SECURITIES PURCHASE AGREEMENT

 
THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated as of March ___,
2015, by and among ROOT9B TECHNOLOGIES, INC., a Delaware corporation (the
“Company”), and each Purchaser (“Purchaser”) whose name and address are set
forth on the Signature Page to this Agreement.
 
 
RECITALS
 

WHEREAS, the Company is conducting a private offering (the “Offering”) of up to
an aggregate of 3,636,364 shares of Common Stock (the “Shares”) and 50% warrant
coverage to purchase up to an aggregate of 1,818,182 shares of Common Stock with
an exercise price equal to $1.50 per share (the shares of Common Stock
underlying the Warrants referred to as the “Warrant Shares”) substantially in
the form attached hereto as Exhibit A (the “Warrants”) (the Shares and Warrants
collectively referred to as the “Securities”), pursuant to Section 4(a)(2) of
the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 of
Regulation D (“Regulation D”) and/or Regulation S (“Regulation S”) as
promulgated under the Securities Act; and

WHEREAS, each Purchaser wishes to participate in the Offering and purchase such
number of shares of Common Stock and Warrants as set forth on the Signature Page
to this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser hereby
agree as follows:
 
ARTICLE I.
 
DEFINITIONS
 
1.1           Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms shall have
the meanings indicated in this Section 1.1:
 
“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is controlled by or
is under common control with such Person, as such terms are used in and
construed under Rule 405 under the Securities Act. With respect to each
Purchaser, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Purchaser will be
deemed to be an Affiliate of such Purchaser.
 
“Agreement” shall have the meaning ascribed to such term in the Preamble.

“Business Day” means a day, other than a Saturday, Sunday or a day on which
commercial banking institutions in New York, New York are authorized or required
by law or executive order to be closed.
 
“Buy-In” has the meaning set forth in Section 4.1(d).
 
“Buy-In Price” has the meaning set forth in Section 4.1(d).

 
 

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“Closing Bid Price” means, for any security as of any date, the last closing
price for such security on the Principal Trading Market, as reported by
Bloomberg, or, if the Principal Trading Market begins to operate on an extended
hours basis and does not designate the closing bid price then the last bid price
of such security prior to 4:00 p.m., New York City Time, as reported by
Bloomberg, or, if the Principal Trading Market is not the principal securities
exchange or trading market for such security, the last closing price of such
security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg, or if the foregoing do
not apply, the last closing price of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price is reported for such security by
Bloomberg, the average of the bid prices of any market makers for such security
as reported in the “pink sheets” on OTC Pink. If the Closing Bid Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Closing Bid Price of such security on such date shall be the fair market
value as mutually determined by the Company and each Purchaser. If the Company
and each Purchaser are unable to agree upon the fair market value of such
security, then the Company shall, within two Business Days submit via facsimile
(a) the disputed determination to an independent, reputable investment bank
selected by such Purchaser and approved by the Company or (b) the disputed
arithmetic calculation to the Company’s independent, outside accountant. The
Company shall cause at its expense the investment bank or the accountant, as the
case may be, to perform the determinations or calculations and notify the
Company and the holder of the results no later than ten Business Days from the
time it receives the disputed determinations or calculations. Such investment
bank’s or accountant’s determination or calculation, as the case may be, shall
be binding upon all parties absent manifest error. All such determinations shall
be appropriately adjusted for any stock dividend, stock split, stock combination
or other similar transaction during the applicable calculation period.
 
“Closing” means the closing of the purchase and sale of the Shares and the
Warrant pursuant to this Agreement.
 
“Closing Date” means the date upon which all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all of the
conditions set forth in Sections 2.1(a), 2.1(b), 2.2, 5.1 and 5.2 hereof are
satisfied, or such other date as the parties may agree.
 
“Commission” means the Securities and Exchange Commission.
 
“Common Stock” means shares of the Common Stock, $0.001 par value per share of
the Company and also includes any securities into which the Common Stock may
hereafter be reclassified or changed.
 
“Common Stock Equivalents” means any securities of the Company or any Subsidiary
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock or other securities that entitle the holder to receive, directly or
indirectly, Common Stock.
 
“Company” has the meaning set forth in the Recitals.
 
“Company Counsel” means Ruskin Moscou Faltischek, P.C.
 
“Company Deliverables” has the meaning set forth in Section 2.2(a).

