Exhibit 10.12

 

SECURITIES PURCHASE AGREEMENT

 

SECURITIES PURCHASE AGREEMENT, dated as of 6 August 2018 (this “Agreement”), by
and between Prism Technologies Group, Inc., a Delaware corporation (the
“Company”), and Novelty Capital Partners I, LLC, a Delaware limited liability
company (the “Purchaser”).

 

Recitals

 

The Company has authorized the sale and issuance of secured promissory notes in
the form of Exhibit A hereto (each, a “Note” and, collectively, the “Notes”)
having an aggregate principal amount of up to $1,000,000 (the “Aggregate Note
Amount”), which Aggregate Note Amount may be increased by the Company upon the
consent of the Purchaser.

 

Upon the terms and subject to the conditions herein, the Purchaser is willing to
purchase from the Company, and the Company is willing to sell to the Purchaser,
one or more Notes up to the Aggregate Note Amount together with related warrants
to acquire shares of the Company’s common stock.

 

Agreement

 

In consideration of the foregoing, and the promises in this Agreement, the
Company and the Purchaser, intending to be legally bound, agree as follows:

 

1.

The Notes and Warrants.

 

1.1

Issuance of Notes. Subject to the satisfaction or waiver of the conditions in
Articles 5 and 6, the Company agrees to issue and sell to the Purchaser, and the
Purchaser agrees to purchase up to $1,000,000 of aggregate original principal
amount of Notes. The Aggregate Note Amount may be increased by the Company upon
the consent of both Parties. A Note in the amount of $600,000 aggregate
principal amount will be purchased by the Purchaser on the third trading day
following the date of this Agreement.

 

1.2

Issuance of Warrants.

 

(a)

Concurrently with the issuance of the Notes to the Purchaser, the Company will
issue to the Purchaser a warrant in the form attached hereto as Exhibit B (each,
a “Warrant” and, collectively, the “Warrants” and together with the Notes, the
“Securities”) to purchase shares of common stock, par value $0.001 per share, of
the Company (the “Common Stock”).

 

(b)

The number of shares of Common Stock issuable under each Warrant shall be
determined by setting the Black-Scholes value of each Warrant equal to twenty
percent of the aggregate principal amount of Notes being issued on such date. In
no event will the number of shares of Common Stock issuable (other than as a
result of anti-dilution adjustments) under all of the Warrants exceed 19.9
percent of the then outstanding shares of Common Stock.

 

(c)

If the Parties are unable to agree upon a calculation of the Black-Sholes value
of a Warrant, they shall each submit their respective calculations to a third
party investment bank selected by the Purchaser but not affiliated with the
Purchaser. Such third party investment bank shall select either the Company’s
valuation or the Purchaser’s valuation (but not any other value) as closest to
the correct valuation of the Warrant (using the Black-Scholes model).

 

1.3

Delivery. Subject to the satisfaction or waiver of the conditions in Article 5,
the sale and purchase of the Securities shall take place at a closing (the
“Closing”) to be held by electronic delivery of documents on the third trading
day following the date of this Agreement (the “Closing Date”). At the Closing,
the Company shall deliver to the Purchaser the Note and Warrant to be purchased
by the Purchaser, against receipt by the Company of a $600,000 wire transfer
(the “Purchase Price”). Each of the Securities will be registered in the
Purchaser’s name in the Company’s records.

 

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1.4

Subsequent Sales. At any time on or before the one-year anniversary of the
Closing or at such later time as the Company and the Purchaser may mutually
agree, the Company may sell up to the balance of the Aggregate Note Amount not
sold at the Closing to the Purchaser. All such sales made at any additional
closings (each an “Additional Closing”), shall be made on the terms and subject
to the conditions in this Agreement, and (i) the representations and warranties
of the Company in Article 2 shall speak as of the Closing and the Company shall
have no obligation to update any such disclosure, and (ii) the representations
and warranties of the Purchaser in Article 3 shall speak as of such Additional
Closing. Any Notes sold pursuant to this Section shall be deemed to be “Notes”
for all purposes under this Agreement. Notwithstanding anything to the contrary
contained in this Agreement, any Notes issued per this Section shall be in the
same form attached hereto as Exhibit A.

 

1.5

Use of Proceeds. The proceeds of the sale and issuance of the Securities shall
be used to retire liabilities of the Company accrued as of the Closing Date to
persons that are not related parties of the Company and for general corporate
purposes, including working capital.

 

1.6

Payments. All payments on account of the Notes (whether for principal, interest
or otherwise) shall be made on a pro rata basis to the Purchaser in accordance
with the respective outstanding principal amounts of their Notes. The Company
shall not purchase or redeem any of the Notes unless an offer on the same terms
is made to all Purchaser.

 

2.

Representations and Warranties of the Company. The Company represents and
warrants to the Purchaser that except as otherwise described in the Company’s
filings pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”)
subsequent to 31 December 2016 (excluding Risk Factor, forward-looking
statements and similar disclosures and as amended through the date of this
Agreement, the “SEC Filings”), which qualify these representations and
warranties in their entirety:

 

2.1

Organization, Good Standing and Qualification.

 

(a)

The Company is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as now
conducted and to own or lease its properties. The Company is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property makes such qualification or leasing necessary unless the failure to so
qualify has not had and could not reasonably be expected to have a material
adverse effect on (i) the assets, liabilities, results of operations, condition
(financial or otherwise) or business of the Company and its subsidiaries taken
as a whole, (ii) the legality, validity or enforceability of any of this
Agreement, the Notes, the Security Agreement, the Warrants or any other document
required to be delivered hereby or thereby (the “Transaction Documents”) or
(iii) the ability of the Company to perform its obligations under the
Transaction Documents (a “Material Adverse Effect”). Each of the Company’s
“subsidiaries” (for purposes of this Agreement, as defined in Rule 405 under the
Securities Act of 1933 (the “Securities Act”), has been duly incorporated or
organized, as the case may be, and is validly existing as a corporation,
partnership or limited liability company, as applicable, in good standing under
the laws of the jurisdiction of its incorporation or organization and has the
power and authority (corporate or other) to carry on its business as now
conducted and to own or lease its properties.

 

(b)

Each of the Company’s subsidiaries is duly qualified as a foreign corporation,
partnership or limited liability company, as applicable, to transact business
and is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property makes such qualification or
leasing necessary unless the failure to so qualify has not had and could not
reasonably be expected to have a Material Adverse Effect. All of the issued and
outstanding capital stock or other equity or ownership interests of each of the
Company’s subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and are owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or adverse claim (other than per the Security Agreement attached as
Exhibit 4).

 

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2.2

Authority. The Company has the requisite corporate power and authority and has
taken all requisite corporate action necessary for, and no further action on the
part of the Company, its officers, directors and stockholders is necessary for,
(i) the authorization, execution and delivery of the Transaction Documents, (ii)
the authorization of the performance of all obligations of the Company hereunder
or thereunder, and (iii) the authorization, issuance and delivery of the
Securities. The Transaction Documents constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors’ rights generally and to general equitable principles.
The shares of Common Stock issuable upon exercise of the Warrants, when issued
per the Warrants, have been reserved for issuance and will be duly authorized,
fully paid, non-assessable and not issued in contravention of any preemptive
rights.

 

2.3

No Conflict, Breach, Violation or Default. The execution, delivery and
performance of the Transaction Documents by the Company and the issuance and
sale of the Securities in accordance with the provisions thereof will not,
except for such violations, conflicts or defaults as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect,
(i) conflict with or result in a breach or violation of (a) any of the terms and
provisions of, or constitute a default under, the Company’s certificate of
incorporation or bylaws, both as in effect on the date hereof (true and complete
copies of which are exhibits included in the SEC Filings, or (b) assuming the
accuracy of the representations and warranties in Article 3, any applicable
statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or its
subsidiaries, or any of their assets or properties, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any lien, encumbrance
or other adverse claim (other than per the Security Agreement) upon any of the
properties or assets of the Company or its subsidiaries or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any contract the termination of which would
reasonably be expected to have a Material Adverse Effect.

 

2.4

Consents. The execution, delivery and performance by the Company of the
Transaction Documents and the offer, issuance and sale of the Securities require
no consent of, action by or in respect of, or filing with, any person or entity,
governmental body, agency, or official other than filings that have been made
pursuant to applicable state securities laws and the rules and regulations of
FINRA, or such post-sale filings pursuant to applicable state and federal
securities laws and the rules and regulations of FINRA that the Company
undertakes to file within the applicable time periods.

 

2.5

No Violation or Default. The Company and its subsidiaries are not (i) in default
under or in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the
Company or its subsidiaries under), nor has the Company or its subsidiaries
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) in
violation of any judgment, decree or order of any court, arbitrator or
governmental body or (iii) in violation of any statute, rule, ordinance or
regulation of any governmental authority, including all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as could not have or reasonably be expected to result in a Material
Adverse Effect.

