FAT BRANDS INC.

 

SUBSCRIPTION AGREEMENT

(Series A Fixed Rate Cumulative Preferred Stock)

 

THIS SUBSCRIPTION AGREEMENT (this “Agreement”), is made by and between FAT
Brands Inc., a Delaware corporation (the “Company”), and each of the purchasers
who has delivered a signature page hereto (each a “Purchaser” and collectively,
the “Purchasers”).

 

RECITAL

 

WHEREAS, the Company is offering (the “Offering”), in a private placement
pursuant to Rule 506(b) under the Securities Act, a minimum amount of eight
million dollars ($8,000,000) (the “Minimum Amount”), and a maximum amount of ten
million dollars ($10,000,000) (the “Maximum Amount”) of units (the “Units”),
with each Unit consisting of (i) 100 shares of the Company’s Series A Fixed Rate
Cumulative Preferred Stock (the “Preferred Stock”), and (ii) a warrant (the
“Warrant”) to purchase $1,000 of shares of the Company’s Common Stock at an
exercise price of $8.00 per share (125 shares per Unit).

 

AGREEMENT

 

The parties hereby agree as follows:

 

1. Purchase and Sale of Preferred Stock and Warrants.

 

1.1 Sale and Issuance of Preferred Stock and Warrants.

 

(a) The Company shall adopt and file with the Secretary of State of the State of
Delaware on or before the Initial Closing (as defined below) a Certificate of
Designation in the form of Exhibit A attached hereto (the “Certificate”).

 

(b) Subject to the terms and conditions of this Agreement, each Purchaser agrees
to purchase at the Closing (as defined below) and the Company agrees to sell and
issue to each Purchaser at the Closing, that number of Units set forth opposite
such Purchaser’s name on the signature page hereto, at a purchase price of ten
thousand dollars ($10,000) per Unit (the “Purchase Price”). The shares of the
Preferred Stock to be issued to the Purchasers pursuant to this Agreement are
collectively referred to in this Agreement as the “Shares.” For purposes of this
Agreement, the Units, the Preferred Stock, the Warrants and the Common Stock
issuable upon exercise of the Warrants (“Warrant Shares”), as applicable, are
referred to herein as the “Securities.”

 

(c) Subject to waiver in the sole discretion of the Company, the minimum
investment by each Purchaser shall be one (1) Unit ($10,000). No fractional
Units will be offered or sold.

 

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1.2 Closing; Delivery.

 

(a) Once subscriptions for the Minimum Amount have been reached, an initial
closing shall take place, remotely via the exchange of documents and signatures
at such time and place as the Company and the Purchasers shall mutually agree
upon (which time and place are designated as the “Initial Closing”), and
continue thereafter for up to 90 days after the Initial Closing or until the
Company decides to terminate the Offering in its sole discretion. In the event
there is more than one closing, the term “Closing” shall apply to each such
closing unless otherwise specified.

 

(b) At each Closing, the Company shall deliver to each Purchaser (i) a
certificate representing the Preferred Stock, (ii) the Warrant being purchased
by such Purchaser at such Closing in the form attached hereto as Exhibit B,
(iii) an executed Registration Rights Agreement in the form attached hereto as
Exhibit C, and (iv) an executed Investor Rights and Voting Agreement in the form
attached hereto as Exhibit D, against payment of the purchase price therefor by
check payable to the Company, by wire transfer to a bank account designated by
the Company, or any combination thereof.

 

1.3 Use of Proceeds. In accordance with the directions of the Company’s Board of
Directors, the Company will use all or a portion of the net proceeds from the
sale of the Units for general corporate purposes, including, but not limited to,
any or all of the following: (i) acquisitions of new restaurant chains and
brands, (ii) repayment of indebtedness of the Company, and (iii) working
capital. Any excess proceeds will be used for general corporate purposes.

 

1.4 Defined Terms Used in this Agreement. In addition to the terms defined
above, the following terms used in this Agreement shall be construed to have the
meanings set forth or referenced below.

 

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

 

(b) “Code” means the Internal Revenue Code of 1986, as amended.

 

(c) “Common Stock” means collectively, all shares of the Company’s common stock,
par value $0.0001 per share.

 

(d) “Company Intellectual Property” means all patents, patent applications,
trademarks, trademark applications, service marks, service mark applications,
tradenames, copyrights, trade secrets, domain names, mask works, information and
proprietary rights and processes, similar or other intellectual property rights,
subject matter of any of the foregoing, tangible embodiments of any of the
foregoing, and licenses in, to and under any of the foregoing, as are necessary
to the Company in the conduct of the Company’s business as now conducted and as
presently proposed to be conducted.

 

(e) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

 

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(f) “Knowledge” including the phrase “to the Company’s knowledge” shall mean the
actual knowledge of any officer or director of the Company.

 

(g) “Material Adverse Effect” means any event, occurrence, fact, condition or
change that individually or in the aggregate has had, or would reasonably be
expected to have, a material adverse effect on (i) the business, assets
(including intangible assets), liabilities, financial condition, property,
prospects or results of operations of the Company or (ii) on the ability of the
Company to consummate the transactions contemplated by this Agreement and the
other Transaction Documents or on the Company’s ability to perform its
obligations hereunder and thereunder.

 

(h) “Person” means any individual, corporation, partnership, trust, limited
liability company, association or other entity.

 

(i) “Preferred Stock” is defined in the Recitals hereto.

 

(j) “Purchaser” means each of the Purchasers who are initially a party to this
Agreement, each Person to whom the rights of a Purchaser are assigned pursuant
to Subsection 6.2, any additional Purchaser who becomes a party to this
Agreement pursuant to Subsection 1.2, and any one of them, as the context may
require.

 

(k) “SEC” means the U.S. Securities and Exchange Commission.

 

(l) “SEC Reports” means all reports, schedules, forms, statements and other
documents filed by the Company with the SEC under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) under the Exchange
Act, during the time preceding the date hereof and including the exhibits
thereto, documents incorporated by reference therein and any materials filed or
furnished by the Company under the Exchange Act, whether or not any such reports
were required.

 

(m) “Securities Act” means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.

