EXECUTION VERSION 

 

Stock PURCHASE AND REGISTRATION RIGHTS AGREEMENT

 

THIS STOCK PURCHASE AND REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated
as of May 16, 2014, by and among GlassesOff Inc., a Nevada corporation with
headquarters located at 5 Jabotinski St. POB 12, Ramat Gan, Israel 5252006 (the
“Company”), and each investor identified on the signature pages hereto (each, an
“Investor” and collectively, the “Investors”).

 

RECITALS

 

A.           The Company and each Investor are executing and delivering this
Agreement in reliance upon the exemption from registration afforded by
Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506(b) of Regulation D (“Regulation D”) as promulgated by the
United States Securities and Exchange Commission (the “SEC”) under the
Securities Act.

 

B.           Each Investor, severally and not jointly, wishes to purchase, and
the Company wishes to sell, upon the terms and conditions stated in this
Agreement, that aggregate number of shares of the common stock, $0.001 par
value, of the Company (the “Common Stock”), set forth across from such
Investor’s name on the Schedule of Investors (which aggregate amount for all
Investors together shall collectively be referred to herein as the “Common
Shares”).

 

C.           During the forty-five (45) day period commencing immediately after
the Closing, the Company may elect in its sole discretion to offer and sell
additional shares of Common Stock in one or more closings on substantially
identical terms (including, without limitation, purchase price) to those
contained in this Agreement (each, an “Additional Closing”); provided, that the
aggregate number of shares of Common Stock so offered and sold shall not exceed
8,000,000, inclusive of the Common Shares (for an aggregate purchase price of up
to $10,000,000).

 

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 Investors,
intending to be legally bound hereby, agree as follows:

 

Article I
DEFINITIONS

 

1.1          Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:

 

“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 144 under the
Securities Act.

 

“Additional Closing” has the meaning set forth in the Recitals.

 

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

 

“Allowable Grace Period” has the meaning set forth in Section 4.7(c)(xv).

 

“BHCA” has the meaning set forth in Section 3.1(jj).

 

“Blue Sky Filing” has the meaning set forth in Section 6.1(a).

 

 

 

 

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

 

“Buy-In” has the meaning set forth in Section 4.1(b).

 

“Buy-In Price” has the meaning set forth in Section 4.1(b).

 

“Claims” has the meaning set forth in Section 6.1(a).

 

“Closing” means the closing of the purchase and sale of the Common Shares
pursuant to Section 2.1.

 

“Closing Date” means the second (2nd) Trading Day after the date on which this
Agreement has been executed and delivered by all parties hereto, unless on such
date the conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 (other than
those to be satisfied at the Closing) shall not have been satisfied or waived in
writing, in which case the Closing Date shall be on the second (2nd) Trading Day
after the date on which the last to be satisfied or waived of the conditions set
forth in Sections 2.1, 2.2, 5.1 and 5.2 (other than those to be satisfied at the
Closing) shall have been satisfied or waived.

 

“Common Shares” has the meaning set forth in the Recitals.

 

“Common Stock” has the meaning set forth in the Recitals.

 

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

 

“Company Counsel” means Greenberg Traurig, P.A.

 

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

 

“Current Public Information Failure” has the meaning Set forth in Section
4.7(b).

 

“Disclosure Materials” has the meaning set forth in Section 3.1(g).

 

“Effectiveness Deadline” has the meaning set forth in Section 4.7(a).

 

“Effectiveness Failure” has the meaning set forth in Section 4.7(b).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Federal Reserve” has the meaning set forth in Section 3.1(jj).

 

“Filing Deadline” has the meaning set forth in Section 4.7(a).

 

“Filing Failure” has the meaning set forth in Section 4.7(b).

 

“FINRA” has the meaning set forth in Section 3.2(c).

 

“GAAP” United States generally accepted accounting principles applied on a
consistent basis during the periods involved.

 

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“Grace Period” has the meaning set forth in Section 4.7(c)(xv).

 

“Indebtedness” means, with respect to any Person, without duplication (A) all
indebtedness for borrowed money, (B) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, and (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by such Person, even though such Person
which owns such assets or property has not assumed or become liable for the
payment of such indebtedness.

 

“Indemnified Damages” has the meaning set forth in Section 6.1(a).

 

“Indemnified Party” has the meaning set forth in Section 6.1(b).

 

“Indemnified Person” has the meaning set forth in Section 6.1(a).

 

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

 

“Legend Removal Date” has the meaning set forth in Section 4.1(b).

 

“Lien” means any lien, charge, claim, security interest, pledge encumbrance,
right of first refusal, preemptive right or other restriction.

 

“Losses” means any and all losses, claims, damages, liabilities, settlement
costs and expenses, including, without limitation, reasonable attorneys’ fees.

 

“Maintenance Failure” has the meaning set forth in Section 4.7(b).

 

“Material Adverse Effect” means any condition, circumstance, or situation that
may result in, or reasonably be expected to result in (i) a material adverse
effect on the legality, validity or enforceability of this Agreement or any of
the Transaction Documents, (ii) a material adverse effect on the results of
operations, assets, business or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform its obligations hereunder or under
any of the Transaction Documents in any material respect on a timely basis;
provided, however, that with respect to the immediately preceding clause (ii),
none of the following shall be deemed in themselves to constitute, and none of
the following shall be taken into account in determining whether there has been,
a Material Adverse Effect: (a) any change generally affecting the economy,
financial markets or political, economic or regulatory conditions in the United
States, the State of Israel or any other geographic region in which the Company
and its subsidiaries conduct business (except, in each case, to the extent that
the Company or such subsidiary is disproportionately adversely affected relative
to other participants in the industries in which the Company or such subsidiary
participate), (b) general financial, credit or capital market conditions,
including interest rates or exchange rates, or any changes therein,
(c) conditions (or changes therein) in any industry or industries in which the
Company operates (including seasonal fluctuations) to the extent that such
conditions do not disproportionately have a greater adverse impact on the
Company and its subsidiaries, taken as a whole, relative to other companies
operating in such industry or industries, (d) the announcement or pendency of
this Agreement and the transactions contemplated hereby or (e) changes in
applicable law or GAAP (or, in each case, any interpretations thereof).

 

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“Material Contract” means any contract of the Company that has been filed or was
required to have been filed as an exhibit to the SEC Reports pursuant to
Item 601(b)(10) of Regulation S-K.

 

“Material Permits” has the meaning set forth in Section 3.1(s).

 

“Money Laundering Laws” has the meaning set forth in Section 3.1(kk).

 

“OFAC” has the meaning set forth in Section 3.1(hh).

 

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

 

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

 

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

 

“Registrable Securities” means (i) the Common Shares and (ii) any shares of
capital stock issued or issuable with respect to the Common Shares as a result
of any stock split, dividend, distribution, recapitalization or similar
transaction; provided, that the Registrable Securities shall cease to be
Registrable Securities when (i) a registration statement covering such
Registrable Securities has been declared effective by the SEC and such
Registrable Securities have been disposed of pursuant to such effective
registration statement, or (ii) such Registrable Securities may be sold without
restrictions or other limitations pursuant to Rule 144 (or any successor
provision) under the Securities Act (including, without limitation, volume
restrictions) and without the need for current public information required by
Rule 144(c)(1).

 

“Registration Delay Payments” has the meaning set forth in Section 4.7(b).

 

“Registration Period” has the meaning set forth in Section 4.7(c)(i).

 

“Registration Statement” has the meaning set forth in Section 4.7(a).

 

“Regulation D” has the meaning set forth in the Recitals.

 

“Representatives” has the meaning set forth in Section 7.14.

 

“Required Approvals” has the meaning set forth in Section 3.1(p).

 

“Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.

 

“Schedule of Investors” means the list of Investors attached hereto as Annex A.

 

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“SEC” has the meaning set forth in the Recitals.

 

“SEC Reports” has the meaning set forth in Section 3.1(g).

 

“Securities Act” has the meaning set forth in the Recitals.

 

“Shares” means shares of Common Stock.

 

“Short Sales” means and includes, without limitation, all “short sales” as
defined in Rule 200 promulgated under Regulation SHO under the Exchange Act and
all types of direct and indirect stock pledges, forward sale contracts, options,
puts, calls, short sales, swaps, derivatives and similar arrangements (including
on a total return basis), and sales and other transactions through non-U.S.
broker-dealers or foreign regulated brokers.

 

“Subsidiary” means the following subsidiaries of the Company: (i) Ucansi Inc., a
Delaware corporation, and (ii) EYEKON E.R.D. LTD., an Israeli company.

 

“Trading Day” means (i) a day on which the Common Stock is traded on a Trading
Market (other than the OTCBB), or (ii) if the Common Stock is not listed or
quoted on a Trading Market (other than the OTCBB), a day on which the Common
Stock is traded in the over-the-counter market, as reported by the OTCBB, or
(iii) if the Common Stock is not listed or quoted on any Trading Market, a day
on which the Common Stock is quoted in the over-the-counter market as reported
by the Pink Sheets LLC (or any similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
Trading Day shall mean a Business Day.

 

“Trading Market” means whichever of the New York Stock Exchange, the NYSE MKT,
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market or the OTCBB on which the Common Stock is listed or quoted for trading on
the date in question.

 

“Transaction” has the meaning set forth in Section 3.2(i).

 

“Transaction Documents” means this Agreement, including the schedules, annexes
and exhibits attached hereto, and the Transfer Agent Instructions and each of
the other agreements or instruments entered into or executed by the parties
hereto in connection with the transactions contemplated by this Agreement.

 

“Transfer Agent” means VStock Transfer, LLC, or any successor transfer agent for
the Company.

 

“Transfer Agent Instructions” means the transfer agent instructions,
substantially in the form of Exhibit B, executed by the Company and delivered to
the Transfer Agent.

 

“Violations” has the meaning set forth in Section 6.1(a).

 

“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 City time) to 4:02 p.m. (New York City
time)), (b) if the Common Stock is not then listed or quoted for trading on the
OTCBB and if prices for the Common Stock are then reported in the “Pink Sheets”
published by Pink OTC Markets, Inc. (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 (c) 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 Investors and reasonably acceptable to
the Company, the fees and expenses of which shall be paid by the Company.

 

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Article II
PURCHASE AND SALE

 

2.1           Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing, the Company shall issue and sell to each Investor,
and each Investor shall, severally and not jointly, purchase from the Company,
such number of Common Shares set forth across from such Investor’s name on the
Schedule of Investors, at a purchase price equal to $1.25 per Common Share. The
date and time of the Closing shall be 10:00 a.m., New York City Time, on the
Closing Date. The Closing shall take place at the offices of the Company
Counsel, or at such other location as the parties determine. Closing may take
place by delivery of the items to be delivered at Closing by facsimile or other
electronic transmission.

 

2.2           Closing Deliveries.

 

(a)          At the Closing, the Company shall deliver or cause to be delivered
to each Investor a copy of the Company’s irrevocable instructions to the
Transfer Agent instructing the Transfer Agent to deliver one or more stock
certificates, inclusive of such restrictive and other legends as set forth in
Section 4.1(b) hereof, evidencing such number of Common Shares set forth on such
Investor’s signature page to this Agreement, registered in the name of such
Investor.

 

(b)          At the Closing, each Investor shall deliver or cause to be
delivered to the Company the following:

 

(i)          the purchase price set forth across from such Investor’s name on
the Schedule of Investors in U.S. dollars and in immediately available funds, by
wire transfer to an account designated in writing to such Investor by the
Company for such purpose;

 

(ii)         a completed and executed Investor Signature Page to this Agreement;

 

(iii)        a completed Stock Certificate Questionnaire in the form attached
hereto as Exhibit A-1; and

 

(iv)        a completed and executed copy of the Investor Certificate attached
hereto as Exhibit A-2.

 

Article III
REPRESENTATIONS AND WARRANTIES

 

3.1           Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors as follows:

 

(a)          Subsidiaries. The Company owns, directly or indirectly, all of the
capital stock or comparable equity interests of each Subsidiary free and clear
of any Lien (other than restrictions on transfer arising under applicable
securities laws), and all issued and outstanding shares of capital stock or
comparable equity interest of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights. The Company does
not own an equity or other ownership interest in any Person other than the
Subsidiaries.

 

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(b)          Organization and Qualification. The Company and each Subsidiary is
an entity duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization, as applicable, with
the requisite power and legal 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 of any of the provisions of its certificate or
articles of incorporation, bylaws or other organizational or charter documents,
as applicable. The Company and each Subsidiary is duly qualified to do 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, would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect and no Proceeding has been instituted seeking to revoke, limit or curtail
such power or authority or qualification.

 

(c)          Authorization; Enforcement. The Company has the requisite corporate
power authority to enter into and to consummate the transactions contemplated by
each of the Transaction Documents to which it is a party and otherwise to carry
out its obligations hereunder and thereunder. The execution and delivery by the
Company of each of the Transaction Documents to which it is a party 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 consent or action is required by the Company, its Board of Directors or
its stockholders. Each of the Transaction Documents to which it is a party has
been (or upon delivery will be) duly executed by the Company and is, or when
delivered in accordance with the terms hereof, 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.