 

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2.6

Litigation. Other than as disclosed in Disclosure Schedule 2.6, there are no
legal, governmental or regulatory investigations, actions, suits or proceedings
pending to which the Company or any of its subsidiaries is or may reasonably be
expected to become a party or to which any property of the Company or its
subsidiaries is or may reasonably be expected to become the subject that,
individually or in the aggregate, if determined adversely to the Company or its
subsidiaries, could (i) reasonably be expected to have a Material Adverse Effect
or (ii) adversely affect or challenge the legality, validity or enforceability
of the Transaction Documents. Disclosure Schedule 2.6 correctly sets for all
amounts payable (other than court costs incurred after the date of this
Agreement) in connection with a favorable outcome in all litigation pending as
of the date of this Agreement (nothing in this Section shall constitute a
representation or warranty by Company or any of Company’s officers, directors or
employees that any favorable outcome will be obtained). All of the contracts,
agreements, arrangements or understandings (whether legally enforceable or not)
that could be expected to result in obligations of the Company or its
subsidiaries in litigation pending as of the date of this Agreement have been
made available to the Purchaser.

 

2.7

Title. Other than as disclosed in Disclosure Schedule 2.7, the Company and its
subsidiaries have good and marketable title to all real properties and all other
properties and assets owned by them, in each case free from liens, encumbrances
and defects, except such as would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect; and the Company and its
subsidiaries hold any leased real or personal property under valid, subsisting
and enforceable leases with which the Company and its subsidiaries are in
compliance and with no exceptions, except such as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

 

2.8

Intellectual Property. The Company and its subsidiaries own, possess, license or
have other rights to use, the patents and patent applications, copyrights,
trademarks, service marks, trade names, service names and trade secrets
described in the SEC Filings as being owned, possessed, licensed or otherwise
having rights to use in connection with its business and that the failure to so
have would have or reasonably be expected to result in a Material Adverse Effect
(collectively, the “Intellectual Property Rights”). There is no pending or, to
the Company’s and its subsidiaries’ knowledge, threatened action, suit,
proceeding or claim by any person or entity that the Company’s business or the
business of its subsidiaries as now conducted or as contemplated to be conducted
as described by the SEC Filings infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of another. To
the Company’s knowledge, the Intellectual Property Rights are enforceable. The
Company and its subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of its Intellectual Property
Rights, except where failure to do so would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

2.9

Financial Statements. The financial statements included in each SEC Filing
comply in all material respects with applicable accounting requirements and the
rules and regulations of the SEC with respect thereto as in effect at the time
of filing (or to the extent corrected by a subsequent restatement) and present
fairly, in all material respects, the financial position of the Company as of
the dates shown and its results of operations and cash flows for the periods
shown, subject in the case of unaudited financial statements to normal,
immaterial year-end audit adjustments, and such financial statements have been
prepared in conformity with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (“GAAP”)
(except as may be disclosed therein or in the notes thereto, and except that the
unaudited financial statements may not contain all footnotes required by GAAP,
and, in the case of quarterly financial statements, as permitted by Form 10-Q).
Except as set forth in the financial statements of the Company included in the
SEC Filings, the Company has not incurred any liabilities, contingent or
otherwise, except those incurred in the ordinary course of business, consistent
(as to amount and nature) with past practices since the date of such financial
statements, none of which, individually or in the aggregate, have had or would
reasonably be expected to have a Material Adverse Effect.

 

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2.10

Certain Fees. No brokerage or finder’s fees or commissions are or will be
payable by the Company or any subsidiaries to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other person or
entity with respect to the transactions contemplated by the Transaction
Documents. The Purchaser shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other persons or entities for
fees of a type contemplated in this Section that may be due in connection with
the transactions contemplated by the Transaction Documents.

 

2.11

Solvency. Based on the consolidated financial condition of the Company as of the
initial Closing Date, after giving effect to the receipt by the Company of the
Aggregate Note Amount: (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature, (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business as now conducted and as
proposed to be conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company,
consolidated and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the
proceeds the Company would receive, were it to liquidate all of its assets,
after taking into account all anticipated uses of the cash, would be sufficient
to pay all amounts on or in respect of its liabilities when such amounts are
required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt). The Company has no
knowledge of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the initial Closing Date.
Disclosure Schedule 2.11 sets forth as of the date hereof, after giving effect
to the transactions contemplated herein, all outstanding secured and unsecured
Indebtedness of the Company or any subsidiary, or for which the Company or any
subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of
$50,000 (other than trade accounts payable incurred in the ordinary course of
business), (y) all guaranties, endorsements and other contingent obligations in
respect of indebtedness of others, whether or not the same are or should be
reflected in the Company’s consolidated balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and (z)
the present value of any lease payments in excess of $50,000 due under leases
required to be capitalized in accordance with GAAP. Neither the Company nor any
subsidiary is in default with respect to any Indebtedness.

 

2.12

Tax Status. Except for matters that would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect, the
Company and its subsidiaries each (i) has made or filed all United States
federal, state and local income and all foreign income and franchise tax
returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations and (iii) has set aside on its books provision
reasonably adequate for the payment of all material taxes for periods subsequent
to the periods to which such returns, reports or declarations apply. There are
no unpaid taxes in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company or of any subsidiary know
of no basis for any such claim. Disclosure Schedule 2.122.12 correctly sets
forth the expiration date of the Company’s net operating loss carryforwards as
of 31 December 2017, but nothing in this Section or Disclosure Schedule 2.12
shall be construed as a representation or warranty that the Company will realize
the tax benefits of the net operating loss carryforwards. To the Company’s
knowledge, none of such net operating loss carryforwards are subject to any
limitation on use under the Internal Revenue Code of 1986, including Section 382
thereof.

 

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2.13

Foreign Corrupt Practices. Neither the Company nor any subsidiary, nor to the
knowledge of the Company or any subsidiary, any agent or other person acting on
behalf of the Company or any subsidiary, has: (i) directly or indirectly, used
any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to
any foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Company or any
subsidiary (or made by any person acting on its behalf of which the Company is
aware) which is in violation of law or (iv) violated in any material respect any
provision of Foreign Corrupt Practices Act.

 

2.14

Accountants. There are no disagreements of any kind presently existing, or
reasonably anticipated by the Company to arise, between the Company and the
accountants formerly or presently employed by the Company which could affect the
Company’s ability to perform any of its obligations under any of the Transaction
Documents.

 

2.15

Seniority. As of the Closing Date, no Indebtedness or other claim against the
Company is senior or pari passu to the Notes in right of payment, whether with
respect to interest or upon liquidation or dissolution, or otherwise, other than
the indebtedness secured by security interests in specific assets disclosed in
Disclosure Schedule 2.15 (which is senior only as to underlying assets covered
thereby) and capital lease obligations (which is senior only as to the property
covered thereby).

 

2.16

Regulatory Status

 

(a)

Neither the Company nor any of its subsidiaries nor, to the Company's knowledge,
any director, officer, agent, employee or affiliate of the Company or any
subsidiary is currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

(b)

The Company is not and has never been a U.S. real property holding corporation
within the meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon Purchaser’s request.

 

(c)

Neither the Company nor any of its subsidiaries or Affiliates is subject to the
Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by
the Board of Governors of the Federal Reserve System (the “Federal Reserve”).

 

(d)

The Company is not required to register under the Investment Company Act of
1940.

 

(e)

“Affiliate” means, with respect to any person, another person controlling,
controlled by or under common control with, such person. Neither the Company nor
any of its subsidiaries or Affiliates owns or controls, directly or indirectly,
five percent or more of the outstanding shares of any class of voting securities
or twenty-five percent or more of the total equity of a bank or any entity that
is subject to the BHCA and to regulation by the Federal Reserve. Neither the
Company nor any of its subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.

 

(f)

The operations of the Company and its subsidiaries are and have been conducted
at all times in compliance with applicable financial record-keeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, applicable money laundering statutes and applicable rules and
regulations thereunder (collectively, the “Money Laundering Laws”), and no
action or proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving the Company or any of its subsidiaries with
respect to the Money Laundering Laws is pending or, to the knowledge of the
Company or any of its subsidiaries, threatened.

 

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2.17

SEC Filings.

 

(a)

Except as disclosed in Disclosure Schedule 2.17. the Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by the Company under Securities Act and the Exchange Act, since 31 December
2016. At the time of filing thereof, the SEC Filings complied as to form in all
material respects with the requirements of the Securities Act or Exchange Act,
as applicable, and did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.

 

(b)

Except for the issuance of the Securities contemplated by this Agreement, no
event, liability, fact, circumstance, occurrence or development has occurred or
exists or is reasonably expected to occur or exist with respect to the Company
or its subsidiaries or their respective businesses, properties, operations,
assets or financial condition, that would be required to be disclosed by the
Company under applicable securities laws at the time this representation is made
or deemed made that has not been publicly disclosed at least 1 business day
prior to the date that this representation is made.

 

3.

Representations and Warranties of the Purchaser. The Purchaser represents and
warrants to the Company as follows:

 

3.1

Binding Obligation. The Purchaser has full legal capacity, power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement and the Transaction Documents constitute valid and binding
obligations of the Purchaser, enforceable in accordance with their terms, except
as limited by bankruptcy, insolvency or other laws of general application
relating to or affecting the enforcement of creditors’ rights generally and
general principles of equity.

