Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of December
19, 2017, between Snap Interactive, Inc., a Delaware corporation (the
“Company”), and Hershey Strategic Capital, LP (including its successors and
assigns, the “Purchaser”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(a)(2) of the Securities Act and Rule 506 promulgated
thereunder, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, securities of the Company as
more fully described in this 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 the Purchaser agree
as follows:

 

ARTICLE I. 

DEFINITIONS

 

1.1     Definitions. 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” means any action, suit, inquiry, notice of violation or proceeding
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign).

 

“Advisory Agreement” means the Professional Services Agreement, dated as of
December 18, 2017, between the Company and Adam Hershey, a copy of which is
attached as Exhibit A.

 

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

 

“Agreement” shall have the meaning ascribed to such term in the recitals hereto.

 

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

 

“Closing” means the closing of the purchase and sale of the Common Shares
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 Purchaser’s obligations to pay the Purchase
Price and (ii) the Company’s obligations to deliver the Common Shares, in each
case, have been satisfied or waived.

 

 

 

 

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

 

“Common Shares” means the shares of Common Stock delivered to the Purchaser at
the Closing in accordance with Section 2.2(a) hereof.

 

“Common Stock” means the common stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may
hereafter be reclassified or changed.

 

“Company” shall have the meaning ascribed to such term in the recitals hereto.

 

“Company Counsel” means Haynes and Boone, LLP, with offices located at 2323
Victory Avenue, Suite 700, Dallas, TX 75219.

 

“Evaluation Date” shall have the meaning ascribed to such term in Section
3.1(p).

 

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

 

“GAAP” shall have the meaning ascribed to such term in Section 3.1(g).

 

“Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(m).

 

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

 

“Material Adverse Effect” shall mean, with respect to either party hereto: (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 or condition (financial or otherwise) of such party
and its subsidiaries, taken as a whole, or (iii) a material adverse effect on
such party’s ability to perform in any material respect its obligations under
any Transaction Document.

 

“Material Permits” shall have the meaning ascribed to such term in Section
3.1(k).

 

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“Permitted Liens” means (a) statutory Liens for current taxes or other
governmental charges not yet due and payable or the amount or validity of which
is being contested in good faith, (b) mechanics’, carriers’, workers’,
repairers’ and similar statutory Liens arising or incurred in the ordinary
course of business for amounts which are not delinquent or which are being
contested by appropriate proceedings, (c) zoning, entitlement, building and
other land use regulations imposed by governmental entities having jurisdiction
over such Person’s owned or leased real property, which are not violated by the
current use and operation of such real property, (d) covenants, conditions,
restrictions, easements and other similar non-monetary matters of record
affecting title to such Person’s owned or leased real property, which do not
materially impair the occupancy or use of such real property for the purposes
for which it is currently used in connection with such Person’s businesses, (e)
any right of way or easement related to public roads and highways, which do not
materially impair the occupancy or use of such real property for the purposes
for which it is currently used in connection with such Person’s businesses, (f)
Liens arising under workers’ compensation, unemployment insurance, social
security, retirement and similar legislation, and (g) any other Liens that, in
the aggregate, do not materially impair the value or the continued use and
operation of the assets or properties to which they relate, including the rights
to use a license under a contract.

 

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

 

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

 

“Purchase Price” shall have the meaning ascribed to such term in Section 2.1.

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.7.

 

“Required Approvals” shall have the meaning ascribed to such term in Section
3.1(d).

 

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

 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(g).

 

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

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act.

 

“Subsidiary” means each of Snap Mobile Limited, A.V.M. Software, Inc., Paltalk
Software Inc., Paltalk Holdings, Inc., Tiny Acquisition Inc., Camshare, Inc.,
Vumber LLC and Fire Talk LLC, and shall, where applicable, also include any
direct or indirect subsidiary of the Company formed or acquired after the date
hereof.

 

“Trading Day” means a day on which the 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
MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange, the OTC Bulletin Board or any
over-the-counter market operated by OTC Markets Group Inc. (or any successors to
any of the foregoing).

 

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“Transaction Documents” means this Agreement, the Advisory Agreement, all
exhibits and schedules thereto and hereto and any other documents or agreements
executed in connection with the transactions contemplated hereunder.

