EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of March 19,
2020, is by and among Phunware, Inc., a Delaware corporation with offices
located at 7800 Shoal Creek Blvd, Suite 230-S, Austin, Texas 78757 (the
“Company”), and each of the investors listed on the Schedule of Buyers attached
hereto (individually, a “Buyer” and collectively, the “Buyers”).
RECITALS
A. The Company and each Buyer is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule
506(b) of Regulation D (“Regulation D”) as promulgated by the United States
Securities and Exchange Commission (the “SEC”) under the 1933 Act.
B. The Company has authorized a new series of senior convertible notes of the
Company, in the aggregate original principal amount of $3,000,000, substantially
in the form attached hereto as Exhibit A (the “Notes”), which Notes shall be
convertible into shares of Common Stock (as defined below) (the shares of Common
Stock issuable pursuant to the terms of the Notes, including, without
limitation, upon conversion or otherwise, collectively, the “Conversion
Shares”), in accordance with the terms of the Notes.
C. Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms
and conditions stated in this Agreement, a Note in the aggregate original
principal amount set forth opposite such Buyer’s name in column (3) on the
Schedule of Buyers.
D. At the Closing, the parties hereto shall execute and deliver a Registration
Rights Agreement, in the form attached hereto as Exhibit B (the “Registration
Rights Agreement”), pursuant to which the Company has agreed to provide certain
registration rights with respect to the Registrable Securities (as defined in
the Registration Rights Agreement), under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.
E. The Notes and the Conversion Shares are collectively referred to herein as
the “Securities.”
F. The Company has engaged Canaccord Genuity LLC as the sole placement agent
(the “Placement Agent”) for the offering of the Notes on a “best efforts” basis.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each Buyer hereby
agree as follows:
1.PURCHASE AND SALE OF NOTES.
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(a)Purchase of Notes
. Subject to the satisfaction (or waiver) of the conditions set forth in
Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each
Buyer severally, but not jointly, agrees to purchase from the Company on the
Closing Date (as defined below) a Note in the original principal amount as is
set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers.
(b)Closing
. The closing (the “Closing”) of the purchase of the Notes by the Buyers shall
occur at the offices of Kelley Drye & Warren LLP, 101 Park Avenue, New York, NY
10178. The date and time of the Closing (the “Closing Date”) shall be 10:00
a.m., New York time, on the first (1st) Business Day on which the conditions to
the Closing set forth in Sections 6 and 7 below are satisfied or waived (or such
other date as is mutually agreed to by the Company and each Buyer). As used
herein “Business Day” means any day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to remain closed.
(c)Purchase Price
. The aggregate purchase price for the Notes to be purchased by each Buyer (the
“Purchase Price”) shall be the amount set forth opposite such Buyer’s name in
column (4) on the Schedule of Buyers. Each Buyer shall pay $920 for each $1,000
of principal amount of Notes to be purchased by such Buyer at the Closing.
(d)Form of Payment
. On the Closing Date, (i) each Buyer shall pay its respective Purchase Price
(less, in the case of any Buyer, the amounts withheld pursuant to Section 4(g))
to the Company for the Notes to be issued and sold to such Buyer at the Closing,
by wire transfer of immediately available funds in accordance with the Flow of
Funds Letter (as defined below) and (ii) the Company shall deliver to each Buyer
a Note in the aggregate original principal amount as is set forth opposite such
Buyer’s name in column (3) of the Schedule of Buyers, duly executed on behalf of
the Company and registered in the name of such Buyer or its designee.
2.BUYER’S REPRESENTATIONS AND WARRANTIES.
Each Buyer, severally and not jointly, represents and warrants to the Company
and the Placement Agent with respect to only itself that, as of the date hereof
and as of the Closing Date:
(a)Organization; Authority. Such Buyer is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents (as
defined below) to which it is a party and otherwise to carry out its obligations
hereunder and thereunder.
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(b)No Public Sale or Distribution
. Such Buyer (i) is acquiring its Note, and (ii) upon conversion of its Note
will acquire the Conversion Shares issuable upon conversion thereof, in each
case, for its own account and not with a view towards, or for resale in
connection with, the public sale or distribution thereof in violation of
applicable securities laws, except pursuant to sales registered or exempted
under the 1933 Act; provided, however, by making the representations herein,
such Buyer does not agree, or make any representation or warranty, to hold any
of the Securities for any minimum or other specific term and reserves the right
to dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption from registration under the 1933 Act.
Such Buyer does not presently have any agreement or understanding, directly or
indirectly, with any Person to distribute any of the Securities in violation of
applicable securities laws. For purposes of this Agreement, “Person” means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other entity and any
Governmental Entity or any department or agency thereof.
(c)Accredited Investor Status
. Such Buyer is an “accredited investor” as that term is defined in Rule 501(a)
of Regulation D.
(d)Reliance on Exemptions
. Such Buyer understands that the Securities are being offered and sold to it in
reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in part
upon the truth and accuracy of, and such Buyer’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
such Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire the Securities.
(e)Information
. Such Buyer and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities that have been requested by
such Buyer. Such Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company. Neither such inquiries nor any
other due diligence investigations conducted by such Buyer or its advisors, if
any, or its representatives shall modify, amend or affect such Buyer’s right to
rely on the Company’s representations and warranties contained herein. Such
Buyer understands that its investment in the Securities involves a high degree
of risk. Such Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities. Such Buyer hereby acknowledges and agrees that it
has independently evaluated the merits of its decision to purchase the
Securities, and that (i) the Placement Agent is acting solely as placement agent
in connection with the execution, delivery and performance of this Agreement and
is not acting as underwriter or in any other capacity and is not and shall not
be construed as a fiduciary for such Buyer, the Company or any other Person
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in connection with the execution, delivery and performance of this Agreement,
and (ii) such Buyer has not relied on the Placement Agent or its officers,
directors, employees, attorneys or affiliates with respect to the negotiation,
execution or performance of this Agreement or any representation or warranty
made in, in connection with, or as an inducement to this Agreement.
(f)No Governmental Review
. Such Buyer understands that no United States federal or state agency or any
other government or governmental agency has passed on or made any recommendation
or endorsement of the Securities or the fairness or suitability of the
investment in the Securities nor have such authorities passed upon or endorsed
the merits of the offering of the Securities.
(g)Transfer or Resale
. Such Buyer understands that except as provided in the Registration Rights
Agreement and Section 4(h) hereof: (i) the Securities have not been and are not
being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the Company (if
requested by the Company) an opinion of counsel, in a form reasonably acceptable
to the Company, to the effect that such Securities to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an exemption from
such registration, or (C) such Buyer provides the Company with reasonable
assurance that such Securities can be sold, assigned or transferred pursuant to
Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule
thereto) (collectively, “Rule 144”); (ii) any sale of the Securities 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 Securities 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 1933 Act) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC promulgated thereunder; and (iii) neither the Company nor
any other Person is under any obligation to register the Securities under the
1933 Act or any state securities laws or to comply with the terms and conditions
of any exemption thereunder. Notwithstanding the foregoing, the Securities may
be pledged in connection with a bona fide margin account or other loan or
financing arrangement secured by the Securities and such pledge of Securities
shall not be deemed to be a transfer, sale or assignment of the Securities
hereunder, and no Buyer effecting a pledge of Securities shall be required to
provide the Company with any notice thereof or otherwise make any delivery to
the Company pursuant to this Agreement or any other Transaction Document (as
defined in Section 3(b)), including, without limitation, this Section 2(g).
(h)Validity; Enforcement
. This Agreement and the Registration Rights Agreement have been duly and
validly authorized, executed and delivered on behalf of such Buyer and shall
constitute the legal, valid and binding obligations of such Buyer enforceable
against such Buyer in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar
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laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.
(i)No Conflicts
. The execution, delivery and performance by such Buyer of this Agreement and
the Registration Rights Agreement and the consummation by such Buyer of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of such Buyer, 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 Buyer 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 Buyer, except in the case of clauses (ii)
and (iii) above, for such conflicts, defaults, rights or violations which could
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Buyer to perform its obligations
hereunder.
3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers and the Placement
Agent that, as of the date hereof and as of the Closing Date (except for
representations and warranties that speak as of a specific date, which shall be
true and correct as of such specific date):
(a)Organization and Qualification
. Each of the Company and each of its Subsidiaries are (or, solely with respect
to the good standing of the Company, after giving effect to the Delaware Payment
at the Closing, will be) entities duly organized and validly existing and in
good standing under the laws of the jurisdiction in which they are formed, and
have the requisite power and authority to own their properties and to carry on
their business as now being conducted and as presently proposed to be conducted.
Each of the Company and each of its Subsidiaries is (or, solely with respect to
the due qualifications of the Company, after giving effect to the Delaware
Payment at the Closing, will be) duly qualified as a foreign entity to do
business and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not reasonably be expected to have a Material Adverse Effect
(as defined below). As used in this Agreement, “Material Adverse Effect” means
any material adverse effect on (i) the business, properties, assets,
liabilities, operations (including results thereof), condition (financial or
otherwise) or prospects of the Company or any Subsidiary, individually or taken
as a whole, (ii) the transactions contemplated hereby or in any of the other
Transaction Documents or any other agreements or instruments to be entered into
in connection herewith or therewith or (iii) the authority or ability of the
Company or any of its Subsidiaries to perform any of their respective
obligations under any of the Transaction Documents (as defined below). Other
than the Persons (as defined below) set forth on Schedule 3(a), the Company has
no Subsidiaries. “Subsidiaries” means any Person in which the Company, directly
or indirectly, (I) owns any of the outstanding capital stock or holds any equity
or similar interest of such Person or
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(II) controls or operates all or any part of the business, operations or
administration of such Person, and each of the foregoing, is individually
referred to herein as a “Subsidiary.”
(b)Authorization; Enforcement; Validity
. The Company has the requisite power and authority to enter into and perform
its obligations under this Agreement and the other Transaction Documents and to
issue the Securities in accordance with the terms hereof and thereof. Each
Subsidiary has the requisite power and authority to enter into and perform its
obligations under the Transaction Documents to which it is a party. The
execution and delivery of this Agreement and the other Transaction Documents by
the Company and its Subsidiaries, and the consummation by the Company and its
Subsidiaries of the transactions contemplated hereby and thereby (including,
without limitation, the issuance of the Notes and the reservation for issuance
and issuance of the Conversion Shares issuable upon conversion of the Notes)
have been duly authorized by the Company’s board of directors and each of its
Subsidiaries’ board of directors or other governing body, as applicable, and
(other than the filing with the SEC of one or more Registration Statements in
accordance with the requirements of the Registration Rights Agreement, a Form D
with the SEC and any other filings as may be required by any state securities
agencies) no further filing, consent or authorization is required by the
Company, its Subsidiaries, their respective boards of directors or their
stockholders or other governing body. This Agreement has been, and the other
Transaction Documents to which it is a party will be prior to the Closing, duly
executed and delivered by the Company, and each constitutes the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with its respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies and except as rights to indemnification and to contribution may be
limited by federal or state securities law. Prior to the Closing, the
Transaction Documents to which each Subsidiary is a party will be duly executed
and delivered by each such Subsidiary, and shall constitute the legal, valid and
binding obligations of each such Subsidiary, enforceable against each such
Subsidiary in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies and except as rights to indemnification and to contribution
may be limited by federal or state securities law. “Transaction Documents”
means, collectively, this Agreement, the Notes, the Registration Rights
Agreement, the Irrevocable Transfer Agent Instructions (as defined below) and
each of the other agreements and instruments entered into or delivered by any of
the parties hereto in connection with the transactions contemplated hereby and
thereby, as may be amended from time to time.
(c)Issuance of Securities
. The issuance of the Notes are duly authorized and upon issuance in accordance
with the terms of the Transaction Documents shall be validly issued, fully paid
and non-assessable and free from all preemptive or similar rights, mortgages,
defects, claims, liens, pledges, charges, taxes, rights of first refusal,
encumbrances, security interests and other encumbrances
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(collectively “Liens”) with respect to the issuance thereof. As of the Closing,
the Company shall have reserved from its duly authorized capital stock not less
than 300% of the maximum number of Conversion Shares issuable upon conversion of
the Notes (assuming for purposes hereof that (i) the Notes are convertible at
the Alternate Conversion Price (as defined in the Notes) assuming an Alternate
Conversion Date (as defined in the Note) as of the date hereof, (ii) interest on
the Notes shall accrue through December 31, 2021 and will be converted in shares
of Common Stock at a conversion price equal to the Alternate Conversion Price
assuming an Alternate Conversion Date as of the date hereof and (iii) any such
conversion shall not take into account any limitations on the conversion of the
Notes set forth in the Notes). Upon issuance or conversion in accordance with
the Notes, the Conversion Shares, when issued, will be validly issued, fully
paid and nonassessable and free from all preemptive or similar rights or Liens
with respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of Common Stock. Subject to the accuracy of the
representations and warranties of the Buyers in this Agreement, the offer and
issuance by the Company of the Securities is exempt from registration under the
1933 Act.
(d)No Conflicts
. The execution, delivery and performance of the Transaction Documents by the
Company and its Subsidiaries and the consummation by the Company and its
Subsidiaries of the transactions contemplated hereby and thereby (including,
without limitation, the issuance of the Notes and the Conversion Shares and the
reservation for issuance of the Conversion Shares) will not (i) result in a
violation of the Certificate of Incorporation (as defined below) (including,
without limitation, any certificate of designation contained therein), Bylaws
(as defined below), certificate of formation, memorandum of association,
articles of association, bylaws or other organizational documents of the Company
or any of its Subsidiaries, or any capital stock or other securities of the
Company or any of its Subsidiaries, (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
in any respect under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including,
without limitation, foreign, federal and state securities laws and regulations
and the rules and regulations of the Nasdaq Capital Market (the “Principal
Market”) and including all applicable foreign, federal and state laws, rules and
regulations) applicable to the Company or any of its Subsidiaries or by which
any property or asset of the Company or any of its Subsidiaries is bound or
affected.
(e)Consents
. Neither the Company nor any Subsidiary is required to obtain any consent from,
authorization or order of, or make any filing or registration with (other than
the filing with the SEC of one or more Registration Statements in accordance
with the requirements of the Registration Rights Agreement, a Form D with the
SEC and any other filings as may be required by any state securities agencies),
any Governmental Entity (as defined below) or any regulatory or self-regulatory
agency or any other Person in order for it to execute, deliver or perform any of
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its respective obligations under or contemplated by the Transaction Documents,
in each case, in accordance with the terms hereof or thereof. All consents,
authorizations, orders, filings and registrations which the Company or any
Subsidiary is required to obtain pursuant to the preceding sentence have been or
will be obtained or effected on or prior to the Closing Date, and neither the
Company nor any of its Subsidiaries are aware of any facts or circumstances
which might prevent the Company or any of its Subsidiaries from obtaining or
effecting any of the registration, application or filings contemplated by the
Transaction Documents. The Company is not in violation of the requirements of
the Principal Market and has no knowledge of any facts or circumstances which
could reasonably lead to delisting or suspension of the Common Stock in the
foreseeable future. “Governmental Entity” means any nation, state, county, city,
town, village, district, or other political jurisdiction of any nature, federal,
state, local, municipal, foreign, or other government, governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal),
multi-national organization or body; or body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature or instrumentality of any
of the foregoing, including any entity or enterprise owned or controlled by a
government or a public international organization or any of the foregoing.
(f)Acknowledgment Regarding Buyer’s Purchase of Securities
. The Company acknowledges and agrees that each Buyer is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated hereby and thereby and that no Buyer is (i) an
officer or director of the Company or any of its Subsidiaries, (ii) an
“affiliate” (as defined in Rule 144) of the Company or any of its Subsidiaries
or (iii) to its knowledge, a “beneficial owner” of more than 10% of the shares
of Common Stock (as defined for purposes of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the “1934 Act”)). The Company further
acknowledges that no Buyer is acting as a financial advisor or fiduciary of the
Company or any of its Subsidiaries (or in any similar capacity) with respect to
the Transaction Documents and the transactions contemplated hereby and thereby,
and any advice given by a Buyer or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Buyer’s purchase of the
Securities. The Company further represents to each Buyer that the Company’s and
each Subsidiary’s decision to enter into the Transaction Documents to which it
is a party has been based solely on the independent evaluation by the Company,
each Subsidiary and their respective representatives.
(g)No General Solicitation; Placement Agent’s Fees
. Neither the Company, nor any of its Subsidiaries or affiliates, nor any Person
acting on its or their behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D) in connection with
