation of any Governmental Authority, including without limitation all foreign, federal, state and local Laws relating to taxes,
environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each
case of each of clauses (i), (ii) and (iii) such as could not have or reasonably be expected to result in a Material Adverse Effect.
(m) Environmental Laws. To the Knowledge of the Company, the Company and its Subsidiaries (i) are in compliance with all federal,
state, local and foreign Laws relating to pollution or protection of human health or the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata), including Laws relating to emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”)
into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental
Laws”); (ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or approval
where in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect.
(n) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit.
(o) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to, or have valid and marketable
rights to lease or otherwise use, all real property and all personal property that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for (i) Liens that do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii)
Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made in accordance with GAAP, and the
payment of which is neither delinquent nor subject to penalties. Neither the Company nor any of its Subsidiaries has any written notice
of any claim of any sort that has been asserted by anyone adverse to the rights of the Company or its Subsidiaries under any of the leases
or subleases or licenses or with respect to the properties mentioned above, or affecting or questioning the rights of the Company or
any Subsidiary to the continued possession or use of the leased or subleased or licensed premises or the properties mentioned above,
other than such claims which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(p) Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights
and similar rights necessary or required for use in connection with their respective businesses as described in the SEC Reports and which
the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Except
as set forth on Schedule 3.1(p), none of, and neither the Company nor any Subsidiary has received written notice that any of, the Intellectual
Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years
from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited financial
statements included within the SEC Reports, a written notice of a claim or otherwise has any Knowledge that the Intellectual Property
Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have a Material Adverse
Effect. To the Knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement
by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures
to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(q) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including,
but not limited to, directors and officers insurance coverage in amount deemed prudent by the Company. Neither the Company nor any Subsidiary
has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost. The Company
has no knowledge of facts that would preclude it from having valid license rights or clear title to the Intellectual Property Rights.
The Company has no knowledge that it lacks or will be unable to obtain any rights or licenses to use all Intellectual Property Rights
that are necessary to conduct its business.
(r) Transactions with Affiliates and Employees. Other than as set forth in the SEC Reports, none of the officers or directors of the
Company or any Subsidiary and, to the Knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a
party to any transaction with the Company or any Subsidiary (other than for services as an independent contractor through an Affiliate,
employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to
or by, providing for rental of real or personal property to or from, providing for the borrowing of money from or lending of money to
or otherwise requiring payments to or from any officer, director or such employee or, to the Knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member
or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement
for expenses incurred on behalf of the Company and (iii) other employee benefits, including awards under the Company’s 2024 Equity
Incentive Plan.
(s) Sarbanes-Oxley; Internal Accounting Controls. Except as set forth in the SEC Reports, the Company and the Subsidiaries are in
material compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date of this
Agreement, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date
of this Agreement and as of the Closing Date. Except as set forth in the SEC Reports, the Company and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that: (i)
transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
Except as set forth in the SEC Reports, the Company and the Subsidiaries have established disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures
to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s
certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as
of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation
Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since
the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange
Act) of the Company and its Subsidiaries that have materially affected, or are reasonably likely to materially affect, the internal control
over financial reporting of the Company and its Subsidiaries.
(t) Certain Fees. Except for the fees and expenses of the Placement Agent, no brokerage or finder’s fees or commissions are
or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.
(u) Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.
(v) Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration
under the Investment Company Act of 1940, as amended.
(w) Registration Rights. Other than to each of the Purchasers pursuant to the Registration Rights Agreement, no Person has any right
to cause the Company or any Subsidiary to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.
(x) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and
the Company has taken no action designed to, or which to the Company’s Knowledge, is likely to have the effect of, terminating
the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating
terminating such registration. Except as disclosed in the SEC Reports, the Company has not, in the twelve (12) months preceding the date
of this Agreement, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that
the Company is not in compliance with the listing or maintenance requirements of such Trading Market. Except as disclosed in the SEC
Reports, the Company is in compliance with all such listing and maintenance requirements. The Company has no reason to believe that it
will not in the foreseeable future continue to be in compliance with all such listing and maintenance requirements except for the requirement
disclosed in the SEC Reports. The Common Stock is currently eligible for electronic transfer through the Depository Trust Company or
another established clearing corporation and the Company is current in payment of the fees to the Depository Trust Company (or such other
established clearing corporation) in connection with such electronic transfer.
(y) Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order
to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the
Laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company
fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of
the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.
(z) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or
counsel with any information that it believes constitutes or might constitute material, non-public information, which is not otherwise
disclosed to the Purchasers. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting
transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding
the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules
to this Agreement, is true and correct in all material respects as of the date made, is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve (12)
months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any
representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section
3.2 of this Agreement.
(aa) No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities
to be integrated with prior offerings by the Company for purposes of any applicable stockholder approval provisions of any Trading Market
on which any of the securities of the Company are listed or designated.
(bb) Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt
by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds
the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known
contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its
business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements
of the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii)
the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after
taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when
such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any
facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the Closing Date. All outstanding secured and unsecured Indebtedness of the Company or
any Subsidiary, or for which the Company or any Subsidiary has commitments are set forth in the Schedule 3.1(bb). For the purposes of
this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $75,000 (other
than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements, and other contingent obligations
in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated balance
sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions
in the ordinary course of business; and (z) the present value of any lease payments in excess of $75,000 due under leases required to
be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.
(cc) Tax Status. The Company and its Subsidiaries each (i) has made or filed all material United States federal, state and local income
and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii)
has paid all material taxes and other governmental assessments and charges that are material in amount, shown or determined to be due
on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material
taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no
basis for any such claim.
(dd)
No General Solicitation. Neither the Company nor any Person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers and
certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.
(ee) Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the Knowledge of the Company or any Subsidiary, any
agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate
funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf
of which the Company is aware) which is in violation of Law or (iv) violated in any material respect any provision of FCPA.
(ff) Accountants. The Company’s accounting firm is set forth in the SEC Reports. To the Knowledge and belief of the Company,
such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with
respect to the financial statements to be included in the Company’s Annual Report for the fiscal year ending December 31, 2025.
(gg) No Disagreements with Accountants and Lawyers. Except as set forth on Schedule 3.1(gg), there are no disagreements of any kind
presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or
presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could
affect the Company’s ability to perform any of its obligations under any of the Transaction Documents.
(hh) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers
is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or
any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby
is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s
decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives.
(ii) Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Sections 3.2(g) and 4.14 of this Agreement), it is understood and acknowledged by the Company that: (i) none of the Purchasers
has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities
of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified
term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales
or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and counter-parties in “derivative”
transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the
Common Stock and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party
in any “derivative” transaction. The Company further understands and acknowledges that (y) one or more Purchasers may engage
in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the
periods that the value of the Warrant Shares deliverable with respect to Securities are being determined, and (z) such hedging activities
(if any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging
activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any
of the Transaction Documents.
(jj) Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any
of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities
of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Placement Agent in connection with the placement
of the Securities.
(kk) Officers’ Certificate. Any certificate executed by any duly authorized officer of the Company and delivered to the Purchasers
shall be deemed a representation and warranty by the Company to the Purchasers as to the matters covered thereby.
(ll) D&O Questionnaires. To the Company’s Knowledge, all information contained in the questionnaires most recently completed
by each of the Company’s directors and officers and beneficial owner of 5% or more of the Common Stock or Common Stock Equivalents
is true and correct in all respects and the Company has not become aware of any information which would cause the information disclosed
in such questionnaires to become inaccurate and incorrect, in any material respect.
(mm) Stock Options. Each stock option granted by the Company under the Company’s stock option plan, if any, was granted (i) in
accordance with the terms of the Company’s 2024 Equity Inventive Plan and (ii)
with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered
granted under GAAP and applicable Law. No stock option granted under the Company’s stock option plan has been backdated. The Company
has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior to, or
otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding
the Company or its Subsidiaries or their financial results or prospects.
(nn) Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s Knowledge, any director,
officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(oo) U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within
the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s
request.
(pp) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company
Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the
“Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly,
five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity
of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries
or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and
to regulation by the Federal Reserve.
(qq) Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended,
applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”),
and no Action or Proceeding by or before any court or Governmental Authority or body or any arbitrator involving the Company or any Subsidiary
with respect to the Money Laundering Laws is pending or, to the Knowledge of the Company or any Subsidiary, threatened.
(rr) No Disqualification Events. With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under the
Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of
the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity
securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act)
connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and, together, “Issuer
Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii)
under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2)
or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification
Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the
Purchasers a copy of any disclosures provided thereunder.
(ss) Other Covered Persons. Other than the Placement Agent, the Company is not aware of any person (other than any Issuer Covered Person)
that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of any
Securities.
(tt) Notice of Disqualification Events. The Company will notify the Purchasers and the Placement Agent in writing, prior to the Closing
Date of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time,
become a Disqualification Event relating to any Issuer Covered Person.
(uu) Cybersecurity. (i) (a) To the Knowledge of the Company, there has been no security breach or other compromise of or relating to
any of the Company’s or any Subsidiary’s information technology and computer systems, networks, hardware, software, data
(including the data of its respective customers, employees, suppliers, vendors and any third party data maintained by or on behalf of
it), equipment or technology (collectively, “IT Systems and Data”) and (b) the Company and the Subsidiaries have not
been notified of, and has no Knowledge of any event or condition that would reasonably be expected to result in, any material security
breach or other compromise to its IT Systems and Data; (ii) the Company and the Subsidiaries are presently in compliance with all applicable
Laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority,
internal policies and contractual obligations relating to the privacy and security of IT Systems and Data and to the protection of such
IT Systems and Data from unauthorized use, access, misappropriation or modification, except, in the case of clauses (i) and (ii) herein,
as would not, individually or in the aggregate, have a Material Adverse Effect; (iii) the Company and the Subsidiaries have implemented
and maintained commercially reasonable safeguards to maintain and protect its material confidential information and the integrity, continuous
operation, redundancy and security of all IT Systems and Data; and (iv) the Company and the Subsidiaries have implemented backup and
disaster recovery technology consistent with industry standards and practices.
3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and
warrants as of the date of this Agreement and as of the Closing Date to the Company as follows (unless as of a specific date therein,
in which case they shall be accurate as of such date):
(a) Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and
in good standing under the Laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited
liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance
by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate,
partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to
which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms of this
Agreement, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its
terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by Laws relating to the availability
of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions
may be limited by applicable Law.
(b) Own Account. Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business. Such Purchaser is acquiring
such Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part
thereof in violation of the Securities Act or any applicable state securities Law, has no present intention of distributing any of such
Securities in violation of the Securities Act or any applicable state securities Law and has no direct or indirect arrangement or understandings
with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable
state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the
a registration statement or otherwise in compliance with applicable federal and state securities Laws).
(c) Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date of this Agreement it is, and
on each date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1),
(a)(2), (a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9), (a)(10), (a)(11), (a)(12) or (a)(13) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the Securities Act.
(d) Experience of Purchaser. Purchaser, either alone or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in
the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an
investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(e) Access to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including
all exhibits and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the
Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition,
results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the investment. Such Purchaser acknowledges and agrees that neither
the Placement Agent nor any Affiliate of the Placement Agent has provided such Purchaser with any information or advice with respect
to the Securities nor is such information or advice necessary or desired. Neither the Placement Agent nor any Affiliate has made or makes
any representation as to the Company or the quality of the Securities and the Placement Agent and any Affiliate may have acquired non-public
information with respect to the Company which such Purchaser agrees need not be provided to it. In connection with the issuance of the
Securities to such Purchaser, neither the Placement Agent nor any of its Affiliates has acted as a financial advisor or fiduciary to
such Purchaser.
(g) Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has
not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any
purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser
first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending immediately prior to the execution of this Agreement. Notwithstanding the
foregoing, in the case of a Purchaser that is a multi- managed investment vehicle whereby separate portfolio managers manage separate
portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with
respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered
by this Agreement. Other than to other Persons party to this Agreement or to such Purchaser’s representatives, including, without
limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, such Purchaser has maintained
the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).
Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or
preclude any actions, with respect to locating or borrowing shares in order to effect Short Sales or similar transactions in the future.
The
Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s
right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement
or the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, for the avoidance of doubt, nothing contained
herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order
to effect Short Sales or similar transactions in the future.
ARTICLE
IV.
**OTHER
AGREEMENTS OF THE PARTIES**
4.1 Transfer
Restrictions.
(a)
The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement, including the Registration Statement, or Rule 144, to the Company or to an
Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor
thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form
and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration
of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be
bound by the terms of this Agreement and the Registration Rights Agreement shall have the rights and obligations of a Purchaser under
this Agreement and the Registration Rights Agreement.
(b)
The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities (or on
any book-entry position representing the Securities) in substantially the following form:
“[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY [AND THE SECURITIES ISSUABLE
UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER
OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES
ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.”
The
Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor”
as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, such Purchaser may transfer
pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company
and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities,
including, if the Securities are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of
any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act
to appropriately amend the list of Selling Stockholders (as defined in the Registration Rights Agreement) thereunder.
(c)
Certificates or book-entry positions evidencing the Conversion Shares and Warrant Shares shall not contain any legend (including the
legend set forth in Section 4.1(b), (i) while a registration statement (including the Registration Statement) covering the resale
of such security is effective under the Securities Act, (ii) following any sale of such Conversion Shares or Warrant Shares pursuant
to Rule 144 (assuming cashless exercise of the Warrants), (iii) if such Conversion Shares or Warrant Shares are eligible for sale under
Rule 144 (assuming cashless exercise of the Warrants), without the requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such Conversion Shares and Warrant Shares and without volume or manner-of-sale restrictions,
or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements
issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent or the Purchaser
promptly after the Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder, or if requested by
a Purchaser, respectively. If all or any portion of a Warrant is exercised at a time when there is an effective registration statement
to cover the resale of the Warrant Shares, or if such Conversion Shares or Warrant Shares may be sold under Rule 144 and the Company
is then in compliance with the current public information required under Rule 144 (assuming cashless exercise of the Warrants), or if
the Conversion Shares or Warrant Shares may be sold under Rule 144 without the requirement for the Company to be in compliance with the
current public information required under Rule 144 as to such Conversion Shares or Warrant Shares or if such legend is not otherwise
required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff
of the Commission) then such Conversion Shares and Warrant Shares shall be issued free of all legends. The Company agrees that following
the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than the
earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) following
the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Conversion Shares or Warrant Shares, as
the case may be, issued with a restrictive legend (such date, the “Legend Removal Date”), deliver or cause to be delivered
to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make
any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section
4. Certificates for Securities subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by
crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser. As
used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days,
on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of a certificate
representing Conversion Shares or Warrant Shares, as the case may be, issued with a restrictive legend.
(d)
In addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, (i) as partial liquidated
damages and not as a penalty, for each $1,000 of Conversion Shares or Warrant Shares (based on the VWAP of the Common Stock on the date
such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(c),
$10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after the Legend Removal Date) for each Trading Day after
the Legend Removal Date until such certificate is delivered without a legend and (ii) if the Company fails to (a) issue and deliver (or
cause to be delivered) to a Purchaser by the Legend Removal Date a certificate representing the Securities so delivered to the Company
by such Purchaser that is free from all restrictive and other legends and (b) if after the Legend Removal Date such Purchaser purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Purchaser of all or
any portion of the number of shares of Common Stock, or a sale of a number of shares of Common Stock equal to all or any portion of the
number of shares of Common Stock, that such Purchaser anticipated receiving from the Company without any restrictive legend, then an
amount equal to the excess of such Purchaser’s total purchase price (including brokerage commissions and other out-of-pocket expenses,
if any) for the shares of Common Stock so purchased (including brokerage commissions and other out-of-pocket expenses, if any) (the “Buy-In
Price”) over the product of (A) such number of Conversion Shares or Warrant Shares that the Company was required to deliver
to such Purchaser by the Legend Removal Date multiplied by (B) the lowest closing sale price of the Common Stock on any Trading Day during
the period commencing on the date of the delivery by such Purchaser to the Company of the applicable Conversion Shares or Warrant Shares
(as the case may be) and ending on the date of such delivery and payment under this Section 4(d).
(e)
Each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any Securities
pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or
an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold in compliance with the
plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Securities
as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.