 

“Transfer Agent” means Corporate Stock Transfer, Inc., the current transfer
agent of the Company, with a mailing address of 3200 Cherry Creek Drive, Suite
430, Denver, CO 80209 and a facsimile number of (303) 282-5800, and any
successor transfer agent of the Company.

 

ARTICLE II. 

PURCHASE AND SALE

 

2.1     Closing. On the Closing Date, upon the terms and subject to the
conditions set forth herein, and substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to sell,
and the Purchaser agrees to purchase, an aggregate of 200,000 Common Shares at a
price equal to $5.00 per share, for an aggregate purchase price of $1,000,000
(the “Purchase Price”). Purchaser shall deliver to the Company, via wire
transfer or a certified check, immediately available funds equal to the Purchase
Price, and the Company shall deliver to the Purchaser the Common Shares, and
each of the Company and the 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 occur by
electronic exchange of documents at the offices of Company Counsel or such other
location as the parties shall mutually agree.

 

2.2      Deliveries.

 

(a)      On or prior to the Closing Date, the Company shall deliver or cause to
be delivered to the Purchaser the following:

 

(i)      this Agreement, duly executed by the Company; and

 

(ii)     the 200,000 Common Shares.

 

(b)    On or prior to the Closing Date, the Purchaser shall deliver or cause to
be delivered to the Company the following:

 

(i)      this Agreement, duly executed by the Purchaser;

 

(ii)     the Purchase Price by wire transfer to an account specified in writing
by the Company; and

 

(iii)     such other documents as may be reasonably requested by the Company,
including any documents required by the Transfer Agent to complete the
transactions contemplated hereby.

 

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2.3    Closing Conditions.

 

(a)     The obligations of the Company hereunder in connection with the Closing
are subject to the following conditions being met:

 

(i)      the accuracy in all material respects on the Closing Date of the
representations and warranties of the Purchaser 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 Purchaser required to
be performed at or prior to the Closing Date shall have been performed;

 

(iii)     the Company shall have received the Purchase Price;

 

(iv)     the delivery by the Purchaser of the items set forth in Section 2.2(b)
of this Agreement; and

 

(v)     there shall have been no Material Adverse Effect with respect to the
Purchaser since the date hereof.

 

(b)     The obligations of the Purchaser in connection with the Closing are
subject to the following conditions being met:

 

(i)      the accuracy in all material 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 in all material
respects 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 Company shall have received the Purchase Price; and

 

(iv)    there shall have been no Material Adverse Effect with respect to the
Company since the date hereof.

 

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ARTICLE III. 

REPRESENTATIONS AND WARRANTIES

 

3.1     Representations and Warranties of the Company. Except as otherwise
disclosed in the SEC Reports (excluding any disclosure set forth in any section
relating to forward-looking statements), the Company hereby makes the following
representations and warranties to the Purchaser:

 

(a)      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 a Material Adverse Effect.

 

(b)      Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of this Agreement and each of the other Transaction Documents by
the Company and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of the Company and no further corporate action is required by the
Company, the Board of Directors or the Company’s stockholders in connection
herewith or therewith other than in connection with the Required Approvals. This
Agreement and each other Transaction Document 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.

 

(c)      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 Common Shares and the consummation by the Company of
the transactions contemplated hereby and thereby do not and will not: (i)
conflict with or violate any provision of the Company’s certificate or articles
of incorporation, bylaws or other organizational or charter documents, (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
(other than a Permitted Lien) upon any of the material properties or assets of
the Company or any Subsidiary, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any material agreement, credit facility or debt instrument
(evidencing a Company or Subsidiary debt or otherwise) to which the Company or
any Subsidiary is a party or by which any material 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
material 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
reasonably be expected to result in a Material Adverse Effect.

 

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(d)      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 and
(ii) the filing of a Form D with the Commission and such filings as are required
to be made under applicable state securities laws (collectively, the “Required
Approvals”).

 

(e)      Issuance of the Common Shares. The Common Shares are duly authorized
and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens (other than Permitted Liens) imposed by the Company other
than restrictions on transfer provided for in the Transaction Documents.

