PHUNWARE, INC.

Common Stock
(par value $0.0001 per share)

At-The-Market Issuance Sales Agreement
August 14, 2020
Ascendiant Capital Markets, LLC
18881 Von Karman Avenue, 16th Floor
Irvine, CA 92612

Ladies and Gentlemen:
Phunware, Inc., a Delaware corporation (the “Company”), confirms its agreement
(this “Agreement”) with Ascendiant Capital Markets, LLC (“Ascendiant”), as
follows:
1. Issuance and Sale of Shares. The Company agrees to issue and sell through
Ascendiant, shares (the “Placement Shares”) of the Company’s common stock, par
value $0.0001 per share (the “Common Stock”), from time to time during the term
of this Agreement and on the terms set forth in this Agreement; provided
however, that in no event will the Company issue or sell through Ascendiant such
number of Placement Shares that would (a) cause the aggregate offering price of
such Placement Shares to exceed the remaining maximum aggregate offering price
of securities of the Company registered on the effective Registration Statement
(as defined below) pursuant to which the offering is being made, or (b) exceed
the number of the Company’s authorized but unissued shares of Common Stock (the
lesser of (a) and (b), the “Maximum Amount”). Notwithstanding anything to the
contrary contained herein, the parties hereto agree that compliance with the
limitations set forth in this Section 1 on the amount of Placement Shares issued
and sold under this Agreement will be the sole responsibility of the Company and
that Ascendiant will have no obligation in connection with such compliance. The
issuance and sale of Placement Shares through Ascendiant will be effected
pursuant to the Registration Statement (as defined below) filed by the Company
and declared effective by the U.S. Securities and Exchange Commission (the
“SEC”), although nothing in this Agreement will be construed as requiring the
Company to use the Registration Statement to issue Common Stock.
The Company has filed with the SEC, in accordance with the provisions of the
Securities Act of 1933, as amended (the “Securities Act”), and the rules and
regulations thereunder (the “Securities Act Regulations”), a registration
statement on Form S-3 (File No. 333-235896), including a base prospectus,
relating to certain securities, including the Placement Shares, to be issued
from time to time by the Company, and which incorporates by reference documents
that the Company has filed or will file in accordance with the provisions of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules
and regulations thereunder. The Company has prepared a prospectus supplement
specifically relating to the Placement Shares (the “Prospectus Supplement”) to
the base prospectus included as part of the registration statement. The Company
will furnish to Ascendiant, for use by it, copies of the prospectus included as
part of the registration statement, as supplemented by the Prospectus
Supplement, relating to the Placement Shares. Except when the context otherwise
requires, such registration statement, including all documents filed as part
thereof or incorporated by reference therein, and including any information
contained in a Prospectus (as defined below) subsequently filed with the SEC
pursuant to Rule 424(b) under the Securities Act Regulations or deemed to be a
part of the registration statement pursuant to Rule 430B of the Securities Act
Regulations, is herein called the “Registration Statement.” The base prospectus,
including all documents incorporated therein by reference, included in the
Registration Statement, as it may be supplemented by the Prospectus Supplement,
in the form in which the prospectus and/or Prospectus Supplement have most
recently been filed by the Company with the SEC pursuant to Rule 424(b) under
the Securities Act Regulations is herein called the “Prospectus.” Any reference
herein to the Registration Statement, the Prospectus, or any amendment or
supplement thereto will be deemed to refer to and include the documents
incorporated by reference therein, and any reference herein to the terms
“amend,” “amendment,” or “supplement” respecting the Registration Statement or
the

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

Prospectus will be deemed to refer to and include the filing of any document
with the SEC deemed to be incorporated by reference therein (the “Incorporated
Documents”).
For purposes of this Agreement, all references to the Registration Statement,
the Prospectus, or to any amendment or supplement thereto will be deemed to
include the most recent copy filed with the SEC pursuant to its Electronic Data
Gathering Analysis and Retrieval System, or if applicable, the Interactive Data
Electronic Application system when used by the SEC (collectively, “EDGAR”).
2. Placements. Each time that the Company wishes to issue and sell Placement
Shares hereunder (each, a “Placement”), it will notify Ascendiant by email
notice (or other method mutually agreed to in writing by the parties) of the
number of Placement Shares, the period during which sales are requested to be
made, any limitation on the number of Placement Shares that may be sold in any
one day, and any minimum price below which sales may not be made (a “Placement
Notice”), the form of which is attached hereto as Schedule 1. The Placement
Notice will originate from any of the individuals from the Company set forth on
Schedule 3 (with a copy to each of the other individuals from the Company listed
on the schedule) and will be addressed to each of the individuals from
Ascendiant set forth on Schedule 3, as Schedule 3 may be amended from time to
time. The Placement Notice will be effective unless and until: (a) Ascendiant
declines to accept the terms contained therein for any reason, in its sole
discretion; (b) the entire amount of the Placement Shares thereunder have been
sold; (c) the Company suspends or terminates the Placement Notice; or (d) the
Agreement has been terminated under the provisions of Section 13. The amount of
any discount, commission, or other compensation to be paid by the Company to
Ascendiant in connection with the sale of the Placement Shares will be
calculated in accordance with the terms set forth in Schedule 2. Neither the
Company nor Ascendiant will have any obligation whatsoever respecting a
Placement or any Placement Shares unless and until the Company delivers a
Placement Notice to Ascendiant and Ascendiant does not decline such Placement
Notice pursuant to the terms set forth above, and then only upon the terms
specified therein and herein. In the event of a conflict between the terms of
Sections 2, 3, and 4 of this Agreement and the terms of a Placement Notice, the
terms of the Placement Notice will control.
3. Sale of Placement Shares by Ascendiant. Subject to the terms and conditions
of this Agreement, Ascendiant, for the period specified in the Placement Notice,
will use its commercially reasonable efforts consistent with its normal trading
and sales practices and applicable state and federal laws, rules, and
regulations and the rules of The NASDAQ Capital Market (the “Exchange”), to sell
the Placement Shares up to the amount specified, and otherwise in accordance
with the terms of such Placement Notice. Ascendiant will provide written
confirmation to the Company no later than the opening of the Trading Day (as
defined below) immediately following the Trading Day on which it has sold
Placement Shares hereunder, setting forth the number of Placement Shares sold on
such day, the compensation payable by the Company to Ascendiant pursuant to
Section 2 for such sales, and the Net Proceeds (as defined below) payable to the
Company, with an itemization of the deductions made by Ascendiant (as set forth
in Section 5(b)) from the gross proceeds that it receives from such sales.
Subject to the terms of the Placement Notice, Ascendiant may sell Placement
Shares by any method permitted by law deemed to be an “at the market” offering
as defined in Rule 415(a)(1)(x) and 415(a)(4) of the Securities Act Regulations,
including sales made directly on the Exchange or on any other existing trading
market for the Common Stock or to or through a market maker. Subject to the
terms of a Placement Notice, Ascendiant may also sell Placement Shares by any
other method permitted by law, including in privately negotiated transactions,
with the Company’s consent. “Trading Day” means any day on which Common Stock is
purchased and sold on the Exchange.
4. Suspension of Sales. The Company or Ascendiant may, upon notice to the other
party in writing (including by email correspondence to each of the individuals
of the other party set forth on Schedule 3, if receipt of such correspondence is
actually acknowledged by any of the individuals to whom the notice is sent,
other than via auto-reply) or by telephone (confirmed immediately by verifiable
email correspondence to each of the individuals of the other party set forth on
Schedule 3), suspend any sale of Placement Shares; provided, however, that such
suspension will not affect or impair any party’s obligations respecting any
Placement Shares sold hereunder prior to the receipt of such notice. Each of the
parties agrees that no such notice under this Section 4 will be effective
against any other party unless it is made to one of the individuals named on
Schedule 3 hereto, as such schedule may be amended from time to time.
2

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

5. Sale and Delivery to Ascendiant; Settlement.
(a) Sale of Placement Shares. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, upon
delivery of a Placement Notice, and unless the sale of the Placement Shares
described therein has been declined, suspended, or otherwise terminated in
accordance with the terms of this Agreement, Ascendiant, for the period
specified in the Placement Notice, will use its commercially reasonable efforts
consistent with its normal trading and sales practices and applicable state and
federal laws, rules and regulations and the rules of the Exchange to sell such
Placement Shares up to the amount specified, and otherwise in accordance with
the terms of such Placement Notice. The Company acknowledges and agrees that:
(i) there can be no assurance that Ascendiant will be successful in selling
Placement Shares; (ii) Ascendiant will incur no liability or obligation to the
Company or any other Person (as defined herein) if it does not sell Placement
Shares for any reason other than a failure by Ascendiant to use its commercially
reasonable efforts consistent with its normal trading and sales practices and
applicable law and regulations to sell such Placement Shares as required under
this Agreement; and (iii) Ascendiant will be under no obligation to purchase
Placement Shares on a principal basis pursuant to this Agreement, except as
otherwise agreed by Ascendiant and the Company.
(b) Settlement of Placement Shares. Unless otherwise specified in the applicable
Placement Notice, settlement for sales of Placement Shares will occur on the
second Trading Day (or such earlier day as is industry practice for regular-way
trading) following the date on which such sales are made (each, a “Settlement
Date”). The Agent shall notify the Company of each sale of Placement Shares
following the close of trading on (but in any event no later than opening of
trading on the Trading Day following) the Trading Day that the Agent sold
Placement Shares. The amount of proceeds to be delivered to the Company on a
Settlement Date against receipt of the Placement Shares sold (the “Net
Proceeds”) will be equal to the aggregate sales price received by Ascendiant,
after deduction for: (i) Ascendiant’s commission, discount, or other
compensation for such sales payable by the Company pursuant to Section 2 hereof;
(ii) any transaction fees imposed by any governmental or self-regulatory
organization for such sales, and (iii) the balance of any unpaid costs or
expenses to be paid or reimbursed by Ascendiant pursuant to this Agreement.
(c) Delivery of Placement Shares. On or before each Settlement Date, the Company
will, or will cause its transfer agent to, electronically transfer the Placement
Shares being sold by crediting Ascendiant’s or its designee’s account (provided
Ascendiant will have given the Company written notice of such designee a
reasonable period of time prior to the Settlement Date) at The Depository Trust
Company through its Deposit and Withdrawal at Custodian System or by such other
means of delivery as may be mutually agreed upon by the parties hereto, which in
all cases will be freely tradable, transferable, registered shares in good
deliverable form. On each Settlement Date, Ascendiant will deliver the related
Net Proceeds in same-day funds to an account designated by the Company on, or
prior to, the Settlement Date. The Company agrees that if the Company, or its
transfer agent (if applicable), defaults in its obligation to deliver Placement
Shares on a Settlement Date through no fault of Ascendiant, that in addition to
and in no way limiting the rights and obligations set forth in Section 11(a)
hereto, it will: (i) hold Ascendiant harmless against any loss, claim, damage,
or expense (including reasonable and documented legal fees and expenses), as
incurred, arising out of or in connection with such default by the Company or
its transfer agent (if applicable); and (ii) pay to Ascendiant (without
duplication) any commission, discount, or other compensation to which it would
otherwise have been entitled absent such default.
(d) Limitations on Offering Size. Under no circumstances will the Company cause
or request the offer or sale of any Placement Shares if, after giving effect to
the sale of such Placement Shares, the aggregate gross sales proceeds of
Placement Shares sold pursuant to this Agreement would exceed the lesser of:
(i) together with all sales of Placement Shares under this Agreement, the
Maximum Amount; or (ii) the amount authorized from time to time to be issued and
sold under this Agreement by the Company’s board of directors, a duly authorized
committee thereof, or a duly authorized executive committee, and notified to
Ascendiant in writing. Under no circumstances will the Company cause or request
the offer or sale of any Placement Shares pursuant to this Agreement at a price
lower than the minimum price
3