 

3.2

Securities Law Compliance. The Purchaser has been advised that the Securities
have not been registered under the Securities Act or any state securities laws
and, therefore, cannot be resold unless they are registered under the Securities
Act and applicable state securities laws or unless an exemption from such
registration requirements is available. The Purchaser is aware that the Company
is under no obligation to effect any such registration with respect to the
Securities or to file for or comply with any exemption from registration. The
Purchaser has not been formed solely for the purpose of making this investment
and is purchasing the Securities to be acquired by the Purchaser hereunder for
its own account for investment, not as a nominee or agent, and not with a view
to, or for resale in connection with, the distribution thereof, and the
Purchaser has no present intention of selling, granting any participation in, or
otherwise distributing the same in violation of the Securities Act. The
Purchaser has such knowledge and experience in financial and business matters
that the Purchaser is capable of evaluating the merits and risks of such
investment, is able to incur a complete loss of such investment without
impairing the Purchaser’s financial condition and is able to bear the economic
risk of such investment for an indefinite period of time. The Purchaser is an
accredited investor as such term is defined in Rule 501 of Regulation D under
the Securities Act and shall submit to the Company such further assurances of
such status as may be reasonably requested by the Company. The Purchaser’s
principal place of business is in California.

 

3.3

Access to Information. The Purchaser hereby: (a) acknowledges that the Purchaser
has received all the information the Purchaser has requested from the Company
and that the Purchaser considers necessary or appropriate for deciding whether
to acquire the Securities; and (b) represents that the Purchaser has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Securities and to obtain any
additional information necessary to verify the accuracy of the information given
the Purchaser.

 

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3.4

Tax Advisors. The Purchaser has reviewed with its own tax advisors the U.S.
federal, state and local and non-U.S. tax consequences of this investment and
the transactions contemplated by this Agreement. With respect to such matters,
the Purchaser relies solely on any such advisors and not on any statements or
representations of the Company or any of its agents, written or oral. Purchaser
understands that it (and not the Company) shall be responsible for its own tax
liability that may arise as a result of this investment and the transactions
contemplated by this Agreement.

 

4.

Covenants of the Company.

 

4.1

Affirmative Covenants. The Company covenants that so long as any of the Notes
are outstanding:

 

(a)

The Company will, and will cause each of its subsidiaries to, comply with all
laws, ordinances or governmental rules or regulations to which each of them is
subject and will obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that non-compliance
with such laws, ordinances or governmental rules or regulations or failures to
obtain or maintain in effect such licenses, certificates, permits, franchises
and other governmental authorizations could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b)

The Company will, and will cause each of its subsidiaries to, maintain, with
financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated or
consistent with the existing practices of the Company and its subsidiaries as of
the date hereof.

 

(c)

The Company will, and will cause each of its subsidiaries to, file all income
tax returns and all other material tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies)
in the form of a tax) imposed on them or any of their properties, assets, income
or franchises, to the extent the same have become due and payable and before
they have become delinquent and all claims for which sums have become due and
payable that have or might become a lien on properties or assets of the Company
or any subsidiary; provided that neither the Company nor any subsidiary need pay
any such tax, assessment, charge, levy or claim if (i) the amount, applicability
or validity thereof is contested by the Company or such subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company or a
subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such subsidiary or (ii) the nonpayment of all such
taxes, assessments, charges, levies and claims in the aggregate could not
reasonably be expected to have a Material Adverse Effect.

 

(d)

The Company will preserve and keep in full force and effect its and its
subsidiaries legal existence, provided that the Company, upon the approval of
the Board of Directors, may divest the Subsidiary listed in Disclosure Schedule
4.1(d) upon such terms as are in the best interests of the Company. The Company
will at all times preserve and keep in full force and effect all rights and
franchises of the Company and its subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve and keep in
full force and effect such legal existence, right or franchise could not,
individually or in the aggregate, have a Material Adverse Effect.

 

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(e)

The Company will ensure that, at all times, all liabilities of the Company under
the Notes will rank in right of payment either pari passu or senior to all
Indebtedness of the Company other than the Indebtedness described in Disclosure
Schedule 4.1(e). The Company will, if it or any of its subsidiaries shall create
or assume any lien or encumbrance upon any of its property or assets, whether
now owned or hereafter acquired, other than liens disclosed in the SEC Filings,
make or cause to be made effective provision whereby the Notes will be secured
by such lien equally and ratably with any and all other indebtedness thereby
secured so long as any such other Debt shall be so secured.

 

(f)

The Company will perform and observe, and cause each of its Subsidiaries to
perform and observe, all of the terms and provisions of each Transaction
Document to be performed or observed by it, maintain each such Transaction
Document in full force and effect, enforce such Transaction Document in
accordance with its terms, take all such action to such end as may be from time
to time requested by the Purchaser and make to each other party to each such
Transaction Document such demands and requests for information and reports or
for action as the Company or any of its Subsidiaries is entitled to make under
such Transaction Document, except, in any case, where the failure to do so,
either individually or in the aggregate, would not be reasonably likely to have
a Material Adverse Effect.

 

(g)

The Company will, and will cause each of its subsidiaries to, maintain proper
books of record and account, in which full and correct entries in all material
respects shall be made of all financial transactions and the assets and business
of the Company and each Restricted Subsidiary, in conformity with GAAP and all
applicable requirements of any Governmental Authority having legal or regulatory
jurisdiction over the Company, or such subsidiary, as the case may be.

 

(h)

The Company will not, and will not permit any subsidiary to, transfer assets
(except assets transferred for fair market value in the ordinary course of
business); provided that the foregoing restrictions do not apply to the transfer
of assets (i) by the Company to a wholly-owned subsidiary, or (ii) by a
subsidiary to the Company or to another subsidiary with respect to which the
Company shall have at least the same degree of ownership and control as it had
with respect to the transferring subsidiary.

 

Computations under this Section shall include all issues or sales of any capital
stock of any class (including as capital stock for the purposes of this Section,
any warrants, rights or options to purchase or otherwise acquire shares or
similar equity interests or other Securities exchangeable for or convertible
into shares or similar equity interests) of any subsidiary to any Person other
than the Company or a wholly-owned subsidiary.

 

4.2

Negative Covenants. Until all obligations under the Notes are satisfied, the
Company and its subsidiaries shall not:

 

(a)

incur, suffer or permit to exist any Indebtedness other than (i) the
indebtedness outstanding on the date hereof and listed on Disclosure Schedule
2.155; (ii) indebtedness evidenced by the Notes; and (iii) indebtedness of the
type described in clause (c) of the definition of “Permitted Liens” as such term
is defined in the Security Agreement.

 

(b)

incur, suffer or permit to exist any Lien (as defined in the Security Agreement)
other than Permitted Liens (as defined in the Security Agreement).

 

(c)

enter into any transaction with any Affiliate of the Company which would be
required to be disclosed in any public filing with the Commission, unless such
transaction is made on an arm’s-length basis and expressly approved by a
majority of the disinterested directors of the Company (even if less than a
quorum otherwise required for board approval).

 

(d)

permit any of its subsidiaries to enter into any agreement or otherwise cause
restrictions (other than restrictions arising under applicable statutes) on the
ability of the Company’s subsidiaries to make distributions to the Company.

 

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(e)

and shall not permit any of its subsidiaries to, at any time, declare or make,
or incur any liability to declare or make, any Restricted Payment; provided that
the Company may make one or more Restricted Payments in each fiscal quarter of
the Company if: (i) the aggregate amount of all such Restricted Payments in such
fiscal quarter would not exceed the Available Cash for the immediately preceding
fiscal quarter of the Company; and (ii) no Default or Event of Default would
exist immediately before or after giving effect to such Restricted Payment.
“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock of the Company
or any subsidiary, or any payment (whether in cash, securities or other
property), on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such capital stock. Restricted Payment shall
not include the issuance of contingent value rights pursuant to Section 4.5.

 

4.3

Publicity. The Company shall file a Current Report on Form 8-K, including the
Transaction Documents as exhibits thereto, with the Commission within the time
required by the Exchange Act.

 

4.4

Use of Proceeds. The Company shall use the net proceeds from the sale of the
Securities hereunder for working capital purposes and shall not use such
proceeds: (a) for the satisfaction of any portion of the Company’s Indebtedness,
(b) for the redemption of any equity or equity equivalents of the Company or any
of its subsidiaries or to make any distribution or dividend to any stockholders
of the Company, (c) for the settlement of any outstanding litigation or (d) in
violation of applicable law.

 

4.5

Permanent Covenants of the Company.

 

(a)

The Company shall cause Prism Technologies, LLC (the “LLC”) to continue its
appeal of the patent infringement case titled Prism Technologies, LLC v. Sprint
Spectrum LP d/b/a Sprint PCS (United States District Court for the District of
Nebraska, No. 8:12-cv-00123-LES-TDT) (“Sprint Litigation”),

 

(b)

Not later than 31 December 2018 (the date of such distribution, the
“Distribution Date”), the Company’s board of directors shall (unless the
Company’s board of directors determines in good faith, after consultation with
outside counsel, that do to so would constitute a breach of the duties of the
board of directors under applicable law), distribute as a pro rata dividend to
holders of shares of Company common stock contingent value rights, representing
the right to receive ninety percent (90%) of the Net Litigation Proceeds, to the
Company’s, provided that the distribution may be deferred if the Company’s board
of directors determines in good faith that conditions exist that make the
immediate distribution to stockholders contrary to law or not in the best
interests of the Company and its stockholders, in which case the distribution
may be deferred until the conditions have abated. “Net Litigation Proceeds”
means the total cash amount recovered by the Company or its subsidiaries in
connection with the Sprint Litigation after deducting (i) all liabiities and
obligations of the LLC, including attorney contingency fees) expert fees;
deferred purchase amounts paid to third parties and satisfaction of litigation
financing; (ii) payments pursuant to the 2016 Incentive Compensation Plan (as
amended); and (iii) repayment of all obligations on the Notes and other
financings incurred to support the Company cash operating expenses (excluding
amortization and other non-cash expenses) for the period beginning March 26,
2015 and ending on the date the Sprint Litigation is concluded.