the offer or sale of the Securities. The Company shall be responsible for the
payment of any placement agent’s fees, financial advisory fees, or brokers’
commissions (other than for Persons engaged by any Buyer or its investment
advisor) relating to or arising out of the transactions contemplated hereby,
including, without
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limitation, placement agent fees payable to the Placement Agent in connection
with the sale of the Securities. The fees and expenses of the Placement Agent to
be paid by the Company or any of its Subsidiaries are as set forth on Schedule
3(g) attached hereto. The Company shall pay, and hold each Buyer harmless
against, any liability, loss or expense (including, without limitation,
attorney’s fees and out-of-pocket expenses) arising in connection with any such
claim. The Company acknowledges that it has engaged the Placement Agent in
connection with the sale of the Securities. Other than the Placement Agent,
neither the Company nor any of its Subsidiaries has engaged any placement agent
or other agent in connection with the offer or sale of the Securities.
(h)No Integrated Offering
. None of the Company, its Subsidiaries or any of their affiliates, nor any
Person acting on 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 require registration of the issuance of any of the
Securities under the 1933 Act, whether through integration with prior offerings
or otherwise, or cause this offering of the Securities to require approval of
stockholders of the Company for purposes of the 1933 Act or under any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated for quotation. None of
the Company, its Subsidiaries, their affiliates nor any Person acting on their
behalf will take any action or steps that would require registration of the
issuance of any of the Securities under the 1933 Act or cause the offering of
any of the Securities to be integrated with other offerings of securities of the
Company.
(i)Dilutive Effect
. The Company understands and acknowledges that the number of Conversion Shares
will increase in certain circumstances. The Company further acknowledges that
its obligation to issue the Conversion Shares pursuant to the terms of the Notes
in accordance with this Agreement and the Notes is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company.
(j)Application of Takeover Protections; Rights Agreement
. The Company and its board of directors have taken all necessary action, if
any, in order to render inapplicable any control share acquisition, interested
stockholder, business combination, poison pill (including, without limitation,
any distribution under a rights agreement), stockholder rights plan or other
similar anti-takeover provision under the Certificate of Incorporation, Bylaws
or other organizational documents or the laws of the jurisdiction of its
incorporation or otherwise which is or could become applicable to any Buyer as a
result of the transactions contemplated by this Agreement, including, without
limitation, the Company’s issuance of the Securities and any Buyer’s ownership
of the Securities.
(k)SEC Documents; Financial Statements
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. During the two (2) years prior to the date hereof, the Company has timely
filed all reports, schedules, forms, proxy statements, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to the date
hereof and all exhibits and appendices included therein and financial
statements, notes and schedules thereto and documents incorporated by reference
therein being hereinafter referred to as the “SEC Documents”). The Company has
delivered or has made available to the Buyers or their respective
representatives true, correct and complete copies of each of the SEC Documents
not available on the EDGAR system. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, 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. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto as in effect as of the time of
filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles (“GAAP”), consistently applied, during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly presented in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments which will not be
material, either individually or in the aggregate). The reserves, if any,
established by the Company or the lack of reserves, if applicable, are
reasonable based upon facts and circumstances known by the Company on the date
hereof and there are no loss contingencies that are required to be accrued by
the Statement of Financial Accounting Standard No. 5 of the Financial Accounting
Standards Board which are not provided for by the Company in its financial
statements or otherwise. No other information provided by or on behalf of the
Company to any of the Buyers which is not included in the SEC Documents
(including, without limitation, information referred to in Section 2(e) of this
Agreement or in the disclosure schedules to this Agreement) contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein not misleading, in the light of the
circumstance under which they are or were made. The Company is not currently
contemplating to amend or restate any of the financial statements (including,
without limitation, any notes or any letter of the independent accountants of
the Company with respect thereto) included in the SEC Documents (the “Financial
Statements”), nor is the Company currently aware of facts or circumstances which
would require the Company to amend or restate any of the Financial Statements,
in each case, in order for any of the Financials Statements to be in compliance
with GAAP and the rules and regulations of the SEC. The Company has not been
informed by its independent accountants that they recommend that the Company
amend or restate any of the Financial Statements or that there is any need for
the Company to amend or restate any of the Financial Statements.
(l)Absence of Certain Changes
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. Except as otherwise disclosed in the SEC Documents, since the date of the
Company’s most recent audited financial statements contained in a Form 10-K,
there has been no material adverse change and no material adverse development in
the business, assets, liabilities, properties, operations (including results
thereof), condition (financial or otherwise) or prospects of the Company or any
of its Subsidiaries. Except as otherwise disclosed in the SEC Documents, since
the date of the Company’s most recent audited financial statements contained in
a Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or
paid any dividends, (ii) sold any assets, individually or in the aggregate,
outside of the ordinary course of business or (iii) made any capital
expenditures, individually or in the aggregate, outside of the ordinary course
of business. Neither the Company nor any of its Subsidiaries has taken any steps
to seek protection pursuant to any law or statute relating to bankruptcy,
insolvency, reorganization, receivership, liquidation or winding up, nor does
the Company or any Subsidiary have any knowledge or reason to believe that any
of their respective creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably lead a
creditor to do so. The Company and its Subsidiaries, individually and on a
consolidated basis, are not as of the date hereof, and after giving effect to
the transactions contemplated hereby to occur at the Closing, will not be
Insolvent (as defined below). For purposes of this Section 3(l), “Insolvent”
means, (i) with respect to the Company and its Subsidiaries, on a consolidated
basis, (A) the present fair saleable value of the Company’s and its
Subsidiaries’ assets is less than the amount required to pay the Company’s and
its Subsidiaries’ total Indebtedness (as defined below), (B) the Company and its
Subsidiaries are unable to pay their debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured or (C) the Company and its Subsidiaries intend to incur or believe that
they will incur debts that would be beyond their ability to pay as such debts
mature; and (ii) with respect to the Company and each Subsidiary, individually,
(A) the present fair saleable value of the Company’s or such Subsidiary’s (as
the case may be) assets is less than the amount required to pay its respective
total Indebtedness, (B) the Company or such Subsidiary (as the case may be) is
unable to pay its respective debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured or (C) the
Company or such Subsidiary (as the case may be) intends to incur or believes
that it will incur debts that would be beyond its respective ability to pay as
such debts mature. Neither the Company nor any of its Subsidiaries has engaged
in any business or in any transaction, and is not about to engage in any
business or in any transaction, for which the Company’s or such Subsidiary’s
remaining assets constitute unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted.
(m)No Undisclosed Events, Liabilities, Developments or Circumstances
. Except as otherwise disclosed in the SEC Documents, no event, liability,
development or circumstance has occurred or exists, or is reasonably expected to
exist or occur with respect to the Company, any of its Subsidiaries or any of
their respective businesses, properties, liabilities, prospects, operations
(including results thereof) or condition (financial or otherwise), that (i)
would be required to be disclosed by the Company under applicable securities
laws on a registration statement on Form S-1 filed with the SEC relating to an
issuance and sale by the
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Company of its Common Stock and which has not been publicly announced, or (ii)
could have a Material Adverse Effect.
(n)Conduct of Business; Regulatory Permits
. Neither the Company nor any of its Subsidiaries is in violation of any term of
or in default under its Certificate of Incorporation, any certificate of
designation, preferences or rights of any other outstanding series of preferred
stock of the Company or any of its Subsidiaries or Bylaws or their
organizational charter, certificate of formation, memorandum of association,
articles of association, Certificate of Incorporation or certificate of
incorporation or bylaws, respectively. Neither the Company nor any of its
Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except in all cases for
possible violations which could not, individually or in the aggregate, have a
Material Adverse Effect. Without limiting the generality of the foregoing, the
Company is not in violation of any of the rules, regulations or requirements of
the Principal Market and has no knowledge of any facts or circumstances that
could reasonably lead to delisting or suspension of the Common Stock by the
Principal Market in the foreseeable future. Since December 28, 2018, (i) the
Common Stock has been listed or designated for quotation on the Principal
Market, (ii) trading in the Common Stock has not been suspended by the SEC or
the Principal Market and (iii) the Company has received no communication,
written or oral, from the SEC or the Principal Market regarding the suspension
or delisting of the Common Stock from the Principal Market. The Company and each
of its Subsidiaries possess all certificates, authorizations and permits issued
by the appropriate regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate, a
Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit. There is no agreement,
commitment, judgment, injunction, order or decree binding upon the Company or
any of its Subsidiaries or to which the Company or any of its Subsidiaries is a
party which has or would reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of the Company or any
of its Subsidiaries, any acquisition of property by the Company or any of its
Subsidiaries or the conduct of business by the Company or any of its
Subsidiaries as currently conducted other than such effects, individually or in
the aggregate, which have not had and would not reasonably be expected to have a
Material Adverse Effect on the Company or any of its Subsidiaries.
(o)Foreign Corrupt Practices
. Neither the Company, the Company’s Subsidiary or any director, officer, agent,
employee, nor any other person acting for or on behalf of the foregoing
(individually and collectively, a “Company Affiliate”) have violated the U.S.
Foreign Corrupt Practices Act (the “FCPA”) or any other applicable anti-bribery
or anti-corruption laws, nor has any Company Affiliate offered, paid, promised
to pay, or authorized the payment of any money, or offered, given, promised to
give, or authorized the giving of anything of value, to any officer, employee or
any other person
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acting in an official capacity for any Governmental Entity to any political
party or official thereof or to any candidate for political office (individually
and collectively, a “Government Official”) or to any person under circumstances
where such Company Affiliate knew or was aware of a high probability that all or
a portion of such money or thing of value would be offered, given or promised,
directly or indirectly, to any Government Official, for the purpose of:
a.(A) influencing any act or decision of such Government Official in his/her
official capacity, (B) inducing such Government Official to do or omit to do any
act in violation of his/her lawful duty, (C) securing any improper advantage, or
(D) inducing such Government Official to influence or affect any act or decision
of any Governmental Entity, or
b.assisting the Company or its Subsidiaries in obtaining or retaining business
for or with, or directing business to, the Company or its Subsidiaries.
i.Sarbanes-Oxley Act
. The Company and each Subsidiary is in compliance with any and all applicable
requirements of the Sarbanes-Oxley Act of 2002, as amended, and any and all
applicable rules and regulations promulgated by the SEC thereunder.
ii.Transactions With Affiliates
. Except as otherwise disclosed in the SEC Documents, no current or former
employee, partner, director, officer or stockholder (direct or indirect) of the
Company or its Subsidiaries, or any associate, or, to the knowledge of the
Company, any affiliate of any thereof, or any relative with a relationship no
more remote than first cousin of any of the foregoing, is presently, or has ever
been, (i) a party to any transaction with the Company or its Subsidiaries
(including any contract, agreement or other arrangement providing for the
furnishing of services by, or rental of real or personal property from, or
otherwise requiring payments to, any such director, officer or stockholder or
such associate or affiliate or relative Subsidiaries (other than for ordinary
course services as employees, officers or directors of the Company or any of its
Subsidiaries)) or (ii) the direct or indirect owner of an interest in any
corporation, firm, association or business organization which is a competitor,
supplier or customer of the Company or its Subsidiaries (except for a passive
investment (direct or indirect) in less than 5% of the common stock of a company
whose securities are traded on or quoted through an Eligible Market (as defined
in the Notes)), nor does any such Person receive income from any source other
than the Company or its Subsidiaries which relates to the business of the
Company or its Subsidiaries or should properly accrue to the Company or its
Subsidiaries. Except as otherwise disclosed in the SEC Documents, no employee,
officer, stockholder or director of the Company or any of its Subsidiaries or
member of his or her immediate family is indebted to the Company or its
Subsidiaries, as the case may be, nor is the Company or any of its Subsidiaries
indebted (or committed to make loans or extend or guarantee credit) to any of
them, in each case in excess of $250,000 other than (i) for payment of salary
for services rendered, (ii) reimbursement for reasonable expenses incurred on
behalf of the Company, and (iii) for other standard employee benefits made
generally
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available to all employees or executives (including stock option agreements
outstanding under any stock option plan approved by the Board of Directors of
the Company).
iii.Equity Capitalization.
c.Definitions:
(A) “Common Stock” means (x) the Company’s shares of common stock, $0.0001 par
value per share, and (y) any capital stock into which such common stock shall
have been changed or any share capital resulting from a reclassification of such
common stock.
(B) “Preferred Stock” means (x) the Company’s blank check preferred stock,
$0.0001 par value per share, the terms of which may be designated by the board
of directors of the Company in a certificate of designations and (y) any capital
stock into which such preferred stock shall have been changed or any share
capital resulting from a reclassification of such preferred stock (other than a
conversion of such preferred stock into Common Stock in accordance with the
terms of such certificate of designations).
d.Authorized and Outstanding Capital Stock. As of the date hereof, the
authorized capital stock of the Company consists of (A) 1,000,000,000 shares of
Common Stock, of which, 40,353,345 are issued and outstanding and 9,673,627
shares are reserved for issuance pursuant to Convertible Securities (as defined
below) (other than the Notes) exercisable or exchangeable for, or convertible
into, shares of Common Stock and (B) 0 shares of Preferred Stock, none of which
are issued and outstanding. 0 shares of Common Stock are held in the treasury of
the Company.
e.Valid Issuance; Available Shares; Affiliates. All of such outstanding shares
are duly authorized and have been, or upon issuance will be, validly issued and
are fully paid and nonassessable. Schedule 3(r)(iii) sets forth the number of
shares of Common Stock that are (A) reserved for issuance pursuant to
Convertible Securities (as defined below) (other than the Notes) and (B) that
are, as of the date hereof, owned by Persons who are “affiliates” (as defined in
Rule 405 of the 1933 Act and calculated based on the assumption that only
officers, directors and holders of at least 10% of the Company’s issued and
outstanding Common Stock are “affiliates” without conceding that any such
Persons are “affiliates” for purposes of federal securities laws) of the Company
or any of its Subsidiaries. To the Company’s knowledge, no Person owns 10% or
more of the Company’s issued and outstanding shares of Common Stock (calculated
based on the assumption that all Convertible Securities (as defined below),
whether or not presently exercisable or convertible, have been fully
exercised or converted (as the case may be) taking account of any limitations on
exercise or conversion (including “blockers”) contained therein without
conceding that such identified Person is a 10% stockholder for purposes of
federal securities laws).
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f.Existing Securities; Obligations. Except as disclosed in the SEC Documents:
(A) none of the Company’s or any Subsidiary’s shares, interests or capital stock
is subject to preemptive rights or any other similar rights or Liens suffered or
permitted by the Company or any Subsidiary; (B) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any shares, interests or capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares, interests or capital stock of the Company or
any of its Subsidiaries or options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, or exercisable or exchangeable for, any shares,
interests or capital stock of the Company or any of its Subsidiaries; (C) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except pursuant to the Registration Rights Agreement); (D) there
are no outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries; (E) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities; and (F) neither the Company nor any Subsidiary has
any stock appreciation rights or “phantom stock” plans or agreements or any
similar plan or agreement.
g.Organizational Documents. The Company has furnished or made available by
virtue of its SEC Documents to the Buyers true, correct and complete copies of
the Company’s Certificate of Incorporation, as amended and as in effect on the
date hereof (the “Certificate of Incorporation”), and the Company’s bylaws, as
amended and as in effect on the date hereof (the “Bylaws”), and the terms of all
Convertible Securities and the material rights of the holders thereof in respect
thereto.
iv.Indebtedness and Other Contracts
. Neither the Company nor any of its Subsidiaries, except as disclosed on
Schedule 3(s), (i) has any outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or instruments
evidencing Indebtedness of the Company or any of its Subsidiaries or by which
the Company or any of its Subsidiaries is or may become bound, (ii) is a party
to any contract, agreement or instrument, the violation of which, or default
under which, by the other party(ies) to such contract, agreement or instrument
could reasonably be expected to result in a Material Adverse Effect, (iii) has
any financing statements securing obligations in any amounts filed in connection
with the Company or any of its Subsidiaries; (iv) is in violation of any term
of, or 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, or (v) is a
party to any contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Company’s
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officers, has or is expected to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries have any liabilities or obligations required
to be disclosed in the SEC Documents which are not so disclosed in the SEC
Documents, other than those incurred in the ordinary course of the Company’s or
its Subsidiaries’ respective businesses and which, individually or in the
aggregate, do not or could not have a Material Adverse Effect. For purposes of
this Agreement: (x) “Indebtedness” of any Person means, without duplication (A)
all indebtedness for borrowed money, (B) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (including,
without limitation, “capital leases” in accordance with GAAP) (other than trade