 

(n) “Transaction Agreements” means this Agreement, the Warrants, the
Registration Rights Agreement, the Investor Rights and Voting Agreement, and the
Subscription Booklet relating to the offering of Units.

 

(o) “Transaction Documents” means the Transaction Agreements and the
Certificate.

 

(p) “Warrants” is defined in the Recitals hereto.

 

2. Representations and Warranties of the Company. The Company hereby represents
and warrants to each Purchaser that the following representations are true and
complete as of the date hereof and will be true and complete as of the date of
each Closing:

 

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2.1 Organization, Good Standing, Corporate Power and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as presently conducted and as proposed to be
conducted. The Company is duly qualified to transact business and is in good
standing in the state in which it maintains its principal place of business and
in each other jurisdiction in which it is required to be so qualified, except
where the failure to so qualify would not, individually or in the aggregate,
have a Material Adverse Effect.

 

2.2 Capitalization.

 

(a) The authorized capital of the Company consists, immediately prior to the
Initial Closing, of:

 

(i) 25,000,000 shares of Common Stock, 10,153,600 of which are issued and
outstanding immediately prior to the Initial Closing. All of the outstanding
shares of Common Stock have been duly authorized, are fully paid and
nonassessable and were issued in compliance with all applicable federal and
state securities laws.

 

(ii) 5,000,000 shares of Preferred Stock, none of which is issued and
outstanding immediately prior to the Initial Closing. The rights, privileges and
preferences of the Preferred Stock are as stated in the Certificate and as
provided by the Delaware General Corporation Law.

 

(b) Except as set forth in the SEC Reports, there are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal or similar rights) or agreements, orally or in writing, to purchase or
acquire from the Company any shares of Common Stock or Preferred Stock or other
capital stock, or any securities convertible into or exchangeable for shares of
Common Stock or Preferred Stock or other capital stock.

 

2.3 Subsidiaries. Except as set forth in the SEC Reports, the Company does not
currently own or control, directly or indirectly, any interest in any other
corporation, partnership, trust, joint venture, limited liability company,
association, or other business entity.

 

2.4 Authorization. All corporate action required to be taken by the Company’s
Board of Directors and stockholders in order to authorize the Company to enter
into the Transaction Agreements, and to issue the Units at each Closing,
including the Initial Closing, and the Common Stock issuable upon exercise of
the Warrants has been taken or will be taken prior to each applicable Closing.
All action on the part of the officers of the Company necessary for the
execution and delivery of the Transaction Agreements, the performance of all
obligations of the Company under the Transaction Agreements to be performed as
of each Closing, and the issuance and delivery of the Shares and Warrants has
been taken or will be taken prior to such Closing. The Transaction Agreements,
when executed and delivered by the Company, shall constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or
other laws of general application relating to or affecting the enforcement of
creditors’ rights generally, or (b) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies.

 

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2.5 Valid Issuance of Shares. The Shares, when issued, sold and delivered in
accordance with the terms and for the consideration set forth in this Agreement,
will be validly issued, fully paid and nonassessable and free of restrictions on
transfer other than restrictions on transfer under the Transaction Documents,
applicable state and federal securities laws and liens or encumbrances created
by or imposed by a Purchaser. The Warrants, when issued, will constitute valid
and binding obligations of the Company. Assuming the accuracy of the
representations of the Purchasers in Section 3 of this Agreement and subject to
the filings described in Subsection 2.6 below, the Shares and Warrants will be
issued in compliance with all applicable federal and state securities laws. Upon
issuance in accordance with the terms of the Certificate and Warrants, as
applicable, the Warrant Shares will be validly issued, fully paid and
nonassessable and free of restrictions on transfer other than restrictions on
transfer under the Transaction Documents, applicable federal and state
securities laws and liens or encumbrances created by or imposed by a Purchaser.
Based in part upon the representations of the Purchasers in Section 3 of this
Agreement, and subject to Subsection 2.6 below, the Warrant Shares will be
issued in compliance with all applicable federal and state securities laws.

 

2.6 Governmental Consents and Filings. Assuming the accuracy of the
representations made by the Purchasers in Section 3 of this Agreement, no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority is required on the part of the Company in connection with
the consummation of the transactions contemplated by this Agreement, except for
(a) the filing of the Certificate, which will have been filed as of the Initial
Closing and (b) filings by the Company pursuant to Regulation D of the
Securities Act, and applicable state securities laws, which have been made or
will be made in a timely manner.

 

2.7 Litigation. There is no claim, action, suit, proceeding, arbitration or
investigation or regulatory or governmental inquiry pending or, to the Company’s
knowledge, currently threatened in writing or otherwise overtly threatened: (a)
against any officer or director of the Company arising out of any officer or
director’s employment or board relationship with the Company; (b) that questions
the validity of the Transaction Documents or the right of the Company to enter
into them, or to consummate the transactions contemplated by the Transaction
Documents; or (c) that would reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect. Neither the Company nor, to the
Company’s knowledge, any of its officers or directors is a party or is named as
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality (in the case of officers or
directors, such as would affect the Company). There is no action, suit,
proceeding or arbitration by the Company pending or which the Company intends to
initiate. The foregoing includes, without limitation, actions, suits,
proceedings or arbitrations pending or threatened in writing or otherwise
overtly threatened (or any basis therefor known to the Company) involving the
prior employment of any of the Company’s employees, their services provided in
connection with the Company’s business, any information or techniques allegedly
proprietary to any of their former employers or their obligations under any
agreements with prior employers.

