EXHIBIT 10.1

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of May 20, 2019,
is by and between Dolphin Entertainment, Inc., a Florida corporation
(the “Company”), and Lincoln Park Capital Fund, LLC, an Illinois limited
liability company (the “Investor”).

RECITALS

A.

The Company and the Investor are 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 the issuance of a senior convertible note in the
original principal amount of $1,100,000, in the form attached hereto as Exhibit
A (the “Note”), which Note shall be convertible into shares of Common Stock (as
defined below) (as converted, collectively, the “Conversion Shares”), in
accordance with the terms of the Note.

C.

The Investor wishes to purchase, and the Company wishes to sell, upon the terms
and conditions stated in this Agreement, (i) the original principal amount of
the Note, (ii) a Series A Warrant, in the form attached hereto as Exhibit B-1
(the “Series A Warrant”), to initially purchase an aggregate of up to 137,500
shares of Common Stock (collectively, the “Series A Warrant Shares”), at an
exercise price of $2.00 per share (subject to adjustment as provided in the
Series A Warrant), (iii) if all or any part of the Note remains outstanding on
the two (2) month anniversary of the date of this Agreement, a Series B Warrant,
in the form attached hereto as Exhibit B-2 (the “Series B Warrant”), to
initially purchase an aggregate of up to 137,500 shares of Common Stock
(collectively, the “Series B Warrant Shares”), at an exercise price of $2.00 per
share (subject to adjustment as provided in the Series B Warrant), (iv) if all
or any part of the Note remains outstanding on the four (4) month anniversary of
the date of this Agreement, a Series C Warrant, in the form attached hereto as
Exhibit B-3 (the “Series C Warrant”), to initially purchase an aggregate of up
to 137,500 shares of Common Stock (collectively, the “Series C Warrant Shares”),
at an exercise price of $2.00 per share (subject to adjustment as provided in
the Series C Warrant), and (v) if all or any part of the Note remains
outstanding on the six (6) month anniversary of the date of this Agreement, a
Series D Warrant, in the form attached hereto as Exhibit B-4 (the “Series D
Warrant” and, collectively with the Series A Warrant, the Series B Warrant and
the Series C Warrant, the “Warrants”), to initially purchase an aggregate of up
to 137,500 shares of Common Stock (collectively, the “Series D Warrant Shares”,
and, collectively with the Series A Warrant Shares, the Series B Warrant Shares
and the Series C Warrant Shares, the “Warrant Shares”), at an exercise price of
$2.00 per share (subject to adjustment as provided in the Series D Warrant).

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D.

At the Closing (as defined below), the parties hereto shall execute and deliver
a Registration Rights Agreement, in the form attached hereto as Exhibit C (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 Note, the Conversion Shares, the Warrants and the Warrant Shares are
collectively referred to herein as the “Securities.”

F.

The parties have agreed that, among other things, the obligation to repay the
Note shall be an unsecured obligation of the Company.

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 the Investor
hereby agree as follows:

1.

PURCHASE AND SALE OF NOTE AND WARRANTS.

(a)

Note and Warrant. Subject to the satisfaction (or waiver) of the conditions set
forth in Sections 6 and 7 below, the Company shall issue and sell to the
Investor, and the Investor shall purchase from the Company on the Closing Date
(as defined below), the Note and the Series A Warrant. If (i) all or any part of
the Note remains outstanding on July 20, 2019, the two (2) month anniversary of
the date of this Agreement, the Company shall, within two (2) Business Days of
such date, issue to the Investor the Series B Warrant, (ii) all or any part of
the Note remains outstanding on September 20, 2019, the four (4) month
anniversary of the date of this Agreement, the Company shall, within two (2)
Business Days of such date, issue to the Investor the Series C Warrant, and
(iii) all or any part of the Note remains outstanding on November 20, 2019, the
six (6) month anniversary of the date of this Agreement, the Company shall,
within two (2) Business Days of such date, issue to the Investor the Series D
Warrant.

(b)

Closing. The closing (the “Closing”) of the purchase of the Note and the Series
A Warrant by the Investor shall occur at the offices of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., 666 Third Avenue, New York, NY 10017, or at
such other place or at such other time or on such other date as the Company and
the Investor mutually may agree in writing (and provided that Closing may take
place by the electronic exchange of those documents required hereunder to be
delivered at Closing). 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 later date as is mutually agreed to by the Company and the
Investor). 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 Note and the Warrants to be
purchased by the Investor hereunder (the “Purchase Price”) shall be $1,000,000.
The Note will be issued with an original issue discount of approximately
9.0909%.

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(d)

Payment of Purchase Price; Delivery of Note and Warrants. On the Closing Date,
(i) the Investor shall pay the Purchase Price to the Company for the Note and
the Warrants by wire transfer of immediately available funds in accordance with
the Company’s written wire instructions (less the amounts withheld pursuant to
Section 4(g)) and (ii) the Company shall deliver to the Investor (A) the Note
and (B) the Series A Warrant, in each case duly executed on behalf of the
Company and registered in the name of the Investor or its designee. If all or
any part of the Note remains outstanding on July 20, 2019, the Company shall,
within two (2) Business Days of such date, issue to the Investor the Series B
Warrant, duly executed on behalf of the Company and registered in the name of
the Investor or its designee. If all or any part of the Note remains outstanding
on September 20, 2019, the Company shall, within two (2) Business Days of such
date, issue to the Investor the Series C Warrant, duly executed on behalf of the
Company and registered in the name of the Investor or its designee. If all or
any part of the Note remains outstanding on November 20, 2019, the Company
shall, within two (2) Business Days of such date, issue to the Investor the
Series D Warrant, duly executed on behalf of the Company and registered in the
name of the Investor or its designee. No additional consideration, other than
the Purchase Price paid by the Investor to the Company on the Closing Date (less
the amounts withheld pursuant to Section 4(g)), shall be payable by the Investor
to the Company in exchange for the issuance to the Investor of the Series B
Warrant, the Series C Warrant or the Series D Warrant, as applicable.

2.

INVESTOR’S REPRESENTATIONS AND WARRANTIES.

The Investor represents and warrants to the Company that:

(a)

Organization; Authority. The Investor 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 to which
it is a party and otherwise to carry out its obligations hereunder and
thereunder.

(b)

No Public Sale or Distribution. The Investor is acquiring the Securities in the
ordinary course of its business, 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; provided, however, by making
the representations herein, the Investor 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
under the 1933 Act. The Investor does not presently have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities.

(c)

Accredited Investor Status.  At the time the Investor was offered the
Securities, it was, and as of the date hereof it is, and at Closing it will be,
an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or
(a)(8) under the 1933 Act.

(d)

Experience of Investor.  The Investor, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the investment in the Securities, and has so evaluated
the merits and risks of such investment.

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The Investor is able to bear the economic risk of an investment in the
Securities and is able to afford a complete loss of such investment. The
Investor acknowledges and agrees that the Company has not made any
representations or warranties with respect to the Securities or the transactions
contemplated hereby other than those specifically set forth in Section 3, and
the Investor acknowledges and agrees that it has relied solely upon the
representations and warranties contained in Section 3 in determining whether to
enter into this Agreement and the other Transaction Documents and to consummate
the transactions contemplated hereby and thereby.

(e)

Reliance on Exemptions. The Investor 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 the Investor’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Investor set forth herein in order to determine the
availability of such exemptions and the eligibility of the Investor to acquire
the Securities.

(f)

Information. The Investor 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 which have been
requested by the Investor. The Investor and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and has received
answers, satisfactory in all respect to the Investor, to all such questions. The
Investor understands that its investment in the Securities involves a high
degree of risk. The Investor 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, and the Investor acknowledges and agrees
that the Company has not provided to the Investor any accounting, legal, tax or
other advice in respect of the transactions contemplated by the Transaction
Documents, including the offer, purchase and sale of the Securities.

(g)

No Governmental Review.  The Investor 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.

(h)

Transfer or Resale. The Investor 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 or other
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, or (B) the Investor shall have
delivered to the Company (if requested by the Company) an opinion of counsel to
the Investor, in a form and substance 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)
the Investor provides the Company with reasonable assurance that, at the time of
any sale of such sale of transfer, such Securities may be legally 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

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further, if Rule 144 is not applicable, any resale of the Securities under
circumstances in which the seller (or the Person (as defined below) 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.

(i)

Validity; Enforcement. This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Investor and constitutes the legal,
valid and binding obligations of the Investor enforceable against the Investor
in accordance with its terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

(j)

No Conflicts.  The execution, delivery and performance by the Investor of this
Agreement and the consummation by the Investor of the transactions contemplated
hereby will not (i) result in a violation of the organizational documents of the
Investor, (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 the Investor is a party or (iii)
result in a violation of any law, rule, regulation, order, judgment  or decree
(including federal and state securities laws) applicable to the Investor, except
in the case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of the
Investor to perform its obligations hereunder.