 

(d)          No Conflicts. The execution, delivery and performance by the
Company of the 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 or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, as applicable, (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, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement (including any Material Contract), 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, except to the extent that such conflict, default, termination,
amendment, acceleration or cancellation right would not have or reasonably be
expected to result in a Material Adverse Effect, or (iii) 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 any
Subsidiary is subject or by which any property or asset of the Company or any
Subsidiary is bound or affected, except to the extent that such violation would
not have or reasonably be expected to result in a Material Adverse Effect.

 

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(e)          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 restrictions on transfer arising under applicable
securities laws) and will not be subject to preemptive or similar rights of
stockholders (other than those imposed by the Investors).

 

(f)          Capitalization. The aggregate number of shares and type of all
authorized, issued and outstanding classes of capital stock, options and other
securities of the Company and of each Subsidiary (whether or not presently
convertible into or exercisable or exchangeable for shares of capital stock of
the Company or any Subsidiary, as applicable) is set forth in Schedule 3.1(f)
hereto. All outstanding shares of capital stock of the Company and of each
Subsidiary are duly authorized, validly issued, fully paid and nonassessable and
have been issued in compliance in all material respects with all applicable
securities laws, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase any capital
stock of the Company or such Subsidiary.

 

(g)          SEC Reports; Financial Statements. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it under the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the 12 months preceding the date hereof (the “SEC Reports” and ,
collectively with this Agreement and the schedules hereto, the “Disclosure
Materials”). As of their respective dates (or, if amended or superseded by a
filing prior to the Closing Date, then on the date of such filing), the SEC
Reports filed by the Company complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder, and none of the SEC Reports, when filed (or, if amended
or superseded by a filing prior to the Closing Date, then on the date of such
filing) by the Company, 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 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 SEC with respect
thereto as in effect at the time of filing (or, if amended or superseded by a
filing prior to the Closing Date, then on the date of such filing). Such
financial statements have been prepared in accordance with GAAP, except as may
be otherwise specified in such financial statements, the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP or may be condensed or summary statements, and fairly present
in all material respects the consolidated 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, year-end audit adjustments. All Material
Contracts to which the Company or any Subsidiary is a party or to which the
property or assets of the Company or any Subsidiary are subject are included as
part of or identified in the SEC Reports.

 

(h)          Absence of Litigation. Except as disclosed in the SEC Reports,
there is no action, suit, claim, or Proceeding pending, or, to the Company’s
knowledge, threatened, before or by any court, public board, government agency,
self-regulatory organization or body that adversely affect or challenge the
legality, validity or enforceability of any of the Transaction Documents or that
would, individually or in the aggregate, have or be reasonably likely to result
in a Material Adverse Effect.

 

(i)          Compliance. Except as would not, individually or in the aggregate,
have or be reasonably likely to result in a Material Adverse Effect, (i) 
neither the Company nor any Subsidiary 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 written 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 (including any Material Contract) 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) neither
the Company nor any Subsidiary is in violation of any order of any court,
arbitrator or governmental body, or (iii)  neither the Company nor any
Subsidiary is or has been in violation of any statute, rule or regulation of any
governmental authority.

 

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(j)          Title to Assets. Neither the Company nor any Subsidiary owns real
property. The Company and each Subsidiary has good and marketable title in all
personal property owned by them that is material to the business of the Company
and each Subsidiary, in each case free and clear of all Liens, except for Liens
that do not, individually or in the aggregate, have or are reasonably likely to
result in a Material Adverse Effect or which do not materially affect the value
and do not materially interfere with the use of such property by the Company.
Any real property and facilities held under lease by the Company or any
Subsidiary is held by it under valid, subsisting and enforceable leases of which
the Company and each Subsidiary is in compliance.

 

(k)          Intellectual Property. The Company and its subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names, service
marks, service mark registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and rights necessary to conduct their respective businesses as now
conducted. Except for matters described in the SEC Documents, or matters which
would not be reasonably likely to have a Material Adverse Effect, the Company
and its Subsidiaries do not have any knowledge of any violation or infringement
by the Company or its Subsidiaries of trademark, trade name rights, patents,
patent rights, copyrights, inventions, licenses, service names, service marks,
service mark registrations, trade secret or other similar rights of others, and,
to the knowledge of the Company, there is no claim, action or Proceeding being
made or brought against, or to the Company’s knowledge, being threatened
against, the Company or its subsidiaries regarding trademark, trade name,
patents, patent rights, invention, copyright, license, service names, service
marks, service mark registrations, trade secret or other violation or
infringement; and the Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing. 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 would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(l)          Insurance. The Company and each Subsidiary is insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses and locations in which
the Company and each Subsidiary is engaged. 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.

 

(m)          Internal Accounting Controls. The Company and each Subsidiary
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
generally accepted accounting principles 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.

 

(n)          Sarbanes-Oxley Act; Disclosure Controls. The Company is in
compliance in all material respects with applicable requirements of the
Sarbanes-Oxley Act of 2002 and applicable rules and regulations promulgated by
the SEC thereunder, except where such noncompliance would not have, individually
or in the aggregate, a Material Adverse Effect. The Company maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15(e) and Rule
15d-15(e) under the Exchange Act).

 

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(o)          Indebtedness. Except as disclosed in the SEC Reports, neither the
Company nor any Subsidiary (i) has any outstanding Indebtedness, (ii) is in
violation of any term of and is not in default under any contract, agreement or
instrument relating to any Indebtedness, except where such violations and
defaults would not result, individually or in the aggregate, in a Material
Adverse Effect and (iii) is a party to any contract, agreement or instrument
relating to any Indebtedness, the performance of which, in the reasonable
judgment of the Company’s officers, would have or is expected to result in a
Material Adverse Effect.

 

(p)          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
(including the issuance of the Common Shares), other than (i) filings required
by applicable state securities laws, (ii) the filing of a Notice of Sale of
Securities on Form D with the SEC under Regulation D of the Securities Act,
(iii) the filing of any requisite notices and/or application(s) to any Trading
Market for the issuance and sale of the Common Shares and the listing of the
Common Shares for trading or quotation, as the case may be, thereon in the time
and manner required thereby and (iv) those that have been made or obtained prior
to the date of this Agreement (collectively, the “Required Approvals”).

 

(q)          Material Changes; Undisclosed Events, Liabilities or Developments. 
Since September 30, 2013, except as specifically disclosed in an SEC Report
filed subsequent to such date and prior to the date hereof: (i) there has been
no event, occurrence or development that has had or that would 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 and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the SEC,
(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
existing Company stock option plans. The Company does not have pending before
the SEC any request for confidential treatment of information. Except for the
transactions contemplated by the Transaction Documents, including the issuance
of the Common Shares, no event, liability, fact, circumstance, occurrence or
development has occurred or exists with respect to the Company or its
Subsidiaries or their respective businesses, properties, operations, assets or
financial condition, that would be required to be disclosed by the Company on a
Current Report on Form 8-K at the time this representation is made or deemed
made that has not been publicly disclosed at least 1 Trading Day prior to the
date that this representation is made.

 

(r)          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 would 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 with the Company, or any restrictive covenant in favor
of any third party.  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 would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

10

 

 

(s)          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 would 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.

 

(t)          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 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, without limitation, award
agreements under any incentive compensation plan of the Company.

 

(u)          Certain Fees.  Other than as set forth on Schedule 3.1(u) and
except with respect to compensation payable to any of the Company’s officers,
directors and employees, 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.  The Investors 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 3.1(u) that may be due in connection with the
transactions contemplated by the Transaction Documents. 

 

(v)         Private Placement.  Assuming the accuracy of the Investors’
representations and warranties set forth in Section 3.2 and their compliance
with their agreements contained in this Agreement, no registration under the
Securities Act is required for the offer and sale of the Common Shares by the
Company to the Investors pursuant to the terms of this Agreement. The issuance
and sale of the Common Shares hereunder does not contravene the rules and
regulations of the Trading Market, which, for the avoidance of doubt, is the
OTCBB.

 

(w)          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.

 

(x)          Registration Rights.  Other than (i) as disclosed in the SEC
Reports, (ii) as set forth in this Agreement and (iii) with respect to any
Person who acquires Common Stock at one or more Additional Closings, no Person
has any right to cause the Company to effect the registration under the
Securities Act of any securities of the Company or any Subsidiaries.

 

11

 

 

(y)          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 Investors or their agents or counsel with any information
that it believes constitutes material, non-public information. The Company
understands and confirms that the Investors 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 Investors
regarding the Company and its Subsidiaries, their respective businesses and the
transactions contemplated hereby, including the Schedules to this Agreement, 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 light of the circumstances under which they were made, not
misleading. The press releases disseminated by the Company since June 26, 2013
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 light of the circumstances under which they were
made and when made, not misleading. The Company acknowledges and agrees that no
Investor 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 hereof.

 

(z)          No Integrated Offering. Assuming the accuracy of the Investors’
representations and warranties set forth in in Section 3.2 and their compliance
with their agreements contained in this Agreement, 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.

 

(aa)         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 Common Shares 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 and (ii) the
Company’s assets do not constitute unreasonably small capital to carry on its
business as now conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company.  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.

 

(bb)         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.  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.

 

(cc)         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,
and may offer, the Common Shares for sale only to the Investors and other
“accredited investors” within the meaning of Rule 501 under the Securities Act.

 

12

 

 

(dd)         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, (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 Foreign Corrupt Practices Act of 1977, as amended.

 

(ee)         Accountants.  The Company’s accounting firm is named 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)
will express its opinion with respect to the financial statements to be included
in the Company’s Annual Report on Form 10-K for the fiscal year ended December
31, 2013.

 

(ff)         No Disagreements with Accountants and Lawyers.  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.

 

(gg)         Regulation M Compliance.  The Company has not, and to its knowledge
no one acting on its behalf has 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.

 

(hh)         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”).

 

(ii)         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.

 

(jj)         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.

 

(kk)         Money Laundering.  The operations of the Company and its
Subsidiaries are and, to the knowledge of the Company, have been conducted at
all times in material 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, suit or proceeding by or before any court or governmental agency,
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.

 

3.2           Representations and Warranties of the Investors. Each Investor
hereby, as to itself only and for no other Investor, represents and warrants to
the Company as follows:

 

13

 

 

(a)          Organization; Authority. Such Investor, if such Investor is not a
natural person, is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization with the
requisite corporate, limited liability company, partnership or other 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 purchase by such Investor of the Common Shares hereunder and the
consummation of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate, partnership or other action on
the part of such Investor. This Agreement and the Transaction Documents to which
such Investor is a party or has or will execute have been duly executed and
delivered by such Investor and constitute the valid and binding obligations of
such Investor, enforceable against it in accordance with their 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 Public Sale or Distribution. Such Investor is acquiring the
Common Shares in the ordinary course of business for its own account and not
with a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered under the Securities
Act or under an exemption from such registration and in compliance with
applicable federal and state securities laws, and such Investor does not have a
present arrangement to effect any distribution of the Common Shares to or
through any person or entity.

 

(c)          Investor Status. Such Investor is an “accredited investor” as
defined in Rule 501(a) under the Securities Act or a “qualified institutional
buyer” as defined in Rule 144A(a) under the Securities Act. Such Investor is not
a registered broker dealer registered under Section 15(a) of the Exchange Act,
or a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) or an
entity engaged in the business of being a broker dealer. Except as otherwise
disclosed in writing to the Company in such Investor’s Selling Stockholder
Questionnaire, such Investor is not affiliated with any broker dealer registered
under Section 15(a) of the Exchange Act, or a member of the FINRA or an entity
engaged in the business of being a broker dealer.

 

(d)          General Solicitation. Such Investor 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, broadcast over television or radio, disseminated over the Internet or
presented at any seminar or any other general solicitation or general
advertisement. Neither such Investor, nor any Person acting on behalf of such
Investor, has offered or sold, and does not presently intend to offer and sell
at any future time, any Common Stock by any form of general solicitation or
general advertising.

 

(e)          Experience of Such Investor; Risk of Loss. Such Investor 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. Such Investor understands that it must bear the economic risk of its
investment in the Common Shares indefinitely, and is able to bear such risk and
is able to afford a complete loss of such investment. Such Investor has the
ability to bear the economic risks of its prospective investment in the Common
Shares and can afford the complete loss of such investment.

 

14

 

 

(f)          Access to Information. Such Investor acknowledges that it has
reviewed the Disclosure Materials 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 Company and 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 (other than material
non-public information) about the Company and each Subsidiary 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.

 

(g)          No Governmental Review. Such Investor understands that no U.S.
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Common Shares or the
fairness or suitability of the investment in the Common Shares nor have such
authorities passed upon or endorsed the merits of the offering of the Common
Shares.

 

(h)          No Conflicts. The execution, delivery and performance by such
Investor of this Agreement and the consummation by such Investor of the
transactions contemplated hereby will not (i) result in a violation of the
organizational documents of such Investor or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
such Investor is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws) applicable to such Investor, except in the case of clauses (ii) and (iii)
above, for such that are not material and do not otherwise affect the ability of
such Investor to consummate the transactions contemplated hereby or perform its
obligations hereunder.