 

(f)      Capitalization. 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 under the Company’s stock option plans
and the issuance of shares of Common Stock to employees pursuant to the
Company’s employee stock purchase plans. 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. The
issuance and sale of the Common Shares will not obligate the Company to issue
shares of Common Stock or other securities to any Person (other than the
Purchaser) and will not result in a right of any holder of Company securities to
adjust the exercise, conversion, exchange or reset price under any of such
securities. 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, except where the failure to do
so would not reasonably be expected to result in a Material Adverse Effect.

 

(g)      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 year preceding the date hereof (the
foregoing materials 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,
except where the failure to do so would not reasonably be expected to result in
a Material Adverse Effect. 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
materially misleading. 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. 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.

 

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(h)      Material Changes; Undisclosed Events, Liabilities or Developments.
Since the date of the latest audited financial statements included within the
SEC Reports, except as specifically disclosed in a subsequent SEC Report filed
prior to the date hereof: (i) there has been no event, occurrence or development
that has resulted in a Material Adverse Effect, (ii) the Company has not
incurred any material liabilities other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not materially 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 or
redeemed any shares of its capital stock, except for the net withholding of an
aggregate of 43,405 shares of restricted Common Stock in October 2017 pursuant
to the terms of a Restricted Stock Award Agreement, and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans. The Company does not have
pending before the Commission any request for confidential treatment of
information.

 

(i)       Litigation. Except as set forth in the SEC Reports, there is no
material Action pending or, to the knowledge of the Company, threatened against
the Company, any Subsidiary or any of their respective properties which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Common Shares or (ii) could, if there were
an unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect.

 

(j)       Compliance. 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 material agreement or
instrument to which it is a party, (ii) is in violation of any judgment, decree
or order of any court, arbitrator or other governmental authority or (iii) is 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 as could not have or reasonably be expected to result in a Material
Adverse Effect.

 

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(k)      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 of any
Material Permit.

 

(l)      Title to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them and good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Permitted Liens. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and the Subsidiaries
are in material compliance.

 

(m)     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 as described
in the SEC Reports as necessary or required for use in connection with their
respective businesses, except where the failure to have such rights would not
reasonably be expected to have a Material Adverse Effect (collectively, the
“Intellectual Property Rights”). 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 for such claims as would not reasonably be expected
to have a Material Adverse Effect. To the knowledge of the Company, all such
Intellectual Property Rights are enforceable and, other than as disclosed in the
SEC Reports, there is no existing material 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.

 

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(n)      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. 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.

 

(o)     Transactions With Affiliates and Employees. Except 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 employees, officers, directors and
consultants), 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.

 

(p)     Sarbanes-Oxley; Internal Accounting Controls. 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 hereof, and
any and all applicable rules and regulations promulgated by the Commission
thereunder that are effective as of the date hereof, except where the failure to
be in compliance would not reasonably be expected to result in a Material
Adverse Effect. 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. 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) that have
materially affected, or is reasonably likely to materially affect, the internal
control over financial reporting of the Company and its Subsidiaries.

 

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(q)     Certain Fees. No brokerage or finder’s fees or commissions are or will
be payable by the Company or any Subsidiaries 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.

 

(r)       Private Placement. Assuming the accuracy of the Purchaser’s
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Common Shares by
the Company to the Purchaser as contemplated hereby.

 

(s)      Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Common Shares, 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.

 

(t)      Listing and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(g) of the Exchange Act, and the Company has taken no
action designed to, or which to its 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. The Common Stock is currently eligible for
electronic transfer through the Depository Trust Company.

 

(u)      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 Purchaser as a result of the Purchaser 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 Common Shares and the Purchaser’s ownership of the Common
Shares.

 

(v)      No Integrated Offering. Assuming the accuracy of the Purchaser’s
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 Common Shares to be integrated with prior offerings by the
Company for purposes of the Securities Act which would require the registration
of any such securities under the Securities Act.

 

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(w)    Tax Status. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and its Subsidiaries each (i) has made or filed all 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 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. To the
knowledge of the Company, there are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction.

 

(x)      No General Solicitation. Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Common Shares by any form
of general solicitation or general advertising. The Company has offered the
Common Shares for sale only to the Purchaser and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.

 

(y)     Accountants. To the knowledge and belief of the Company, the Company’s
independent accounting firm is a registered public accounting firm as required
by the Exchange Act.

 

(z)     Acknowledgment Regarding Purchaser’s Purchase of Common Shares. The
Company acknowledges and agrees that the Purchaser 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 represents to the
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.