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

authorized from time to time by the Company’s board of directors, a duly
authorized committee thereof, or a duly authorized executive committee, and
notified to Ascendiant in writing.
6. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with Ascendiant, that as of the date of this Agreement
and as of each Applicable Time (as defined below), unless such representation,
warranty or agreement specifies a different date or time:
(a) Registration Statement and Prospectus. The Company and, assuming no act or
omission on the part of Ascendiant that would make such statement untrue, the
transactions contemplated by this Agreement, meet the requirements for and
comply with the conditions for the use of Form S3 under the Securities Act. The
Registration Statement has been filed with the SEC and has been declared
effective under the Securities Act. The Prospectus Supplement will name
Ascendiant as the agent in the section entitled “Plan of Distribution.” The
Company has not received, and has no notice of, any order of the SEC preventing
or suspending the use of the Registration Statement or threatening or
instituting proceedings for that purpose. The Registration Statement and the
offer and sale of Placement Shares as contemplated hereby meet the requirements
of Rule 415 under the Securities Act and comply in all material respects with
said Rule. Any statutes, regulations, contracts, or other documents that are
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement have been so described or
filed. Copies of the Registration Statement, the Prospectus, and any such
amendments or supplements and all documents incorporated by reference therein
that were filed with the SEC on or prior to the date of this Agreement have been
delivered, or are available through EDGAR, to Ascendiant and its counsel. The
Company has not distributed and, prior to the later to occur of each Settlement
Date and completion of the distribution of the Placement Shares, will not
distribute any offering material in connection with the offering or sale of the
Placement Shares other than the Registration Statement and the Prospectus and
any Issuer Free Writing Prospectus (as defined below) to which Ascendiant has
consented. The Common Stock is currently listed on the Exchange under the
trading symbol “PHUN.” Except as disclosed on Schedule 6(a) hereto and in the
Registration Statement, including the Incorporated Documents, the Company has
not, in the 12 months preceding the date hereof, received notice from the
Exchange to the effect that the Company is not in compliance with the Exchange’s
listing or maintenance requirements. Except as disclosed in the Registration
Statement, including the Incorporated Documents, or the Prospectus, the Company
has no reason to believe that it will not in the foreseeable future continue to
be in compliance with all such listing and maintenance requirements.
(b) No Misstatement or Omission. The Registration Statement, when it became
effective, and the Prospectus, and any amendment or supplement thereto, on the
date of such Prospectus or amendment or supplement, conformed and will conform
in all material respects with the requirements of the Securities Act. At each
Settlement Date, the Registration Statement and the Prospectus, as of such date,
will conform in all material respects with the requirements of the Securities
Act. The Registration Statement, when it became or becomes effective, did not,
and will not, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus and any amendment and supplement thereto,
on the date thereof and at each Applicable Time (defined below), did not or will
not include an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The documents incorporated by
reference in the Prospectus or any Prospectus Supplement did not, and any
further documents filed and incorporated by reference therein will not, when
filed with the SEC, contain an untrue statement of a material fact or omit to
state a material fact required to be stated in such document or necessary to
make the statements in such document, in light of the circumstances under which
they were made, not misleading. The foregoing will not apply to statements in,
or omissions from, any such document made in reliance upon, and in conformity
with, information furnished to the Company by Ascendiant specifically for use in
the preparation thereof.
(c) Conformity with Securities Act and Exchange Act. The documents incorporated
by reference in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, when such documents were or are filed with the SEC under the
Securities Act or the Exchange Act or became or
4

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

become effective under the Securities Act, as the case may be, conformed or will
conform in all material respects with the requirements of the Securities Act and
the Exchange Act, as applicable.
(d) Financial Information. The consolidated financial statements of the Company
included or incorporated by reference in the Registration Statement, the
Prospectus, and the Issuer Free Writing Prospectuses, if any, together with the
related notes and schedules, complied as to form 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 present in all material respects the consolidated financial position of
the Company and the Subsidiaries as of the dates indicated and the consolidated
results of operations and cash flows of the Company for the periods specified
(subject, in the case of unaudited statements, to normal year-end audit
adjustments that will not be material, either individually or in the aggregate);
the other financial and statistical data respecting the Company and the
Subsidiaries contained or incorporated by reference in the Registration
Statement, the Prospectus, and the Issuer Free Writing Prospectuses, if any, are
accurately and fairly presented and prepared on a basis consistent with the
financial statements and books and records of the Company; there are no
financial statements (historical or pro forma) that are required to be included
or incorporated by reference in the Registration Statement or the Prospectus
that are not included or incorporated by reference as required; the Company and
the Subsidiaries (as defined below) do not have any material liabilities or
obligations, direct or contingent (including any off-balance sheet obligations),
not described in the Registration Statement (including the exhibits thereto) and
the Prospectus that are required to be described in the Registration Statement
or the Prospectus (including exhibits thereto and Incorporated Documents); and
all disclosures contained or incorporated by reference in the Registration
Statement, the Prospectus, and the Issuer Free Writing Prospectuses, if any,
regarding “non-GAAP financial measures” (as such term is defined by the rules
and regulations of the SEC) comply in all material respects with Regulation G of
the Exchange Act and Item 10 of Regulation S-K under the Securities Act, to the
extent applicable.
(e) Conformity with EDGAR Filing. The Prospectus delivered to Ascendiant for use
in connection with the sale of the Placement Shares pursuant to this Agreement
will be identical to the versions of the Prospectus created to be transmitted to
the SEC for filing via EDGAR, except to the extent permitted by Regulation ST.
(f) Organization. The Company and any subsidiary that is a significant
subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X
promulgated by the SEC) (collectively, the “Subsidiaries”) are, and will be,
duly organized, validly existing as a corporation, limited partnership, limited
liability company, or other legal entity, and in good standing under the laws of
their respective jurisdictions of organization, except where the failure to be
in good standing would not, individually or in the aggregate, have a Materially
Adverse Effect (as defined below) or would reasonably be expected to have a
Material Adverse Effect. The Company and each of the Subsidiaries are, and will
be, duly qualified as a foreign corporation for transaction of business and in
good standing under the laws of each other jurisdiction in which their
respective ownership or lease of property or the conduct of their respective
businesses requires such qualification, and have all corporate power and
authority necessary to own or hold their respective properties and to conduct
their respective businesses as described in the Registration Statement and the
Prospectus, except where the failure to be so qualified or in good standing or
have such power or authority would not, individually or in the aggregate, have a
material adverse effect or would reasonably be expected to have a material
adverse effect on the assets, business, operations, earnings, properties,
condition (financial or otherwise), prospects, stockholders’ equity, or results
of operations of the Company and the Subsidiaries (as defined below) taken as a
whole, or prevent or materially interfere with consummation of the transactions
contemplated hereby (a “Material Adverse Effect”).
(g) Subsidiaries. The subsidiaries set forth on Schedule 4, are the Company’s
only subsidiaries. Except as set forth in the Registration Statement and in the
Prospectus, the Company owns,
5

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

directly or indirectly, all of the equity interests of the Subsidiaries free and
clear of any lien, charge, security interest, encumbrance, right of first
refusal, or other restriction, and all the equity interests of the Subsidiaries
are validly issued and are fully paid, nonassessable, and free of preemptive and
similar rights.
(h) No Violation or Default. Neither the Company nor any of its Subsidiaries is:
(i) in violation of its charter or bylaws or similar organizational documents;
(ii) in default, and no event has occurred that, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance of
any term, covenant, or condition contained in any indenture, mortgage, deed of
trust, loan agreement, or other agreement or instrument to which the Company or
any of its Subsidiaries is a party, by which the Company or any of its
Subsidiaries is bound, or to which any of the property or assets of the Company
or any of its Subsidiaries are subject; or (iii) in violation of any law or
statute or any judgment, order, rule, or regulation of any court, arbitrator, or
governmental or regulatory authority, except, in the case of each of clauses
(ii) and (iii) above, for any such violation or default that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as described in the Prospectus, the Prospectus
Supplement, or the Incorporated Documents, to the Company’s knowledge, no other
party under any material contract or other agreement to which it or any of its
Subsidiaries is a party is in default in any respect thereunder where such
default would reasonably be expected to have a Material Adverse Effect.
(i) No Material Adverse Change. Subsequent to the respective dates as of which
information is given in the Registration Statement, the Prospectus, and the Free
Writing Prospectuses, if any (including any document deemed incorporated by
reference therein), there has not been: (i) any Material Adverse Effect, or any
development involving a prospective Material Adverse Effect, in or affecting the
business, properties, management, financial, condition (financial or otherwise),
results of operations, or prospects of the Company and the Subsidiaries taken as
a whole; (ii) any transaction that is material to the Company and the
Subsidiaries taken as a whole; (iii) any obligation or liability, direct or
contingent (including any off-balance sheet obligations), incurred by the
Company or any Subsidiary, that is material to the Company and the Subsidiaries
taken as a whole; (iv) any material change in the capital stock other than
changes resulting from any of the following transactions (each a “Permitted
Transaction”): (1) the grant of additional options under the Company’s existing
stock option plans, (2) changes in the number of outstanding Common Stock of the
Company due to the issuance of shares upon the exercise or conversion of
securities exercisable for, or convertible into, Common Stock outstanding on the
date hereof, (3) as a result of the sale of Placement Shares or (4) as described
in a proxy statement filed on Schedule 14A or a Registration Statement on Form
S-4 and otherwise publicly announced); or (v) any dividend or distribution of
any kind declared, paid, or made on the capital stock of the Company or any
Subsidiary, other than in each case above, in the ordinary course of business or
as otherwise disclosed in the Registration Statement or Prospectus (including
any document deemed incorporated by reference therein).
(j) Capitalization. The issued and outstanding shares of capital stock of the
Company have been validly issued, are fully paid, and nonassessable. The Company
has an authorized, issued, and outstanding capitalization as set forth in the
Registration Statement and the Prospectus as of the dates referred to therein
(other than changes resulting from Permitted Transactions), and such authorized
capital stock conforms to the description thereof set forth in the Registration
Statement and the Prospectus. The description of the Common Stock in the
Registration Statement and the Prospectus is complete and accurate in all
material respects. Except as disclosed in or contemplated by the Registration
Statement or the Prospectus or pursuant to any Permitted Transactions, as of the
date referred to therein, the Company did not have reserved or available for
issuance any shares of Common Stock in respect of options, any rights or
warrants to subscribe for, any securities or obligations convertible into or
exchangeable for, or any contracts or commitments to issue or sell, any shares
of capital stock or other securities.
(k) Authorization; Enforceability. The Company has full legal right, power, and
authority to enter into this Agreement and perform the transactions contemplated
hereby. This Agreement has been duly authorized, executed, and delivered by the
Company and is a legal, valid, and binding agreement of the Company enforceable
in accordance with its terms, except to the extent that: (i) enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting creditors’ rights
6