 

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2.8 Intellectual Property. The Company owns or possesses or believes it can
acquire on commercially reasonable terms sufficient legal rights to all Company
Intellectual Property without any conflict with, or infringement of, the rights
of others. To the Company’s knowledge, no product or service marketed or sold
(or proposed to be marketed or sold) by the Company violates or will violate any
license or infringes or will infringe any intellectual property rights of any
other party. Other than with respect to commercially available software products
under standard end-user object code license agreements, there are no outstanding
options, licenses, agreements, claims, encumbrances or shared ownership
interests of any kind relating to the Company Intellectual Property, nor is the
Company bound by or a party to any options, licenses or agreements of any kind
with respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other Person. The Company has not received any communications alleging that the
Company has violated, or by conducting its business, would violate any of the
patents, trademarks, service marks, tradenames, copyrights, trade secrets, mask
works or other proprietary rights or processes of any other Person. The Company
has obtained and possesses valid licenses to use all of the software programs
present on the computers and other software-enabled electronic devices that it
owns or leases or that it has otherwise provided to its employees for their use
in connection with the Company’s business. To the Company’s knowledge, it will
not be necessary to use any inventions of any of its employees or consultants
(or Persons it currently intends to hire) made prior to their employment by the
Company. Each employee and consultant has assigned to the Company all
intellectual property rights he or she owns that are related to the Company’s
business as now conducted and as presently proposed to be conducted.

 

2.9 Compliance with Other Instruments and Law. The Company is not in violation,
breach or default (a) of any provisions of its Certificate of Incorporation, the
Certificate or Bylaws, (b) of any instrument, judgment, order, writ or decree,
(c) under any credit agreement, loan, note, indenture, mortgage or other debt
instrument or agreement, (d) under any material lease, agreement, contract,
agreement or purchase order to which it is a party or by which it is bound. The
Company is currently in compliance, and has in the past complied, with all
provisions of federal, state and other statutes, rules, regulations or laws
applicable to the Company, except for any such violations which, individually or
in the aggregate, would not have a Material Adverse Effect. The execution,
delivery and performance of the Transaction Agreements and the consummation of
the transactions contemplated by the Transaction Agreements will not result in
any violation, breach or default (a) of any provision of the Certificate of
Incorporation, the Certificate or Bylaws, (b) of any instrument, judgment,
order, writ or decree, (c) under any credit agreement, loan, note, indenture,
mortgage or other debt instrument or agreement, (d) under any material lease,
agreement, contract, agreement or purchase order to which the Company is a party
or by which it is bound, or (e) of any provision of federal, state or other
statute, rule, regulation or law applicable to the Company.

 

2.10 Rights of Registration. The Preferred Stock and Warrant Shares will not be
registered upon issuance and are subject to Rule 144 under the Securities Act,
but will have registration rights under the Registration Rights Agreement
attached hereto as Exhibit C.

 

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2.11 Property. Except as set forth in the SEC Reports, all property and assets
that the Company owns are free and clear of all mortgages, deeds of trust,
liens, loans and encumbrances, except for statutory liens for the payment of
current taxes that are not yet delinquent, liens granted to the lenders under
the Company’s existing line of credit and any other liens or encumbrances that,
in the aggregate, are immaterial in nature and arose in the ordinary course of
business and that do not and will not materially impair the Company’s ownership
or use of its property or assets or have a Material Adverse Effect. With respect
to the property and assets it leases, the Company is in compliance with such
leases and holds a valid leasehold interest free of any liens, claims or
encumbrances other than those of the lessors of such property or assets. The
Company does not own any real property.

 

2.12 Tax Returns and Payments. There are no federal, state, county, local or
foreign taxes due and payable by the Company which have not been timely paid,
except as would not, individually or in the aggregate, have a Material Adverse
Effect. There are no material accrued and unpaid federal, state, country, local
or foreign taxes of the Company which are due, whether or not assessed or
disputed. There have been no examinations or audits of any tax returns or
reports by any applicable federal, state, local or foreign governmental agency
currently pending or that have occurred in the last three years. The Company has
duly and timely filed all federal, state, county, local and foreign tax returns
required to have been filed by it and there are in effect no waivers of
applicable statutes of limitations with respect to taxes for any year.

 

2.13 Financial Statements. The SEC Reports contain audited financial statements
of the Company and its subsidiaries as of and for the fiscal year ended December
31, 2017 and unaudited financial statements as of and for the quarterly period
ended April 1, 2018 (including balance sheet, income statement and statement of
cash flows) (collectively, the “Financial Statements”). The Financial Statements
(other than pro forma financial statements) have been prepared in accordance
with generally accepted accounting principles (“GAAP”) applied on a consistent
basis throughout the periods indicated. The Financial Statements fairly present
in all material respects the financial condition and operating results of the
Company as of the dates, and for the periods, indicated therein. Except as set
forth in the Financial Statements, the Company has no material liabilities or
obligations, contingent or otherwise, other than (i) liabilities, obligations
and commitments incurred in connection with the operation of the Company’s
business in the ordinary course of business; and (ii) liabilities and
obligations of a type or nature not required under GAAP to be reflected in the
Financial Statements, and which, in all such cases, individually and in the
aggregate, would not have a Material Adverse Effect. The Company maintains and
will continue to maintain a standard system of accounting established and
administered in accordance with GAAP.

 

2.14 Subsequent Changes. Since the date of the last financial statements
included within the SEC Reports and except as disclosed in the SEC Reports, (i)
there has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii) the Company
has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or disclosed in filings
made with the SEC, (iii) the Company has not altered its method of accounting,
(iv) the Company has not declared or made any dividend or distribution of cash
or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock and (v) the
Company has not issued any equity securities, except pursuant to existing
Company stock option plans. The Company does not have pending before the SEC any
request for confidential treatment of information.

 

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2.15 Permits. The Company has all franchises, permits, licenses and any similar
authority necessary for the conduct of its business, except as would not,
individually or in the aggregate, have a Material Adverse Effect. The Company is
not in default in any material respect under any of such franchises, permits,
licenses or other similar authority

 

2.16 Books and Records. The books of account and other financial records of the
Company (1) are accurate, complete, and correct in all material respects; (2)
accurately and fairly reflect all transactions and dispositions of assets; and
(3) have been maintained in accordance with sound business practices, including
the maintenance of adequate internal accounting controls, which, without
limitation, are reasonably designed to provide assurance that transactions are
executed as documented in the books of account and other financial records, and
that access to assets (including disposition of assets) is permitted only in
accordance with management’s general or specific authorization

 

