EXHIBIT 10.1

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of April 9, 2018
(the “Closing Date”), is between AIRBORNE WIRELESS NETWORK, a Nevada corporation
(the “Company”), and YA II PN, LTD., a Cayman Island exempt company (the
“Buyer”).

 

WITNESSETH

 

WHEREAS, the Company and the Buyer desire to enter into this transaction for the
Company to sell, and the Buyer to purchase, the Convertible Debenture (as
defined below) pursuant to an exemption from registration pursuant to Section
4(a)(2) and/or Rule 506 of Regulation D (“Regulation D”) as promulgated by the
U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of
1933, as amended (the “Securities Act”);

 

WHEREAS, the parties desire that on the date hereof, upon the terms and subject
to the conditions contained herein, the Company shall issue and sell to the
Buyer, as provided herein, and the Buyer shall purchase from the Company, a
Convertible Debenture in the original principal amount of $1,250,000 in the form
attached hereto as “Exhibit A” (the “Convertible Debenture”), which shall be
convertible into shares of the Company’s common stock, par value $0.001 (the
“Common Stock”) (as converted, the “Conversion Shares”), for a total purchase
price of $1,250,000 (the “Purchase Price”);

 

WHEREAS, on the date hereof, upon the terms and subject to the conditions
contained herein, the Company shall issue to the Buyer, as provided herein, a
Warrant (the “Warrant”), which shall be exercisable into 625,000 shares of the
Common Stock (as exercised, the “Warrant Shares”); and

 

WHEREAS, the Convertible Debenture, the Conversion Shares, the Warrant and the
Warrant Shares are collectively referred to herein as the “Securities.”

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Buyer hereby
agree as follows:

 

1. PURCHASE AND SALE OF CONVERTIBLE DEBENTURE.

 

(a) Purchase of Convertible Debenture. Subject to the satisfaction (or waiver)
of the conditions set forth in Sections 6 and 7 below, the Company shall issue
and sell to the Buyer, and the Buyer agrees to purchase from the Company, the
Convertible Debenture.

 

(b) Form of Payment; Deliveries. Subject to the satisfaction of the terms and
conditions of this Agreement, on the Closing Date, (i) the Buyer shall deliver
to the Company the Purchase Price for the Convertible Debenture to be issued and
sold to the Buyer at such Closing, minus the fees as set forth herein, by wire
transfer of immediately available funds and (ii) the Company shall deliver to
the Buyer, Convertible Debenture, duly executed on behalf of the Company.

 

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2. BUYER’S REPRESENTATIONS AND WARRANTIES.

 

The Buyer represents and warrants to the Company that, as of the date hereof:

 

(a) Investment Purpose. The Buyer is acquiring the Securities for its own
account for investment only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the Securities Act; provided, however, that
by making the representations herein, the Buyer reserves the right to dispose of
the Securities at any time in accordance with or pursuant to an effective
registration statement covering such Securities or an available exemption under
the Securities Act. The Buyer does not presently have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities.

 

(b) Accredited Investor Status. The Buyer is an “Accredited Investor” as that
term is defined in Rule 501(a) of Regulation D by virtue of meeting the
requirements of subsection 8 thereof. The Buyer has such knowledge, skill and
experience in business, financial and investment matters that it is capable of
evaluating the merits and risks of an investment in the Securities.

 

(c) Reliance on Exemptions. The Buyer understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and the Buyer’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Securities.

 

(d) Information. The Buyer and its advisors (and his or, its counsel), if any,
have been furnished with all materials relating to the business, finances and
operations of the Company and information they deemed material to making an
informed investment decision regarding the Buyer’s purchase of the Securities,
which have been requested by the Buyer. The Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and its
management. Neither such inquiries nor any other due diligence investigations
conducted by the Buyer or its advisors, if any, or its representatives shall
modify, amend or affect the Buyer’s right to rely on the Company’s
representations and warranties contained in Section 3 below. The Buyer
understands that its investment in the Securities involves a high degree of
risk. The Buyer has sought such accounting, legal and tax advice, as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.

 

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(e) Transfer or Resale. The Buyer understands that: (i) none of the issuance,
sale or resale of the Securities have been registered under the Securities Act
or any state securities laws, and the Securities may not be offered for sale,
sold, assigned or transferred unless (A) such sale, assignment or transfer is
subsequently registered thereunder, (B) the Buyer shall have delivered to the
Company an opinion of counsel, in a generally acceptable form, to the effect
that such Securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration requirements, or
(C) the Buyer provides the Company with reasonable assurances (in the form of
seller and broker representation letters) that such Securities are being sold,
assigned or transferred pursuant to Rule 144 promulgated under the Securities
Act, as amended (or a successor rule thereto) (collectively, “Rule 144”), in
each case following the applicable holding period set forth therein; and (ii)
any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the SEC
thereunder.

 

(f) Legends. The Buyer agrees to the imprinting, so long as its required by this
Section 2(f), of a restrictive legend on the Securities in substantially the
following form:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE [AND THOSE SECURITIES INTO WHICH
THEY ARE CONVERTIBLE] HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES [AND THOSE
SECURITIES INTO WHICH THEY ARE CONVERTIBLE] HAVE BEEN ACQUIRED SOLELY FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.

 

Certificates evidencing the Conversion Shares shall not contain any legend
(including the legend set forth above), (i) following any sale of such
Conversion Shares while a registration statement covering the resale of such
security is effective under the Securities Act, (ii) following any sale of such
Conversion Shares pursuant to Rule 144 or (iii) if such legend is not required
under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the SEC). The Buyer
agrees that the removal of restrictive legend from certificates representing
Securities as set forth in this Section 2(f) is predicated upon the Company’s
reliance that the Buyer will sell any Securities pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if
Securities are sold pursuant to a registration statement, they will be sold in
compliance with the plan of distribution set forth therein.