payables entered into in the ordinary course of business consistent with past
practice), (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 GAAP, consistently
applied for the periods covered thereby, is classified as a capital lease, (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 Lien upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though the
Person which owns such assets or property has not assumed or become liable for
the payment of such indebtedness, and (H) all Contingent Obligations in respect
of indebtedness or obligations of others of the kinds referred to in clauses (A)
through (G) above; and (y) “Contingent Obligation” means, as to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to any Indebtedness, lease, dividend or other obligation of another
Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto.
v.Litigation
. Except as otherwise disclosed in the SEC Documents, there is no action, suit,
arbitration, proceeding, inquiry or investigation before or by the Principal
Market, any court, public board, other Governmental Entity, self-regulatory
organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries, the Common Stock or
any of the Company’s or its Subsidiaries’ officers or directors, whether of a
civil or criminal nature or otherwise, in their capacities as such, that was
required to be disclosure in the Company’s SEC Documents under applicable
securities laws. To the knowledge of the Company, no director, officer or
employee of the Company or any of its subsidiaries has willfully violated 18
U.S.C. §1519 or engaged in spoliation in reasonable anticipation of litigation.
Without limitation of the foregoing, except as otherwise disclosed in the SEC
Documents, there has not been, and to the knowledge of the Company, there is not
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pending or contemplated, any investigation by the SEC involving the Company, any
of its Subsidiaries or any current or former director or officer of the Company
or any of its Subsidiaries, that was required to be disclosure in the Company’s
SEC Documents under applicable securities laws. The SEC has not issued any stop
order or other order suspending the effectiveness of any registration statement
filed by the Company under the 1933 Act or the 1934 Act. Neither the Company nor
any of its Subsidiaries is subject to any order, writ, judgment, injunction,
decree, determination or award of any Governmental Entity.
vi.Insurance
. The Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company nor
any such Subsidiary has been refused any insurance coverage sought or applied
for, and neither the Company nor any such Subsidiary has any reason to believe
that it will be unable 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 at a cost that would not have a Material
Adverse Effect.
vii.Employee Relations
. Neither the Company nor any of its Subsidiaries is a party to any collective
bargaining agreement or employs any member of a union. The Company and its
Subsidiaries believe that their relations with their employees are good. No
executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or
other key employee of the Company or any of its Subsidiaries has notified the
Company or any such Subsidiary that such officer intends to leave the Company or
any such Subsidiary or otherwise terminate such officer’s employment with the
Company or any such Subsidiary. No executive officer or other key employee of
the Company or any of its Subsidiaries is, or is now expected to be, in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued
employment of each such executive officer or other key employee (as the case may
be) does not subject the Company or any of its Subsidiaries to any liability
with respect to any of the foregoing matters. The Company and its Subsidiaries
are in compliance with all federal, state, local and foreign laws and
regulations respecting labor, employment and employment practices and benefits,
terms and conditions of employment and wages and hours, except where failure to
be in compliance would not, either individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.
viii.Title.
h.Real Property. Each of the Company and its Subsidiaries holds good title to
all real property, leases in real property, facilities or other interests in
real property owned or held by the Company or any of its Subsidiaries (the “Real
Property”). The Real Property is free and clear of all Liens and is not subject
to any rights of way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature
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except for (a) Liens for current taxes not yet due and (b) zoning laws and other
land use restrictions that do not impair the present or anticipated use of the
property subject thereto. Any Real Property held under lease by the Company or
any of its Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
or any of its Subsidiaries.
i.Fixtures and Equipment. Each of the Company and its Subsidiaries (as
applicable) has good title to, or a valid leasehold interest in, the tangible
personal property, equipment, improvements, fixtures, and other personal
property and appurtenances that are used by the Company or its Subsidiary in
connection with the conduct of its business (the “Fixtures and Equipment”). The
Fixtures and Equipment are in the reasonable opinion of management, made in good
faith, sufficient for the conduct of the Company’s and/or its Subsidiaries’
businesses (as applicable) in the manner as conducted prior to the Closing. Each
of the Company and its Subsidiaries owns all of its Fixtures and Equipment free
and clear of all Liens except for (a) liens for current taxes not yet due and
(b) zoning laws and other land use restrictions that do not impair the present
or anticipated use of the property subject thereto.
ix.Intellectual Property Rights
. 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, original works of authorship, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
other intellectual property rights and all applications and registrations
therefor (“Intellectual Property Rights”) necessary to conduct their respective
businesses as now conducted and presently proposed to be conducted and which the
failure to do so could have a Material Adverse Effect. Each of patents owned by
the Company or any of its Subsidiaries is listed on Schedule 3(x)(i). Except as
set forth in Schedule 3(x)(ii), none of the Company’s Intellectual Property
Rights have expired or terminated or have been abandoned or are expected to
expire or terminate or are expected to be abandoned, within three years from the
date of this Agreement. The Company does not have any knowledge of any
infringement by the Company or its Subsidiaries of Intellectual Property Rights
of others. There is no claim, action or proceeding being made or brought, or to
the knowledge of the Company or any of its Subsidiaries, being threatened,
against the Company or any of its Subsidiaries regarding its Intellectual
Property Rights. Neither the Company nor any of its Subsidiaries is aware of any
facts or circumstances which might give rise to any of the foregoing
infringements or claims, actions or proceedings. The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property Rights.
x.Environmental Laws
a.. (i) The Company and its Subsidiaries (A) are in compliance with any and all
Environmental Laws (as defined below), (B) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their
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respective businesses and (C) are in compliance with all terms and conditions of
any such permit, license or approval where, in each of the foregoing clauses
(A), (B) and (C), the failure to so comply could be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect. The term
“Environmental Laws” means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, or toxic
or hazardous substances or wastes (collectively, “Hazardous Materials”) into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.
b.To the knowledge of the Company, no Hazardous Materials:
i.have been disposed of or otherwise released from any Real Property of the
Company or any of its Subsidiaries in violation of any Environmental Laws; or
ii.are present on, over, beneath, in or upon a Real Property or any portion
thereof in quantities that would constitute a violation of any Environmental
Laws. No prior use by the Company or any of its Subsidiaries of any Real
Property has occurred that violates any Environmental Laws, which violation
would have a material adverse effect on the business of the Company or any of
its Subsidiaries.
c.Neither the Company nor any of its Subsidiaries knows of any other person who
or entity which has stored, treated, recycled, disposed of or otherwise located
on any Real Property asbestos and polychlorinated biphenyls.
d.To the knowledge of the Company, none of the Real Properties are on any
federal or state “Superfund” list or Liability Information System (“CERCLIS”)
list or any state environmental agency list of sites under consideration for
CERCLIS, nor subject to any environmental related Liens.
xi.Subsidiary Rights
. The Company or one of its Subsidiaries has the unrestricted right to vote, and
(subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by the
Company or such Subsidiary.
xii.Tax Status
. The Company and each of its Subsidiaries (i) has timely made or filed all
foreign, federal and state income and all other tax returns, reports and
declarations required by any
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jurisdiction to which it is subject, (ii) has timely 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, except those
being contested in good faith and (iii) has set aside on its books provision
reasonably adequate for the payment of all 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 and its Subsidiaries know of
no basis for any such claim. The Company is not operated in such a manner as to
qualify as a passive foreign investment company, as defined in Section 1297 of
the Internal Revenue Code of 1986, as amended (the “Code”). The net operating
loss carryforwards (“NOLs”) for United States federal income tax purposes of the
consolidated group of which the Company is the common parent, if any, shall not
be adversely effected by the transactions contemplated hereby. The transactions
contemplated hereby do not constitute an “ownership change” within the meaning
of Section 382 of the Code, thereby preserving the Company’s ability to utilize
such NOLs.
xiii.Internal Accounting and Disclosure Controls
. The Company and each of its Subsidiaries maintains internal control over
financial reporting (as such term is defined in Rule 13a-15(f) under the 1934
Act) that is effective to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles, including
that (i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any difference. The
Company maintains disclosure controls and procedures (as such term is defined in
Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that
information required to be disclosed by the Company in the reports that it files
or submits under the 1934 Act is recorded, processed, summarized and reported,
within the time periods specified in the rules and forms of the SEC, including,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act is accumulated and communicated to the Company’s management,
including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions
regarding required disclosure. Neither the Company nor any of its Subsidiaries
has received any notice or correspondence from any accountant, Governmental
Entity or other Person relating to any potential material weakness or
significant deficiency in any part of the internal controls over financial
reporting of the Company or any of its Subsidiaries.
xiv.Off Balance Sheet Arrangements
. There is no transaction, arrangement, or other relationship between the
Company or any of its Subsidiaries and an unconsolidated or other off balance
sheet entity that is required to be
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disclosed by the Company in its 1934 Act filings and is not so disclosed or that
otherwise could be reasonably likely to have a Material Adverse Effect.
xv.Investment Company Status
. The Company is not, and upon consummation of the sale of the Securities will
not be, an “investment company,” an affiliate of an “investment company,” a
company controlled by an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company” as such terms
are defined in the Investment Company Act of 1940, as amended.
xvi.Acknowledgement Regarding Buyers’ Trading Activity
. Except as expressly provided otherwise in the Transaction Documents, it is
understood and acknowledged by the Company that (i) following the public
disclosure of the transactions contemplated by the Transaction Documents, in
accordance with the terms thereof, none of the Buyers have been asked by the
Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the
Company or any of its Subsidiaries, to desist from effecting any transactions in
or with respect to (including, without limitation, purchasing or selling, long
and/or short) any securities of the Company, or “derivative” securities based on
securities issued by the Company or to hold any of the Securities for any
specified term; (ii) any Buyer, and counterparties in “derivative” transactions
to which any such Buyer is a party, directly or indirectly, presently may have a
“short” position in the Common Stock which was established prior to such Buyer’s
knowledge of the transactions contemplated by the Transaction Documents; (iii)
each Buyer shall not be deemed to have any affiliation with or control over any
arm’s length counterparty in any “derivative” transaction; and (iv) each Buyer
may rely on the Company’s obligation to timely deliver shares of Common Stock
upon conversion, exercise or exchange, as applicable, of the Securities as and
when required pursuant to the Transaction Documents for purposes of effecting
trading in the Common Stock of the Company. The Company further understands and
acknowledges that following the public disclosure of the transactions
contemplated by the Transaction Documents pursuant to the Press Release (as
defined below) one or more Buyers may engage in hedging and/or trading
activities (including, without limitation, the location and/or reservation of
borrowable shares of Common Stock) at various times during the period that the
Securities are outstanding, including, without limitation, during the periods
that the value and/or number of the Conversion Shares deliverable with respect
to the Securities are being determined and such hedging and/or trading
activities (including, without limitation, the location and/or reservation of
borrowable shares of Common Stock), if any, can reduce the value of the existing
stockholders’ equity interest in the Company both at and after the time the
hedging and/or trading activities are being conducted. The Company acknowledges
that such aforementioned hedging and/or trading activities do not constitute a
breach of this Agreement, the Notes or any other Transaction Document or any of
the documents executed in connection herewith or therewith.
xvii.Manipulation of Price
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. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of
the Company, no Person acting on their behalf has, directly or indirectly, (i)
taken any action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Company or any of its
Subsidiaries to facilitate the sale or resale of any of the Securities, (ii)
sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities (other than the Placement Agent), (iii) paid or agreed to
pay to any Person any compensation for soliciting another to purchase any other
securities of the Company or any of its Subsidiaries or (iv) paid or agreed to
pay any Person for research services with respect to any securities of the
Company or any of its Subsidiaries.
xviii.U.S. Real Property Holding Corporation
. Neither the Company nor any of its Subsidiaries is, or has ever been, and so
long as any of the Securities are held by any of the Buyers, shall become, a
U.S. real property holding corporation within the meaning of Section 897 of the
Code, and the Company and each Subsidiary shall so certify upon any Buyer’s
request.
xix.Registration Eligibility
. The Company is eligible to register the Registrable Securities for resale by
the Buyers using Form S-3 promulgated under the 1933 Act.
xx.Transfer Taxes
. On the Closing Date, all stock transfer or other taxes (other than income or
similar taxes) which are required to be paid in connection with the issuance,
sale and transfer of the Securities to be sold to each Buyer hereunder will be,
or will have been, fully paid or provided for by the Company, and all laws
imposing such taxes will be or will have been complied with.
xxi.Bank Holding Company Act
. Neither the Company nor any of its Subsidiaries 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 (25%) 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.
xxii.Illegal or Unauthorized Payments; Political Contributions
. Neither the Company nor any of its Subsidiaries nor, to the best of the
Company’s knowledge (after reasonable inquiry of its officers and directors),
any of the officers, directors, employees, agents or other representatives of
the Company or any of its Subsidiaries or any other
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business entity or enterprise with which the Company or any Subsidiary is or has
been affiliated or associated, has, directly or indirectly, made or authorized
any payment, contribution or gift of money, property, or services, whether or
not in contravention of applicable law, (i) as a kickback or bribe to any Person
or (ii) to any political organization, or the holder of or any aspirant to any
elective or appointive public office except for personal political contributions
not involving the direct or indirect use of funds of the Company or any of its
Subsidiaries.
xxiii.Money Laundering
. The Company and its Subsidiaries are in compliance with, and have not
previously violated, the USA Patriot Act of 2001 and all other applicable U.S.
and non-U.S. anti-money laundering laws and regulations, including, without
limitation, the laws, regulations and Executive Orders and sanctions programs
administered by the U.S. Office of Foreign Assets Control, including, but not
limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any
regulations contained in 31 CFR, Subtitle B, Chapter V.
xxiv.Management
. Except as set forth in Schedule 3(mm) hereto, during the past five year
period, to the knowledge of the Company, no current officer or director or
current ten percent (10%) or greater stockholder of the Company or any of its
Subsidiaries has been the subject of:
e.a petition under bankruptcy laws or any other insolvency or moratorium law or
the appointment by a court of a receiver, fiscal agent or similar officer for
such Person, or any partnership in which such person was a general partner at or
within two years before the filing of such petition or such appointment, or any
corporation or business association of which such person was an executive
officer at or within two years before the time of the filing of such petition or
such appointment;
f.a conviction in a criminal proceeding or a named subject of a pending criminal
proceeding (excluding traffic violations that do not relate to driving while
intoxicated or driving under the influence);
g.any order, judgment or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining any such person from, or otherwise limiting, the following activities:
(1)Acting as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, any other person regulated by the United States Commodity Futures
Trading Commission or an associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company, bank,
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savings and loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity;
(2)Engaging in any particular type of business practice; or
(3)Engaging in any activity in connection with the purchase or sale of any
security or commodity or in connection with any violation of securities laws or
commodities laws;
h.any order, judgment or decree, not subsequently reversed, suspended or
vacated, of any authority barring, suspending or otherwise limiting for more
than sixty (60) days the right of any such person to engage in any activity
described in the preceding sub paragraph, or to be associated with persons
engaged in any such activity;
i.a finding by a court of competent jurisdiction in a civil action or by the SEC
or other authority to have violated any securities law, regulation or decree and
the judgment in such civil action or finding by the SEC or any other authority
has not been subsequently reversed, suspended or vacated; or
j.a finding by a court of competent jurisdiction in a civil action or by the
Commodity Futures Trading Commission to have violated any federal commodities
law, and the judgment in such civil action or finding has not been subsequently
reversed, suspended or vacated.
xxv.Stock Option Plans
xxvi.. Each stock option granted by the Company was granted (i) in accordance
with the terms of the applicable stock option plan of the Company and (ii) with
an exercise price at least equal to the fair market value of the Common Stock on
the date such stock option would be considered granted under GAAP and applicable
law. No stock option granted under the Company’s stock option plan has been
backdated. The Company has not knowingly granted, and there is no and has been
no policy or practice of the Company to knowingly grant, stock options prior to,
or otherwise knowingly coordinate the grant of stock options with, the release
or other public announcement of material information regarding the Company or
its Subsidiaries or their financial results or prospects.
xxvii.No Disagreements with Accountants and Lawyers
xxviii.. Other than with Wilson Sonsini Goodrich & Rosati and Ellenoff Grossman
& Schole LLP with respect to the aggregate amount of fees owed by the Company,
there are no material disagreements of any kind presently existing, or
reasonably anticipated by the Company to arise, between the Company and the