(k)

Residency. The Investor is a resident of the State of Illinois

(l)

Certain Trading Activities.  The Investor represents and warrants to the Company
that at no time prior to the date of this Agreement has any of the Investor, its
agents, representatives or affiliates engaged in or effected, in any manner
whatsoever, directly or indirectly, any (i) “short sale” (as such term is
defined in Rule 200 of Regulation SHO of the Securities Exchange Act of 1934, as
amended (the “1934 Act”)) of the Common Stock or (ii) hedging transaction, which
establishes a net short position with respect to the Common Stock.

(m)

General Solicitation.  The Investor is not purchasing the Securities as a result
of any advertisement, article, notice or other communication regarding the
Securities published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar.

(n)

Manipulation of Price. Since the time that the Investor was first contacted by
the Company or its agent regarding the investment in the Company contemplated
herein, the Investor has not, and, to the knowledge of the Investor, no Person
acting on its 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 to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of,

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any of the Securities, or (iii) paid or agreed to pay to any Person any
compensation for soliciting another to purchase any other securities of the
Company.

3.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to the Investor that, as of the date hereof
and as of the Closing Date:

(a)

Organization and Qualification. Each of the Company and each of its Subsidiaries
are 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 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 currently anticipated prospects of the Company and its
Subsidiaries, taken as a whole, excluding any effect that results or arises
primarily from (A) any change in the United States or foreign economies or
securities or financial markets in general that does not have a disproportionate
effect on the Company and its Subsidiaries, taken as a whole, (B) any change
that generally affects the industry in which the Company and its Subsidiaries
operate that does not have a disproportionate effect on the Company and its
Subsidiaries, taken as a whole, (C) any change arising in connection with
earthquakes, hostilities, acts of war, sabotage or terrorism or military actions
or any escalation or material worsening of any such hostilities, acts of war,
sabotage or terrorism or military actions existing as of the date hereof, or (D)
any change in applicable laws or accounting rules that does not have a
disproportionate effect on the Company and its Subsidiaries, taken as a whole;
(ii) the enforceability of any Transaction Document; or (iii) the Company’s
ability to perform in any material respect on a timely basis any of its
obligations under any Transaction Document to be performed as of the date of
determination. The Company owns, directly or indirectly, all of the capital
stock or other equity interests of each Subsidiary free and clear of any liens
(except as disclosed in the SEC Documents, as such term is defined below), and
all of the issued and outstanding shares of capital stock of each Subsidiary are
validly issued and are fully paid, non-assessable and free of preemptive and
similar rights to subscribe for or purchase securities. “Subsidiaries” means any
Person in which the Company, directly or indirectly, (A) owns any of the
outstanding capital stock or holds any equity or similar interest of such Person
such that such Person is required by GAAP to be included in the Company’s
consolidated financial statements or (B) 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. The execution and delivery of this Agreement and the
other Transaction Documents by

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the Company, and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Note and the reservation for issuance and issuance of the Conversion Shares
issuable upon conversion of the Note, the issuance of the respective Warrants
and the reservation for issuance and issuance of the respective Warrant Shares
upon exercise of the applicable Warrant) have been duly authorized by the
Company’s board of directors and (other than (i) the filing with the SEC of one
or more Registration Statements in accordance with the requirements of the
Registration Rights Agreement, (ii) the filing of a Form D with the SEC, (iii)
the filing of a Notice of Additional Listing with The Nasdaq Capital Market (the
“Principal Market”) and (iv) any other filings as may be required by any state
securities agencies) no further filing, consent or authorization is required by
the Company, its board of directors or its shareholders.  This Agreement has
been, and the other Transaction Documents will be prior to the Closing (other
than those Warrants that are to be issued following the Closing Date), duly
executed and delivered by the Company, and each constitutes (or upon execution
and delivery thereof by the Company will constitute) the legal, valid and
binding obligations of the Company, enforceable against the Company 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 Note, the Warrants, the Registration Rights
Agreement, the Irrevocable Transfer Agent Instructions (as defined below) and
each of the other agreements and instruments entered into and delivered at
Closing by any of the parties hereto in connection with the transactions
contemplated hereby and thereby, as may be amended from time to time in
accordance with their respective terms.

(c)

Issuance of Securities. The issuance of the Note and the Warrants is duly
authorized and, upon issuance in accordance with the terms of the Transaction
Documents, will be validly issued, fully paid and non-assessable and free from
all preemptive or similar rights, taxes, liens, charges and other encumbrances
with respect to the issue thereof. As of the Closing, the Company shall have
reserved from its duly authorized capital stock not less than 100% of the sum of
(i) the maximum number of Conversion Shares issuable upon conversion of the Note
(assuming for purposes hereof that the Note is convertible at the Standard
Conversion Price (as defined in the Note) and without taking into account any
limitations on the conversion of the Note set forth therein) and (ii) the
maximum number of Series A Warrant Shares issuable upon exercise of the Series A
Warrant (without taking into account any limitations on the exercise of the
Series A Warrant set forth therein).  Prior to (A) the time of issuance of the
Series B Warrant, if and when required under this Agreement, the Company shall
have reserved from its duly authorized capital stock not less than 100% of the
maximum number of Series B Warrant Shares issuable upon exercise of the Series B
Warrant (without taking into account any limitations on the exercise of the
Series B Warrant set forth therein), (B) the time of issuance of the Series C
Warrant, if and when required under this Agreement, the Company shall have
reserved from its duly authorized capital stock not less than 100% of the
maximum number of Series C Warrant Shares issuable upon exercise of the Series C
Warrant (without taking into account any limitations on the exercise of the
Series C Warrant set forth therein), and (C) the time of issuance of the Series
D Warrant, if and when required under this Agreement, the Company shall have
reserved from its duly authorized capital stock not less than 100% of the
maximum number of

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Series D Warrant Shares issuable upon exercise of the Series D Warrant (without
taking into account any limitations on the exercise of the Series D Warrant set
forth therein). Upon conversion in accordance with the Note, exercise in
accordance with the Series A Warrant, or, if issued to the Investor under this
Agreement, exercise in accordance with the Series B Warrant, the Series C
Warrant and the Series D Warrant (as the case may be), the Conversion Shares,
the Series A Warrant Shares, the Series B Warrant Shares, the Series C Warrant
Shares and the Series D Warrant Shares, respectively, when issued, will be
validly issued, fully paid and non-assessable and free from all preemptive or
similar rights, taxes, liens, charges and other encumbrances 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 Investor in this Agreement, the offer, issuance and sale by
the Company of the Securities to the Investor under this Agreement and the other
Transaction Documents, as applicable, are exempt from registration under the
1933 Act under Section 4(a)(2) of the 1933 Act and Rule 506(b) of Regulation D.
“Common Stock” means (i) the Company’s shares of common stock, $0.015 par value
per share, and (ii) any capital stock into which such common stock shall have
been changed or any share capital resulting from a reclassification of such
common stock.

(d)

No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Note and the reservation for issuance and issuance of the Conversion Shares
issuable upon conversion of the Note, the issuance of the Series A Warrant and
the reservation for issuance and issuance of the Series A Warrant Shares
issuable upon exercise of the Series A Warrant, the issuance of the Series B
Warrant, if and when required under this Agreement, and the reservation for
issuance and issuance of the Series B Warrant Shares issuable upon exercise of
the Series B Warrant, the issuance of the Series C Warrant, if and when required
under this Agreement, and the reservation for issuance and issuance of the
Series C Warrant Shares issuable upon exercise of the Series C Warrant, and the
issuance of the Series D Warrant, if and when required under this Agreement, and
the reservation for issuance and issuance of the Series D Warrant Shares
issuable upon exercise of the Series D Warrant) will not (i) result in a
violation of the Company’s Articles of Incorporation, as amended and as in
effect on the date hereof (including, without limitation, any certificate of
designation contained therein) (the “Charter”), the Company’s bylaws, as amended
and as in effect on the date hereof (the “Bylaws”), the certificate of
incorporation, certificate of formation, memorandum of association, articles of
association, bylaws or other organizational documents of any of the Company’s
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) 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 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, other than, in the case of clause (ii) or
(iii) above, such conflicts, defaults, violations or rights that would not
reasonably be expected to have a Material Adverse Effect.

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(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 (i) the filing with the SEC of one or more Registration Statements
in accordance with the requirements of the Registration Rights Agreement, (ii)
the filing of a Form D with the SEC, (iii) the filing of a Notice of Additional
Listing with the Principal Market and (iv) any other filings as may be required
by any state securities agencies), any court, governmental agency or any
regulatory or self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of 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 is required to obtain at or prior to the Closing
have been obtained or effected on or prior to the Closing Date, and the Company
is not aware of any facts or circumstances which might prevent the Company 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 would reasonably lead to delisting or suspension of the
Common Stock in the foreseeable future.

(f)

Acknowledgment Regarding Investor’s Purchase of Securities. The Company
acknowledges and agrees that the Investor 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 the Investor is not (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 1934 Act). The
Company further acknowledges that the Investor is not 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 the Investor or any of
its representatives or agents in connection with the Transaction Documents and
the transactions contemplated hereby and thereby is merely incidental to the
Investor’s purchase of the Securities. The Company further represents to the
Investor that the Company’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 and its 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, in each case
with respect to Person’s retained by the Company and acting on its behalf,
relating to or arising out of the transactions contemplated by the Transaction
Documents.  The Company shall pay, and hold the Investor 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.  Neither the
Company nor any of its Subsidiaries has engaged any placement agent or other
agent in connection with the offer and sale of any of the Securities
contemplated by the Transaction Documents.