 

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(g) Organization; Authority. The Buyer is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents (as
defined below) to which it is a party and otherwise to carry out its obligations
hereunder and thereunder.

 

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

 

(i) No Conflicts. The execution, delivery and performance by the Buyer of this
Agreement and the consummation by the Buyer of the transactions contemplated
hereby will not (i) result in a violation of the organizational documents of the
Buyer, (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Buyer is a party or (iii) result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws) applicable to the Buyer, except,
in the case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of the
Buyer to perform its obligations hereunder.

 

(j) Certain Trading Activities. The Buyer hereby agrees that it shall not
directly or indirectly, engage in any Short Sales involving the Company’s
securities during the period commencing on the date hereof and ending when no
Convertible Debenture remain outstanding. "Short Sales" means all "short sales"
as defined in Rule 200 promulgated under Regulation SHO under the 1934 Act (as
defined below); except that the Buyer may sell the Underlying Securities (as
defined below) upon the conversion of the Convertible Debenture or the exercise
of the Warrant even if the Company or its transfer agent have not yet delivered
the stock certificates to the Buyer evidencing the Underlying Securities.

 

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

Except as set forth under the corresponding section of the Disclosure Schedules
which Disclosure Schedules shall be deemed a part hereof and to qualify any
representation or warranty otherwise made herein to the extent of such
disclosure, the Company hereby makes the representations and warranties set
forth below to the Buyer:

 

(a) Organization and Qualification. The Company and each of its Subsidiaries are
entities duly formed, validly existing and in good standing under the laws of
the jurisdiction in which they are formed, and have the requisite power and
authority to own their properties and to carry on their business as now being
conducted and as presently proposed to be conducted. The Company and each of its
Subsidiaries is duly qualified as a foreign entity to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not
reasonably be expected to have a Material Adverse Effect (as defined below). As
used in this Agreement, “Material Adverse Effect” means any material adverse
effect on (i) the business, properties, assets, liabilities, operations
(including results thereof), condition (financial or otherwise) or prospects of
the Company and its Subsidiary, taken as a whole, (ii) the transactions
contemplated hereby or in any of the other Transaction Documents or any other
agreements or instruments to be entered into by the Company in connection
herewith or therewith or (iii) the authority or ability of the Company to
perform any of its obligations under any of the Transaction Documents (as
defined below). “Subsidiaries” means any Person in which the Company, directly
or indirectly, owns a majority of the outstanding capital stock having voting
power or holds a majority of the equity or similar interest of such Person, and
each of the foregoing, is individually referred to herein as a “Subsidiary”.

 

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(b) Authorization; Enforcement; Validity. The Company has the requisite power
and authority to enter into and perform its obligations under this Agreement and
the other Transaction Documents and to issue the Securities in accordance with
the terms hereof and thereof. The execution and delivery of this Agreement and
the other Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Convertible Debenture, the reservation for
issuance and issuance of the Conversion Shares issuable upon conversion of the
Convertible Debenture) have been duly authorized by the Company's board of
directors and no further filing, consent or authorization is required by the
Company, its board of directors or its stockholders or other governmental body.
This Agreement has been, and the other Transaction Documents to which the
Company is a party will be prior to the Closing, duly executed and delivered by
the Company, and each constitutes the legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with its respective
terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of applicable creditors' rights and remedies and except as rights to
indemnification and to contribution may be limited by federal or state
securities law. “Transaction Documents” means, collectively, this Agreement, the
Convertible Debenture, the Warrant, and each of the other agreements and
instruments entered into by the Company or delivered by the Company in
connection with the transactions contemplated hereby and thereby, as may be
amended from time to time.

 

(c) Issuance of Securities. The issuance of the Convertible Debenture,
Conversion Shares, the Warrant and the Warrant Shares are duly authorized and,
upon issuance and payment in accordance with the terms of the Transaction
Documents, the Securities shall be validly issued, fully paid and non-assessable
and free from all preemptive or similar rights (except as disclosed in the SEC
Documents (as defined below)), mortgages, defects, claims, liens, pledges,
charges, taxes, rights of first refusal, encumbrances, security interests and
other encumbrances (collectively “Liens”) with respect to the issuance thereof.
As of the Closing, the Company shall have reserved from its duly authorized
capital stock not less than the sum of (i) the Warrant Shares, plus (ii) 300% of
the maximum number of shares of Common Stock issuable upon conversion of the
Convertible Debenture (assuming for purposes hereof that (x) the Convertible
Debenture is convertible at the Conversion Price (as defined therein) as of the
date of determination, and (y) any such conversion shall not take into account
any limitations on the conversion of the Convertible Debenture set forth
therein). Upon issuance, conversion or exercise in accordance with the
Convertible Debenture and the Warrant (as applicable), the Conversion Shares and
the Warrant Shares, when issued, will be validly issued, fully paid and
nonassessable and free from all preemptive or similar rights (except as
disclosed in the SEC Documents) or Liens with respect to the issue thereof, with
the holders being entitled to all rights accorded to a holder of Common Stock.

 

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(d) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Convertible Debenture, the Conversion Shares, the Warrant and the Warrant
Shares and the reservation for issuance of the Conversion Shares and the Warrant
Shares) will not (i) result in a violation of the Articles of Incorporation (as
defined below), Bylaws (as defined below), certificate of formation, memorandum
of association, articles of association, bylaws or other organizational
documents of the Company or any of its Subsidiaries, or any capital stock or
other securities of the Company or any of its Subsidiaries, (ii) conflict with,
or constitute a default under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including, without limitation, U.S. federal and state securities laws and
regulations, the securities laws of the jurisdictions of the Company's
incorporation or in which it or its subsidiaries operate and the rules and
regulations of the OTC QB (the “Principal Market”) and including all applicable
laws, rules and regulations of the State of Nevada) applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any
of its Subsidiaries is bound or affected, except in the case of (ii) and (iii)
for any conflict, default, right or violation that would not reasonably be
expected to result in a Material Adverse Effect.