accountants and lawyers presently employed by the Company and the Company is
current with respect to any fees owed to its accountants and lawyers other than
payables listed in Schedule 3(s) which could affect the Company’s ability to
perform any of its obligations under any of the Transaction Documents. In
addition, on or prior to the date hereof, the Company had discussions with its
accountants about its financial
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statements previously filed with the SEC. Based on those discussions, the
Company has no reason to believe that it will need to restate any such financial
statements or any part thereof.
xxix.No Disqualification Events
xxx.. With respect to Securities to be offered and sold hereunder in reliance on
Rule 506(b) under the 1933 Act (“Regulation D Securities”), none of the Company,
any of its predecessors, any affiliated issuer, any director, executive officer,
other officer of the Company participating in the offering contemplated hereby,
any beneficial owner of 20% or more of the Company’s outstanding voting equity
securities, calculated on the basis of voting power, nor any promoter (as that
term is defined in Rule 405 under the 1933 Act) connected with the Company in
any capacity at the time of sale (each, an “Issuer Covered Person” and,
together, “Issuer Covered Persons”) is subject to any of the “Bad Actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a
“Disqualification Event”), except for a Disqualification Event covered by Rule
506(d)(2) or (d)(3). The Company has exercised reasonable care to determine
whether any Issuer Covered Person is subject to a Disqualification Event. The
Company has complied, to the extent applicable, with its disclosure obligations
under Rule 506(e), and has furnished to the Buyers a copy of any disclosures
provided thereunder.
xxxi.Other Covered Persons
xxxii.. The Company is not aware of any Person (other than the Placement Agent)
that has been or will be paid (directly or indirectly) remuneration for
solicitation of Buyers or potential purchasers in connection with the sale of
any Regulation D Securities.
xxxiii.No Additional Agreements
. The Company does not have any agreement or understanding with any Buyer with
respect to the transactions contemplated by the Transaction Documents other than
as specified in the Transaction Documents.
xxxiv.Public Utility Holding Act
. None of the Company nor any of its Subsidiaries is a “holding company,” or an
“affiliate” of a “holding company,” as such terms are defined in the Public
Utility Holding Act of 2005.
xxxv.Federal Power Act
. None of the Company nor any of its Subsidiaries is subject to regulation as a
“public utility” under the Federal Power Act, as amended.
xxxvi.Ranking of Notes
xxxvii.. No Indebtedness of the Company, at the Closing, will be senior to, or
pari passu with, the Notes in right of payment, whether with respect to payment
or redemptions, interest,
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damages, upon liquidation or dissolution or otherwise (except Permitted
Indebtedness (as defined in the Note) or Permitted Additional Indebtedness (as
defined in the Note)).
xxxviii.Disclosure
. The Company confirms that neither it nor any other Person acting on its behalf
has provided any of the Buyers or their agents or counsel with any information
that constitutes or could reasonably be expected to constitute material,
non-public information concerning the Company or any of its Subsidiaries, other
than the existence of the transactions contemplated by this Agreement and the
other Transaction Documents. The Company understands and confirms that each of
the Buyers will rely on the foregoing representations in effecting transactions
in securities of the Company. All disclosure provided to the Buyers regarding
the Company and its Subsidiaries, their businesses and the transactions
contemplated hereby, including the schedules to this Agreement, furnished by or
on behalf of the Company or any of its Subsidiaries is true and correct and does
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. All of
the written information furnished after the date hereof by or on behalf of the
Company or any of its Subsidiaries to each Buyer pursuant to or in connection
with this Agreement and the other Transaction Documents, taken as a whole, will
be true and correct in all material respects as of the date on which such
information is so provided and will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Each press release issued by the Company or any of its
Subsidiaries during the twelve (12) months preceding the date of this Agreement
did not at the time of release contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading. No event or circumstance has occurred or
information exists with respect to the Company or any of its Subsidiaries or its
or their business, properties, liabilities, prospects, operations (including
results thereof) or conditions (financial or otherwise), which, under applicable
law, rule or regulation, requires public disclosure at or before the date hereof
or announcement by the Company but which has not been so publicly disclosed. All
financial projections and forecasts that have been prepared by or on behalf of
the Company or any of its Subsidiaries and made available to each Buyer have
been prepared in good faith based upon reasonable assumptions and represented,
at the time each such financial projection or forecast was delivered to each
Buyer, the Company’s best estimate of future financial performance (it being
recognized that such financial projections or forecasts are not to be viewed as
facts and that the actual results during the period or periods covered by any
such financial projections or forecasts may differ from the projected or
forecasted results). The Company acknowledges and agrees that no Buyer makes or
has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 2.
4.COVENANTS.
xxxix.Best Efforts
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. Each Buyer shall use its best efforts to timely satisfy each of the covenants
hereunder and conditions to be satisfied by it as provided in Section 6 of this
Agreement. The Company shall use its best efforts to timely satisfy each of the
covenants hereunder and conditions to be satisfied by it as provided in Section
7 of this Agreement.
xl.Form D and Blue Sky
. The Company shall file a Form D with respect to the Securities as required
under Regulation D and to provide a copy thereof to each Buyer promptly after
such filing. The Company shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for, or to, qualify the
Securities for sale to the Buyers 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), and shall provide
evidence of any such action so taken to the Buyers within 15 days of the Closing
Date. Without limiting any other obligation of the Company under this Agreement,
the Company shall timely make all filings and reports relating to the offer and
sale of the Securities required under all applicable securities laws (including,
without limitation, all applicable federal securities laws and all applicable
“Blue Sky” laws), and the Company shall comply with all applicable foreign,
federal, state and local laws, statutes, rules, regulations and the like
relating to the offering and sale of the Securities to the Buyers.
xli.Reporting Status
. Until the date on which the Buyers shall have sold all of the Registrable
Securities (the “Reporting Period”), the Company shall timely file all reports
required to be filed with the SEC pursuant to the 1934 Act, and the Company
shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would no
longer require or otherwise permit such termination. The Company shall take all
actions necessary to maintain its eligibility to register the Registrable
Securities for resale by the Buyers on Form S-3.
xlii.Use of Proceeds
. The Company will use the proceeds from the sale of the Securities for general
corporate purposes, but not, directly or indirectly, for (i) the satisfaction of
any Indebtedness of the Company or any of its Subsidiaries, (ii) the redemption
or repurchase of any securities of the Company or any of its Subsidiaries, or
(iii) the settlement of any outstanding litigation.
xliii.Financial Information
. The Company agrees to send the following to each Investor (as defined in the
Registration Rights Agreement) during the Reporting Period (i) unless the
following are filed with the SEC through EDGAR and are available to the public
through the EDGAR system, within one (1) Business Day after the filing thereof
with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports on
Form 10-Q, any interim reports or any consolidated balance sheets, income
statements, stockholders’ equity statements and/or cash flow statements
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for any period other than annual, any Current Reports on Form 8-K and any
registration statements (other than on Form S-8) or amendments filed pursuant to
the 1933 Act, (ii) unless the following are either filed with the SEC through
EDGAR or are otherwise widely disseminated via a recognized news release service
(such as PR Newswire), on the same day as the release thereof, facsimile copies
of all press releases issued by the Company or any of its Subsidiaries and (iii)
unless the following are filed with the SEC through EDGAR, copies of any notices
and other information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the
stockholders.
xliv.Listing
. The Company shall promptly secure the listing or designation for quotation (as
the case may be) of all of the Registrable Securities upon each national
securities exchange and automated quotation system, if any, upon which the
Common Stock is then listed or designated for quotation (as the case may be)
(subject to official notice of issuance) and shall maintain such listing or
designation for quotation (as the case may be) of all Registrable Securities
from time to time issuable under the terms of the Transaction Documents on such
national securities exchange or automated quotation system. The Company shall
maintain the Common Stock’s listing or authorization for quotation (as the case
may be) on the Principal Market, The New York Stock Exchange, the NYSE American,
the Nasdaq Global Market or the Nasdaq Global Select Market (each, an “Eligible
Market”). Neither the Company nor any of its Subsidiaries shall take any action
which could be reasonably expected to result in the delisting or suspension of
the Common Stock on an Eligible Market. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4(f).
xlv.Fees
. The Company shall reimburse the lead Buyer for all costs and expenses incurred
by it or its affiliates in connection with the structuring, documentation,
negotiation and closing of the transactions contemplated by the Transaction
Documents (including, without limitation, as applicable, all reasonable legal
fees of outside counsel and disbursements of Kelley Drye & Warren LLP, counsel
to the lead Buyer, any other reasonable fees and expenses in connection with the
structuring, documentation, negotiation and closing of the transactions
contemplated by the Transaction Documents and due diligence and regulatory
filings in connection therewith) (the “Transaction Expenses”) and shall be
withheld by the lead Buyer from its Purchase Price at the Closing, less $10,000
previously paid by the Company to the lead Buyer which shall be credited against
any Transaction Expenses reimbursable by the Company; provided, that the Company
shall promptly reimburse Kelley Drye & Warren LLP on demand for all Transaction
Expenses not so reimbursed through such withholding at the Closing.
Notwithstanding the foregoing, in no event shall the Company be responsible for
reimbursement of Transaction Expenses in excess of $30,000 in the aggregate. The
Company shall be responsible for the payment of any placement agent’s fees,
financial advisory fees, transfer agent fees, DTC (as defined below) fees or
broker’s commissions (other than for Persons engaged by any Buyer) relating to
or arising out of the transactions contemplated hereby (including, without
limitation, any fees or commissions payable to the Placement Agent, who is the
Company’s sole placement agent in connection with
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the transactions contemplated by this Agreement). The Company shall pay, and
hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, reasonable attorneys’ fees and out-of-pocket expenses)
arising in connection with any claim relating to any such payment. Except as
otherwise set forth in the Transaction Documents, each party to this Agreement
shall bear its own expenses in connection with the sale of the Securities to the
Buyers.
xlvi.Pledge of Securities
. Notwithstanding anything to the contrary contained in this Agreement, the
Company acknowledges and agrees that the Securities may be pledged by an
Investor in connection with a bona fide margin agreement or other loan or
financing arrangement that is secured by the Securities. The pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Investor effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section 2(g) hereof; provided that an
Investor and its pledgee shall be required to comply with the provisions of
Section 2(g) hereof in order to effect a sale, transfer or assignment of
Securities to such pledgee. The Company hereby agrees to execute and deliver
such documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by a Buyer.
xlvii.Disclosure of Transactions and Other Material Information
.
k.Disclosure of Transaction. The Company shall, on or before 9:30 a.m., New York
time, on the first (1st) Business Day after the date of this Agreement, issue a
press release (the “Press Release”) reasonably acceptable to the lead Buyer
disclosing all the material terms of the transactions contemplated by the
Transaction Documents. On or before 9:30 a.m., New York time, on the first (1st)
Business Day after the date of this Agreement, the Company shall file a Current
Report on Form 8-K describing all the material terms of the transactions
contemplated by the Transaction Documents in the form required by the 1934 Act
and attaching all the material Transaction Documents (including, without
limitation, this Agreement (and all schedules to this Agreement), the form of
Notes and the form of the Registration Rights Agreement) (including all
attachments, the “8-K Filing”). From and after the filing of the 8-K Filing, the
Company shall have disclosed all material, non-public information (if any)
provided to any of the Buyers 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. In addition,
effective upon the filing of the 8-K Filing, the Company acknowledges and agrees
that any and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its Subsidiaries or any of
their respective officers, directors, affiliates, employees or agents, on the
one hand, and any of the Buyers or any of their affiliates, on the other hand,
shall terminate.
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l.Limitations on Disclosure. The Company shall not, and the Company shall cause
each of its Subsidiaries and each of its and their respective officers,
directors, employees and agents not to, provide any Buyer with any material,
non-public information regarding the Company or any of its Subsidiaries from and
after the date hereof without the express prior written consent of such Buyer
(which may be granted or withheld in such Buyer’s sole discretion). In the event
of a breach of any of the foregoing covenants, including, without limitation,
Section 4(o) of this Agreement, or any of the covenants or agreements contained
in any other Transaction Document, by the Company, any of its Subsidiaries, or
any of its or their respective officers, directors, employees and agents (as
determined in the reasonable good faith judgment of such Buyer), in addition to
any other remedy provided herein or in the Transaction Documents, such Buyer
shall have the right to make a public disclosure, in the form of a press
release, public advertisement or otherwise, of such breach or such material,
non-public information, as applicable, without the prior approval by the
Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees or agents. No Buyer shall have any liability to the
Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees, affiliates, stockholders or agents, for any such
disclosure. To the extent that the Company delivers any material, non-public
information to a Buyer without such Buyer’s consent, the Company hereby
covenants and agrees that such Buyer shall not have any duty of confidentiality
with respect to, or a duty not to trade on the basis of, such material,
non-public information. Subject to the foregoing, neither the Company, its
Subsidiaries nor any Buyer shall issue any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, the Company shall be entitled, without the prior approval of any Buyer,
to make the Press Release and any press release or other public disclosure with
respect to such transactions (i) in substantial conformity with the 8-K Filing
and contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release). Without the prior written consent of
the applicable Buyer (which may be granted or withheld in such Buyer’s sole
discretion), the Company shall not (and shall cause each of its Subsidiaries and
affiliates to not) disclose the name of such Buyer in any filing, announcement,
release or otherwise. Notwithstanding anything contained in this Agreement to
the contrary and without implication that the contrary would otherwise be true,
the Company expressly acknowledges and agrees that no Buyer shall have (unless
expressly agreed to by a particular Buyer after the date hereof in a written
definitive and binding agreement executed by the Company and such particular
Buyer (it being understood and agreed that no Buyer may bind any other Buyer
with respect thereto)), any duty of confidentiality with respect to, or a duty
not to trade on the basis of, any material, non-public information regarding the
Company or any of its Subsidiaries.
m.Other Confidential Information. Disclosure Failures; Disclosure Delay
Payments. In addition to other remedies set forth in this Section 4(i), and
without limiting anything set forth in any other Transaction Document, at any
time after the Closing Date if the Company, any of its Subsidiaries, or any of
their respective officers,
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directors, employees or agents, provides any Buyer with material non-public
information relating to the Company or any of its Subsidiaries (each, the
“Confidential Information”), the Company shall, on or prior to the applicable
Required Disclosure Date (as defined below), publicly disclose such Confidential
Information on a Current Report on Form 8-K or otherwise (each, a “Disclosure”).
From and after such Disclosure, the Company shall have disclosed all
Confidential Information provided to such Buyer 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.
In addition, effective upon such Disclosure, the Company acknowledges and agrees
that any and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its Subsidiaries or any of
their respective officers, directors, affiliates, employees or agents, on the
one hand, and any of the Buyers or any of their affiliates, on the other hand,
shall terminate. In the event that the Company fails to effect such Disclosure
on or prior to the Required Disclosure Date and such Buyer shall have possessed
Confidential Information for at least ten (10) consecutive Trading Days (each, a
“Disclosure Failure”), then, as partial relief for the damages to such Buyer by
reason of any such delay in, or reduction of, its ability to buy or sell shares
of Common Stock after such Required Disclosure Date (which remedy shall not be
exclusive of any other remedies available at law or in equity), the Company
shall pay to such Buyer an amount in cash equal to the greater of (I) two
percent (2%) of the aggregate Purchase Price and (II) the applicable Disclosure
Restitution Amount, on each of the following dates (each, a “Disclosure Delay
Payment Date”): (i) on the date of such Disclosure Failure and (ii) on every
thirty (30) day anniversary such Disclosure Failure until the earlier of (x) the
date such Disclosure Failure is cured and (y) such time as all such non-public
information provided to such Buyer shall cease to be Confidential Information
(as evidenced by a certificate, duly executed by an authorized officer of the
Company to the foregoing effect) (such earlier date, as applicable, a
“Disclosure Cure Date”). Following the initial Disclosure Delay Payment for any
particular Disclosure Failure, without limiting the foregoing, if a Disclosure
Cure Date occurs prior to any thirty (30) day anniversary of such Disclosure
Failure, then such Disclosure Delay Payment (prorated for such partial month)
shall be made on the second (2nd) Business Day after such Disclosure Cure Date.
The payments to which an Investor shall be entitled pursuant to this Section
4(l)(iii) are referred to herein as “Disclosure Delay Payments.” In the event
the Company fails to make Disclosure Delay Payments in a timely manner in
accordance with the foregoing, such Disclosure Delay Payments shall bear
interest at the rate of two percent (2%) per month (prorated for partial months)
until paid in full.
n.For the purpose of this Agreement the following definitions shall apply:
(1)“Disclosure Failure Market Price” means, as of any Disclosure Delay Payment
Date, the price computed as the quotient of (I) the sum of the five (5) highest
VWAPs (as defined in the Notes) of the Common Stock during the applicable
Disclosure Restitution Period (as defined below), divided by (II) five (5) (such
period, the “Disclosure Failure Measuring Period”). All such
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determinations to be appropriately adjusted for any share dividend, share split,
share combination, reclassification or similar transaction that proportionately
decreases or increases the Common Stock during such Disclosure Failure Measuring
Period.