4.2 Furnishing of Information; Public Information. Until the earliest of the time that (i) no Purchaser owns Securities or (ii) the
Warrants have expired, the Company covenants to maintain to use its reasonable best efforts to maintain the registration of the Common
Stock under Section 12(b) or 12(g) of the Exchange Act and to make reasonable best efforts to timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to be filed by the Company after the date of this Agreement
pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.
4.3 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities for purposes of the
rules and regulations of any Trading Market such that it would require stockholder approval prior to the closing of such other transaction
unless stockholder approval is obtained before the closing of such subsequent transaction.
4.4 Securities Laws Disclosure; Publicity. The Company shall (a) by the Disclosure Time, issue a press release disclosing the material
terms of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including the Transaction Documents as exhibits
thereto, with the Commission within the time required by the Exchange Act. From and after the issuance of such press release, the Company
represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers
by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents, including, without limitation
the Placement Agent, in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the issuance
of such press release, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents, including,
without limitation the Placement Agent, employees or Affiliates on the one hand, and any of the Purchasers or any of their Affiliates
on the other hand, shall terminate and be of no further force or effect. The Company understands and confirms that each Purchaser shall
be relying on the foregoing covenant in effecting transactions in securities of the Company. The Company and each Purchaser shall consult
with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor
any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company,
with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release
of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by Law, in which case
the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding
the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing
with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (a) as required
by federal securities Law in connection with the filing of final Transaction Documents with the Commission and (b) to the extent such
disclosure is required by Law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice
of such disclosure permitted under this clause (b).
4.5 Stockholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person,
that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving
Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.
4.6 Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, which shall be disclosed pursuant to Section 4.4 and except for any Purchaser who is an officer or director of the Company
the Company covenants and agrees that neither it, nor any other Person acting on its behalf will provide any Purchaser or its agents
or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public information, unless
prior thereto such Purchaser shall have consented to the receipt of such information and agreed with the Company to keep such information
confidential. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions
in securities of the Company. To the extent that the Company, any of its Subsidiaries, or any of their respective officers, directors,
agents, employees or Affiliates delivers any material, non- public information to a Purchaser without such Purchaser’s consent,
the Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality to the Company, any of its Subsidiaries,
or any of their respective officers, directors, agents, including, without limitation, the Placement Agent, employees or Affiliates,
or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates not
to trade on the basis of, such material, non-public information, provided that the Purchaser shall remain subject to applicable Law.
To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information
regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current
Report on Form 8-K. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting
transactions in securities of the Company.
4.7 Use of Proceeds. The Company shall use approximately $12,000,000 from the net proceeds from the sale of Securities under this
Agreement to retire the Class B Common Stock owned by Joseph F. Basile III and the remainder of the proceeds for general corporate operating
expenses. The Company may not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than payment
of trade payables in the ordinary course of the Company’s business and prior practices), (b) for the redemption of any Common Stock
or Common Stock Equivalents, (c) for the settlement of any outstanding litigation, or (d) in violation of FCPA or OFAC regulations.
4.8 Indemnification of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser
and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding
a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any
and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in
settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or
incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company
in this Agreement or in the other Transaction Documents, (b) any action instituted against the Purchaser Parties in any capacity, or
any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect
to any of the transactions contemplated by the Transaction Documents (unless such action is solely based upon a material breach of such
Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings
such Purchaser Party may have with any such stockholder or any violations by such Purchaser Party of state or federal securities Laws
or any conduct by such Purchaser Party which is finally judicially determined to constitute fraud, gross negligence or willful misconduct)
or (c) in connection with any registration statement of the Company providing for the resale by the Purchasers of the Warrant Shares
issued and issuable upon exercise of the Warrants, the Company will indemnify each Purchaser Party, to the fullest extent permitted by
applicable Law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’
fees) and expenses, as incurred, arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained
in such registration statement, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any prospectus or supplement thereto, in the light of the circumstances under which they
were made) not misleading, except to the extent, but only to the extent, that such untrue statements or omissions are based solely upon
information regarding such Purchaser Party furnished in writing to the Company by such Purchaser Party expressly for use therein, or
(ii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule
or regulation thereunder in connection therewith). If any action shall be brought against any Purchaser Party in respect of which indemnity
may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have
the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser
Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the
position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees
and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y)
for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld
or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s
breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other
Transaction Documents. The indemnification required by this Section 4.8 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein
shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities
the Company may be subject to pursuant to Law.
4.9 Reservation of Common Stock. As of the date of this Agreement, the Company has reserved and the Company shall continue to reserve
and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling
the Company to issue Conversion Shares pursuant to this Agreement and the Certificate of Designation and Warrant Shares pursuant to any
exercise of the Warrants.
4.10 Listing of Common Stock. The Company hereby agrees to use commercially reasonable efforts to maintain the listing or quotation
of the Common Stock on the Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall apply
to list or quote all of the Conversion Shares and Warrant Shares on such Trading Market and promptly secure the listing of all of the
Conversion Shares and Warrant Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock
traded on any other Trading Market, it will then include in such application all of the Conversion Shares and Warrant Shares, and will
take such other action as is necessary to cause all of the Conversion Shares and Warrant Shares to be listed or quoted on such other
Trading Market as promptly as possible. The Company will then take all action reasonably necessary to continue the listing and trading
of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic transfer
through the Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment of
fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer.
4.11
Reserved.
4.12 Equal Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration
is also offered to all of the parties to the Transaction Documents. For clarification purposes, (a) this provision constitutes a separate
right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat
the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or otherwise and (b) participation in future offerings shall not be considered consideration
under this Section 4.12.
4.13 Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that
neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at
such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as
described in Section 4.4. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described
in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction. Notwithstanding the
foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that
(i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities
of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial
press release as described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any
securities of the Company in accordance with applicable securities Laws from and after the time that the transactions contemplated by
this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4 and (iii) no Purchaser
shall have any duty of confidentiality or duty not to trade in the securities of the Company to the Company or its Subsidiaries, or any
of their respective officers, directors, employees, Affiliates or agents, including, without limitation, the Placement Agent, after the
issuance of the initial press release as described in Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that is
a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and
the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of
such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Securities covered by this Agreement.
4.14 Capital Changes. Until the date that is one hundred twenty (120) days from the Effective Date, the Company shall not undertake
a reverse or forward stock split or reclassification of the Common Stock without the prior written consent of the Purchasers holding
a majority in interest of the Shares.
4.15 Acknowledgment of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding
shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its
obligations under the Transaction Documents, including, without limitation, its obligation to issue the Shares in accordance with this
Agreement and Conversion Shares in accordance with the Certificate of Designation and Warrant Shares pursuant to the Transaction Documents,
are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of
any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance may
have on the ownership of the other stockholders of the Company.
4.17 Reserved.
4.18 Exercise Procedures. The form of Notice of Exercise included in the Warrants sets forth the totality of the procedures required
of the Purchasers in order to exercise the Warrants. No additional legal opinion, other information or instructions shall be required
of the Purchasers to exercise their Warrants. Without limiting the preceding sentences, no ink-original Notice of Exercise shall be required,
nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required in order to
exercise the Warrants. The Company shall honor exercises of the Warrants and shall deliver Warrant Shares in accordance with the terms,
conditions and time periods set forth in the Transaction Documents.
4.19 Lock-Up Agreements. The Company shall not amend, modify, waive or terminate any provision of any of the Lock-Up Agreements (and
any lock-up agreements contemplated in the Lock-Up Agreements) and shall enforce the provisions of each Lock-Up Agreement (and any lock-up
agreements contemplated in the Lock-Up Agreements) in accordance with its terms. If any party to a Lock-Up Agreement (and any lock-up
agreements contemplated in the Lock-Up Agreements) breaches any provision of a Lock-Up Agreement, the Company shall promptly use commercially
reasonable efforts to seek specific performance of the terms of such Lock-Up Agreement (and any lock- up agreements contemplated in the
Lock-Up Agreements).
4.20 Form D; Blue Sky Filings. If required, the Company agrees to timely file a Form D with respect to the Securities as required under
Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers
at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence
of such actions promptly upon request of any Purchaser.
4.21 Right of Participation. For a period of eighteen (18) months after the date of the Closing, the Purchasers that hold any Shares
shall have the right of first refusal to participate with respect to any offering involving (i) future equity or equity-linked securities
of the Company or (ii) debt of the Company, which is convertible into equity or in which there is an equity component.
ARTICLE
V.
MISCELLANEOUS
5.1 Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without
any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the
Closing has not been consummated on or before the fifth (5th) Trading Day following the date of this Agreement; provided, however,
that no such termination will affect the right of any party to sue for any breach by any other party (or parties).
5.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including,
without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any exercise notice
delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.
5.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding
of the parties with respect to the subject matter of this Agreement and of the Transaction Documents and supersede all prior agreements
and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents,
exhibits and schedules.
5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication is
delivered via facsimile at the facsimile number or email at the email address as set forth on the signature pages attached hereto at
or prior to 5:30 p.m. (New York, New York time) on a Trading Day, (b)
the next Trading Day after the time of transmission, if such notice or communication is delivered via facsimile at the facsimile number
or email at the email address as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30
p.m. (New York, New York time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth on the signature pages attached hereto. To the extent that any notice provided
pursuant to any Transaction Document constitutes, or contains material, non-public information regarding the Company or any of the Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument
executed, in the case of an amendment, by the Company and Purchasers holding at least 50.1% in of the Shares then outstanding based on
the initial Subscription Amounts hereunder (or, prior to the Closing, the Company and each Purchaser) or, in the case of a waiver, by
the party against whom enforcement of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately
and adversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers)
shall also be required. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed
to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement
of this Agreement, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of
any such right. Any proposed amendment or waiver that disproportionately, materially and adversely affects the rights and obligations
of any Purchaser relative to the comparable rights and obligations of the other Purchasers shall require the prior written consent of
such adversely affected Purchaser. Any amendment effected in accordance with this Section 5.5 shall be binding upon each Purchaser and
holder of Securities and the Company.
5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions of this Agreement.
5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and
permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent
of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom
such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”
5.8 No Third-Party Beneficiaries. The Placement Agent shall be the third-party beneficiary of the representations and warranties of
the Company in Section 3.1 and the representations and warranties of the Purchasers in Section 3.2. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision
of this Agreement be enforced by, any other Person, except as otherwise set forth in Section 4.8 and this Section 5.8.
5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the internal Laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto
or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively
in the state and federal courts sitting in New York County, New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in New York county, Borough of Manhattan, New York for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement
of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or Proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding is improper or is an inconvenient
venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such Action or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by Law. If any party shall commence an Action or Proceeding to enforce any provisions of the Transaction
Documents, then, in addition to the obligations of the Company under Section 4.8, the prevailing party in such Action or Proceeding shall
be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such Action or Proceeding.
5.10 Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.
5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have been executed by each party and delivered to each other party,
it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature
page were an original thereof.
5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions
of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may
rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election
in whole or in part without prejudice to its future actions and rights; provided, however, that, in the case of a rescission
of an exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock subject to any such rescinded
exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such shares and
the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant (including, issuance
of a replacement warrant certificate evidencing such restored right).
5.14 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to
the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also
pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by Law, including recovery of damages,
each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction
Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that
a remedy at Law would be adequate.
5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document
or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including,
without limitation, any bankruptcy Law, state or federal Law, common Law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not occurred.
5.17 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document
are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other
Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as
a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional
party in any Proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation
of the Transaction Documents. For reasons of administrative convenience only, each Purchaser and its respective counsel have chosen to
communicate with the Company through the legal counsel to the Placement Agent. The legal counsel of the Placement Agent does not represent
any of the Purchasers and only represents the Placement Agent. The Company has elected to provide all Purchasers with the same terms
and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers.
It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between
the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.
5.18 Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts
have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts
are due and payable shall have been canceled.
5.19 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business
Day.
5.20 Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise
the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each
and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the
date of this Agreement.
5.21 **WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY,
THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.**
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
**JFB CONSTRUCTION HOLDINGS**
By:
Name:
Title Address for Notice:
1300 S. Dixie Highway, Suite B Lantana, FL 33462
Email:
[PURCHASER
SIGNATURE PAGES TO JFB CONSTRUCTION HOLDINGS SECURITIES PURCHASE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.
Name
of Purchaser:
*Signature
of Authorized Signatory of Purchaser:*
Name
of Authorized Signatory:
Title
of Authorized Signatory:
Email
Address of Authorized Signatory:
Address
for Notice to Purchaser:
Address
for Delivery of Securities to Purchaser (if not same as address for notice):
Subscription
Amount:
Shares:
Common
A Warrants:
Common
B Warrant:
EIN
Number:
EXHIBIT
A-1
**COMMON
STOCK PURCHASE WARRANT A**
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON
STOCK PURCHASE WARRANT A JFB CONSTRUCTION HOLDINGS
Warrant Shares: 8,068,933 Issue Date: September 29, 2025
THIS
COMMON STOCK PURCHASE WARRANT A (the “Warrant”) certifies that, for value received, American Ventures LLC, Series
XIV JFB or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the Issue Date (the “Exercise Date”) and on or prior to
5:00 p.m. (New York, New York time) on September 29, 20281 (the “Termination Date”) but not thereafter,
to subscribe for and purchase from JFB Construction Holdings, a Nevada corporation (the “Company”), up to 8,068,933
shares (as subject to adjustment hereunder, the “Warrant Shares”) of the Company’s Common Stock (as defined
below). The purchase price of one share of Common Stock 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 or in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated as of September
26, 2025, among the Company and the purchasers signatory thereto:
“Adjustment
Period” has the meaning set forth in Section 3(b).
“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.
“Alternate
Consideration” has the meaning set forth in Section 3(e).
“Applicable
Price” has the meaning set forth in Section 3(b).
“Base
Share Price” has the meaning set forth in Section 3(b).
“Black
Scholes Value” has the meaning set forth in Section 3(e).
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or other
day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Convertible
Securities” has the meaning set forth in Section 3(b)(1).
“Convertible
Securities Shares” has the meaning set forth in Section 3(b)(1).
“Dilutive
Issuance” has the meaning set forth in Section 3(b).
“Distribution”
has the meaning set forth in Section 3(d).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Floor
Price” means a price equal to $2.72, which shall be appropriately adjusted for any stock dividend, stock split, stock combination,
reclassification or similar event or transaction.
“Fundamental
Transaction” has the meaning set forth in Section 3(e).
“Nasdaq
Minimum Price” means the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding
the execution of the SPA, or (ii) the average Nasdaq Official Closing Price of the Common Stock (as reflected on Nasdaq.com) for the
five trading days immediately preceding the signing of the SPA.
“New
Exercise Price” has the meaning set forth in Section 3(b).
“New
Issuance Price” has the meaning set forth in Section 3(b).
“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.
“Primary
Security” has the meaning set forth in Section 3(b)(4).
“Purchase
Rights” has the meaning set forth in Section 3(c).
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary”
means any subsidiary of the Company required to be listed pursuant to Item 601(b)(21) of Regulation S-K.
“Successor
Entity” has the meaning set forth in Section 3(e).
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, the New York Stock
Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
“Transfer
Agent” means ClearTrust Transfer, LLC, the current transfer agent of the Company, with a mailing address of 16540 Pointe Village
Drive, Suite 210, Lutz, FL 33558 and a phone number of (813) 235-4490, and any successor transfer agent of the Company.
“Unit”
has the meaning set forth in Section 3(b)(4).
“Valuation
Event” has the meaning set forth in Section 3(b)(4).