 

(e) Consents. The Company is not required to obtain any material consent from,
authorization or order of, or make any filing or registration with (other than
any filings as may be required by any state securities agencies and any filings
as may be required by the Principal Market), any Governmental Entity (as defined
below) or any regulatory or self-regulatory agency or any other Person in order
for it to execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents, in each case, in accordance with the
terms hereof or thereof. All consents, authorizations, orders, filings and
registrations which the Company or any Subsidiary is required to obtain pursuant
to the preceding sentence have been or will be obtained or effected on or prior
to the Closing Date, and neither the Company nor any of its Subsidiaries are
aware of any facts or circumstances which might prevent the Company or any of
its Subsidiaries from obtaining or effecting any of the registration,
application or filings contemplated by the Transaction Documents. The Company is
not in material violation of the requirements of the Principal Market and has no
knowledge of any facts or circumstances which could reasonably lead to delisting
or suspension of the Common Stock in the foreseeable future. “Governmental
Entity” means any nation, state, county, city, town, village, district, or other
political jurisdiction of any nature, federal, state, local, municipal, foreign,
or other government, governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal), multi-national organization or body; or body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any nature or
instrumentality of any of the foregoing, including any entity or enterprise
owned or controlled by a government or a public international organization or
any of the foregoing.

 

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(f) Acknowledgment Regarding Buyer's Purchase of Securities. The Company
acknowledges and agrees that the Buyer is acting solely in the capacity of an
arm's length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that the Buyer is not (i) an
officer or director of the Company or any of its Subsidiaries, (ii) to its
knowledge, an "affiliate" (as defined in Rule 144 promulgated under the 1933 Act
(or a successor rule thereto) (collectively, “Rule 144”)) of the Company or any
of its Subsidiaries or (iii) to its knowledge, a “beneficial owner” of more than
10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the
1934 Act). The Company further acknowledges that the Buyer is not acting as a
financial advisor or fiduciary of the Company or any of its Subsidiaries (or in
any similar capacity) with respect to the Transaction Documents and the
transactions contemplated hereby and thereby, and any advice given by the Buyer
or any of its representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely
incidental to the Buyer's purchase of the Securities. The Company further
represents to the Buyer that the Company's decision to enter into the
Transaction Documents to which it is a party has been based solely on the
independent evaluation by the Company and its representatives.

 

(g) No Integrated Offering. None of the Company, its Subsidiaries or any of
their affiliates, nor any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Securities to require approval of stockholders of the Company under any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated for quotation.
None of the Company, its Subsidiaries, their affiliates nor any Person acting on
their behalf will take any action or steps that would cause the offering of any
of the Securities to require registration under the Securities Act.

 

(h) Dilutive Effect. The Company understands and acknowledges that the number of
Conversion Shares and Warrant Shares will increase in certain circumstances. The
Company further acknowledges its obligation to issue the Conversion Shares upon
conversion of the Convertible Debenture and the Warrant Shares upon exercise of
the Warrant in accordance with this Agreement, the Convertible Debenture and the
Warrant is, absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other stockholders of the
Company.

 

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(i) Reserved.

 

(j) SEC Documents; Financial Statements. During the two (2) years prior to the
date hereof, the Company has filed all reports, schedules, forms, proxy
statements, statements and other documents required to be filed by it with the
SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date
hereof and all exhibits and appendices included therein and financial
statements, notes and schedules thereto and documents incorporated by reference
therein being hereinafter referred to as the “SEC Documents”). The Company has
delivered or has made available to the Buyer or its respective representatives
true, correct and complete copies of each of the SEC Documents not available on
the EDGAR system. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto as in effect as of the time of filing, except with
respect to those financial statements restated in subsequent SEC Reports. Such
financial statements, as restated, if applicable, have been prepared in
accordance with generally accepted accounting principles (“GAAP”), consistently
applied, during the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may exclude footnotes or may be
condensed or summary statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments which will not be
material, either individually or in the aggregate). The reserves, if any,
established by the Company or the lack of reserves, if applicable, are
reasonable based upon facts and circumstances known by the Company on the date
hereof and there are no loss contingencies that are required to be accrued by
the Statement of Financial Accounting Standard No. 5 of the Financial Accounting
Standards Board which are not provided for by the Company in its financial
statements or otherwise. The Company is not currently contemplating to amend or
restate any of the financial statements (including, without limitation, any
notes or any letter of the independent accountants of the Company with respect
thereto) included in the SEC Documents (the “Financial Statements”), nor is the
Company currently aware of facts or circumstances which would require the
Company to amend or restate any of the Financial Statements, in each case, in
order for any of the Financials Statements to be in compliance with GAAP and the
rules and regulations of the SEC. The Company has not been informed by its
independent accountants that they recommend that the Company amend or restate
any of the Financial Statements not already amended or restated or that there is
any need for the Company to further amend or restate any of the Financial
Statements.