2.17 Data Privacy. In connection with its collection, storage, transfer and/or
use of any personally identifiable information from any individuals, including,
without limitation, any customers, prospective customers, employees and/or other
third parties (collectively “Private Information”), the Company is and has been
in compliance in all material respects with all applicable laws in all relevant
jurisdictions, the Company’s privacy policies and the requirements of any
contract or codes of conduct to which the Company is a party or to which it is
subject. The Company takes all steps reasonably necessary (including
implementing and monitoring compliance with technical, organizational and
administrative security measures) to protect Private Information against loss
and against unauthorized access, use, modification, disclosure or other misuse.
In the past three (3) years, there has been no modification, disclosure or other
misuse of, nor to the Company’s knowledge, any unauthorized access to any
Private Information, nor has there been any breach in security of any of the
information systems used to store or otherwise process any Private Information.
The Company requires all third parties to which the Company provides Private
Information or access thereto to maintain the privacy and security of such
Private Information, including by contractually obligating such third parties to
protect such Private Information in accordance with the applicable privacy laws.
The Company is not subject to any complaints, lawsuits, proceedings, audits,
investigations or claims by any private party, the Federal Trade Commission, any
state attorney general or similar state official, or any other governmental
authority, foreign or domestic, regarding its collection, use, storage,
disclosure, transfer or maintenance of any Private Information and, to the
Company’s knowledge, there are no such complaints, lawsuits, proceedings,
audits, investigations or claims pending or threatened in writing or otherwise
overtly threatened.

 

2.18 Material Contracts and Instruments.

 

(a) The Company has filed with the SEC each contract or agreement required to be
filed by the Company under Items 601(b)(2), (3), (4) and (10) of Regulation S-K
(such instruments, contracts and agreements, collectively being “Material
Document”).

 

(b) Each Material Document (i) is valid and binding on the Company and, to the
knowledge of the Company, any counterparties thereto. No event has occurred
that, with notice or lapse of time, is or is reasonably expected to constitute a
material breach or default, or permit the termination, modification, or
acceleration under any contract or agreement that is a Material Document. There
are no negotiations pending or in progress to revise any contract or agreement
that is a Material Document in any material respect, other than change orders,
changes in scope, or other similar changes in the ordinary course of business.

 

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2.19 Employment Matters. The Company is not a party to, or bound by, any
collective bargaining or other agreement with a labor organization representing
any of its employees. Since January 1, 2017, there has not been, nor, to the
knowledge of the Company, has there been any threat of, any strike, slowdown,
work stoppage, lockout, concerted refusal to work overtime or other similar
labor activity or dispute affecting the Company.

 

(a) Except as set forth in the SEC Reports, all persons employed by the Company
are employees at will and there are no contracts between the Company and any
employee of the Company, including employment agreements, loans or promissory
notes, change in control agreements, stay agreements or separation pay
agreements.

 

(b) Except as disclosed in the Financial Statements, there are no long term
incentive arrangements, stock options, stock appreciation rights, bonus
agreements or stock purchase plans or other equity related grants (“Equity
Grants”) of any kind in favor of any employees of the Company.

 

(c) The Company is in compliance in all material respects with all applicable
laws pertaining to employment and employment practices (including the WARN Act)
to the extent they relate to employees of the Company; and there are no actions,
suits, claims, investigations or other legal proceedings against the Company
pending, or to the knowledge of the Company, threatened in writing or otherwise
overtly threatened to be brought or filed, by or with any governmental authority
or arbitrator in connection with the employment of any current or former
employee of the Company, including, without limitation, any claim relating to
unfair labor practices, employment discrimination, harassment, retaliation,
equal pay or any other employment related matter arising under applicable laws.

 

2.20 Related Party Transactions. Except as disclosed in the SEC Reports, there
is no contract or other agreement, arrangement or obligation to which the
Company is a party involving any director or executive officer of the Company,
other than the payment of salaries and benefits and other compensation to
employees of the Company in the ordinary course of business consistent with past
practice.

 

2.21 Insurance. The Company maintains insurance with reputable insurers in such
amounts and with such coverages as the Company has reasonably determined to be
prudent in accordance with industry standards. All such insurance policies
currently maintained are in full force and effect on the date of this Agreement
and all premiums due on all insurance policies have been paid. There are no
material outstanding unpaid claims under any such insurance policies, and the
Company has not received any refusal of coverage under such insurance policies
nor has it been notified of any reservation of rights by any insurance carrier
with respect to any claim under such insurance policies.

 

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2.22 Foreign Corrupt Practices Act. Neither the Company nor, to the knowledge of
the Company, any director, officer, agent, consultant, employee or other person
acting on behalf (or who has acted on behalf) of the Company (“Related Parties”
and each a “Related Party”) is aware of or has taken any action, directly or
indirectly, that would result in a violation by any of such Persons of the
Foreign Corrupt Practice Act, as amended (“FCPA”), or any similar anti-bribery
or anti-corruption law, including, without limitation, taking any act
“corruptly” (as the term is interpreted by the U.S. Department of Justice, the
U.S. Securities and Exchange Commission, or by court decisions) in furtherance
of an offer, payment, promise to pay or authorization of the payment of any
money, or other property, gift, promise to give, or authorization of the giving
of anything of value to any “foreign official” (as such term is defined in the
FCPA, and as interpreted by the U.S. Department of Justice, the U.S. Securities
and Exchange Commission, or by court decisions) or any foreign political party
or official thereof or any candidate for foreign political office, including,
without limitation, any improper contribution, gift, bribe, rebate, or kickback,
and the Company and, to the knowledge of the Company, its Related Parties have
conducted their businesses in compliance with the FCPA and all similar
anti-bribery or anti-corruption laws, and have instituted and maintain policies
and procedures designed to ensure, and which are reasonably expected to continue
to ensure, continued compliance therewith. “Foreign officials” include foreign
governmental officials, foreign governmental employees, and employees of
business enterprises that are owned or controlled by foreign governments. The
Company is not currently conducting an investigation into any suspected or
alleged violation of the FCPA of any similar anti-bribery or anti-corruption
law. Neither the Company nor, to the Company’s knowledge, any of its Related
Parties is (or for the last five years has been) under administrative, civil, or
criminal investigation, indictment, information, or audit by any party, in
connection with alleged or possible violations of the FCPA or any similar
anti-bribery or anti-corruption law, and the Company is not aware of any basis
for any such investigation, indictment, information, or audit. Neither the
Company nor, to the Company’s knowledge, any Related Party has received notice
from, or made a voluntary disclosure to, the U.S. Department of Justice or the
U.S. Securities and Exchange Commission, or any other government entity
regarding alleged or possible violations of the FCPA or similar anti-bribery or
anti-corruption laws.