 

(i)          Prohibited Transactions; Confidentiality. Such Investor has not,
directly or indirectly, and no Person acting on behalf of or pursuant to any
understanding with such Investor has, engaged in any purchases or sales in any
of the Company’s securities, including derivatives thereof, including, without
limitation, any Short Sales involving any of the Company’s securities (a
“Transaction”), since the time that such Investor was first contacted by the
Company or any other Person regarding an investment in the Company. Such
Investor covenants that neither it nor any Person acting on its behalf or
pursuant to any understanding with such Investor will engage, directly or
indirectly, in any Transactions in the securities of the Company prior to the
time the transactions contemplated by this Agreement are publicly disclosed.

 

(j)          No Legal, Tax or Investment Advice. Such Investor understands that
nothing in this Agreement or any other materials presented by or on behalf of
the Company to the Investor in connection with the purchase of the Common Shares
constitutes legal, tax or investment advice. Such Investor has consulted such
legal, tax and investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of the Common Shares
and has made its own assessment and has satisfied itself concerning the relevant
tax and other economic considerations relevant to its investment in the Common
Shares.

 

(k)          Reliance on Exemptions. Such Investor understands that the Common
Shares are being offered and sold to it in reliance on specific exemptions from
the registration requirements of U.S. federal and state securities laws and that
the Company is relying upon the truth and accuracy of, and such Investor’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Investor set forth herein and in the other
Transaction Documents in order to determine the availability of such exemptions
and the eligibility of such Investor to acquire the Common Shares.

 

(l)          Residency. Such Investor is a resident of that jurisdiction
specified below its address on the Schedule of Investors.

 

15

 

 

(m)          Transfer or Resale. Such Investor understands that: (i) the Common
Shares have not been and are not being registered under the Securities Act, any
U.S. state securities laws or the laws of any foreign country or other
jurisdiction, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder or (B) such Investor shall have
delivered to the Company an opinion of counsel, in a form reasonably acceptable
to the Company, to the effect that such Common Shares to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an exemption from
such registration; (ii) any sale of the Common Shares made in reliance on Rule
144 may be made only in accordance with the terms of Rule 144 and further, if
Rule 144 is not applicable, any resale of the Common Shares under circumstances
in which the seller (or the Person through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder; and (iii) except as set forth in Section 4.7,
neither the Company nor any other Person is under any obligation to register the
Common Shares under the Securities Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.

 

(n)          Legends. Such Investor understands that the certificates
representing the Common Shares, except as set forth below, shall bear any legend
as required by the “blue sky” laws of any state and a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):

 

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY APPLICABLE STATE
SECURITIES LAWS 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 COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS.

 

Such Investor understands that the legend set forth above shall be removed and
the Company shall issue a certificate without such legend to the holder of the
Common Shares upon which it is stamped, if, unless otherwise required by state
securities laws, (i) such Common Shares (x) are registered for resale pursuant
to an effective registration statement under the Securities Act and (y) are
resold pursuant to such registration statement or (ii) in connection with a
sale, assignment or other transfer pursuant to Rule 144, such holder provides
the Company with an opinion of a law firm reasonably acceptable to the Company,
in a form reasonably acceptable to the Company, to the effect that such sale,
assignment or transfer may be made in compliance with Rule 144.

 

(o)          Subsequent Closings. Such Investor acknowledges that during the
forty-five (45) day period commencing immediately after the Closing, the Company
may elect in its sole discretion to offer and sell additional shares of Common
Stock in one or more Additional Closings; provided, that the aggregate number of
shares of Common Stock so offered and sold will not exceed 8,000,000, inclusive
of the Common Shares (for an aggregate purchase price of up to $10,000,000).

 

16

 

 

Article IV
OTHER AGREEMENTS OF THE PARTIES

 

4.1           Transfer Restrictions.

 

(a)          The Investors covenant that the Common Shares will be disposed of
only pursuant to an effective registration statement under, and in compliance
with the requirements of, the Securities Act or pursuant to an available
exemption from the registration requirements of the Securities Act, and in
compliance with applicable state securities laws. In connection with any
transfer of Common Shares other than pursuant to an effective registration
statement or to the Company, the Company may require the transferor to provide
to the Company an opinion of counsel selected by the transferor, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration under the Securities
Act. Notwithstanding the foregoing, the Company hereby consents to and agrees to
register on the books of the Company and with its Transfer Agent, without any
such legal opinion, except to the extent that the transfer agent requests such
legal opinion, any transfer of Common Shares by an Investor to an Affiliate of
such Investor, provided that such transfer does not involve a “sale” within the
meaning of Section 2(a)(3) of the Securities Act and provided that such
Affiliate does not request any removal of any existing legends on any
certificate evidencing the Common Shares.

 

(b)          The Investors agree to the imprinting, until no longer required by
this Section 4.1(b), of the following legend on any certificate evidencing any
of the Common Shares:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY APPLICABLE STATE
SECURITIES LAWS 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 COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS.

 

The Company acknowledges and agrees that an Investor 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 Common Shares to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Investor may transfer
pledged or secured Common Shares 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; provided, that an opinion of legal counsel to
the Company may be required by the Company’s transfer agent in connection with
any such transfer. Further, no notice shall be required of such pledge. At the
appropriate Investor’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Common Shares may
reasonably request in connection with a pledge or transfer of the Common Shares,
including, (i) the opinion of legal counsel to the Company, if required by the
transfer agent, as described above and (ii) if the Common Shares are subject to
registration pursuant to this 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.

 

17

 

 

Certificates evidencing the Common Shares shall not be required to contain such
legend or any other legend (i) following any sale of such Common Shares pursuant
to an effective registration statement under the Securities Act, (ii) pursuant
to Rule 144 if the holder provides the Company with a legal opinion (and the
documents upon which the legal opinion is based) reasonably acceptable to the
Company to the effect that the Common Shares can be sold under Rule 144 or (iii)
if the holder provides the Company with a legal opinion (and the documents upon
which the legal opinion is based) reasonably acceptable to the Company to the
effect that the legend is not required under applicable requirements of the
Securities Act (including controlling judicial interpretations and
pronouncements issued by the Staff of the SEC). The Company will no later than
three (3) Trading Days following the delivery by an Investor to the Company or
the Transfer Agent (if delivery is made to the Transfer Agent a copy shall be
contemporaneously delivered to the Company) of (x) a legended certificate
representing the applicable Common Shares and any necessary instruments of
transfer and (y) evidence reasonably satisfactory to the Company and its counsel
of the occurrence of any of (i) through (iii) above (including any applicable
investor and broker representation letters and the delivery of any legal opinion
referred to therein, as applicable), deliver or cause to be delivered to such
Investor (or a transferee of such Investor, as applicable) a certificate or
book-entry (including shares transferred via DWAC or similar methodology by DTC)
representing such Common Shares that is free from all restrictive and other
legends (the date on which (x) and (y) are delivered being referred to herein as
the “Legend Removal Date”). The Company may not make any notation on its records
or give instructions to the Transfer Agent that expand the restrictions on
transfer set forth in this Section 4.1(b).

 

If the Company shall fail for any reason or for no reason to issue to an
Investor within three (3) Trading Days after the Legend Removal Date a
certificate or book-entry (including shares transferred via DWAC or similar
methodology by DTC) that is free from all restrictive and other legends, and if
on or after such Trading Day such Investor purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by such Investor of such Common Shares that such Investor anticipated
receiving without legend from the Company (a “Buy-In”), then the Company shall,
within three (3) Business Days after the written request of such Investor and in
such Investor’s discretion, either (i) pay cash to such Investor in an amount
equal to such Investor’s total purchase price (including brokerage commissions,
if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at
which point the Company’s obligation to deliver such unlegended Common Shares
shall terminate, or (ii) promptly honor its obligation to deliver to such
Investor such unrestricted Common Shares as provided above and pay cash to such
Investor in an amount equal to the excess (if any) of the Buy-In Price over the
product of (A) such number of Common Shares, multiplied by (B) the closing price
of the Common Stock on the applicable Trading Market on the Legend Removal Date.
If an Investor effects a Buy-In in accordance with this Section 4.1(b), and the
Company thereafter pays to such Investor, within the applicable three (3)
Business Day period, the amount specified in the immediately preceding clauses
(i) or (ii) (as elected by such Investor’s), then such payment shall be such
Investor’s sole and exclusive remedy for the Company’s failure to issue to an
Investor within three (3) Trading Days after the Legend Removal Date a
certificate or book-entry (including shares transferred via DWAC or similar
methodology by DTC) that is free from all restrictive and other legends.

 

4.2           Use of Proceeds. The Company intends to use the net proceeds from
the sale of the Common Shares to fund research and development, future potential
acquisitions, working capital and general corporate purposes. The Company also
may use a portion of the net proceeds, currently intended for general corporate
purposes, to acquire or invest in technologies, products or services that
complement its business. The Company shall not use such proceeds:  (a) for the
satisfaction of any portion of the Company’s Indebtedness that is outstanding on
the date of this Agreement other than payment of capital lease obligations and
trade payables in the ordinary course of the Company’s business and prior
practices, (b) for settlement of any outstanding litigation or (c) in violation
of FCPA or OFAC regulations.

 

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4.3           Securities Laws Disclosure; Publicity.  The Company shall file a
Current Report on Form 8-K with the SEC within the time required by the Exchange
Act, disclosing this Agreement and the transactions contemplated hereby as
required by the Exchange Act and the rules and regulations promulgated
thereunder. From and after the filing of such Current Report on Form 8-K, the
Company represents to the Investors that it shall have publicly disclosed all
material, non-public information delivered to any of the Investors by the
Company or any of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated
by the Transaction Documents. Without the prior written consent of an Investor,
which consent shall not be unreasonably withheld, conditioned or delayed, the
Company shall not publicly disclose the name of such Investor, or include the
name of such Investor in any filing with the SEC or any regulatory agency or
Trading Market; provided, however, that without such Investor’s consent, the
Company may publicly disclose the name of such Investor, or include the name of
such Investor in any filing with the SEC or any regulatory agency or Trading
Market (a) as required by federal securities law in connection with any
registration statement contemplated by this Agreement or (b) to the extent such
disclosure is required by law or Trading Market regulations, in which case the
Company shall provide the Investors with prior notice of such disclosure
permitted under this clause (b).

 

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

 

4.5           Non-Public Information. Except with respect to the material terms
and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that neither it, nor any other Person acting on
its behalf, will provide any Investor or its agents or counsel with any
information that the Company believes constitutes material non-public
information, unless prior thereto such Investor shall have entered into a
written agreement with the Company regarding the confidentiality and use of such
information. The Company understands and confirms that each Investor shall be
relying on the foregoing covenant in effecting transactions in securities of the
Company.

 

4.6           Form D and Blue Sky. The Company agrees to timely file a Form D
with respect to the Common Shares as required under Regulation D. The Company,
on or before the Closing Date, 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 Investors at the Closing pursuant to
this Agreement under applicable securities or “blue sky” laws of the states of
the United States (or to obtain an exemption from such qualification). The
Company shall make all filings and reports relating to the offer and sale of the
Common Shares required under applicable securities or “blue sky” laws of the
states of the United States following the Closing Date and shall provide copies
to any Investor who so requests.

 

4.7           Resale Registration.

 

(a)          Mandatory Registration. The Company shall prepare and, as soon as
reasonably practicable, but in no event later than the 60th day following the
Closing Date (the “Filing Deadline”), file with the SEC, a registration
statement on Form S-1 or such other form under the Securities Act as is then
available to the Company (including the prospectus, amendments and supplements
to such registration statement or prospectus, including pre- and post-effective
amendments, all exhibits thereto and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement,
the “Registration Statement”), providing for the resale from time to time by the
Investors of any and all Registrable Securities. Notwithstanding anything to the
contrary contained herein, the Filing Deadline shall be automatically extended
by a number of days necessary to address any comments to the Registration
Statement by any Investor’s counsel, which comments have required that the
Company not file the Registration Statement as set forth in clause (B) of
Section 4.7(c)(iii). The Registration Statement shall contain (except as
otherwise directed by the Investors) the “Selling Stockholders” and “Plan of
Distribution” sections in substantially the form attached hereto as Annex B. The
Company agrees to use its reasonable best efforts to cause the Registration
Statement to be declared effective by the SEC as soon as practicable following
such filing, but in no event later than the earlier of (x) the 150th day
following the Closing Date or (y) the fifth day following the date on which the
Company is notified (orally or in writing, whichever is earlier) by the SEC that
the Registration Statement will not be reviewed or will not be subject to
further review (such date, the “Effectiveness Deadline”). The Company shall
promptly, and in any event within three (3) Trading Days, notify the Investors
of the effectiveness of the Registration Statement. The Company shall maintain
the effectiveness of the Registration Statement for so long as there are any
Registrable Securities outstanding, with respect to such Registrable Securities.