 

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(k) Absence of Certain Changes. Since the date of the Company's most recent
audited financial statements contained in a Form 10-K, there has been no
material adverse change and no material adverse development in the business,
assets, liabilities, properties, operations (including results thereof),
condition (financial or otherwise) or prospects of the Company or any of its
Subsidiaries. Since the date of the Company's most recent audited financial
statements contained in a Form 10-K, except as disclosed in the SEC Documents,
neither the Company nor any of its Subsidiaries has (i) declared or paid any
dividends, (ii) sold any material assets, individually or in the aggregate,
outside of the ordinary course of business or (iii) made any material capital
expenditures, individually or in the aggregate, outside of the ordinary course
of business. Neither the Company nor any of its Subsidiaries has taken any steps
to seek protection pursuant to any law or statute relating to bankruptcy,
insolvency, reorganization, receivership, liquidation or winding up, nor does
the Company or any Subsidiary have any knowledge or reason to believe that any
of their respective creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably lead a
creditor to do so.

 

(l) No Undisclosed Events, Liabilities, Developments or Circumstances. No event,
liability, development or circumstance has occurred or exists, or is reasonably
expected to exist or occur specific to the Company, any of its Subsidiaries or
any of their respective businesses, properties, liabilities, prospects,
operations (including results thereof) or condition (financial or otherwise),
that has not been publicly disclosed and would reasonably be expected to have a
Material Adverse Effect.

 

(m) Conduct of Business; Regulatory Permits. Neither the Company nor any of its
Subsidiaries is in violation of any term under its Articles of Incorporation,
any certificate of designation, preferences or rights of any other outstanding
series of preferred stock of the Company or any of its Subsidiaries or Bylaws or
their organizational charter, certificate of formation, memorandum of
association, articles of association, Articles of Incorporation or certificate
of incorporation or bylaws, respectively. Neither the Company nor any of its
Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except in all cases for
violations which would not reasonably be expected to have a Material Adverse
Effect. Without limiting the generality of the foregoing, the Company is not in
material violation of any of the rules, regulations or requirements of the
Principal Market and has no knowledge of any facts or circumstances that could
reasonably lead to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future. During the one year prior to the date hereof,
(i) the Common Stock has been listed or designated for quotation on the
Principal Market, (ii) trading in the Common Stock has not been suspended by the
SEC or the Principal Market and (iii) the Company has received no communication,
written or oral, from the SEC or the Principal Market regarding the suspension
or delisting of the Common Stock from the Principal Market, which has not been
publicly disclosed. The Company and each of its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate regulatory
authorities necessary to conduct their respective businesses as conducted as of
the date hereof and as described in the SEC Documents, except where the failure
to possess such certificates, authorizations or permits would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
and neither the Company nor any of its Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit. There is no agreement, commitment, judgment,
injunction, order or decree binding upon the Company or any of its Subsidiaries
or to which the Company or any of its Subsidiaries is a party which has or would
reasonably be expected to have the effect of prohibiting or materially impairing
any business practice of the Company or any of its Subsidiaries, any acquisition
of property by the Company or any of its Subsidiaries or the conduct of business
by the Company or any of its Subsidiaries as currently conducted other than such
effects, individually or in the aggregate, which have not had and would not
reasonably be expected to have a Material Adverse Effect on the Company or any
of its Subsidiaries.

 

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(n) Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries
nor any director, officer, agent, employee, nor any other person acting for or
on behalf of the Company or any of its Subsidiaries (individually and
collectively, a “Company Affiliate”) have violated the U.S. Foreign Corrupt
Practices Act (the “FCPA”) or any other applicable anti-bribery or anti-
corruption laws, nor has any Company Affiliate offered, paid, promised to pay,
or authorized the payment of any money, or offered, given, promised to give, or
authorized the giving of anything of value, to any officer, employee or any
other person acting in an official capacity for any Governmental Entity to any
political party or official thereof or to any candidate for political office
(individually and collectively, a “Government Official”) or to any person under
circumstances where such Company Affiliate knew or was aware of a high
probability that all or a portion of such money or thing of value would be
offered, given or promised, directly or indirectly, to any Government Official,
for the purpose, in violation of applicable law, of: (i) (A) influencing any act
or decision of such Government Official in his/her official capacity, (B)
inducing such Government Official to do or omit to do any act in violation of
his/her lawful duty, (C) securing any improper advantage, or (D) inducing such
Government Official to influence or affect any act or decision of any
Governmental Entity, or (ii) assisting the Company or its Subsidiaries in
obtaining or retaining business for or with, or directing business to, the
Company or its Subsidiaries.

 

(o) Equity Capitalization.

 

(i) Definitions:

 

(A) “Common Stock” means (x) the Company's shares of common stock, par value
$0.001 per share, and (y) any capital stock into which such common stock shall
have been changed or any share capital resulting from a reclassification of such
common stock.

 

  10

   

 

(ii) Authorized and Outstanding Capital Stock. As of the date hereof, the
authorized capital stock of the Company consists of (A) 350,000,000 shares of
Common Stock, of which 97,543,028 are issued and outstanding and (B) 10,000,000
shares of preferred stock, of which none are outstanding.

 

(iii) Valid Issuance; Available Shares. All of such outstanding shares are duly
authorized and have been validly issued and are fully paid and nonassessable.

 

(iv) Existing Securities; Obligations. Except as disclosed in the SEC Documents:
(A) none of the Company's or any Subsidiary's shares, interests or capital stock
is subject to preemptive rights or any other similar rights or Liens suffered or
permitted by the Company or any Subsidiary; (B) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any shares, interests or capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares, interests or capital stock of the Company or
any of its Subsidiaries or options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, or exercisable or exchangeable for, any shares,
interests or capital stock of the Company or any of its Subsidiaries; (C) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except pursuant to this Agreement); (D) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries; (E) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; and (G) neither the Company nor any Subsidiary has any stock
appreciation rights or "phantom stock" plans or agreements or any similar plan
or agreement.