 

2.23 Money Laundering Laws.

 

(a) Neither the Company nor, to the knowledge of the Company, any of its Related
Parties has engaged in, or is currently engaged in, a transaction, investment,
undertaking, or activity in violation of criminal provisions against money
laundering under U.S. or applicable foreign law. The Company and, to the
knowledge of the Company, each of its Related Parties are in compliance with all
applicable anti-money laundering requirements to prevent and detect money
laundering under U.S. or applicable foreign law, including, without limitation,
requirements to maintain compliance programs, maintain customer and transaction
records, conduct customer due diligence, and report suspicious, cash or other
transactions to government authorities (collectively, the “Money Laundering
Laws”).

 

(b) Neither the Company, nor to the knowledge of the Company, any of its Related
Parties (i) is under investigation by any governmental entity for, or has been
charged with, or convicted of, money laundering or any crimes which in the
United States would be predicate crimes to money laundering, or any violation of
any of the Money Laundering Laws; (ii) has been assessed civil or criminal
penalties under any of the Money Laundering Laws; or (iii) has had any of its
funds seized or forfeited in any action under any of the Money Laundering Laws.
To the knowledge of the Company, there is no investor in the Company whose
investment in the Company has been or will be derived from, or related to, any
illegal activities, including, without limitation, prohibited money laundering
activities.

 

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2.24 Office of Foreign Assets Control.

 

(a) The Company and, to the knowledge of the Company, its Related Parties have
at all times complied with, and are currently in compliance with, (i) all
applicable U.S. and foreign government laws and regulations concerning the
exportation of any products, technology, technical data or services, including
those administered by, without limitation, the U.S. Department of Commerce, the
U.S. Department of State, and the U.S. Department of the Treasury; (ii) U.S. and
international economic and trade sanctions, including, but not limited to, those
administered by the Office of Foreign Assets Control (“OFAC”) within the U.S.
Department of the Treasury; and (iii) all laws and regulations administered by
the Bureau of Customs and Border Protection in the U.S. Department of Homeland
Security;

 

(b) neither the Company nor, to the knowledge of the Company, any of its Related
Parties has engaged in, or is currently engaged in, any sales, exports,
re-exports, imports, or other activities in, relating to, or involving, directly
or indirectly, countries subject to U.S. economic sanctions, including Cuba, the
Crimea Region of Ukraine, Iran, Syria, and Sudan, or that otherwise would be
prohibited if performed by U.S. persons or entities;

 

(c) neither the Company, nor to the knowledge of the Company, any of its Related
Parties is (1) listed on, or owned or controlled by, fifty (50%) or more in the
aggregate, directly or indirectly, a person or persons listed on, (i) the List
of Specially Designated Nationals and Blocked Persons maintained by OFAC or any
other list of known or suspected terrorists, terrorist organizations, or other
prohibited persons made publicly available or provided to the Company by any
agency of the government of the United States or any jurisdiction in which the
Company is doing business; (ii) the Bureau of Industry and Security of the
United States Department of Commerce “Denied Persons List,” “Entity List,” or
“Unverified List”; (iii) the Office of Defense Trade Controls of the United
States Department of State “List of Debarred Parties”; or (iv) any lists of
restricted persons or entities maintained by any other U.S. government
authority; or (2) or has engaged in business transactions or other dealings
with, or is currently engaged in business transactions or other dealings with,
an entity listed on, or owned or controlled by, fifty percent (50%) or more in
the aggregate, directly or indirectly, a person or persons listed on, (i) the
List of Specially Designated Nationals and Blocked Persons maintained by OFAC or
any other list of known or suspected terrorists, terrorist organizations, or
other prohibited persons made publicly available or provided to the Company by
any agency of the government of the United States or any jurisdiction in which
the Company is doing business; (ii) the Bureau of Industry and Security of the
United States Department of Commerce “Denied Persons List,” “Entity List,” or
“Unverified List”; (iii) the Office of Defense Trade Controls of the United
States Department of State “List of Debarred Parties”; or (iv) any lists of
restricted persons or entities maintained by any other U.S. government
authority; or (3) operating, organized in, or resident in, or acting on behalf
of a Government of, or involved in business arrangements or other transactions
with, a countries subject to U.S. economic sanctions, including Cuba, the Crimea
Region of Ukraine, Iran, Syria, and Sudan, or any person owned or controlled,
fifty percent (50%) or more in the aggregate, directly or indirectly, by any
such person or persons, or (3) a person who has been determined by competent
authority to be subject to the prohibitions contained in Executive Order 13224,
66 Fed. Reg. 49,079 (Sept. 25, 2001) (Executive Order Blocking Property and
Prohibiting Transactions with Persons who Commit, Threaten to Commit, or Support
Terrorism), Executive Order 13382, 70 Fed. Reg. 38,567 (July. 1, 2005)
(Executive Order Blocking Property of Weapons of Mass Destruction Proliferators
and Their Supporters), or any other similar prohibitions contained in the laws
administered by, and regulations of, OFAC or in any enabling legislation or
other executive orders in respect thereof;

 

11

 

 

(d) neither the Company nor, to the knowledge of the Company, any of its Related
Parties has made a voluntary disclosure to governmental regulatory authorities
reporting violations of laws or regulations relating to the export or re-export
of products, technology, software, services or other information from the United
States or any other jurisdiction; and

 

(e) neither the Company nor, to the knowledge of the Company, any of its Related
Parties have participated or are currently participating in, or have cooperated
or are currently cooperating with, an unsanctioned international boycott within
the meaning of Section 999 of the Internal Revenue Code of 1986, as amended.