 

(c)

Until the day following the Distribution Date, the Company will not issue stock
or any other form of ownership interest (including securities convertible into
common stock) in the Company or the LLC, other than the Warrants described in
Schedule 2, without the affirmative consent of not less than a majority of the
stockholders, provided that the foregoing restriction shall not apply to any
issuance of an ownership interest that would not require stockholder approval
pursuant to any Nasdaq Marketplace Rule in effect as of the Closing.

 

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(d)

For a period of six years from the date of this Agreement, the Purchaser agrees
that all rights to indemnification, advancement of expenses and exculpation from
liabilities for acts or omissions occurring at or prior to the date of this
Agreement (whether asserted or claimed prior to, at or after the Effective Time)
now existing in favor of the current or former directors or officers of the
Company and its subsidiaries under (i) any indemnification or other similar
agreements of the listed in Disclosure Schedule 4.5(d); and (ii) the
indemnification, expense advancement and exculpation provisions in any
certificate of incorporation or bylaws or comparable organizational document of
the Company or any of its subsidiaries, in each case as in effect on the date of
this Agreement, shall continue in full force and effect in accordance with their
terms, and the Purchaser shall cause the Company and its subsidiaries to perform
its obligations thereunder. Notwithstanding anything to the contrary set forth
in this Section or elsewhere in this Agreement, if an indemnified person is
prohibited in a written contract with the Company or its subsidiaries from
effecting a settlement without the prior consent of such entity, neither the
Purchaser nor any of its Affiliates (shall be liable for any settlement effected
without their prior written consent (which consent shall not be unreasonably
withheld, delayed or conditioned).

 

5.

Conditions to Closing of the Purchaser. The Purchaser’s obligations at the
Closing are subject to the fulfillment, on or prior to the Closing Date, of all
of the following conditions, any of which may be waived in whole or in part by
the Purchaser:

 

5.1

Representations and Warranties. The representations and warranties made by the
Company in Article 2 shall have been true and correct when made, and shall be
true and correct on the Closing Date.

 

5.2

Governmental Approvals and Filings. Except for any notices required or permitted
to be filed after the Closing Date under federal and state securities law, the
Company shall have obtained all governmental approvals required in connection
with the lawful sale and issuance of the Securities.

 

5.3

Legal Requirements. At the Closing, the sale and issuance by the Company, and
the purchase by the Purchaser, of the Securities shall be legally permitted by
all laws and regulations to which the Purchaser or the Company are subject.

 

5.4

Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated at the Closing and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to the Purchaser.

 

5.5

Deliveries. The Company shall have delivered to the Purchaser the following: (a)
the Note, duly executed; (b) the Warrant, duly executed; (c) the Security
Agreement, duly executed by the Company; (d) guarantee agreements by each
subsidiary of the Company in the form attached as Annex C.

 

5.6

Board Composition. As of the Closing Date, the size of the board of directors of
the Company shall be fixed at three. Such directors shall be comprised of
Jonathon R. Skeels, Richard S. Chernicoff andThomas C. Stewart.

 

6.

Conditions to Obligations of the Company. The Company’s obligation to issue and
sell the Securities at the Closing is subject to the fulfillment, on or prior to
the Closing Date, of the following conditions, any of which may be waived in
whole or in part by the Company:

 

6.1

Representations and Warranties. The representations and warranties made by the
applicable Purchaser in Article 3 shall be true and correct when made, and shall
be true and correct on the Closing Date.

 

6.2

Legal Requirements. At the Closing, the sale and issuance by the Company, and
the purchase by the applicable Purchaser, of the Securities shall be legally
permitted by all laws and regulations to which the Purchaser or the Company are
subject.

 

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6.3

Purchase Price. The Purchaser shall have delivered to the Company the Purchase
Price in respect of the Securities being purchased by the Purchaser hereunder.

 

7.

Miscellaneous.

 

7.1

Registration, Transfer and Replacement of the Notes. The Notes, Warrants and
shares of Common Stock issuable under the Transaction Agreements shall be
registered notes, warrants and shares, respectively. The Company will keep, at
its principal executive office or its third party transfer agent designated for
such purpose, books for the registration and registration of transfer of the
Notes, Warrants and shares of Common Stock issuable upon exercise of the
Warrants. Prior to presentation of any Note or Warrant for registration of
transfer, the Company shall treat the person or entity in whose name such Note
or Warrant is registered as the owner and holder of such Note for all purposes
whatsoever, whether or not such Note shall be overdue, and the Company shall not
be affected by notice to the contrary. Subject to any restrictions on or
conditions to transfer set forth in any Note, Warrant or share of Common Stock
issuable upon exercise of the Warrant, the holder of such Note, Warrant or share
of Common Stock, at its option, may in person or by duly authorized attorney
surrender the same for exchange at the Company’s executive offices or the office
of its third party transfer agent designated for such pupose, and promptly
thereafter and at the Company’s expense, except as provided below, receive in
exchange therefor one or more new Notes, each in the principal requested by such
holder, dated the date to which interest shall have been paid on the Note so
surrendered or, if no interest shall have yet been so paid, dated the date of
the Note so surrendered and registered in the name of such person or entity or
person or entities as shall have been designated in writing by such holder or
its attorney for the same principal amount as the then unpaid principal amount
of the Note so surrendered, Warrants or share of Common Stock. Upon receipt by
the Company of evidence reasonably satisfactory to it of the ownership of and
the loss, theft, destruction or mutilation of any Note, Warrant or share of
Common Stock issuable upon exercise of the Warrants and (a) in the case of loss,
theft or destruction, of indemnity reasonably satisfactory to it; or (b) in the
case of mutilation, upon surrender thereof, the Company, at its expense, will
execute and deliver in lieu thereof a new Note executed in the same manner as
the Note being replaced, in the same principal amount as the unpaid principal
amount of such Note and dated the date to which interest shall have been paid on
such Note or, if no interest shall have yet been so paid, dated the date of such
Note.

 

7.2

Usury. To the extent it may lawfully do so, the Company hereby agrees not to
insist upon or plead or in any manner whatsoever claim, and will resist any and
all efforts to be compelled to take the benefit or advantage of, usury laws
wherever enacted, now or at any time hereafter in force, in connection with any
action or proceeding that may be brought by the Purchaser or any of its
successors in interest in order to enforce any right or remedy under any
Transaction Document. Notwithstanding any provision to the contrary contained in
any Transaction Document, it is expressly agreed and provided that the total
liability of the Company under the Transaction Documents for payments in the
nature of interest shall not exceed the maximum lawful rate authorized under
applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no
event shall any rate of interest or default interest, or both of them, when
aggregated with any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such Maximum Rate. It is
agreed that if the maximum contract rate of interest allowed by law and
applicable to the Transaction Documents is increased or decreased by statute or
any official governmental action subsequent to the date hereof, the new maximum
contract rate of interest allowed by law will be the Maximum Rate applicable to
the Transaction Documents from the effective date thereof forward, unless such
application is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to the
Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by the Purchaser to the unpaid principal balance of
any such indebtedness or be refunded to the Company, the manner of handling such
excess to be at the Purchaser’s election.

 

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7.3

Survival. The representations and warranties in this Agreement will not survive
the Closing. The covenants in this Agreement shall survive the Closing until
their latest date for performance.

 

7.4

Expenses. All costs and expenses incurred in connection with this Agreement and
the consummation of the transactions contemplated hereby will be paid by the
Company.

 

7.5

Choice of Law. This Agreement and the Transactions will be governed by the Laws
of the State of Delaware that are applicable to contracts made in and performed
solely in Delaware.

 

7.6

Enforcement.

 

(a)

Any dispute arising under, related to or otherwise involving this Agreement or
the Transactions will be litigated in the Court of Chancery of the State of
Delaware. Each Party agrees to submit to the jurisdiction of the Court of
Chancery of the State of Delaware and waive trial by jury. The parties do not
consent to mediate any disputes before the Court of Chancery.

 

(b)

Notwithstanding the foregoing, if there is a determination that the Court of
Chancery of the State of Delaware does not have subject matter jurisdiction over
any dispute arising under this Agreement, the parties agree that: (i) such
dispute will be adjudicated only by, and will be subject to the exclusive
jurisdiction and venue of, the Superior Court of Delaware of and for the County
of New Castle; (ii) if the Superior Court of Delaware does not have subject
matter jurisdiction over such dispute, then such dispute will be adjudicated
only by, and will be subject to the exclusive jurisdiction and venue of, the
Complex Commercial Litigation Division of the Superior Court of the State of
Delaware of and for the County of Newcastle; and (iii) if the Complex Commercial
Litigation Division of the Superior Court of the State of Delaware does not have
subject matter jurisdiction over such dispute, then such dispute will be
adjudicated only by, and will be subject to the exclusive jurisdiction and venue
of, the United States District Court for the State of Delaware.

 

(c)

Each Party irrevocably (i) consents to submit itself to the personal
jurisdiction of the Delaware courts in connection with any dispute arising under
this Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for relief from the Delaware
courts or any other court or governmental body and (iii) agrees that it will not
bring any action arising under this Agreement in any court other than the
Delaware courts. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT
MAY HAVE TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF THIS AGREEMENT, THE
NEGOTIATION OR ENFORCEMENT HEREOF OR THE TRANSACTIONS.