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

generally and by general equitable principles; and (ii) the indemnification and
contribution provisions of Section 11 hereof may be limited by federal or state
securities laws and public policy considerations in respect thereof.
(l) Authorization of Placement Shares. The Placement Shares, when issued and
delivered pursuant to the terms approved by the board of directors of the
Company or a duly authorized committee thereof, or a duly authorized executive
committee, against payment therefor as provided herein, will be duly and validly
authorized and issued and fully paid and nonassessable, free and clear of any
pledge, lien, encumbrance, security interest, or other claim (other than any
pledge, lien, encumbrance, security interest, or other claim arising from an act
or omission of Ascendiant or a purchaser), including any statutory or
contractual preemptive rights, resale rights, rights of first refusal, or other
similar rights, and will be registered pursuant to Section 12 of the Exchange
Act. The Placement Shares, when issued, will conform in all material respects to
the description thereof set forth in or incorporated into the Prospectus.
(m) No Consents Required. No consent, approval, authorization, order,
registration, or qualification of or with any court or arbitrator or any
governmental or regulatory authority is required for the execution, delivery,
and performance by the Company of this Agreement, and the issuance and sale by
the Company of the Placement Shares as contemplated hereby, except for such
consents, approvals, authorizations, orders, and registrations or qualifications
as may be required under applicable state securities laws or by the bylaws and
rules of the Financial Industry Regulatory Authority (“FINRA”) or the Exchange
in connection with the sale of the Placement Shares by Ascendiant.
(n) No Preferential Rights. Except as set forth in the Registration Statement
and the Prospectus: (i) no person, as such term is defined in Rule 102 of
Regulation SX promulgated under the Securities Act (each, a “Person”), has the
right, contractual or otherwise, to cause the Company to issue or sell to such
Person any Common Stock or shares of any other capital stock or other securities
of the Company (other than upon the exercise of options or warrants to purchase
Common Stock or upon the exercise of options that may be granted from time to
time under the Company’s stock option plans); (ii) no Person has any preemptive
rights, rights of first refusal, or any other rights (whether pursuant to a
“poison pill” provision or otherwise) to purchase any Common Stock or shares of
any other capital stock or other securities of the Company from the Company that
have not been duly waived respecting the offering contemplated hereby; (iii) no
Person has the right to act as an underwriter or as a financial advisor to the
Company in connection with the offer and sale of the Common Stock; and (iv) no
Person has the right, contractual or otherwise, to require the Company to
register under the Securities Act any Common Stock or shares of any other
capital stock or other securities of the Company, or to include any such shares
or other securities in the Registration Statement or the offering contemplated
thereby, whether as a result of the filing or effectiveness of the Registration
Statement or the sale of the Placement Shares as contemplated thereby or
otherwise, except for such rights as have been waived on or prior to the date
hereof.
(o) Independent Public Accountant. Marcum LLP (the “Accountants”), whose reports
on the consolidated financial statements of the Company are filed with the SEC
as part of the Company’s most recent Annual Report on Form 10-K and incorporated
into the Registration Statement, are and, during the periods covered by its
report, were an independent registered public accounting firm within the meaning
of the Securities Act and the Public Company Accounting Oversight Board (United
States). To the Company’s knowledge, after due inquiry, the Accountants are not
in violation of the auditor independence requirements of the Sarbanes-Oxley Act
of 2002 (the “Sarbanes-Oxley Act”) respecting the Company.
(p) Enforceability of Agreements. To the Company’s knowledge, all agreements
between the Company and third parties expressly referenced in the Prospectus,
other than such agreements that have expired by their terms or whose termination
is disclosed in documents filed by the Company on EDGAR, are legal, valid, and
binding obligations of the Company enforceable in accordance with their
respective terms, except to the extent that: (i) enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
creditors’ rights generally and by general equitable principles; and (ii) the
indemnification provisions of certain agreements may be limited be federal or
state securities laws
7

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

or public policy considerations in respect thereof, except for any
unenforceability that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
(q) No Litigation. Except as set forth in the Registration Statement or the
Prospectus: (i) there are no legal, governmental, or regulatory actions, suits,
or proceedings pending or, to the Company’s knowledge, any legal, governmental,
or regulatory investigations to which the Company or a Subsidiary is a party or
to which any property of the Company or any of its Subsidiaries is the subject
that, individually or in the aggregate, if determined adversely to the Company
or any of its Subsidiaries, would reasonably be expected to have a Material
Adverse Effect or materially and adversely affect the ability of the Company to
perform its obligations under this Agreement; (ii) to the Company’s knowledge,
no actions, suits, or proceedings are threatened or contemplated by any
governmental or regulatory authority or threatened by others that, individually
or in the aggregate, if determined adversely to the Company or any of its
Subsidiaries, would reasonably be expected to have a Material Adverse Effect;
(iii) there are no current or pending legal, governmental, or regulatory,
actions, suits, proceedings or, to the Company’s knowledge, investigations that
are required under the Securities Act to be described in the Prospectus that are
not described in the Prospectus including any Incorporated Documents; and
(iv) there are no contracts or other documents that are required under the
Securities Act to be filed as exhibits to the Registration Statement that are
not so filed.
(r) Licenses and Permits. Except as set forth in the Registration Statement or
the Prospectus, the Company and each of its Subsidiaries possess or have
obtained all licenses, certificates, consents, orders, approvals, permits, and
other authorizations issued by, and to the Company’s knowledge, have made all
declarations and filings with, the appropriate federal, state, local, or foreign
governmental or regulatory authorities that are necessary for the ownership or
lease of their respective properties or the conduct of their respective
businesses as described in the Registration Statement and the Prospectus (the
“Permits”), except where the failure to possess, obtain, or make the same would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as disclosed in the Registration Statement or the
Prospectus, neither the Company nor its Subsidiaries have received written
notice of any proceeding relating to revocation or modification of any such
Permit or have any reason to believe that such Permit will not be renewed in the
ordinary course, except when the failure to obtain any such renewal would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(s) S-3 Eligibility. (i) At the time of filing the Registration Statement; and
(ii) if applicable, at the time of the most recent amendment thereto for the
purposes of complying with Section 10(a)(3) of the Securities Act (whether such
amendment was by post-effective amendment, incorporated report filed pursuant to
Section 13 or 15(d) of the Exchange Act, or form of prospectus), the Company met
the then-applicable requirements for use of Form S-3 under the Securities Act,
including compliance with General Instruction I.B. of Form S-3, up to the
Maximum Amount.
(t) No Material Defaults. Except as set forth in the Registration Statement and
Prospectus, neither the Company nor any of the Subsidiaries has defaulted on any
installment on indebtedness for borrowed money or on any rental on one or more
long-term leases, which defaults, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect. Except as set forth in
the Registration Statement and Prospectus, the Company has not filed a report
pursuant to Section 13(a) or 15(d) of the Exchange Act since the filing of its
last Annual Report on Form 10K, indicating that it: (i) has failed to pay any
dividend or sinking fund installment on preferred stock; or (ii) has defaulted
on any installment on indebtedness for borrowed money or on any rental on one or
more long-term leases, which defaults, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(u) Certain Market Activities. To the Company’s knowledge, neither the Company
nor any of the Subsidiaries, nor any of their respective directors, officers, or
controlling Persons has taken, directly or indirectly, any action designed, or
that has constituted or might reasonably be expected to cause or result in,
under the Exchange Act or otherwise, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Placement Shares.
8

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

(v) Broker-Dealer Relationships. Neither the Company nor any of the Subsidiaries
or any related entities: (i) are required to register as a “broker” or “dealer”
in accordance with the provisions of the Exchange Act; or (ii) directly or
indirectly through one or more intermediaries, control or are a “person
associated with a member” or “associated person of a member” (within the meaning
set forth in the FINRA rules).
(w) No Reliance. The Company has not relied upon Ascendiant or legal counsel for
Ascendiant for any legal, tax, or accounting advice in connection with the
offering and sale of the Placement Shares.
(x) Taxes. The Company and each of its Subsidiaries have filed all federal,
state, local, and foreign tax returns that have been required to be filed and
paid all taxes shown thereon through the date hereof, to the extent that such
taxes have become due and are not being contested in good faith, except when the
failure to do so would not reasonably be expected to have a Material Adverse
Effect. Except as otherwise disclosed in or contemplated by the Registration
Statement or the Prospectus, no tax deficiency has been determined adversely to
the Company or any of its Subsidiaries that has had, or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
The Company has no knowledge of any federal, state, or other governmental tax
deficiency, penalty, or assessment that has been or might be asserted or
threatened against it that could have a Material Adverse Effect.
(y) Title to Real and Personal Property. The Company and each of its
Subsidiaries have good and defensible title to all of their real and personal
property owned by them, in each case, free and clear of all liens, encumbrances,
and defects, except as described in the Registration Statement and Prospectus or
that do not materially affect the value of the properties of the Company and its
Subsidiaries, considered as one enterprise, and do not interfere in any material
respect with the use made and proposed to be made of such properties by the
Company and its Subsidiaries, considered as one enterprise; and all of the
leases, subleases, and other rights under which the Company or any of its
Subsidiaries holds or uses properties described in the Registration Statement
and Prospectus are in full force and effect, with such exceptions as would not
reasonably be expected to have a Material Adverse Effect, and neither the
Company nor any of its Subsidiaries has any notice of any material claim of any
sort that has been asserted by anyone adverse to the rights of the Company or
its Subsidiaries under any of the leases, subleases, and other rights mentioned
above, or affecting or questioning the rights of the Company or any Subsidiary
thereof to the continued possession or use of the leased or subleased premises
or the premises granted by leases, subleases, and other rights. The Company and
each of its Subsidiaries have the consents, easements, rights-of-way, or
licenses from any Person as are necessary to enable them to conduct their
business in the manner described in the Registration Statement and the
Prospectus, subject to such qualifications as may be set forth in the
Registration Statement and the Prospectus, and except for the consents,
easements, rights-of-way, or licenses the lack of which would not have,
individually or in the aggregate, a Material Adverse Effect.
(z) Intellectual Property. Except as set forth in the Registration Statement or
the Prospectus, to the Company’s knowledge, the Company and its Subsidiaries own
or possess adequate enforceable rights to use all patents, patent applications,
trademarks (both registered and unregistered), service marks, trade names,
trademark registrations, service mark registrations, copyrights, licenses, and
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems, or procedures) (collectively,
the “Intellectual Property”), necessary for the conduct of their respective
businesses as conducted as of the date hereof, except to the extent that the
failure to own or possess adequate rights to use such Intellectual Property
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; except as disclosed in writing to Ascendiant, the
Company and any of its Subsidiaries have not received any written notice of any
claim of infringement or conflict that asserted Intellectual Property rights of
others, which infringement or conflict, if the subject of an unfavorable
decision, would result in a Material Adverse Effect; there are no pending, or to
the Company’s knowledge, threatened judicial proceedings or interference
proceedings against the Company or its Subsidiaries challenging the Company’s or
its Subsidiaries’ rights in or to or the validity of the scope of any of the
Company’s or its Subsidiaries’ material patents, patent applications, or
proprietary information; to the Company’s knowledge, no other entity or
individual has any right or claim in any of the Company’s
9

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

or its Subsidiaries’ owned, material patents, patent applications, or any patent
to be issued therefrom by virtue of any contract, license, or other agreement
entered into between such entity or individual and the Company or a Subsidiary
or by any non-contractual obligation of the Company or a Subsidiary, other than
by written licenses granted by the Company or a Subsidiary; the Company and its
Subsidiaries have not received any written notice of any claim challenging the
rights of the Company or a Subsidiary in or to any Intellectual Property owned,
licensed, or optioned by the Company or such Subsidiary that, if the subject of
an unfavorable decision, would result in a Material Adverse Effect.
(aa) Environmental Laws. Except as set forth in the Registration Statement or
the Prospectus, the Company and its Subsidiaries: (i) are in compliance with any
and all applicable federal, state, local, and foreign laws, rules, regulations,
decisions, and orders relating to the protection of human health and safety, the
environment, hazardous or toxic substances or wastes, pollutants, or
contaminants (collectively, “Environmental Laws”); (ii) have received and are in
compliance with all permits, licenses, or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses as
described in the Registration Statement and the Prospectus; (iii) have not
received notice of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants, or contaminants, except, in the case of any of clauses (i),
(ii), or (iii) above, for any such failure to comply or failure to receive
required permits, licenses, other approvals or liability as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; and (iv) there are no costs or liabilities arising under
Environmental Laws respecting the operation of the Company’s and each of its
Subsidiaries’ properties (including any capital or operating expenditures
required for clean-up or closure of the properties, compliance with
Environmental Laws, any permit, license, or approval or any related legal
constraints or operating activities, and any potential liabilities of third
parties assumed under contract by the Company or any of its Subsidiaries) that
would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
(bb) Disclosure Controls. The Company and each of its Subsidiaries maintain
systems of internal accounting controls designed to provide reasonable assurance
that: (i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
respecting any differences. The Company is not aware of any material weaknesses
in its internal control over financial reporting (other than as set forth in the
Prospectus). Since the date of the latest audited financial statements of the
Company included in the Prospectus, there has been no change in the Company’s
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting (other than as set forth in the Prospectus). The Company has
established disclosure controls and procedures (as defined in Exchange Act Rules
13a15 and 15d15) for the Company and designed such disclosure controls and
procedures to ensure that material information relating to the Company and each
of its Subsidiaries is made known to the certifying officers by others within
those entities, particularly during the period in which the Company’s Annual
Report on Form 10K or Quarterly Report on Form 10-Q, as the case may be, is
being prepared. The Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures as of a date within 90
days prior to the filing date of the Form 10K for the fiscal year most recently
ended (such date, the “Evaluation Date”). The Company presented in its Form 10K
for the fiscal year most recently ended the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no significant changes in the Company’s internal controls (as such
term is defined in Item 307(b) of Regulation SK under the Securities Act). To
the knowledge of the Company, the Company’s “internal controls over financial
reporting” and “disclosure controls and procedures” are effective.
(cc) Sarbanes-Oxley. There is and has been no failure on the part of the Company
or, to the knowledge of the Company, any of the Company’s directors or officers,
in their capacities as such, to comply with any applicable provisions of the
Sarbanes-Oxley Act and the rules and regulations
10