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(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 shareholders of the Company under any applicable shareholder
approval provisions, including, without limitation, under the rules and
regulations of the Principal Market and under the rules and regulations of any
other 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, whether
through integration with any prior offering of securities of the Company or
otherwise.

(i)

Dilutive Effect. The Company understands and acknowledges that the number of
Conversion Shares and Warrant Shares will increase in certain circumstances. The
Company further acknowledges that its obligation to issue the Conversion Shares
upon conversion of the Note, the issuance of the Series A Warrant Shares upon
exercise of the Series A Warrant, the issuance of the Series B Warrant Shares
upon exercise of the Series B Warrant, the issuance of the Series C Warrant
Shares upon exercise of the Series C Warrant, and the issuance of the Series D
Warrant Shares upon exercise of the Series D Warrant, in each case in accordance
with this Agreement and the Note, the Series A Warrant, the Series B Warrant,
the Series C Warrant and the Series D Warrant, respectively, is absolute and
unconditional, regardless of the dilutive effect that such issuance may have on
the ownership interests of other shareholders 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 shareholder, business
combination, poison pill (including, without limitation, any distribution under
a rights agreement), shareholder rights plan or other similar anti-takeover
provision under the Charter, Bylaws or other organizational documents or the
laws of the jurisdiction of its incorporation or otherwise which is or could
become applicable to the Investor as a result of the transactions contemplated
by this Agreement, including, without limitation, the Company’s issuance of the
Securities and the Investor’s ownership of the Securities. The Company and its
board of directors have taken all necessary action, if any, in order to render
inapplicable any shareholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of shares of Common Stock or a change in
control of the Company or any of its Subsidiaries.

(k)

SEC Documents; Financial Statements. During the one (1) year prior to the date
hereof, the Company has timely filed all reports, schedules, forms, proxy
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 to the Investor or its representatives true, correct and
complete copies of

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each of the SEC Documents not available on the EDGAR system. As of their
respective dates, to the Company’s knowledge, 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, 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 respective 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 were not material, either individually
or in the aggregate). The Company is not contemplating amending or restating any
of the financial statements (including without limitation, any notes or any
letter of any independent accountant of the Company with respect thereto)
included in any of the SEC Documents (the “Financial Statements”). No facts or
circumstances currently exist that would require the Company to amend or restate
any of the Financial Statements in order for each of the Financial Statements to
have been in compliance with generally accepted accounting principles and
applicable law (including, without limitation, the rules and regulations of the
SEC) as of their respective dates. The Company has not been informed by its
registered independent public company accounting firm that it recommends 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. Since the date of the Company’s most recent audited
financial statements contained in the SEC Documents, 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 currently anticipated prospects of the Company or
any of its Subsidiaries. Since the date of the Company’s most recent audited
financial statements contained in the SEC Documents, neither the Company nor any
of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any
material amount of assets, individually or in the aggregate, outside of the
ordinary course of business or (iii) made any material 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, and after giving effect to the transactions contemplated hereby to
occur at the Closing will not be, Insolvent (as defined below). “Insolvent”
means, (I) with respect to the Company and its Subsidiaries, on a consolidated
basis, (i) the present fair saleable value of the Company’s and its

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Subsidiaries’ assets is less than the amount required to pay the Company’s and
its Subsidiaries’ total Indebtedness (as defined below), (ii) 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 (iii) 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, (i) 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 total Indebtedness, (ii) the Company or such Subsidiary (as the case may be)
is unable to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured or (iii)
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. No event,
liability, development or circumstance has occurred or exists, or is currently
reasonably expected to occur or exist with respect to the Company, any of its
Subsidiaries or any of their respective businesses, properties, liabilities,
currently anticipated 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 in any of the SEC Documents and
which has not been so disclosed, (ii) would reasonably be expected to have a
material adverse effect on the Investor’s investment hereunder or (iii) would
reasonably be expected to 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 articles of
incorporation (or similar governing document), any certificate of designation,
preferences or rights of any other outstanding series of preferred stock of the
Company or any such Subsidiary.  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 would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  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

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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 nor any of its Subsidiaries nor
any director, officer, agent, employee or other Person acting on behalf of the
Company or any of its Subsidiaries has, in the course of its actions for, or on
behalf of, the Company or any of its Subsidiaries (i) used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.

(p)

Sarbanes-Oxley Act. The Company and each Subsidiary is in compliance in all
material respects with all applicable requirements of the Sarbanes-Oxley Act of
2002 and all applicable rules and regulations promulgated by the SEC thereunder.

(q)

Transactions With Affiliates. Except as disclosed in the SEC Documents, none of
the officers, directors, employees or affiliates of the Company or any of its
Subsidiaries is presently a party to any transaction with the Company or any of
its Subsidiaries (other than for ordinary course services as employees, officers
or directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
such officer, director, employee or affiliate or, to the knowledge of the
Company or any of its Subsidiaries, any corporation, partnership, trust or other
Person in which any such officer, director, employee or affiliate has a
substantial interest or is an employee, officer, director, trustee or partner.

(r)

Equity Capitalization.  As of the date hereof, the authorized capital stock of
the Company consists of (i) 200,000,000 shares of Common Stock, of which,
14,394,562 shares are issued and outstanding and 3,855,370 shares are reserved
for issuance pursuant to Convertible Securities (as defined below) (other than
the Note and the Warrants) and (ii) 10,000,000 shares of preferred stock, par
value $0.001 per share, of which, 50,000 shares of Series C Preferred Stock are
issued and outstanding. No shares of Common Stock are held in treasury. All of
such outstanding shares are duly authorized and have been, or upon issuance will
be, validly issued and are fully paid and non-assessable.  Except as disclosed
in the SEC Documents, (i) none of the Company’s or any Subsidiary’s capital
stock is subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company or any Subsidiary; (ii)
there are no outstanding options, warrant, 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 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 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 capital stock of the
Company or any of its Subsidiaries; (iii) there are no 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

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by which the Company or any of its Subsidiaries is or may become bound; (iv)
there are no financing statements securing obligations in any amounts filed in
connection with the Company or any of its Subsidiaries; (v) 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); (vi) 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; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (viii) neither the Company nor any Subsidiary has any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan
or agreement; and (ix) 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. The SEC Documents contain true, correct and complete copies of
the Charter and the Bylaws and disclose the material terms of all Convertible
Securities and the material rights of the holders thereof in respect thereto.
“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.

(s)

Indebtedness and Other Contracts. Neither the Company nor any of its
Subsidiaries (i) except as set forth in the SEC Documents, has any outstanding
Indebtedness (as defined below), (ii) is in violation of any contract, agreement
or instrument that would reasonably be expected to result in a Material Adverse
Effect, (iii) 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 (iv) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect. (x) “Indebtedness” of any Person means, without duplication (A)
all indebtedness for borrowed money, (B) all obligations issued, undertaken or
assumed as the purchase price of property or services (including, without
limitation, “capital leases” in accordance with generally accepted accounting
principles and trade payables), (C) all reimbursement or payment obligations
with respect to letters of credit, surety bonds and other similar instruments,
(D) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses, (E) all indebtedness created or
arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to any property or assets
acquired with the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of default are
limited to repossession or sale of such property), (F) all monetary obligations
under any leasing or similar arrangement which, in connection with generally
accepted accounting principles, consistently applied for the periods covered
thereby, is classified as a capital lease, (G) all indebtedness referred to in
clauses (A) through (F) above secured by any mortgage, lien, pledge, charge,

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security interest or other encumbrance 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 (provided that, in the case of this clause (G),
such indebtedness shall be limited to the lower of (x) the principal amount of
such indebtedness and (y) the value of the property securing such indebtedness),
and (H) all Contingent Obligations in respect of indebtedness referred to in
clauses (A) through (G) above; (y) “Contingent Obligation” means, as to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person with respect to any indebtedness identified in clauses (A) through (G)
above 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; and
(z) “Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency thereof.  

(t)

Absence of Litigation. Except as disclosed in the SEC Documents, there is no
action, suit, proceeding, inquiry or investigation before or by the Principal
Market, any court, public board, government agency, 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 which is outside of the
ordinary course of business or individually or in the aggregate material to the
Company or any of its Subsidiaries. There has not been, and to the knowledge of
the Company, there is not 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.

(u)

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.

(v)

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 believes that its and its Subsidiaries’ relations with their respective
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. 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

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not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.