 

(b)          Effect of Failure to File and Obtain and Maintain Effectiveness of
the Registration Statement. If (i) the Registration Statement is (A) not filed
with the SEC on or before the Filing Deadline (a “Filing Failure”) or (B) not
declared effective by the SEC on or before the Effectiveness Deadline (an
“Effectiveness Failure”) (it being understood that if on or prior to the fifth
Business Day immediately following the effective date for the Registration
Statement the Company shall not have filed a “final” prospectus for the
Registration Statement with the SEC under Rule 424(b) (whether or not such a
prospectus is technically required by such rule), the Company shall be deemed to
not have satisfied this clause (i)(B) and such event shall be deemed to be an
Effectiveness Failure), (ii) other than during an Allowable Grace Period, on any
day after the effective date of the Registration Statement sales of all of the
Registrable Securities cannot be made pursuant to the Registration Statement
(including, without limitation, because of a failure to keep such Registration
Statement effective, a failure to disclose such information as is necessary for
sales to be made pursuant to the Registration Statement, a suspension or
delisting of the shares of Common Stock on the applicable Trading Market, or a
failure to register a sufficient number of shares of Common Stock or by reason
of a stop order) or the prospectus contained therein is not available for use
for any reason (a “Maintenance Failure”), or (iii) other than during an
Allowable Grace Period, if the Registration Statement is not effective for any
reason or the prospectus contained therein is not available for use for any
reason, the Company fails to file with the SEC any required reports under
Section 13 or 15(d) of the Exchange Act such that it is not in compliance with
Rule 144(c)(1) (a “Current Public Information Failure”) as a result of which any
of the Investors are unable to sell Registrable Securities without restriction
under Rule 144 (including, without limitation, volume restrictions), then, as
full relief (other than equity remedies) for the damages to any holder by reason
of any such delay in, or reduction of, its ability to sell the Registrable
Securities (which remedy shall not be exclusive of any other remedies available
in equity), the Company shall pay to each holder of Registrable Securities an
amount in cash equal to one-half of one percent (0.5%) of the purchase price
paid by such Investor for the Common Shares purchased by such Investor pursuant
to this Agreement on the date of such Filing Failure, Effectiveness Failure,
Maintenance Failure or Current Public Information Failure, as applicable, and
(2) on every forty-five (45) day anniversary of (I) a Filing Failure until such
Filing Failure is cured; (II) an Effectiveness Failure until such Effectiveness
Failure is cured; (III) a Maintenance Failure until such Maintenance Failure is
cured; and (IV) a Current Public Information Failure until the earlier of (i)
the date such Current Public Information Failure is cured and (ii) such time
that such public information is no longer required pursuant to Rule 144 (in each
case, pro-rated for periods totaling less than forty-five (45) days). The
payments to which a holder of Registrable Securities shall be entitled pursuant
to this Section 4.7(b) are referred to herein as “Registration Delay Payments.”
Following the initial Registration Delay Payment for any particular event or
failure (which shall be paid on the date of such event or failure, as set forth
above), without limiting the foregoing, if an event or failure giving rise to
the Registration Delay Payments is cured prior to any forty-five (45) day
anniversary of such event or failure, then such Registration Delay Payment shall
be made on the third (3rd) Business Day after such cure (pro-rated for the
number of days elapsed between the date on which the most recent Registration
Delay Payment was required to have been paid in accordance with this Section
4.7(b) and the date of cure). In the event the Company fails to make
Registration Delay Payments in a timely manner in accordance with the foregoing,
such Registration Delay Payments shall bear interest at the rate of 1.5% per
month (prorated for partial months) until paid in full. Notwithstanding the
foregoing, no Registration Delay Payments shall be owed to an Investor (other
than with respect to a Maintenance Failure resulting from a suspension or
delisting of (or a failure to timely list) the shares of Common Stock on the
applicable Trading Market) with respect to any period during which all of such
Investor’s Registrable Securities may be sold by such Investor without
restriction under Rule 144 (including, without limitation, volume restrictions)
and without the need for current public information required by Rule 144(c)(1)).
For the avoidance of doubt, no more than one Registration Delay Payment shall be
payable by the Company at any given time, notwithstanding that more than one
failure giving rise to a Registration Delay Payment shall have occurred and is
continuing (e.g., an Effectiveness Failure and a Current Public Information
Failure continuing simultaneously); provided, that, Registration Delay Payments
shall continue in accordance with this Section 4.7(b) until all failures giving
rise to such payments are cured.

 

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(c)          Related Obligations. The Company shall use its reasonable best
efforts to effect the registration of the Registrable Securities in accordance
with the intended method of disposition thereof, and, pursuant thereto, the
Company shall have the following obligations:

 

(i)          The Company shall promptly prepare and file with the SEC the
Registration Statement with respect to all the Registrable Securities (but in no
event later than the applicable Filing Deadline) and use its reasonable best
efforts to cause the Registration Statement to become effective as soon as
practicable after such filing (but in no event later than the Effectiveness
Deadline). Subject to Allowable Grace Periods, the Company shall keep the
Registration Statement effective (and the prospectus contained therein available
for use) pursuant to Rule 415 for resales by the Investors on a delayed or
continuous basis at then-prevailing market prices (and not fixed prices) at all
times for so long as there remain outstanding any Registrable Securities (the
“Registration Period”). Notwithstanding anything to the contrary contained in
this Agreement, the Company shall ensure that, when filed and at all times while
effective, the Registration Statement (1) shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein (in the case of
prospectuses, in the light of the circumstances in which they were made) not
misleading and (2) will disclose (whether directly or through incorporation by
reference to other SEC filings to the extent permitted) all material information
regarding the Company and its securities. The Company shall submit to the SEC,
within five (5) days after the Staff of the SEC advises the Company (orally or
in writing, whichever is earlier) that the Staff either will not review the
Registration Statement or has no further comments on the Registration Statement
(as the case may be), a request for acceleration of effectiveness of the
Registration Statement to a time and date not later than forty-eight (48) hours
after the submission of such request.

 

(ii)         Subject to Section 4.7(c)(xv), the Company shall prepare and file
with the SEC such amendments (including, without limitation, post-effective
amendments) and supplements to the Registration Statement and the prospectus
used in connection with the Registration Statement, which prospectus is to be
filed pursuant to Rule 424 promulgated under the Securities Act, as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the provisions of the
Securities Act; provided, however, by 5:30 p.m. (New York time) on or prior to
the fifth Business Day immediately following the effective date of the
Registration Statement, the Company shall file with the SEC in accordance with
Rule 424(b) under the Securities Act the final prospectus to be used in
connection with sales pursuant to the Registration Statement (whether or not
such a prospectus is technically required by such rule). In the case of
amendments and supplements to the Registration Statement which are required to
be filed pursuant to this Agreement (including, without limitation, pursuant to
this Section 4.7(c)(ii)) by reason of the Company filing a report on Form 10-Q
or Form 10-K or any analogous report under the Exchange Act, the Company shall,
if permitted under the applicable rules and regulations of the SEC, have
incorporated such report by reference into the Registration Statement, if
applicable, or shall file such amendments or supplements with the SEC on or
prior to the third (3rd) Trading Day following the date on which the Exchange
Act report is filed with the SEC which created the requirement for the Company
to amend or supplement the Registration Statement.

 

20

 

 

(iii)        The Company shall (A) permit legal counsel for each Investor to
review and comment upon (i) the Registration Statement at least five (5) days
prior to its filing with the SEC and (ii) all amendments and supplements to the
Registration Statement (including, without limitation, the prospectus contained
therein) (except for Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K, and any similar or successor reports) within
a reasonable number of days prior to their filing with the SEC, and (B) not file
the Registration Statement or amendment or supplement thereto in a form to which
any legal counsel for any Investor reasonably objects. The Company shall not
file any amendment or supplement to the Registration Statement (except for
amendments and supplements in respect of Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or successor
reports) or to any prospectus contained therein without the prior consent of
legal counsel to each Investor, which consent shall not be unreasonably
withheld, conditioned or delayed. The Company shall reasonably cooperate with
legal counsel for each other Investor in performing the Company’s obligations
pursuant to this Section 4.7(c)(iii).

 

(iv)        The Company shall promptly furnish to each Investor, without charge,
(i) copies of any correspondence from the SEC or the Staff to the Company or its
representatives relating to the Registration Statement, provided that such
correspondence shall not contain any material, non-public information regarding
the Company or any of its Subsidiaries, (ii) upon request, after the same is
prepared and filed with the SEC, a reasonable number of copies of the
Registration Statement and any amendment(s) and supplement(s) thereto,
including, if so requested, the financial statements and schedules filed
therewith, all documents incorporated therein by reference, all exhibits and
each preliminary prospectus, (iii) upon request, upon the effectiveness of the
Registration Statement, two (2) copies of the prospectus included in the
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may reasonably request from time to time), and
(iv) such other documents, including, without limitation, copies of any
preliminary or final prospectus, as such Investor may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor.

 

(v)         The Company shall use its reasonable best efforts to (i) register
and qualify, unless an exemption from registration and qualification applies,
the resale by Investors of the Registrable Securities covered by the
Registration Statement under such other securities or “blue sky” laws of
jurisdictions in the United States as shall be reasonably appropriate for the
distribution of the Registrable Securities covered by the Registration
Statement, (ii) prepare and file in those jurisdictions, such amendments
(including, without limitation, post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 4.7(c)(v), (y) subject itself to general taxation in any
such jurisdiction, or (z) file a general consent to service of process in any
such jurisdiction. The Company shall promptly notify each Investor who holds
Registrable Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or “blue sky” laws of any
jurisdiction in the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.

 

21

 

 

(vi)        The Company shall notify each Investor in writing of the happening
of any event, as promptly as practicable after becoming aware of such event, as
a result of which the prospectus included in the Registration Statement, as then
in effect, includes an untrue statement of a material fact or omission to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, non-public information regarding the Company or any of its
Subsidiaries), and, subject to Section 4.7(c)(xv), promptly prepare a supplement
or amendment to the Registration Statement and such prospectus contained therein
to correct such untrue statement or omission and, upon request by any Investor,
deliver two (2) copies of such supplement or amendment to such Investor (or such
other number of copies as such Investor may reasonably request). The Company
shall also promptly notify each Investor in writing when a prospectus or any
prospectus supplement or post-effective amendment has been filed, when the
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to each Investor by
facsimile or e-mail on the same day of such effectiveness and by overnight
mail), and when the Company receives written notice from the SEC that the
Registration Statement or any post-effective amendment will be reviewed by the
SEC. The Company shall respond as promptly as practicable to any comments
received from the SEC with respect to the Registration Statement or any
amendment thereto. If the Company receives SEC comments which challenge the
right of an Investor to have its Registrable Securities included in the
Registration Statement without being deemed an underwriter thereunder, the
Company shall, in discussions with and responses to the SEC, use its reasonable
best efforts and time to cause as many Registrable Securities as possible to be
included in the Registration Statement without characterizing any Investor as an
underwriter and in such regard use its reasonable best efforts to cause the SEC
to permit the affected Investors or their respective counsel to reasonably
participate in SEC conversations on such issue together with Company Counsel,
and timely convey relevant information concerning such issue with the affected
Investors or their respective counsel. In no event may the Company name any
Investor as an underwriter without such Investor’s prior written consent;
provided, however, that if, after the Company complies with its covenants
contained in this Section 4.7(c)(vi), the SEC requires that such Investor be
named an underwriter and such Investor refuses to promptly deliver its written
consent to be so named, then the Company may exclude such Investor and such
Investor’s Registrable Securities from the Registration Statement, and such
Investor’s shares of Common Stock acquired under this Agreement shall be deemed
to no longer be Registrable Securities, irrespective of the definition of
“Registrable Securities” contained in this Agreement.

 

(vii)       The Company shall (i) use reasonable best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of the
Registration Statement or the use of any prospectus contained therein, or the
suspension of the qualification, or the loss of an exemption from qualification,
of any of the Registrable Securities for sale in any jurisdiction and, if such
an order or suspension is issued, to obtain the withdrawal of such order or
suspension as soon as reasonably practicable and (ii) notify each Investor who
holds Registrable Securities of the issuance of such order and the resolution
thereof or its receipt of actual notice of the initiation or threat of any
proceeding for such purpose.

 

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(viii)      The Company shall hold in confidence and not make any disclosure of
confidential information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in the Registration Statement or is
otherwise required to be disclosed in the Registration Statement pursuant to the
Securities Act, (iii) the release of such information is ordered pursuant to a
subpoena or other final, non-appealable order from a court or governmental body
of competent jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this Agreement
or any other Transaction Document. The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt written notice to such Investor and allow such Investor, at
such Investor’s expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, such information.

 

(ix)         Without limiting any obligation of the Company under this
Agreement, the Company shall use its reasonable best efforts either to (i) cause
all of the Registrable Securities to be listed on each securities exchange on
which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange, or (ii) secure designation and quotation of
all of the Registrable Securities on the applicable Trading Market. In addition,
the Company shall cooperate with each Investor and any broker or dealer through
which any such Investor proposes to sell its Registrable Securities in effecting
a filing with FINRA pursuant to FINRA Rule 5110 as requested by such Investor
and at such Investor’s expense. Other than with respect to the immediately
preceding sentence, the Company shall pay all fees and expenses in connection
with satisfying its obligations under this Section 4.7(c)(ix).