 

(d)

Process may be served in the manner specified for Notices in Section 7.7, such
service will be deemed effective on the date of receipt of such notice, and each
Party irrevocably waives any defenses or objections it may have to service in
such manner.

 

(e)

Each Party irrevocably stipulates that irreparable damage would occur if any of
the provisions of this Agreement were not performed per their specific terms.
Accordingly, each Party will be entitled to specific performance of the terms
hereof in addition to any other remedy to which it is entitled at law or in
equity.

 

(f)

The court shall award attorneys' fees and expenses and costs to the
substantially prevailing Party in any action (including appeals) for the
enforcement or interpretation of this Agreement. If there are cross claims in
such action (including appeals), the court will determine which party is the
substantially prevailing Party as to the action as a whole and award fees,
expenses and costs to such Party.

 

(g)

No breach of any representation, warranty or covenant contained herein or in any
certificate delivered pursuant to this Agreement shall give rise to any right on
the part of any party, after the Closing, to rescind this Agreement or any of
the Transactions.

 

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7.7

Notices. All notices and other communications hereunder will be in writing in
the English language and will be deemed given when delivered personally or by an
internationally recognized courier service, such as DHL, to the other Party at
the following addresses (or at such other address for a party as may be
specified by like notice):

 

(a)

If to the Purchaser:

Novelty Capital Partners I, LLC

520 Newport Center Drive, 12th Floor

Newport Beach, CA 92660

Attention: Jonathon R. Skeels

 

(b)

If to the Company:

L. Eric Loewe

General Counsel and Secretary

Prism Technologies Group, Inc.

101 Parkshore Dr., Suite 100

Folsom, CA 95630

 

7.8

No Third-Party Beneficiaries. Except for the obligations of the Company
described in Section 4.5, this Agreement is solely for the benefit of the
Parties and no other Person will be entitled to rely on this Agreement or to
anticipate the benefits of this Agreement as a third-party beneficiary hereof.

 

7.9

Assignment. Except as provided in this Section, no party may assign, delegate or
otherwise transfer this Agreement or any rights or obligations under this
Agreement in whole or in part (whether by operation of law or otherwise),
without the prior written content of the other party. Subject to the foregoing,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and permitted assigns. Any
assignment in violation of this Section will be null and void. Notwithstanding
the foregoing, the Purchaser may assign this Agreement and delegate its
obligations hereunder to another investment vehicle; provided, however, that the
assignee expressly assumes in writing all of the obligations of the assigning
Party under this Agreement, and the assigning Party provides written notice and
evidence of such assignment and assumption to the nonassigning Party. No
assignment permitted by this Section shall release the assigning Party from
liability for the full performance of its obligations under this Agreement.

 

7.10

No Waiver. No failure or delay in the exercise or assertion of any right
hereunder will impair such right or be construed to be a waiver of, or
acquiescence in, or create an estoppel with respect to any breach of any
representation, warranty or covenant herein, nor will any single or partial
exercise of any such right preclude other or further exercise thereof or of any
other right. All rights and remedies under this Agreement are cumulative to, and
not exclusive of, any rights or remedies otherwise available.

 

7.11

Severability. Any term or provision hereof that is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable in any
situation in any jurisdiction will not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the invalid, void or unenforceable term or provision in any other situation or
in any other jurisdiction. If the final judgment of a court of competent
jurisdiction or other authority declares any term or provision hereof invalid,
void or unenforceable, the court or other authority making such determination
will have the power to and will, subject to the discretion of such body, reduce
the scope, duration, area or applicability of the term or provision, to delete
specific words or phrases, or to replace any invalid, void or unenforceable term
or provision with a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision.

 

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7.12

Amendment. Subject to applicable Law, the Parties may (i) extend the time for
the performance of obligations or other acts of the other Party, (ii) waive any
inaccuracies in the representations and warranties of the other Party herein,
(iii) waive compliance by the other Party with any of the agreements or
conditions herein or (iv) amend, modify or supplement this Agreement. Any
agreement on the part of a Party to any such extension, waiver, amendment,
modification or supplement will be valid only if in an instrument in writing
signed by an authorized representative of such Party. Notwithstanding the
generality of the foregoing, any amendment, termination, waiver or modification
to the obligations of the Company under Section 4.5 shall be effective only if
approved by the affirmative vote of a majority of the Company’s stockholders at
a regular or special meeting.

 

7.13

Entire Agreement. This Agreement and the other Transaction Documents contain the
entire agreement of the Parties and supersedes all prior and contemporaneous
agreements, negotiations, arrangements, representations and understandings,
written, oral or otherwise, between the Parties with respect to the subject
matter hereof.

 

7.14

Counterparts. This Agreement may be executed in one or more counterparts
(whether delivered by electronic copy or otherwise), each of which will be
considered one and the same agreement and will become effective when two or more
counterparts have been signed by each of the Parties and delivered to the other
Party. Each Party need not sign the same counterpart.

 

7.15

Construction and Interpretation. When a reference is made in this Agreement to a
section or article, such reference will be to a section or article of this
Agreement, unless otherwise clearly indicated to the contrary. Whenever the
words "include," "includes" or "including" are used in this Agreement they will
be deemed to be followed by the words "without limitation". The words "hereof,"
"herein" and "herewith" and words of similar import will, unless otherwise
stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article and section references are
references to the articles and sections of this Agreement, unless otherwise
specified. The plural of any defined term will have a meaning correlative to
such defined term and words denoting any gender will include all genders and the
neuter. Where a word or phrase is defined herein, each of its other grammatical
forms will have a corresponding meaning. A reference to any legislation or to
any provision of any legislation will include any modification, amendment,
re-enactment thereof, any legislative provision substituted therefore and all
rules, regulations and statutory instruments issued or related to such
legislation. If any ambiguity or question of intent or interpretation arises,
this Agreement will be construed as if drafted jointly by the parties, and no
presumption or burden of proof will arise favoring or disfavoring any Party by
virtue of the authorship of any provision of this Agreement. No prior draft of
this Agreement will be used in the interpretation or construction of this
Agreement. The Parties intend that each provision of this Agreement will be
given full separate and independent effect. Although the same or similar subject
matters may be addressed in different provisions of this Agreement, the Parties
intend that, except as expressly provided herein, each such provision will be
read separately, be given independent significance and not be construed as
limiting any other provision of this Agreement (whether or not more general or
more specific in scope, substance or content). Headings are used for convenience
only and will not in any way affect the construction or interpretation of this
Agreement.

 

15

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The parties have caused this Agreement to be duly executed and delivered by
their proper and duly authorized officers as of the date and year first written
above.

 

PRISIM TECHNOLOGIES GROUP, INC.                     By:  /s/ L. Eric Loewe    
Name: L. Eric Loewe     Title:  SVP, General Counsel and Secretary            
NOVELTY CAPITAL PARTNERS I, LLC     By:  NOVELTY CAPITAL LLC, its Manager      
              By:   /s/ Jonathon Skeels     Name: Jonathon Skeels     Title: 
Managing Partner    

 

 

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Exhibit A

 

THIS SECURED NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THIS
SECURED NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.

 

SECURED PROMISSORY NOTE

$_____________

________ 20__

Folsom, California

 

FOR VALUE RECEIVED, Prisim Technologies Group, Inc., a Delaware corporation (the
“Company”), hereby promises to pay to the order of ___________ (the “Holder”),
or its registered assigns, in lawful money of the United States of America and
in immediately available funds, the principal sum of $_____, together with
accrued and unpaid interest thereon, each due and payable on the date and in the
manner set forth below. This Note is issued pursuant to the Securities Purchase
Agreement, dated as of __ March 2018 (the “Purchase Agreement”). Capitalized
words used but not otherwise defined hereunder shall have the meaning ascribed
to such terms in the Purchase Agreement.

 

THE OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A SECURITY AGREEMENT (THE
“SECURITY AGREEMENT”) AND AN INTELLECTUAL PROPERTY SECURITY AGREEMENT (“THE IP
SECURITY AGREEMENT”), EACH DATED AS OF THE DATE HEREOF AND EXECUTED BY THE
COMPANY FOR THE BENEFIT OF THE PURCHASER. ADDITIONAL RIGHTS OF THE PURCHASER ARE
SET FORTH IN THE SECURITY AGREEMENT AND THE IP SECURITYAGREEMENT.

 

The following is a statement of the rights of Holder and the conditions to which
this Note is subject, and to which Holder, by the acceptance of this Note,
agrees:

 

1. Principal Repayment. The outstanding principal amount of this Note, and all
accrued and unpaid interest thereon, shall be due and payable on March 31, 2021
(the “Maturity Date”).

 

2. Interest. The Company further promises to pay interest on the outstanding
principal amount hereof from the date hereof, until payment in full, which
interest shall be payable at the rate of ten percent (10%) per annum (the
“Stated Interest Rate”) or the maximum rate permissible by law, whichever is
less. Interest shall accrue daily be due and payable on the Maturity Date, and
shall be calculated on the basis of a 365-day year for the actual number of days
elapsed. Upon the occurrence and during the continuance of an Event of Default,
all amounts owing hereunder shall bear interest at the Stated Interest Rate plus
two percent per annum.