 
 

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“Company’s Knowledge” means with respect to any statement made to the knowledge
of the Company, that the statement is based upon the actual knowledge of the
executive officers of the Company having responsibility for the matter or
matters that are the subject of the statement after reasonable investigation.
 
“Control” (including the terms “controlling”, “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
 
“Deadline Date” has the meaning set forth in Section 4.1(d).
 
“Delaware Courts” means the state and federal courts sitting in the State of
Delaware.
 
“DTC” has the meaning set forth in Section 4.1(c).
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.
 
“Indemnified Person” has the meaning set forth in Section 4.8(b).
 
“Legend Removal Date” has the meaning set forth in Section 4.1(c).
 
“Lien” means any lien, charge, claim, encumbrance, security interest, right of
first refusal, preemptive right or other restrictions of any kind.
 
“Material Adverse Effect” means any of (i) a material and adverse effect on the
legality, validity or enforceability of any Transaction Document , (ii) a
material and adverse effect on the results of operations, assets, properties,
business, condition (financial or otherwise) or prospects of the Company and the
Subsidiaries, taken as a whole, or (iii) any adverse impairment to the Company’s
ability to perform in any material respect on a timely basis its obligations
under any Transaction Document.
 
“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.
 
“Press Release” has the meaning set forth in Section 4.6.
 
“Principal Trading Market” means the Trading Market, if any, on which the Common
Stock is primarily listed on and quoted for trading, which, as of the Closing
Date, shall be the over the counter market as reported on the OTC Bulletin
Board.
 
“Purchase Price” means $1.10 per Share.
 
“Purchaser” has the meaning set forth in the Recitals.
 
“Purchaser Deliverables” has the meaning set forth in Section 2.2(b).
 
“Purchaser Party” has the meaning set forth in Section 4.8(a).
 
“Registrable Securities” means the Shares and the Warrant Shares.
 
“Regulation D” has the meaning set forth in the Recitals.
 
“Required Approvals” has the meaning set forth in Section 3.1(e).

 
 

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“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
 
“SEC Reports” has the meaning set forth in Section 3.1(h).
 
“Secretary’s Certificate” has the meaning set forth in Section 2.2(a)(vi).
 
“Securities” means collectively, the Warrants, the Shares and the Warrant
Shares.
 
“Securities Act” has the meaning set forth in the Recitals.
 
“Shares” has the meaning set forth in the Recitals.
 
“Subsidiary” means any entity in which the Company, directly or indirectly, owns
sufficient capital stock or holds a sufficient equity or similar interest such
that it is consolidated with the Company in the financial statements of the
Company.
 
“Trading Day” means (i) if the Company’s Principal Trading Market is the over
the counter market as reported on the OTC Bulletin Board, a day on which the
Common Stock is traded in the over-the-counter market, as reported by the OTC
Bulletin Board, (ii) if the Company’s Principal Trading Market is a Trading
Market other than the over the counter market as reported on the OTC Bulletin
Board, a day on which the Common Stock is listed or quoted and traded on its
Principal Trading Market, or (iii) if the Common Stock is not quoted on any
Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported in the “pink sheets” by Pink OTC Markets
Inc. (or any similar organization or agency succeeding to its functions of
reporting prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) or (iii) hereof, then Trading Day
shall mean a Business Day.
 
“Trading Market” means whichever of the New York Stock Exchange, the NYSE Amex,
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market or OTC Bulletin Board on which the Common Stock is listed or quoted for
trading on the date in question.
 
“Transaction Documents” means this Agreement and exhibits attached hereto, the
Warrant and any other documents or agreements executed in connection with the
transactions contemplated hereunder or thereunder.
 
“Transfer Agent” means Continental Stock Transfer and Trust, or any successor
transfer agent for the Company.
 
“Warrant” has the meaning set forth in Recitals.
 
 “Warrant Shares” has the meaning set forth in the Recitals.
 
ARTICLE II.
 
PURCHASE AND SALE
 
2.1           Closing.
 
(a)           Purchase and Sale.  In reliance upon the representations and
warranties of the Company and each Purchaser contained herein and subject to the
terms and conditions set forth herein, at Closing, each Purchaser shall
purchase, and the Company shall sell and issue to each Purchaser, shares of
Common Stock and corresponding Warrants set forth on the signature page annexed
to the end of this Agreement as executed by such Purchaser (the “Purchaser
Signature

 
 

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Page”), issued in such Purchaser’s name, at a purchase price of $1.10 per share
(the “Purchase Price”).
 