(w)

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, patents, patent rights, copyrights,
original works, 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.  None of the Company’s or its
Subsidiaries’ Intellectual Property Rights have expired, terminated or been
abandoned, or are expected to expire, terminate or be abandoned, within three
years from the date of this Agreement, except in any case in which such
expiration, termination or abandonment would not reasonably be expected to have
a Material Adverse Effect.  The Company has no knowledge of any infringement by
the Company or any of its Subsidiaries of Intellectual Property Rights of
others.  There is no claim, action or proceeding pending, or to the knowledge of
the Company, currently threatened, against the Company or any of its
Subsidiaries regarding their Intellectual Property Rights.  The Company is not
aware of any facts or circumstances which might give rise to any of the
foregoing infringements or claims, actions or proceedings. The Company and each
of its Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of all of their Intellectual Property Rights.

(x)

Environmental Laws. The Company and its Subsidiaries (i) are in compliance with
all Environmental Laws (as defined below), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) are in compliance with all
terms and conditions of any such permit, license or approval where, in each of
the foregoing clauses (i), (ii) and (iii), the failure to so comply would be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. “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.

(y)

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.

(z)

Tax Status. The Company and each of its Subsidiaries (i) has timely made or
filed all material foreign, federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(ii) has timely paid all material taxes and other governmental assessments and
charges that are material in amount, shown or determined to be

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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 in accordance with GAAP. There are no unpaid taxes
in any material amount claimed to be due by the taxing authority of any
jurisdiction.  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 U.S.
Internal Revenue Code of 1986, as amended (the “Code”).

(aa)

Internal Accounting and Disclosure Controls. Except as disclosed in the SEC
Documents, the Company 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. Except as disclosed in the SEC
Documents, 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.

(bb)

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
disclosed by the Company in its 1934 Act filings and is not so disclosed or that
otherwise would be reasonably likely to have a Material Adverse Effect.

(cc)

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.

(dd)

U.S. Real Property Holding Corporation.  Neither the Company nor any of its
Subsidiaries is, or has ever been, 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 the Investor’s request.

(ee)

Transfer Taxes. On the Closing Date, all stock transfer taxes which are required
to be paid in connection with the issuance, sale and transfer of the Securities
to be sold to the Investor 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.

(ff)

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 equity 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

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entity that is subject to the BHCA and to regulation by the Federal Reserve.

(gg)

Shell Company Status. The Company is not, and has never been, an issuer
identified in, or subject to, Rule 144(i).

(hh)

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.

(ii)

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.

(jj)

No Additional Agreements. The Company does not have any agreement or
understanding with the Investor with respect to the transactions contemplated by
the Transaction Documents other than as specified in the Transaction Documents.

(kk)

Real Property. Each of the Company and its Subsidiaries holds good title to all
real property, leases in real property, or other interests in real property
owned or held by the Company or any of its Subsidiaries (the “Real Property”)
owned by the Company or any of its Subsidiaries (as applicable). The Real
Property is free and clear of all mortgages, defects, claims, liens, pledges,
charges, taxes, rights of first refusal, encumbrances, security interests and
other encumbrances (collectively “Encumbrances”), except for Encumbrances that
would not be reasonably expected to have a Material Adverse Effect.

(ll)

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 adequate for the uses to which they are being put are sufficient
for the conduct of the Company’s and/or its Subsidiaries’ businesses (as
applicable) in the manner as conducted prior to the Closing.

(mm)

Illegal or Unauthorized Payments; Political Contributions.  Neither the Company
nor any of its Subsidiaries nor, to the Company’s knowledge (after reasonable
inquiry of its officers and directors), any of the officers, directors,
employees or agents of the Company or any of its Subsidiaries or any other
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, in
contravention of applicable law, (a) as a kickback or bribe to any Person or (b)
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.

(nn)

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, without limitation, (i) Executive Order 13224 of September

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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.

(oo)

Registration Rights.  No holder of securities of the Company has rights to the
registration of any securities of the Company because of the transactions
contemplated by the Transaction Documents, including, without limitation, the
issuance of the Securities hereunder, which would expose the Company to material
liability or any Investor to any liability or that would impair the Company’s
ability to consummate the issuance and sale of the Securities in the manner, and
at the times, contemplated hereby, which rights have not been waived by the
holder thereof as of the date hereof.

(pp)

Management. During the prior two (2) year period ending on the day immediately
preceding  the date hereof, to the knowledge of the Company, no current officer
or director of the Company has been the subject of:

(i)

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;

(ii)

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);

(iii)

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, 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 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;

(iv)

any order, judgment or decree, not subsequently reversed, suspended or vacated,
of any authority barring, suspending or otherwise limiting for more than sixty

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(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;

(v)

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

(vi)

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.

(qq)

Stock Option Plans. Since January 1, 2015, each stock option granted by the
Company was granted (i) in accordance with the terms of the applicable stock
option plan of the Company or outside of the Company’s stock option plan as an
inducement to employment or the engagement as a director 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 generally
accepted accounting principles and applicable law. No stock option granted under
the Company’s stock option plan has been backdated. Since January 1, 2015, 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 any of its
Subsidiaries or any of its or their respective financial results or prospects.

(rr)

No Disagreements with Accountants and Lawyers.  There are no material
disagreements of any kind presently existing between the Company, on the one
hand, and any accountants or lawyers formerly or presently employed or engaged
by the Company, on the other hand. The Company is current with respect to any
fees owed to its accountants and lawyers which could reasonably affect the
Company’s ability to perform any of its obligations under any of the Transaction
Documents.

(ss)

Ranking of Note. The Note shall constitute a senior general unsecured obligation
of the Company, ranking equally in right of payment with all of the existing and
future senior Indebtedness of the Company and ranking senior in right of payment
to any future Indebtedness of the Company that is expressly made subordinate to
the Note by the terms of such Indebtedness.

(tt)

XBRL. The interactive data in eXtensible Business Reporting Language (“XBRL”)
included or incorporated by reference in the SEC Documents fairly presents the
information called for in all material respects and has been prepared in all
material respects in accordance with the SEC’s rules and guidelines applicable
thereto.

(uu)

Accountants. BDO USA, LLP, whose report dated April 15, 2019 relating to the
financial statements of the Company is filed with the SEC as part of the
Company’s Annual Report on Form 10-K for the year ended December 31, 2018, is
and during the periods covered

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by its report was an independent registered public accounting firm within the
meaning of the 1933 Act and the Public Company Accounting Oversight Board
(United States).

(vv)

Listing and Maintenance Requirements. The Common Stock is registered pursuant to
Section 12(b) of the 1934 Act, and the Company has taken no action designed to,
or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the 1934 Act nor has the Company received
any notification that the SEC is contemplating terminating such registration.
The Company is not in violation in any material respect of any of the rules,
regulations or requirements of the Principal Market and has no knowledge of any
facts or circumstances that would reasonably lead to delisting or suspension of
the Common Stock by the Principal Market in the foreseeable future.  Except as
disclosed in the SEC Documents, during the two years prior to the date hereof,
(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 Common Stock is
currently eligible for electronic transfer through the Depository Trust Company
(“DTC”) or another established clearing corporation and the Company is current
in payment of the fees to DTC (or such other established clearing corporation)
in connection with such electronic transfer.

(ww)

No Disqualification Events.  None of the Company, any of its predecessors, any
affiliated issuer, any director, executive officer, other officer of the Company
participating in the offering hereunder, any beneficial owner of 20% or more of
the Company’s outstanding voting equity securities, calculated on the basis of
voting power, nor any promoter (as that term is defined in Rule 405 under the
1933 Act) connected with the Company in any capacity at the time of sale (each,
an “Issuer Covered Person”) is subject to any of the “Bad Actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) of Regulation D (a
“Disqualification Event”), except for a Disqualification Event covered by Rule
506(d)(2) or (d)(3) of Regulation D. 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) of Regulation D, and has furnished to the Investor
a copy of any disclosures provided thereunder.

(xx)

Disclosure.  The Company confirms that neither it nor any other Person acting on
its behalf has provided the Investor or its agents or counsel with any
information that constitutes 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 the Investor will rely on the foregoing
representations in effecting transactions in securities of the Company. All
disclosure provided to the Investor regarding the Company and its Subsidiaries
(taken as a whole), 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.  The press releases disseminated by
the Company during the twelve (12) months preceding the date of this Agreement,
taken as a whole, were true and correct in all material respects as of their
respective dates. No event or circumstance has occurred or information exists

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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.  

4.

COVENANTS.

(a)

Reasonable Best Efforts. The Investor shall use its reasonable best efforts to
timely satisfy each of the conditions to be satisfied by it as provided in
Section 6 of this Agreement. The Company shall use its reasonable best efforts
to timely satisfy each of the conditions to be satisfied by it as provided in
Section 7 of this Agreement.

(b)

Form D and Blue Sky.  The Company shall file a Form D with the SEC with respect
to the Securities as required under Regulation D and to provide a copy thereof
to the Investor promptly after such filing. The Company shall, on or before the
Closing Date, 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 Investor 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 Investor on or prior to 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 federal, foreign, state
and local laws, statutes, rules, regulations and the like relating to the
offering and sale of the Securities to the Investor.