(2)“Disclosure Restitution Amount” means, as of any Disclosure Delay Payment
Date, the product of (x) difference of (I) the Disclosure Failure Market Price
less (II) the lowest purchase price, per share of Common Stock, of any Common
Stock issued or issuable to such Buyer pursuant to this Agreement or any other
Transaction Documents, multiplied by (y) 10% of the aggregate daily dollar
trading volume (as reported on Bloomberg (as defined in the Notes)) of the
Common Stock on the Principal Market for each Trading Day (as defined in the
Notes) either (1) with respect to the initial Disclosure Delay Payment Date,
during the period commencing on the applicable Required Disclosure Date through
and including the Trading Day immediately prior to the initial Disclosure Delay
Payment Date or (2) with respect to each other Disclosure Delay Payment Date,
during the period commencing the immediately preceding Disclosure Delay Payment
Date through and including the Trading Day immediately prior to such applicable
Disclosure Delay Payment Date (such applicable period, the “Disclosure
Restitution Period”).
(3)“Required Disclosure Date” means (x) if such Buyer authorized the delivery of
such Confidential Information, either (I) if the Company and such Buyer have
mutually agreed upon a date (as evidenced by an e-mail or other writing) of
Disclosure of such Confidential Information, such agreed upon date or (II)
otherwise, the seventh (7th) calendar day after the date such Buyer first
received any Confidential Information or (y) if such Buyer did not authorize the
delivery of such Confidential Information, the first (1st) Business Day after
such Buyer’s receipt of such Confidential Information.
xlviii.Additional Registration Statements
. Until the Applicable Date (as defined below) and at any time thereafter while
any Registration Statement is not effective or the prospectus contained therein
is not available for use or any Current Public Information Failure (as defined
in the Registration Rights Agreement) exists, the Company shall not file a
registration statement or an offering statement under the 1933 Act relating to
securities that are not the Registrable Securities (other than a registration
statement on Form S-8 or such supplements or amendments to registration
statements that are outstanding and have been declared effective by the SEC as
of the date hereof (solely to the extent necessary to keep such registration
statements effective and available and not with respect to any Subsequent
Placement)). “Applicable Date” means the earlier of (x) the first date on which
the resale by the Buyers of all the Registrable Securities required to be filed
on the initial Registration Statement (as defined in the Registration Rights
Agreement) pursuant to the Registration Rights Agreement is declared effective
by the SEC (and each prospectus contained therein is available for use on such
date) or (y) the first date on which all of the Registrable
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Securities are eligible to be resold by the Buyers pursuant to Rule 144 (or, if
a Current Public Information Failure has occurred and is continuing, such later
date after which the Company has cured such Current Public Information Failure).
xlix.Additional Issuance of Securities
. So long as any Buyer beneficially owns any Securities, the Company will not,
without the prior written consent of the Required Holders, issue any Notes
(other than to the Buyers as contemplated hereby) and the Company shall not
issue any other securities that would cause a breach or default under the Notes.
The Company agrees that for the period commencing on the date hereof and ending
on the date immediately following the 60th Trading Day after the Applicable Date
(provided that such period shall be extended by the number of calendar days
during such period and any extension thereof contemplated by this proviso on
which any Registration Statement is not effective or any prospectus contained
therein is not available for use or any Current Public Information Failure
exists) (the “Restricted Period”), neither the Company nor any of its
Subsidiaries shall directly or indirectly: (I) issue, offer, sell, grant any
option or right to purchase, or otherwise dispose of (or announce any issuance,
offer, sale, grant of any option or right to purchase or other disposition of)
any equity security or any equity-linked or related security (including, without
limitation, any “equity security” (as that term is defined under Rule 405
promulgated under the 1933 Act), any Convertible Securities (as defined below),
any debt, any preferred stock or any purchase rights) (any such issuance, offer,
sale, grant, disposition or announcement (whether occurring during the
Restricted Period or at any time thereafter) is referred to as a “Subsequent
Placement”) or (II) offer, sell, announce or consummate any Subsequent Placement
at a New Issuance Price (as defined in the Notes) less than the Conversion Price
(as defined in the Notes) as of the Closing Date (as adjusted for stock splits,
stock dividends, stock combinations, recapitalizations and similar events).
Notwithstanding the foregoing, this Section 4(k) shall not apply in respect of
the issuance of (i) shares of Common Stock or standard options to purchase
Common Stock to directors, officers or employees of the Company in their
capacity as such pursuant to an Approved Stock Plan (as defined below), provided
that (1) all such issuances (taking into account the shares of Common Stock
issuable upon exercise of such options) after the date hereof pursuant to this
clause (i) do not, in the aggregate, exceed more than 15% of the Common Stock
issued and outstanding immediately prior to the date hereof and (2) the exercise
price of any such options is not lowered, none of such options are amended to
increase the number of shares issuable thereunder and none of the terms or
conditions of any such options are otherwise materially changed in any manner
that adversely affects any of the Buyers; (ii) shares of Common Stock issued
upon the conversion or exercise of Convertible Securities (other than standard
options to purchase Common Stock issued pursuant to an Approved Stock Plan that
are covered by clause (i) above) issued prior to the date hereof, provided that
the conversion, exercise or other method of issuance (as the case may be) of any
such Convertible Security is made solely pursuant to the conversion, exercise or
other method of issuance (as the case may be) provisions of such Convertible
Security that were in effect on the date immediately prior to the date of this
Agreement, the conversion, exercise or issuance price of any such Convertible
Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Stock Plan that are covered by clause (i) above) is not lowered,
none of such Convertible Securities (other than standard options to purchase
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Common Stock issued pursuant to an Approved Stock Plan that are covered by
clause (i) above) are amended to increase the number of shares issuable
thereunder and none of the terms or conditions of any such Convertible
Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Stock Plan that are covered by clause (i) above) are otherwise
materially changed in any manner that adversely affects any of the Buyers; (iii)
the Conversion Shares (iv) any shares of Common Stock issued or issuable in
connection with vendor services and/or settlement of litigation or other claims
up to $5 million in the aggregate which in no event shall include any issuances
of securities that directly and/or indirectly will be used to raise capital,
which must have been approved by a majority of the disinterested directors of
the Company and (v) any shares of Common Stock issued or issuable in connection
with any bona fide strategic or commercial alliances, acquisitions, mergers,
licensing arrangements, and strategic partnerships, provided, that (x) the
primary purpose of such issuance is not to raise capital as reasonably
determined, and (y) the purchaser or acquirer or recipient of the securities in
such issuance solely consists of either (A) the actual participants in such
strategic or commercial alliance, strategic or commercial licensing arrangement
or strategic or commercial partnership, (B) the actual owners of such assets or
securities acquired in such acquisition or merger or (C) the stockholders,
partners, employees, consultants, officers, directors or members of the
foregoing Persons, in each case, which is, itself or through its subsidiaries,
an operating company or an owner of an asset, in a business synergistic with the
business of the Company and shall provide to the Company additional benefits in
addition to the investment of funds, and (z) the number or amount of securities
issued to such Persons by the Company shall not be disproportionate to each such
Person’s actual participation in (or fair market value of the contribution to)
such strategic or commercial alliance or strategic or commercial partnership or
ownership of such assets or securities to be acquired by the Company, as
applicable (each of the foregoing in clauses (i) through (v), collectively the
“Excluded Securities”). “Approved Stock Plan” means any employee benefit plan
which has been approved by the board of directors of the Company prior to or
subsequent to the date hereof pursuant to which shares of Common Stock and
standard options to purchase Common Stock may be issued to any employee, officer
or director for services provided to the Company in their capacity as such.
“Convertible Securities” means any capital stock or other security of the
Company or any of its Subsidiaries that is at any time and under any
circumstances directly or indirectly convertible into, exercisable or
exchangeable for, or which otherwise entitles the holder thereof to acquire, any
capital stock or other security of the Company (including, without limitation,
Common Stock) or any of its Subsidiaries.
l.Reservation of Shares
. So long as any of the Notes remain outstanding, the Company shall take all
action necessary to at all times have authorized, and reserved for the purpose
of issuance, no less than 300% of the maximum number of shares of Common Stock
issuable upon conversion of all the Notes then outstanding (assuming for
purposes hereof that (i) the Notes are convertible at the Alternate Conversion
Price assuming an Alternate Conversion Date as of the applicable date of
determination, (ii) interest on the Notes shall accrue through December 31, 2021
and will be converted in shares of Common Stock at a conversion price equal to
the Alternate Conversion Price assuming an Alternate Conversion Date as of the
applicable date of determination and (iii)
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any such conversion shall not take into account any limitations on the
conversion of the Notes set forth in the Notes) (collectively, the “Required
Reserve Amount”); provided that at no time shall the number of shares of Common
Stock reserved pursuant to this Section 4(l) be reduced other than
proportionally in connection with any conversion, and/or redemption, as
applicable of Notes. If at any time the number of shares of Common Stock
authorized and reserved for issuance is not sufficient to meet the Required
Reserve Amount, the Company will promptly take all corporate action necessary to
authorize and reserve a sufficient number of shares, including, without
limitation, calling a special meeting of stockholders to authorize additional
shares to meet the Company’s obligations pursuant to the Transaction Documents,
in the case of an insufficient number of authorized shares, obtain stockholder
approval of an increase in such authorized number of shares, and voting the
management shares of the Company in favor of an increase in the authorized
shares of the Company to ensure that the number of authorized shares is
sufficient to meet the Required Reserve Amount.
li.Conduct of Business
. The business of the Company and its Subsidiaries shall not be conducted in
violation of any law, ordinance or regulation of any Governmental Entity, except
where such violations would not reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect.
lii.Other Notes; Variable Securities
So long as any Notes remain outstanding, the Company and each Subsidiary shall
be prohibited from effecting or entering into an agreement to effect any
Subsequent Placement involving a Variable Rate Transaction. “Variable Rate
Transaction” means a transaction in which the Company or any Subsidiary (i)
issues or sells any Convertible Securities either (A) at a conversion, exercise
or exchange rate or other price that is based upon and/or varies with the
trading prices of or quotations for the shares of Common Stock at any time after
the initial issuance of such Convertible Securities, or (B) with a conversion,
exercise or exchange price that is subject to being reset at some future date
after the initial issuance of such Convertible Securities or upon the occurrence
of specified or contingent events directly or indirectly related to the business
of the Company or the market for the Common Stock or (ii) enters into any
agreement (including, without limitation, an equity line of credit or an
“at-the-market” offering) whereby the Company or any Subsidiary may sell
securities at a future determined price (other than standard and customary
“preemptive” or “participation” rights). Each Buyer shall be entitled to obtain
injunctive relief against the Company and its Subsidiaries to preclude any such
issuance, which remedy shall be in addition to any right to collect damages.
liii.Participation Right
. At any time on or prior to the second anniversary of the Closing Date, neither
the Company nor any of its Subsidiaries shall, directly or indirectly, effect
any Subsequent Placement unless the Company shall have first complied with this
Section 4(o). The Company acknowledges and agrees that the right set forth in
this Section 4(o) is a right granted by the
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Company, separately, to each Buyer. The Company acknowledges and agrees that the
right set forth in this Section 4(o) is a right granted by the Company,
separately, to each Buyer.
o.At least five (5) Trading Days prior to any proposed or intended Subsequent
Placement, the Company shall deliver to each Buyer a written notice (each such
notice, a “Pre-Notice”), which Pre-Notice shall not contain any information
(including, without limitation, material, non-public information) other than:
(A) if the proposed Offer Notice (as defined below) constitutes or contains
material, non-public information, a statement asking whether the Investor is
willing to accept material non-public information or (B) if the proposed Offer
Notice does not constitute or contain material, non-public information, (x) a
statement that the Company proposes or intends to effect a Subsequent Placement,
(y) a statement that the statement in clause (x) above does not constitute
material, non-public information and (z) a statement informing such Buyer that
it is entitled to receive an Offer Notice (as defined below) with respect to
such Subsequent Placement upon its written request. Upon the written request of
a Buyer within three (3) Trading Days after the Company’s delivery to such Buyer
of such Pre-Notice, and only upon a written request by such Buyer, the Company
shall promptly, but no later than one (1) Trading Day after such request,
deliver to such Buyer an irrevocable written notice (the “Offer Notice”) of any
proposed or intended issuance or sale or exchange (the “Offer”) of the
securities being offered (the “Offered Securities”) in a Subsequent Placement,
which Offer Notice shall (A) identify and describe the Offered Securities, (B)
describe the price and other terms upon which they are to be issued, sold or
exchanged, and the number or amount of the Offered Securities to be issued, sold
or exchanged, (C) identify the Persons (if known) to which or with which the
Offered Securities are to be offered, issued, sold or exchanged and (D) offer to
issue and sell to or exchange with such Buyer in accordance with the terms of
the Offer such Buyer’s pro rata portion of 30% of the Offered Securities,
provided that the number of Offered Securities which such Buyer shall have the
right to subscribe for under this Section 4(o) shall be (x) based on such
Buyer’s pro rata portion of the aggregate original principal amount of the Notes
purchased hereunder by all Buyers (the “Basic Amount”), and (y) with respect to
each Buyer that elects to purchase its Basic Amount, any additional portion of
the Offered Securities attributable to the Basic Amounts of other Buyers as such
Buyer shall indicate it will purchase or acquire should the other Buyers
subscribe for less than their Basic Amounts (the “Undersubscription Amount”),
which process shall be repeated until each Buyer shall have an opportunity to
subscribe for any remaining Undersubscription Amount, but such process shall not
extend past the tenth (10th) Business Day following the Offer Notice (unless the
Company delivers an additional Offering Notice or amends or modifies the terms
or conditions of such Subsequent Placement).
p.To accept an Offer, in whole or in part, such Buyer must deliver a written
notice to the Company prior to the end of the fifth (5th) Business Day after
such Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the
portion of such Buyer’s Basic Amount that such Buyer elects to purchase and, if
such Buyer shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Buyer
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elects to purchase (in either case, the “Notice of Acceptance”). If the Basic
Amounts subscribed for by all Buyers are less than the total of all of the Basic
Amounts, then each Buyer who has set forth an Undersubscription Amount in its
Notice of Acceptance shall be entitled to purchase, in addition to the Basic
Amounts subscribed for, the Undersubscription Amount it has subscribed for;
provided, however, if the Undersubscription Amounts subscribed for exceed the
difference between the total of all the Basic Amounts and the Basic Amounts
subscribed for (the “Available Undersubscription Amount”), each 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 Buyer bears to the total Basic Amounts of all Buyers that have subscribed
for Undersubscription Amounts, subject to rounding by the Company to the extent
it deems reasonably necessary. Notwithstanding the foregoing, if the Company
desires to modify or amend the terms and conditions of the Offer prior to the
expiration of the Offer Period, the Company may deliver to each Buyer a new
Offer Notice and the Offer Period shall expire on the fifth (5th) Business Day
after such Buyer’s receipt of such new Offer Notice.
q.The Company shall have five (5) Business Days from the expiration of the Offer
Period above (A) to offer, issue, sell or exchange all or any part of such
Offered Securities as to which a Notice of Acceptance has not been given by a
Buyer (the “Refused Securities”) pursuant to a definitive agreement(s) (the
“Subsequent Placement Agreement”), but only to the offerees described in the
Offer Notice (if so described therein) and only upon terms and conditions
(including, without limitation, unit prices and interest rates) that are not
more favorable to the acquiring Person or Persons or less favorable to the
Company than those set forth in the Offer Notice and (B) to publicly announce
(x) the execution of such Subsequent Placement Agreement, and (y) either (I) the
consummation of the transactions contemplated by such Subsequent Placement
Agreement or (II) the termination of such Subsequent Placement Agreement, which
shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent
Placement Agreement and any documents contemplated therein filed as exhibits
thereto.
r.In the event the Company shall propose to sell less than all the Refused
Securities (any such sale to be in the manner and on the terms specified in
Section 4(o)(iii) above), then each Buyer may, at its sole option and in its
sole discretion, withdraw its Notice of Acceptance or reduce the number or
amount of the Offered Securities specified in its Notice of Acceptance to an
amount that shall be not less than the number or amount of the Offered
Securities that such Buyer elected to purchase pursuant to Section 4(o)(ii)
above multiplied by a fraction, (i) the numerator of which shall be the number
or amount of Offered Securities the Company actually proposes to issue, sell or
exchange (including Offered Securities to be issued or sold to Buyers pursuant
to this Section 4(o) prior to such reduction) and (ii) the denominator of which
shall be the original amount of the Offered Securities. In the event that any
Buyer so elects to reduce the number or amount of Offered Securities specified
in its Notice of Acceptance, the Company may not issue, sell or exchange more
than the reduced number or amount of the Offered Securities
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unless and until such securities have again been offered to the Buyers in
accordance with Section 4(o)(i) above.
s.Upon the closing of the issuance, sale or exchange of all or less than all of
the Refused Securities, such Buyer shall acquire from the Company, and the
Company shall issue to such Buyer, the number or amount of Offered Securities
specified in its Notice of Acceptance, as reduced pursuant to Section 4(o)(iv)
above if such Buyer has so elected, upon the terms and conditions specified in
the Offer. The purchase by such Buyer of any Offered Securities is subject in
all cases to the preparation, execution and delivery by the Company and such
Buyer of a separate purchase agreement relating to such Offered Securities
reasonably satisfactory in form and substance to such Buyer and its counsel.
t.Any Offered Securities not acquired by a Buyer or other Persons in accordance
with this Section 4(o) may not be issued, sold or exchanged until they are again
offered to such Buyer under the procedures specified in this Agreement.
u.The Company and each Buyer agree that if any Buyer elects to participate in
the Offer, (x) neither the Subsequent Placement Agreement with respect to such