 

(v) Organizational Documents. The Company has furnished to the Buyer or filed on
EDGAR true, correct and complete copies of the Company's Articles of
Incorporation, as amended and as in effect on the date hereof (the “Articles of
Incorporation”), and the Company's bylaws, as amended and as in effect on the
date hereof (the “Bylaws”), and the terms of all Convertible Securities and the
material rights of the holders thereof in respect thereto.

 

  11

   

 

(p) Litigation. Except as disclosed in the SEC Documents, there is no action,
suit, arbitration, proceeding, inquiry or investigation before or by the
Principal Market, any court, public board, other Governmental Entity,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened in writing against or affecting the Company or any of its
Subsidiaries, the Common Stock or any of the Company's or its Subsidiaries'
officers or directors, whether of a civil or criminal nature or otherwise, in
their capacities as such, which would reasonably be expected to result in a
Material Adverse Effect. After reasonable inquiry of its employees, the Company
is not aware of any event which might result in or form the basis for any such
action, suit, arbitration, investigation, inquiry or other proceeding. Without
limitation of the foregoing, there has not been, and to the knowledge of the
Company, there is not pending or contemplated, any investigation by the SEC
involving the Company, any of its Subsidiaries or any current or former director
or officer of the Company or any of its Subsidiaries. Neither the Company nor
any of its Subsidiaries is the subject of any order, writ, judgment, injunction,
decree, determination or award of any Governmental Entity that would reasonably
be expected to result in a Material Adverse Effect.

 

(q) Insurance. The Company currently maintains no insurance policies. Neither
the Company nor any such Subsidiary has been refused any insurance coverage
sought or applied for.

 

(r) Manipulation of Price. Neither the Company nor any of its Subsidiaries has,
and, to the knowledge of the Company, no Person acting on their behalf has,
directly or indirectly, (i) taken any action designed to cause or to result in
the stabilization or manipulation of the price of any security of the Company or
any of its Subsidiaries to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase any other
securities of the Company or any of its Subsidiaries.

 

(s) Shell Company Status. The Company has not been an issuer identified in Rule
144(i)(1)(i) during the last twelve (12) months.

 

(t) Money Laundering. The Company and its Subsidiaries are in material
compliance with, and have not previously violated, the USA Patriot Act of 2001
and all other applicable U.S. and non-U.S. anti-money laundering laws and
regulations, including, but not limited to, the laws, regulations and Executive
Orders and sanctions programs (“Sanctions Programs”) administered by the U.S.
Office of Foreign Assets Control (“OFAC”), including, without limitation, (i)
Executive Order 13224 of September 23, 2001 entitled, "Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism" (66 Fed. Reg. 49079 (2001)); and any regulations contained in 31 CFR,
Subtitle B, Chapter V.

 

  12

   

 

(u) Disclosure. The Company confirms that neither it nor any other Person acting
on its behalf has provided any of the Buyer or its agents or counsel with any
information that constitutes or could reasonably be expected to constitute
material, non- public information concerning the Company or any of its
Subsidiaries, other than the existence of the transactions contemplated by this
Agreement and the other Transaction Documents. The Company understands and
confirms that each of the Buyer will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided to
the Buyer regarding the Company and its Subsidiaries, their businesses and the
transactions contemplated hereby, including the schedules to this Agreement,
furnished by or on behalf of the Company or any of its Subsidiaries, taken as a
whole, is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. All of the written information furnished after the date
hereof by or on behalf of the Company or any of its Subsidiaries to the Buyer
pursuant to or in connection with this Agreement and the other Transaction
Documents, taken as a whole, will be true and correct in all material respects
as of the date on which such information is so provided. No event or
circumstance has occurred or information exists with respect to the Company or
any of its Subsidiaries or its or their business, properties, liabilities,
prospects, operations (including results thereof) or conditions (financial or
otherwise), which, under applicable law, rule or regulation, requires public
disclosure at or before the date hereof or announcement by the Company but which
has not been so publicly disclosed. All financial projections and forecasts that
have been prepared by or on behalf of the Company or any of its Subsidiaries and
made available to the Buyer have been prepared in good faith based upon
reasonable assumptions and represented, at the time each such financial
projection or forecast was delivered to the Buyer, the Company's best estimate
of future financial performance (it being recognized that such financial
projections or forecasts are not to be viewed as facts and that the actual
results during the period or periods covered by any such financial projections
or forecasts may differ from the projected or forecasted results). The Company
acknowledges and agrees that no Buyer makes or has made any representations or
warranties with respect to the transactions contemplated hereby other than those
specifically set forth in Section 2.

 

(v) No General Solicitation. Neither the Company, nor any of its affiliates, nor
any Person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Securities.

 

(w) Private Placement. Assuming the accuracy of the Buyer’s representations and
warranties set forth in Section 2, no registration under the Securities Act is
required for the offer and sale of the Securities by the Company to the Buyer as
contemplated hereby. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Primary Market.

 

4. COVENANTS.

 

(a) Reporting Status. Until the date on which the Buyer shall have sold all of
the Underlying Securities, as defined below, (the “Reporting Period”), the
Company shall timely file all reports required to be filed with the SEC pursuant
to the 1934 Act, and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would no longer require or otherwise permit such
termination.

 

  13

   

 

(b) Use of Proceeds. Neither the Company nor any Subsidiary will, directly or
indirectly, use the proceeds of the transactions contemplated herein, or lend,
contribute, facilitate or otherwise make available such proceeds to any Person
(i) to fund, either directly or indirectly, any activities or business of or
with any Person that is identified on the list of Specially Designated Nationals
and Blocker Persons maintained by OFAC, or in any country or territory, that, at
the time of such funding, is, or whose government is, the subject of Sanctions
Programs, or (ii) in any other manner that will result in a violation of
Sanctions Programs.