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

promulgated thereunder. Each of the principal executive officer and the
principal financial officer of the Company (or each former principal executive
officer of the Company and each former principal financial officer of the
Company as applicable) has made all certifications required by Sections 302 and
906 of the Sarbanes-Oxley Act respecting all reports, schedules, forms,
statements, and other documents required to be filed by it or furnished by it to
the SEC. For purposes of the preceding sentence, “principal executive officer”
and “principal financial officer” will have the meanings given to such terms in
the Sarbanes-Oxley Act.
(dd) Finder’s Fees. Other than as set forth on Schedule 6(dd), neither the
Company nor any of the Subsidiaries has incurred any liability for any finder’s
fees, brokerage commissions, or similar payments in connection with the
transactions herein contemplated, except as may otherwise exist respecting
Ascendiant pursuant to this Agreement.
(ee) Labor Disputes. Except as disclosed in the Registration Statement or the
Prospectus, no labor disturbance by or dispute with employees of the Company or
any of its Subsidiaries exists or, to the knowledge of the Company, is
threatened that would reasonably be expected to result in a Material Adverse
Effect.
(ff) Investment Company Act. Neither the Company nor any of the Subsidiaries is
or, after giving effect to the offering and sale of the Placement Shares, will
be an “investment company” or an entity “controlled” by an “investment company,”
as such terms are defined in the Investment Company Act of 1940, as amended (the
“Investment Company Act”).
(gg) Operations. The operations of the Company and its Subsidiaries are and have
been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions to which the Company or its Subsidiaries are subject, the
rules and regulations thereunder, and any related or similar rules, regulations,
or guidelines, issued, administered, or enforced by any governmental agency
having jurisdiction over the Company (collectively, the “Money Laundering
Laws”), except as would not reasonably be expected to result in a Material
Adverse Effect; and no action, suit, or proceeding by or before any court or
governmental agency, authority, or body or any arbitrator involving the Company
or any of its Subsidiaries respecting the Money Laundering Laws is pending or,
to the knowledge of the Company, threatened.
(hh) Off-Balance Sheet Arrangements. There are no transactions, arrangements,
and other relationships between and/or among the Company, and/or, to the
knowledge of the Company, any of its affiliates and any unconsolidated entity,
including any structural finance, special purpose, or limited purpose entity
(each, an “Off Balance Sheet Transaction”) that could reasonably be expected to
affect materially the Company’s liquidity or the availability of or requirements
for its capital resources, including those Off Balance Sheet Transactions
described in the SEC’s Statement about Management’s Discussion and Analysis of
Financial Conditions and Results of Operations (Release Nos. 338056; 3445321;
FR61), required to be described in the Prospectus that have not been described
as required.
(jj) Underwriter Agreements. The Company is not a party to any agreement with an
agent or underwriter for any other “at-the-market” or continuous equity
transaction.
(jj) ERISA. To the knowledge of the Company: (i) each material employee benefit
plan, within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), that is maintained, administered, or
contributed to by the Company or any of its Subsidiaries (other than a
Multiemployer Plan, within the meaning of Section 3(37) of ERISA) for employees
or former employees of the Company and any of its Subsidiaries has been
maintained in compliance with its terms and the requirements of any applicable
statutes, orders, rules, and regulations, including ERISA and the Internal
Revenue Code of 1986, as amended (the “Code”); (ii) no prohibited transaction,
within the meaning of Section 406 of ERISA or Section 4975 of the Code, has
occurred respecting any such plan (excluding transactions effected pursuant to a
statutory or administrative exemption); and (iii) for each such
11

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

plan that is subject to the funding rules of Section 412 of the Code or Section
302 of ERISA, no “accumulated funding deficiency” as defined in Section 412 of
the Code has been incurred, whether or not waived, and the fair market value of
the assets of each such plan (excluding for these purposes accrued but unpaid
contributions) equals or exceeds the present value of all benefits accrued under
such plan determined using reasonable actuarial assumptions, other than, in the
case of (i), (ii), and (iii) above, as would not reasonably be expected to have
a Material Adverse Effect.
(kk) Margin Rules. Neither the issuance, sale, and delivery of the Placement
Shares nor the application of the proceeds thereof by the Company as described
in the Registration Statement and the Prospectus will violate Regulation T, U,
or X of the Board of Governors of the Federal Reserve System or any other
regulation of such Board of Governors.
(ll) Insurance. The Company and each of its Subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as the Company and each of
its Subsidiaries reasonably believe are adequate for the conduct of their
properties and as is customary for companies of similar size engaged in similar
businesses in similar industries.
(mm) No Improper Practices. (i) Neither the Company nor, to the Company’s
knowledge, the Subsidiaries or to the Company’s knowledge, any of their
respective executive officers has, in the past five years, made any unlawful
contributions to any candidate for any political office (or failed fully to
disclose any contribution in violation of law) or made any contribution or other
payment to any official of, or candidate for, any federal, state, municipal, or
foreign office or other Person charged with similar public or quasi-public duty
in violation of any law or of the character required to be disclosed in the
Registration Statement or the Prospectus that is not so described; (ii) no
relationship, direct or indirect, exists between or among the Company or, to the
Company’s knowledge, any Subsidiary or any affiliate of any of them, on the one
hand, and the directors, officers and stockholders of the Company or, to the
Company’s knowledge, any Subsidiary, on the other hand, that is required by the
Securities Act to be described in the Registration Statement and the Prospectus
that is not so described; (iii) no relationship, direct or indirect, exists
between or among the Company or any Subsidiary or any affiliate of them, on the
one hand, and the directors, officers, stockholders, or directors of the Company
or, to the Company’s knowledge, any Subsidiary, on the other hand, that is
required to be described in the Registration Statement and the Prospectus that
is not so described; (iv)  there are no material outstanding loans or advances
or material guarantees of indebtedness by the Company or, to the Company’s
knowledge, any Subsidiary to or for the benefit of any of their respective
officers or directors or any of the members of the families of any of them that
is required to be described in the Registration Statement and the Prospectus
that is not so described; and (v) the Company has not offered, or caused any
placement agent to offer, Common Stock to any Person with the intent to
influence unlawfully: (1) a customer or supplier of the Company or any
Subsidiary to alter the customer’s or supplier’s level or type of business with
the Company or any Subsidiary; or (2) a trade journalist or publication to write
or publish favorable information about the Company or any Subsidiary or any of
their respective products or services; and (vi) neither the Company nor any
Subsidiary nor, to the Company’s knowledge, any employee or agent of the Company
or any Subsidiary has made any payment of funds of the Company or any Subsidiary
or received or retained any funds in violation of any law, rule, or regulation
(including the Foreign Corrupt Practices Act of 1977), which payment, receipt,
or retention of funds is of a character required to be disclosed in the
Registration Statement or the Prospectus that is not so described.
(nn) Status under the Securities Act. The Company was not and is not an
ineligible issuer as defined in Rule 405 under the Securities Act at the times
specified in Rules 164 and 433 under the Securities Act in connection with the
offering of the Placement Shares.
(oo) No Misstatement or Omission in an Issuer Free Writing Prospectus. Each
Issuer Free Writing Prospectus, if any, as of its issue date and as of each
Applicable Time (as defined in Section 25 below), did not, does not and will not
include any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement or the Prospectus, including
any incorporated document deemed to be a part thereof that has not been
superseded or modified. The foregoing sentence
12

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

does not apply to statements in or omissions from any Issuer Free Writing
Prospectus based upon and in conformity with written information furnished to
the Company by Ascendiant specifically for use therein.
(pp) No Conflicts. None of the execution of this Agreement; the issuance,
offering, or sale of the Placement Shares; the consummation of any of the
transactions contemplated herein; or the compliance by the Company with the
terms and provisions hereof will conflict with or result in a breach of any of
the terms and provisions of; constitute or will constitute a default under; or
has resulted in or will result in the creation or imposition of any lien,
charge, or encumbrance upon any property or assets of the Company pursuant to
the terms of any contract or other agreement to which the Company may be bound
or to which any of the property or assets of the Company is subject, except:
(i) such conflicts, breaches, or defaults as may have been waived; and (ii) such
conflicts, breaches, and defaults that would not reasonably be expected to have
a Material Adverse Effect; nor will such action result in any violation of the
provisions of the organizational or governing documents of the Company or in any
material violation of the provisions of any statute or any order, rule, or
regulation applicable to the Company or of any court or of any federal, state,
or other regulatory authority or other government body having jurisdiction over
the Company, except where such violation would not reasonably be expected to
have a Material Adverse Effect.
(qq) Regulatory Compliance.
(i) Neither the Company nor any of its Subsidiaries (each, an “Entity”) nor any
director, officer, employee, agent, affiliate, or representative of the Entity,
is a government, individual, or entity that is owned or controlled by any
director, officer, employee, agent, affiliate, or representative of the Entity
that is:
(1) the subject of any sanctions administered or enforced by the U.S. Department
of Treasury’s Office of Foreign Assets Control, the United Nations Security
Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions
authority (collectively, “Sanctions”); or
(2) located, organized, or resident in a country or territory that is the
subject of Sanctions (including Burma/Myanmar, Cuba, Iran, North Korea, Sudan
and Syria).
(ii) The Company, on behalf of each Entity, represents and covenants that it
will not, directly or indirectly, use, lend, contribute, or otherwise make
available the proceeds of the offering governed by this Agreement to any
subsidiary, joint venture partner, or other director, officer, employee, agent,
affiliate, or representative of the Entity:
(1) to fund or facilitate any activities or business of or with any Person or in
any country or territory that, at the time of such funding or facilitation, is
the subject of Sanctions; or
(2) in any other manner that will result in a violation of Sanctions by any
Person (including any Person participating in the offering, whether as
underwriter, advisor, investor, or otherwise).
(iii) Except as detailed in the Prospectus, for the past five years, the Entity
has not knowingly engaged in, is not now knowingly engaged in, and will not
engage in, any dealings or transactions with any Person, or in any country or
territory, that at the time of the dealing or transaction is or was the subject
of Sanctions.
(rr) Stock Transfer Taxes. On each Settlement Date, all stock transfer or other
taxes (other than income taxes) that are required to be paid in connection with
the sale and transfer of the Placement Shares to be sold 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 fully complied with in all material
respects.
13