Offer nor any other transaction documents related thereto (collectively, the
“Subsequent Placement Documents”) shall include any term or provision whereby
such Buyer shall be required to agree to any restrictions on trading as to any
securities of the Company or be required to consent to any amendment to or
termination of, or grant any waiver, release or the like under or in connection
with, any agreement previously entered into with the Company or any instrument
received from the Company, and (y) any registration rights set forth in such
Subsequent Placement Documents shall be similar in all material respects to the
registration rights contained in the Registration Rights Agreement.
v.Notwithstanding anything to the contrary in this Section 4(o) and unless
otherwise agreed to by such Buyer, the Company shall either confirm in writing
to such Buyer that the transaction with respect to the Subsequent Placement has
been abandoned or shall publicly disclose its intention to issue the Offered
Securities, in either case, in such a manner such that such Buyer will not be in
possession of any material, non-public information, by the fifth (5th) Business
Day following delivery of the Offer Notice. If by such fifth (5th) Business Day,
no public disclosure regarding a transaction with respect to the Offered
Securities has been made, and no notice regarding the abandonment of such
transaction has been received by such Buyer, such transaction shall be deemed to
have been abandoned and such Buyer shall not be in possession of any material,
non-public information with respect to the Company or any of its Subsidiaries.
Should the Company decide to pursue such transaction with respect to the Offered
Securities, the Company shall provide such Buyer with another Offer Notice and
such Buyer will again have the right of participation set forth in this Section
4(o). The Company shall not be permitted to deliver more than one such Offer
Notice to such Buyer in any sixty (60) day period, except as expressly
contemplated by the last sentence of Section 4(o)(ii).
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w.The restrictions contained in this Section 4(o) shall not apply in connection
with the issuance of any Excluded Securities. The Company shall not circumvent
the provisions of this Section 4(o) by providing terms or conditions to one
Buyer that are not provided to all.
liv.Dilutive Issuances
. For so long as any Notes remain outstanding, the Company shall not, in any
manner, enter into or affect any Dilutive Issuance (as defined in the Notes) if
the effect of such Dilutive Issuance is to cause the Company to be required to
issue upon conversion of any Notes any shares of Common Stock in excess of that
number of shares of Common Stock which the Company may issue upon conversion of
the Notes without breaching the Company’s obligations under the rules or
regulations of the Principal Market.
lv.Passive Foreign Investment Company
. The Company shall conduct its business, and shall cause its Subsidiaries to
conduct their respective businesses, in such a manner as will ensure that the
Company will not be deemed to constitute a passive foreign investment company
within the meaning of Section 1297 of the Code.
lvi.Restriction on Redemption and Cash Dividends
. So long as any Notes are outstanding, the Company shall not, directly or
indirectly, redeem, or declare or pay any cash dividend or distribution on, any
securities of the Company without the prior express written consent of the
Buyers.
lvii.Corporate Existence
. So long as any Buyer beneficially owns any Notes, the Company shall not be
party to any Fundamental Transaction (as defined in the Notes) unless the
Company is in compliance with the applicable provisions governing Fundamental
Transactions set forth in the Notes.
lviii.Stock Splits
. Until the Notes and all notes issued pursuant to the terms thereof are no
longer outstanding, the Company shall not effect any stock combination, reverse
stock split or other similar transaction (or make any public announcement or
disclosure with respect to any of the foregoing) without the prior written
consent of the Required Holders (as defined below).
lix.Conversion Procedures. The form of Conversion Notice (as defined in the
Notes) included in the Notes sets forth the totality of the procedures required
of the Buyers in order to convert the Notes. Except as provided in Section 5(d),
no additional legal opinion, other information or instructions shall be required
of the Buyers to convert their Notes. The Company shall honor conversions of the
Notes and shall deliver the Conversion Shares in accordance with the terms,
conditions and time periods set forth in the Notes.
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lx.Regulation M
. The Company will not take any action prohibited by Regulation M under the 1934
Act, in connection with the distribution of the Securities contemplated hereby.
lxi.General Solicitation
lxii.. None of the Company, any of its affiliates (as defined in Rule 501(b)
under the 1933 Act) or any person acting on behalf of the Company or such
affiliate will solicit any offer to buy or offer or sell the Securities by means
of any form of general solicitation or general advertising within the meaning of
Regulation D, including: (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar medium or
broadcast over television or radio; and (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
lxiii.Integration
lxiv.. None of the Company, any of its affiliates (as defined in Rule 501(b)
under the 1933 Act), or any person acting on behalf of the Company or such
affiliate will sell, offer for sale, or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the 1933 Act) which will be
integrated with the sale of the Securities in a manner which would require the
registration of the Securities under the 1933 Act or require stockholder
approval under the rules and regulations of the Principal Market and the Company
will take all action that is appropriate or necessary to assure that its
offerings of other securities will not be integrated for purposes of the 1933
Act or the rules and regulations of the Principal Market, with the issuance of
Securities contemplated hereby.
lxv.Notice of Disqualification Events
i.. The Company will notify the Buyers in writing, prior to the Closing Date of
(i) any Disqualification Event relating to any Issuer Covered Person and (ii)
any event that would, with the passage of time, become a Disqualification Event
relating to any Issuer Covered Person.
ii.Stockholder Approval
. The Company shall provide each stockholder entitled to vote at an annual or
special meeting of stockholders of the Company (the “Stockholder Meeting”),
which shall be promptly called and held not later than December 31, 2020 (the
“Stockholder Meeting Deadline”), a proxy statement, in a form reasonably
acceptable to the lead Buyer and Kelley Drye & Warren LLP, at the expense of the
Company, with the Company obligated to reimburse the expenses of Kelley Drye &
Warren LLP incurred in connection therewith in an amount not exceed $5,000,
soliciting each such stockholder’s affirmative vote at the Stockholder Meeting
for approval of resolutions (“Stockholder Resolutions”) providing for the
issuance of the Securities (as defined herein) in compliance with the rules and
regulations of the Principal Market (“Stockholder Approval”, and the date the
Stockholder Approval is obtained, the “Stockholder Approval Date”), and the
Company shall use its reasonable best efforts to solicit its stockholders’
approval
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of such resolutions and to cause the Board of Directors of the Company to
recommend to the stockholders that they approve such resolutions. The Company
shall be obligated to seek to obtain the Stockholder Approval by the Stockholder
Meeting Deadline. If, despite the Company’s reasonable best efforts the
Stockholder Approval is not obtained on or prior to the Stockholder Meeting
Deadline, the Company shall cause an additional Stockholder Meeting to be held
on or prior to June 30, 2021. If, despite the Company’s reasonable best efforts
the Stockholder Approval is not obtained after such subsequent stockholder
meetings, the Company shall cause an additional Stockholder Meeting to be held
quarterly thereafter until such Stockholder Approval is obtained.
iii.Closing Documents
. On or prior to fourteen (14) calendar days after the Closing Date, the Company
agrees to deliver, or cause to be delivered, to each Buyer and Kelley Drye &
Warren LLP a complete closing set of the executed Transaction Documents,
Securities and any other document required to be delivered to any party pursuant
to Section 7 hereof or otherwise.
5.REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.
iv.Register
. The Company shall maintain at its principal executive offices (or such other
office or agency of the Company as it may designate by notice to each holder of
Securities), a register for the Notes in which the Company shall record the name
and address of the Person in whose name the Notes have been issued (including
the name and address of each transferee), the principal amount of the Notes held
by such Person, the number of Conversion Shares issuable pursuant to the terms
of the Notes held by such Person. The Company shall keep the register open and
available at all times during business hours for inspection of any Buyer or its
legal representatives.
v.Transfer Agent Instructions
. The Company shall issue irrevocable instructions to its transfer agent and any
subsequent transfer agent (as applicable, the “Transfer Agent”) in a form
acceptable to each of the Buyers (the “Irrevocable Transfer Agent Instructions”)
to issue certificates or credit shares to the applicable balance accounts at The
Depository Trust Company (“DTC”), registered in the name of each Buyer or its
respective nominee(s), for the Conversion Shares in such amounts as specified
from time to time by each Buyer to the Company upon conversion of the Notes. The
Company represents and warrants that no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section 5(b), and stop transfer
instructions to give effect to Section 2(g) hereof, will be given by the Company
to its transfer agent with respect to the Securities, and that the Securities
shall otherwise be freely transferable on the books and records of the Company,
as applicable, to the extent provided in this Agreement and the other
Transaction Documents. If a Buyer effects a sale, assignment or transfer of the
Securities in accordance with Section 2(g), the Company shall permit the
transfer and shall promptly instruct its transfer agent to issue one or more
certificates or credit shares to the applicable balance
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accounts at DTC in such name and in such denominations as specified by such
Buyer to effect such sale, transfer or assignment. In the event that such sale,
assignment or transfer involves Conversion Shares sold, assigned or transferred
pursuant to an effective registration statement or in compliance with Rule 144,
the transfer agent shall issue such shares to such Buyer, assignee or transferee
(as the case may be) without any restrictive legend in accordance with
Section 5(d) below. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to a Buyer. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Section 5(b) will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this Section 5(b), that
a Buyer shall be entitled, in addition to all other available remedies, to an
order and/or injunction restraining any breach and requiring immediate issuance
and transfer, without the necessity of showing economic loss and without any
bond or other security being required. The Company shall cause its counsel to
issue the legal opinion referred to in the Irrevocable Transfer Agent
Instructions to the Company’s transfer agent on each Effective Date (as defined
in the Registration Rights Agreement). Any fees (with respect to the transfer
agent, counsel to the Company or otherwise) associated with the issuance of such
opinion or the removal of any legends on any of the Securities shall be borne by
the Company.
vi.Legends
. Each Buyer understands that the Securities have been issued (or will be issued
in the case of the Conversion Shares) pursuant to an exemption from registration
or qualification under the 1933 Act and applicable state securities laws, and
except as set forth below, the Securities 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):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE [HAVE BEEN][THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER
(IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE
TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.]
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vii.Removal of Legends
. Certificates evidencing Securities shall not be required to contain the legend
set forth in Section 5(c) above or any other legend (i) while a registration
statement (including a Registration Statement) covering the resale of such
Securities is effective under the 1933 Act, (ii) following any sale of such
Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of
the Company), (iii) if such Securities are eligible to be sold, assigned or
transferred under Rule 144 (provided that a Buyer provides the Company with
reasonable assurances that such Securities are eligible for sale, assignment or
transfer under Rule 144 which shall not include an opinion of Buyer’s counsel),
(iv) in connection with a sale, assignment or other transfer (other than under
Rule 144), provided that such Buyer provides the Company with an opinion of
counsel to such Buyer, in a generally acceptable form, to the effect that such
sale, assignment or transfer of the Securities may be made without registration
under the applicable requirements of the 1933 Act or (v) if such legend is not
required under applicable requirements of the 1933 Act (including, without
limitation, controlling judicial interpretations and pronouncements issued by
the SEC). If a legend is not required pursuant to the foregoing, the Company
shall no later than two (2) Trading Days (or such earlier date as required
pursuant to the 1934 Act or other applicable law, rule or regulation for the
settlement of a trade initiated on the date such Buyer delivers such legended
certificate representing such Securities to the Company) following the delivery
by a Buyer to the Company or the transfer agent (with notice to the Company) of
a legended certificate representing such Securities (endorsed or with stock
powers attached, signatures guaranteed, and otherwise in form necessary to
affect the reissuance and/or transfer, if applicable), together with any other
deliveries from such Buyer as may be required above in this Section 5(d), as
directed by such Buyer, either: (A) provided that the Company’s transfer agent
is participating in the DTC Fast Automated Securities Transfer Program and such
Securities are Conversion Shares, credit the aggregate number of shares of
Common Stock to which such Buyer shall be entitled to such Buyer’s or its
designee’s balance account with DTC through its Deposit/Withdrawal at Custodian
system or (B) if the Company’s transfer agent is not participating in the DTC
Fast Automated Securities Transfer Program, issue and deliver (via reputable
overnight courier) to such Buyer, a certificate representing such Securities
that is free from all restrictive and other legends, registered in the name of
such Buyer or its designee (the date by which such credit is so required to be
made to the balance account of such Buyer’s or such Buyer’s designee with DTC or
such certificate is required to be delivered to such Buyer pursuant to the
foregoing is referred to herein as the “Required Delivery Date”, and the date
such shares of Common Stock are actually delivered without restrictive legend to
such Buyer or such Buyer’s designee with DTC, as applicable, the “Share Delivery
Date”). The Company shall be responsible for any transfer agent fees or DTC fees
with respect to any issuance of Securities or the removal of any legends with
respect to any Securities in accordance herewith.
viii.Failure to Timely Deliver; Buy-In
. If the Company fails to fail, for any reason or for no reason, to issue and
deliver (or cause to be delivered) to a Buyer (or its designee) by the Required
Delivery Date, either (I) if the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, a certificate for the number of
Conversion Shares to which such Buyer is entitled and register such
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Conversion Shares on the Company’s share register or, if the Transfer Agent is
participating in the DTC Fast Automated Securities Transfer Program, to credit
the balance account of such Buyer or such Buyer’s designee with DTC for such
number of Conversion Shares submitted for legend removal by such Buyer pursuant
to Section 5(d) above or (II) if the Registration Statement covering the resale
of the Conversion Shares submitted for legend removal by such Buyer pursuant to
Section 5(d) above (the “Unavailable Shares”) is not available for the resale of
such Unavailable Shares and the Company fails to promptly, but in no event later
than as required pursuant to the Registration Rights Agreement (x) so notify
such Buyer and (y) deliver the Conversion Shares electronically without any
restrictive legend by crediting such aggregate number of Conversion Shares
submitted for legend removal by such Buyer pursuant to Section 5(d) above to
such Buyer’s or its designee’s balance account with DTC through its
Deposit/Withdrawal At Custodian system (the event described in the immediately
foregoing clause (II) is hereinafter referred as a “Notice Failure” and together
with the event described in clause (I) above, a “Delivery Failure”), then, in
addition to all other remedies available to such Buyer, the Company shall pay in
cash to such Buyer on each day after the Share Delivery Date and during such
Delivery Failure an amount equal to 2% of the product of (A) the sum of the
number of shares of Common Stock not issued to such Buyer on or prior to the
Required Delivery Date and to which such Buyer is entitled, and (B) any trading
price of the Common Stock selected by such Buyer in writing as in effect at any
time during the period beginning on the date of the delivery by such Buyer to
the Company of the applicable Conversion Shares and ending on the applicable
Share Delivery Date. In addition to the foregoing, if on or prior to the
Required Delivery Date either (I) if the Transfer Agent is not participating in
the DTC Fast Automated Securities Transfer Program, the Company shall fail to
issue and deliver a certificate to a Buyer and register such shares of Common
Stock on the Company’s share register or, if the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program, credit the balance
account of such Buyer or such Buyer’s designee with DTC for the number of shares
of Common Stock to which such Buyer submitted for legend removal by such Buyer
pursuant to Section 5(d) above (ii) below or (II) a Notice Failure occurs, and
if on or after such Trading Day such Buyer purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by such Buyer of shares of Common Stock submitted for legend removal by
such Buyer pursuant to Section 5(d) above that such Buyer is entitled to receive
from the Company (a “Buy-In”), then the Company shall, within two (2) Trading
Days after such Buyer’s request and in such Buyer’s discretion, either (i) pay
cash to such Buyer in an amount equal to such Buyer’s total purchase price
(including brokerage commissions and other out-of-pocket expenses, if any, for
the shares of Common Stock so purchased) (the “Buy-In Price”), at which point
the Company’s obligation to so deliver such certificate or credit such Buyer’s
balance account shall terminate and such shares shall be cancelled, or (ii)
promptly honor its obligation to so deliver to such Buyer a certificate or
certificates or credit the balance account of such Buyer or such Buyer’s
designee with DTC representing such number of shares of Common Stock that would
have been so delivered if the Company timely complied with its obligations
hereunder and pay cash to such Buyer in an amount equal to the excess (if any)
of the Buy-In Price over the product of (A) such number of shares of Conversion
Shares that the Company was required to deliver to such Buyer by the Required
Delivery Date multiplied by (B) the lowest Closing Sale Price (as defined in the
Notes) of the Common Stock on any Trading Day during the period commencing on
the date of the delivery by such Buyer to the Company of the applicable
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Conversion Shares and ending on the date of such delivery and payment under this
clause (ii). Nothing shall limit such Buyer’s right to pursue any other remedies
available to it hereunder, at law or in equity, including, without limitation, a
decree of specific performance and/or injunctive relief with respect to the
Company’s failure to timely deliver certificates representing shares of Common
Stock (or to electronically deliver such shares of Common Stock) as required
pursuant to the terms hereof. Notwithstanding anything herein to the contrary,
with respect to any given Notice Failure and/or Delivery Failure, this Section
5(e) shall not apply to the applicable Buyer the extent the Company has already
paid such amounts in full to such Buyer with respect to such Notice Failure
and/or Delivery Failure, as applicable, pursuant to the analogous sections of
the Note held by such Buyer.
ix.FAST Compliance. While any Notes remain outstanding, the Company shall
maintain a transfer agent that participates in the DTC Fast Automated Securities
Transfer Program.
6.CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
x.The obligation of the Company hereunder to issue and sell the Notes to each
Buyer at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for the Company’s sole benefit and may be waived by the Company at any time in
its sole discretion by providing each Buyer with prior written notice thereof:

x.Such Buyer shall have executed each of the other Transaction Documents to
which it is a party and delivered the same to the Company.
y.Such Buyer and each other Buyer shall have delivered to the Company the
Purchase Price (less, in the case of any Buyer, the amounts withheld pursuant to
Section 4(g)) for the Note being purchased by such Buyer at the Closing by wire
transfer of immediately available funds in accordance with the Flow of Funds
Letter.
z.The representations and warranties of such Buyer shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though originally made at that time (except for representations and warranties
that speak as of a specific date, which shall be true and correct as of such
specific date), and such Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by such Buyer at or
prior to the Closing Date.
7.CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.
xi.The obligation of each Buyer hereunder to purchase its Note at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for each Buyer’s sole
benefit and may be waived by such Buyer at any time in its sole discretion by
providing the Company with prior written notice thereof:

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aa.The Company shall have duly executed and delivered to such Buyer each of the
Transaction Documents to which it is a party and the Company shall have duly
executed and delivered to such Buyer a Note in such original principal amount as
is set forth across from such Buyer’s name in column (3) of the Schedule of
Buyers, as being purchased by such Buyer at the Closing pursuant to this
Agreement.
ab.Such Buyer shall have received the opinion of Winstead PC, the Company’s
counsel, dated as of the Closing Date, addressed to such Buyer and the Placement
Agent in the form acceptable to such Buyer.
ac.The Company shall have delivered to such Buyer a copy of the Irrevocable
Transfer Agent Instructions, in the form acceptable to such Buyer, which
instructions shall have been delivered to and acknowledged in writing by the
Company’s transfer agent.
ad.[Intentionally Omitted].
ae.The Company shall have delivered to such Buyer a certificate evidencing the
Company’s qualification as a foreign corporation issued by the Secretary of
State (or comparable office) of each jurisdiction in which the Company conducts
business and is required to so qualify, as of a date within ten (10) days of the
Closing Date.
af.The Company shall have delivered to such Buyer a certified copy of the
Certificate of Incorporation as certified by the Delaware Secretary of State
within ten (10) days of the Closing Date.
ag.The Company shall have delivered to such Buyer a certificate, in the form
acceptable to such Buyer, executed by the Secretary of the Company and dated as
of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as
adopted by the Company’s board of directors in a form reasonably acceptable to
such Buyer, (ii) the Certificate of Incorporation of the Company and (iii) the
Bylaws of the Company, each as in effect at the Closing.
ah.Each and every representation and warranty of the Company shall be true and
correct as of the date when made and as of the Closing Date as though originally
made at that time (except for representations and warranties that speak as of a
specific date, which shall be true and correct as of such specific date) and the
Company shall have performed, satisfied and complied in all respects with the
covenants, agreements and conditions required to be performed, satisfied or
complied with by the Company at or prior to the Closing Date. Such Buyer shall
have received a certificate, duly executed by the Chief Executive Officer of the
Company, dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by such Buyer in the form
acceptable to such Buyer.
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ai.The Company shall have delivered to such Buyer a letter from the Company’s
transfer agent certifying the number of shares of Common Stock outstanding on
the Closing Date immediately prior to the Closing.
aj.The Common Stock (A) shall be designated for quotation or listed (as
applicable) on the Principal Market and (B) shall not have been suspended, as of
the Closing Date, by the SEC or the Principal Market from trading on the
Principal Market nor shall suspension by the SEC or the Principal Market have
been threatened, as of the Closing Date, either (I) in writing by the SEC or the
Principal Market or (II) by falling below the minimum maintenance requirements
of the Principal Market.
ak.The Company shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for the sale of the Securities,
including without limitation, those required by the Principal Market, if any,
except as provided in subparagraph (xiv) below.
al.No statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any court or
Governmental Entity of competent jurisdiction that prohibits the consummation of
any of the transactions contemplated by the Transaction Documents.
am.Since the date of execution of this Agreement, no event or series of events
shall have occurred that reasonably would have or result in a Material Adverse
Effect.
an.The Company has filed with its Principal Market a Notice of Listing of
Additional Shares with regard to the Conversion Shares; however, it has not yet
received acknowledgement from or acceptance of such notice from the Principal
Market. Except for the foregoing, the Company shall have obtained any necessary
approval of the Principal Market to list or designate for quotation (as the case
may be) the Conversion Shares.
ao.As of time of consummation of the Closing (without giving effect to the
transactions contemplated hereby), the market capitalization of the Company
shall at least be $30 million.
ap.Within two (2) Business Days prior to the Closing, the Company shall have
delivered or caused to be delivered to each Buyer certified copies of requests
for copies of information on Form UCC-11, listing all effective financing
statements which name as debtor the Company or any of its Subsidiaries and which
are filed in such office or offices as may be reasonably necessary, in the
opinion of the Buyers, together with copies of such financing statements and the
results of searches for any tax Lien and judgment Lien filed against such Person
or its property, which results, except as otherwise agreed to in writing by the
Buyers, shall not show any such Liens (other than Permitted Liens);
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aq.No Price Failure (as defined in the Notes) or Volume Failure (as defined in
the Notes) shall exist as of the Closing Date.
ar.Such Buyer shall have received a letter on the letterhead of the Company,
duly executed by the Chief Executive Officer of the Company, setting forth the
wire amounts of each Buyer and the wire transfer instructions of the Company
(the “Flow of Funds Letter”), which shall include instructions to pay in full
all amounts payable by the Company or any of its Subsidiaries to the State of
Delaware in an aggregate amount not to exceed $203,252.99 (collectively, the
“Delaware Payment”).
as.The Company and each Subsidiary shall have delivered to such Buyer a copy of
its lien search results from the Company’s or such Subsidiary’s jurisdiction of
incorporation.
at.The Company and its Subsidiaries shall have delivered to such Buyer such
other documents, instruments or certificates relating to the transactions
contemplated by this Agreement as such Buyer or its counsel may reasonably
request.
8.TERMINATION.
In the event that the Closing shall not have occurred with respect to a Buyer
within five (5) days of the date hereof, then such Buyer shall have the right to
terminate its obligations under this Agreement with respect to itself at any
time on or after the close of business on such date without liability of such
Buyer to any other party; provided, however, (i) the right to terminate this
Agreement under this Section 8 shall not be available to such Buyer if the
failure of the transactions contemplated by this Agreement to have been
consummated by such date is the result of such Buyer’s breach of this Agreement
and (ii) the abandonment of the sale and purchase of the Notes shall be
applicable only to such Buyer providing such written notice, provided further
that no such termination shall affect any obligation of the Company under this
Agreement to reimburse such Buyer for the expenses described in Section 4(g)
above. Nothing contained in this Section 8 shall be deemed to release any party
from any liability for any breach by such party of the terms and provisions of
this Agreement or the other Transaction Documents or to impair the right of any
party to compel specific performance by any other party of its obligations under
this Agreement or the other Transaction Documents.
9.MISCELLANEOUS.
xii.Governing Law; Jurisdiction; Jury Trial
. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. The Company hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or under any
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of the other Transaction Documents or with any transaction contemplated hereby
or thereby, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of 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 to such party at the address for such 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.
Nothing contained herein shall be deemed or operate to preclude any Buyer from
bringing suit or taking other legal action against the Company in any other
jurisdiction to collect on the Company’s obligations to such Buyer or to enforce
a judgment or other court ruling in favor of such Buyer. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER
TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY
OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
xiii.Counterparts
. This Agreement may be executed in two or more identical counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other
party. In the event that any signature is delivered by facsimile transmission or
by an e-mail which contains a portable document format (.pdf) file of an
executed signature page, such signature page 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 signature page were an
original thereof.
xiv.Headings; Gender
. The headings of this Agreement are for convenience of reference and shall not
form part of, or affect the interpretation of, this Agreement. Unless the
context clearly indicates otherwise, each pronoun herein shall be deemed to
include the masculine, feminine, neuter, singular and plural forms thereof. The
terms “including,” “includes,” “include” and words of like import shall be
construed broadly as if followed by the words “without limitation.” The terms
“herein,” “hereunder,” “hereof” and words of like import refer to this entire
Agreement instead of just the provision in which they are found.
xv.Severability; Maximum Payment Amounts
. If any provision of this Agreement is prohibited by law or otherwise
determined to be invalid or unenforceable by a court of competent jurisdiction,
the provision that would otherwise be prohibited, invalid or unenforceable shall
be deemed amended to apply to the broadest extent that it would be valid and
enforceable, and the invalidity or unenforceability of such provision shall not
affect the validity of the remaining provisions of this Agreement so long as
this
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Agreement as so modified continues to express, without material change, the
original intentions of the parties as to the subject matter hereof and the
prohibited nature, invalidity or unenforceability of the provision(s) in
question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the benefits that
would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s).
Notwithstanding anything to the contrary contained in this Agreement or any
other Transaction Document (and without implication that the following is
required or applicable), it is the intention of the parties that in no event
shall amounts and value paid by the Company and/or any of its Subsidiaries (as
the case may be), or payable to or received by any of the Buyers, under the
Transaction Documents (including without limitation, any amounts that would be
characterized as “interest” under applicable law) exceed amounts permitted under
any applicable law. Accordingly, if any obligation to pay, payment made to any
Buyer, or collection by any Buyer pursuant the Transaction Documents is finally
judicially determined to be contrary to any such applicable law, such obligation
to pay, payment or collection shall be deemed to have been made by mutual
mistake of such Buyer, the Company and its Subsidiaries and such amount shall be
deemed to have been adjusted with retroactive effect to the maximum amount or
rate of interest, as the case may be, as would not be so prohibited by the
applicable law. Such adjustment shall be effected, to the extent necessary, by
reducing or refunding, at the option of such Buyer, the amount of interest or
any other amounts which would constitute unlawful amounts required to be paid or
actually paid to such Buyer under the Transaction Documents. For greater
certainty, to the extent that any interest, charges, fees, expenses or other
amounts required to be paid to or received by such Buyer under any of the
Transaction Documents or related thereto are held to be within the meaning of
“interest” or another applicable term to otherwise be violative of applicable
law, such amounts shall be pro-rated over the period of time to which they
relate.
xvi.Entire Agreement; Amendments
. This Agreement, the other Transaction Documents and the schedules and exhibits
attached hereto and thereto and the instruments referenced herein and therein
supersede all other prior oral or written agreements between the Buyers, the
Company, its Subsidiaries, their affiliates and Persons acting on their behalf,
including, without limitation, any transactions by any Buyer with respect to
Common Stock or the Securities, and the other matters contained herein and
therein, and this Agreement, the other Transaction Documents, the schedules and
exhibits attached hereto and thereto and the instruments referenced herein and
therein contain the entire understanding of the parties solely with respect to
the matters covered herein and therein; provided, however, nothing contained in
this Agreement or any other Transaction Document shall (or shall be deemed to)
(i) have any effect on any agreements any Buyer has entered into with, or any
instruments any Buyer has received from, the Company or any of its Subsidiaries
prior to the date hereof with respect to any prior investment made by such Buyer
in the Company or (ii) waive, alter, modify or amend in any respect any
obligations of the Company or any of its Subsidiaries, or any rights of or
benefits to any Buyer or any other Person, in any agreement entered into prior
to the date hereof between or among the Company and/or any of its
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Subsidiaries and any Buyer, or any instruments any Buyer received from the
Company and/or any of its Subsidiaries prior to the date hereof, and all such
agreements and instruments shall continue in full force and effect. Except as
specifically set forth herein or therein, neither the Company nor any Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. For clarification purposes, the Recitals are part of this Agreement. No
provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and the Required Holders (as defined below), and
any amendment to any provision of this Agreement made in conformity with the
provisions of this Section 9(e) shall be binding on all Buyers and holders of
Securities, as applicable; provided that no such amendment shall be effective to
the extent that it (A) applies to less than all of the holders of the Securities
then outstanding or (B) imposes any obligation or liability on any Buyer without
such Buyer’s prior written consent (which may be granted or withheld in such
Buyer’s sole discretion). No waiver shall be effective unless it is in writing
and signed by an authorized representative of the waiving party, provided that
the Required Holders may waive any provision of this Agreement, and any waiver
of any provision of this Agreement made in conformity with the provisions of
this Section 9(e) shall be binding on all Buyers and holders of Securities, as
applicable, provided that no such waiver shall be effective to the extent that
it (1) applies to less than all of the holders of the Securities then
outstanding (unless a party gives a waiver as to itself only) or (2) imposes any
obligation or liability on any Buyer without such Buyer’s prior written consent
(which may be granted or withheld in such Buyer’s sole discretion). No
consideration (other than reimbursement of legal fees) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision
of any of the Transaction Documents unless the same consideration also is
offered to all of the parties to the Transaction Documents, all holders of the
Notes. From the date hereof and while any Notes are outstanding, the Company
shall not be permitted to receive any consideration from a Buyer or a holder of
Notes that is not otherwise contemplated by the Transaction Documents in order
to, directly or indirectly, induce the Company or any Subsidiary (i) to treat
such Buyer or holder of Notes in a manner that is more favorable than to other
similarly situated Buyers or holders of Notes, or (ii) to treat any Buyer(s) or
holder(s) of Notes in a manner that is less favorable than the Buyer or holder
of Notes that is paying such consideration; provided, however, that the
determination of whether a Buyer has been treated more or less favorably than
another Buyer shall disregard any securities of the Company purchased or sold by
any Buyer. The Company has not, directly or indirectly, made any agreements with
any Buyers relating to the terms or conditions of the transactions contemplated
by the Transaction Documents except as set forth in the Transaction Documents.
Without limiting the foregoing, the Company confirms that, except as set forth
in this Agreement, no Buyer has made any commitment or promise or has any other
obligation to provide any financing to the Company, any Subsidiary or otherwise.
As a material inducement for each Buyer to enter into this Agreement, the
Company expressly acknowledges and agrees that (x) no due diligence or other
investigation or inquiry conducted by a Buyer, any of its advisors or any of its
representatives shall affect such Buyer’s right to rely on, or shall modify or
qualify in any manner or be an exception to any of, the Company’s
representations and warranties contained in this Agreement or any other
Transaction Document and (y) unless a provision of this Agreement or any other
Transaction Document is expressly preceded by the phrase “except as disclosed in
the SEC Documents,” nothing contained in any of the SEC Documents shall affect
such Buyer’s right to rely on, or shall modify or qualify in any manner or
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be an exception to any of, the Company’s representations and warranties
contained in this Agreement or any other Transaction Document. “Required
Holders” means (I) prior to the Closing Date, each Buyer entitled to purchase
Notes at the Closing and (II) on or after the Closing Date, (x) Alto Opportunity
Master Fund, SPC - Segregated Master Portfolio B (“Alto”), so long as Alto holds
any of the Notes or Registrable Securities (or any Convertible Securities issued
in exchange for any of the foregoing), or (y) otherwise, (A) holders of a
majority in aggregate principal amount of the Notes as of such time (excluding
any Notes held by the Company or any of its Subsidiaries as of such time) issued
or issuable hereunder or pursuant to the Notes or (B) the Buyers, with respect
to any waiver or amendment of Section 4(o) after such time as Alto doesn’t hold
any of the Notes.
xvii.Notices
. Any notices, consents, waivers or other communications required or permitted
to be given under the terms of this Agreement must be in writing and will be
deemed to have been delivered: (i) upon receipt, when delivered personally; (ii)
upon receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party)
or electronic mail (provided that such sent email is kept on file (whether
electronically or otherwise) by the sending party and the sending party does not
receive an automatically generated message from the recipient’s email server
that such e-mail could not be delivered to such recipient); or (iii) one (1)
Business Day after deposit with an overnight courier service with next day
delivery specified, in each case, properly addressed to the party to receive the
same. The addresses, facsimile numbers and e-mail addresses for such
communications shall be:
If to the Company:
Phunware, Inc. 7800 Shoal Creek Blvd, Suite  Austin, Texas 78757  Telephone:
(512) 693-4199 Facsimile: (___) ___-____ Attention: Chief Executive
Officer E-Mail: aknitowski@phunware.com
If to the Transfer Agent:
Continental Stock Transfer & Trust Company 1 State Street, Floor 30 New York,
New York 110004_ Telephone: (212) 845-329 Facsimile: (___) ___-____ Attention:
Michael Mullings and George Dalton E-Mail: mmullings@continentalstock.com and
gdalton@continentalstock.com
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If to a Buyer, to its address, e-mail address and facsimile number set forth on
the Schedule of Buyers, with copies to such Buyer’s representatives as set forth
on the Schedule of Buyers,
with a copy (for informational purposes only) to:
Kelley Drye & Warren LLP 101 Park Avenue New York, NY 10178 Telephone: (212)
808-7540 Facsimile: (212) 808-7897 Attention: Michael A. Adelstein, Esq. E-mail:
madelstein@kelleydrye.com
or to such other address, e-mail address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change, provided that Kelley Drye & Warren LLP shall only be provided
copies of notices sent to the lead Buyer. Written confirmation of receipt (A)
given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s facsimile machine
or e-mail containing the time, date, recipient facsimile number and, with
respect to each facsimile transmission, an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above,
respectively.
xviii.Successors and Assigns
. This Agreement shall be binding upon and inure to the benefit of the parties
and their respective successors and assigns, including any purchasers of any of
the Notes. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Required Holders,
including, without limitation, by way of a Fundamental Transaction (as defined
in the Notes) (unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the Notes). A Buyer
may assign some or all of its rights hereunder in connection with any transfer
of any of its Securities without the consent of the Company, in which event such
assignee shall be deemed to be a Buyer hereunder with respect to such assigned
rights.
xix.No Third Party Beneficiaries
. This Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person, other than the
Indemnitees referred to in Section 9(k). Notwithstanding the foregoing, the
Placement Agent shall be an intended third party beneficiary of (i) the
Company’s representations and warranties set forth in Section 3 hereof and (ii)
each Buyer’s representations, warranties and agreements set forth in Section 2
hereof.
xx.Survival
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. The representations, warranties, agreements and covenants shall survive the
Closing. Each Buyer shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.
xxi.Further Assurances
. Each party shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as any other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
xxii.Indemnification
. In consideration of each Buyer’s execution and delivery of the Transaction
Documents and acquiring the Securities thereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless each Buyer and each holder of any
Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons’ agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnitees”) from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys’ fees and disbursements (the
“Indemnified Liabilities”), incurred by any Indemnitee as a result of, or
arising out of, or relating to (i) any misrepresentation or breach of any
representation or warranty made by the Company or any Subsidiary in any of the
Transaction Documents, (ii) any breach of any covenant, agreement or obligation
of the Company or any Subsidiary contained in any of the Transaction Documents
or (iii) any cause of action, suit, proceeding or claim brought or made against
such Indemnitee by a third party (including for these purposes a derivative
action brought on behalf of the Company or any Subsidiary) or which otherwise
involves such Indemnitee that arises out of or results from (A) the execution,
delivery, performance or enforcement of any of the Transaction Documents, (B)
any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (C) any
disclosure properly made by such Buyer pursuant to Section 4(i), or (D) the
status of such Buyer or holder of the Securities either as an investor in the
Company pursuant to the transactions contemplated by the Transaction Documents
or as a party to this Agreement (including, without limitation, as a party in
interest or otherwise in any action or proceeding for injunctive or other
equitable relief). To the extent that the foregoing undertaking by the Company
may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 9(k) shall be the same as those set forth in
Section 6 of the Registration Rights Agreement.
xxiii.Construction
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. 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. No specific representation or
warranty shall limit the generality or applicability of a more general
representation or warranty. Each and every reference to share prices, shares of
Common Stock and any other numbers in this Agreement that relate to the Common
Stock shall be automatically adjusted for any stock splits, stock dividends,
stock combinations, recapitalizations or other similar transactions that occur
with respect to the Common Stock after the date of this Agreement.
Notwithstanding anything in this Agreement to the contrary, for the avoidance of
doubt, nothing contained herein shall constitute a representation or warranty
against, or a prohibition of, any actions with respect to the borrowing of,
arrangement to borrow, identification of the availability of, and/or securing
of, securities of the Company in order for such Buyer (or its broker or other
financial representative) to effect short sales or similar transactions in the
future.
xxiv.Remedies
. Each Buyer and in the event of assignment by Buyer of its rights and
obligations hereunder, each holder of Securities, shall have all rights and
remedies set forth in the Transaction Documents and all rights and remedies
which such holders have been granted at any time under any other agreement or
contract and all of the rights which such holders have under any law. Any Person
having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights granted by law. Furthermore, the Company recognizes
that in the event that it or any Subsidiary fails to perform, observe, or
discharge any or all of its or such Subsidiary’s (as the case may be)
obligations under the Transaction Documents, any remedy at law would inadequate
relief to the Buyers. The Company therefore agrees that the Buyers shall be
entitled to specific performance and/or temporary, preliminary and permanent
injunctive or other equitable relief from any court of competent jurisdiction in
any such case without the necessity of proving actual damages and without
posting a bond or other security. The remedies provided in this Agreement and
the other Transaction Documents shall be cumulative and in addition to all other
remedies available under this Agreement and the other Transaction Documents, at
law or in equity (including a decree of specific performance and/or other
injunctive relief).
xxv.Withdrawal Right
. Notwithstanding anything to the contrary contained in (and without limiting
any similar provisions of) the Transaction Documents, whenever any Buyer
exercises a right, election, demand or option under a Transaction Document and
the Company or any Subsidiary does not timely perform its related obligations
within the periods therein provided, then such Buyer may rescind or withdraw, in
its sole discretion from time to time upon written notice to the Company or such
Subsidiary (as the case may be), any relevant notice, demand or election in
whole or in part without prejudice to its future actions and rights.
xxvi.Payment Set Aside; Currency
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. To the extent that the Company makes a payment or payments to any Buyer
hereunder or pursuant to any of the other Transaction Documents or any of the
Buyers enforce or exercise their rights hereunder or thereunder, and such
payment or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, foreign, state
or federal law, common law or equitable cause of action), then to the extent of
any such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred. Unless
otherwise expressly indicated, all dollar amounts referred to in this Agreement
and the other Transaction Documents are in United States Dollars (“U.S.
Dollars”), and all amounts owing under this Agreement and all other Transaction
Documents shall be paid in U.S. Dollars. All amounts denominated in other
currencies (if any) shall be converted into the U.S. Dollar equivalent amount in
accordance with the Exchange Rate on the date of calculation. “Exchange Rate”
means, in relation to any amount of currency to be converted into U.S. Dollars
pursuant to this Agreement, the U.S. Dollar exchange rate as published in the
Wall Street Journal on the relevant date of calculation.
xxvii.Judgment Currency
.
au.If for the purpose of obtaining or enforcing judgment against the Company in
connection with this Agreement or any other Transaction Document in any court in
any jurisdiction it becomes necessary to convert into any other currency (such
other currency being hereinafter in this Section 9(p) referred to as the
“Judgment Currency”) an amount due in US Dollars under this Agreement, the
conversion shall be made at the Exchange Rate prevailing on the Trading Day
immediately preceding:
(1)the date actual payment of the amount due, in the case of any proceeding in
the courts of New York or in the courts of any other jurisdiction that will give
effect to such conversion being made on such date: or
(2)the date on which the foreign court determines, in the case of any proceeding
in the courts of any other jurisdiction (the date as of which such conversion is
made pursuant to this Section 9(p)(i)(2) being hereinafter referred to as the
“Judgment Conversion Date”).
av.If in the case of any proceeding in the court of any jurisdiction referred to
in Section 9(p)(i)(2) above, there is a change in the Exchange Rate prevailing
between the Judgment Conversion Date and the date of actual payment of the
amount due, the applicable party shall pay such adjusted amount as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the Exchange Rate prevailing on the date of payment, will produce
the amount of US Dollars which could have been
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purchased with the amount of Judgment Currency stipulated in the judgment or
judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
aw.Any amount due from the Company under this provision shall be due as a
separate debt and shall not be affected by judgment being obtained for any other
amounts due under or in respect of this Agreement or any other Transaction
Document.
xxviii.Independent Nature of Buyers’ Obligations and Rights
. The obligations of each Buyer under the Transaction Documents are several and
not joint with the obligations of any other Buyer, and no Buyer shall be
responsible in any way for the performance of the obligations of any other Buyer
under any Transaction Document. Nothing contained herein or in any other
Transaction Document, and no action taken by any Buyer pursuant hereto or
thereto, shall be deemed to constitute the Buyers as, and the Company
acknowledges that the Buyers do not so constitute, a partnership, an
association, a joint venture or any other kind of group or entity, or create a
presumption that the Buyers are in any way acting in concert or as a group or
entity, and the Company shall not assert any such claim with respect to such
obligations or the transactions contemplated by the Transaction Documents or any
matters, and the Company acknowledges that the Buyers are not acting in concert
or as a group, and the Company shall not assert any such claim, with respect to
such obligations or the transactions contemplated by the Transaction Documents.
The decision of each Buyer to purchase Securities pursuant to the Transaction
Documents has been made by such Buyer independently of any other Buyer. Each
Buyer acknowledges that no other Buyer has acted as agent for such Buyer in
connection with such Buyer making its investment hereunder and that no other
Buyer will be acting as agent of such Buyer in connection with monitoring such
Buyer’s investment in the Securities or enforcing its rights under the
Transaction Documents. The Company and each Buyer confirms that each Buyer has
independently participated with the Company and its Subsidiaries in the
negotiation of the transaction contemplated hereby with the advice of its own
counsel and advisors. Each Buyer shall be entitled to independently protect and
enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of any other Transaction Documents, and it shall not be
necessary for any other Buyer to be joined as an additional party in any
proceeding for such purpose. The use of a single agreement to effectuate the
purchase and sale of the Securities contemplated hereby was solely in the
control of the Company, not the action or decision of any Buyer, and was done
solely for the convenience of the Company and its Subsidiaries and not because
it was required or requested to do so by any Buyer. It is expressly understood
and agreed that each provision contained in this Agreement and in each other
Transaction Document is between the Company, each Subsidiary and a Buyer,
solely, and not between the Company, its Subsidiaries and the Buyers
collectively and not between and among the Buyers.
[signature pages follow]