 

(x)          The Company shall cooperate with the Investors who hold Registrable
Securities being offered and, to the extent applicable, facilitate the timely
preparation and delivery of certificates (subject to applicable securities laws,
not bearing any restrictive legend) representing the Registrable Securities to
be offered pursuant to the Registration Statement and enable such certificates
to be in such denominations or amounts (as the case may be) as the Investors may
reasonably request from time to time and registered in such names as the
Investors may request.

 

(xi)         The Company shall use its reasonable best efforts to cause the
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.

 

(xii)        The Company shall make generally available to its security holders
as soon as practical, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in form complying with, and in
the manner provided by, the provisions of Rule 158 under the Securities Act)
covering a twelve-month period beginning not later than the first day of the
Company’s fiscal quarter next following the effective date of the Registration
Statement.

 

(xiii)       The Company shall otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC in connection with
the Registration Statement.

 

(xiv)      Within two (2) Business Days after the date on which the Registration
Statement is declared effective by the SEC, the Company shall deliver, or shall
cause legal counsel for the Company to deliver, to the transfer agent for the
Registrable Securities (with copies to the Investors whose Registrable
Securities are included in the Registration Statement upon request by any such
Investor) written confirmation that the Registration Statement has been declared
effective by the SEC.

 

23

 

 

(xv)       Notwithstanding anything to the contrary herein (but subject to the
last sentence of this Section 4.7(c)(xv)), at any time after the date on which
the Registration Statement is declared effective by the SEC, the Company may
delay the disclosure of material, non-public information concerning the Company
or any of its Subsidiaries, the disclosure of which at the time is not, in the
good faith opinion of the board of directors or any named executive officer of
the Company, in the best interest of the Company or otherwise required by law or
under this Agreement (a “Grace Period”), provided that the Company shall
promptly notify the Investors in writing of the (i) existence of material,
non-public information giving rise to a Grace Period (provided that in each such
notice the Company shall not disclose the content of such material, non-public
information to any of the Investors) and the date on which such Grace Period
will begin and (ii) date on which such Grace Period ends, provided further that
(I) no Grace Period shall exceed twenty (20) consecutive days and during any
three hundred sixty five (365) day period all such Grace Periods shall not
exceed an aggregate of forty-five (45) days, (II) the first day of any Grace
Period must be at least five (5) Trading Days after the last day of any prior
Grace Period and (III) no Grace Period may exist during the forty-five (45)
Trading Day period immediately following the effective date of the Registration
Statement (provided that such forty-five (45) Trading Day period shall be
extended by the number of Trading Days during such period and any extension
thereof contemplated by this proviso during which the Registration Statement is
not effective or the prospectus contained therein is not available for use)
(each, an “Allowable Grace Period”). For purposes of determining the length of a
Grace Period above, such Grace Period shall begin on and include the date the
Company delivers to the Investors the notice referred to in clause (i) above and
shall end on and include the later of the date the Company delivers to the
Investors the notice referred to in clause (ii) above and the date referred to
in such notice. The provisions of Section 4.7(c)(vi) hereof shall not be
applicable during the period of any Allowable Grace Period. Upon expiration of
each Grace Period, the Company shall again be bound by the first sentence of
Section 4.7(c)(vi) with respect to the information giving rise thereto unless
such material, non-public information is no longer applicable. Notwithstanding
anything to the contrary contained in this Section 4.7(c)(xv), the Company shall
cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee of an Investor in accordance with the terms of this Agreement in
connection with any sale of Registrable Securities with respect to which such
Investor has entered into a contract for sale, and delivered a copy of the
prospectus included as part of the Registration Statement to the extent
applicable, prior to such Investor’s receipt of the notice of a Grace Period and
for which the Investor has not yet settled.

 

(d)          Obligations of the Investors. Each Investor shall furnish to the
Company such information regarding itself, the Registrable Securities held by
it, and the intended method of disposition of such securities as the Company
shall reasonably request and as shall be required in connection with the
registration of the Registrable Securities, and shall execute such documents in
connection with such registration as the Company may reasonably request. Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of the Registration Statement, unless such
Investor has notified the Company in writing of such Investor’s election to
exclude all of such Investor’s Registrable Securities from the Registration
Statement.

 

(e)          Expenses of Registration. All expenses incurred in connection with
the Registration Statement, excluding underwriters’ discounts and commissions,
but including without limitation all registration, filing and qualification
fees, word processing, duplicating, printers’ and accounting fees, stock
exchange fees, messenger and delivery expenses, all fees and expenses of
complying with state securities or blue sky laws and the fees and disbursements
of counsel for the Company shall be paid by the Company.

 

4.8           Additional Issuances of Securities.

 

(a)          Solely for purposes of this Section 4.8, the following definitions
shall apply:

 

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

 

(ii)         “Common Stock Equivalents” means, collectively, New Options and
Convertible Securities.

 

(iii)        “Eligible Buyer” means an Investor who purchased $750,000 or more
of Common Shares on the Closing Date.

 

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

 

(v)         “Subsequent Placement” means the Company’s direct or indirect offer,
sale, grant of any option to purchase, or other disposition, in each case for
cash consideration, of any of Common Stock or Common Stock Equivalents or its
Subsidiaries’ equity or equity equivalent securities, including without
limitation any debt, preferred stock or other instrument or security that is, at
any time during its life and under any circumstances, convertible into or
exchangeable or exercisable for shares of Common Stock or Common Stock
Equivalents; provided, however, that a Subsequent Placement shall not include
any direct or indirect (i) grant or other issuance of Common Stock or Common
Stock Equivalents to employees, officers, directors, strategic partners,
suppliers or any other vendors or agents of the Company or its Subsidiaries
under arrangements approved by the Company’s Board of Directors; (ii) issuance
of any Common Stock or Common Stock Equivalents in connection with (x) the
closing of any acquisition or license by the Company of assets of a third party
or (y) the consummation of a merger or consolidation of the Company with or into
another entity; or (iii) the issuance of Common Stock upon the exercise,
exchange or conversion of Common Stock Equivalents.

 

(b)          From the Closing Date until the second anniversary of the Closing
Date the Company will not, directly or indirectly, effect any Subsequent
Placement unless it shall have first complied with this Section 4.8.

 

(c)          The Company shall deliver to each Eligible Buyer a written notice
(each, an “Offer Notice”) of any proposed or intended issuance or sale (each, an
“Offer”) of the securities being offered (the “Offered Securities”) in a
Subsequent Placement, which Offer Notice shall (i) identify and describe the
Offered Securities, (ii) describe the price and other terms upon which they are
to be issued or sold, and the number or amount of the Offered Securities to be
issued or sold and (iii) offer to issue and sell to such Eligible Buyers at
least 30% of the Offered Securities in such Subsequent Placement, allocated
among such Eligible Buyers (a) based on the Eligible Buyers’ respective pro rata
portions of the total dollar amount of Common Shares purchased by such Eligible
Buyers on the Closing Date (the “Basic Amount”), and (b) with respect to each
Eligible Buyer that elects to purchase its Basic Amount, any additional portion
of the Offered Securities attributable to the Basic Amounts of other Eligible
Buyers as such Eligible Buyer shall indicate it will purchase or acquire should
the other Eligible Buyers subscribe for less than their respective Basic Amounts
(the “Undersubscription Amount”).

 

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

 

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(e)          The Company shall have thirty (30) Business Days from the
expiration of the Offer Period above to offer, issue or sell all or any part of
such Offered Securities as to which a Notice of Acceptance has not been
delivered by the Eligible Buyers (the “Refused Securities”), but only upon terms
and conditions (including, without limitation, security prices and interest
rates) that are not more favorable to the acquiring person or persons or less
favorable to the Company than those set forth in the Offer Notice.

 

(f)          In the event the Company shall propose to sell less than all the
Refused Securities (any such sale to be in the manner and on the terms specified
in this Section 4.8), then each Eligible Buyer may, at its sole option and in
its sole discretion, reduce the number or amount of the Offered Securities
specified in its Notice of Acceptance to an amount that shall not be less than
the number or amount of the Offered Securities that such Eligible Buyer elected
to purchase pursuant to its Notice of Acceptance multiplied by a fraction, (i)
the numerator of which shall be the number or amount of Offered Securities the
Company actually proposes to issue or sell (including Offered Securities to be
issued or sold to Eligible Buyers pursuant to Section 4.8(d) prior to such
reduction) and (ii) the denominator of which shall be the original amount of the
Offered Securities. In the event that any Eligible Buyer so elects to reduce the
number or amount of Offered Securities specified in its Notice of Acceptance,
the Company may not issue or sell more than the reduced number or amount of the
Offered Securities unless and until such securities have again been offered to
the Eligible Buyers in accordance with this Section 4.8.

 

(g)          Upon the closing of the issuance or sale of all or less than all of
the Refused Securities, the Eligible Buyers shall acquire from the Company, and
the Company shall issue to the Eligible Buyers, the number or amount of Offered
Securities specified in the Notices of Acceptance, as reduced pursuant to
Section 4.8(f) if the Eligible Buyers have so elected, upon the terms and
subject to the conditions specified in the Offer. Any Offered Securities not
acquired by the Eligible Buyers or other persons upon consummation of the
applicable Offer may not be issued or sold until they are again offered to the
Eligible Buyers under the procedures specified in this this Section 4.8.

 

(h)          In exchange for the Company’s willingness to agree to the
procedures set forth in this Section 4.8, each Eligible Buyer hereby irrevocably
agrees that it will hold in strict confidence any and all Offer Notices, the
information contained therein, and the fact that the Company is contemplating a
Subsequent Placement, unless and until it notifies the Company in writing that
it no longer desires to receive Offer Notices, following which such Eligible
Buyer shall (i) no longer be an Eligible Buyer for purposes of this Section 4.8
and (ii) continue to be bound by the confidentiality obligations contained in
this Section 4.8(h) with respect to each Offer Notice that it shall have
received prior to notifying the Company of its desire to no longer receive Offer
Notices.

 

Article V
CONDITIONS

 

5.1           Conditions Precedent to the Obligations of the Investors. The
obligation of each Investor to acquire Common Shares at the Closing is subject
to the satisfaction, unless waived in writing by such Investor, at or before the
Closing, of each of the following conditions:

 

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(a)          Representations and Warranties. The representations and warranties
of the Company contained herein shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made on
and as of the Closing Date (except for those representations and warranties that
speak as of a specific date, which shall be true and correct in all material
respects as of such specified date).

 

(b)          Performance. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by it at or prior to the Closing.

 

(c)          Approvals. The Company shall have obtained all governmental,
regulatory or third party consents and approvals, if any, necessary for the sale
of the Common Shares (including all Required Approvals), all of which shall be
and remain so long as necessary in full force and effect.

 

(d)          No Suspensions of Trading in Common Stock; Listing. Trading in the
Common Stock shall not have been suspended by the SEC or any Trading Market at
any time since the date of execution of this Agreement 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 which, in each case, makes it impracticable to purchase
the Common Shares at the Closing.

 

(e)          Absence of Litigation. No action, suit or proceeding by or before
any court or any governmental body or authority, against the Company or any
Subsidiary or pertaining to the transactions contemplated by this Agreement or
their consummation, shall have been instituted on or before the Closing Date,
which action, suit or proceeding would, if determined adversely, have or
reasonably be expected to result in, a Material Adverse Effect.

 

(f)          Transaction Documents. The Company shall have executed each of the
Transaction Documents to which it is a party and delivered the same to the
Investors.

 

(g)          No Injunction. No Proceeding shall have been filed and no statute,
rule, regulation, executive order, decree, ruling or injunction shall have been
enacted, entered or promulgated by any court or governmental authority of
competent jurisdiction that prohibits or seeks to prohibit or otherwise
challenges the consummation of any of the transactions contemplated by the
Transaction Documents.

 

(h)          Adverse Changes. Since the execution of this Agreement, no event or
series of events shall have occurred that has had a Material Adverse Effect.

 

(i)          Minimum Purchase. Investors purchasing Common Shares having an
aggregate purchase price of not less than $5,000,000 shall have executed each of
the Transaction Documents to which they are a party and delivered the same to
the Company as required by this Agreement.

 

(j)          VWAP of Common Stock. The VWAP of the Common Stock on the
applicable Trading Market for the twenty (20) Trading Day period ending on the
Trading Day immediately prior to the Closing Date shall be not less than $1.25.

 

27

 

 

(k)          Legal Opinion. Company Counsel shall have delivered to the
Investors a legal opinion of Company Counsel, addressed to the Investors, in
form and substance reasonable satisfactory to the Investors.

 

(l)          Officer’s Certificate. The Company shall have delivered to the
Investors a certificate executed by a duly authorized officer of the Company
certifying the fulfillment of the conditions specified in Sections 5.1(a) and
5.1(b).