 

2.25 Investment Company. The Company is not, and after giving effect to the
issuance of the Units and the application of the proceeds therefrom as
contemplated by this Agreement, will not be an “investment company” within the
meaning of the Investment Company Act of 1940, as amended, nor will the Company
be required to register as an “investment company” under the Investment Company
Act of 1940, as amended.

 

3. Representations and Warranties of the Purchasers. Each Purchaser hereby
represents and warrants to the Company, severally and not jointly, that as of
the date hereof and as of the date of each Closing at which such Purchaser
acquires Units pursuant hereto:

 

3.1 Authorization. Such Purchaser has full power and authority to enter into the
Transaction Agreements to which it is a party. Such Transaction Agreements, when
executed and delivered by the Purchaser, will constitute valid and legally
binding obligations of the Purchaser, enforceable in accordance with their
terms, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and any other laws of general application
affecting enforcement of creditors’ rights generally, and as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies.

 

3.2 Purchase for Own Account. This Agreement is made with the Purchaser in
reliance upon the Purchaser’s representation to the Company, which by the
Purchaser’s execution of this Agreement, the Purchaser hereby confirms, that the
Securities to be acquired by the Purchaser will be acquired for investment for
the Purchaser’s own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof in violation of federal, state or
other applicable securities laws, and that the Purchaser has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, the Purchaser further represents that the
Purchaser does not presently have any contract, undertaking, agreement or
arrangement with any Person to sell, transfer or grant participations to such
Person or to any third Person, with respect to any of the Securities. The
Purchaser has not been formed for the specific purpose of acquiring the
Securities.

 

12

 

 

3.3 Disclosure of Information. The Purchaser has had an opportunity to discuss
the Company’s business, management, financial affairs and the terms and
conditions of the offering of the Units with the Company’s management and has
had an opportunity to review the Company’s facilities, and has considered the
Risk Factors set forth in Exhibit E herein. The Purchaser has consulted his, her
or its own legal, tax, financial, investment and other advisors in connection
with such Purchaser’s execution and delivery of this Agreement to the extent
such Purchaser has deemed appropriate and such Purchaser’s investment in the
Shares and Warrants to be acquired by such Purchaser pursuant to this Agreement,
and acknowledges that the Company is giving no such legal, tax, financial or
investment advice to the Purchaser.

 

3.4 Restricted Securities. The Purchaser understands that the Securities have
not been, and will not be, registered under the Securities Act, by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the Purchaser’s representations as expressed
herein. The Purchaser understands that the Securities are “restricted
securities” under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Purchaser may be required to hold the Securities
indefinitely unless they are registered with the SEC and qualified by state
authorities, or an exemption from such registration and qualification
requirements is available. Except as provided under the Registration Rights
agreement contemplated herein, the Purchaser acknowledges that the Company has
no obligation to register or qualify the Securities for resale. The Purchaser
further acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Securities,
and on requirements relating to the Company which are outside of the Purchaser’s
control, and which the Company may not be able to satisfy. The Purchaser
understands that this offering is not intended to be part of a public offering,
and that the Purchaser will not be able to rely on the protection of Section 11
of the Securities Act.

 

3.5 Legends. The Purchaser understands that the Securities may be notated with
one or all of the following legends:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL OR OTHER
EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.”

 

13

 

 

(a) Any other legend set forth in, or required by, this Agreement or any other
Transaction Document.

 

(b) Any legend required by the securities laws of any state to the extent such
laws are applicable to the Securities represented by the certificate,
instrument, or book entry with such a legend.

 

3.6 Accredited Investor. The Purchaser is an accredited investor as defined in
Rule 501(a) of Regulation D promulgated under the Securities Act.

 

3.7 Disqualification Events. No “bad actor” disqualification event is applicable
to the Purchaser or, to the Purchaser’s knowledge, any Person, with respect to
such Purchaser as an “issuer” for purposes of Rule 506 promulgated under the
Securities Act, listed in the first paragraph of Rule 506(d)(1), except for a
disqualification event as to which Rule 506(d)(2)(ii–iv) or (d)(3), is
applicable.

 

3.8 Residence. If the Purchaser is an individual, then the Purchaser resides in
the state or province identified in the address of the Purchaser set forth on
the signature page hereto. If the Purchaser is a partnership, corporation,
limited liability company or other entity, then the Purchaser’s principal place
of business is in the state or province identified in the address of the
Purchaser set forth on the signature page hereto.

 

3.9 Anti-Money Laundering Matters. The Purchaser is in all material respects in
compliance with all applicable provisions of the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (the “USA Patriot Act”), the U.S. Bank Secrecy Act (the
“BSA”) and any other anti-money laundering laws and applicable regulations
adopted to implement the provisions of such laws and applicable to the
Purchaser, including, if applicable, policies and procedures that can be
reasonably expected to detect and cause the reporting of transactions under
Section 5318 of the BSA. Neither the Purchaser, nor any holder of any beneficial
interest in the Securities (each a “Beneficial Owner”) is or will be:

 

(a) a person or entity listed in the Annex to Executive Order 13224 (2001)
issued by the President of the United States (Executive Order Blocking Property
and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism), which is posted on the website of the U.S. Department of
Treasury (http://www.treas.gov);

 

(b) named on the List of Specially Designated Nationals and Blocked Persons
maintained by the U.S. Office of Foreign Assets Control (OFAC), which is posted
on the website of the U.S. Department of Treasury (http://www.treas.gov);

 

(c) a Designated National as defined in the Cuban Assets Control Regulations, 31
CFR Part 515;

 

(d) a Foreign Shell Bank;

 

14

 

 

(e) a person resident in or whose subscription funds are transferred from or
through an account in a Non-Cooperative Jurisdiction; or

 

(f) a person resident in a jurisdiction designated by the U.S. Secretary of the
Treasury under Sections 311 or 312 of the USA Patriot Act as warranting special
measures due to money-laundering concerns.