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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.

COMPANY:

PHUNWARE, INC.

By:   Name:
        Title:

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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.

BUYER:

ALTO OPPORTUNITY MASTER FUND, SPC - SEGREGATED MASTER PORTFOLIO B

By:   
Name:
Title:

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SCHEDULE OF BUYERS

(1)(2)(3)(4)(5)

BuyerAddress and Facsimile NumberOriginal Principal Amount of NotesPurchase
PriceLegal Representative’sAddress and Facsimile Number

Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B
c/o Ayrton Capital LLC
222 Broadway, 19th Floor
New York, NY 10038
Attention Waqas Khatri Marian Freidin
E-mail: wk@ayrtonllc.com
             mfreidin@ayrtonllc.com
$3,000,000$2,760,000
Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Telephone: (212) 808-7540
Facsimile: (212) 808-7897
Attention: Michael A. Adelstein, Esq.

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Schedule 3(a)

Subsidiaries

PhunCoin, Inc.
Phunware OpCo, Inc.
Rain Acquisition Sub, Inc.
Rain Acquisition, LLC
Phun Token International
30 Second Software, Inc.
Taurus Merger Company, LLC
GoTV Networks, Inc.
Simplikate Systems LLC
GoTV Studios, LLC
SendDroid, LLC
Chengdu Digby Technology Co., Ltd.
Phunware Holdings CV
Rain – US LLC
Odyssey Mobile Marketing Limited
Odyssey Mobile Asia Pte. Ltdl
Odyssey Mobile Northern Europe Ltd
Phunware NL Cooperatief U.A.
Phunware Europe BV
Faith Based Apps, LLC

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EXECUTION COPY
Schedule 3(g)

Phunware shall pay to Canaccord Genuity in cash by wire transfer of immediately
available funds, upon, and subject to, the closing of a Private Placement, a
closing fee equal to 6.0% of the Gross Proceeds. For purposes hereof, the term
“Gross Proceeds” shall mean the aggregate investment proceeds received by Client
from any Investor or Investors other than Excluded Persons at such closing of
the Private Placement.

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EXECUTION COPY
Schedule 3(r)(iii)

A)
image01.jpg [image01.jpg]

B)
image11.jpg [image11.jpg]

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EXECUTION COPY
Schedule 3(s)

The Indebtedness reflected in the Balance Sheet at September 30, 2019, will have
increased $416,665 to $2,211,925 as of March 5, 2020 of which $860,000 is
attributable to five-year unsecured notes that do not begin maturing until 2024
and $497,139 is attributable to Bay View Funding which provides the Company a
factoring line.
Leases
•The Company has operating office space leases in Austin, Texas; Irvine,
California; San Diego, California; and Miami, Florida.
•On May 18, 2018, the Company entered into a lease amendment with 3050 Biscayne
Properties, LLC to extend its current lease in Miami, Florida (the “Amendment”).
The Amendment commences on July 1, 2018 and terminates on June 30, 2023. Under
the Amendment, the Company will pay monthly rent of approximately $109 per year
for the first year, with such rent increasing by a specified amount every year
thereafter.
•On July 16, 2019, the Company entered into a lease agreement with BRE CA Office
Owner, LLC for new office space in Irvine, California, for the lease of
approximately 8,687 rentable square feet located at 16845 Von Karman Avenue (the
“Lease”). The Lease commences on November 1, 2019, and terminates on March 31,
2025, subject to one five-year renewal option. Under the Lease, the Company will
pay monthly rent of approximately $354 per year for the first year, with such
rent increasing by a specified amount every year thereafter. The Lease also
obligates the Company to pay its proportionate share of certain cost increases
incurred by the landlord. The Company may receive certain abatements subject to
the terms and conditions of the Lease. The Company was also obligated to pay a
security deposit of approximately $118.
•On August 20, 2019, the Company entered into a lease amendment with Seamless
Shoal Creek, LLC to extend its current lease in Austin, Texas (the "Amendment").
The Amendment commences on April 1, 2020, and terminates on March 31, 2022, with
no renewal options. Under the Amendment, the Company will pay monthly rent of
approximately $223 and $231 per year for the first year and second year,
respectively. The Amendment also obligates the Company to pay its proportionate
share of certain cost increases incurred by the landlord.
•On November 12, 2019, the Company entered into a lease amendment with
Promontory Associates, a California General Partnership to extend its current
lease in San Diego, California (the “Amendment”). The Amendment commences on
February 1, 2020 and terminates on June 30, 2025, subject to one five-year
renewal option. Under the Amendment, the Company will pay monthly rent of
approximately $151 per year for the first year, with such rent increasing by a
specified amount every year thereafter. The Company may receive certain
abatements subject to the terms and conditions of the Lease. The Amendment also
obligates the Company to pay its proportionate share of certain cost increases
incurred by the landlord.

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EXECUTION COPY
Schedule 3(x)(i)

ISSUED PATENTS

1.Method and System for Accessing Wireless Account Information (Patent #
7,979,350)
2.Server-Side Wireless Communications Link Support for Mobile Handheld Devices
(Patent # 8,009,619)
3.Client-Side Wireless Communications Link Support for Mobile Handheld Devices
(Patent # 8,060,594)
4.Server Method and System for Rendering Content on a Wireless Device (Patent #
8,103,865)
5.Method and System for Rendering Content on a Wireless Device (Patent #
8,478,245 & Patent # 8,989,715)
6.Server Method and System for Executing Applications on a Wireless Device
(Patent # 8,560,601)
7.Methods and Systems for Interactive User Interface Objects (Patent #
8,732,619)
8.Enterprise Branded Application Frameworks for Mobile and Other Environments
(Patent # 8,788,358 & Patent # 9,965,775)
9.Geo-Fence Entry and Exit Notification System (Patent # 8,812,024 & Patent #
8,812,027)
10.Method and System for Customizing Content on a Server for Rendering on a
Wireless Device (Patent # 9,015,692)
11.Systems and Methods for Indoor and Outdoor Mobile Device Navigation (Patent #
9,766,080)
12.Monitoring Outdoor and Indoor Regions with Mobile Devices (Patent #
10,038,972)
13.Mobile Device Localization Based on Relative Received Signal Strength
Indicators (Patent # 10,254,378)

PENDING PATENTS
1.Systems and Methods for Indoor and Outdoor Mobile Device Navigation
(Application # 15/678,987)
2.Monitoring Outdoor and Indoor Regions with Mobile Devices (Application #
16/028,268)
3.Methods and Systems for Interactive User Interface Objects (Application #
15/942,221)
4.Systems and Methods for Utilizing Dynamic Device Location (Application #
16/035,342)
5.Systems and Methods for Enterprise Branded Application Frameworks for Mobile
and Other Environments (Application # 15/942,071)

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