(b)           The sale of Securities will take place in one or more closings
(“Closing”), subject to the satisfaction of all the parties hereto of their
obligations herein.  Each Purchasers shall submit an executed copy of this
Agreement to the Company along with the Purchase Price by bank wire directly to
the Company.  The Closing of the sale of Securities contemplated by this
Agreement shall take place from time to time as subscriptions are received,
without any consent of, or notice to, Purchasers.  Subscriptions that are not
accepted will be returned with any funds (less wire fees).  The Closing shall
take place at the offices of the Company  (each, a “Closing Date”) on or before
March 13, 2015 unless otherwise extended by the Company in its sole discretion
up to a maximum of 30 days (the “Termination Date”).
 
2.2           Closing Deliveries.   
 
(a)            On or prior to the Closing Date, the Company shall issue, deliver
or cause to be delivered to a Purchaser the following (the “Company
Deliverables”):
 
(i) 
this Agreement, duly executed by the Company;

 
(ii) 
one or more stock certificates, evidencing the Shares subscribed for by each
Purchaser hereunder, registered in the name of such Purchaser or as otherwise
set forth on the Accredited Investor Questionnaire included as Exhibit B hereto;

 
(iv)           the Warrant, duly executed by the Company;
 
(v)           a certificate of the Secretary of the Company (the “Secretary’s
Certificate”), dated as of the Closing Date, (a) certifying the resolutions
adopted by the Board of Directors of the Company or a duly authorized committee
thereof approving the transactions contemplated by this Agreement and the other
Transaction Documents and the issuance of the Securities, (b) certifying the
current versions of the certificate of incorporation, as amended, and by-laws,
as amended, of the Company and (c) certifying as to the signatures and authority
of persons signing the Transaction Documents and related documents on behalf of
the Company, in the form attached hereto as Exhibit C; and
 
(vi) 
the Compliance Certificate referred to in Section 5.1(g).

 
(b)            On or prior to the Closing Date, each Purchaser shall deliver or
cause to be delivered to the Company the following (the “Purchaser
Deliverables”):
 
(i) 
this Agreement, duly executed by each Purchaser;

 
(ii)            the Aggregate Purchase Price, in U.S. dollars and in immediately
available funds, by wire transfer in accordance with the Company’s written
instructions; and
 
(iii) 
a fully completed Accredited Investor Questionnaire in the form attached hereto
as Exhibit B.

 
ARTICLE III.
 
REPRESENTATIONS AND WARRANTIES
 
3.1           Representations and Warranties of the Company. The Company hereby
represents and warrants as of the date hereof and as of the Closing Date (except
for the representations and

 
 

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warranties that speak as of a specific date, which shall be made as of such
date), to each Purchaser that:
 
(a)           Organization and Qualification. The Company and each of its
“Significant Subsidiaries” (as defined in Rule 1-02 of Regulation S-X) is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own or lease and use
its properties and assets and to carry on its business as currently conducted.
The Company and each of its Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, would not in the reasonable
judgment of the Company be expected to have a Material Adverse Effect.
 
(b)           Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents to which it is a
party and otherwise to carry out its obligations hereunder and thereunder,
including, without limitation, to issue the Securities in accordance with the
terms hereof. The Company’s execution and delivery of each of the Transaction
Documents to which it is a party and the consummation by it of the transactions
contemplated hereby and thereby (including, but not limited to, the sale and
delivery of the Securities) have been duly authorized by all necessary corporate
action on the part of the Company, and no further corporate action is required
by the Company, its Board of Directors or its stockholders in connection
therewith other than in connection with the Required Approvals. Each of the
Transaction Documents to which it is a party has been (or upon delivery will
have been) duly executed by the Company and is, or when delivered in accordance
with the terms hereof, will constitute the legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
except (i) as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
 
(c)           No Conflicts. The execution, delivery and performance by the
Company of the Transaction Documents to which it is a party and the consummation
by the Company of the transactions contemplated hereby or thereby (including,
without limitation, the issuance of the Securities) do not and will not
(i) conflict with or violate any provisions of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or otherwise result in a
violation of the organizational documents of the Company or any Subsidiary, (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would result in a default) under, result in the creation of any
Lien upon any of the properties or assets of the Company or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any material contract, or (iii) subject to
the Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations and the rules and regulations,
assuming the correctness of the representations and warranties made by each
Purchaser herein, of any self-regulatory organization to which the Company or
its securities are subject, including all applicable Trading Markets), or by
which any property or asset of the Company is bound or affected, except in the
case of clauses