Section
2. Exercise.
a) Exercise of Warrant. 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 Exercise Date and on or before the Termination Date by delivery to the Company (and solely for informational
purposes, to Dominari Securities LLC) 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 Exhibit A (the “Notice of Exercise”). Within the earlier of (i) first (1st) 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 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. **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.**
b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $5.75, subject to adjustment hereunder
(the “Exercise Price”).
c) Cashless Exercise. If at any time after the Exercise Date, there is no effective registration statement registering, as required
pursuant to the terms and conditions of the Registration Rights Agreement, or the prospectus contained therein is not available for the
resale of the Warrant Shares by 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 Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) 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.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York, New York time) to 4:02 p.m. (New York, New York time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market
(or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common
Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
If
Warrant Shares are issued in such a cashless exercise, the parties hereto acknowledge and agree that in accordance with Section 3(a)(9)
of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of
the Warrant Shares being issued may be tacked on to the holding period of this Warrant. Assuming (i) the Holder is not an Affiliate of
the Company, and (ii) either (A) all of the applicable conditions of Rule 144 promulgated under the Securities Act with respect to Holder
and the Warrant Shares are met in the case of such a cashless exercise or (B) the sale of the Warrant Shares is covered by an effective
registration statement and the prospectus is current, the Company agrees that the Company will cause the removal of the legend from such
Warrant Shares (including by delivering an opinion of the Company’s counsel to the Company’s transfer agent at its own expense
to ensure the foregoing), and the Company agrees that the Holder is under no obligation to sell the Warrant Shares issuable upon the
exercise of the Warrant prior to removing the legend. 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
the sale of, 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.
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 the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale
limitations pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate or
book-entry statement, 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 by the Warrant Share
Delivery Date. Notwithstanding anything herein to the contrary, upon delivery of the Notice of Exercise, the Holder shall be deemed for
purposes of Regulation SHO under the Exchange Act to have become the holder of the Warrant Shares irrespective of the date of delivery
of the Warrant Shares. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise
by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each
$1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise),
$10 per Trading Day (increasing to $20 per Trading Day on the third Trading Day after the Warrant Share Delivery Date) for each Trading
Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees
to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As
used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days,
on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of
Exercise.
ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise; 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).
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, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon
such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x)
the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds
(y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection
with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B)
at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise
was not honored and return any amount received by the Company in respect of the Exercise Price for those Warrant Shares (in which case
such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had
the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000, under
clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the
Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence
of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
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, 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.
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 shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised 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
nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock 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 shares of Common Stock, a Holder may rely on
the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed
with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of
a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date
as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
f) Issuance Limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant. Notwithstanding
the foregoing and for avoidance of doubt, to comply with the rules of The Nasdaq Stock Market LLC, 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, to the to the extent that after giving
effect to such issuance after exercise as set forth on the applicable Notice of Exercise such Holder or any of its affiliates would beneficially
own in excess of 19.99% of the Common Stock or such lesser percentage required by The Nasdaq Stock Market LLC without first obtaining
stockholder approval in accordance with the listing rules of The Nasdaq Stock Market LLC.
Section
3. Certain Adjustments. Notwithstanding anything to the contrary in this Warrant, the adjustment provisions of this Warrant
are subject to the Nasdaq Minimum Price.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares
of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the
Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of
shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Equity Sales. If, at any time while this Warrant is outstanding (such period, the “Adjustment Period”),
the Company issues, sells, enters into an agreement to sell, or grants any option to purchase, or sells, enters into an agreement to
sell, or grants any right to reprice, or otherwise disposes of or issues (or announces any offer, sale, grant, or any option to purchase
or other disposition), or, in accordance with this Section 3(b), is deemed to have issued or sold, any shares of Common Stock or Common
Stock Equivalents 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 simultaneously with the
consummation (or, if earlier, the announcement) of such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount
(the “New Exercise Price”) equal to the lower of (A) the New Issuance Price and (B) the lowest VWAP during the five
(5) consecutive Trading Days immediately following the Dilutive Issuance (such lower price, the “Base Share Price”)
and the number of Warrant Shares issuable hereunder shall be proportionately increased such that the aggregate Exercise Price of this
Warrant on the Issuance Date for the Warrant Shares then outstanding shall remain unchanged; provided that the Base Share Price shall
not be less than the Floor Price. If the Company enters into a Variable Rate Transaction (as defined in the Purchase Agreement); *provided,
that*, with respect to a Variable Rate Transaction that is an equity line of credit or an “at-the-market offering”, this
Section 3(b) shall apply to any issuances of Common Stock or Common Stock Equivalents thereunder rather than the entry into the agreement
with respect thereto), the Company shall be deemed to have issued shares of Common Stock or Common Stock Equivalents at the lowest possible
price, conversion price, or exercise price at which such securities may be issued, converted, or exercised. For the avoidance of doubt,
in the event the Exercise Price has been adjusted pursuant to this Section 3(b) and the Dilutive Issuance that triggered such adjustment
does not occur, is not consummated, is unwound, or is canceled after the facts for any reason whatsoever, in no event shall the Exercise
Price be readjusted to the Exercise Price that would have been in effect if such Dilutive Issuance had not occurred or been consummated.
For all purposes of the foregoing, the following shall be applicable:
(1) Issuance of Options. If, during the Adjustment Period, the Company in any manner grants or sells any Options and the lowest price
per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise, or exchange
of any convertible securities (“Convertible Securities”) issuable upon exercise of any such Option (such shares of
Common Stock 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 shares of Common Stock shall be deemed to be outstanding and
to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes
of this Section 3(i)(1), the “lowest price per share for which one share of Common Stock 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.
(2) Issuance of Convertible Securities. If, during the Adjustment Period, the Company in any manner issues or sells any Convertible
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(b)(2), 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(b)(2),
except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issue or sale.
(3) 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 shares of Common Stock 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(i)(3), 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 Share 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(i)(3) shall be made
if such adjustment would result in an increase of the Exercise Price then in effect.
(4) 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 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 share of Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in
accordance with Section 3(i)(1) or 3(i)(2) above and (z) the lowest VWAP of the shares of Common Stock on any Trading Day during the
five (5) consecutive Trading Days immediately following the consummation (or, if applicable, the announcement) of such Dilutive Issuance
(for the avoidance of doubt, if such public announcement, if applicable, is released prior to the opening of the Principal Market on
a Trading Day, such Trading Day shall be the first Trading Day in such five (5) Trading Day period and if this Warrant is exercised on
any given Exercise Date during any such period, the Holder may elect to earlier end such period (including, solely with respect to such
portion of this Warrant exercised on such applicable Exercise Date)). If any shares of Common Stock, Options, or Convertible Securities
are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount
of cash received by the Company therefor. If any shares of Common Stock, Options, or Convertible Securities are issued or sold for a
consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration,
except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company
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 shares of Common Stock, Options, or Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed
to be the fair market value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares
of Common Stock, Options or Convertible Securities (as the case may be). The fair 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.
(5) Record Date. If, during the Adjustment Period, the Company takes a record of stockholders for the purpose of entitling them (A)
to receive a dividend or other distribution payable in shares of Common Stock, Options, or in Convertible Securities or (B) to subscribe
for or purchase shares of Common Stock, Options, or Convertible Securities, then such record date will be deemed to be the date of the
issue or sale of shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had
held the number of shares of Common Stock acquirable upon complete 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 shares
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that to the
extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) Pro Rata Distributions. During such time as this 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 holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this 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 shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date 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 shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in
the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation). 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.
e) Fundamental
Transaction. If, at any time while the Warrants are outstanding:
1)
the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into
another person;
2)
the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions;
3)
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 shares of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property
and has been accepted by the holders of 50% or more of the Company’s shares of Common Stock or 50% or more of the total voting
power of the Company’s shares of Common Stock;
4)
the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization
of shares of Common Stock or any compulsory share exchange pursuant to which the shares of Common Stock are effectively converted into
or exchanged for other securities, cash or property; or
5)
the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another person
or group of persons whereby such other person or group acquires 50% or more of the Company’s shares of Common Stock or 50% or more
of the total voting power of the Company’s shares of Common Stock (each a “Fundamental Transaction”);
then,
upon any subsequent exercise of a Warrant, the Holder shall have the right to receive, for each share of Common Stock 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 shares of capital stock 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 shares of Common Stock 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 share of
Common Stock in such Fundamental Transaction and the Company shall apportion the Exercise Price among the Alternate Consideration in
a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock
are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given
the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.
Notwithstanding
anything to the contrary, in the event of a Fundamental Transaction, other than a merger where the primary purpose is to the change the
Company’s domicile, 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 shares of Common Stock 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 shares of Common Stock
are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided,
further, that if holders of shares of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction,
such holders will be deemed to have received common stock 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 contemplated 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 contemplated 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 public announcement of the applicable contemplated 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(e) and (D) a remaining option time equal to the time between the date of the public announcement of the applicable
contemplated 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(e) 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
shares of Common Stock 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 shares of Common Stock prior 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 be added to the term “Company” under this Warrant (so that from
and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer
instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally with the Company), and may exercise
every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations
of the Company prior thereto under this Warrant with the same effect as if the Company and such Successor Entity or Successor Entities,
jointly and severally, had been named as the Company herein.
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 shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding. For the avoidance
of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless of (i) whether the Company has
sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs
prior to the Exercise Date.
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 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 Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is 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 email to the Holder at its last 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 stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled
to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to
deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to
be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. 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.
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 of the Company.
i) Shareholder Approval. If required, the Company shall hold a special meeting of shareholders (which may also be at the annual meeting
of shareholders) at the earliest practicable date after the date hereof, but in no event later than forty five (45) after the applicable
date for the purpose of obtaining shareholder approval with the recommendation of the Board of Directors that such proposal be approved,
and the Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals
in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal. The Company shall
use its reasonable best efforts to obtain such shareholder approval, and officers, directors and shareholders shall cast their proxies
in favor of such proposal. If the Company does not obtain shareholder approval at the first meeting, the Company shall call a meeting
every three (3) months thereafter to seek shareholder approval until the earlier of the date shareholder approval is obtained or the
Warrants are no longer outstanding. Notwithstanding the foregoing, the Company may, in lieu of holding a special meeting of shareholders
as aforesaid, obtain the written consent of a majority of its shareholders covering the shareholder approval so long as prior to forty
five (45) days after the applicable date such written consents are obtained and in accordance with Exchange Act Rule 14c-2 at least twenty
(20) days shall have transpired from the date on which a written information statement containing the information specified in Schedule
14C detailing such shareholder approval shall have been filed with the Commission and delivered to shareholders of the Company.
Section
4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof
and to the provisions of Section 4.1 of the Purchase Agreement, 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. 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 Issue 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 Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company 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.
d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer
of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under
applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public
information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or
transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.
e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant
and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to
or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities
law, except pursuant to sales registered or exempted under the Securities Act.
Section
5. 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 the rights of a Holder to receive Warrant Shares on a “cashless exercise,” and to
receive the cash payments contemplated pursuant to Sections 2(d)(i) and 2(d)(iv), in no event will the Company be required to net cash
settle an exercise of this Warrant.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading
Day.
d) Authorized
Shares.
The
Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with
the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants
that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly
issued, fully paid and nonassessable (which means that no further sums are required to be paid by the holders thereof in connection with
the issue thereof) and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and 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.
e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined
in accordance with the provisions of the Purchase Agreement.
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, notwithstanding the fact that
the right to exercise this Warrant terminates on the Termination Date. No provision of this Warrant shall be construed as a waiver by
the Holder of any rights which the Holder may have under the federal securities laws and the rules and regulations of the Commission
thereunder. Without limiting any other provision of this Warrant or the Purchase Agreement, 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 notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall
be delivered in accordance with the notice provisions of the Purchase Agreement.
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 Common Stock 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 of this Warrant, 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.
*(Signature
Page Follows)*
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.
**JFB CONSTRUCTION HOLDINGS**
By:
Joseph F. Basile III
Chief Executive Officer
EXHIBIT
A
NOTICE
OF EXERCISE
TO: **JFB CONSTRUCTION HOLDINGS**
(1)
The undersigned hereby elects to purchase Warrant Shares of the Company pursuant to the terms of the attached Warrant dated
September 29, 2025 (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, payable to the Company; 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:
(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the
Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name
of Investing Entity:
*Signature
of Authorized Signatory of Investing Entity*:
Name
of Authorized Signatory:
Title
of Authorized Signatory:
Date:
EXHIBIT
B
ASSIGNMENT
FORM
*(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant 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:
EXHIBIT
A-2
**COMMON
STOCK PURCHASE WARRANT B**
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON
STOCK PURCHASE WARRANT B
JFB
CONSTRUCTION HOLDINGS
Warrant Shares: 8,068,933 Issue Date: September 29, 2025
THIS
COMMON STOCK PURCHASE WARRANT B (the “Warrant”) certifies that, for value received, American Ventures LLC, Series
XIV JFB or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the Issue Date (the “Exercise Date”) and on or prior to
5:00 p.m. (New York, New York time) on September 29, 20281 (the “Termination Date”) but not thereafter,
to subscribe for and purchase from JFB Construction Holdings, a Nevada corporation (the “Company”), up to 8,068,933
shares (as subject to adjustment hereunder, the “Warrant Shares”) of the Company’s Common Stock (as defined
below). The purchase price of one share of Common Stock 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 or in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated as of September
26, 2025, among the Company and the purchasers signatory thereto:
“Adjustment
Period” has the meaning set forth in Section 3(b).
“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.
“Alternate
Consideration” has the meaning set forth in Section 3(e).
“Applicable
Price” has the meaning set forth in Section 3(b).
“Base
Share Price” has the meaning set forth in Section 3(b).
“Black
Scholes Value” has the meaning set forth in Section 3(e).
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or other
day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Convertible
Securities” has the meaning set forth in Section 3(b)(1).
“Convertible
Securities Shares” has the meaning set forth in Section 3(b)(1).
“Dilutive
Issuance” has the meaning set forth in Section 3(b).
“Distribution”
has the meaning set forth in Section 3(d).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Floor
Price” means a price equal to $2.72, which shall be appropriately adjusted for any stock dividend, stock split, stock combination,
reclassification or similar event or transaction.
“Fundamental
Transaction” has the meaning set forth in Section 3(e).
“Nasdaq
Minimum Price” means the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding
the execution of the SPA, or (ii) the average Nasdaq Official Closing Price of the Common Stock (as reflected on Nasdaq.com) for the
five trading days immediately preceding the signing of the SPA.
“New
Exercise Price” has the meaning set forth in Section 3(b).
“New
Issuance Price” has the meaning set forth in Section 3(b).
“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.
“Primary
Security” has the meaning set forth in Section 3(b)(4).
“Purchase
Rights” has the meaning set forth in Section 3(c).
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary”
means any subsidiary of the Company required to be listed pursuant to Item 601(b)(21) of Regulation S-K.
“Successor
Entity” has the meaning set forth in Section 3(e).
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, the New York Stock
Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
“Transfer
Agent” means ClearTrust Transfer, LLC, the current transfer agent of the Company, with a mailing address of 16540 Pointe Village
Drive, Suite 210, Lutz, FL 33558 and a phone number of (813) 235-4490, and any successor transfer agent of the Company.
“Unit”
has the meaning set forth in Section 3(b)(4).
“Valuation
Event” has the meaning set forth in Section 3(b)(4).
Section
2. Exercise.
a) Exercise of Warrant. 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 Exercise Date and on or before the Termination Date by delivery to the Company (and solely for informational
purposes, to Dominari Securities LLC) 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 Exhibit A (the “Notice of Exercise”). Within the earlier of (i) first (1st) 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 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. **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.**
b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $6.25, subject to adjustment hereunder
(the “Exercise Price”).
c) Cashless Exercise. If at any time after the Exercise Date, there is no effective registration statement registering, as required
pursuant to the terms and conditions of the Registration Rights Agreement, or the prospectus contained therein is not available for the
resale of the Warrant Shares by 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 Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) 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.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York, New York time) to 4:02 p.m. (New York, New York time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market
(or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common
Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
If
Warrant Shares are issued in such a cashless exercise, the parties hereto acknowledge and agree that in accordance with Section 3(a)(9)
of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of
the Warrant Shares being issued may be tacked on to the holding period of this Warrant. Assuming (i) the Holder is not an Affiliate of
the Company, and (ii) either (A) all of the applicable conditions of Rule 144 promulgated under the Securities Act with respect to Holder
and the Warrant Shares are met in the case of such a cashless exercise or (B) the sale of the Warrant Shares is covered by an effective
registration statement and the prospectus is current, the Company agrees that the Company will cause the removal of the legend from such
Warrant Shares (including by delivering an opinion of the Company’s counsel to the Company’s transfer agent at its own expense
to ensure the foregoing), and the Company agrees that the Holder is under no obligation to sell the Warrant Shares issuable upon the
exercise of the Warrant prior to removing the legend. 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
the sale of, 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.