 

(m)          Secretary’s Certificate. The Company shall have delivered to the
Investors a certificate executed by the secretary of the Company, dated as of
the Closing Date, as to (i) the resolutions adopted by the Board of Directors of
the Company approving the transactions contemplated hereby, (ii) the articles of
incorporation of the Company, as in effect on the Closing Date, (iii) the bylaws
of the Company, as in effect on the Closing Date, (iv) the good standing of the
Company and each U.S. Subsidiary in the jurisdiction of its incorporation, in
each case as of a date not more than five (5) days prior to the Closing Date,
and (v) the authority and incumbency of the officers of the Company executing
the Transaction Documents.

 

5.2           Conditions Precedent to the Obligations of the Company. The
obligation of the Company to sell the Common Shares at the Closing is subject to
the satisfaction or waiver by the Company, at or before the Closing, of each of
the following conditions:

 

(a)          Representations and Warranties. The representations and warranties
of the Investors contained herein shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made on
and as of the Closing Date (except for those representations and warranties that
speak as of a specific date, which shall be true and correct in all material
respects as of such specified date).

 

(b)          Performance. The Investors shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Investors at or prior to the Closing.

 

(c)          Approvals. The Company shall have obtained all governmental,
regulatory or third party consents and approvals, if any, necessary for the sale
of the Common Shares (including all Required Approvals), all of which shall be
and remain so long as necessary in full force and effect.

 

(d)          Deliverables. The Investors shall have executed each of the
Transaction Documents to which it is a party and delivered the same to the
Company. The Investors shall have delivered to the Company those items required
by Section 2.2(b).

 

(e)          No Injunction. No Proceeding shall have been filed and no statute,
rule, regulation, executive order, decree, ruling or injunction shall have been
enacted, entered or promulgated by any court or governmental authority of
competent jurisdiction that prohibits or seeks to prohibit or otherwise
challenges the consummation of any of the transactions contemplated by the
Transaction Documents.

 

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Article VI
INDEMNIFICATION

 

6.1           Indemnification.

 

(a)          To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor and each of its
directors, officers, shareholders, members, partners, employees, agents,
advisors and representatives and each Person, if any, who controls such Investor
within the meaning of the Securities Act or the Exchange Act and each of the
directors, officers, shareholders, members, partners, employees, agents,
advisors, representatives of such controlling Persons (each, an “Indemnified
Person”), against any losses, obligations, claims, damages, liabilities,
contingencies, judgments, fines, penalties, charges, costs (including, without
limitation, court costs, reasonable attorneys’ fees and costs of defense and
investigation), amounts paid in settlement or expenses, joint or several,
(collectively, “Claims”) incurred in investigating, preparing or defending any
action, claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or other
regulatory agency, body or the SEC, whether pending or threatened in writing
(“Indemnified Damages”), to which any of them may become subject insofar as such
Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any breach of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents, (ii) any untrue statement or alleged untrue
statement of a material fact in the Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other “blue sky” laws of any jurisdiction
in which Registrable Securities are offered (“Blue Sky Filing”), or the omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (iii) any untrue
statement or alleged untrue statement of a material fact contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (iv) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to the
Registration Statement (the matters in the foregoing clauses (i) through (iv)
being, collectively, “Violations”). Subject to Section 6.1(c), the Company shall
reimburse the Indemnified Persons for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6.1(a): (i) shall not apply
to a Claim by an Indemnified Person arising out of or based upon a Violation
which occurs in reliance upon and in conformity with information furnished in
writing to the Company by such Indemnified Person for such Indemnified Person
expressly for use in connection with the preparation of, or inclusion in, the
Registration Statement or any such amendment thereof or supplement thereto and
(ii) shall not be available to a particular Investor to the extent such Claim is
based on a failure of such Investor to deliver or to cause to be delivered the
prospectus made available by the Company (to the extent applicable), including,
without limitation, a corrected prospectus, if such prospectus or corrected
prospectus was made available by the Company; and (iii) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of any of the Registrable Securities by
any of the Investors.

 

29

 

 

 

(b)                In connection with the Registration Statement, each Investor
agrees to severally and not jointly indemnify, hold harmless and defend, to the
same extent and in the same manner as is set forth in Section 6.1(a), the
Company, each of its directors, officers, shareholders, members, partners,
employees, agents, advisors and representatives and each Person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act and each of the directors, officers, shareholders, members, partners,
employees, agents, advisors, representatives of such controlling Persons (each,
an “Indemnified Party”), against any Claim or Indemnified Damages to which any
of them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or are
based upon any Violation, in each case, to the extent, and only to the extent,
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use in
connection with the preparation of, or inclusion in, the Registration Statement
or any such amendment thereof or supplement thereto; and, subject to Section
6.1(c) and the below provisos in this Section 6.1(b), such Investor will
reimburse an Indemnified Party any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or defending any such
Claim; provided, however, the indemnity agreement contained in this Section
6.1(b) and the agreement with respect to contribution contained in Section 6.2
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which consent shall
not be unreasonably withheld or delayed, provided, further, that such Investor
shall be liable under this Section 6.1(b) for only that amount of a Claim or
Indemnified Damages as does not exceed the net proceeds to such Investor as a
result of the applicable sale of Registrable Securities pursuant to the
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of any of the Registrable Securities by any of
the Investors.

 

(c)                Promptly after receipt by an Indemnified Person or
Indemnified Party (as the case may be) under this Section 6.1 of notice of the
commencement of any action or proceeding (including, without limitation, any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party (as the case may be) shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6.1, deliver to the
applicable indemnifying party a written notice of the commencement thereof, and
the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party (as the case may be); provided, however, an Indemnified
Person or Indemnified Party (as the case may be) shall have the right to retain
its own counsel with the fees and expenses of such counsel to be paid by the
indemnifying party if: (i) the indemnifying party has agreed in writing to pay
such fees and expenses; (ii) the indemnifying party shall have failed promptly
to assume the defense of such Claim and to employ counsel reasonably
satisfactory to such Indemnified Person or Indemnified Party (as the case may
be) in any such Claim; or (iii) the named parties to any such Claim (including,
without limitation, any impleaded parties) include both such Indemnified Person
or Indemnified Party (as the case may be) and the indemnifying party, and such
Indemnified Person or such Indemnified Party (as the case may be) shall have
been advised by counsel that a conflict of interest is likely to exist if the
same counsel were to represent such Indemnified Person or such Indemnified Party
and the indemnifying party (in which case, if such Indemnified Person or such
Indemnified Party (as the case may be) notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, then the indemnifying party shall not have the right to
assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Party), provided further that in the case of clause (iii) above the
indemnifying party shall not be responsible for the reasonable fees and expenses
of more than one (1) separate legal counsel for such Indemnified Person or
Indemnified Party (as the case may be). The Indemnified Party or Indemnified
Person (as the case may be) shall reasonably cooperate with the indemnifying
party in connection with any negotiation or defense of any such action or Claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party or Indemnified Person
(as the case may be) which relates to such action or Claim. The indemnifying
party shall keep the Indemnified Party or Indemnified Person (as the case may
be) reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent; provided, however, the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the prior written consent of the Indemnified Party or Indemnified
Person (as the case may be), consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person (as the case may be) of a release from all liability in
respect to such Claim or litigation, and such settlement shall not include any
admission as to fault on the part of the Indemnified Party. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person (as the
case may be) with respect to all third parties, firms or corporations relating
to the matter for which indemnification has been made. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party (as the case may be)
under this Section 6.1, except to the extent that the indemnifying party is
materially and adversely prejudiced in its ability to defend such action.

 

30

 

 

(d)                No Person involved in the sale of Registrable Securities who
is guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) in connection with such sale shall be entitled to
indemnification from any Person involved in such sale of Registrable Securities
who is not guilty of fraudulent misrepresentation.

 

(e)                the indemnity and contribution agreements contained herein
shall be in addition to (i) any cause of action or similar right of the
Indemnified Party or Indemnified Person against the indemnifying party or
others, and (ii) any liabilities to which the indemnifying party may be subject
pursuant to the law.

 

6.2               Contribution. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6.1 to the fullest extent permitted by
law; provided, however: (i) no contribution shall be made under circumstances
where the maker would not have been liable for indemnification under the fault
standards set forth in Section 6.1; (ii) no Person involved in the sale of
Registrable Securities which Person is guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) in connection with
such sale shall be entitled to contribution from any Person involved in such
sale of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (iii) contribution by any seller of Registrable
Securities shall be limited in amount to the amount of net proceeds received by
such seller from the applicable sale of such Registrable Securities pursuant to
the Registration Statement. Notwithstanding the provisions of this Section 6.2,
no Investor shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the net proceeds actually received by such
Investor from the applicable sale of the Registrable Securities subject to the
Claim exceeds the amount of any damages that such Investor has otherwise been
required to pay, or would otherwise be required to pay under Section 6.1(b), by
reason of such untrue or alleged untrue statement or omission or alleged
omission.

 

Article VII
MISCELLANEOUS

 

7.1               Termination. This Agreement may be terminated by the Company
or Investors having the right to acquire a majority of the Common Shares
hereunder, by written notice to the other parties, if the Closing has not been
consummated by May 20, 2014; provided that no such termination will affect the
right of any party to sue for any breach by the other party (or parties).

 

7.2               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, stamp taxes and other taxes and duties levied
in connection with the sale and issuance of the applicable Common Shares.

 

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7.3               Entire Agreement; Further Assurances. The Transaction
Documents, together with the Exhibits, Annexes and Schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof 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. At or after the Closing, and
without further consideration, the Company and the Investors will execute and
deliver to the Investors such further documents as may be reasonably requested
in order to give practical effect to the intention of the parties under the
Transaction Documents.

 

7.4               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 or
email at the facsimile number or email address specified in this Section 7.4
prior to 6:30 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 or email at the facsimile number or email address specified in
this Section 7.4 on a day that is not a Trading Day or later than 6:30 p.m. (New
York City time) on any Trading Day, (c) the Trading Day following the date of
deposit with a nationally recognized overnight courier service, or (d) upon
actual receipt by the party to whom such notice is required to be given. The
addresses, facsimile numbers and email addresses for such notices and
communications are those set forth on the signature pages hereof, or such other
address or facsimile number as may be designated in writing hereafter, in the
same manner, by any such Person.

 

7.5               Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Investors holding or having the right to
acquire a majority of the Common Shares at the time of such amendment or, in the
case of a waiver, by the party against whom enforcement of any such waiver 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.

 

7.6               Construction. 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. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

 

7.7               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 the Investors; provided, however
this Agreement shall be assigned to any corporation or association into which
the Company may be merged or converted or with which it may be consolidated, or
any corporation, association or other similar entity resulting from any merger,
conversion or consolidation to which the Company shall be a party without the
execution or filing of any paper with any party hereto or any further act on the
part of any of the parties to this Agreement except where an instrument of
transfer or assignment is required by law to effect such succession, anything
herein to the contrary notwithstanding. Any Investor may assign its rights under
this Agreement to any Person to whom such Investor assigns or transfers any
Common Shares, provided (i) such transferor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company after such assignment, (ii) the Company is furnished
with written notice of the name and address of such transferee or assignee,
(iii) following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the Securities Act
and applicable state securities laws, (iv) such transferee agrees in writing to
be bound, with respect to the transferred Common Shares, by the provisions
hereof that apply to the “Investors” and (v) such transfer shall have been made
in accordance with the applicable requirements of this Agreement and with all
laws applicable thereto.

 

32

 

 

7.8               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.

 

7.9               Governing Law; Venue; Waiver of Jury Trial. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. THE COMPANY AND INVESTORS HEREBY IRREVOCABLY SUBMIT 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 BROUGHT BY THE COMPANY
OR ANY INVESTOR HEREUNDER, 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 WAIVE,
AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY
OR ANY INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION
OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. 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 MANNER PERMITTED BY LAW.
THE COMPANY AND INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

 

7.10            Survival. Unless this Agreement is terminated under Section 7.1,
the representations and warranties, agreements and covenants contained herein
shall survive indefinitely.

 

7.11            Execution. This Agreement may be executed in counterparts, all
of which when taken together shall be considered one and the same agreement. In
the event that any signature is delivered by facsimile transmission or email
attachment, 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 email-attached signature page were an
original thereof.

 

7.12            Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

33

 

 

7.13            Independent Nature of Investors’ Obligations and Rights. The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Documents. The decision of each Investor to
purchase Common Shares pursuant to this Agreement has been made by such Investor
independently of any other Investor and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company which may have been made or given by any
other Investor or by any agent or employee of any other Investor, and no
Investor or any of its agents or employees shall have any liability to any other
Investor (or any other person) relating to or arising from any such information,
materials, statements or opinions. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no other
Investor will be acting as agent of such Investor in connection with monitoring
its investment hereunder. Each Investor 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 Investor to be joined as an additional party in
any Proceeding for such purpose.