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

Any certificate signed by an officer of the Company and delivered to Ascendiant
or to counsel for Ascendiant pursuant to or in connection with this Agreement
will be deemed to be a representation and warranty by the Company, as
applicable, to Ascendiant as to the matters set forth therein.
7. Covenants of the Company. The Company covenants and agrees with Ascendiant
that:
(a) Registration Statement Amendments. After the date of this Agreement and
during any period in which a Prospectus relating to any Placement Shares is
required to be delivered by Ascendiant under the Securities Act (including in
circumstances when such requirement may be satisfied pursuant to Rule 172 under
the Securities Act): (i) the Company will notify Ascendiant promptly of the time
when any subsequent amendment to the Registration Statement, other than
documents incorporated by reference, has been filed with the SEC and/or has
become effective or any subsequent supplement to the Prospectus has been filed
and of any request by the SEC for any amendment or supplement to the
Registration Statement or Prospectus or for additional information; (ii) the
Company will prepare and file with the SEC, promptly upon Ascendiant’s
reasonable request, any amendments or supplements to the Registration Statement
or Prospectus that, in Ascendiant’s reasonable opinion, may be necessary or
advisable in connection with the distribution of the Placement Shares by
Ascendiant (provided, however, that the failure of Ascendiant to make such
request will not relieve the Company of any obligation or liability hereunder,
or affect Ascendiant’s right to rely on the representations and warranties made
by the Company in this Agreement and provided, further, that the only remedy
Ascendiant will have respecting the failure to make such filing will be to cease
making sales under this Agreement until such amendment or supplement is filed);
(iii) the Company will not file any amendment or supplement to the Registration
Statement or Prospectus relating to the Placement Shares or a security
convertible into the Placement Shares unless a copy thereof has been submitted
to Ascendiant within a reasonable period of time before the filing and
Ascendiant has not reasonably objected thereto (provided, however, that the
failure of Ascendiant to make such objection will not relieve the Company of any
obligation or liability hereunder, or affect Ascendiant’s right to rely on the
representations and warranties made by the Company in this Agreement and
provided, further, that the only remedy Ascendiant will have respecting the
failure by the Company to provide Ascendiant with such copy will be to cease
making sales under this Agreement) and the Company will furnish to Ascendiant at
the time of filing thereof a copy of any document that upon filing is deemed to
be incorporated by reference into the Registration Statement or Prospectus,
except for those documents available via EDGAR; and (iv) the Company will cause
each amendment or supplement to the Prospectus to be filed with the SEC as
required pursuant to the applicable paragraph of Rule 424(b) of the Securities
Act or, in the case of any document to be incorporated therein by reference, to
be filed with the SEC as required pursuant to the Exchange Act, within the
period prescribed (the determination to file or not file any amendment or
supplement with the SEC under this Section 7(a), based on the Company’s
reasonable opinion or reasonable objections, will be made exclusively by the
Company).
(b) Notice of SEC Stop Orders. The Company will advise Ascendiant, promptly
after it receives notice or obtains knowledge thereof, of the issuance or
threatened issuance by the SEC of any stop order suspending the effectiveness of
the Registration Statement, of the suspension of the qualification of the
Placement Shares for offering or sale in any jurisdiction, or of the initiation
or threatening of any proceeding for any such purpose; and it will promptly use
its commercially reasonable efforts to prevent the issuance of any stop order or
to obtain its withdrawal if such a stop order should be issued. The Company will
advise Ascendiant promptly after it receives any request by the SEC for any
amendments to the Registration Statement or any amendment or supplements to the
Prospectus or any Issuer Free Writing Prospectus or for additional information
related to the offering of the Placement Shares or for additional information
related to the Registration Statement, the Prospectus or any Issuer Free Writing
Prospectus.
(c) Delivery of Prospectus; Subsequent Changes. During any period in which a
Prospectus relating to the Placement Shares is required to be delivered by
Ascendiant under the Securities Act respecting the offer and sale of the
Placement Shares (including in circumstances where such requirement may be
satisfied pursuant to Rule 172 under the Securities Act) (the “Prospectus
Delivery Period”), the Company will comply with all requirements imposed upon it
by the Securities Act, as from time to time in force, and to file on or before
their respective due dates all reports and any definitive proxy or information
14

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

statements required to be filed by the Company with the SEC pursuant to Sections
13(a), 13(c), 14, 15(d), or any other provision of or under the Exchange Act. If
the Company has omitted any information from the Registration Statement pursuant
to Rule 430A under the Securities Act, it will use commercially reasonable
efforts to comply with the provisions of and make all requisite filings with the
SEC pursuant to said Rule 430A and to notify Ascendiant promptly of all such
filings. If during the Prospectus Delivery Period any event occurs as a result
of which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances then existing, not
misleading, or if during the Prospectus Delivery Period it is necessary to amend
or supplement the Registration Statement or Prospectus to comply with the
Securities Act, the Company will promptly notify Ascendiant to suspend the
offering of Placement Shares during such period and the Company will promptly
amend or supplement the Registration Statement or Prospectus (at the expense of
the Company) so as to correct such statement or omission or effect such
compliance; provided, however, that the Company may delay any amendment or
supplement, if in the sole discretion of the Company, it is in the Company’s
best interest to do so.
(d) Listing of Placement Shares. During the Prospectus Delivery Period, the
Company will use its reasonable best efforts to cause the Placement Shares to be
listed on the Exchange and to qualify the Placement Shares for sale under the
securities laws of such jurisdictions as Ascendiant reasonably designates and to
continue such qualifications in effect so long as required for the distribution
of the Placement Shares; provided, however, that the Company will not be
required in connection therewith to qualify as a foreign corporation or dealer
in securities or file a general consent to service of process in any
jurisdiction.
(e) Delivery of Registration Statement and Prospectus. The Company will furnish
to Ascendiant and its counsel (at the expense of the Company) copies of the
Registration Statement, the Prospectus (including all documents incorporated by
reference therein) and all amendments and supplements to the Registration
Statement or Prospectus that are filed with the SEC during the Prospectus
Delivery Period (including all documents filed with the SEC during such period
that are deemed to be incorporated by reference therein), in each case as soon
as reasonably practicable and in such quantities as Ascendiant may from time to
time reasonably request and, at Ascendiant’s request, will also furnish copies
of the Prospectus to each exchange or market on which sales of the Placement
Shares may be made; provided, however, that the Company will not be required to
furnish any document (other than the Prospectus) to Ascendiant to the extent
such document is available on EDGAR.
(f) Earnings Statement. The Company will make generally available to its
security holders as soon as practicable, but in any event not later than 15
months after the end of the Company’s current fiscal quarter, an earnings
statement covering a 12-month period that satisfies the provisions of Section
11(a) and Rule 158 of the Securities Act. The Company’s compliance with the
reporting requirements of the Exchange Act shall be deemed to satisfy this
Section 7(f).
(g) Use of Proceeds. The Company will use the Net Proceeds as described in the
Prospectus in the section entitled “Use of Proceeds.”
(h) Notice of Other Sales. Without the prior written notice to Ascendiant, the
Company will not, directly or indirectly, offer to sell, sell, contract to sell,
grant any option to sell or otherwise dispose of any Common Stock (other than
the Placement Shares offered pursuant to this Agreement) or securities
convertible into or exchangeable for Common Stock, warrants or any rights to
purchase or acquire, Common Stock during the period beginning on the date on
which any Placement Notice is delivered to Ascendiant hereunder and ending on
the third Trading Day immediately following the final Settlement Date respecting
Placement Shares sold pursuant to such Placement Notice (or, if the Placement
Notice has been terminated or suspended prior to the sale of all Placement
Shares covered by a Placement Notice, the date of such suspension or
termination); and will not directly or indirectly in any other “at-the-market”
offering sell, contract to sell, grant any option to sell or otherwise dispose
of any Common Stock (other than the Placement Shares offered pursuant to this
Agreement) or securities convertible into or exchangeable for Common Stock,
warrants or any rights to purchase or acquire, Common Stock prior to the
termination of
15

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

this Agreement; provided, however, that such restrictions will not be required
in connection with the Company’s issuance or sale of: (1) Common Stock, options
to purchase Common Stock or Common Stock issuable upon the exercise of options,
pursuant to any employee or director stock option or benefits plan, stock
ownership plan or dividend reinvestment plan (but not Common Stock subject to a
waiver to exceed plan limits in its dividend reinvestment plan) of the Company
whether now in effect or hereafter implemented; (2) Common Stock issuable upon
conversion of securities or the exercise of warrants, options or other rights in
effect or outstanding, and disclosed in filings by the Company available on
EDGAR or otherwise in writing to Ascendiant; and (3) Common Stock, or securities
convertible into or exercisable for Common Stock, offered and sold in a
privately negotiated transaction to vendors, customers, strategic partners or
potential strategic partners who are qualified institutional buyers and not more
than three Persons that are “accredited investors” within the meaning of such
term under paragraph (a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) of Rule 501 under
the Securities Act and otherwise conducted in a manner so as not to be
integrated with the offering of Common Stock hereby.
(i) Change of Circumstances. The Company will, at any time during the pendency
of a Placement Notice, advise Ascendiant promptly after it will have received
notice or obtained knowledge thereof, of any information or fact that would
alter or affect in any material respect any opinion, certificate, letter or
other document required to be provided to Ascendiant pursuant to this Agreement.
(j) Due Diligence Cooperation. The Company will cooperate with any reasonable
due diligence review conducted by Ascendiant or its representatives in
connection with the transactions contemplated hereby, including providing
information and making available documents and senior corporate officers, during
regular business hours and at the Company’s principal offices or such other
location mutually agreed to by the parties, as Ascendiant may reasonably
request.
(k) Required Filings Relating to Placement of Placement Shares. The Company
agrees that on such dates as the Securities Act requires, the Company will:
(i) file a prospectus supplement with the SEC under the applicable paragraph of
Rule 424(b) under the Securities Act (each and every filing under Rule 424(b), a
“Filing Date”), which prospectus supplement will set forth, within the relevant
period, the amount of Placement Shares sold through Ascendiant, the Net Proceeds
to the Company and the compensation payable by the Company to Ascendiant
respecting such Placement Shares; and (ii) deliver such number of copies of each
such prospectus supplement to each exchange or market on which such sales were
effected as may be required by the rules or regulations of such exchange or
market.
(l) Representation Dates; Certificate. Prior to the delivery of the first
Placement Notice and each time the Company:
(i) files the Prospectus relating to the Placement Shares or amends or
supplements (other than a prospectus supplement relating solely to an offering
of securities other than the Placement Shares) the Registration Statement or the
Prospectus relating to the Placement Shares by means of a post-effective
amendment, sticker, or supplement but not by means of incorporation of documents
by reference into the Registration Statement or the Prospectus relating to the
Placement Shares;
(ii) files an annual report on Form 10-K under the Exchange Act (including any
Form 10-K/A that contains restated financial statements);
(iii) files a quarterly report on Form 10-Q under the Exchange Act; or
(iv) files a current report on Form 8-K containing amended audited financial
information (other than information “furnished” pursuant to Items 2.02 or 7.01
of Form 8-K or to provide disclosure pursuant to Item 8.01 of Form 8-K relating
to the reclassification of certain properties as discontinued operations in
accordance with Statement of Financial Accounting Standards No. 144) under the
Exchange Act (each date of filing of one or more of the documents referred to in
clauses (i) through (iv) will be a “Representation Date”);
16