 

The Purchaser agrees to promptly notify the Company of any material change in
any information affecting this representation and warranty. Neither the
Purchaser nor any Beneficial Owner is a senior foreign political figure, which
means a current or former senior official in the executive, legislative,
administrative, military, or judicial branches of a foreign government (whether
or not elected), a senior official of a major foreign political party, or a
senior executive of a foreign government-owned commercial enterprise. This
restriction on senior foreign political figures also applies to any immediate
family member of such figure (a spouse, parent, sibling, child, or a spouse’s
parent, sibling or child) or close associate of such figure (a person who is
publicly known to maintain, or who actually maintains, a close personal or
professional relationship with such individual). No portion of the purchase
price: (i) does or will originate from, nor will it be routed through, an
account maintained at a Foreign Shell Bank, an “offshore bank”, or a bank
organized or chartered under the laws of a Non-Cooperative Jurisdiction, (ii)
has been or will be derived from, or related to, any activity that is deemed
criminal under applicable law, or (iii) causes or will cause the Company, or any
of its affiliates to be in violation of the BSA, the U.S. Money Laundering
Control Act of 1986 or the U.S. International Money Laundering Abatement and
Anti-Terrorism Financing Act of 2001. The Purchaser is not otherwise prohibited
from investing in the Company pursuant to applicable anti-money laundering,
anti-bribery and corruption, antiterrorist or asset or exchange control laws,
regulations, rules or orders. The Purchaser acknowledges and agrees that if at
any time it is discovered that any of the representations in this Section 3.9
are incorrect in any material respect, or if otherwise required by applicable
law related to money laundering, anti-bribery and corruption, antiterrorism or
asset or exchange controls and similar activities, the Company may, in its sole
discretion, undertake appropriate actions to ensure compliance with applicable
law, including but not limited to freezing, segregating or withdrawing the
Purchaser’s interest in the Company. The Purchaser agrees to provide to the
Company any additional information or documentation that the Company reasonable
deems necessary or appropriate to ensure compliance with all applicable laws
concerning money laundering, anti-bribery and corruption, antiterrorism or asset
or exchange controls and similar activities. The Purchaser shall promptly notify
the Company if any of the representations in this Section 3.9 cease to be true
and accurate in any material respect.

 

3.10 FATCA Matters. The Purchaser acknowledges that, to the extent applicable,
the Company will seek to comply with the Foreign Account Tax Compliance Act
provisions of the Code and any rules, regulations, forms, instructions, other
guidance and any intergovernmental agreements issued in connection therewith
(the “FATCA Provisions”). In furtherance of these efforts, the Purchaser agrees
to promptly deliver any additional documentation or information, and updates
thereto as applicable, which the Company may reasonably request in order to
comply with the FATCA Provisions. The Purchaser acknowledges and agrees that,
notwithstanding anything to the contrary contained in the Certificates, the
Transaction Agreements or any other agreement, the failure to promptly comply
with such requests, or to provide such additional information, may result in the
withholding of amounts with respect to, or other limitations on, distributions
made to the Purchaser and such other reasonably necessary or advisable action by
the Company with respect to the Securities, and the Purchaser shall have no
claim, and shall not pursue any claim, against the Company or any other Person
in connection therewith.

 

15

 

 

4. Conditions to the Purchasers’ Obligations at Closing. The obligations of each
Purchaser to purchase Units at the Initial Closing or any subsequent Closing, as
applicable, are subject to the fulfillment, on or before such Closing, of each
of the following conditions, unless otherwise waived:

 

4.1 Representations and Warranties. The representations and warranties of the
Company contained in Section 2 shall be true and correct as of such Closing as
if made on the date of such Closing, and, subsequent to the execution of this
Agreement, no event, occurrence, fact, condition or change shall have occurred
that individually or in the aggregate has had, or would reasonably be expected
to have, a Material Adverse Effect with respect to the Company.

 

4.2 Performance. The Company shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by the Company on or before
such Closing.

 

4.3 Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the Units
pursuant to this Agreement shall be obtained and effective as of such Closing.

 

4.4 Certificate. The Company shall have filed the Certificate with the Secretary
of State of Delaware on or prior to the Closing, which shall continue to be in
full force and effect as of the Closing.

 

4.5 Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated at the Closing and all documents incident
thereto shall be reasonably satisfactory in form and substance to each
Purchaser, and each Purchaser (or its counsel) shall have received all such
counterpart original and certified or other copies of such documents as
reasonably requested.

 

5. Conditions of the Company’s Obligations at Closing. The obligations of the
Company to sell Units to any Purchaser at the Initial Closing or any subsequent
Closing are subject to the fulfillment, on or before the Closing, of each of the
following conditions, unless otherwise waived:

 

5.1 Representations and Warranties. The representations and warranties of such
Purchaser contained in Section 3 shall be true and correct in all respects as of
such Closing.

 

5.2 Performance. Such Purchaser shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by such Purchaser on or
before each applicable Closing.

 

16

 

 

5.3 Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required to be obtained by such Purchaser in connection with the lawful
issuance and sale of the Shares and Warrants pursuant to this Agreement shall be
obtained and effective as of each applicable Closing.

 

6. Miscellaneous.

 

6.1 Survival of Warranties. Unless otherwise set forth in this Agreement, the
representations and warranties of the Company and the Purchasers contained in or
made pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing and shall in no way be affected by any investigation
or knowledge of the subject matter thereof made by or on behalf of the
Purchasers or the Company.

 

6.2 Successors and Assigns.

 

(a) The terms and conditions of this Agreement shall inure to the benefit of and
be binding upon the respective successors and permitted assigns of the parties.
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.

 

(b) Any successor or permitted assignee of any Purchaser, including any
Prospective Transferee who purchases shares of Transfer Stock in accordance with
the terms hereof, shall deliver to the Company and the Purchasers, as a
condition to any transfer or assignment, a counterpart signature page hereto
pursuant to which such successor or permitted assignee shall confirm their
agreement to be subject to and bound by all of the provisions set forth in this
Agreement that were applicable to the predecessor or assignor of such successor
or permitted assignee.

 

6.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal law of the State of Delaware. Any legal suit,
action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby may be instituted in the federal courts of the
United States or the courts of the State of Delaware, and each party irrevocably
submits to the exclusive jurisdiction of such courts in any such suit, action or
proceeding. The parties irrevocably and unconditionally waive any objection to
the laying of venue of any suit, action or any proceeding in such courts and
irrevocably waive and agree not to plead or claim in any such court that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.