(c)

Reporting Status.  Until the date on which the Investor shall have sold all of
the Registrable Securities (the “Reporting Period”), the Company shall 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. At any time during
the Reporting Period, if the Company (i) shall fail for any reason to satisfy
the current public information requirement under Rule 144(c) or (ii) has been or
becomes an issuer described in Rule 144(i)(1)(i), and the Company shall fail to
satisfy any condition set forth in Rule 144(i)(2) (a “Public Information
Failure”) then, in addition to the Investor’s other available remedies, the
Company shall pay to the Investor, in cash, as partial liquidated damages and
not as a penalty, by reason of any delay in or restriction of its ability to
sell any Conversion Shares or the Warrant Shares (solely in the event that the
Investor in fact shall have been unable to effect a sale of the Conversion
Shares or the Warrant Shares), an amount in cash equal to one percent (1.00%) of
the original principal amount of the Note on the day of a Public Information
Failure and on every thirtieth (30th) day (prorated for periods totaling less
than thirty days) thereafter until the earlier of (a) the date such Public
Information Failure is cured and (b) such time that such public information is
no longer required for the Investor to transfer all of the Registrable
Securities pursuant to Rule 144. The payments to which the Investor shall be
entitled pursuant to this Section 4(c) are referred to herein as “Public
Information Failure Payments.” Public Information Failure Payments shall be paid
on the earlier of (i) the last day of the calendar month during which such
Public Information Failure Payments are incurred and

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(ii) the third (3rd) Business Day after the event or failure giving rise to the
Public Information Failure Payments is cured.  In the event the Company fails to
make Public Information Failure Payments in a timely manner, such Public
Information Failure Payments shall bear interest at the rate of one-half percent
(0.50%) per month (prorated for partial months) until paid in full.  Nothing
herein shall limit the Investor’s right to pursue actual damages for the Public
Information Failure, and the Investor shall have the right to pursue all
remedies available to it at law or in equity, including, without limitation, a
decree of specific performance and/or injunctive relief.

(d)

Use of Proceeds. The Company shall use the proceeds from the sale of the
Securities for general working capital and other corporate purposes.

(e)

Financial Information. As long as any portion of the Note or any of the Warrants
remains outstanding, the Company agrees to send the following to the Investor
during the Reporting Period unless the following are filed with the SEC through
EDGAR and are available to the public through the EDGAR system, (i) 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 Current Reports on
Form 8-K and any registration statements (other than on Form S-8) or amendments
filed pursuant to the 1933 Act and (ii) copies of any notices and other
information made available or given to the shareholders of the Company
generally, contemporaneously with the making available or giving thereof to the
shareholders.

(f)

Listing.  The Company shall promptly secure the approval for listing of all of
the Registrable Securities upon any Eligible Market (subject to official notice
of issuance) (but in no event later than the Closing Date) and shall maintain
such listing of all Registrable Securities from time to time issuable under the
terms of the Transaction Documents on any Eligible Market. The Company shall
maintain the Common Stock’s listing on the Principal Market, the New York Stock
Exchange, the NYSE American, The Nasdaq Global Select Market or The Nasdaq
Global 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).

(g)

Fees.  The Company shall reimburse the Investor for all reasonable costs and
expenses incurred by it or its affiliates in connection with the transactions
contemplated by the Transaction Documents (including, without limitation, as
applicable, all reasonable legal fees and disbursements of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., counsel to the Investor, 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), in an aggregate
amount set forth in a provision that is expressly binding on the Company and the
Investor in that certain term sheet, dated as of April 4, 2019, executed by the
Company and the Investor (the “Term Sheet”), which aggregate amount, less any
portion thereof previously paid by the Company to the Investor. The Company
shall be responsible for the payment of any placement agent’s fees, financial
advisory fees, transfer agent fees, DTC fees or broker’s commissions (other than
for Persons engaged by the Investor) relating to or arising out of the
transactions contemplated by the Transaction Documents to be consummated at
Closing. The Company shall

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pay, and hold the Investor 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 Investor.

(h)

Pledge of Securities. Notwithstanding anything to the contrary contained in this
Agreement, the Company acknowledges and agrees that the Securities may be
pledged by the 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 the Investor effecting a pledge of Securities shall
not 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. The Company hereby agrees, at the sole cost and expense of the
Investor, 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 the Investor.

(i)

Disclosure of Transactions and Other Material Information.

(i)

Disclosure of Transaction.  The Company shall, on or before 9:00 a.m., New York
time, on the second (2nd) Business Day after the date of this Agreement, (i)
issue a press release (the “Press Release”) reasonably acceptable to the
Investor disclosing all the material terms of the transactions contemplated by
the Transaction Documents, and (ii) file with the SEC a Current Report on Form
8-K reasonably acceptable to the Investor 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), and
the form of Warrants) (including all attachments, the “8-K Filing”). The Company
shall permit the Investor to review and comment upon the Press Release and the
8-K Filing within a reasonable time prior to their filing with the SEC, the
Company shall give reasonable consideration to all such comments, and the
Company shall not issue the Press Release or file the 8-K Filing with the SEC in
a form to which the Investor reasonably objects. The Investor shall furnish to
the Company such information regarding itself, the Securities beneficially owned
by it and the intended method of distribution thereof, including any arrangement
between the Investor and any other Person relating to the sale or distribution
of the Securities, as shall be reasonably requested by the Company in connection
with the preparation and issuance of the Press Release and the preparation and
filing of the 8-K Filing, and shall otherwise cooperate with the Company as
reasonably requested by the Company in connection with the preparation and
issuance of the Press Release and the preparation and filing of the 8-K Filing
with the SEC.  From and after the issuance of the Press Release, the Company
represents to the Investor that it shall have publicly disclosed all material,
non-public information delivered to the Investor 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 issuance of the Press Release, the
Company acknowledges and agrees that any and all confidentiality or similar
obligations under any agreement, whether written or oral,

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between the Company, any of its Subsidiaries or any of their respective
officers, directors, agents, employees or Affiliates on the one hand, and the
Investor or any of its Affiliates on the other hand, shall terminate (unless
otherwise agreed between such parties in separate written confidentiality or
similar agreements, the terms of which shall not otherwise be modified by this
provision). The Company and the Investor shall consult with each other in
issuing any other press releases with respect to the transactions contemplated
by the Transaction Documents, and neither the Company nor the Investor shall
issue any such press release nor otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of
the Investor, or without the prior consent of the Investor, with respect to any
press release of the Company, which consent shall not unreasonably be withheld
or delayed, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party with prior notice of
such public statement or communication.  Notwithstanding the foregoing, the
Company shall not publicly disclose the name of the Investor, or include the
name of the Investor in any filing with the SEC or any regulatory agency or
Trading Market, without the prior written consent of the Investor (which may be
granted or withheld in the Investor’s sole discretion), except (x) to the extent
such disclosure is required by applicable U.S. federal securities laws in
connection with the filing with the SEC of (1) fully executed copies of this
Agreement and the Registration Rights Agreement (and the other Transaction
Documents) with the SEC as exhibits to the 8-K Filing and pursuant to
incorporation by reference in any subsequently filed report or registration
statement with the SEC and (2) any Registration Statement registering under the
1933 Act any Registrable Securities for resale by the Investor as contemplated
by the Registration Rights Agreement and (y) to the extent such disclosure is
required by applicable law or Trading Market regulations.

(ii)

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 the Investor with any material,
non-public information regarding the Company or any of its Subsidiaries from and
after the issuance of the Press Release and the 8-K Filing without the express
prior written consent of the Investor (which may be granted or withheld in the
Investor’s sole discretion). To the extent that the Company delivers any
material, non-public information to the Investor without the Investor's consent,
the Company expressly acknowledges and agrees that the Investor shall not have
(unless expressly agreed to by the Investor after the date hereof in a written
definitive and binding agreement executed by the Company and the Investor) any
duty of confidentiality with respect to, or a duty not to trade on the basis of,
any such material, non-public information regarding the Company or any of its
Subsidiaries.

(iii)

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, directors, employees or agents, provides the Investor 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 in a manner

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compliant with Regulation FD or on a Current Report on Form 8-K or another
report or statement filed with the SEC under the 1934 Act or the 1933 Act (each,
a “Disclosure”). From and after such Disclosure, the Company shall have
disclosed all Confidential Information provided to the Investor 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 Investor or any of its
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
the Investor shall have possessed Confidential Information for at least ten (10)
consecutive Trading Days (as defined in the Note) (each, a “Disclosure
Failure”), then, as partial relief for the damages to the Investor 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
the Investor an amount in cash equal to one percent (1.00%) of the original
principal amount of the Note (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 the Investor 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
third (3rd) Business Day after such Disclosure Cure Date.  The payments to which
an Investor shall be entitled pursuant to this Section 4(i)(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 one-half
percent (0.5%) per month (prorated for partial months) until paid in full.
Nothing herein shall limit the Investor’s right to pursue actual damages for the
Disclosure Failure, and the Investor shall have the right to pursue all remedies
available to it at law or in equity, including, without limitation, a decree of
specific performance and/or injunctive relief.