 

3. Place of Payment. All amounts payable hereunder shall be payable at the
office of Holder, unless another place of payment shall be specified in writing
by Holder. All payments hereunder shall be made without any set-off,
counterclaim defenses, withholding (for taxes or otherwise) or reduction of any
kind.

 

4. Application of Payments. Payment on this Note shall be applied first to costs
in connection with the collection amounts due hereunder, accrued interest and
thereafter to the outstanding principal balance hereof. This Note may be prepaid
in whole or in part at any time without penalty or premium. Any interest accrued
on the amounts so prepaid to the date of such prepayment shall be paid at the
time of any such prepayment.

 

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5. Event of Default. Each of the following events shall be an “Event of Default”
hereunder:

 

(a)

the Company fails to pay timely any of the principal amount due under this Note
on the date the same becomes due and payable or any accrued interest or other
amounts due under this Note on the date the same becomes due and payable;

 

(b)

the Company shall default in its performance of any other covenant under this
Note or any of the Transaction Documents, which default is not cured within the
earlier of (i) five days after notice thereof from Holder and (ii) ten days
after the Company has become aware or should have become aware of such failure;

 

(c)

the Company breaches any representation or warranty contained in this Note or
any Transaction Document and such breach adversely affects, or could reasonably
be expected to adversely affect, any of the Holder’s rights or obligations under
this Note or any Transaction Document;

 

(d)

a default or event of default (subject to any grace or cure period provided in
the applicable agreement, document or instrument) shall occur under (A) any of
the Transaction Documents (except for a default caused by Company’s breach of
Section 4.5 or 7.12 of the Securities Purchase Agreement) or (B) any other
material agreement, lease, document or instrument to which the Company or any
subsidiary is obligated;

 

(e)

the Company or any subsidiary shall default on any of its obligations under any
mortgage, credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by which there
may be secured or evidenced, any indebtedness for borrowed money or money due
under any long term leasing or factoring arrangement that (a) involves an
obligation greater than $150,000, whether such indebtedness now exists or shall
hereafter be created, and (b) results in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise become
due and payable;

 

(f)

the Company or any Significant Subsidiary (as such term is defined in Rule
1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event. “Bankruptcy
Event” means any of the following events: (i) the Company or any Significant
Subsidiary thereof commences a case or other proceeding under any bankruptcy,
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction relating to the
Company or any Significant Subsidiary thereof, (ii) there is commenced against
the Company or any Significant Subsidiary thereof any such case or proceeding
that is not dismissed within sixty days after commencement, (iii) the Company or
any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any
order of relief or other order approving any such case or proceeding is entered,
(iv) the Company or any Significant Subsidiary thereof suffers any appointment
of any custodian or the like for it or any substantial part of its property that
is not discharged or stayed within sixty calendar days after such appointment,
(v) the Company or any Significant Subsidiary thereof makes a general assignment
for the benefit of creditors, (vi) the Company or any Significant Subsidiary
thereof calls a meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts, (vii) the Company or any Significant
Subsidiary thereof admits in writing that it is generally unable to pay its
debts as they become due, (viii) the Company or any Significant Subsidiary
thereof, by any act or failure to act, expressly indicates its consent to,
approval of or acquiescence in any of the foregoing or takes any corporate or
other action for the purpose of effecting any of the foregoing;

 

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(g)

the Company shall be a party to any Change of Control Transaction or shall sell
or dispose of all or in excess of 33% of its assets in one transaction (other
than the contingent value rights contemplated in Section 4.5(b) of the Purchase
Agreement) or a series of related transactions (whether or not such sale would
constitute a Change of Control Transaction). “Change of Control Transaction”
means the occurrence after the date hereof of any of (i) an acquisition after
the date hereof by an individual or legal entity or “group” (as described in
Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control
(whether through legal or beneficial ownership of capital stock of the Company,
by contract or otherwise) of in excess of 33% of the voting securities of the
Company, (ii) the Company merges into or consolidates with any other person or
entity, or any person or entity merges into or consolidates with the Company
and, after giving effect to such transaction, the stockholders of the Company
immediately prior to such transaction own less than 66% of the aggregate voting
power of the Company or the successor entity of such transaction, (iii) the
Company sells or transfers all or substantially all of its assets to another
person or entity and the stockholders of the Company immediately prior to such
transaction own less than 66% of the aggregate voting power of the acquiring
entity immediately after the transaction, or (iv) a replacement at one time or
within a three year period of more than one-half of the members of the board of
directors which is not approved by a majority of those individuals who are
members of the board of directors on the original issue date of this Note (or by
those individuals who are serving as members of the board of directors on any
date whose nomination to the board of directors of the Company was approved by a
majority of the members of the board of directors who are members on the date
hereof); or

 

(h)

any monetary judgment, writ or similar final process shall be entered or filed
against the Company, any subsidiary or any of their respective property or other
assets for more than $50,000, and such judgment, writ or similar final process
shall remain unvacated, unbonded or unstayed for a period of forty five calendar
days.

 

Upon the occurrence of an Event of Default hereunder, all unpaid principal,
accrued interest and other amounts owing hereunder shall, automatically, be
immediately due, payable and collectible by Holder. In connection with such
acceleration described herein, the Holder need not provide, and the Company
hereby waives, any presentment, demand, protest or other notice of any kind, and
the Holder may immediately and without expiration of any grace period enforce
any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such acceleration may be rescinded and
annulled by Holder at any time prior to payment hereunder and the Holder shall
have all rights as a holder of the Note until such time, if any, as the Holder
receives full payment pursuant to this Section 5. No such rescission or
annulment shall affect any subsequent Event of Default or impair any right
consequent thereon.

 

6. Waivers. The Company (a) waives presentment, demand, protest or notice of any
kind in connection with this Note and (b) agrees, in the event of an Event of
Default, to pay to the Holder of this Note, on demand, all costs and expenses
(including reasonable legal fees and expenses as and when incurred), incurred in
connection with the enforcement and/or collection of this Note. The right to
plead any and all statutes of limitations as a defense to any demands hereunder
is hereby waived to the full extent permitted by law.

 

7. Purchase Agreement. This Note is issued under and entitled to the benefits of
the Purchase Agreement. Article 7 of the Purchase Agreement shall apply to this
Note mutatis mutandis.

 

8. Governing Law. This Note shall be governed by and construed under the laws of
the State of Delaware applicable to contracts made in and to be solely performed
in Delaware.

 

9. Amendments. No amendment, modification or waiver of any provision of this
Note nor consent to departure by the Company therefrom shall be effective,
irrespective of any course of dealing, unless the same shall be in writing and
signed by the Company and the Holder.

 

10. Successors and Assigns. This Note may be transferred only in compliance with
the provisions herein and upon its surrender to the Company for registration of
transfer, duly endorsed, or accompanied by a duly executed written instrument of
transfer in form satisfactory to the Company. Thereupon, this Note shall be
reissued to, and registered in the name of, the transferee, or a new Note for
like principal amount and interest shall be issued to, and registered in the
name of, the transferee. Interest and principal shall be paid solely to the
registered holder of this Note. Such payment shall constitute full discharge of
the Company’s obligation to pay such interest and principal.

 

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11. Registered Form. This Note is in registered form within the meaning of 26
C.F.R. Section 1.871-14(c)(1)(i) for United States federal income and
withholding tax purposes. This Note may be transferred only upon its surrender
to the Company for registration of transfer, duly endorsed, or accompanied by a
duly executed written instrument of transfer in form reasonably satisfactory to
the Company. Thereupon, this Note shall be reissued to, and registered in the
name of, the transferee, or a new Note for like principal amount and interest
shall be issued to, and registered in the name of, the transferee.

 

12. Absolute Obligation. Except as expressly provided herein, no provision of
this Note shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, liquidated damages and accrued
interest, as applicable, on this Note at the time, place, and rate, and in the
coin or currency, herein prescribed. This Note is a direct debt obligation of
the Company. This Note ranks pari passu with all other Notes now or hereafter
issued under the terms set forth herein.

 

13. Secured Obligation. The obligations of the Company under this Note are
secured by all assets of the Company pursuant to the Security Agreement, dated
as of __ May 2018 between the Company and Novelty Capital Partners I, LLC.

 

The Company has caused this Note to be issued as of the date first written
above.

 

PRISIM TECHNOLOGIES GROUP, INC.

 

 

By:     ___________________

Name:

Title:

 

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Exhibit B

COMMON STOCK PURCHASE WARRANT

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

 

Warrant Number: ___

Warrant Shares: _______

Initial Exercise Date: ___________

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
received, _____________ or its assigns (the “Holder”) is entitled, upon the
terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after three year anniversary of the original
issuance date of the this Warrant (the “Initial Exercise Date”) and on or prior
to the close of business on the five year anniversary of the Initial Exercise
Date (the “Termination Date”) but not thereafter, to subscribe for and purchase
from Prism Technologies Group, Inc., a Delaware corporation (the “Company”), up
to ______ shares (as subject to adjustment hereunder, the “Warrant Shares”) of
the Company’s common stock (“Common Stock”). The purchase price of one share of
Common Stock under this Warrant shall be equal to the Exercise Price, as defined
in Section 2(b).

 

1. Definitions. In addition to the terms defined elsewhere in this Agreement,
the following terms have the meanings indicated in this Section 1:

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.

 

“Board of Directors” means the board of directors of the Company.

 

“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.