 

6.4 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Counterparts may be
delivered via facsimile, electronic mail (including pdf or any electronic
signature complying with the U.S. ESIGN Act of 2000, e.g., www.docusign.com) or
other transmission method and any counterpart so delivered shall be deemed to
have been duly and validly delivered and be valid and effective for all
purposes.

 

17

 

 

6.5 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

 

6.6 Notices. All notices and other communications given or made pursuant to this
Agreement shall be in writing and shall be deemed effectively given upon the
earlier of actual receipt, or (a) personal delivery to the party to be notified,
(b) following written or electronic confirmation of delivery and receipt by the
recipient, if sent by electronic mail or facsimile (which sending by electronic
mail or facsimile shall promptly be followed by a copy sent by mail as provided
in Section (c) below), (c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid (which sending by mail
shall promptly be followed by the sending of a copy by electronic mail as
provided in clause (b) above), or (d) one (1) Business Day after deposit with a
nationally recognized overnight courier, freight prepaid, specifying next
Business Day delivery, with written verification of receipt (which sending by
overnight courier shall be promptly be followed by the sending of a copy by
electronic mail as provided in clause (b) above). All communications shall be
sent to the respective parties at their addresses as set forth on the signature
page hereto, or to the principal office of the Company and to the attention of
the Chief Executive Officer, in the case of the Company, or to such e-mail
address, facsimile number or address as subsequently modified by written notice
given in accordance with this Subsection 6.6.

 

6.7 Amendments and Waivers. Any term of this may be amended, terminated or
waived (either generally or in a particular instance, and either retroactively
or prospectively) only with the written consent of the Company, and (a) the
holders of at least a majority of the then-outstanding Shares, or (b) for an
amendment, termination or waiver effected prior to the Initial Closing,
Purchasers obligated to purchase a majority of the Shares to be issued at the
Initial Closing; provided, however, that any amendment or modification of this
Agreement that would affect a Purchaser (solely in its capacity as a Purchaser
and not otherwise) in a disproportionately material or adverse manner shall be
effected only with the prior written consent of such Purchaser. Any amendment or
waiver effected in accordance with this Subsection 6.8 shall be binding upon the
Purchasers and each transferee of the Shares, each future holder of all such
securities, and the Company.

 

6.8 Nature of Purchasers’ Obligations and Rights. The obligations of each
Purchaser under this Agreement or any of the other Transaction Documents are
several and not joint with the obligations of any other Purchaser, and no
Purchaser shall be responsible in any way for the performance of the obligations
of any other Purchaser under this Agreement or any of the other Transaction
Documents. Nothing contained herein or in any other Transaction Document, and no
action taken by any Purchaser pursuant hereto or thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or to create a presumption that the Purchasers are in
any way acting in concert or as a group with respect to such obligations or the
transactions contemplated by this Agreement or any other Transaction Document.
Each Purchaser confirms that it has independently participated in the
negotiation of the transactions contemplated hereby. All rights, powers and
remedies provided to the Purchasers under this Agreement or otherwise available
in respect thereof at law or in equity shall be cumulative and not alternative
or exclusive, and the exercise or beginning of the exercise of any thereof by
any party shall not preclude the simultaneous or later exercise of any other
rights, powers or remedies by such party or any other party.

 

18

 

 

6.9 Severability. In case any one or more of the provisions contained in this
Agreement is for any reason held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provision of this Agreement, and such invalid, illegal, or unenforceable
provision shall be reformed and construed so that it will be valid, legal, and
enforceable to the maximum extent permitted by law.

 

6.10 Delays or Omissions. No delay or omission to exercise any right, power or
remedy accruing to any party under this Agreement, upon any breach or default of
any other party under this Agreement, shall impair any such right, power or
remedy of such non-breaching or non-defaulting party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, of or
in any similar breach or default thereafter occurring; nor shall any waiver of
any single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any party of any breach or default under
this Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall be cumulative
and not alternative.

 

6.11 Entire Agreement. This Agreement (including any Exhibits hereto), the
Certificates and the other Transaction Agreements constitute the full and entire
understanding and agreement between the parties with respect to the subject
matter hereof, and any other written or oral agreement relating to the subject
matter hereof existing between the parties are expressly canceled.

 

6.12 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE
OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR
THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND
ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE
PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH
PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED
THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.

 

6.13 Specific Performance. In addition to any and all other remedies that may be
available at law in the event of any breach of this Agreement, the Company shall
be entitled to specific performance of the agreements and obligations of the
Purchaser hereunder and to such other injunction or other equitable relief as
may be granted by a court of competent jurisdiction.

 

[Signature Page Follows]

 

19

 

 

IN WITNESS WHEREOF, the Purchaser has executed this Subscription Agreement for
an investment in Units of FAT Brands Inc. as of the date set forth below.

 

Individual Purchasers:     Entity Purchasers:        

Investment Amount:

$_____________ (___Units at $10,000 per Unit)

   

Investment Amount:

$_____________ (___Units at $10,000 per Unit)

                Name of Purchaser (Print or Type)     Name of Purchaser (Print
or Type)             By: Signature     Signature                       Name of
Signatory (Print or Type)         Co-Investor (spouses, etc.), if applicable    
Additional signatories, if applicable             By:   Name of Co-Purchaser
(Print or Type)           Signature     Name of Signatory (Print or Type)      
  Date signed     Date signed

 

COMPANY

 

The foregoing Subscription Agreement is hereby accepted by FAT Brands Inc.:

 

FAT BRANDS INC.         By: /s/ Andrew A. Wiederhorn   Name: Andrew A.
Wiederhorn   Title: Chief Executive Officer  

 

 

 

 

EXHIBITS

 

Exhibit A - CERTIFICATE OF DESIGNATION OF SERIES A FIXED RATE CUMULATIVE
PREFERRED STOCK     Exhibit B - FORM OF WARRANT     Exhibit C - REGISTRATION
RIGHTS AGREEMENT     Exhibit D - INVESTOR RIGHTS AND VOTING AGREEMENT    
Exhibit E - RISK FACTORS

 

E-1