(iv)

For the purpose of this Agreement, “Required Disclosure Date” means (x) if the
Investor authorized the delivery of such Confidential Information, either (I) if
the Company and the Investor 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 the Investor first received any Confidential Information (provided, that if
such 7th calendar day is not a Trading Day, then on the next succeeding Trading
Day) or (y) if the Investor did not authorize the delivery of such Confidential
Information, the first (1st) Business Day after

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the Company, any of its Subsidiaries, or any of their respective officers,
directors, employees or agents, provided the Investor with such Confidential
Information.

(j)

Prohibition of Short Sales and Hedging Transactions. During the term of this
Agreement, the Investor and its agents, representatives and affiliates shall not
in any manner whatsoever enter into or effect, directly or indirectly, any (i)
“short sale” (as such term is defined in Rule 200 of Regulation SHO of the 1934
Act) of the Common Stock or (ii) hedging transaction, which establishes a net
short position with respect to the Common Stock.

(k)

Reservation of Shares. So long as any portion of the Note or any of the Warrants
remains outstanding, the Company shall take all action necessary to at all times
have authorized, and reserved for the purpose of issuance, no less than (i) the
number of shares of Common Stock required to be reserved for issuance to effect
the conversion of the Note in full under Section 8 of the Note (without taking
into account any limitations on the conversion of the Note set forth therein)
and (ii) the number of shares of Common Stock required to be reserved for
issuance to effect the exercise of all of the outstanding Warrants in full under
Section 1(g) of the Warrants (without taking into account any limitations on the
exercise of the Warrants set forth therein) (collectively, the “Required Reserve
Amount”). 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 shareholders 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 shareholder 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.

(l)

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 result, either
individually or in the aggregate, in a Material Adverse Effect.

(m)

Variable Rate Transaction. So long as any portion of the Note or any of the
Warrants remains outstanding, without the prior written consent of the Investor
(which may be delayed, conditioned or withheld in the Investor’s sole
discretion), the Company and each Subsidiary shall be prohibited from effecting
or entering into an agreement to effect any issuance by the Company or any of
its Subsidiaries of Common Stock or Convertible Securities (or a combination of
units thereof) involving an “equity line of credit”, or other similar offering
of Common Stock or Convertible Securities, whereby the Company may sell Common
Stock or Convertible Securities at a future determined price, other than (A)
pursuant to an agreement or transaction between the Company and the Investor and
(B) pursuant to an “at-the-market offering” of Common Stock by the Company
exclusively through a registered broker-dealer acting as agent of the Company
pursuant to a written agreement between the Company and such registered
broker-dealer. The Investor 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, without the
necessity of showing economic loss and without any

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bond or other security being required.  For the elimination of doubt (and
without, by negative implication or otherwise, expanding the prohibition
contained in this Section 4(m)), this Section 4(m) shall not prohibit the
Company or any of its Subsidiaries from entering into any agreement to effect
the issuance by the Company or any of its Subsidiaries of Common Stock or
Convertible Securities whereby the Company may sell Common Stock or Convertible
Securities at a future determined price to any Person (or to the equity holders
of a Person), in each case pursuant to any merger, consolidation, business
combination, or asset purchase transaction approved by the Board of Directors or
a majority of the members of a committee of directors established for such
purpose, provided that any such issuance shall only be to a Person (or to the
equity holders of a Person) which is, itself or through its subsidiaries, an
operating company or 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, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities.

(n)

No Frustration. So long as any portion of the Note or any of the Warrants
remains outstanding, neither the Company nor any of its affiliates or
Subsidiaries, nor any of its or their respective officers, employees, directors,
agents or other representatives, will, without the prior written consent of the
Investor (which consent may be withheld, delayed or conditioned in the
Investor’s sole discretion), effect, enter into, amend the terms of, extend the
maturity or term of, or announce or recommend to its shareholders any covenant,
agreement, plan, arrangement or transaction (or issue, amend or waive any
security of the Company or any agreement with respect to any Indebtedness) that
would or would reasonably be expected to prohibit, limit, restrict, delay,
conflict with or impair the ability or right of the Company to timely perform
its obligations under this Agreement, the Note or any of the Warrants,
including, without limitation, the obligation of the Company to timely (i)
deliver shares of Common Stock to any of the Investors or their respective
affiliates in accordance with this Agreement, the Note and the Warrants and (ii)
repay in cash all outstanding principal and other amounts outstanding under the
Note at maturity or at any other times when payments are required to be made in
cash pursuant to the terms of the Note.

(o)

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.

(p)

Conversion/Exercise Procedures.  The form of Conversion Notice (as defined in
the Note) included in the Note sets forth the totality of the procedures
required of the Investor in order to convert the Note. The form of Exercise
Notice (as defined in the Warrants) included in the Warrants sets forth the
totality of the procedures required of the Investor in order to exercise the
Warrants. No legal opinion or other information or instructions shall be
required of the Investor to convert any portion of the Note or to exercise any
portion of any of the Warrants.  The Company shall honor conversions of the Note
and shall deliver the applicable number of Conversion Shares in accordance with
the terms, conditions and time periods set forth in the Note. The Company shall
honor exercises of the Warrants and shall deliver the applicable number of
Warrant Shares in accordance with the terms, conditions and time periods set
forth in the Warrants. Without limiting the preceding sentences, no ink-original
Conversion Notice or

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Exercise Notice shall be required, nor shall any medallion guarantee (or other
type of guarantee or notarization) of any Conversion Notice or Exercise Notice
form be required in order to convert any portion of the Note or to exercise any
portion of any of the Warrants, as applicable.

(q)

General Solicitation.  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: () any advertisement, article, notice or
other communication published in any newspaper, magazine or similar medium or
broadcast over television or radio; and () any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.

(r)

Integration.  None of the Company, its Subsidiaries, their affiliates nor any
Person acting on their behalf will take any action or steps that would (i)
require registration of the offer, issuance or sale of the Securities under the
1933 Act, or (ii) cause the offer, issuance or sale of the Securities to be
integrated with any other offering of securities of the Company (including,
without limitation, any prior or other offering of securities of the Company or
otherwise).

(s)

Notice of Disqualification Events.  The Company will notify the Investor in
writing, prior to the Closing Date of (i) any Disqualification Event relating to
any Issuer Covered Person and (ii) any event that has occurred and would, with
the passage of time, reasonably be expected to become a Disqualification Event
relating to any Issuer Covered Person, in each case of which it is aware.

(t)

Closing Documents.  On or prior to the thirtieth (30th) calendar day after the
Closing Date, the Company agrees to deliver, or cause to be delivered, to the
Investor and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. a complete
closing set of the executed Transaction Documents and any other document
required to be delivered to any party pursuant to Section 7 hereof or otherwise.
 Delivery of such closing set may be made in electronic form.

5.

REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.

(a)

Register. The Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may determine from time to time), a
register for the Note and the Warrants in which the Company shall record the
name and address of the Person in whose name the Note and the Warrants have been
issued (including the name and address of each transferee to the extent the
Company has knowledge of such transferee), the principal amount of the Note held
by such Person, the number of Conversion Shares issuable upon conversion of the
Note and the number of Warrant Shares issuable upon exercise of the Warrants
held by such Person. The Company shall keep the register available during
regular business hours for inspection by the Investor or its legal
representatives; provided, that the Investor provide the Company with reasonable
advance notice of such inspection.

(b)

Transfer Agent Instructions. The Company shall issue irrevocable instructions to
its transfer agent and any subsequent transfer agent in a form reasonably
acceptable to the Investor (the “Irrevocable Transfer Agent Instructions”) to
issue certificates or credit shares to the applicable balance accounts at DTC,
registered in the name of the Investor or its respective

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nominee(s), for the Conversion Shares and the Warrant Shares in such amounts as
specified from time to time by the Investor to the Company upon conversion of
the Note or the exercise of the Warrants (as the case may be), and in each case
in accordance with the terms of the Note and the Warrants, as applicable. 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(h) 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 the Investor effects a sale, assignment or transfer of
the Securities in accordance with Section 2(h), the Company shall permit the
transfer and shall promptly instruct its transfer agent to issue one or more
certificates or credit shares to the applicable balance accounts at DTC in such
name and in such denominations as specified by the Investor to effect such sale,
transfer or assignment. In the event that such sale, assignment or transfer
involves Conversion Shares or Warrant Shares sold, assigned or transferred
pursuant to an effective registration statement (including a Registration
Statement) covering the resale of such shares or in compliance with Rule 144,
the Company’s transfer agent shall issue such shares to the Investor, 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 the Investor. 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
the Investor 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 each legal opinion referred to in the Irrevocable Transfer
Agent Instructions to the Company’s transfer agent as follows: (i) upon each
conversion of the Note (unless such issuance is covered by a prior legal opinion
previously delivered to the Company’s transfer agent), (ii) upon each exercise
of the Series A Warrant, each exercise of the Series B Warrant, each exercise of
the Series C Warrant and each exercise of the Series D Warrant (unless such
issuance is covered by a prior legal opinion previously delivered to the
Company’s transfer agent), and (iii) on each date a registration statement
(including a Registration Statement) covering the resale of any Registrable
Securities is declared effective by the SEC under the 1933 Act (including,
without limitation, any Effective Date (as defined in the Registration Rights
Agreement)).  The Company may request from the Investor (or other applicable
holder of the Securities), and the Investor (or other applicable holder of the
Securities) shall provide, customary Rule 144 representation letters (as
applicable) in connection with any transfer or sale of the Securities under Rule
144 for which a legal opinion is required by the Transfer Agent or otherwise,
and the Company’s counsel shall be an addressee thereof and shall be entitled to
rely upon such representation letters.  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.