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 the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale
limitations pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of a certificate or
book-entry statement, 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 by the Warrant Share
Delivery Date. Notwithstanding anything herein to the contrary, upon delivery of the Notice of Exercise, the Holder shall be deemed for
purposes of Regulation SHO under the Exchange Act to have become the holder of the Warrant Shares irrespective of the date of delivery
of the Warrant Shares. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise
by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each
$1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise),
$10 per Trading Day (increasing to $20 per Trading Day on the third Trading Day after the Warrant Share Delivery Date) for each Trading
Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees
to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As
used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days,
on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of
Exercise.
ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise; 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).
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, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon
such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x)
the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds
(y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection
with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B)
at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise
was not honored and return any amount received by the Company in respect of the Exercise Price for those Warrant Shares (in which case
such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had
the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000, under
clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the
Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence
of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
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, 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.
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 shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised 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
nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock 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 shares of Common Stock, a Holder may rely on
the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed
with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of
a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date
as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
f) Issuance Limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant. Notwithstanding
the foregoing and for avoidance of doubt, to comply with the rules of The Nasdaq Stock Market LLC, 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, to the to the extent that after giving
effect to such issuance after exercise as set forth on the applicable Notice of Exercise such Holder or any of its affiliates would beneficially
own in excess of 19.99% of the Common Stock or such lesser percentage required by The Nasdaq Stock Market LLC without first obtaining
stockholder approval in accordance with the listing rules of The Nasdaq Stock Market LLC.
Section
3. Certain Adjustments. Notwithstanding anything to the contrary in this Warrant, the adjustment provisions of this Warrant
are subject to the Nasdaq Minimum Price.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares
of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the
Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such
event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise
Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after
the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Equity Sales. If, at any time while this Warrant is outstanding (such period, the “Adjustment Period”),
the Company issues, sells, enters into an agreement to sell, or grants any option to purchase, or sells, enters into an agreement to
sell, or grants any right to reprice, or otherwise disposes of or issues (or announces any offer, sale, grant, or any option to purchase
or other disposition), or, in accordance with this Section 3(b), is deemed to have issued or sold, any shares of Common Stock or Common
Stock Equivalents 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 simultaneously with the
consummation (or, if earlier, the announcement) of such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount
(the “New Exercise Price”) equal to the lower of (A) the New Issuance Price and (B) the lowest VWAP during the five
(5) consecutive Trading Days immediately following the Dilutive Issuance (such lower price, the “Base Share Price”)
and the number of Warrant Shares issuable hereunder shall be proportionately increased such that the aggregate Exercise Price of this
Warrant on the Issuance Date for the Warrant Shares then outstanding shall remain unchanged; provided that the Base Share Price shall
not be less than the Floor Price. If the Company enters into a Variable Rate Transaction (as defined in the Purchase Agreement); *provided,
that*, with respect to a Variable Rate Transaction that is an equity line of credit or an “at-the-market offering”, this
Section 3(b) shall apply to any issuances of Common Stock or Common Stock Equivalents thereunder rather than the entry into the agreement
with respect thereto), the Company shall be deemed to have issued shares of Common Stock or Common Stock Equivalents at the lowest possible
price, conversion price, or exercise price at which such securities may be issued, converted, or exercised. For the avoidance of doubt,
in the event the Exercise Price has been adjusted pursuant to this Section 3(b) and the Dilutive Issuance that triggered such adjustment
does not occur, is not consummated, is unwound, or is canceled after the facts for any reason whatsoever, in no event shall the Exercise
Price be readjusted to the Exercise Price that would have been in effect if such Dilutive Issuance had not occurred or been consummated.
For all purposes of the foregoing, the following shall be applicable:
(1) Issuance of Options. If, during the Adjustment Period, the Company in any manner grants or sells any Options and the lowest price
per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise, or exchange
of any convertible securities (“Convertible Securities”) issuable upon exercise of any such Option (such shares of
Common Stock 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 shares of Common Stock shall be deemed to be outstanding and
to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes
of this Section 3(i)(1), the “lowest price per share for which one share of Common Stock 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.
(2) Issuance of Convertible Securities. If, during the Adjustment Period, the Company in any manner issues or sells any Convertible
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(b)(2), 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(b)(2),
except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issue or sale.
(3) 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 shares of Common Stock 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(i)(3), 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 Share 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(i)(3) shall be made
if such adjustment would result in an increase of the Exercise Price then in effect.
(4) 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 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 share of Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in
accordance with Section 3(i)(1) or 3(i)(2) above and (z) the lowest VWAP of the shares of Common Stock on any Trading Day during the
five (5) consecutive Trading Days immediately following the consummation (or, if applicable, the announcement) of such Dilutive Issuance
(for the avoidance of doubt, if such public announcement, if applicable, is released prior to the opening of the Principal Market on
a Trading Day, such Trading Day shall be the first Trading Day in such five (5) Trading Day period and if this Warrant is exercised on
any given Exercise Date during any such period, the Holder may elect to earlier end such period (including, solely with respect to such
portion of this Warrant exercised on such applicable Exercise Date)). If any shares of Common Stock, Options, or Convertible Securities
are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount
of cash received by the Company therefor. If any shares of Common Stock, Options, or Convertible Securities are issued or sold for a
consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration,
except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company
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 shares of Common Stock, Options, or Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed
to be the fair market value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares
of Common Stock, Options or Convertible Securities (as the case may be). The fair 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.
(5) Record Date. If, during the Adjustment Period, the Company takes a record of stockholders for the purpose of entitling them (A)
to receive a dividend or other distribution payable in shares of Common Stock, Options, or in Convertible Securities or (B) to subscribe
for or purchase shares of Common Stock, Options, or Convertible Securities, then such record date will be deemed to be the date of the
issue or sale of shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had
held the number of shares of Common Stock acquirable upon complete 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 shares
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that to the
extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) Pro Rata Distributions. During such time as this 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 holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this 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 shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date 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 shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in
the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation). 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.
e) Fundamental Transaction. If, at any time while the Warrants are outstanding:
1)
the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into
another person;
2)
the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions;
3)
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 shares of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property
and has been accepted by the holders of 50% or more of the Company’s shares of Common Stock or 50% or more of the total voting
power of the Company’s shares of Common Stock;
4)
the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization
of shares of Common Stock or any compulsory share exchange pursuant to which the shares of Common Stock are effectively converted into
or exchanged for other securities, cash or property; or
5)
the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another person
or group of persons whereby such other person or group acquires 50% or more of the Company’s shares of Common Stock or 50% or more
of the total voting power of the Company’s shares of Common Stock (each a “Fundamental Transaction”);
then,
upon any subsequent exercise of a Warrant, the Holder shall have the right to receive, for each share of Common Stock 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 shares of capital stock 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 shares of Common Stock 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 share of
Common Stock in such Fundamental Transaction and the Company shall apportion the Exercise Price among the Alternate Consideration in
a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock
are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given
the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.
Notwithstanding
anything to the contrary, in the event of a Fundamental Transaction, other than a merger where the primary purpose is to the change the
Company’s domicile, 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 shares of Common Stock 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 shares of Common Stock
are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided,
further, that if holders of shares of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction,
such holders will be deemed to have received common stock 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 contemplated 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 contemplated 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 public announcement of the applicable contemplated 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(e) and (D) a remaining option time equal to the time between the date of the public announcement of the applicable
contemplated 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(e) 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
shares of Common Stock 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 shares of Common Stock prior 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 be added to the term “Company” under this Warrant (so that from
and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer
instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally with the Company), and may exercise
every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall assume all of the obligations
of the Company prior thereto under this Warrant with the same effect as if the Company and such Successor Entity or Successor Entities,
jointly and severally, had been named as the Company herein.
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 shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding. For the avoidance
of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless of (i) whether the Company has
sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs
prior to the Exercise Date.
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 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 Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is 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 email to the Holder at its last 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 stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled
to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to
deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to
be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. 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.
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 of the Company.
i) Shareholder Approval. If required, the Company shall hold a special meeting of shareholders (which may also be at the annual meeting
of shareholders) at the earliest practicable date after the date hereof, but in no event later than forty five (45) after the applicable
date for the purpose of obtaining shareholder approval with the recommendation of the Board of Directors that such proposal be approved,
and the Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals
in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal. The Company shall
use its reasonable best efforts to obtain such shareholder approval, and officers, directors and shareholders shall cast their proxies
in favor of such proposal. If the Company does not obtain shareholder approval at the first meeting, the Company shall call a meeting
every three (3) months thereafter to seek shareholder approval until the earlier of the date shareholder approval is obtained or the
Warrants are no longer outstanding. Notwithstanding the foregoing, the Company may, in lieu of holding a special meeting of shareholders
as aforesaid, obtain the written consent of a majority of its shareholders covering the shareholder approval so long as prior to forty
five (45) days after the applicable date such written consents are obtained and in accordance with Exchange Act Rule 14c-2 at least twenty
(20) days shall have transpired from the date on which a written information statement containing the information specified in Schedule
14C detailing such shareholder approval shall have been filed with the Commission and delivered to shareholders of the Company.
Section
4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof
and to the provisions of Section 4.1 of the Purchase Agreement, 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. 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 Issue 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 Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company 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.
d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer
of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under
applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public
information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or
transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.
e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant
and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to
or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities
law, except pursuant to sales registered or exempted under the Securities Act.
Section
5. 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 the rights of a Holder to receive Warrant Shares on a “cashless exercise,” and to
receive the cash payments contemplated pursuant to Sections 2(d)(i) and 2(d)(iv), in no event will the Company be required to net cash
settle an exercise of this Warrant.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading
Day.
d) Authorized Shares.
The
Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with
the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants
that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly
issued, fully paid and nonassessable (which means that no further sums are required to be paid by the holders thereof in connection with
the issue thereof) and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and 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.
e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined
in accordance with the provisions of the Purchase Agreement.
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, notwithstanding the fact that
the right to exercise this Warrant terminates on the Termination Date. No provision of this Warrant shall be construed as a waiver by
the Holder of any rights which the Holder may have under the federal securities laws and the rules and regulations of the Commission
thereunder. Without limiting any other provision of this Warrant or the Purchase Agreement, 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 notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall
be delivered in accordance with the notice provisions of the Purchase Agreement.
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 Common Stock 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 of this Warrant, 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.
(Signature
Page Follows)
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.
**JFB CONSTRUCTION HOLDINGS**
By:
Joseph F. Basile III
Chief Executive Officer
EXHIBIT
A
NOTICE
OF EXERCISE
TO: **JFB CONSTRUCTION HOLDINGS**
(1)
The undersigned hereby elects to purchase Warrant Shares of the Company pursuant to the terms of the attached Warrant dated
September 29, 2025 (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, payable to the Company; 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:
(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the
Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name
of Investing Entity:
*Signature
of Authorized Signatory of Investing Entity*:
Name
of Authorized Signatory:
Title
of Authorized Signatory:
Date:
EXHIBIT
B
ASSIGNMENT
FORM
*(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant 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:
**EXHIBIT
B**
**LOCK-UP
AGREEMENT**
**LOCK-UP
AGREEMENT**
September
[*], 2025
Dominari
Securities LLC 725 Fifth
Avenue,
23rd Floor New York, NY
10022
Ladies
and Gentlemen:
The
undersigned understands that Dominari Securities LLC (the “**Placement Agent**”) proposes to enter into a placement agency
agreement (the “**Placement Agency Agreement**”) with JFB Construction Holdings, a Nevada corporation (the “**Company**”),
providing, on a “reasonable best efforts” basis, for the unregistered offering (collectively, the “**Offering**”)
of securities of the Company, including, but not limited to, shares of the Company’s Series C Preferred Stock, par value $0.0001
per share (such preferred stock, the “**Shares**”), and purchase warrants (“**Warrants**,” and, together
with the Shares, the “**Securities**”) to purchase shares of common stock, par value $0.0001,
of the Company (“**Common Stock**” ).
To
induce the Placement Agent to continue its efforts in connection with the Offering, the undersigned hereby agrees that, without the prior
written consent of the Placement Agent, the undersigned will not, during the period commencing on the date of the Placement Agency Agreement
and ending one hundred and eighty (180) days after the final closing date under the Placement Agency Agreement (the “**Lock-Up
Period**”), (1) offer, pledge, sell, contract to sell, encumber, grant, lend, hypothecate, pledge or otherwise transfer or dispose
of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition, whether by actual
disposition or effective economic disposition due to cash settlement or otherwise, by the undersigned or any affiliate of the undersigned
or any person in privity with the undersigned or any affiliate of the undersigned), directly or indirectly, or establish or increase
a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange
Act of 1934, as amended (the “**Exchange Act**”), with respect to, any Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock beneficially owned, whether now owned or hereafter acquired by the undersigned or with
respect to which the undersigned has or hereafter acquires the power of disposition (collectively, the “**Lock-Up Securities**”);
(2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership
of the Lock-Up Securities, whether any such transaction described in clause (1) or (2) of this paragraph is to be settled by delivery
of Lock-Up Securities, in cash or otherwise; (3) make any demand for or exercise any right with respect to the registration of any Lock-Up
Securities; or (4) publicly disclose the intention to do anything set forth in clauses (1) through (3) of this paragraph.
Notwithstanding
the foregoing, and subject to the conditions below, the undersigned may transfer Lock-Up Securities without the prior written consent
of the Placement Agent in connection with (a) transactions relating to Lock-Up Securities acquired in open market transactions after
the completion of the Offering; provided that, no filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily
made in connection with subsequent sales of Lock-Up Securities acquired in such open market transactions; (b) transfers of Lock-Up Securities
(i) as a *bona fide* gift, by will or intestacy, (ii) by operation of law, such as pursuant to a qualified domestic order or as
required by a divorce settlement, or (iii) to any immediate family member or to any trust for the direct or indirect benefit of the undersigned
or the family member of the undersigned (for purposes of this lock-up agreement, “immediate family member” means any relationship
by blood, marriage or adoption, not more remote than first cousin); (c) transfers of Lock-Up Securities to a charity or educational institution;
or (d) if the undersigned, directly or indirectly, controls a corporation, partnership, limited liability company or other business entity,
any transfers of Lock-Up Securities to any shareholder, partner or member of, or owner of similar equity interests in, the undersigned,
as the case may be; provided that in the case of any transfer pursuant to the foregoing clauses (b), (c) or (d), (i) any such transfer
shall not involve a disposition for value, (ii) each transferee shall sign and deliver to the Placement Agent a lock-up agreement substantially
in the form of this Lock- up Agreement (this “**Agreement**”) and (iii) no filing under Section 16(a) of the Exchange
Act shall be required or shall be voluntarily made. The undersigned also agrees and consents to the entry of stop transfer instructions
to be in effect solely during the Lock-Up Period (subject to the terms of this lock-up agreement) with the Company’s transfer agent
and registrar against the transfer of the undersigned’s Lock-Up Securities except in compliance with this lock-up agreement.
If
the undersigned is an officer or director of the Company, (i) the undersigned agrees that the foregoing restrictions shall be equally
applicable to any Common Stock that the undersigned may purchase in the Offering; (ii) the Placement Agent agrees that, at least three
(3) business days before the effective date of any release or waiver of the foregoing restrictions in connection with a transfer of Lock-Up
Securities, the Placement Agent will notify the Company of the impending release or waiver; and (iii) the Company has agreed in the Placement
Agency Agreement to announce the impending release or waiver by press release through a major news service or a Current Report on Form
8-K at least two (2) business days before the effective date of such release or waiver. Any release or waiver granted by the Placement
Agent hereunder to any such officer or director shall only be effective two (2) business days after the publication date of such press
release. The provisions of this paragraph will not apply if (a) the release or waiver is effected solely to permit a transfer of Lock-Up
Securities not for consideration and (b) the transferee has agreed in writing to be bound by the same terms described in this Agreement
to the extent and for the duration that such terms remain in effect at the time of such transfer.