 

(aa)   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
Common Shares, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Common Shares, or (iii) paid or agreed to
pay to any Person any compensation for soliciting another to purchase any other
securities of the Company.

 

(bb)   Stock Option Plans. For the two years preceding the date hereof, each
stock option granted by the Company under the Company’s stock option plan was
granted (i) in accordance with the terms of the Company’s stock option 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.

 

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(cc)    No Disqualification Events. With respect to the Common Shares 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 Purchaser
a copy of any disclosures provided thereunder.

 

3.2     Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants as of the date hereof and as of the Closing Date to the
Company as follows (unless as of a specific date therein):

 

(a)     Organization; Authority. The Purchaser is 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 the 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 the Purchaser. Each Transaction
Document to which it is a party has been duly executed by the Purchaser, and
when delivered by such Purchaser in accordance with the terms hereof, 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)     No Conflicts. The execution, delivery and performance by the Purchaser
of this Agreement and the other Transaction Documents to which it is a party and
the consummation by the Purchaser of the transactions contemplated hereby and
thereby do not and will not: (i) conflict with or violate any provision of the
Purchaser’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, (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 (other than a Permitted Lien) upon any
of the material properties or assets of the Purchaser or any of its
subsidiaries, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any material agreement, credit facility or debt instrument (evidencing debt or
otherwise held by the Purchaser or one of its subsidiaries) to which the
Purchaser or any of its subsidiaries is a party or by which any material
property or asset of the Purchaser or any of its subsidiaries is bound or
affected, or (iii) 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 Purchaser or one of its
subsidiaries is subject (including federal and state securities laws and
regulations), or by which any material property or asset of the Purchaser or one
of its subsidiaries is bound or affected.

 

 13 

 

 

(c)      Own Account. The Purchaser understands that the Common Shares are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Common Shares as
principal for its own account and not with a view to or for distributing or
reselling such Common Shares 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 Common Shares 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 Common Shares in violation of the Securities Act or any
applicable state securities law (this representation and warranty not limiting
the Purchaser’s right to sell the Common Shares pursuant to a currently
effective registration statement or otherwise in compliance with applicable
federal and state securities laws). The Purchaser is acquiring the Common Shares
hereunder in the ordinary course of its business.

 

(d)      Purchaser Status. At the time the Purchaser was offered the Common
Shares, it was, and as of the date hereof it is, an “accredited investor” as
defined in Rule 501 under the Securities Act.

 

(e)      Experience of the Purchaser. The 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 Common Shares, and has so evaluated
the merits and risks of such investment. The Purchaser is able to bear the
economic risk of an investment in the Common Shares and, at the present time, is
able to afford a complete loss of such investment.

 

(f)      General Solicitation. The Purchaser is not purchasing the Common Shares
as a result of any advertisement, article, notice or other communication
regarding the Common Shares published in any newspaper, magazine or similar
media or broadcast over television or radio or presented at any seminar or any
other general solicitation or general advertisement.

 

 14 

 

 

(g)     Governmental Review.  The Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Common Shares
offered hereby.

 

(h)      Access to Information. The 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 Common Shares and the merits and risks of investing in the
Common Shares; (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. The Purchaser acknowledges
and understands that (i) the Company may possess material nonpublic information
regarding the Company not known to the Purchaser and that may impact the value
of the Common Shares and (ii) the Purchaser is relying on its own due diligence
investigation in determining to enter into this Agreement and consummate the
transactions contemplated hereby. The Purchaser agrees that the Company shall
have no liability to the Purchaser due to or in connection with the Company’s
use or non-disclosure of such information, and the Purchaser hereby irrevocably
waives any claim that it might have based on the failure of the Company to
disclose such information.

 

(i)       Certain Transactions and Confidentiality. Other than consummating the
transactions contemplated hereunder, the Purchaser has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with the Purchaser, executed any purchases or sales, including
Short Sales, of the securities of the Company during the period commencing as of
the time that the 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 hereof. Other than to other Persons party to this
Agreement, the Purchaser has maintained the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and
terms of this transaction).

 

(j)       Litigation. There is no material Action pending, or to the knowledge
of the Purchaser, threatened against the Purchaser, any of its subsidiaries or
any of their respective properties which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
Common Shares or (ii) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect.