 

7.14            Representations. Each Investor agrees that, except for the
representations and warranties contained in Section , the Company makes no other
representations or warranties, and the Company hereby disclaims any other
representations or warranties made by itself or any of its directors, officers
employees, investment bankers, financial advisors, attorneys, accountants,
agents and other representatives (collectively, “Representatives”), with respect
to the execution and delivery of this Agreement and the other Transaction
Documents, notwithstanding the delivery or disclosure to any other party or any
other party’s Representatives of any document or other information with respect
to any one or more of the foregoing. Without limiting the generality of the
foregoing, and notwithstanding any otherwise express representations and
warranties made by the Company in this Agreement, each of the Investors agrees
that neither the Company nor any of its subsidiaries makes or has made any
representation or warranty with respect to (i) any projections, forecasts,
estimates, plans or budgets or future revenues, expenses or expenditures, future
results of operations (or any component thereof), future cash flows (or any
component thereof) or future financial condition (or any component thereof) of
the Company or any of its subsidiaries or the future business, operations or
affairs of the Company or any of its subsidiaries heretofore or hereafter
delivered to or made available to it, or (ii) any other information, statements
or documents heretofore or hereafter delivered to or made available to it with
respect to the Company or any of its subsidiaries or the business, operations or
affairs of the Company or any of its subsidiaries, except to the extent and as
expressly covered by a representation and warranty made in this Agreement.

 

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

 

[SIGNATURE PAGES FOLLOW]

 

34

 

 

IN WITNESS WHEREOF, the parties hereto have executed or caused this Stock
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

 

  GlassesOff Inc.       By: /s/ Nimrod Madar   Name: Nimrod Madar   Title:
President & CEO         Address for Notice:   5 Jabotinski St. POB 12   Ramat
Gan, Israel 5252006       Facsimile No.:   Telephone No.:   Attn:       With a
copy to:       Greenberg Traurig, P.A.   333 S.E. 2nd Avenue   Suite 4400  
Miami, FL 33131       Facsimile No.: 305.961.5756   Telephone No.: 305.579.0756
  Attn: Robert L. Grossman

 

COMPANY SIGNATURE PAGE

 

 

 

 

Investor Signature Page

 

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of that certain Stock Purchase and Registration Rights Agreement
dated as of May 16, 2014 (the “Purchase Agreement”), by and among GlassesOff
Inc., a Nevada corporation, and the Investors (as defined therein), as to the
number of shares of Common Stock set forth across from such Investor’s name on
the Schedule of Investors, and authorizes this signature page to be attached to
the Purchase Agreement or counterparts thereof.

    

  Name of Investor:       Cowen Overseas Investment LP

 

  By: /s/Peter Cohen   Name: Peter Cohen   Title: Chairman & CEO

 

  Address:                   Telephone No.:           Facsimile No.:          
Email Address:  

 

Delivery Instructions (if different than above):   c/o:     Address:        
Telephone No.:     Facsimile No. :     Other Special Instructions:        
Exhibits:  

  

  A Instruction Sheet for Investors   A-1 Stock Certificate Questionnaire   A-2
Investor Certificate   B Company Transfer Agent Instructions

 

 

 

 

Investor Signature Page

 

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of that certain Stock Purchase and Registration Rights Agreement
dated as of May 16, 2014 (the “Purchase Agreement”), by and among GlassesOff
Inc., a Nevada corporation, and the Investors (as defined therein), as to the
number of shares of Common Stock set forth across from such Investor’s name on
the Schedule of Investors, and authorizes this signature page to be attached to
the Purchase Agreement or counterparts thereof.

  

  Name of Investor:       Sasson Darwish

 

  By: /s/ Sasson Darwish   Name:     Title:  

 

  Address:                   Telephone No.:           Facsimile No.:          
Email Address:  

 

Delivery Instructions (if different than above):   c/o:     Address:        
Telephone No.:     Facsimile No. :     Other Special Instructions:        
Exhibits:  

  

  A Instruction Sheet for Investors   A-1 Stock Certificate Questionnaire   A-2
Investor Certificate   B Company Transfer Agent Instructions

 

 

 

 

Investor Signature Page

 

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of that certain Stock Purchase and Registration Rights Agreement
dated as of May 16, 2014 (the “Purchase Agreement”), by and among GlassesOff
Inc., a Nevada corporation, and the Investors (as defined therein), as to the
number of shares of Common Stock set forth across from such Investor’s name on
the Schedule of Investors, and authorizes this signature page to be attached to
the Purchase Agreement or counterparts thereof.

  

  Name of Investor:       Donald G. Drapkin

 

  By: /s/ Donald G. Drapkin   Name: Donald G. Drapkin   Title:  

 

  Address:                  Telephone No.:           Facsimile No.:          
Email Address:  

 

Delivery Instructions (if different than above):   c/o:     Address:        
Telephone No.:     Facsimile No. :     Other Special Instructions:        
Exhibits:  

  

  A Instruction Sheet for Investors   A-1 Stock Certificate Questionnaire   A-2
Investor Certificate   B Company Transfer Agent Instructions

 

 

 

  

Investor Signature Page

 

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of that certain Stock Purchase and Registration Rights Agreement
dated as of May 16, 2014 (the “Purchase Agreement”), by and among GlassesOff
Inc., a Nevada corporation, and the Investors (as defined therein), as to the
number of shares of Common Stock set forth across from such Investor’s name on
the Schedule of Investors, and authorizes this signature page to be attached to
the Purchase Agreement or counterparts thereof.

   

  Name of Investor:       Elevator Ventures Holding Ltd.

 

  By: /s/ Ori Glezel   Name: Ori Glezel   Title: Director

 

  Address:                 Telephone No.:           Facsimile No.:          
Email Address:  

 

Delivery Instructions (if different than above):   c/o:     Address:        
Telephone No.:     Facsimile No. :     Other Special Instructions:        
Exhibits:  

  

  A Instruction Sheet for Investors   A-1 Stock Certificate Questionnaire   A-2
Investor Certificate   B Company Transfer Agent Instructions

  

 

 

 

Investor Signature Page

 

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of that certain Stock Purchase and Registration Rights Agreement
dated as of May 16, 2014 (the “Purchase Agreement”), by and among GlassesOff
Inc., a Nevada corporation, and the Investors (as defined therein), as to the
number of shares of Common Stock set forth across from such Investor’s name on
the Schedule of Investors, and authorizes this signature page to be attached to
the Purchase Agreement or counterparts thereof.

 

  Name of Investor:       Michael Hobi

 

  By: /s/ Michael Hobi   Name: Michael Hobi   Title:  

 

  Address:                   Telephone No.:            Facsimile No.:          
Email Address:  

 

Delivery Instructions (if different than above):   c/o:     Address:        
Telephone No.:     Facsimile No. :     Other Special Instructions:        
Exhibits:  

  

  A Instruction Sheet for Investors   A-1 Stock Certificate Questionnaire   A-2
Investor Certificate   B Company Transfer Agent Instructions

 

 

 

  

Investor Signature Page

 

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of that certain Stock Purchase and Registration Rights Agreement
dated as of May 16, 2014 (the “Purchase Agreement”), by and among GlassesOff
Inc., a Nevada corporation, and the Investors (as defined therein), as to the
number of shares of Common Stock set forth across from such Investor’s name on
the Schedule of Investors, and authorizes this signature page to be attached to
the Purchase Agreement or counterparts thereof.

 

  Name of Investor:       J&B Whitman, Ltd.

 

  By: /s/ Jeffrey Whitman   Name: Jeffrey Whitman   Title:  

 

  Address:                   Telephone No.:           Facsimile No.:          
Email Address:  

 

Delivery Instructions (if different than above):   c/o:     Address:        
Telephone No.:     Facsimile No. :     Other Special Instructions:        
Exhibits:  

  

  A Instruction Sheet for Investors   A-1 Stock Certificate Questionnaire   A-2
Investor Certificate   B Company Transfer Agent Instructions

 

 

 

 

Investor Signature Page

 

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of that certain Stock Purchase and Registration Rights Agreement
dated as of May 16, 2014 (the “Purchase Agreement”), by and among GlassesOff
Inc., a Nevada corporation, and the Investors (as defined therein), as to the
number of shares of Common Stock set forth across from such Investor’s name on
the Schedule of Investors, and authorizes this signature page to be attached to
the Purchase Agreement or counterparts thereof.

  

  Name of Investor:       Levy Ehud

 

  By: /s/ Levy Ehud   Name: Levy Ehud   Title:  

 

  Address:

 

 

 

            Telephone No.:         Facsimile No.:         Email Address:  

 

Delivery Instructions (if different than above):   c/o:     Address:        
Telephone No.:     Facsimile No. :     Other Special Instructions:        
Exhibits:  

  

  A Instruction Sheet for Investors   A-1 Stock Certificate Questionnaire   A-2
Investor Certificate   B Company Transfer Agent Instructions

 

 

 

 

Investor Signature Page

 

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of that certain Stock Purchase and Registration Rights Agreement
dated as of May 16, 2014 (the “Purchase Agreement”), by and among GlassesOff
Inc., a Nevada corporation, and the Investors (as defined therein), as to the
number of shares of Common Stock set forth across from such Investor’s name on
the Schedule of Investors, and authorizes this signature page to be attached to
the Purchase Agreement or counterparts thereof.

 

  Name of Investor:       Shai Novik

 

  By: /s/ Shai Novik   Name:     Title:  

 

  Address:                   Telephone No.:           Facsimile No.:          
Email Address:  

 

Delivery Instructions (if different than above):   c/o:     Address:        
Telephone No.:     Facsimile No. :     Other Special Instructions:        
Exhibits:  

  

  A Instruction Sheet for Investors   A-1 Stock Certificate Questionnaire   A-2
Investor Certificate   B Company Transfer Agent Instructions

 

 

 

 

Investor Signature Page

 

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of that certain Stock Purchase and Registration Rights Agreement
dated as of May 16, 2014 (the “Purchase Agreement”), by and among GlassesOff
Inc., a Nevada corporation, and the Investors (as defined therein), as to the
number of shares of Common Stock set forth across from such Investor’s name on
the Schedule of Investors, and authorizes this signature page to be attached to
the Purchase Agreement or counterparts thereof.

 

  Name of Investor:       Ramius Co-Investment III LLC

 

  By: /s/ Owen Littman   Name: Owen Littman   Title: Authorized Signatory

 

  Address:                 Telephone No.:         Facsimile No.:           Email
Address:

 

Delivery Instructions (if different than above):   c/o:     Address:        
Telephone No.:     Facsimile No. :     Other Special Instructions:        
Exhibits:  

  

  A Instruction Sheet for Investors   A-1 Stock Certificate Questionnaire   A-2
Investor Certificate   B Company Transfer Agent Instructions

  

 

 

 

Investor Signature Page

 

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of that certain Stock Purchase and Registration Rights Agreement
dated as of May 16, 2014 (the “Purchase Agreement”), by and among GlassesOff
Inc., a Nevada corporation, and the Investors (as defined therein), as to the
number of shares of Common Stock set forth across from such Investor’s name on
the Schedule of Investors, and authorizes this signature page to be attached to
the Purchase Agreement or counterparts thereof.

  

  Name of Investor:       Sanitas Trust

 

  By: /s/ David Kretzmer   Name: David Kretzmer   Title: Trustee

 

  Address:                   Telephone No.:           Facsimile No.:          
Email Address:  

 

Delivery Instructions (if different than above):   c/o:     Address:        
Telephone No.:     Facsimile No. :     Other Special Instructions:        
Exhibits:  

  

  A Instruction Sheet for Investors   A-1 Stock Certificate Questionnaire   A-2
Investor Certificate   B Company Transfer Agent Instructions

 

 

 

 

Investor Signature Page

 

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of that certain Stock Purchase and Registration Rights Agreement
dated as of May 16, 2014 (the “Purchase Agreement”), by and among GlassesOff
Inc., a Nevada corporation, and the Investors (as defined therein), as to the
number of shares of Common Stock set forth across from such Investor’s name on
the Schedule of Investors, and authorizes this signature page to be attached to
the Purchase Agreement or counterparts thereof.

 

  Name of Investor:       Shayke Avizarim Ltd.

 

  By: /s/ Eyal Karmir   Name: Eyal Karmir   Title: CEO

 

  Address:                 Telephone No.:                       Facsimile No.:  
        Email Address:  

 

Delivery Instructions (if different than above):   c/o:     Address:        
Telephone No.:     Facsimile No. :     Other Special Instructions:        
Exhibits:  

  

  A Instruction Sheet for Investors   A-1 Stock Certificate Questionnaire   A-2
Investor Certificate   B Company Transfer Agent Instructions

 

 

 

 

Investor Signature Page

 

IN WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of that certain Stock Purchase and Registration Rights Agreement
dated as of May 16, 2014 (the “Purchase Agreement”), by and among GlassesOff
Inc., a Nevada corporation, and the Investors (as defined therein), as to the
number of shares of Common Stock set forth across from such Investor’s name on
the Schedule of Investors, and authorizes this signature page to be attached to
the Purchase Agreement or counterparts thereof.