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

the Company will furnish Ascendiant (but in the case of clause (iv) above only
if Ascendiant reasonably determines that the information contained in such Form
8K is material) with a certificate, in the form attached hereto as Exhibit A.
The requirement to provide a certificate under this Section 7(l) will be waived
for any Representation Date occurring at a time at which no Placement Notice is
pending, which waiver will continue until the earlier to occur of the date the
Company delivers a Placement Notice hereunder (which for such calendar quarter
will be considered a Representation Date) and the next occurring Representation
Date; provided, however, that such waiver will not apply for any Representation
Date on which the Company files its annual report on Form 10K. Notwithstanding
the foregoing, if the Company subsequently decides to sell Placement Shares
following a Representation Date when the Company relied on such waiver and did
not provide Ascendiant with a certificate under this Section 7(l), then before
the Company delivers the Placement Notice or Ascendiant sells any Placement
Shares, the Company will provide Ascendiant with a certificate, in the form
attached hereto as Exhibit A, dated the date of the Placement Notice.
(m) Legal Opinion. Prior to the delivery of the first Placement Notice and
within five Trading Days of each Representation Date for which the Company is
obligated to deliver a certificate in the form attached hereto as Exhibit A for
which no waiver is applicable, the Company will cause to be furnished to
Ascendiant written opinions of Winstead PC or other counsel reasonably
satisfactory to Ascendiant (“Company Counsel”), in form and substance reasonably
satisfactory to Ascendiant and its counsel; provided, however, the Company will
be required to furnish to Ascendiant no more than one opinion hereunder per
calendar quarter; provided, further, that in lieu of such opinions for
subsequent periodic filings under the Exchange Act, Company Counsel may furnish
Ascendiant with a letter (a “Reliance Letter”) to the effect that Ascendiant may
rely on a prior opinion delivered under this Section 7(m) to the same extent as
if it were dated the date of such letter (except that statements in such prior
opinion will be deemed to relate to the Registration Statement and the
Prospectus as amended or supplemented as of the date of the Reliance Letter).
(n) Comfort Letters. Prior to the delivery of the first Placement Notice and
within five Trading Days of each Representation Date, other than pursuant to
Section 7(l)(iii), for which the Company is obligated to deliver a certificate
in the form attached hereto as Exhibit A for which no waiver is applicable, the
Company will cause its Accountants to furnish Ascendiant letters (the “Comfort
Letters”), dated the date the Comfort Letters are delivered, which will meet the
requirements set forth in this Section 7(n). The Comfort Letter from each of the
Accountants will be in a form and substance reasonably satisfactory to
Ascendiant: (i) confirming that they are an independent public accounting firm
within the meaning of the Securities Act and the PCAOB; (ii) stating, as of such
date, the conclusions and findings of such firm respecting the financial
information and other matters ordinarily covered by accountants’ “comfort
letters” to underwriters in connection with registered public offerings (the
first such letter, the “Initial Comfort Letter”); and (iii) updating the Initial
Comfort Letter with any information that would have been included in the Initial
Comfort Letter had it been given on such date and modified as necessary to
relate to the Registration Statement and the Prospectus, as amended and
supplemented to the date of such letter.
(o) Market Activities. The Company will not, directly or indirectly: (i) take
any action designed to cause or result in, or that constitutes or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of Common
Stock; or (ii) sell, bid for, or purchase Common Stock in violation of
Regulation M, or pay anyone any compensation for soliciting purchases of the
Placement Shares other than Ascendiant.
(p) Investment Company Act. The Company will conduct its affairs in such a
manner so as to reasonably ensure that neither it nor any of its Subsidiaries
will be or become, at any time prior to the termination of this Agreement, an
“investment company,” as such term is defined in the Investment Company Act.
(q) No Offer to Sell. Other than an Issuer Free Writing Prospectus approved in
advance by the Company and Ascendiant in its capacity as agent hereunder,
neither Ascendiant nor the Company
17

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

(including its agents and representatives, other than Ascendiant in its capacity
as such) will make, use, prepare, authorize, approve, or refer to any written
communication (as defined in Rule 405 under the Securities Act), required to be
filed with the SEC, that constitutes an offer to sell or solicitation of an
offer to buy Placement Shares hereunder.
(r) Sarbanes-Oxley Act. The Company and the Subsidiaries will maintain and keep
accurate books and records reflecting their assets and maintain internal
accounting controls in a manner designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles and including those policies and procedures that:
(i) pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
Company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit the preparation of the Company’s consolidated financial
statements in accordance with generally accepted accounting principles;
(iii) that receipts and expenditures of the Company are being made only in
accordance with management’s and the Company’s directors’ authorization; and
(iv) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that could
have a material effect on its financial statements. The Company and the
Subsidiaries will use commercially reasonable efforts to maintain such controls
and other procedures, including those required by Sections 302 and 906 of the
Sarbanes-Oxley Act, and the applicable regulations thereunder that are designed
to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the periods specified in the SEC’s rules and
forms, including controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the Company’s
management, including its principal executive officer and principal financial
officer, or individuals performing similar functions, as appropriate to allow
timely decisions regarding required disclosure and to ensure that material
information relating to the Company or the Subsidiaries is made known to them by
others within those entities, particularly during the period in which such
periodic reports are being prepared.
8. Representations and Covenants of Ascendiant. Ascendiant represents and
warrants that it is duly registered as a broker-dealer under FINRA, the Exchange
Act, and the applicable statutes and regulations of each state in which the
Placement Shares will be offered and sold, except such states in which
Ascendiant is exempt from registration or such registration is not otherwise
required. Ascendiant will continue, for the term of this Agreement, to be duly
registered as a broker-dealer under FINRA, the Exchange Act, and the applicable
statutes and regulations of each state in which the Placement Shares will be
offered and sold, except such states in which Ascendiant is exempt from
registration or such registration is not otherwise required, during the term of
this Agreement. Ascendiant will comply with all applicable law and regulations
in connection with the Placement Shares, including Regulation M.
9. Payment of Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including: (i) the
preparation, filing, including any fees required by the SEC, and printing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment and supplement thereto and each Free
Writing Prospectus, in such number as Ascendiant will reasonably deem necessary;
(ii) the printing and delivery to Ascendiant of this Agreement and such other
documents as may be required in connection with the offering, purchase, sale,
issuance, or delivery of the Placement Shares; (iii) the preparation, issuance,
and delivery of the certificates, if any, for the Placement Shares to
Ascendiant, including any stock or other transfer taxes and any capital duties,
stamp duties, or other duties or taxes payable upon the sale, issuance, or
delivery of the Placement Shares to Ascendiant; (iv) the fees and disbursements
of the counsel, accountants, and other advisors to the Company; (v) the fees and
expenses of the transfer agent and registrar for the Common Stock; (vi) the
filing fees incident to any review by FINRA of the terms of the sale of the
Placement Shares; (vii) the fees and expenses incurred in connection with the
listing of the Placement Shares on the Exchange; (viii) usual and customary
transaction, ticket, and similar charges; (ix) $30,000 of the fees and expenses
of Ascendiant’s legal counsel initially, of which $10,000 was previously paid,
and thereafter, the reasonable fees and expenses of Ascendiant’s legal counsel
over $30,000 incurred in connection with quarterly and annual bring-downs
18

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

after closing and during the Commitment Period; the Company shall pay retainers
to Ascendiant’s counsel at the reasonable request of Ascendiant to cover future
fees and expenses.
10. Conditions to Ascendiant’s Obligations. The obligations of Ascendiant
hereunder respecting a Placement will be subject to the continuing accuracy and
completeness of the representations and warranties made by the Company herein,
to the due performance by the Company of its obligations hereunder, to the
completion by Ascendiant of a due diligence review satisfactory to it in its
reasonable judgment, and to the continuing satisfaction (or waiver by Ascendiant
in its sole discretion) of the following additional conditions:
(a) Registration Statement Effective. The Company shall at all times maintain in
effect the Registration Statement, which will be available for the sale of all
Placement Shares contemplated to be issued by any Placement Notice.
(b) No Material Notices. None of the following events will have occurred and be
continuing: (i) receipt by the Company of any request for additional information
from the SEC or any other federal or state governmental authority during the
period of effectiveness of the Registration Statement the response to which
would require any post-effective amendments or supplements to the Registration
Statement or the Prospectus; (ii) the issuance by the SEC or any other federal
or state governmental authority of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for that
purpose; (iii) receipt by the Company of any notification respecting the
suspension of the qualification or exemption from qualification of any of the
Placement Shares for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; or (iv) the occurrence of any event that
requires the making of any changes in the Registration Statement, the Prospectus
or documents so that, in the case of the Registration Statement, it will not
contain any materially untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading and, that in the case of the Prospectus, it will not
contain any materially untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(c) No Misstatement or Material Omission. Ascendiant will not have advised the
Company that the Registration Statement or Prospectus, or any amendment or
supplement thereto, contains an untrue statement of fact that in Ascendiant’s
reasonable opinion is material, or omits to state a fact that in Ascendiant’s
opinion is material and is required to be stated therein or is necessary to make
the statements therein not misleading.
(d) Material Changes. Except as contemplated in the Prospectus, or disclosed in
the Company’s reports filed with the SEC, there will not have been any material
adverse change, on a consolidated basis, in the authorized capital stock of the
Company or any Material Adverse Effect, or any development that could reasonably
be expected to cause a Material Adverse Effect.
(e) Legal Opinion. Ascendiant will have received the opinions of Company Counsel
required to be delivered pursuant Section 7(m) on or before the date on which
such delivery of such opinions is required pursuant to Section 7(m).
(f) Comfort Letters. Ascendiant will have received the Comfort Letters required
to be delivered pursuant Section 7(n) on or before the date on which such
delivery of such letter is required pursuant to Section 7(n).
(g) Representation Certificate. Ascendiant will have received the certificate
required to be delivered pursuant to Section 7(l) on or before the date on which
delivery of such certificate is required pursuant to Section 7(l).
(h) No Suspension. Trading in the Common Stock will not have been suspended on
the Exchange and the Common Stock will not have been delisted from the Exchange.
19

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

(i) Other Materials. On each date on which the Company is required to deliver a
certificate pursuant to Section 7(l), the Company will have furnished to
Ascendiant such appropriate further information, certificates, and documents as
Ascendiant may reasonably request and that are usually and customarily furnished
by an issuer of securities in connection with a securities offering. All such
opinions, certificates, letters, and other documents will be in compliance with
the provisions hereof. The Company will furnish Ascendiant with such conformed
copies of such opinions, certificates, letters, and other documents as
Ascendiant will reasonably request.
(j) Securities Act Filings Made. All filings with the SEC required by Rule 424
under the Securities Act to have been filed prior to the issuance of any
Placement Notice hereunder will have been made within the applicable period
prescribed for such filing by Rule 424.
(k) Approval for Listing. The Placement Shares will either have been approved
for listing on the Exchange, subject only to notice of issuance, or the Company
will have filed an application for listing of the Placement Shares on the
Exchange at, or prior to, the issuance of any Placement Notice.
(l) No Termination Event. No event will have occurred that would permit
Ascendiant to terminate this Agreement pursuant to Section 13(a).
11. Indemnification and Contribution.
(a) Company Indemnification. The Company agrees to indemnify and hold harmless
Ascendiant, its partners, members, directors, officers, employees, and agents
and each Person, if any, who controls Ascendiant within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act as follows:
(i) against any and all loss, liability, claim, damage, and expense whatsoever,
as incurred, joint or several, arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading, or arising out of any untrue statement or
alleged untrue statement of a material fact included in any related Issuer Free
Writing Prospectus or the Prospectus (or any amendment or supplement thereto),
or the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense whatsoever,
as incurred, joint or several, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that any such settlement is effected with the
written consent of the Company, which consent will not unreasonably be delayed
or withheld; and
(iii) against any and all expense whatsoever, as incurred (including the
reasonable fees and disbursements of counsel), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement will not apply to any loss,
liability, claim, damage, or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by
Ascendiant expressly for use in the Registration Statement (or any amendment
thereto), or in any related Issuer Free Writing Prospectus or the Prospectus (or
any amendment or supplement thereto).
20