 

 15 

 

 

(k)      No Disqualification Events. With respect to the Common Shares to be
offered and sold hereunder in reliance on Rule 506 under the Securities Act,
none of the Purchaser, any of its predecessors, any director, executive officer,
other officer of the Purchaser participating in the offering hereunder, any
beneficial owner of 20% or more of the Purchaser’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
Purchaser in any capacity at the time of sale (each, an “Purchaser Covered
Person” and, together, “Purchaser Covered Persons”) is subject to any
Disqualification Event, except for a Disqualification Event covered by Rule
506(d)(2) or (d)(3). The Purchaser has exercised reasonable care to determine
whether any Purchaser Covered Person is subject to a Disqualification Event.

 

(l)      Certain Fees. No brokerage or finder’s fees or commissions are or will
be payable by the Purchaser or any of its subsidiaries 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.

 

(m)     Sufficiency of Funds. The Purchaser has sufficient cash on hand or other
sources of immediately available funds to enable it to make payment of the
Purchase Price and consummate the transactions contemplated by this Agreement.

 

ARTICLE IV. 

OTHER AGREEMENTS OF THE PARTIES

 

4.1    Transfer Restrictions.

 

(a)     The Common Shares may only be disposed of in compliance with state and
federal securities laws. In connection with any transfer of Common Shares other
than pursuant to an effective registration statement or Rule 144, to the Company
or to an Affiliate of a Purchaser, 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 Common
Shares 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 shall have
the rights and obligations of a Purchaser under this Agreement.

 

(b)     The Purchaser agrees to the imprinting of a legend on any of the Common
Shares in the following form:

 

THIS SECURITY 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 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.

 

 16 

 

 

(c)     Certificates evidencing the Common Shares shall be eligible to have the
legend set forth in Section 4.1(b) hereof removed: (i) following any sale of
such Common Shares pursuant to a currently effective registration statement,
(ii) following any sale of such Common Shares pursuant to Rule 144 or (iii) if
Company Counsel, in its sole discretion, determines such legend is not required
under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission). If
the Purchaser effects a sale, assignment or transfer of Common Shares pursuant
to and in accordance with the requirements of Rule 144 or a currently effective
registration statement, the Company shall permit the transfer and shall promptly
instruct its transfer agent to issue one or more certificates or credit shares
to the applicable balance accounts at DTC in such name and in such denominations
as specified by such Purchaser to effect such sale, transfer or assignment. Any
fees (with respect to the transfer agent, counsel to the Company or otherwise)
associated with the removal of any legends on any of the Common Shares shall be
borne by the Company.

  

(d)     The Purchaser agrees that it will sell any Common Shares pursuant to
either the registration requirements of the Securities Act, including any
applicable prospectus delivery requirements, or an exemption therefrom, and that
if Common Shares 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 Common Shares as set forth in this Section 4.1 is predicated upon
the Company’s reliance upon this understanding.

 

4.2     Furnishing of Information. The Company covenants to use reasonable
efforts to maintain the registration of the Common Stock under Section 12(g) of
the Exchange Act and 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 hereof pursuant to the Exchange Act for as long as the
Company determines that maintaining the registration of the Common Stock under
the Exchange Act is in the best interests of the Company.

 

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 Common Shares in a manner that would require the registration under the
Securities Act of the sale of the Common Shares.

 

4.4     Securities Laws Disclosure; Publicity. The Company shall promptly after
execution of this Agreement issue a press release disclosing the material terms
of the transactions contemplated hereby and file a Current Report on Form 8-K
with the Commission within the time required by the Exchange Act. The Company
and the Purchaser shall consult with each other in issuing any other press
releases with respect to the transactions contemplated hereby, and neither the
Company nor the Purchaser shall issue any such press release or otherwise make
any such public statement without the prior consent of the other party, which
consent shall not unreasonably be withheld or delayed; provided, however, that
if such disclosure is required by law, the disclosing party shall be permitted
to make such disclosure after promptly providing the other party with prior
notice of such public statement or communication.

 

 17 

 

 

4.5     Shareholder Rights Plan. No claim will be made or enforced by the
Company or, with the consent of the Company, by any other Person, that the
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 the Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Common Shares under the
Transaction Documents or under any other agreement between the Company and the
Purchaser.