No
provision herein shall be deemed to restrict or prohibit (i) the exercise of stock options granted pursuant to any of the Company’s
equity incentive or other compensation plans or the exercise of warrants or conversion of any shares of the Company’s capital stock; *provided that* such restrictions shall apply to any of the Lock-Up Securities issued upon such exercise or conversion, (ii) or
the transfer of shares of the Lock-Up Securities to satisfy withholding obligations for any equity award granted pursuant to the terms
of the Company’s equity incentive or other compensation plans, such as upon exercise, vesting, lapse of substantial risk of forfeiture,
or other similar taxable event, in each case on a “cashless” or “net exercise” basis (which, for the avoidance
of doubt shall not include “cashless” exercise programs involving a broker or other third party), *provided* that as
a condition of any transfer pursuant to this clause (ii), that if the undersigned is required to file a report under Section 16(a) of
the Exchange Act, reporting a reduction in beneficial ownership of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock during the Lock-Up Period, the undersigned shall include a statement in such report, and if applicable
an appropriate disposition transaction code, to the effect that such transfer is being made as a share delivery or forfeiture in connection
with a net value exercise, or as a forfeiture or sale of shares solely to cover required tax withholding, as the case may be, (iii) the
entry into or modification of any plan established in compliance with Rule 10b5-1 of the Exchange Act at any time (other than the entry
into or modification of such plan in such a manner as to cause the sale of any Lock-Up Securities within the Lock-Up Period), (iv) a
sale of 100% of the Company’s outstanding shares of Common Stock, (v) transfers of shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock pursuant to a bona fide third party tender offer made to all holders of the Common
Stock, merger, consolidation or other similar transaction involving a change of control (as defined below) of the Company, including
voting in favor of any such transaction or taking any other action in connection with such transaction, *provided that* in the event
that such merger, tender offer or other transaction is not completed, the Common Stock and any security convertible into or exercisable
or exchangeable for Common Stock shall remain subject to the restrictions set forth herein, (vi) the establishment of any contract, instruction
or plan that satisfies all of the requirements of Rule 10b5-1 (a “Rule 10b5-1 Plan”) under the Exchange Act; *provided*, *however*, that no sales of Common Stock or securities convertible into, or exchangeable or exercisable for, Common Stock, shall
be made pursuant to a Rule 10b5-1 Plan prior to the expiration of the Lock-Up Period; *provided further*, that the Company is not
required to report the establishment of such Rule 10b5- 1 Plan in any public report or filing with the U.S. Securities and Exchange Commission
under the Exchange Act during the Lock-Up Period and does not otherwise voluntarily effect any such public filing or report regarding
such Rule 10b5-1 Plan, and (vi) any demands or requests for, exercise any right with respect to, or take any action in preparation of,
the registration by the Company under the Securities Act of 1933, as amended (the “**Securities Act**”), of the undersigned’s
Lock- Up Securities, provided that no transfer of the undersigned’s Lock-Up Securities registered pursuant to the exercise of any
such right, and no registration statement shall be filed under the Securities Act, with respect to any of the undersigned’s Lock-Up
Securities during the Lock-Up Period. For purposes of clause (v) above, “change of control” shall mean the consummation of
any bona fide third party tender offer, merger, purchase, consolidation or other similar transaction the result of which is that any
“person” (as defined in Section 13(d)(3) of the Exchange Act), or group of persons, becomes the beneficial owner (as defined
in Rules 13d-3 and 13d-5 of the Exchange Act) of a majority of total voting power of the voting stock of the Company.
This
Agreement may not be amended or otherwise modified in any respect without the written consent of each of the Company and the undersigned.
This Agreement shall be construed and enforced in accordance with the laws of the State of New York without regard to the principles
of conflict of laws. The undersigned hereby irrevocably submits to the exclusive jurisdiction of the United States District Court sitting
in the Southern District of New York and the courts of the State of New York located in Manhattan, for the purposes of any suit, action
or proceeding arising out of or relating to this Agreement, and hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that (i) it is not personally subject to the jurisdiction of such court, (ii) the suit, action or proceeding is brought in
an inconvenient forum, or (iii) the venue of the suit, action or proceeding is improper. The undersigned hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by receiving a copy thereof sent to the
Company at the address in effect for notices to it under the Placement Agency Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. The undersigned hereby waives any right to a trial by jury. Nothing contained
in this Agreement shall be deemed to limit in any way any right to serve process in any manner permitted by law. The undersigned agrees
and understands that this Agreement does not intend to create any relationship between the undersigned and the Placement Agent, but that
the Placement Agent is a third-party beneficiary of this Agreement.
The
undersigned understands that the Company and the Placement Agent are relying upon the execution, delivery and performance of this Agreement
in proceeding toward consummation of the Offering and the Company shall be entitled to specific performance of the undersigned’s
obligations hereunder. The undersigned hereby represents that the undersigned has the power and authority to execute, deliver and perform
this Agreement and that this Agreement constitutes the legal, valid and binding obligation of the undersigned, enforceable in accordance
with its terms. Upon request, the undersigned will execute any additional documents necessary in connection with the enforcement hereof.
The undersigned further understands that this Agreement is irrevocable and shall be binding upon the undersigned’s heirs, legal
representatives, successors and assigns from the date of this Agreement.
The
undersigned further understands that, if the Placement Agency Agreement is not executed by December 31, 2025, or if the Placement Agency
Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated for any reason prior to payment
for and the initial delivery of the Common Stock to be sold or an initial closing of the Offering does not occur, then this Agreement
shall automatically be void and of no further force or effect.
Whether
or not the Offering actually occurs depends on a number of factors, including market conditions. Any sale of Securities in the Offering
will only be made pursuant to one or more securities purchase agreements or pursuant to the prospectus with investors identified by the
Placement Agent or to such investors pursuant to the prospectus and related Placement Agency Agreement, the terms of which are subject
to negotiation between the Company, such investors and the Placement Agent.
This
Agreement may not be amended or otherwise modified in any respect without the written consent of each of the Company and the undersigned.
This Agreement shall be construed and enforced in accordance with the laws of the State of New York without regard to the principles
of conflict of laws. The undersigned hereby irrevocably submits to the exclusive jurisdiction of the United States District Court sitting
in the Southern District of New York and the courts of the State of New York located in Manhattan, for the purposes of any suit, action
or proceeding arising out of or relating to this Agreement, and hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that (i) it is not personally subject to the jurisdiction of such court, (ii) the suit, action or proceeding is brought in
an inconvenient forum, or (iii) the venue of the suit, action or proceeding is improper. The undersigned hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by receiving a copy thereof sent to the
Company at the address in effect for notices to it under the Subscription Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. The undersigned hereby waives any right to a trial by jury. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law.
*[Signature
page follows]*
- Very truly yours,
- Date: Name:
- Title:
- Address:
[Signature
Page to Lock-Up Agreement]
**EXHIBIT
C**
**CERTIFICATE
OF DESIGNATION**
**Certificate
of Designation of**
**Series
C Convertible Preferred Stock of**
**JFB
Construction Holdings**
Pursuant
to Section 78.1955 of the
Nevada
Revised Statutes
JFB
Construction Holdings, a Nevada corporation (the “Corporation”), does hereby certify that, pursuant to the authority
contained in its Articles of Incorporation (“Articles”), as amended, and in accordance with the provisions of Section
78.1955 of the Nevada Revised Statutes (the “NRS”), the Corporation’s Board of Directors has duly adopted the
following resolutions creating a series of Preferred Stock designated as Series C Convertible Preferred Stock:
RESOLVED,
that the Corporation hereby designates and creates a series of the authorized Preferred Shares of the Corporation, designated as Series
C Convertible Preferred Stock, as follows:
FIRST:
that, of the 10,000,000 Preferred Shares, having a par value of $0.0001 per share (“Preferred Stock”) authorized to
be issued by the Corporation, 4,400,000 shares are hereby designated as “Series C Convertible Preferred Stock.” The rights,
preferences and limitations granted to and imposed upon the Series C Convertible Preferred Stock are as set forth below:
Section
1. Definitions. For the purposes hereof, the following terms shall have the following meanings:
“Common
Stock” means the Corporation’s common stock, par value $0.0001 per share.
“Conversion”
shall have the meaning set forth in Section 5.
“Conversion
Date” shall have the meaning set forth in Section 5(a).
“Conversion
Period Commencement Date” means the Closing Date (as defined in the Private Purchase Agreement).
“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of the Series C Preferred Stock
in accordance with the terms hereof.
“Governmental
Entity” means any foreign governmental authority, the United States of America, any state of the United States and any political
subdivision of any of the foregoing, and any agency, instrumentality, department, commission, board, bureau, central bank, authority,
court or other tribunal, in each case whether executive, legislative, judicial, regulatory or administrative, having jurisdiction over
the Buyers, a Seller or the Company, any of the Company’s Subsidiaries or their respective property.
“Holder”
means holder of the Series C Preferred Stock.
“Notice
of Conversion” shall have the meaning set forth in Section 5(a).
“Original
Issue Date” means the date of the first issuance of any shares of the Series C Preferred Stock under the terms of the Private
Purchase Agreement.
“Private
Purchase Agreement” means the Securities Purchase Agreement, dated September 26, 2025, between the buyer and seller named therein,
as amended, modified or supplemented from time to time in accordance with its terms.
“Series
C Preferred Stock” means the Corporation’s Series C Convertible Preferred Stock, par value $0.0001 per share.
“Stated
Value” means the stated value of the Series C Convertible Preferred Stock, which shall be $10.00 per share, subject to adjustment
for stock splits, dividends, combinations and related transactions as set forth herein.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange, the OTCQB, OTCQX, Pink Open Market (or any successors to any of the foregoing).
“Triggering
Event” shall have the meaning set forth in Section 7(a).
“Triggering
Redemption Amount” means, the sum of (x) 100% of the consideration paid for the Series C Preferred Stock pursuant to the Private
Purchase Agreement (y) all accrued but unpaid dividends thereon (if any), and (z) all other costs, expenses or amounts due in respect
of the Preferred Stock including, but not limited to legal fees and expenses of legal counsel to the Holder in connection with, related
to and/or arising out of a Triggering Event.
“Triggering
Redemption Payment Date” shall have the meaning set forth in Section 7(b).
Section
2. Designation and Amount. Four Million Four Hundred Thousand (4,400,000) shares of Preferred Stock of the Corporation are hereby
designated as “Series C Convertible Preferred Stock.”
Section
3. Dividends. So long as any shares of Series C Preferred Stock are outstanding, the Corporation shall not, directly or indirectly,
redeem, or declare or pay any cash dividend or distribution on, any securities of the Corporation without the prior express written consent
of the Holders (defined below). In the event that dividends are consented to by the Holders, then the Holders shall be entitled to receive,
and the Corporation shall pay, dividends on shares of Series C Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to
and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the
Common Stock. No other dividends shall be paid on shares of Series C Preferred Stock.
Section
4. Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”),
the entire remaining assets and funds of the Corporation legally available for distribution, if any, shall be distributed first, to the
holders of the Series C Preferred Stock in proportion to the shares of Series C Preferred Stock owned by them, and applied toward the
payment of the Triggering Redemption Amount, and thereafter, any remainder shall then be distributed to the holders of other Preferred
Stock and Common Stock in proportion of the number of such shares then held by them.
Section
5. Conversion. Holders of Series C Preferred Stock shall have the following rights with respect to the conversion (“Conversion”)
of the Series C Preferred Stock into shares of Common Stock:
(a) Conversions at Option of Holder. Subject to and in compliance with the provisions of this Section 5, upon the Conversion Period
Commencement Date, each share of Series C Preferred Stock may, at the option of the Holder, be converted into fully paid and non-assessable
shares of Common Stock, as set forth herein, upon notice (a “Notice of Conversion”) to the Corporation. The Holders
shall effect conversions by providing the Corporation with a Notice of Conversion that shall specify the Conversion Price, the number
of shares of Series C Preferred Stock to be converted, the number of shares of Series C Preferred Stock owned prior to the conversion
at issue, the number of shares of Series C Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion
is to be effected, which date may not be prior to the date the Holder delivers such Notice of Conversion to the Corporation (the “Conversion
Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice
of Conversion to the Corporation is deemed delivered hereunder. To effect conversions, as the case may be, of shares of Series C Preferred
Stock, a Holder shall not be required to surrender the certificate(s) representing such shares of Series C Preferred Stock to the Corporation
unless all of the shares of Series C Preferred Stock represented thereby are so converted, in which case the Holder shall deliver the
certificate representing such shares of Series C Preferred Stock promptly following the Conversion Date at issue. The Corporation shall
issue certificates representing the Conversion Shares promptly, but in no event more than five (5) business days following surrender
by a Holder of the certificate(s) representing the converted shares of Series C Preferred Stock to the Corporation (such date that the
Corporation is required to deliver such certificate(s), the “Delivery Date”).
(b) Conversion Price; Conversion Share*s*. The “Conversion Price” of the Series C Preferred Stock shall be
$5.44. Each share of Series C Preferred Stock shall be convertible into approximately 1.838 shares of Conversion Shares, subject to adjustment
as set forth hereunder, being the result of dividing the Stated Value by the Conversion Price.
(c) Limitations of Conversion. Notwithstanding anything to the contrary herein, the Holders of Series C Preferred Stock may not effectuate
any Conversion and the Corporation may not issue any shares of Common Stock in connection therewith that would be in excess of that number
of shares of Common Stock equivalent to 4.99% of the number of shares of Common Stock (the “Maximum Percentage”); provided, however, that the Holders may effectuate any Conversion and the Corporation shall be obligated to issue shares
of Common Stock in connection therewith that would not trigger such a requirement. To the extent the above limitation applies, the determination
of whether the Series C Preferred Stock held by such Holder shall be convertible (vis-à-vis other convertible, exercisable or
exchangeable securities owned by such Holder or any of its affiliates) and of which such securities shall be convertible, exercisable
or exchangeable (as among all such securities owned by such Holder and its affiliates) shall, subject to such Maximum Percentage limitation,
be determined on the basis of the first submission to the Company for conversion, exercise or exchange (as the case may be). No prior
inability of a Holder to convert Series C Preferred Stock, or of the Company to issue shares of Common Stock to such Holder, pursuant
to this Section 5(c) shall have any effect on the applicability of the provisions of this Section 5(c) with respect to any subsequent
determination of convertibility or issuance (as the case may be). For purposes of this Section 5(c), beneficial ownership and all determinations
and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. The provisions of this Section 5(c) shall
be implemented in a manner otherwise than in strict conformity with the terms of this Section 5(c) (or any portion hereof) which may
be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained, or to make changes
or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this
Section 5(c) shall apply to a successor holder of Series C. Preferred Stock For any reason at any time, upon the written or oral request
of a Holder, the Company shall within one Business Day confirm orally and in writing to such Holder the number of shares of Common Stock
then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock,
including, without limitation, pursuant to this Certificate of Designation.
(d) Stock Splits. If the Corporation, at any time after the Original Issue Date and while at least one share of Series C Preferred
Stock is outstanding: (i) subdivides outstanding shares of Common Stock into a larger number of shares, (ii) combines (including by way
of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iii) issues by reclassification of shares
of Common Stock any shares of capital stock of the Corporation, then in each case the Conversion Price shall be multiplied by a fraction
of which (x) the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately
before such event and (y) the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to this Section shall become effective immediately after the effective date of the applicable event described
in subsections (i) through (iii) above.
(e) Subsequent Rights Offering*s*. In addition to any adjustments pursuant to Section 5(e) above, if at any time the Corporation
grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to
the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired as
if the Holder had held the number of shares of Common Stock convertible from Series C Preferred Stock held by such Holder (without regard
to any limitations on exercise hereof) immediately before the date on which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined
for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the Holder’s right to participate
in any such Purchase Right would result in the Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate
in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto
would not result in the Holder exceeding the Maximum Percentage).
(f) Lower Price Issuances. For a period (a) commencing on the applicable issuance date of the Series C Preferred Stock and (b) ending
on the date that is eighteen months after such issuance date, if the Company issues or sells any securities, including options, warrants
or convertible securities at a price of or with an exercise or conversion price of, or an exchange at, less than the Conversion Price,
then upon such issuance or sale, the Conversion Price shall be reduced to the sale price or the exercise or conversion price of the securities
issued or sold; *provided, however*, that in no event shall the Conversion Price be adjusted to less than $2.77(as
adjusted for stock splits, combinations, recapitalizations and similar events, the “Floor Price”); *provided, further*, that if the Conversion Price is reduced as the result of the issuance of convertible or derivative securities, and
all of such convertible or derivative securities lapse without the issuance of Common Stock, then the Conversion Price shall be re-adjusted
to what it would be but for the issuance of the convertible or derivative securities. Whenever the Conversion Price is adjusted pursuant
to any provision of this Section, the Company shall promptly give notice to the Holder setting forth the Conversion Price after such
adjustment and any resulting adjustment to the number of Conversion Shares and setting forth a statement of the facts requiring such
adjustment (the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive
Issuance Notice pursuant to this Section, upon the occurrence of any Dilutive Issuance or other reduction of the Conversion Rate, the
Holder is entitled to receive a number of Conversion Shares based upon the reduced Conversion Price regardless of whether the Holder
accurately refers to the Conversion Price in the Notice of Exercise. In order to comply with the Rules of the Nasdaq, in no event shall
the adjusted Conversion Price in this Section 5(f) be below the Floor Price set forth in this Section 5(f).