(c)

Legends. The Investor understands that the Securities have been issued (or will
be issued in the case of the Conversion Shares and the Warrant Shares) pursuant
to an exemption from registration or qualification under the 1933 Act and
applicable state securities laws, and except as set forth in Section 5(d) below,
the Securities shall bear any legend as required by the

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“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 THIS SECURITY NOR THE SECURITIES [FOR][INTO] WHICH THIS SECURITY IS
[EXERCISABLE][CONVERTIBLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN] REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.  THIS SECURITY AND THE SECURITIES ISSUABLE
UPON [EXERCISE][CONVERSION] OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH
SECURITIES.

(d)

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 the Investor 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
counsel), (iv) in connection with a sale, assignment or other transfer (other
than under Rule 144), provided that the Investor provides the Company with an
opinion of counsel to the Investor, in form and substance reasonably acceptable
to the Company, 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 following the delivery by the Investor to the Company or the
Company’s 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 the Investor
as may be required above in this Section 5(d), as directed by the Investor,
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 or Warrant Shares, credit the aggregate number of shares of
Common Stock to which the Investor shall be entitled to the Investor’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 at the Company’s
expense (via reputable overnight courier)

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to the Investor, a certificate representing such Securities that is free from
all restrictive and other legends, registered in the name of the Investor or its
designee (the date by which such credit is so required to be made to the balance
account of the Investor’s or the Investor’s nominee with DTC or such certificate
is required to be delivered to the Investor pursuant to the foregoing is
referred to herein as the “Required Delivery Date”).

(e)

Failure to Timely Deliver; Buy-In.  If the Company fails to (i) issue and
deliver (or cause to be delivered) to the Investor by the Required Delivery Date
a certificate representing the Securities so delivered to the Company by the
Investor that is free from all restrictive and other legends or (ii) credit the
balance account of the Investor’s or the Investor’s nominee with DTC for such
number of Conversion Shares or Warrant Shares so delivered to the Company, then,
in addition to all other remedies available to the Investor, the Company shall
pay in cash to the Investor on each day after the Required Delivery Date that
the issuance or credit of such shares is not timely effected an amount equal to
one percent (1.0%) of the original principal amount of the Note. In addition to
the foregoing, if the Company fails to so properly deliver such unlegended
certificates or so properly credit the balance account of the Investor’s or the
Investor’s nominee with DTC by the Required Delivery Date, and if on or after
the Required Delivery Date the Investor (or any other Person in respect, or on
behalf, of the Investor) purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Investor of
all or any portion of the number of shares of Common Stock, or a sale of a
number of shares of Common Stock equal to all or any portion of the number of
shares of Common Stock, that the Investor so anticipated receiving from the
Company without any restrictive legend, then, in addition to all other remedies
available to the Investor, the Company shall, within three (3) Trading Days
after the Investor’s request and in the Investor’s sole discretion, either (i)
pay cash to the Investor in an amount equal to the Investor’s total purchase
price (including brokerage commissions and other out-of-pocket expenses actually
incurred by the Investor, if any) for the shares of Common Stock so purchased
(including brokerage commissions and other out-of-pocket expenses actually
incurred by the Investor, if any) (the “Buy-In Price”), at which point the
Company’s obligation to so deliver such certificate or credit the Investor’s
balance account shall terminate and such shares shall be cancelled, or (ii)
promptly honor its obligation to so deliver to the Investor a certificate or
certificates or credit the Investor’s DTC account 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 the Investor 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 or Warrant Shares (as the case may
be) that the Company was required to deliver to the Investor by the Required
Delivery Date multiplied by (B) the lowest Closing Sale Price (as defined in the
Note) of the Common Stock on any Trading Day during the period commencing on the
date of the delivery by the Investor to the Company of the applicable Conversion
Shares or Warrant Shares (as the case may be) and ending on the date of such
delivery and payment under this clause (ii).

(f)

FAST Compliance.  So long as any portion of the Note or any of the Warrants
remains outstanding, the Company shall maintain a transfer agent that
participates in the DTC Fast Automated Securities Transfer Program.

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6.

CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

(a)

The obligation of the Company hereunder to issue and sell the Note and the
Series A Warrant to the Investor at the Closing, and the obligation of the
Company to issue the Series B Warrant, the Series C Warrant and the Series D
Warrant to the Investor at the applicable times set forth in this Agreement (if
the Company is required to do so under this Agreement), 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
the Investor with prior written notice thereof:

(i)

The Investor shall have executed this Agreement and each of the other
Transaction Documents to which it is a party and delivered the same to the
Company.

(ii)

The Investor shall have delivered to the Company the Purchase Price (less the
amounts withheld pursuant to Section 4(g)) for the Note and the Series A Warrant
being purchased by the Investor at the Closing by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Company.

(iii)

The representations and warranties of the Investor 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
date), and the Investor 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 the Investor at or
prior to the Closing Date.

7.

CONDITIONS TO THE INVESTOR’S OBLIGATION TO PURCHASE.  

(a)

The obligation of the Investor hereunder to purchase the Note and the Series A
Warrant 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 Investor’s sole benefit and may be waived by the Investor at any time in
its sole discretion by providing the Company with prior written notice thereof:

(i)

The Company shall have duly executed and delivered to the Investor this
Agreement, the Registration Rights Agreement and each of the other Transaction
Documents to which it is a party, including, without limitation, the Note in the
original principal amount of $1,100,000, duly executed on behalf of the Company
and registered in the name of the Investor or its designee, and the Series A
Warrant, duly executed on behalf of the Company and registered in the name of
the Investor or its designee.

(ii)

The Company shall have delivered to the Investor a copy of the Irrevocable
Transfer Agent Instructions, in the form reasonably acceptable to the Investor,
which instructions shall have been delivered to and acknowledged in writing by
the Company’s transfer agent.

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(iii)

The Company shall have delivered to the Investor a certificate evidencing the
good standing of the Company issued by the Department of State of the State of
Florida as of a date within ten (10) days prior to the Closing Date.

(iv)

The Company shall have delivered to the Investor a certificate, in the form
reasonably acceptable to the Investor, 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 the Investor and (ii) the Charter and Bylaws.

(v)

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 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. The Investor shall have received
a certificate, executed by the Chief Executive Officer of the Company, dated as
of the Closing Date, to the foregoing effect.

(vi)

The Company shall have delivered to the Investor 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.

(vii)

The Common Stock (A) shall be listed on the Principal Market and (B) at any time
from the date hereof to the Closing Date, shall not have been suspended 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, either (I)
in writing by the SEC or the Principal Market or (II) by falling below the
minimum maintenance requirements of the Principal Market.

(viii)

At any time from the date hereof to the Closing Date, trading in securities
generally as reported by Bloomberg L.P. shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by such service, or on the Principal Market, nor shall a
banking moratorium have been declared either by the United States or New York
State authorities nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of the Investor, makes it
impracticable or inadvisable to purchase the Note and the Series A Warrant at
the Closing.

(ix)

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.

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(x)

No statute, regulation, order, decree, writ, ruling or injunction shall have
been enacted, entered, promulgated, threatened or endorsed by any court or
governmental authority of competent jurisdiction which prohibits the
consummation of or which would materially modify or delay any of the
transactions contemplated by the Transaction Documents.

(xi)

No action, suit or proceeding before any arbitrator or any court or governmental
authority shall have been commenced or threatened, and no inquiry or
investigation by any governmental authority shall have been commenced or
threatened, against the Company or any Subsidiary, or any of the officers,
directors or affiliates of the Company or any Subsidiary, seeking to restrain,
prevent or change the transactions contemplated by the Transaction Documents, or
seeking material damages in connection with such transactions.

(xii)

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.

(xiii)

All of the Conversion Shares that may be issued upon the full conversion of the
Note, without regard to any limitations on conversion set forth in the Note, and
all of the Warrant Shares that may be issued upon the full exercise of all of
the Warrants, without regard to any limitations on exercise set forth in the
Warrants, in each case shall have been approved for listing on the Principal
Market as of the Closing Date, subject only to notice of issuance.

(xiv)

All reports, schedules, registrations, forms, statements, information and other
documents required to have been filed by the Company with the SEC pursuant to
the reporting requirements of the 1934 Act, including all material required to
have been filed pursuant to Section 13(a) or 15(d) of the 1934 Act, shall have
been filed with the SEC under the 1934 Act.

(xv)

No condition, occurrence, state of facts or event that would constitute an Event
of Default (as such term is defined in the Note) shall exist on the date of this
Agreement or on the Closing Date.

(xvi)

The Company and its Subsidiaries shall have delivered to the Investor such other
documents, instruments or certificates relating to the transactions contemplated
by this Agreement as the Investor or its counsel may reasonably request.

8.