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

(b) Ascendiant Indemnification. Ascendiant agrees to indemnify and hold harmless
the Company and its directors and each officer of the Company who signed the
Registration Statement, and each Person, if any, that: (i) controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act; or (ii) is controlled by or is under common control with the
Company against any and all loss, liability, claim, damage, and expense
described in the indemnity contained in Section 11(c), as incurred, but only
respecting untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendments thereto), the
Prospectus (or any amendment or supplement thereto) or any Free Writing
Prospectus in reliance upon and in conformity with information furnished to the
Company in writing by Ascendiant expressly for use therein.
(c) Procedure.
(i) Any party that proposes to assert the right to be indemnified under this
Section 11 will, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section 11, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve the indemnifying party from: (1) any liability that it might have to any
indemnified party otherwise than under this Section 11; and (2) any liability
that it may have to any indemnified party under the foregoing provision of this
Section 11 unless, and only to the extent that, such omission results in the
forfeiture or material impairment of substantive rights or defenses by the
indemnifying party.
(ii) If any such action is brought against any indemnified party and it notifies
the indemnifying party of its commencement, the indemnifying party will be
entitled to participate in and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense of the action, with
counsel reasonably satisfactory to the indemnified party, and after notice from
the indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense.
(iii) The indemnified party will have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel will be at
the expense of such indemnified party unless: (1) the employment of counsel by
the indemnified party has been authorized in writing by the indemnifying party;
(2) the indemnified party has reasonably concluded (based on advice of counsel)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party; (3) a conflict or potential conflict exists (based on advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party); or (4) the
indemnifying party has not in fact employed counsel to assume the defense of
such action within a reasonable time after receiving notice of the commencement
of the action, in each of which cases the reasonable fees, disbursements and
other charges of counsel will be at the expense of the indemnifying party or
parties.
(iv) It is understood that the indemnifying party or parties will not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements and other charges of more than
one separate firm admitted to practice in such jurisdiction at any one time for
all such indemnified party or parties. All such fees, disbursements, and other
charges will be reimbursed by the indemnifying party promptly after the
indemnifying party receives a written invoice relating to fees, disbursements
and other charges in reasonable detail.
21

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

(v) An indemnifying party will not, in any event, be liable for any settlement
of any action or claim effected without its written consent. No indemnifying
party will, without the prior written consent of each indemnified party, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, or proceeding relating to the matters contemplated by
this Section 11 (whether or not any indemnified party is a party thereto),
unless such settlement, compromise or consent: (i) includes an unconditional
release of each indemnified party from all liability arising out of such
litigation, investigation, proceeding, or claim; and (ii) does not include a
statement as to or an admission of fault, culpability, or a failure to act by or
on behalf of any indemnified party.
(d) Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 11 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or Ascendiant, the Company
and Ascendiant will contribute to the total losses, claims, liabilities,
expenses, and damages (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted, but after deducting any
contribution received by the Company from Persons other than Ascendiant, such as
Persons that control the Company within the meaning of the Securities Act,
officers of the Company who signed the Registration Statement and directors of
the Company, who also may be liable for contribution) to which the Company and
Ascendiant may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company, on the one hand, and Ascendiant, on
the other hand. The relative benefits received by the Company, on the one hand,
and Ascendiant, on the other hand, will be deemed to be in the same proportion
as the total net proceeds from the sale of the Placement Shares (before
deducting expenses) received by the Company bear to the total compensation
received by Ascendiant (before deducting expenses) from the sale of Placement
Shares on behalf of the Company. If, but only if, the allocation provided by the
foregoing sentence is not permitted by applicable law, the allocation of
contribution will be made in such proportion as is appropriate to reflect not
only the relative benefits referred to in the foregoing sentence but also the
relative fault of the Company, on the one hand, and Ascendiant, on the other
hand, respecting the statements or omission that resulted in such loss, claim,
liability, expense or damage, or action in respect thereof, as well as any other
relevant equitable considerations respecting such offering. Such relative fault
will be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or
Ascendiant, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and Ascendiant agree that it would not be just and equitable if
contributions pursuant to this Section 11(d) were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, liability, expense, or
damage, or action in respect thereof, referred to above in this Section 11(d)
will be deemed to include, for the purpose of this Section 11(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim to the extent consistent
with Section 11(c) hereof. Notwithstanding the foregoing provisions of this
Section 11(d), Ascendiant will not be required to contribute any amount in
excess of the commissions received by it under this Agreement and no Person
found guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 11(d), any Person who controls a party to this Agreement within the
meaning of the Securities Act, and any officers, directors, partners, employees
or agents of Ascendiant, will have the same rights to contribution as that
party, and each officer and director of the Company who signed the Registration
Statement will have the same rights to contribution as the Company, subject in
each case to the provisions hereof. Any party entitled to contribution, promptly
after receipt of notice of commencement of any action against such party in
respect of which a claim for contribution may be made under this Section 11(d),
will notify any such party or parties from whom contribution may be sought, but
the omission to so notify will not relieve that party or parties from whom
contribution may be sought from any other obligation it or they may have under
this Section 11(d) except to the extent that the failure to so notify such other
party materially prejudiced the substantive rights or defenses of the party from
whom contribution is sought. Except for a settlement entered into pursuant to
the
22

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

last sentence of Section 11(c) hereof, no party will be liable for contribution
respecting any action or claim settled without its written consent if such
consent is required pursuant to Section 11(c) hereof.
12. Representations and Agreements to Survive Delivery. The indemnity and
contribution agreements contained in Section 11 of this Agreement and all
representations and warranties of the Company herein or in certificates
delivered pursuant hereto will survive, as of their respective dates, regardless
of: (a) any investigation made by or on behalf of Ascendiant, any controlling
Persons, or the Company (or any of their respective officers, directors, or
controlling Persons); (b) delivery and acceptance of the Placement Shares and
payment therefor; or (c) any termination of this Agreement.
13. Termination.
(a) Ascendiant may terminate this Agreement, by notice to the Company, as
hereinafter specified at any time: (i) if there has been, since the time of
execution of this Agreement or since the date as of which information is given
in the Prospectus, any Material Adverse Effect, or any development has occurred
that is reasonably likely to have a Material Adverse Effect or in the sole
judgment of Ascendiant makes it impractical or inadvisable to market the
Placement Shares or to enforce contracts for the sale of the Placement Shares;
(ii) if there has occurred any material adverse change in the financial markets
in the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of Ascendiant, impracticable or inadvisable
to market the Placement Shares or to enforce contracts for the sale of the
Placement Shares; (iii) if trading in the Common Stock has been suspended or
limited by the SEC or the Exchange, or if trading generally on the Exchange has
been suspended or limited, or minimum prices for trading have been fixed on the
Exchange; (iv) if any suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market will have occurred and be
continuing; (v) if a major disruption of securities settlements or clearance
services in the United States will have occurred and be continuing; or (vi) if a
banking moratorium has been declared by either U.S. Federal or New York
authorities. Any such termination will be without liability of any party to any
other party except that the provisions of Section 9 (Expenses), Section 11
(Indemnification), Section 12 (Survival of Representations), Section 18
(Applicable Law; Waiver of Jury Trial), and Section 19 (Consent to Jurisdiction)
hereof will remain in full force and effect notwithstanding such termination. If
Ascendiant elects to terminate this Agreement as provided in this Section 13(a),
Ascendiant will provide the required notice as specified in Section 14
(Notices).
(b) (i) The Company will have the right, by giving 10 days’ notice as
hereinafter specified to terminate this Agreement in its sole discretion at any
time after the date of this Agreement.
        (ii) If Ascendiant declines any Placement Notice pursuant to Section
2(a) of this Agreement, then the Company will have the right to terminate this
Agreement by giving written notice of termination to Ascendiant. Any such
termination will be effective immediately upon a delivery of a termination
notice by the Company to Ascendiant.
Any termination pursuant to Section 13(b) will be without liability of any party
to any other party except that the provisions of Section 9, Section 11, Section
12, Section 18, and Section 19 hereof will remain in full force and effect
notwithstanding such termination.
(c) Ascendiant will have the right, by giving 10 days’ notice as hereinafter
specified to terminate this Agreement in its sole discretion at any time after
the date of this Agreement. Any such termination will be without liability of
any party to any other party except that the provisions of Section 9, Section
11, Section 12, Section 18, and Section 19 hereof will remain in full force and
effect notwithstanding such termination.
23

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

(d) Unless earlier terminated pursuant to this Section 13, this Agreement will
automatically terminate upon the earlier to occur of: (i) the one-year
anniversary of the date hereof; or (ii) the issuance and sale of all of the
Placement Shares through Ascendiant on the terms and subject to the conditions
set forth herein, except that, in either such case, the provisions of Section 9,
Section 11, Section 12, Section 18 and Section 19 hereof will remain in full
force and effect notwithstanding such termination.
(e) This Agreement will remain in full force and effect unless terminated
pursuant to Sections 13(a), (b), (c), or (d) above or otherwise by mutual
agreement of the parties. Upon termination of this Agreement, the Company will
not have any liability to Ascendiant for any discount, commission, or other
compensation respecting any Placement Shares not otherwise sold by Ascendiant
under this Agreement.
(f) Any termination of this Agreement will be effective on the date specified in
such notice of termination; provided, however, that such termination will not be
effective until the close of business on the date of receipt of such notice by
Ascendiant or the Company, as the case may be. If such termination will occur
prior to the Settlement Date for any sale of Placement Shares, such Placement
Shares will settle in accordance with the provisions of this Agreement.
14. Notices.
(a) All notices or other communications required or permitted to be given by any
party to any other party pursuant to the terms of this Agreement will be in
writing, unless otherwise specified:
and if sent to Ascendiant, will be delivered to:
Ascendiant Capital Markets, LLC
Attention: Managing Partner
18881 Von Karman Avenue, 16th Floor
Irvine, CA 92612

with a copy to:
Michael Best & Friedrich LLP
Attention: Betsy T. Voter
170 South Main Street, Suite 1000
Salt Lake City, UT 84101

and if sent to the Company, will be delivered to:
Phunware, Inc.
Attn: Matt Aune
7800 Shoal Creek Blvd, Suite 230-S
Austin, TX 78757

with a copy to:
Winstead PC
Attn: Alex R. Allemann
401 Congress Ave., Suite 2100
Austin, Texas 78701

(b) Each such notice or other communication will be deemed given: (i) when
delivered personally on or before 4:30 p.m., New York City time, on a Business
Day or, if such day is not a Business Day, on the next succeeding Business Day;
or (ii) on the next Business Day after timely delivery to a
24

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

nationally recognized overnight courier. For purposes of this Agreement,
“Business Day” will mean any day on which the Exchange and commercial banks in
the City of New York are open for business.
(c) An electronic communication (“Electronic Notice”) will be deemed written
notice for purposes of this Section 14 if sent to the electronic mail address
specified by the receiving party under separate cover. Electronic Notice will be
deemed received at the time the party sending Electronic Notice receives
confirmation of receipt by the receiving party. Any party receiving Electronic
Notice may request and will be entitled to receive the notice on paper, in a
nonelectronic form (“Nonelectronic Notice”), which will be sent to the
requesting party within 10 days of receipt of the written request for
Nonelectronic Notice.
(d) Each party to this Agreement may change such address for notices by sending
to the parties to this Agreement written notice of a new address for such
purpose.
15. Successors and Assigns. This Agreement will inure to the benefit of and be
binding upon the Company and Ascendiant and their respective successors and the
affiliates, controlling persons, partners, members, officers, directors,
employees, and agents referred to in Section 11 hereof. References to any of the
parties contained in this Agreement will be deemed to include the successors and
permitted assigns of such party. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. Neither party may assign its rights or obligations under this
Agreement without the prior written consent of the other party.
16. Adjustments for Stock Splits. The parties acknowledge and agree that all
share-related numbers contained in this Agreement will be adjusted to take into
account any share consolidation, stock split, stock dividend, corporate
domestication or similar event effected respecting the Placement Shares.
17. Entire Agreement; Amendment; Severability. This Agreement (including all
schedules and exhibits attached hereto and Placement Notices issued pursuant
hereto), by and between the Company and Ascendiant constitutes the entire
agreement of the parties respecting the subject matter hereof and thereof and
supersedes all other prior and contemporaneous agreements and undertakings, both
written and oral, among the parties hereto with regard to the subject matter
hereof and thereof. Neither this Agreement nor any term hereof may be amended
except pursuant to a written instrument executed by the Company and Ascendiant.
In the event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal, or
unenforceable as written by a court of competent jurisdiction, then such
provision will be given full force and effect to the fullest possible extent
that it is valid, legal, and enforceable, and the remainder of the terms and
provisions herein will be construed as if such invalid, illegal, or
unenforceable term or provision was not contained herein, but only to the extent
that giving effect to such provision and the remainder of the terms and
provisions hereof will be in accordance with the intent of the parties as
reflected in this Agreement.
18. APPLICABLE LAW; WAIVER OF JURY TRIAL. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS. SPECIFIED TIMES OF DAY REFER TO NEW YORK
CITY TIME. THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
19. CONSENT TO JURISDICTION. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY
OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION WITH ANY TRANSACTION CONTEMPLATED HEREBY, 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
25