 

4.6     Use of Proceeds. The Company shall use the net proceeds from the sale of
the Common Shares hereunder for working capital purposes.

 

4.7      Indemnification of the Purchaser. Subject to the provisions of this
Section 4.7, for the twelve (12) month period following the date hereof, the
Company will indemnify and hold the 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 the 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 material breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (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 based upon a 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 constitutes
fraud, gross negligence, willful misconduct, malfeasance or bad faith). 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 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 or a Purchaser Party’s fraud,
gross negligence, willful misconduct, malfeasance or bad faith. The
indemnification required by this Section 4.7 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.

 

 18 

 

 

4.8     Certain Transactions and Confidentiality. The Purchaser covenants that
neither it, nor any Affiliate acting on its behalf or pursuant to any
understanding with it, will execute any 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 Purchaser no longer holds any Common Shares.  The
Purchaser 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, the Purchaser will maintain the
confidentiality of the existence and terms of this transaction and the
information included in the Transaction Documents.

 

4.9     Form D; Blue Sky Filings. The Company agrees to timely file a Form D
with respect to the Common Shares as required under Regulation D and to provide
a copy thereof, promptly upon request of the 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 Common Shares for, sale to the
Purchaser 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 the Purchaser.

 

ARTICLE V. 

MISCELLANEOUS

 

5.1    Termination.  This Agreement may be terminated by the Company or the
Purchaser by written notice to the other party if the Closing has not been
consummated on or before December 31, 2017; provided, that such termination will
not 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 incurred in connection herewith (including, without limitation, any
fees required for same-day processing of any instruction letter delivered by the
Company).

 

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 hereof and thereof 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.

 

 19 

 

 

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 date of transmission, if
such notice or communication is delivered via facsimile at the email address as
set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New
York City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile 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 City 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.

 

5.5    Amendments; Waivers. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and the Purchaser or, in the case of a
waiver, by the party against whom enforcement of any such waived provision is
sought. 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 hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such
right.

 

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 hereof.

 

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. Neither
the Company nor the Purchaser may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other party
(other than by merger).

 

5.8    No Third Party Beneficiaries. 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 hereof be enforced by, any
other Person, except as otherwise set forth in Section 4.7 (Indemnification of
the Purchaser) and this Section 5.8 (No Third Party Beneficiaries).

 

 20 

 

 

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 the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, Borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this 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
either party shall commence an action, suit or proceeding to enforce any
provisions of the Transaction Documents, then, in addition to the obligations of
the Company under Section 4.7, the prevailing party in such action, suit or
proceeding shall be reimbursed by the other party for its reasonable and
documented 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 Common Shares.

 

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 signed 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.

 

 21 

 

 

5.13   Replacement of Common Shares. If any certificate or instrument evidencing
any Common Shares 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 Common Shares.

 

5.14   Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, the Purchaser 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.

 

5.15   Saturdays, Sundays and Holidays. 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.

 

5.16   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.

 

5.17   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.

 

(Signature Pages Follow)

 

 22 

 

 

IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed by its authorized signatory as of the date first
indicated above.

 

 

SNAP INTERACTIVE, INC.   Address for Notice:       122 East 42nd Street, 26th
Floor By: /s/ Judy Krandel   New York, NY 10168   Name: Judy Krandel      
Title: CFO   E-mail:       Jkrandel@snap-Interative.com With a copy to (which
shall not constitute notice):    

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

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[PURCHASER SIGNATURE PAGE TO STVI SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed by its authorized signatory as of the date first
indicated above.

 

Name of Purchaser: Hershey Strategic Capital, LP

 

Signature of Authorized Signatory of Purchaser: /s/ Adam
Hershey________________________

 

Name of Authorized Signatory: Adam
Hershey________________________________________

 

Title of Authorized Signatory: Managing
Member_____________________________________

 

Email Address of Authorized Signatory:
Adam@hersheycapitalmgt.com___________________

 

Address for Notice to Purchaser: 6 Pompano Road Rumson, NJ 07760

   

 

Address for Delivery of Common Shares to Purchaser (if not same as address for
notice):

  

 

Purchase Price: $1,000,000

 

Price Per Share: $5.00

  

Aggregate Common Shares to be Issued: 200,000

  

EIN Number: 561948225________

   

 

 

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