(g) Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be.
(h) Reservation of Shares. The Corporation covenants and agrees that any Conversion Shares issued upon the conversion of the Series
C Preferred Stock will, upon issuance, be validly issued and outstanding, fully paid and non-assessable, and free from all taxes, liens
and charges with respect to the issuance thereof. The Corporation further covenants and agrees that the Corporation will at all times
have authorized and reserved a sufficient number of shares of its Common Stock to provide for issuance of the Conversion Shares upon
the conversion of the Series C Preferred Stock.
(i) Payment of Taxes. The Corporation and its paying agent shall be entitled to withhold taxes on all payments on the Series C Preferred
Stock and Conversion Shares to the extent required by law. Prior to the date of any such payment, each Holder shall deliver to the Corporation
or its paying agent a duly executed, valid, accurate and properly completed Internal Revenue Service Form W-9 or Internal Revenue Service
Form W-8, as applicable. The Corporation shall pay any and all documentary, stamp and similar issue or transfer tax due on (A) the issue
of the Series C Preferred Stock and (B) the issue of Conversion Shares; provided, however, in the case of any conversion of Series C
Preferred Stock, the Corporation shall not be required to pay any tax or duty that may be payable in respect of any transfer involved
in the issue and delivery of Conversion Shares in a name other than that of the Holder of the shares to be converted, and no such issue
or delivery shall be made unless and until the person requesting such issue has paid to the Corporation the amount of any such tax or
duty, or has established to the satisfaction of the Corporation that such tax or duty has been paid.
(j) Buy-In. If the Corporation fails, prior to the applicable Delivery Date, to, at its option, (i) deliver to such Holder the applicable
certificate or certificates or (ii) cause its transfer agent to credit the account of such Holder or such Holder’s broker with
the Depository Trust Company through its Deposit Withdrawal Agent Commission system, and if after such Delivery Date such Holder is required
by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm is required to purchase,
shares of Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares which such Holder was entitled to
receive upon the conversion relating to such Delivery Date (a “Buy-In”), then the Corporation shall (A) pay in cash
to such Holder the amount by which (x) such Holder’s total purchase price (including any brokerage commissions) for the shares
of Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such Holder was entitled
to receive from the conversion at issue (or, if less, the number of shares actually delivered in satisfaction of such sale) multiplied
by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions)
and (B) at the option of such Holder, either reissue (if surrendered) the shares of Series C Preferred Stock equal to the number of shares
of Series C Preferred Stock submitted for conversion or deliver to such Holder the number of shares of Common Stock that would have been
issued if the Corporation had timely complied with its delivery requirements. For example, if a Holder purchases shares of Common Stock
having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Series C Preferred Stock
with respect to which the actual sale price (including any brokerage commissions) giving rise to such purchase obligation was a total
of $10,000 under clause (A) of the immediately preceding sentence, the Corporation shall be required to pay such Holder $1,000. The Holder
shall provide the Corporation written notice indicating the amounts payable to such Holder in respect of the Buy-In and, upon request
of the Corporation, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief
with respect to the Corporation’s failure to timely deliver certificates representing shares of Common Stock upon conversion of
the shares of Series C Preferred Stock as required pursuant to the terms hereof.
(k) Partial Liquidated Damages*.* If the Corporation fails to deliver to a Holder shares of Common Stock by the Delivery Date,
the Corporation shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $5,000 of Stated Value of Series
C Preferred Stock being converted, $50 per business day (increasing to $100 per business day on the third business day and increasing
to $200 per business day on the sixth business day after such damages begin to accrue) for each business day after the Delivery Date
until such shares are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue actual
damages for the Corporation’s failure to deliver the shares or pay the cash within the period specified herein and such Holder
shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit a Holder from seeking to enforce damages
pursuant to any other Section hereof or under applicable law.
Section
6. Reacquired Shares. Any shares of Series C Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of preferred stock to be created by resolution
or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.
Section
7. Redemption Upon Triggering Event.
(a)
“Triggering Event” means, wherever used herein, (i) the objection or rejection by the Trading Market, any Governmental
Entity, or any regulatory or self-regulatory agency of any of the Transactions (as defined in the Private Purchase Agreement) on or before
December 31, 2025, or (ii) the failure of any regulatory or self-regulatory agency to approve all of the Transactions, if any such approval
is required, on or before December 31, 2025.
(b)
Upon the occurrence and continuance of a Triggering Event and following a ten (10) day opportunity to cure following written notice from
the Holders to the Corporation, each Holder shall (in addition to all other rights it may have hereunder or under applicable law) have
the right, exercisable at the sole option of such Holder, to require the Corporation to redeem all or any portion of the Series C Preferred
Stock then held by such Holder for a redemption price equal to the full (for fully redemption) or pro rata (for portion redemption) Triggering
Redemption Amount. The Triggering Redemption Amount shall be due and payable within ten (10) Trading Days of the date on which the notice
for the payment therefor is provided by a Holder (the “Triggering Redemption Payment Date”). If the Corporation fails
to pay in full the Triggering Redemption Amount hereunder on the date such amount is due in accordance with this Section, the Corporation
will pay interest thereon at a rate equal to the lesser of ten percent (10%) per annum or the maximum rate permitted by applicable law,
from such date until the Triggering Redemption Amount, plus all such interest thereon, is paid in full.
SECOND:
That such determination of the designation, rights, preferences and limitations relating to the Series C Preferred Stock, was duly made
by the Board of Directors pursuant to the provisions of the Articles of the Corporation, and in accordance with the provisions of NRS
78.1955.
IN
WITNESS WHEREOF, the Corporation has caused this Designation to be duly executed to be effective September 26, 2025.
- JFB Construction
Holdings, a Nevada corporation
- By: */s/
Joseph F. Baile III*
- Joseph F. Basile III
- Chief Executive Officer
---
## EX-10.21
SEC source: [ex10-21.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex10-21.htm)
Exhibit
10.21
PLACEMENT
AGENCY AGREEMENT
September
26, 2025
PERSONAL
AND CONFIDENTIAL
JFB
Construction Holdings
1300 S. Dixie Highway, Suite B
Lantana, FL 33462
Attention:
Joseph F. Basile III
Chief Executive Officer
Dear
Mr. Basile:
**Introduction**.
Subject to the terms and conditions herein (this “Agreement”), JFB Construction Holdings, a Nevada corporation (the
“Company”), hereby agrees to sell the securities of the Company described in the immediately succeeding paragraph
directly to accredited investors (each, an “Investor” and collectively, the “Investors”) through
Dominari Securities LLC as placement agent (the “Placement Agent”).
The
securities to be sold shall be an aggregate of at least $43,895,000.00 shares of the Company’s Series C Convertible Preferred Stock,
par value $0.0001 per share, of the Company (the “Preferred Stock” and the shares underlying the Preferred Stock,
the “Preferred Shares”), having the rights, preferences, and privileges set forth in the Certificate of Designation
(as defined below) and convertible into shares of common stock, $0.0001 par value per share, of the Company (“Common Stock”),
a warrant with a $5.75 exercise price and 3-year term (the “Common A Warrants “), a warrant with a $6.25 exercise
price and 3-year term (the “Common B Warrants,” and, together with the Common A warrants, the “Warrants”),
each Warrant having the right to purchase one share of Common Stock (the “Warrant Shares”). The Preferred Stock, Preferred
Shares, the Warrants, and the Warrant Shares are hereinafter collectively referred to as the “Securities.” Each Share
and Warrant shall have a combined purchase price of $5.44. The documents executed and delivered by the Company and the Investors in connection
with the Offering (as defined below), including, without limitation, a securities purchase agreement (the “Purchase Agreement”),
Certificate of Designation, Registration Rights Agreement, Warrants, and Lock-Up Agreement, shall be collectively referred to herein
as the “Transaction Documents.” The Placement Agent may retain other brokers or dealers to act as sub-agents or selected-dealers
on its behalf in connection with the Offering.
The
terms of the Preferred Stock will be set forth in the Certificate of Designation (the “Certificate of Designation”)
to be filed by the Company with the Secretary of State of the State of Nevada as an amendment to the Company’s Articles of Incorporation.
The Securities will be offered and sold to the Investors in the Offering pursuant to the exemption from the registration requirements
of the Securities Act of 1933, as amended, and the rules and regulations of the Securities and Exchange Commission (the “Commission”)
thereunder (collectively, the “Securities Act”), in reliance upon Section 4(a)(2) of the Securities Act and Rule 506(b)
of Regulation D promulgated by the Commission under the Securities Act (“Regulation D”).
The
Company hereby confirms its agreement with the Placement Agent as follows:
**Section
1. Agreement to Act as Placement Agent**.
(a)
On the basis of the representations, warranties, and agreements of the Company herein contained, and subject to all the terms and conditions
of this Agreement, the Placement Agent shall be the exclusive placement agent in connection with the offering and sale by the Company
of the Securities, with the terms of such offering (“Offering”) to be subject to market conditions and negotiations
between the Company, the Placement Agent, and the prospective Investors. The Placement Agent will act on a reasonable best efforts basis
and the Company agrees and acknowledges that there is no guarantee of the successful placement of the Securities, or any portion thereof,
in the prospective Offering. Under no circumstances will the Placement Agent or any of its “Affiliates” (as defined below)
be obligated to underwrite or purchase any of the Securities for its own account or otherwise provide any financing. The Placement Agent
shall act solely as the Company’s agent and not as principal in the Offering. The Placement Agent shall have no authority to bind
the Company with respect to any prospective offer to purchase Securities and the Company shall have the sole right to accept offers to
purchase Securities and may reject any such offer, in whole or in part. Subject to the terms and conditions hereof, payment of the purchase
price for, and delivery of, the Securities shall be made at the closing of the Offering as provided in the Purchase Agreement (“Closing”
and the date on which each Closing occurs, a “Closing Date”). As compensation for services rendered, on each Closing
Date, the Company shall pay to the Placement Agent the fees and expenses set forth below:
(i)
a transaction fee equal to eight percent (8%) of the gross proceeds of the aggregate amount of Securities sold in the Offering payable
at Closing (“Cash Fee”).
(ii)
Warrants to purchase shares of Common Stock of the Company equal to eight percent (8%) of the shares of Common Stock initially issuable
upon conversion or exercise, as applicable, in full of Securities sold in the Offering (“Placement Agent Warrants”).
The terms of the Placement Agent Warrants shall be identical to the Warrants issued in the Offering, except the exercise price of the
Placement Agent Warrants shall be $5.44 and the exercise term will be five (5) years.
(b)
The term of the Placement Agent’s exclusive engagement will begin on the date of this Agreement and end on the earlier of (i) the
Closing of the Offering, (ii) the Company’s election in its discretion to terminate the Offering, or (iii) December 31, 2025. Notwithstanding
anything to the contrary contained in this Agreement, the provisions concerning confidentiality, indemnification, and contribution contained
in this Agreement and the Company’s obligations contained in the indemnification provisions will survive any expiration or termination
of this Agreement, and the Company’s obligation to pay fees actually earned and payable, if any, and to reimburse expenses actually
incurred and reimbursable pursuant to Section 1 hereof will survive any expiration or termination of this Agreement. Nothing in
this Agreement shall be construed to limit the ability of the Placement Agent or its Affiliates to pursue, investigate, analyze, invest
in, or engage in investment banking, financial advisory, or any other business relationship with Persons (as defined below) other than
the Company. As used herein (i) “Persons” 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 and (ii) “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.
(c)
The Closing shall be conducted pursuant to the Purchase Agreement via wire transfer, against delivery of such Securities, and such Securities
shall be registered in such name or names and shall be in such denominations. The Placement Agent shall not have any independent obligation
to verify the accuracy or completeness of any information contained in Purchase Agreement or other subscription documents for the Offering
(the “Subscription Documents”) or the authenticity, sufficiency, or validity of any check delivered by any prospective
Investor in payment for the Securities, nor shall the Placement Agent incur any liability with respect to any such verification or failure
to verify.
(d)
The Company, on behalf of itself and any successor entity, agrees that, without the prior written consent of the Placement Agent, it
will not, for a period of 180 days after the date of this Agreement (the “Lock-Up Period”), (i) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the Company or any securities in a
Variable Rate Transaction (as defined in the Purchase Agreements); (ii) file or caused to be filed any registration statement with the
Commission relating to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Company, other than as it relates to the Securities sold in this Offering; or (iii) enter
into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of capital
stock of the Company, whether any such transaction described in clause (i), (ii), or (iii) of this Section 1(d) is to be settled by delivery
of shares of capital stock of the Company or such other securities, in cash or otherwise.
**Section
2. Representations, Warranties, and Covenants of the Company**.
(a)
The Placement Agent shall be the third party beneficiary of the representations and warranties of the Company to the Investors in the
Purchase Agreement.
(b)
Any certificate signed by an officer of the Company and delivered to the Placement Agent or to counsel for the Placement Agent shall
be deemed to be a representation and warranty by the Company to the Placement Agent as to the matters set forth therein.
(c)
The Company acknowledges that the Placement Agent will rely upon the accuracy and truthfulness of the foregoing representations and warranties
and hereby consents to such reliance.
(d)
In connection with the Offering, the Company has not published, distributed, issued, posted, or otherwise used or employed and shall
not publish, distribute, issue, post, or otherwise use or employ (i) any form of general solicitation or advertising within the meaning
of Rule 502 under the Securities Act (“General Solicitation”) other than with the prior written consent of the Placement
Agent, or (ii) any General Solicitation that constitutes a written communication within the meaning of Rule 405 under the Securities
Act (“Written General Solicitation Material”). Each individual Written General Solicitation Material, if any, does
not and will not conflict with the information contained in the SEC Reports (as defined below), and does not and will not, contain an
untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(e)
The Company will furnish a copy of any amendment or supplement to a Written General Solicitation Material to the Placement Agent and
counsel for the Placement Agent and obtain the Placement Agent’s written consent prior to any publication, distribution, issuance,
posting, or other use or employment of any such amendment or supplement.
(f)
If at any time after the date of this Agreement and prior to a Closing, any event shall have occurred as a result of which any Written
General Solicitation Material, as then amended or supplemented, would conflict with the information in the Company’s reports, schedules,
forms, statements, and other documents required to be filed by the Company under the Securities Act and the Securities Exchange Act of
1934, as amended (the “Exchange Act”) (collectively, the “SEC Reports”), or would include an untrue
statement of a material fact or omit to state any material fact necessary in order to make the statements therein or in the SEC Reports,
in light of the circumstances under which they were made, not misleading, or, if for any other reason it shall become necessary to amend
or supplement any Written General Solicitation Material, the Company shall promptly notify the Placement Agent and upon its request,
shall use its best efforts to ensure that all purchasers or expected purchasers of the Securities receive corrected Written General Solicitation
Materials.
(g)
The Company represents, warrants, and agrees that all sales of the Securities shall be made only to (i) an “accredited investor”
as defined in 501(a)(1), (a)(2), (a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9), (a)(10), (a)(11), (a)(12), or (a)(13) under the Securities
Act, as applicable, or (ii), a Non U.S. Person as defined under Regulation S promulgated under the Securities Act. Notwithstanding the
foregoing, the Placement Agent shall use commercially reasonable efforts to assist its customers to complete the Subscription Documents.
(h)
None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating
in the Offering, any beneficial owner of twenty percent (10%) or more of the Company’s outstanding voting equity securities, calculated
on the basis of voting power, any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company
in any capacity at the time of sale nor any compensated solicitor or any director, executive officer, or other officer of the compensated
solicitor participating in the Offering (each, an “Issuer Covered Person” and, together, “Issuer Covered
Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under
the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or
(d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event.
The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Placement
Agent a copy of any disclosures provided thereunder.
(i)
The Company will notify the Placement Agent in writing, prior to the Closing Date of (i) any Disqualification Event relating to any Issuer
Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Issuer Covered
Person.