 

  Name of Investor:       Thomas F. Whayne

 

  By: /s/ Thomas F. Whayne   Name: Thomas F. Whayne   Title: Investor

 

  Address:                 Telephone No.:           Facsimile No.:         Email
Address:  

 

Delivery Instructions (if different than above):   c/o:     Address:        
Telephone No.:     Facsimile No. :     Other Special Instructions:        
Exhibits:  

  

  A Instruction Sheet for Investors   A-1 Stock Certificate Questionnaire   A-2
Investor Certificate   B Company Transfer Agent Instructions

 

 

 

 

ANNEX a

 

SCHEDULE OF INVESTORS

 

Name of Investor  Number of
Shares
Purchased   Aggregate Purchase
Price  Cowen Overseas Investment LP   800,000   $1,000,000  Sasson Darwish 
 160,000   $200,000  Donald G. Drapkin   160,000   $200,000  Elevator Ventures
Holding Ltd.   80,000   $100,000  Michael Hobi   500,000   $625,000  J&B
Whitman, Ltd.   80,000   $100,000  Ehud Levy   670,000   $837,500  Shai Novik 
 335,000   $418,750  Ramius Co-Investment III LLC   760,000   $950,000  Sanitas
Trust   335,000   $418,750  Shayke Avizarim Ltd.   40,000   $50,000  Thomas
Whayne   80,000   $100,000              TOTAL:   4,000,000   $5,000,000 

 

 

 

 

Exhibit A

 

INSTRUCTION SHEET FOR INVESTOR

 

(to be read in conjunction with the entire Stock Purchase and Registration
Rights Agreement)

 

A.Complete the following items in the Stock Purchase and Registration Rights
Agreement:

 

1.Complete and execute the Investor Signature Page.  The Stock Purchase and
Registration Rights Agreement must be executed by an individual authorized to
bind the Investor.

 

2.Exhibit A-1 - Stock Certificate Questionnaire:

   

Provide the information requested by the Stock Certificate Questionnaire;

 

3Exhibit A-2 - Investor Certificate:

   

Provide the information requested by the Investor Certificate.

 

4.Return, via facsimile or email, the signed Stock Purchase and Registration
Rights Agreement, including the properly completed Exhibits A-1 and A-2 to:

 

Email:               altmand@gtlaw.com

Facsimile:         305.961.5589

Telephone:       305.579.0589

Attn:                 Drew M. Altman, Esq.

 

5.After completing instruction number four (4) above, deliver the original
signed Stock Purchase and Registration Rights Agreement, including the properly
completed Exhibits  A-1 and A-2 to:

 

Greenberg Traurig, P.A.
333 S.E. 2nd Avenue
Suite 4400
Miami, Florida 33131
Attn: Drew M. Altman, Esq.  

 

B.Instructions regarding the wire transfer of funds for the purchase of the
Common Shares will be sent by facsimile or email to the Investor by the Company
at a later date.

 

A-1-1

 

 

Exhibit A-1

 

GLASSESOFF Inc.

 

STOCK CERTIFICATE QUESTIONNAIRE

 

  Please provide us with the following information:             1. The exact
name that the Common Shares are to be registered in (this is the name that will
appear on the stock certificate(s)).  You may use a nominee name if appropriate:
            2. The relationship between the Investor of the Common Shares and
the Registered Holder listed in response to item 1 above:             3. The
mailing address, telephone and telecopy number and email address of the
Registered Holder listed in response to item 1 above:                          
                                                  4. The Tax Identification
Number of the Registered Holder listed in response to item 1 above:    

 

A-1-2

 

 

Exhibit A-2

 

GLASSESOFF Inc.

 

CERTIFICATE FOR CORPORATE, PARTNERSHIP, LIMITED LIABILITY COMPANY,
TRUST, FOUNDATION AND JOINT INVESTORS

 

If the Investor is a corporation, partnership, limited liability company, trust,
pension plan, foundation, joint Investor (other than a married couple) or other
entity, an authorized officer, partner, or trustee must complete, date and sign
this Certificate.

 

CERTIFICATE

 

The undersigned certifies that the representations and responses below are true
and accurate:

 

(a)           The Investor has been duly formed and is validly existing and has
full power and authority to invest in the Company. The person signing on behalf
of the undersigned has the authority to execute and deliver the Stock Purchase
Agreement on behalf of the Investor and to take other actions with respect
thereto.

 

(b)          Indicate the form of entity of the undersigned:

 

____ Limited Partnership

 

____ General Partnership

 

____ Limited Liability Company

 

____ Corporation

 

____ Revocable Trust (identify each grantor and indicate under what
circumstances the trust is revocable by the grantor):

 

 

(Continue on a separate piece of paper, if necessary.)

 

____ Other type of Trust (indicate type of trust and, for trusts other than
pension trusts, name the grantors and beneficiaries):

 

 

(Continue on a separate piece of paper, if necessary.)

 

____ Other form of organization (indicate form of organization (
                                                                                                  ).

 

(c)           Indicate the approximate date the undersigned entity was formed:
                             .

 

(d)           In order for the Company to offer and sell the Common Shares in
conformance with state and federal securities laws, the following information
must be obtained regarding your investor status. Please initial each category
applicable to you as an investor in the Company.

 

A-2-1

 

 

___ 1. A bank as defined in Section 3(a)(2) of the Securities Act, or any
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity;       ___ 2. A broker or dealer registered pursuant to Section 15 of
the Securities Exchange Act of 1934;       ___ 3. An insurance company as
defined in Section 2(13) of the Securities Act;       ___ 4. An investment
company registered under the Investment Company Act of 1940 or a business
development company as defined in Section 2(a)(48) of that Act;       ___ 5. A
Small Business Investment Company licensed by the U.S.  Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958;       ___ 6. 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;       ___ 7. An employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in Section 3(21) of
such Act, which is either a bank, savings and loan association, insurance
company, or registered investment advisor, or if the employee benefit plan has
total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors;      
___ 8. A private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940;       ___ 9. Any partnership or
corporation or any organization described in Section 501(c)(3) of the Internal
Revenue Code or similar business trust, not formed for the specific purpose of
acquiring the Shares, with total assets in excess of $5,000,000;       ___ 10. A
trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the Shares, whose purchase is directed by a sophisticated
person as described in Rule  506(b)(2)(ii) of the Exchange Act;       ___ 11. A
“qualified institutional buyer” as defined by Rule 144A under the Securities
Act;

 

A-2-2

 

 

          ___ 12.

An entity in which all of the equity owners qualify under any of the above
subparagraphs (or each such equity owner is a natural person who either (i) has
an individual net worth, or joint net worth with such person’s spouse, in excess
of $1,000,000 (exclusive of such person’s primary residence) or (ii) had an
individual income in excess of $200,000 in each of the two most recent years or
joint income with that person’s spouse in excess of $300,000 in each of those
years and has a reasonable expectation of reaching the same income level in the
current year). If the undersigned belongs to this investor category only, list
the equity owners of the undersigned, and, with respect to each equity owner
that is not a natural person, the investor category which each such equity owner
satisfies:

                      (Continue on a separate piece of paper, if necessary.)    
   

Please set forth in the space provided below the (i) states, if any, in the U.S.
in which you maintained your principal office during the past two years and the
dates during which you maintained your office in each state, (ii) state(s), if
any, in which you are incorporated or otherwise organized and (iii) state(s), if
any, in which you pay income taxes.

 

 

 

 

 

 

 

Dated:_______________________________, 2014           Print Name of Investor    
      Name:   Title:   (Signature and title of authorized officer, partner or
trustee)  

 

A-2-3

 

 

Exhibit B

 

COMPANY TRANSFER AGENT INSTRUCTIONS

 

[COMPANY TRANSFER AGENT]

[ADDRESS]

Attention: [_________], Account Representative

 

Ladies and Gentlemen:

 

Reference is made to that certain Stock Purchase Agreement, dated as of
[____________], 2014 (the “Agreement”), by and among GlassesOff Inc., a Nevada
corporation (the “Company”), and the investors named on the Schedule of
Investors attached thereto (collectively, the “Holders”), pursuant to which the
Company is issuing to the Holders shares (the “Common Shares”) of the Company’s
common stock, par value $0.001 per share (“Common Stock”).

 

In connection with the consummation of the transactions contemplated by the
Agreement, this letter shall serve as our irrevocable authorization and
direction to you to issue an aggregate of _______ shares of Common Stock in the
names and denominations set forth on Exhibit I attached hereto. The certificates
should bear the legend set forth on Exhibit II attached hereto and “stop
transfer” instructions should be placed against their subsequent transfer.
Kindly deliver the certificates to the respective delivery addresses set forth
on Exhibit I via hand delivery or overnight courier. We confirm that these
shares will be validly issued, fully paid and non-assessable upon issuance.

 

Please be advised that the Holders are relying upon this letter as an inducement
to enter into the Agreement and, accordingly, each Holder is a third party
beneficiary to these instructions.

 

Please execute this letter in the space indicated to acknowledge your agreement
to act in accordance with these instructions. Should you have any questions
concerning this matter, please contact our counsel, Greenberg Traurig, P.A.,
attention Robert L. Grossman, Esq., at (305) 579-0756.

 

  Very truly yours,       GLASSESOFF INC.       By:     Name:   Title:

 

 

 

 

THE FOREGOING INSTRUCTIONS ARE   ACKNOWLEDGED AND AGREED TO   this ___ day of
[_________], 2014       VSTOCK TRANSFER, LLC       By:     Name:     Title:    
    Enclosures  

 

 

 

 

Exhibit I

 

Name and Address of Stockholder

 

Number of
 Shares
Purchased

                              TOTAL:    

 

 

 

 

EXHIBIT II

 

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY APPLICABLE STATE
SECURITIES LAWS 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 COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS.

 

 

 

 

ANNEX B

 

“SELLING STOCKHOLDERS” / “PLAN OF DISTRIBUTION”

 

Plan of Distribution

 

Each Selling Stockholder (the “Selling Stockholders”) of the shares and any of
their pledgees, assignees and successors-in-interest may, from time to time,
sell any or all of their shares covered hereby on the OTCBB or any other stock
exchange, market or trading facility on which the securities are traded or in
private transactions.  These sales may be at fixed or negotiated prices.  A
Selling Stockholder may use any one or more of the following methods when
selling shares:

 

•ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

 

•block trades in which the broker-dealer will attempt to sell the securities as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;

 

•purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;

 

•an exchange distribution in accordance with the rules of the applicable
exchange;

 

•privately negotiated transactions;

 

•in transactions through broker-dealers that agree with the Selling Stockholders
to sell a specified number of such securities at a stipulated price per
security;

 

•through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;

 

•a combination of any such methods of sale; or

 

•any other method permitted pursuant to applicable law.

 

The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the “Securities Act”), if available, rather
than under this prospectus.

 

Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales.  Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of securities, from the purchaser) in amounts to be
negotiated.

 

In connection with the sale of the shares or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the shares in
the course of hedging the positions they assume.  The Selling Stockholders may
also sell shares short and deliver these shares to close out their short
positions, or loan or pledge the shares to broker-dealers that in turn may sell
these securities.  The Selling Stockholders may also enter into option or other
transactions with broker-dealers or other financial institutions or create one
or more derivative securities which require the delivery to such broker-dealer
or other financial institution of shares offered by this prospectus, which
shares such broker-dealer or other financial institution may resell pursuant to
this prospectus (as supplemented or amended to reflect such transaction).

 

B-1

 

 

The Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares.  The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act. 

 

The Selling Stockholders may be deemed to be statutory underwriters under the
Securities Act. In addition, any broker-dealers who act in connection with the
sale of the shares hereunder may be deemed to be “underwriters” within the
meaning of Section 2(11) of the Securities Act, and any commissions received by
them and profit on any resale of the shares as principal may be deemed to be
underwriting discounts and commissions under the Securities Act. Because Selling
Stockholders may be deemed to be “underwriters” within the meaning of the
Securities Act, they may be subject to the prospectus delivery requirements of
the Securities Act including Rule 172 thereunder.

 

The selling stockholders have acknowledged that they understand their
obligations to comply with the provisions of the Securities Exchange Act of
1934, as amended, and the rules thereunder relating to stock manipulation,
particularly Regulation M.

 

We agreed to keep this prospectus effective with respect to shares of common
stock offered by a Selling Stockholder hereunder until the earlier of such
Selling Stockholder’s sale of such shares pursuant to this prospectus or until
such shares may be sold without restrictions or other limitations pursuant to
Rule 144 (or any successor provision) under the Securities Act (including,
without limitation, volume restrictions) and without the need for current public
information required by Rule 144(c)(1).

 

We will make copies of this prospectus available to the Selling Stockholders and
have informed them of the need to deliver a copy of this prospectus to each
purchaser at or prior to the time of the sale (including by compliance with Rule
172 under the Securities Act).

 

There can be no assurance that the Selling Stockholders will sell any or all of
the shares of common stock registered pursuant to the registration statement of
which this prospectus forms a part.

 

We are not aware of any plans, arrangements or understandings between the
Selling Stockholders and any underwriter, broker-dealer or agent regarding the
sale of shares of common stock by the selling stockholders.

 

We will pay all expenses incident to the filing of this registration statement,
estimated to be $[●]. These expenses include accounting and legal fees in
connection with the preparation of the registration statement of which this
prospectus forms a part, legal and other fees in connection with the
qualification of the sale of the shares under the laws of certain states (if
any), registration and filing fees and other expenses.

 

B-2