 

(c) Listing. The Company shall promptly secure the listing or designation for
quotation (as the case may be) of all of the Underlying Securities (as defined
below) upon each national securities exchange and automated quotation system, if
any, upon which the Common Stock is then listed or designated for quotation (as
the case may be) (subject to official notice of issuance) and shall maintain
such listing or designation for quotation (as the case may be) of all Underlying
Securities from time to time issuable under the terms of the Transaction
Documents on such national securities exchange or automated quotation system.
The Company shall maintain the Common Stock’s listing or authorization for
quotation (as the case may be) on the Principal Market, The New York Stock
Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Select
Market, the OTCQB or the OTCQX (each, an “Eligible Market”). Neither the Company
nor any of its Subsidiaries shall take any action which could be reasonably
expected to result in the delisting or suspension of the Common Stock on an
Eligible Market. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 4(i). “Underlying Securities”
means the (i) the Conversion Shares and the Warrant Shares, and (ii) any common
stock of the Company issued or issuable with respect to the Conversion Shares
and the Warrant Shares, including, without limitation, (1) as a result of any
stock split, stock dividend, recapitalization, exchange or similar event or
otherwise and (2) shares of capital stock of the Company into which the shares
of Common Stock are converted or exchanged without regard to any limitations on
conversion of the Convertible Debenture or the exercise of the Warrant.

 

(d) Fees. The Company shall pay to YA Global II SPV, LLC, an affiliate of the
Buyer (the “Subsidiary Fund”), a commitment fee in the amount of 8% of the
Purchase Price (the “Commitment Fee”). At Closing, the Company shall pay to YA
Global II SPV, LLC a due diligence and structuring fee of $20,000. The Company
authorizes the Buyer to deduct any fees due hereunder from the gross process of
the purchase of the Convertible Debenture.

 

(e) Disclosure of Transactions and Other Material Information. On or before the
end of the fourth (4th) Business Day after the date of this Agreement, the
Company shall file a Form 8-K describing all the material terms of the
transactions contemplated by the Transaction Documents in the form required by
the 1934 Act and attaching all the material Transaction Documents (including,
without limitation, this Agreement (and all schedules to this Agreement)
(including all attachments, the “8-K Filing”). From and after the filing of the
8-K Filing, the Company shall have disclosed all material, non-public
information (if any) provided to any of the Buyer by the Company or any of its
Subsidiaries or any of their respective officers, directors, employees or agents
in connection with the transactions contemplated by the Transaction Documents.
In addition, effective upon the filing of the 8-K Filing, the Company
acknowledges and agrees that any and all confidentiality or similar obligations
with respect to the transactions contemplated by the Transaction Documents under
any agreement, whether written or oral, between the Company, any of its
Subsidiaries or any of their respective officers, directors, affiliates,
employees or agents, on the one hand, and any of the Buyer or any of its
affiliates, on the other hand, shall terminate. The Company shall not, and the
Company shall cause each of its Subsidiaries and each of its and their
respective officers, directors, employees and agents not to, provide any Buyer
with any material, non-public information regarding the Company or any of its
Subsidiaries from and after the date hereof without the express prior written
consent of the Buyer (which may be granted or withheld in the Buyer's sole
discretion).

 

  14

   

 

(f) Reservation of Shares. So long as the Convertible Debenture remains
outstanding, the Company shall take all action necessary to at all times have
authorized, and reserved for the purpose of issuance, no less than the sum of
(i) the Warrant Shares, plus (ii) 300% of the maximum number of shares of Common
Stock issuable upon conversion of all the Convertible Debenture then outstanding
(assuming for purposes hereof that (x) the Convertible Debenture are convertible
at the Conversion Price then in effect, and (y) any such conversion shall not
take into account any limitations on the conversion of the Convertible
Debenture) (the “Required Reserve Amount”); provided that at no time shall the
number of shares of Common Stock reserved pursuant to this Section 4(g) be
reduced other than proportionally in connection with any conversion and/or
redemption, or reverse stock split. If at any time the number of shares of
Common Stock authorized and reserved for issuance is not sufficient to meet the
Required Reserved Amount, the Company will promptly take all corporate action
necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of stockholders to authorize
additional shares to meet the Company's obligations pursuant to the Transaction
Documents, in the case of an insufficient number of authorized shares, and
obtain stockholder approval of an increase in such authorized number of shares,
and voting the management shares of the Company in favor of an increase in the
authorized shares of the Company to ensure that the number of authorized shares
is sufficient to meet the Required Reserved Amount.

 

(g) Conduct of Business. The business of the Company and its Subsidiaries shall
not be conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except where such violations would not reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect.

 

5. REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.

 

(a) Register. The Company shall maintain at its principal executive offices or
with the Transfer Agent (or at such other office or agency of the Company as it
may designate by notice to each holder of Securities), a register for the
Convertible Debenture and the Warrant in which the Company shall record the name
and address of the Person in whose name the Convertible Debenture and the
Warrant have been issued (including the name and address of each transferee),
the amount of Convertible Debenture and Warrant held by such Person, and the
number of Conversion Shares issuable upon conversion of the Convertible
Debenture and Warrant held by such Person. The Company shall keep the register
open and available at all times during business hours for inspection of any
Buyer or its legal representatives.

 

  15

   

 

(b) Transfer Restrictions. The Securities may only be disposed of in compliance
with state and federal securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement or Rule
144, to the Company or to an Affiliate of a Buyer or in connection with a pledge
as contemplated herein, the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act. As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights and
obligations of a Buyer under this Agreement.