TERMINATION.  

In the event that the Closing shall not have occurred within ten (10) days after
the date hereof, then the Investor shall have the right to terminate its
obligations under this Agreement at any time on or after the close of business
on such date without liability of the Investor to any other party; provided,
however, the right to terminate its obligations under this Agreement pursuant to
this Section 8 shall not be available to the Investor if the failure of the
transactions contemplated by this Agreement to have been consummated by such
date is the result of the Investor’s breach of this Agreement; and provided,
further that no such termination shall affect any obligation of the Company
under this Agreement to reimburse the Investor for the expenses

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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.

(a)

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. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or under any of the other Transaction
Documents or in connection herewith or with any transaction contemplated hereby
or thereby or discussed herein or therein, 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 (i) limit, or be deemed to limit, in any way any
right to serve process in any manner permitted by law, (ii) operate, or shall be
deemed to operate, to preclude the Investor from bringing suit or taking other
legal action against the Company in any other jurisdiction to collect on the
Company’s obligations to the Investor or to enforce a judgment or other court
ruling in favor of the Investor or (iii) limit, or be deemed to limit, any
provision of Section 23 of the Note or Section 13 of the Warrants.  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.

(b)

Counterparts. This Agreement may be executed in two or more 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) or similar 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.

(c)

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

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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.

(d)

Severability. 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 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 its
Subsidiaries (as the case may be), or payable to or received by the Investor,
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 the Investor, or collection by the Investor 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 the Investor, 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
the Investor, the amount of interest or any other amounts which would constitute
unlawful amounts required to be paid or actually paid to the Investor 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
the Investor 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.

(e)

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 Investor, the Company their affiliates and Persons acting
on their behalf solely with respect to the 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 the

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Investor has entered into with, or any instruments the Investor has received
from, the Company or any of its Subsidiaries prior to the date hereof with
respect to any prior investment made by the Investor 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 the Investor or any
other Person, in any agreement entered into prior to the date hereof between or
among the Company and/or any of its Subsidiaries and the Investor, 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 the Investor
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 Investor, and any amendment to any
provision of this Agreement made in conformity with the provisions of this
Section 9(e) shall be binding on the Investor and holders of Securities, as
applicable, provided that no such amendment shall be effective to the extent
that it (1) applies to less than all of the holders of the Securities then
outstanding or (2) imposes any obligation or liability on the Investor without
the Investor’s prior written consent (which may be granted or withheld in the
Investor’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 Investor 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 the Investor 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 the Investor without the Investor’s prior written
consent (which may be granted or withheld in the Investor’s sole discretion).
The Company has not, directly or indirectly, made any agreements with the
Investor 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, the Investor has not 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 the Investor to enter into this
Agreement, the Company expressly acknowledges and agrees that (i) no due
diligence or other investigation or inquiry conducted by the Investor, any of
its advisors or any of its representatives shall affect the Investor’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 (ii) 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 the SEC Documents shall
affect the Investor’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.

(f)

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, if delivered
personally; (ii) when sent, if sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); (iii) when sent, if sent by e-mail (provided that such sent
e-mail 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 e-mail server that such e-mail could not be delivered to
such recipient) and (iv) if sent by overnight courier service,

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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/or e-mail addresses for such
communications are as follows:

If to the Company:

Dolphin Entertainment, Inc.

2151 Le Jeune Road, Suite 150 – Mezzanine

Coral Gables, Florida 33134

E-mail address: billodowd@dolphinentertainment.com
Attention:  Chief Executive Officer

With a copy (for informational purposes only) to:

Greenberg Traurig, P.A.

333 SE 2nd Avenue, Suite 4400

Miami, Florida 33134

Telephone: (305) 579-0589
Facsimile:  (305) 961-5589

E-mail address: altmand@gtlaw.com
Attention:  Drew M. Altman, Esq.

If to the Transfer Agent:

Nevada Agency and Transfer Company

50 West Liberty Street, Suite 880

Reno, NV 89501

Telephone:

(775) 322-0626

Facsimile:

(775) 322-5623

E-mail:

tiffany@natco.com

Attention:

Tiffany Baxter

If to the Investor:

Lincoln Park Capital Fund, LLC

440 North Wells, Suite 410

Chicago, IL 60654

Telephone:  (312) 822-9300
Facsimile:  (312) 822-9301
Attention:  Joshua Scheinfeld/Jonathan Cope
E-Mail:  jscheinfeld@lpcfunds.com/jcope@lpcfunds.com

With a copy (for informational purposes only) to:

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
666 Third Avenue
New York, NY 10017

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Telephone: (212) 692-6267
Facsimile:  (212) 983-3115

Attention: Anthony J. Marsico, Esq.

Email: ajmarsico@mintz.com

or to such other address, facsimile number or e-mail address 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. 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 containing the time,
date and recipient facsimile number 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 (iv) above, respectively. A copy of the e-mail transmission containing the
time, date and recipient e-mail address shall be rebuttable evidence of receipt
by e-mail in accordance with clause (iii) above.

(g)

Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted assigns,
including, as contemplated below, any assignee or transferee of any of the
Securities. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investor (which
may be granted or withheld in the sole discretion of the Investor), including,
without limitation, by way of a Fundamental Transaction (as defined in the Note)
(unless the Company is in compliance with the applicable provisions governing
Fundamental Transactions set forth in the Note). The Investor may assign some or
all of its rights hereunder in connection with any assignment or transfer of any
of its Securities without the consent of the Company (provided that the Investor
provides the Company with prompt notice of such assignment), in which event such
assignee or transferee (as the case may be) shall be deemed to be an Investor
hereunder with respect to such assigned rights.

(h)

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).

(i)

Survival. The representations, warranties, agreements and covenants shall
survive the Closing.

(j)

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.

(k)

Indemnification.  In consideration of the Investor’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 the
Investor and each holder of any Securities and all of

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their shareholders, 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 (a)
any misrepresentation or breach of any representation or warranty made by the
Company in any of the Transaction Documents, (b) any breach of any covenant,
agreement or obligation of the Company contained in any of the Transaction
Documents or (c) 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 (i) the
execution, delivery, performance or enforcement of any of the Transaction
Documents, (ii) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Securities,
(iii) any disclosure properly made by the Investor pursuant to Section 4(i), or
(iv) the status of the Investor 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.

(l)

Construction. 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 stock splits, stock
dividends, stock combinations and other similar transactions that occur with
respect to the Common Stock after the date of this Agreement. It is expressly
understood and agreed that for all purposes of this Agreement, and without
implication that the contrary would otherwise be true, neither transactions nor
purchases nor sales shall include the location and/or reservation of borrowable
shares of Common Stock.

(m)

Remedies.  The Investor and each holder of any 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 applicable 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 fails to perform, observe, or
discharge any or all of its obligations under

41

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the Transaction Documents, any remedy at law may prove to be inadequate relief
to the Investor. The Company therefore agrees that the Investor shall be
entitled to seek 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).

(n)

Withdrawal Right. Notwithstanding anything to the contrary contained in (and
without limiting any similar provisions of) the Transaction Documents, whenever
the Investor exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within
the periods therein provided, then the Investor 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.

(o)

Payment Set Aside; Currency. To the extent that the Company makes a payment or
payments to the Investor hereunder or pursuant to any of the other Transaction
Documents or the Investor enforces or exercises its 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.

(p)

Judgment Currency.

(i)

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:

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(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)(1) being hereinafter referred to as the
“Judgment Conversion Date”).

(ii)

If in the case of any proceeding in the court of any jurisdiction referred to in
Section 9(p)(i)(1)  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 purchased with the amount of
Judgment Currency stipulated in the judgment or judicial order at the Exchange
Rate prevailing on the Judgment Conversion Date.

(iii)

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.

(q)

Liquidated Damages. The Company’s obligations to pay any liquidated damages or
other amounts owing under the Transaction Documents is a continuing obligation
of the Company and shall not terminate until all unpaid liquidated damages and
other amounts have been paid notwithstanding the fact that the instrument or
security pursuant to which such partial liquidated damages or other amounts are
due and payable shall have been canceled.

[signature pages follow]

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

COMPANY:

DOLPHIN ENTERTAINMENT, INC.

By:

/s/ William O’Dowd, IV

Name: William O’Dowd, IV

Title:  Chief Executive Officer

 

--------------------------------------------------------------------------------

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

 

INVESTOR:

LINCOLN PARK CAPITAL FUND, LLC

BY: LINCOLN PARK CAPITAL, LLC

BY: ROCKLEDGE CAPITAL CORPORATION

By:

/s/ Joshua Scheinfeld

Name: Joshua Scheinfeld

Title: President

 

 

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Exhibit A

[Filed as Exhibit 4.1 to the Current Report on Form 8-K to which this agreement
is attached as an Exhibit]

 

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Exhibits B-1, B-2, B-3 and B-4

[Filed as Exhibit 4.2 to the Current Report on Form 8-K to which this agreement
is attached as an Exhibit]

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Exhibit C

[Filed as Exhibit 10.2 to the Current Report on Form 8-K to which this agreement
is attached as an Exhibit]