 

“Commission” means the United States Securities and Exchange Commission.

 

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

 

“Liens” means a lien, charge pledge, security interest, encumbrance, right of
first refusal, preemptive right or other restriction.

 

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.

 

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“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

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

 

“Trading Day” means a day on which the Common Stock is traded on a Trading
Market.

 

“Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE
MKT, the Nasdaq Capital Market, the Nasdaq

Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or
the OTC Bulletin Board (or any successors to any of the foregoing).

 

“Transfer Agent” means American Stock Transfer and Trust Company, LLC, and any
successor transfer agent of the Company, and if no such third party is
appointed, the Company.

 

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date)
on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or
quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then
reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported, or (d) in all
other cases, the fair market value of a share of Common Stock as determined by
an independent appraiser selected in good faith by the Holder and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the
Company.

 

2. Exercise.

 

(a) Exercise of Warrant. Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times (i) on or after
the Initial Exercise Date and on or before the Termination Date or (ii) any time
following a Change of Control Event occurring before the Initial Exercise Date,
by delivery to the Company or the Transfer Agent (or such other office or agency
that the Company may designate by notice in writing to the registered Holder at
the address of the Holder appearing on the books of the Company), as applicable,
of a duly executed Notice of Exercise in the form annexed hereto. Within the
earlier of (i) three Trading Days and (ii) the number of Trading Days comprising
the Standard Settlement Period (as defined in Section 2(d)(i)) following the
date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise
Price for the shares specified in the applicable Notice of Exercise by wire
transfer or cashier’s check drawn on a United States bank unless the cashless
exercise procedure specified in Section 2(c) is specified in the applicable
Notice of Exercise. No ink-original Notice of Exercise shall be required, nor
shall any medallion guarantee (or other type of guarantee or notarization) of
any Notice of Exercise form be required. Notwithstanding anything herein to the
contrary, the Holder shall not be required to physically surrender this Warrant
to the Company until the Holder has purchased all of the Warrant Shares
available hereunder and the Warrant has been exercised in full, in which case,
the Holder shall surrender this Warrant to the Company for cancellation within
three (Trading Days of the date the final Notice of Exercise is delivered to the
Company. Partial exercises of this Warrant resulting in purchases of a portion
of the total number of Warrant Shares available hereunder shall have the effect
of lowering the outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased. The Holder
and the Company shall maintain records showing the number of Warrant Shares
purchased and the date of such purchases. The Company shall deliver any
objection to any Notice of Exercise within two Business Day of receipt of such
notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge
and agree that, by reason of the provisions of this paragraph, following the
purchase of a portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be less than the
amount stated on the face hereof.

 

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(b) Exercise Price. The exercise price per share of the Common Stock under this
Warrant shall be [100% of the fair value of the Common Stock on the issue date]
subject to adjustment hereunder (the “Exercise Price”).

 

(c) Cashless Exercise. This Warrant may be exercised, in whole or in part, at
such time by means of a “cashless exercise” in which the Holder shall be
entitled to receive a number of Warrant Shares equal to the quotient obtained by
dividing [(A-B) (X)] by (A), where:

 

(A) = the last VWAP immediately preceding the time of delivery of the Notice of
Exercise giving rise to the applicable “cashless exercise”, as set forth in the
applicable Notice of Exercise (to clarify, the “last VWAP” will be the last VWAP
as calculated over an entire Trading Day such that, if this Warrant is exercised
at a time that the Trading Market is open, the prior Trading Day’s VWAP shall be
used in this calculation);

 

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Shares that would be issuable upon exercise of this
Warrant in accordance with the terms of this Warrant if such exercise were by
means of a cash exercise rather than a cashless exercise.

 

If Warrant Shares are issued in such a cashless exercise, the parties
acknowledge and agree that in accordance with Section 3(a)(9) of the Securities
Act, the Warrant Shares shall take on the characteristics of the Warrants being
exercised, and the holding period of the Warrant Shares being issued may be
tacked on to the holding period of this Warrant. The Company agrees not to take
any position contrary to this Section 2(c).

 

(d) Mechanics of Exercise.

 

(i). Delivery of Warrant Shares Upon Exercise. Warrant Shares purchased
hereunder shall be transmitted by the Transfer Agent to the Holder by crediting
the account of the Holder’s or its designee’s balance account with The
Depository Trust Company through its Deposit or Withdrawal at Custodian system
(“DWAC”) if the Company is then a participant in such system and either (A)
there is an effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the
Warrant Shares are eligible for resale by the Holder without volume or
manner-of-sale limitations pursuant to Rule 144, and otherwise by book-entry,
registered in the Company’s share register in the name of the Holder or its
designee, for the number of Warrant Shares to which the Holder is entitled
pursuant to such exercise to the address specified by the Holder in the Notice
of Exercise by the date that is the earlier of (i) three Business Days and (ii)
the number of Business Days comprising the Standard Settlement Period after the
delivery to the Company of the Notice of Exercise (such date, the “Warrant Share
Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be
deemed for all corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date of delivery of the Warrant Shares, provided that
payment of the aggregate Exercise Price (other than in the case of a cashless
exercise) is received within the earlier of (i) three Trading Days and (ii) the
number of Trading Days comprising the Standard Settlement Period following
delivery of the Notice of Exercise.

 

If the Company fails for any reason to deliver to the Holder the Warrant Shares
subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company
shall pay to the Holder, in cash, as liquidated damages and not as a penalty,
for each $100 of Warrant Shares subject to such exercise (based on the VWAP of
the Common Stock on the date of the applicable Notice of Exercise), $1 per
Trading Day (increasing to $2 per Trading Day on the fifth Trading Day after
such liquidated damages begin to accrue) for each Trading Day after such Warrant
Share Delivery Date until such Warrant Shares are delivered or Holder rescinds
such exercise. The Company agrees to maintain a transfer agent that is a
participant in the FAST program so long as this Warrant remains outstanding and
exercisable. As used herein, “Standard Settlement Period” means the standard
settlement period, expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in effect on the date
of delivery of the Notice of Exercise.

 

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(ii). Delivery of New Warrants Upon Exercise. If this Warrant shall have been
exercised in part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of the Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.

 

(iii). Rescission Rights. If the Company fails to cause the Transfer Agent to
transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the
Warrant Share Delivery Date, then the Holder will have the right to rescind such
exercise.

 

(iv). Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon
Exercise. In addition to any other rights available to the Holder, if the
Company fails to cause the Transfer Agent to transmit to the Holder the Warrant
Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an
exercise on or before the Warrant Share Delivery Date, and if after such date
the Holder is required by its broker to purchase (in an open market transaction
or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of
Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant
Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”),
then the Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased exceeds (y) the amount obtained
by multiplying (1) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue times (2) the
price at which the sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for which such exercise was
not honored (in which case such exercise shall be deemed rescinded) or deliver
to the Holder the number of shares of Common Stock that would have been issued
had the Company timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss. Nothing herein shall limit a Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver shares
of Common Stock upon exercise of the Warrant as required pursuant to the terms
hereof.

 

(v). No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any
fraction of a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.

 

(vi). Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made
without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such Warrant Shares, all of which taxes
and expenses shall be paid by the Company, and such Warrant Shares shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the event Warrant Shares are to be issued
in a name other than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder and the Company may require, as a condition thereto, the
payment of a sum sufficient to reimburse it for any transfer tax incidental
thereto. The Company shall pay all Transfer Agent fees required for same-day
processing of any Notice of Exercise and all fees to the Depository Trust
Company (or another established clearing corporation performing similar
functions) required for same-day electronic delivery of the Warrant Shares.

 

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(vii). Closing of Books. The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.

 

3. Certain Adjustments.

 

(a) Stock Dividends and Splits. If the Company, at any time while this Warrant
is outstanding: (i) pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company upon
exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares
or (iv) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event, and the number of shares
issuable upon exercise of this Warrant shall be proportionately adjusted such
that the aggregate Exercise Price of this Warrant shall remain unchanged. Any
adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.

 

(b) Subsequent Rights Offerings. In addition to any adjustments pursuant to
Section 3(a) above, if at any time the Company grants, issues or sells any
Common Stock Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares
of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares of Common
Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to participate in any
such Purchase Right would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such shares of
Common Stock as a result of such Purchase Right to such extent) and such
Purchase Right to such extent shall be held in abeyance for the Holder until
such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).

 

(c) Pro Rata Distributions. During such time as this Warrant is outstanding, if
the Company shall declare or make any dividend or other distribution of its
assets (or rights to acquire its assets) to holders of shares of Common Stock,
by way of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a "Distribution"), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date of which a record
is taken for such Distribution, or, if no such record is taken, the date as of
which the record holders of shares of Common Stock are to be determined for the
participation in such Distribution (provided, however, to the extent that the
Holder's right to participate in any such Distribution would result in the
Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not
be entitled to participate in such Distribution to such extent (or in the
beneficial ownership of any shares of Common Stock as a result of such
Distribution to such extent) and the portion of such Distribution shall be held
in abeyance for the benefit of the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation).