(j) Authorization; Enforcement.
(A) The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement, including, without limitation, the issuance of the Placement Agent Warrants, and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the Placement Agent Warrants by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors of the Company (“Board”), or the Company’s stockholders in connection with this Agreement, each of the Placement Agent Warrants, or in connection with consummation of the transactions contemplated by this Agreement and each of the Placement Agent Warrants. This Agreement, the Warrants, the Placement Agent Warrants, or any other applicable agreement, has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(B) The Certificate of Designation, the proposed form of which has been furnished to the Placement Agent, has been duly authorized by the Company and will have been duly executed and delivered by the Company and duly filed with the Secretary of State of the State of Nevada before the Closing Date. The holders of the Preferred Stock will have the rights set forth in the Certificate of Designation upon filing of the Certificate of Designation with the Secretary of State of the State of Nevada.
(k) Issuance of the Securities. The Securities will be duly authorized, validly issued, fully paid, and non- assessable upon payment
of the purchase price therefor to the Company in accordance with the terms of the Purchase Agreement, and will have the applicable rights,
preferences, and priorities set forth in the Company’s Articles of Incorporation (including the Certificate of Designation) (as
the same may be amended or restated from time to time, collectively, the “Charter”). The holders of the Securities will not
be subject to personal liability solely by reason of being such holders. The shares of Common Stock issuable upon exercise of the Placement
Agent Warrants (the “PA Warrant Shares”), the Preferred Shares, and the Warrant Shares have been duly authorized and,
when issued in accordance with this Agreement, the Placement Agent Warrants, and the Warrants, will be duly and validly issued, fully
paid and nonassessable, free and clear of all liens, charges, pledges, security interests, encumbrances, or other restrictions imposed
by the Company other than restrictions on transfer provided for in this Agreement and the Placement Agent Warrant. The Company has reserved
from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to the conversion of the Preferred
Stock, the Placement Agent Warrants, and the Warrants. The issuance of the Preferred Stock, the Preferred Shares, the Placement Agent
Warrants, the PA Warrant Shares, the Warrants, and Warrant Shares are not subject to any preemptive rights, rights of first refusal,
or other similar rights of any securityholder of the Company. No holder of the Preferred Stock, the Preferred Shares, the Placement Agent
Warrants, the PA Warrant Shares, the Warrants, and the Warrant Shares will be subject to personal liability solely by reason of being
such a holder.
(l)
Each of the representations and warranties (together with any related disclosure schedules thereto) made by the Company to the Investors
in the applicable Transaction Documents is hereby incorporated herein by reference, as though fully restated herein, and is hereby made
to, and in favor of, the Placement Agent.
**Section
3. Delivery and Payment**. The Closing shall occur at the offices of Lucosky Brookman LLP (“Company Counsel”) (or
at such other place as shall be agreed upon by the Placement Agent and the Company, including via remote transmission of Closing documentation
and the Transaction Documents). Subject to the terms and conditions hereof, at the Closing, payment of the purchase price for the Securities
sold on the Closing Date shall be made by federal funds via wire transfer, against delivery of such Securities, and such Securities shall
be registered in such name or names and shall be in such denominations, as the Placement Agent may request at least one business day
before the time of purchase.
Deliveries
of the documents with respect to the purchase of the Securities, if any, shall be made at the offices of Company Counsel. All actions
taken at the Closing shall be deemed to have occurred simultaneously.
The
Company and the Placement Agent may agree to conduct one or more Closings of the Offering.
**Section
4. Covenants and Agreements of the Company and Placement Agent**. The Company further covenants and agrees with the Placement Agent
as follows:
(a) Blue Sky Compliance. The Company will cooperate with the Placement Agent and the Investors in endeavoring to qualify the Securities
for sale under the securities laws of such jurisdictions (United States and foreign) as the Placement Agent and the Investors may reasonably
request and will make such applications, file such documents, and furnish such information as may be reasonably required for that purpose, *provided that* the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to file such a consent, and *provided further* that the
Company shall not be required to produce any new disclosure documents. The Company will, from time to time, prepare and file such statements,
reports, and other documents as are or may be required to continue such qualifications in effect for so long a period as the Placement
Agent may reasonably request for distribution of the Securities. The Company will advise the Placement Agent promptly of the suspension
of the qualification or registration of (or any such exemption relating to) the applicable Securities for the offering, sale, or trading
in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order
suspending such qualification, registration or exemption, the Company shall use its commercially reasonable efforts to obtain the withdrawal
thereof at the earliest possible moment.
(b) Amendments, Supplements and Other Matters. The Company will comply with the Securities Act and the Exchange Act, and the rules
and regulations of the Commission thereunder, so as to permit the completion of the sale of the Securities as contemplated in this Agreement.
If during the Offering period, any event shall occur as a result of which, in the judgment of the Company or in the opinion of the Placement
Agent or Sichenzia Ross Ference Carmel LLP (“Placement Agent Counsel”) acting as counsel for the Placement Agent,
it becomes necessary to amend or supplement the SEC Reports in order to make the statements therein, in light of the circumstances under
which they were made, as the case may be, not misleading, or if it is necessary at any time to amend or supplement the SEC Reports, the
Company will promptly prepare an appropriate amendment or supplement to the SEC Reports, that is necessary in order to make the statements
therein as so amended or supplemented, in light of the circumstances under which they were made, as the case may be, not misleading,
or so that the SEC Reports, as so amended or supplemented, will comply with law. Before amending the SEC Reports, the Company will furnish
the Placement Agent with a copy of such proposed amendment or supplement and will not distribute any such amendment or supplement to
which the Placement Agent reasonably objects.
(c) Copies of any Amendments and Supplements to the SEC Reports. The Company will furnish the Placement Agent, without charge, during
the period beginning on the date of this Agreement and ending on the Closing Date, as many copies of the SEC Reports and other documents
to be furnished to the Investors as the Placement Agent may reasonably request; *provided that* the Company’s filing of the
SEC Reports on the Electronic Data Gathering and Analysis Retrieval system of the SEC shall be deemed to satisfy this covenant.
(d) Transfer Agent. The Company will maintain, at its expense, a transfer agent for the Common Stock.
(e) Periodic Reporting Obligations. For as long as the Company remains subject to the reporting requirements of the Exchange Act,
the Company will duly file, on a timely basis, with the Commission and The Nasdaq Stock Market LLC (the “Nasdaq”),
or any successor quotation service, exchange or marketplace, all reports and documents required to be filed under the Exchange Act within
the time periods and in the manner required by the Exchange Act.
(f) Additional Documents*.* The Company will enter into any customary Closing documentation as the Placement Agent or the Investors
deem necessary or appropriate to consummate the Offering, all of which will be in form and substance reasonably acceptable to the Placement
Agent and the Investors.
(g) No Manipulation of Price*.* The Company has not taken, directly or indirectly, any action designed to cause or result in,
or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any Common Stock.
(h) Acknowledgment. The Company acknowledges that any advice given by the Placement Agent to the Company is solely for the benefit
and use of the Board and may not be used, reproduced, disseminated, quoted, or referred to, without the Placement Agent’s prior
written consent.
(i) Announcement of Offering. The Company acknowledges and agrees that the Placement Agent may, subsequent to the Closing and at the
Placement Agent’s expense, make public its involvement with the Offering.
(j) Reliance on Others. The Company confirms that it will rely on its own counsel and accountants for legal and accounting advice.
(k) Research Matters. By entering into this Agreement, the Placement Agent does not provide any promise, either explicitly or implicitly,
of favorable or continued research coverage of the Company, and the Company hereby acknowledges and agrees that the Placement Agent’s
selection as a placement agent for the Offering was in no way conditioned, explicitly or implicitly, on the Placement Agent providing
favorable or any research coverage of the Company. In accordance with FINRA Rule 2711(e), the parties hereto acknowledge and agree that
the Placement Agent has not directly or indirectly offered favorable research, a specific rating or a specific price target, or threatened
to change research, a rating or a price target, to the Company or inducement for the receipt of business or compensation. The Company
hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the Placement Agent
with respect to any conflict of interest that may arise from the fact that the views expressed by their independent research analysts
and research departments may be different from or inconsistent with the views or advice communicated to the Company by the Placement
Agent’s investment banking divisions. The Company acknowledges that the Placement Agent is a full service securities firm and as
such from time to time, subject to applicable securities laws, may effect transactions for its own account or the account of its customers
and hold long or short position in debt or equity securities of the Company.
**Section
5. Conditions of the Obligations of the Placement Agent**. The obligations of the Placement Agent hereunder shall be subject to the
accuracy of the representations and warranties on the part of the Company set forth in Section 2 and in the Transaction Documents,
in each case as of the date hereof and as of the Closing Date as though then made, to the timely performance by each of the Company of
its covenants and other obligations hereunder on and as of such dates, and to each of the following additional conditions:
(a) Transaction Documents. The Transactions Documents between the Company and the Investors shall have been executed and delivered.
(b) Corporate Proceedings. All corporate proceedings and other legal matters in connection with this Agreement and the sale and delivery
of the Securities, shall have been completed or resolved in a manner reasonably satisfactory to the Placement Agent Counsel and such
counsel shall have been furnished with such papers and information as it may reasonably have requested to enable such counsel to pass
upon the matters referred to in this Section 5.
(c) No Material Adverse Change. Subsequent to the execution and delivery of this Agreement and prior to the Closing Date, in the Placement
Agent’s sole judgment after consultation with the Company, there shall not have occurred any (i) a material adverse effect on the
legality, validity, or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets,
business, prospects, or condition (financial or otherwise) of the Company and the subsidiaries of the Company (the “Subsidiaries”),
taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis
its obligations under any Transaction Document.
(d) Certificate of Designation. The Certificate of Designation of the Preferred Stock shall have been filed with the Secretary of
State of the State of Nevada and become effective and the Company shall have delivered evidence of such filing and effectiveness to the
Placement Agent in form and substance satisfactory to the Placement Agent.
(e) Placement Agent Compensation. The Cash Fee and the Placement Agent Warrants, calculated in the manner provided in Section 1(a),
and reimbursement of expenses as set forth in Section 6 shall have been paid or delivered to the Placement Agent by wire transfer
of immediately available funds to an account specified by the Placement Agent to the Company prior to the Closing.
(f) Additional Documents. On or before the Closing Date, the Placement Agent and the Placement Agent Counsel shall have received such
information and documents as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the
Securities as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein
contained.
If
any condition specified in this Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated
by the Placement Agent by notice to the Company at any time on or prior to the Closing Date, which termination shall be without liability
on the part of any party to any other party, except that Section 6 (*Payment of Expenses*), Section 7 (*Indemnification
and Contribution*), and Section 8 (*Representations and Indemnities to Survive Delivery*) shall at all times be effective
and shall survive such termination.
**Section
6. Payment of Expenses**. The Company will be responsible for and will pay all expenses relating to the Offering, among other things,
including, without limitation, (i) all filing fees and expenses relating to the registration of the Securities with the Commission; (ii)
all fees and expenses relating to the listing of the Preferred Shares, the Warrant Shares, and the Placement Agent Warrant Shares and
any other applicable equity or equity-linked securities on an exchange; (iii) all fees, expenses, and disbursements relating to the registration
or qualification of the Securities under the “blue sky” securities laws of such states and other jurisdictions as the Placement
Agent may reasonably designate (including, without limitation, all filing and registration fees, and the reasonable fees and disbursements
of the Company’s “blue sky” counsel, which will be the Placement Agent Counsel) unless such filings are not required
in connection with the Company’s proposed Exchange listing; (iv) all fees, expenses, and disbursements relating to the registration,
qualification, or exemption of the Securities under the securities laws of such foreign jurisdictions as the Placement Agent may reasonably
designate; (v) the costs of all mailing and printing of the applicable Transaction Documents or other Offering documents; (vi) transfer
and/or stamp taxes, if any, payable upon the transfer of the Securities from the Company to the Placement Agent; (vii) the fees relating
to the engagement of the escrow agent for the Offering; (ix) the fees and expenses of the Company’s accountants; (x) $150,000 for
legal fees and disbursements for the Placement Agent Counsel; and (xi) a non-accountable expense allowance to the Placement Agent equal
to one percent (1%) of the aggregate Offering proceeds.
**Section
7. Indemnification and Contribution**.
(a)
The Company agrees to indemnify and hold harmless the Placement Agent, its affiliates, and each person controlling the Placement Agent
(within the meaning of Section 15 of the Securities Act), and the directors, officers, agents, and employees of the Placement Agent,
its affiliates and each such controlling person (the Placement Agent, and each such entity or person. an “Indemnified Person”)
from and against any losses, claims, damages, judgments, assessments, costs, and other liabilities (collectively, the “Liabilities”),
and shall reimburse each Indemnified Person for all fees and expenses (including the reasonable fees and expenses of one counsel for
all Indemnified Persons, except as otherwise expressly provided herein) (collectively, the “Expenses”) as they are
incurred by an Indemnified Person in investigating, preparing, pursuing, or defending any actions, whether or not any Indemnified Person
is a party thereto, (i) caused by a breach by the Company of any of its representations, warranties, or covenants contained in this Agreement
or in any certificate delivered by or on behalf of the Company in connection with this Agreement, (x) caused by, or arising out of or
in connection with, any untrue statement or alleged untrue statement of a material fact contained in the SEC Reports or by any omission
or alleged omission to state therein a material fact necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading (other than untrue statements or alleged untrue statements in, or omissions or alleged omissions from,
information relating to an Indemnified Person furnished in writing by or on behalf of such Indemnified Person expressly for use in such
documents), or (iii) otherwise arising out of or in connection with advice or services rendered or to be rendered by any Indemnified
Person pursuant to this Agreement, the transactions contemplated thereby or any Indemnified Person’s actions or inactions in connection
with any such advice, services, or transactions; *provided*, *however*, that, in the case of clause (iii) of this Section 7(a)
only, the Company shall not be responsible for any Liabilities or Expenses of any Indemnified Person that have resulted primarily from
such Indemnified Person’s (x) gross negligence, bad faith, or willful misconduct in connection with any of the advice, actions,
inactions, or services referred to above or (y) use of any Offering materials or information concerning the Company in connection with
the offer or sale of the shares and warrants in the Offering which were not authorized for such use by the Company and which use constitutes
gross negligence, bad faith, or willful misconduct. The Company also agrees to reimburse each Indemnified Person for all Expenses as
they are incurred in connection with enforcing such Indemnified Person’s rights under this Agreement.
(b)
Upon receipt by an Indemnified Person of actual notice of an action against such Indemnified Person with respect to which indemnity may
be sought under this Agreement, such Indemnified Person shall promptly notify the Company in writing; *provided* that failure by
any Indemnified Person so to notify the Company shall not relieve the Company from any liability which the Company may have on account
of this indemnity or otherwise to such Indemnified Person, except to the extent the Company shall have been prejudiced by such failure.
The Company shall, if requested by the Placement Agent, assume the defense of any such action including the employment of counsel reasonably
satisfactory to the Placement Agent, which counsel may also be Company Counsel. Any Indemnified Person shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless: (i) the Company has failed promptly to assume the defense and employ counsel or (ii) the named
parties to any such action (including any impeded parties) include such Indemnified Person and the Company, and such Indemnified Person
shall have been advised in the reasonable opinion of counsel that there is an actual conflict of interest that prevents the counsel selected
by the Company from representing both the Company (or another client of such counsel) and any Indemnified Person; *provided* that
the Company shall not in such event be responsible hereunder for the fees and expenses of more than one firm of separate counsel for
all Indemnified Persons in connection with any Action or related Actions, in addition to any local counsel. The Company shall not be
liable for any settlement of any action effected without its written consent (which shall not be unreasonably withheld). In addition,
the Company shall not, without the prior written consent of the Placement Agent (which shall not be unreasonably withheld), settle, compromise,
or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened action in respect of which indemnification
or contribution may be sought hereunder (whether or not such Indemnified Person is a party thereto) unless such settlement, compromise,
consent, or termination includes an unconditional release of each Indemnified Person from all Liabilities arising out of such action
for which indemnification or contribution may be sought hereunder. The indemnification required under this Agreement shall be made by
periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage, or liability
is incurred and is due and payable.