 

6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

The obligation of the Company hereunder to issue and sell the Convertible
Debenture to the Buyer at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion by providing the Buyer with prior
written notice thereof:

 

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

 

(b) The Buyer shall have delivered to the Company the Purchase Price (less the
amounts withheld pursuant to Section 4(d)) for the Convertible Debenture being
purchased by the Buyer at the Closing by wire transfer of immediately available
funds in accordance with the Closing Statement.

 

(c) The representations and warranties of the Buyer shall be true and correct in
all material respects (other than representations and warranties qualified by
materiality, which shall be true and correct in all material respects) as of the
Closing Date (except for representations and warranties that speak as of a
specific date, which shall be true and correct as of such specific date), and
the Buyer shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Buyer at or prior to the Closing
Date.

 

7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

 

The obligation of the Buyer hereunder to purchase its Convertible Debenture at
the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these conditions are for the
Buyer's sole benefit and may be waived by the Buyer at any time in its sole
discretion by providing the Company with prior written notice thereof:

 

(a) The Company shall have duly executed and delivered to the Buyer each of the
Transaction Documents to which it is a party and the Company shall have duly
executed and delivered to the Buyer the Convertible Debenture.

 

  16

   

 

(b) The Company shall have delivered to the Buyer copies of its and each
Subsidiaries certified copies of its charter, as well as any shareholder or
operating agreements by or among the shareholders or members of any of the
Company’s Subsidiaries.

 

(c) Each and every representation and warranty of the Company shall be true and
correct in all material respects (other than representations and warranties
qualified by materiality, which shall be true and correct in all respects) as of
the Closing Date (except for representations and warranties that speak as of a
specific date, which shall be true and correct as of such specific date) and the
Company shall have performed, satisfied and complied in all respects with the
covenants, agreements and conditions required to be performed, satisfied or
complied with by the Company at or prior to the Closing Date, as set forth in
section 3 and 4.

 

(d) The Common Stock (A) shall be designated for quotation or listed (as
applicable) on the Principal Market and (B) shall not have been suspended, as of
the Closing Date, by the SEC or the Principal Market from trading on the
Principal Market nor shall suspension by the SEC or the Principal Market have
been threatened, as of the Closing Date, either (I) in writing by the SEC or the
Principal Market or (II) by falling below the minimum maintenance requirements
of the Principal Market.

 

(e) The Company shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for the sale of the Securities,
including without limitation, those required by the Principal Market, if any.

 

(f) No statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any court or
Governmental Entity of competent jurisdiction that prohibits the consummation of
any of the transactions contemplated by the Transaction Documents.

 

(g) Since the date of execution of this Agreement, no event or series of events
shall have occurred that has resulted in or would reasonably be expected to
result in a Material Adverse Effect.

 

(h) The Company shall have obtained approval of the Principal Market to list or
designate for quotation (as the case may be) the Conversion Shares, if
applicable.

 

(i) The Buyer shall have received a letter, duly executed by an officer of the
Company, setting forth the wire amounts of the Buyer and the wire transfer
instructions of the Company (the “Closing Statement”).

 

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

 

  17

   

 

8. MISCELLANEOUS.

 

(a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New Jersey, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New Jersey or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New Jersey. The Company
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in Union County, New Jersey, for the adjudication of any
dispute hereunder or in connection herewith or under any of the other
Transaction Documents or with any transaction contemplated hereby or thereby,
and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Nothing contained herein shall be deemed or operate to preclude any Buyer from
bringing suit or taking other legal action against the Company in any other
jurisdiction to collect on the Company's obligations to the Buyer or to enforce
a judgment or other court ruling in favor of the Buyer. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER
TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY
OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.

 

(b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event that any signature is delivered by
facsimile transmission or by an e-mail which contains a portable document format
(.pdf) file of an executed signature page, such signature page shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such signature page
were an original thereof.

 

(c) Headings; Gender. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement. Unless the context clearly indicates otherwise, each pronoun herein
shall be deemed to include the masculine, feminine, neuter, singular and plural
forms thereof. The terms "including," "includes," "include" and words of like
import shall be construed broadly as if followed by the words "without
limitation." The terms "herein," "hereunder," "hereof" and words of like import
refer to this entire Agreement instead of just the provision in which they are
found.

 

(d) Entire Agreement, Amendments. This Agreement supersedes all other prior oral
or written agreements between the Buyer, the Company, their affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the party to
be charged with enforcement.

 

  18

   

 

(e) Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing by
letter and email and will be deemed to have been delivered: upon the later of
(A) either (i) receipt, when delivered personally or (ii) one (1) Business Day
after deposit with an overnight courier service with next day delivery
specified, in each case, properly addressed to the party to receive the same and
(B) receipt, when sent by electronic mail. The addresses and e-mail addresses
for such communications shall be:

 

If to the Company, to:

Airborne Wireless Network

4115 Guardian Street, Suite C

Simi Valley, California 93063

Attention: Michael J. Warren, CEO

E-Mail: michael@airbornewirelessnetwork.com

 

 

With copy to:

Stephen E. Older, Esq.

McGuireWoods LLP

1251 Avenue of the Americas, 20th Floor

New York, New York 10020-1104

Attention: Stephen E. Older, Esq.

E-Mail: Solder@mcguirewoods.com

 

If to a Buyer, to its address and e-mail address set forth below:

 

If to the Buyer, to:

Mark Angelo, Managing Member

1012 Springfield Avenue

Mountainside, NJ 07092

Email: mangelo@yorkvilleadvisors.com

 

With copy to:

David Gonzalez, Esq.

c/o Yorkville Advisors Global, LP

1012 Springfield Avenue

Mountainside, NJ 07092

Email: legal@yorkvilleadvisors.com

 

or to such other address, e-mail address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine or e-mail containing
the time, date, recipient facsimile number and, with respect to each facsimile
transmission, an image of the first page of such transmission or (C) provided by
an overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause (i) or (ii) above, respectively.