 

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(d) Fundamental Transaction. If, at any time while this Warrant is outstanding,
(i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person,
(ii) the Company, directly or indirectly, effects any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct
or indirect, purchase offer, tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders of 50% or more
of the outstanding Common Stock, (iv) the Company, directly or indirectly, in
one or more related transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property, or (v) the Company, directly or indirectly, in one
or more related transactions consummates a stock or share purchase agreement or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person or
group of Persons whereby such other Person or group acquires more than 50% of
the outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the Holder
shall have the right to receive, for each Warrant Share that would have been
issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the number of
shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the “Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(e) on the exercise of this
Warrant). For purposes of any such exercise, the determination of the Exercise
Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Company shall apportion
the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction.

 

Notwithstanding anything to the contrary, in the event of a Fundamental
Transaction, the Company or any Successor Entity (as defined below) shall, at
the Holder’s option, exercisable at any time concurrently with, or within 30
days after, the consummation of the Fundamental Transaction, purchase this
Warrant from the Holder by paying to the Holder an amount of cash equal to the
Black Scholes Value of the remaining unexercised portion of this Warrant on the
date of the consummation of such Fundamental Transaction.

 

“Black Scholes Value” means the value of this Warrant based on the Black and
Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P.
(“Bloomberg”) determined as of the day of consummation of the applicable
Fundamental Transaction for pricing purposes and reflecting (A) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the
time between the date of the public announcement of the applicable Fundamental
Transaction and the Termination Date, (B) an expected volatility equal to the
greater of 100% and the 100 day volatility obtained from the HVT function on
Bloomberg as of the Trading Day immediately following the public announcement of
the applicable Fundamental Transaction, (C) the underlying price per share used
in such calculation shall be the sum of the price per share being offered in
cash, if any, plus the value of any non-cash consideration, if any, being
offered in such Fundamental Transaction and (D) a remaining option time equal to
the time between the date of the public announcement of the applicable
Fundamental Transaction and the Termination Date. The payment of the Black
Scholes Value will be made by wire transfer of immediately available funds
within five Business Days of the Holder’s election (or, if later, on the
effective date of the Fundamental Transaction).

 

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The Company shall cause any successor entity in a Fundamental Transaction in
which the Company is not the survivor (the “Successor Entity”) to assume in
writing all of the obligations of the Company under this Warrant and the other
Transaction Documents in accordance with the provisions of this Section 3(e)
pursuant to written agreements in form and substance reasonably satisfactory to
the Holder and approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the Holder, deliver to the
Holder in exchange for this Warrant a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to this
Warrant which is exercisable for a corresponding number of shares of capital
stock of such Successor Entity (or its parent entity) equivalent to the shares
of Common Stock acquirable and receivable upon exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies the exercise
price hereunder to such shares of capital stock (but taking into account the
relative value of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such number of shares
of capital stock and such exercise price being for the purpose of protecting the
economic value of this Warrant immediately prior to the consummation of such
Fundamental Transaction), and which is reasonably satisfactory in form and
substance to the Holder. Upon the occurrence of any such Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so
that from and after the date of such Fundamental Transaction, the provisions of
this Warrant and the other Transaction Documents referring to the “Company”
shall refer instead to the Successor Entity), and may exercise every right and
power of the Company and shall assume all of the obligations of the Company
under this Warrant and the other Transaction Documents with the same effect as
if such Successor Entity had been named as the Company herein.

 

(f) Calculations. All calculations under this Section 3 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding treasury shares, if any) issued and outstanding.

 

(g) Notice to Holder.

 

(i). Adjustment to Exercise Price. Whenever the Exercise Price is adjusted
pursuant to any provision of this Section 3, the Company shall promptly deliver
to the Holder by facsimile or email a notice setting forth the Exercise Price
after such adjustment and any resulting adjustment to the number of Warrant
Shares and setting forth a brief statement of the facts requiring such
adjustment.

 

(ii). Notice to Allow Exercise by Holder. If (A) the Company shall declare a
dividend (or any other distribution in whatever form) on the Common Stock, (B)
the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the granting to
all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of
any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company, then, in each case, the Company shall cause to be
delivered by facsimile or email to the Holder at its last facsimile number or
email address as it shall appear upon the Warrant Register of the Company, at
least 20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to deliver such notice or any defect
therein or in the delivery thereof shall not affect the validity of the
corporate action required to be specified in such notice. To the extent that any
notice provided in this Warrant constitutes, or contains, material, non-public
information regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to exercise this Warrant during
the period commencing on the date of such notice to the effective date of the
event triggering such notice except as may otherwise be expressly set forth
herein.

 

B-7

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4. Transfer of Warrant.

 

(a) Transferability. This Warrant and all rights hereunder (including, without
limitation, any registration rights) are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of the Company or its
designated agent, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder or its
agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer. Upon such surrender and, if required, such payment,
the Company shall execute and deliver a new Warrant or Warrants in the name of
the assignee or assignees, as applicable, and in the denomination or
denominations specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. The Warrant, if properly assigned
in accordance herewith, may be exercised by a new holder for the purchase of
Warrant Shares without having a new Warrant issued.

 

(b) New Warrants. This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice. All Warrants issued on transfers or exchanges shall
be dated the Initial Exercise Date and shall be identical with this Warrant
except as to the number of Warrant Shares issuable pursuant thereto.

 

(c) Warrant Register. The Company shall register this Warrant, upon records to
be maintained by the Company for that purpose (the “Warrant Register”), in the
name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.

 

(d) Transfer Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant shall
not be either (i) registered pursuant to an effective registration statement
under the Securities Act and under applicable state securities or blue sky laws
or (ii) eligible for resale without volume or manner-of-sale restrictions or
current public information requirements pursuant to Rule 144, the Company may
require, as a condition of allowing such transfer, that the Holder or transferee
of this Warrant, as the case may be, provides to the Company an opinion of
counsel, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that the transfer of this Warrant
does not require registration under the Securities Act.

 

(e) Representation by the Holder. The Holder, by the acceptance hereof,
represents and warrants that it is acquiring this Warrant and, upon any exercise
hereof, will acquire the Warrant Shares issuable upon such exercise, for its own
account and not with a view to or for distributing or reselling such Warrant
Shares or any part thereof in violation of the Securities Act or any applicable
state securities law, except pursuant to sales registered or exempted under the
Securities Act.

 

B-8

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5. Miscellaneous.

 

(a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the
Holder to any voting rights, dividends or other rights as a stockholder of the
Company prior to the exercise hereof as set forth in Section 2(d)(i), except as
expressly set forth in Section 3.

 

(b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.

 

(c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then, such action may be taken or such right may be
exercised on the next succeeding Business Day.

 

(d) Authorized Shares. The Company covenants that, during the period the Warrant
is outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary Warrant Shares upon the exercise of the purchase
rights under this Warrant. The Company will take all such reasonable action as
may be necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of the Trading Market upon which the Common Stock may be listed.
The Company covenants that all Warrant Shares which may be issued upon the
exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant and payment for such Warrant
Shares in accordance herewith, be duly authorized, validly issued, fully paid
and nonassessable and free from all taxes, liens and charges created by the
Company in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue). Except and to the extent
as waived or consented to by the Holder, the Company shall not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of Holder as set forth in this Warrant against impairment.

 

Without limiting the generality of the foregoing, the Company will (i) not
increase the par value of any Warrant Shares above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (ii) take
all such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares upon the
exercise of this Warrant and (iii) use commercially reasonable efforts to obtain
all such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof, as may be, necessary to enable the Company to
perform its obligations under this Warrant. Before taking any action which would
result in an adjustment in the number of Warrant Shares for which this Warrant
is exercisable or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.

 

(e) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware.

 

(f) Purchase Agreement. Article 7 of the Purchase Agreement, dated as of __
August 2018, by and between the Company and Novelty Capital Partners I, LLC
shall apply hereto mutatis mutandis.

 

B-9

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(g) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant, if not registered and the Holder does not utilize
cashless exercise, will have restrictions upon resale imposed by state and
federal securities laws.

 

(h) Damages. If the Company fails to comply with any provision of this Warrant,
which results in any material damages to the Holder, in addition to amounts
payable in connection with enforcement, the Holder’s damages shall include any
lost profits (whether or not the Holder sold or covered) measured as any
diminution in value of the Warrant Shares between the time the Company was
required to perform hereunder and the time the Company actually performs
hereunder (whether as a result of settlement, litigation or otherwise).

 

(i) Limitation of Liability. No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder,
shall give rise to any liability of the Holder for the purchase price of any
Common Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.

 

The Company has caused this Warrant to be executed by its officer thereunto duly
authorized as of the date first above indicated.

 

PRISIM TECHNOLOGIES GROUP, INC.

 

 

By:     ___________________

Name:

Title:

 

B-10

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NOTICE OF EXERCISE

 

TO: PRISIM TECHNOLOGIES, INC.

 

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the
Company pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.

 

(2) Payment shall take the form of (check applicable box):

 

☐ in lawful money of the United States; or

 

☐ the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 2(c), to exercise this
Warrant with respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3) Please issue said Warrant Shares in the name of the undersigned or in such
other name as is specified below:

 

The Warrant Shares shall be delivered to the following DWAC Account Number:
______________

 

 

[SIGNATURE OF HOLDER]

Name of Investing Entity:

Signature of Authorized Signatory of Investing Entity:

Name of Authorized Signatory:

Title of Authorized Signatory:

Date:

 

B-11

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ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute this form and supply required
information. Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant
and all rights evidenced thereby are hereby assigned to [_________] whose
address is

.

Dated: ______________, _______

 

 

 

Holder’s Signature:

Holder’s Address:

 

 

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

 

B-12