(c)
In the event that the indemnity provided for in Section 7(b) is unavailable to an Indemnified Person other than in accordance with this
Agreement, the Company shall contribute to the Liabilities and Expenses paid or payable by such Indemnified Person in such proportion
as is appropriate to reflect (i) the relative benefits to the Company, on the one hand, and to the Placement Agent and any other Indemnified
Person, on the other hand, of the matters contemplated by this Agreement or (ii) if the allocation provided by the immediately preceding
clause is not permitted by applicable law, not only such relative benefits but also the relative fault of the Company, on the one hand,
and the Placement Agent and any other Indemnified Person, on the other hand, in connection with the matters as to which such Liabilities
or Expenses relate, as well as any other relevant equitable considerations; *provided that* in no event shall the Company contribute
less than the amount necessary to ensure that all Indemnified Persons, in the aggregate, are not liable for any Liabilities and Expenses
in excess of the amount of fees actually received by the Placement Agent pursuant to this Agreement. For purposes of this paragraph,
the relative benefits to the Company, on the one hand, and to the Placement Agent on the other hand, of the matters contemplated by this
Agreement shall be deemed to be in the same proportion as (i) the total value paid or contemplated to be paid to or received or contemplated
to be received by the Company in the transaction or transactions that are within the scope of this Agreement, whether or not any such
transaction is consummated, bears to (ii) the fees paid to the Placement Agent under this Agreement. Notwithstanding the above, no person
guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act, shall be entitled to contribution from
a party who was not guilty of fraudulent misrepresentation.
(d)
The Company also agrees that no Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise)
to the Company for or in connection with advice or services rendered or to be rendered by any Indemnified Person pursuant to this Agreement,
the transactions contemplated thereby or any Indemnified Person’s actions or inactions in connection with any such advice, services,
or transactions except for Liabilities (and related Expenses) of the Company that are finally judicially determined to have resulted
primarily from such Indemnified Person’s gross negligence or willful misconduct in connection with any such advice, actions, inactions,
or services.
(e)
The reimbursement, indemnity, and contribution obligations of the Company set forth herein shall apply to any modification of this Agreement
and shall remain in full force and effect regardless of any termination of, or the completion of any Indemnified Person’s services
under or in connection with, this Agreement.
**Section
8. Representations and Indemnities to Survive Delivery**. The respective indemnities, agreements, representations, warranties, and
other statements of the Company or any person controlling the Company, of its officers, and of the Placement Agent set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Placement
Agent, the Company, or any of its or their partners, officers, or directors or any controlling person, as the case may be, and will survive
delivery of and payment for the shares and warrants sold hereunder and any termination of this Agreement. A successor to the Placement
Agent, or to the Company, its directors or officers or any person controlling the Company, shall be entitled to the benefits of the indemnity,
contribution, and reimbursement agreements contained in this Agreement.
**Section
9. Notices**. All communications hereunder shall be in writing and shall be mailed, hand delivered, telecopied, or e-mailed and confirmed
to the parties hereto as follows:
If
to the Placement Agent to the address set forth above, attention: Legal Department, telecopy number: (212) 393-4500
*With
a copy (which shall not constitute notice) to:*
Sichenzia
Ross Ference Carmel LLP
1185 Avenue of the Americas, 31st Floor
New York, NY 10036
Attn:
Ross Carmel, Esq.; Matt Siracusa
Email:
If
to the Company:
Joseph
F. Basile III
Chief Executive Officer
JFB
Construction Holdings
1300 S. Dixie Highway, Suite B
Lantana, FL 33462
E-mail:
*With
a copy (which shall not constitute notice) to:*
Lucosky
Brookman LLP
101 S Wood Ave
Woodbridge,
New Jersey 08830
Attn: Joseph Lucosky, Esq.
Email:
Any
party hereto may change the address for receipt of communications by giving written notice to the others.
**Section
10. Prior Agreement**. By entering into this Agreement, the parties hereto agree that that any prior letter of engagement between the
parties relating to the Offering shall automatically terminate and cease to have any effect whatsoever and shall be superseded in its
entirety by this Agreement.
**Section
11. Successors**. This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the employees,
officers, and directors and controlling persons referred to in Section 7 hereof, and to their respective successors, and personal
representative, and no other person will have any right or obligation hereunder.
**Section
12. Partial Unenforceability**. The invalidity or unenforceability of any section, paragraph, or provision of this Agreement shall
not affect the validity or enforceability of any other section, paragraph, or provision hereof. If any Section, paragraph, or provision
of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and
only such minor changes) as are necessary to make it valid and enforceable.
**Section
13. Governing Law Provisions**. This Agreement shall be deemed to have been made and delivered in New York, New York and both this
Agreement and the transactions contemplated hereby shall be governed as to validity, interpretation, construction, effect, and in all
other respects by the internal laws of the State of New York, without regard to the conflict of laws principles thereof. Each of the
Placement Agent and the Company: (i) agrees that any legal suit, action, or proceeding arising out of or relating to this Agreement and/or
the transactions contemplated hereby shall be instituted exclusively in New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York, (ii) waives any objection which it may have or hereafter to the venue of
any such suit, action or proceeding, and (iii) irrevocably consents to the jurisdiction of the New York Supreme Court, County of New
York, and the United States District Court for the Southern District of New York in any such suit, action or proceeding. Each of the
Placement Agent and the Company further agrees to accept and acknowledge service of any and all process which may be served in any such
suit, action or proceeding in the New York Supreme Court, County of New York, or in the United States District Court for the Southern
District of New York and agrees that service of process upon the Company mailed by certified mail to the Company’s address shall
be deemed in every respect effective service of process upon the Company, in any such suit, action, or proceeding, and service of process
upon the Placement Agent mailed by certified mail to the Placement Agent’s address shall be deemed in every respect effective service
process upon the Placement Agent, in any such suit, action, or proceeding. Notwithstanding any provision of this Agreement to the contrary,
the Company agrees that neither the Placement Agent nor its affiliates, and the respective officers, directors, employees, agents, and
representatives of the Placement Agent, its affiliates and each other person, if any, controlling the Placement Agent or any of its affiliates,
shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the
engagement and transaction described herein except for any such liability for losses, claims, damages, or liabilities incurred by us
that are finally judicially determined to have resulted from the bad faith or gross negligence of such individuals or entities. If either
party shall commence an action or proceeding to enforce any provision of this Agreement, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its reasonable attorney’s fees and other costs and expenses incurred with
the investigation, preparation, and prosecution of such action or proceeding.
**Section
14. Right of First Refusal; Tail Fee**.
(a)
For a period of twenty four (24) months from the closing of the Offering, the Company hereby grants a right of first refusal to the Placement
Agent to act as sole underwriter or sole book-running manager or placement agent for each and every future public and private equity,
equity-linked, convertible or debt (excluding commercial bank debt or the exchange or conversion of existing indebtedness of the Company
as of the date hereof) offerings of the Company, or any successor to or any subsidiary of the Company during such twenty four (24) month
period. If the Placement Agent fails to accept an offer within ten (10) business days after the receipt of a notice containing the material
terms of a proposed financing by registered mail or overnight courier service addressed to the Placement Agent, then the Placement Agent
shall have no further claim or right with respect to the financing proposal contained in such notice. If, however, the terms of such
financing proposal are subsequently modified in any material respect, the right of first refusal provided for in this Section 14(a) shall
apply to such modified proposal as if the original proposal had not been made. The Placement Agent’s failure to exercise its right
of first refusal with respect to any particular proposal shall not affect its rights of first refusal relative to future proposals.
(b)
For a period of twenty four (24) months after the Closing Date, the Placement Agent will receive compensation equal to the Cash Fee and
the Placement Agent Warrants set forth herein with respect to any public and private equity, equity-linked, convertible or debt (excluding
commercial bank debt) offerings of the Company, sale, merger, acquisition, or other similar transactions (each, a “Transaction”)
occurring with a party first introduced to the Company by the Placement Agent or wall-crossed by the Placement Agent in connection with
the Offering.
The
term “Transaction” shall include, without limitation, public and private equity, equity-linked, convertible or debt (excluding
commercial bank debt) offerings of the Company, any investment in (whether in one or a series of transactions) the assets or the capital
stock of the Company, through any proposed merger, consolidation, joint venture, or other business/strategic combination with or involving
the Company or any event which results in the transfer of control of or a material interest in the Company or of all or a substantial
amount of the assets thereof, as well as any recapitalization or restructuring of the Company by the current owners, a third party or
any combination thereof, or any other form of transaction which results in the effective acquisition of the principal business and operations
of the Company.
**Section
15. General Provisions**.
(a)
This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings, and negotiations with respect to the subject matter hereof. This Agreement may be executed in two or
more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit. Section headings herein
are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.
(b)
The Company acknowledges that in connection with the offering of the Securities: (i) the Placement Agent has acted at arm’s length,
are not agents of, and owe no fiduciary duties to the Company or any other person, (ii) the Placement Agent owes the Company only those
duties and obligations set forth in this Agreement, and (iii) the Placement Agent may have interests that differ from those of the Company.
The Company waives to the full extent permitted by applicable law any claims it may have against the Placement Agent arising from an
alleged breach of fiduciary duty in connection with the offering of the Securities.
[*The
remainder of this page has been intentionally left blank.*]
[SIGNATURE
PAGE TO THE PLACEMENT AGENT AGREEMENT]
If
the foregoing is in accordance with your understanding of our agreement, please sign below whereupon this instrument, along with all
counterparts hereof, shall become a binding agreement in accordance with its terms.
Very truly yours,
**DOMINARI SECURITIES LLC**
By: */s/ Eric Newman*
Name: Eric Newman
Title: Executive Vice President & Global Head of Investment Banking
The
foregoing Placement Agent Agreement is hereby confirmed and accepted as of the date first above written.
**JFB CONSTRUCTION HOLDINGS**
By: */s/ Joseph F. Basile III*
Name: Joseph F. Basile III
Title: Chief Executive Officer
---
## EX-10.23
SEC source: [ex10-23.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex10-23.htm)
**Exhibit
10.23**
**SHARE
REDEMPTION AGREEMENT**
**THIS
SHARE REDEMPTION AGREEMENT** is dated as of September 30, 2025 (this “**Agreement**”), by and among JFB Construction
Holdings, a Nevada corporation (the “**Company**”), and Joseph F. Basile III (“**Stockholder**”).
**WHEREAS**,
the Stockholder presently owns 4,000,000 shares of the Company’s Class B Common Stock (the “**Class B Shares**”);
**WHEREAS**,
the Company is entering into one or more subscription agreements with certain investors pursuant to a proposed private offering in public
securities of the Company (the “**PIPE Financing**);
**WHEREAS**,
pursuant to the Company’s Articles of Incorporation, the Company desires to redeem the Class B Shares, and the Stockholder desires
to sell such Class B Shares back to the Company, upon and subject to the consummation of the PIPE Financing and in accordance with the
terms set forth herein (the “**Redemption**”);
**NOW,
THEREFORE**, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. Redemption of Class B Shares.
(a) Redemption. Subject to the terms and conditions of this Agreement, the Stockholder agrees to sell, assign, transfer and deliver
to the Company, and the Company agrees to redeem from the Stockholder, the Class B Shares, with the Class B Shares being cancelled and
returned to treasury.
(b) Redemption Price. The aggregate purchase price for the Class B Shares shall be Twelve Million Dollars ($12,000,000) (the “**Redemption
Price**”), payable from the proceeds of the PIPE Financing.
2. Closing.
(a) Closing. The closing of the redemption (the “**Closing**”) shall occur concurrently with the closing of the PIPE
Financing (the “**PIPE Closing**”).
(b) Deliveries by Stockholder. At the Closing, the Stockholder shall deliver to the Company or other parties, any documents reasonably
requested by the Company or such other parties to effect the transfer ownership of the Class B Shares.
(c) Deliveries by the Company. At the Closing, the Company shall pay the Redemption Price to the Stockholder by wire transfer of immediately
available funds.
3. Representations and Warranties of the Company. The Company hereby represents and warrants to the Stockholder that:
(a)
the Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada;
(b)
all corporate action on the part of the Company necessary for the authorization, execution and delivery of this Agreement, and the performance
of all obligations hereunder, have been taken on or prior to the date hereof. This Agreement has been validly authorized, executed and
delivered by the Company, and constitutes the legal, valid and binding obligations of the Company, enforceable against them in accordance
with their terms, except as such enforceability may be limited by general principles of equity or by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies; and
4. Representations and Warranties of the Stockholder. The Stockholder hereby represents and warrants to the Company that:
(a)
the Stockholder is the lawful owner of the Class B Shares, free and clear of all liens, claims and encumbrances;
(b)
the Stockholder has the authority to take actions necessary for the authorization, execution and delivery of this Agreement, and the
performance of all obligations hereunder such that this Agreement is validly authorized, executed and delivered by the Stockholder and
constitutes the legal, valid and binding obligations of the Stockholder, enforceable against the Stockholder in accordance with its terms,
except as such enforcement may be limited by general principles of equity or by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies;
5. Miscellaneous.
(a) Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Nevada without giving
effect to principles of conflicts of law.
(b) Entire Agreement. This Agreement contains the entire agreement between the Stockholder and the Company regarding the subject matter
hereof and supersedes all prior agreements or understandings between the parties with respect thereto.
(c) Termination. If the PIPE Closing does not occur by October 3, 2025, this Agreement shall terminate automatically without liability
to the Stockholder or the Company.
(d) Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, and all of which will
constitute the same agreement.
**[Signature
Page(s) Follow this Page]**
**IN
WITNESS WHEREOF**, the parties hereto have caused this Agreement to be executed as of the date and year set forth above.
**JFB CONSTRUCTION HOLDINGS**
By:
Name: Ruben Calderon
Title: Chief Financial Officer
JOSEPH F. BASILE III, individually
[Signature
Page to JFB Construction Holdings Share Redemption Agreement]
---
## EX-23.1
SEC source: [ex23-1.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex23-1.htm)
**EXHIBIT
23.1**
**CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
We
consent to the incorporation by reference in the Registration Statement on Form S-1 (No. 333-283106) of our report dated March 31, 2026,
with respect to the consolidated financial statements of JFB Construction Holdings included in this Annual Report on Form 10-K as and
for the years ended December 31, 2025 and 2024.
/s/
M&K CPAS, PLLC
www.mkacpas.com
The
Woodlands Texas
July 2, 2026
---
## EX-31.1
SEC source: [ex31-1.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex31-1.htm)
**Exhibit
31.1**
**CERTIFICATION
PURSUANT TO**
**RULES
13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,**
**AS
ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**
I,
Joseph F. Basile III, certify that:
| (1) | I have reviewed this 10K of JFB Construction Holdings; |
| --- | --- |
| (2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| (3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| (4) | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: July 2, 2026
By: */s/ Joseph F. Basile III*
**Joseph F. Basile III**
**Chief Executive Officer**
**(Principal Executive Officer)**
---
## EX-31.2
SEC source: [ex31-2.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex31-2.htm)
**Exhibit
31.2**
**CERTIFICATION
PURSUANT TO**
**RULES
13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,**
**AS
ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**
I,
Ruben Calderon, certify that:
| (1) | I have reviewed this 10K of JFB Construction Holdings; |
| --- | --- |
| (2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| (3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| (4) | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: July 2, 2026
By: */s/ Ruben Calderon*
**Ruben Calderon**
**Chief Financial Officer**
**(Principal Financial Officer)**
---
## EX-32.1
SEC source: [ex32-1.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex32-1.htm)
**Exhibit
32.1**
**CERTIFICATION
PURSUANT TO**
**18
U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**
**SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002**
In
connection with the Annual Report of JFB Construction Holdings (the “Company”) on Form 10-K for the period ending December
31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18
U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: July 2, 2026
By: */s/ Joseph F. Basile III*
**Joseph F. Basile III**
**Chief Executive Officer**
**(Principal Executive Officer)**
---
## EX-32.2
SEC source: [ex32-2.htm](https://www.sec.gov/Archives/edgar/data/2024306/000149315226031856/ex32-2.htm)
**Exhibit
32.2**
**CERTIFICATION
PURSUANT TO**
**18
U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**
**SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002**
In
connection with the Annual Report of JFB Construction Holdings] (the “Company”) on Form 10-K for the period ending
December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify,
pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: July 2, 2026
By: */s/ Ruben Calderon*
**Ruben Calderon**
**Chief Financial Officer**
**(Principal Financial Officer)**