 

  19

   

 

(f) Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns,
including any purchasers of any of the Convertible Debenture (but excluding any
purchasers of Underlying Securities, unless pursuant to a written assignment by
the Buyer). The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Buyer. In
connection with any transfer of any or all of its Securities, a Buyer may assign
all, or a portion, of its rights and obligations hereunder in connection with
such Securities without the consent of the Company, in which event such assignee
shall be deemed to be a Buyer hereunder with respect to such transferred
Securities.

 

(g) Indemnification.

 

(i) In consideration of the Buyer's execution and delivery of the Transaction
Documents and acquiring the Securities thereunder and in addition to all of the
Company's other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless the Buyer and each holder of any
Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons' agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnitees”) from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
“Indemnified Liabilities”), incurred by any Indemnitee as a result of, or
arising out of, or relating to (i) any misrepresentation or breach of any
representation or warranty made by the Company in any of the Transaction
Documents, (ii) any breach of any covenant, agreement or obligation of the
Company or any Subsidiary contained in any of the Transaction Documents or (iii)
any cause of action, suit, proceeding or claim brought or made against such
Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company or any Subsidiary) or which otherwise involves
such Indemnitee that arises out of or results from (A) the execution, delivery,
performance or enforcement of any of the Transaction Documents, (B) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, or (C) any
disclosure properly made by the Buyer pursuant to Section 4(f), or (D) the
status of the Buyer or holder of the Securities either as an investor in the
Company pursuant to the transactions contemplated by the Transaction Documents
or as a party to this Agreement (including, without limitation, as a party in
interest or otherwise in any action or proceeding for injunctive or other
equitable relief). To the extent that the foregoing undertaking by the Company
may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.

 

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(ii) Promptly after receipt by an Indemnitee under this Section 8(g) of notice
of the commencement of any action or proceeding (including any governmental
action or proceeding) involving an Indemnified Liability, such Indemnitee shall,
if a claim in respect thereof is to be made against the Company under this
Section 8(g), deliver to the Company a written notice of the commencement
thereof, and the Company shall have the right to participate in, and, to the
extent the Company so desires, to assume control of the defense thereof with
counsel mutually reasonably satisfactory to the Company and the Indemnitee;
provided, however, that an Indemnitee shall have the right to retain its own
counsel with the fees and expenses of such counsel to be paid by the Company if:
(A) the Company has agreed in writing to pay such fees and expenses; (B) the
Company shall have failed promptly to assume the defense of such Indemnified
Liability and to employ counsel reasonably satisfactory to such Indemnitee in
any such Indemnified Liability; or (C) the named parties to any such Indemnified
Liability (including any impleaded parties) include both such Indemnitee and the
Company, and such Indemnitee shall have been advised by counsel that a conflict
of interest is likely to exist if the same counsel were to represent such
Indemnitee and the Company (in which case, if such Indemnitee notifies the
Company in writing that it elects to employ separate counsel at the expense of
the Company, then the Company shall not have the right to assume the defense
thereof and such counsel shall be at the expense of the Company), provided
further, that in the case of clause (C) above the Company shall not be
responsible for the reasonable fees and expenses of more than one (1) separate
legal counsel for the Indemnitees. The Indemnitee shall reasonably cooperate
with the Company in connection with any negotiation or defense of any such
action or Indemnified Liability by the Company and shall furnish to the Company
all information reasonably available to the Indemnitee which relates to such
action or Indemnified Liability. The Company shall keep the Indemnitee
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. The Company shall not be liable
for any settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the Company shall not unreasonably
withhold, delay or condition its consent. The Company shall not, without the
prior written consent of the Indemnitee, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability in respect to such Indemnified
Liability or litigation, and such settlement shall not include any admission as
to fault on the part of the Indemnitee. Following indemnification as provided
for hereunder, the Company shall be subrogated to all rights of the Indemnitee
with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made. The failure to deliver written notice
to the Company within a reasonable time of the commencement of any such action
shall not relieve the Company of any liability to the Indemnitee under this
Section 8(g), except to the extent that the Company is materially and adversely
prejudiced in its ability to defend such action.

 

(iii) The indemnification required by this Section 8(g) shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, within ten (10) days after bills supporting the Indemnified
Liabilities are received by the Company.

 

(iv) The indemnity agreement contained herein shall be in addition to (A) any
cause of action or similar right of the Indemnitee against the Company or
others, and (B) any liabilities the Company may be subject to pursuant to the
law.

 

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

 

[REMAINDER PAGE INTENTIONALLY LEFT BLANK]

 

  22

   

 

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

 

 

COMPANY:

 

 

 

 

 

AIRBORNE WIRELESS NETWORK

 

 

 

 

By:

/s/ Michael J. Warren

 

 

Name:

Michael J. Warren

 

 

Title:

Chief Executive Officer

 

 

  23

   

 

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

 

 

BUYER:

 

 

 

 

 

YA II PN, LTD.

 

 

 

 

By:

Yorkville Advisors Global, LP

 

 

Its:

Investment Manager

 

 

 

 

By:

Yorkville Advisors Global II, LLC

 

 

Its:

General Partner

 

 

 

 

By:

/s/ David Gonzalez

 

 

Name:

David Gonzalez

 

 

Title:

Managing member and General Counsel

 

 

  24

   

 

EXHIBIT A

 

FORM OF CONVERTIBLE DEBENTURE

 

 

 

 

 

  25