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

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 (CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT
UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE WILL CONSTITUTE GOOD AND
SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN WILL
BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED
BY LAW.
20. Use of Information. Ascendiant may not use any information gained in
connection with this Agreement and the transactions contemplated by this
Agreement, including due diligence, to advise any party respecting transactions
not expressly approved in writing by the Company. Ascendiant acknowledges that
any information gained in connection with this Agreement and the transactions
contemplated by this Agreement are subject to confidentiality and other
restrictions pursuant to the Confidentiality Agreement and agrees to abide by
the terms of the Confidentiality Agreement.
21. Counterparts. This Agreement may be executed in two or more counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument. Delivery of an executed Agreement by one
party to the other may be made by facsimile transmission.
22. Effect of Headings. The section and exhibit headings herein are for
convenience only and will not affect the construction hereof.
23. Permitted Free Writing Prospectuses. The Company represents, warrants, and
agrees that, unless it obtains the prior consent of Ascendiant, and Ascendiant
represents, warrants and agrees that, unless it obtains the prior consent of the
Company, it has not made and will not make any offer relating to the Placement
Shares that would constitute an Issuer Free Writing Prospectus, or that would
otherwise constitute a “free writing prospectus,” as defined in Rule 405,
required to be filed with the SEC. Any such free writing prospectus consented to
by Ascendiant or by the Company, as the case may be, is hereinafter referred to
as a “Permitted Free Writing Prospectus.” The Company represents and warrants
that it has treated and agrees that it will treat each Permitted Free Writing
Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and
has complied and will comply with the requirements of Rule 433 applicable to any
Permitted Free Writing Prospectus, including timely filing with the SEC where
required, legending, and recordkeeping. For the purposes of clarity, the parties
hereto agree that all free writing prospectuses, if any, listed in Exhibit B
hereto are Permitted Free Writing Prospectuses.
24. Absence of Fiduciary Relationship. The Company acknowledges and agrees that:
(a) Ascendiant is acting solely as agent in connection with the public offering
of the Placement Shares and in connection with each transaction contemplated by
this Agreement and the process leading to such transactions, and no fiduciary or
advisory relationship between the Company or any of its respective affiliates,
stockholders (or other equity holders), creditors or employees or any other
party, on the one hand, and Ascendiant, on the other hand, has been or will be
created in respect of any of the transactions contemplated by this Agreement,
irrespective of whether or not Ascendiant has advised or is advising the Company
on other matters, and Ascendiant has no obligation to the Company respecting the
transactions contemplated by this Agreement except the obligations expressly set
forth in this Agreement;
(b) it is capable of evaluating and understanding, and understands and accepts,
the terms, risks and conditions of the transactions contemplated by this
Agreement;
(c) Ascendiant has not provided any legal, accounting, regulatory or tax advice
respecting the transactions contemplated by this Agreement and it has consulted
its own legal, accounting, regulatory and tax advisors to the extent it has
deemed appropriate;
26

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

(d) it is aware that Ascendiant and its affiliates are engaged in a broad range
of transactions that may involve interests that differ from those of the Company
and Ascendiant has no obligation to disclose such interests and transactions to
the Company by virtue of any fiduciary, advisory or agency relationship or
otherwise; provided that Ascendiant hereby agrees not to engage in any such
transaction that would cause its interests to be in direct conflict with the
best interests of the Company; and
(e) it waives, to the fullest extent permitted by law, any claims it may have
against Ascendiant for breach of fiduciary duty or alleged breach of fiduciary
duty in connection with the sale of Placement Shares under this Agreement and
agrees that Ascendiant will not have any liability (whether direct or indirect,
in contract, tort or otherwise) to it in respect of such a fiduciary duty claim
or to any Person asserting a fiduciary duty claim on its behalf or in right of
it or the Company, employees or creditors of Company, other than in respect of
Ascendiant’s obligations under this Agreement and to keep information provided
by the Company to Ascendiant and Ascendiant’s counsel confidential to the extent
not otherwise publicly available.
25. Definitions. As used in this Agreement, the following terms have the
respective meanings set forth below:
(a)“Applicable Time” means: (i) each Representation Date; and (ii) the time of
each sale of any Placement Shares pursuant to this Agreement.
(b)“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,”
as defined in Rule 433, relating to the Placement Shares.
(c)“Rule 164,” “Rule 172,” “Rule 405,” “Rule 415,” “Rule 424,” “Rule 424(b),”
“Rule 430A,” “Rule 430B,” and “Rule 433” refer to such rules under the
Securities Act Regulations.
(d)All references in this Agreement to financial statements and schedules and
other information that is “contained,” “included,” or “stated” in the
Registration Statement or the Prospectus (and all other references of like
import) will be deemed to mean and include all such financial statements and
schedules and other information that is incorporated by reference in the
Registration Statement or the Prospectus, as the case may be.
(e)All references in this Agreement to the Registration Statement, the
Prospectus or any amendment or supplement to any of the foregoing will be deemed
to include the copy filed with the SEC pursuant to EDGAR; all references in this
Agreement to any Issuer Free Writing Prospectus (other than any Issuer Free
Writing Prospectuses that, pursuant to Rule 433, are not required to be filed
with the SEC) will be deemed to include the copy thereof filed with the SEC
pursuant to EDGAR; and all references in this Agreement to “supplements” to the
Prospectus will include any supplements, “wrappers,” or similar materials
prepared in connection with any offering, sale, or private placement of any
Placement Shares by Ascendiant outside of the United States.
If the foregoing correctly sets forth the understanding between the Company and
Ascendiant, please so indicate in the space provided below for that purpose,
whereupon this letter will constitute a binding agreement between the Company
and Ascendiant.
Very truly yours,
PHUNWARE, INC.

By:Name:Matt AuneTitle:Chief Financial Officer

ACCEPTED as of the date first-above written:
27

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

ASCENDIANT CAPITAL MARKETS, LLC

By:Name:Bradley J. WilhiteTitle:Managing Partner

28

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

SCHEDULE 1
_________________________________

FORM OF PLACEMENT NOTICE
_________________________________

From:  Phunware, Inc.
To:  Ascendiant Capital Markets, LLC
Attention: Bradley J. Wilhite
Subject:  At-The-Market Issuance Placement Notice
Gentlemen:
Pursuant to the terms and subject to the conditions contained in the
At-The-Market Issuance Sales Agreement between Phunware, Inc., a Delaware
corporation (the “Company”) and Ascendiant Capital Markets, LLC (“Ascendiant”),
dated August 14, 2020, the Company hereby requests that Ascendiant sell up to
____________ of the Company’s Common Stock, par value $0.0001 per share, at a
minimum market price of $_______ per share, during the period beginning [month,
day, time] and ending [month, day, time].

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

SCHEDULE 2
__________________________

COMPENSATION
__________________________
The Company will pay to Ascendiant in cash, upon each sale of Placement Shares
pursuant to this Agreement, an amount equal to 3.0% of the gross proceeds from
each sale of Placement Shares.

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

SCHEDULE 3
__________________________

NOTICE PARTIES
__________________________

The Company:
Matt Aune  maune@phunware.com

Ascendiant:
Bradley J. Wilhite bwilhite@ascendiant.com

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

SCHEDULE 4
__________________________

SUBSIDIARIES
__________________________

Phunware OpCo, Inc.

GoTV Networks, Inc. (Delaware corporation)

Taurus Merger Company, LLC (Delaware corporation)

GoTV Studios, LLC (California LLC)

Rain Acquisition, LLC

Faith Based Apps, LLC (California LLC)

Rain – US LLC

Phunware NL Cooperatief U.A.

SendDroid, LLC (Delaware LLC)

Simplikate Systems LLC (Delaware LLC)

30 Second Software, Inc. (Delaware corporation)

Chengdu Digby Technology Co., Ltd. (Chinese company)

Odyssey Mobile Marketing Limited (UK)

Odyssey Mobile Northern Europe Ltd. (Sweden)

Odyssey Mobile Asia Pte. Ltd. (Singapore)

Rain Acquisition Sub, Inc.

Dutch Holdings CV (Netherlands)

Phunware Europe BV

PhunCoin, Inc. (Wyoming)

PhunToken International (Cayman Islands)

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

SCHEDULE 6(a)
__________________________

NOTICE OF NONCOMPLIANCE
__________________________

Except as disclosed in the Registration Statement, including the Incorporated
Documents, the Company has not, in the 12 months preceding the date hereof,
received notice from the Exchange to the effect that the Company is not in
compliance with the Exchange’s listing or maintenance requirements.

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

SCHEDULE 6(dd)
__________________________

FINDER’S FEES, BROKERAGE COMMISSIONS, OR SIMILAR PAYMENTS
__________________________

Neither the Company nor any of the Subsidiaries has incurred any liability for
any finder’s fees, brokerage commissions, or similar payments in connection with
the transactions herein contemplated, except as may otherwise exist respecting
Ascendiant pursuant to this Agreement.

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

Exhibit A
Form of Representation Date Certificate
This Officer’s Certificate (this “Certificate”) is executed and delivered in
connection with Section 7(l) of the At-The-Market Issuance Sales Agreement (the
“Agreement”), dated ________________, 2020, and entered into between Phunware,
Inc. (the “Company”) and Ascendiant Capital Markets, LLC. All capitalized terms
used but not defined herein shall have the meanings given to such terms in the
Agreement

The undersigned, a duly appointed and authorized officer of the Company, having
made all necessary inquiries to establish the accuracy of the statements below
and having been authorized by the Company to execute this certificate, hereby
certifies as follows:
1. As of the date of this Certificate, (i) the Registration Statement does not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading and (ii) neither the Registration Statement nor the
Prospectus contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (iii) no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein not untrue or misleading.
2. Each of the representations and warranties of the Company contained in the
Agreement were, when originally made, and except for representations and
warranties that are made as of a specific date, are, as of the date of this
Certificate, true and correct in all material respects.
3. Each of the covenants required to be performed by the Company in the
Agreement on or prior to the date of the Agreement, this Representation Date,
and each such other date as set forth in the Agreement, has been duly, timely
and fully performed in all material respects and each condition required to be
complied with by the Company on or prior to the date of the Agreement, this
Representation Date, and each such other date as set forth in the Agreement has
been duly, timely and fully complied with in all material respects.
4. Subsequent to the date of the most recent financial statements in the
Prospectus, except as described in the Prospectus, including Incorporated
Documents, there has been no Material Adverse Effect.
5. No stop order suspending the effectiveness of the Registration Statement or
of any part thereof has been issued, and no proceedings for that purpose have
been instituted or are pending or, to the knowledge of the Company are
threatened by any securities or other governmental authority (including, without
limitation, the Commission).
The undersigned has executed this Officer’s Certificate as of the date first
written above.
PHUNWARE, INC.

By:Name:Matt AuneTitle:Chief Financial Officer

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

Exhibit B
Permitted Free Writing Prospectuses
All free writing prospectuses, if any, listed in Exhibit B below are Permitted
Free Writing Prospectuses.