 
 

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(ii) and (iii) such as would not have or reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
 
(d)           Filings, Consents and Approvals. Neither the Company nor any of
its Subsidiaries is required to obtain any consent, waiver, authorization or
order of, give any notice to, or make any filing or registration with, any court
or other federal, state, local or other governmental authority or other Person
in connection with the execution, delivery and performance by the Company of the
Transaction Documents (including, without limitation, the issuance of the
Securities), other than (i) filings required by applicable state securities
laws, (ii) the filing of a Notice of Sale of Securities on Form D with the
Commission under Regulation D of the Securities Act, (iii) the filing of any
requisite notices and/or application(s) to the Principal Trading Market for the
issuance and sale of the Common Stock and the listing of the Common Stock for
trading or quotation, as the case may be, thereon in the time and manner
required thereby, (iv) the filings required in accordance with Section 4.6 of
this Agreement and (v) those that have been made or obtained prior to the date
of this Agreement (collectively, the “Required Approvals”).
 
(e)           Issuance of the Securities. The issuance of the Shares and the
Warrants have been duly authorized and the Shares and Warrant Shares, when
issued and paid for in accordance with the terms of the Transaction Documents,
will be duly and validly issued, fully paid and non-assessable and free and
clear of all Liens, other than restrictions on transfer provided for in the
Transaction Documents or imposed by applicable securities laws, and shall not be
subject to preemptive or similar rights.   Assuming the accuracy of the
representations and warranties of each Purchaser in this Agreement, the
Securities will be issued in compliance with all applicable federal and state
securities laws.
 
(f)           SEC Reports. The Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it under the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months
preceding the date hereof (the foregoing materials, including the exhibits
thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”), on a timely basis or has received a
valid extension of such time of filing and has filed any such SEC Reports prior
to the expiration of any such extension.
 
(g)           No Integrated Offering. Assuming the accuracy of each Purchaser’s
representations and warranties set forth in Section 3.2, none of the Company,
its Subsidiaries nor, to the Company’s Knowledge, any of its Affiliates or any
Person acting on its behalf has, directly or indirectly, at any time within the
past six months, made any offers or sales of any Company security or solicited
any offers to buy any security under circumstances that would (i) eliminate the
availability of the exemption from registration under Regulation D under the
Securities Act in connection with the offer and sale by the Company of the
Securities as contemplated hereby or (ii) cause the offering of the Securities
pursuant to the Transaction Documents to be integrated with prior offerings by
the Company for purposes of any applicable law, regulation or stockholder
approval provisions, including, without limitation, under the rules and
regulations of any Trading Market on which any of the securities of the Company
are listed or designated.

(h)           No General Solicitation or General Advertising.  Neither the
Company nor any person acting on its behalf has engaged or will engage in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with any offer or sale of
the Securities.

 
 

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(i)           Capitalization.  As of February 27, 2015, the authorized capital
stock of the Company consists of 125,000,000 shares of Common Stock, par value
$0.001 per share, of which 68,169,425 shares of Common Stock have been issued
and are outstanding and 10,000,000 shares of Preferred Stock, including
4,485,000 shares of preferred stock, par value $0.001 per share, 1,000,000
shares of Class A convertible preferred stock, par value $0.001, 2,000,000
shares of Class B convertible preferred stock, par value $0.001 per share,
2,500,000 shares of Class C convertible preferred stock, par value $0.001 per
share, and 15,000 shares of Class D convertible preferred stock par value
$1000.00 per share, of which the following have been issued and are outstanding
as of the date of this Agreement: no shares of preferred stock, 0 shares of
Class A convertible preferred stock, 220,000 shares of Class B convertible
preferred stock, 2,380,952 shares of Class C convertible preferred stock, and 0
shares of Class D convertible preferred stock (together, the “Preferred
Shares”).  All of the Shares and Preferred Shares (i) have been duly authorized
and validly issued, (ii) are fully paid and non-assessable, and (iii) have been
issued in material compliance with all applicable securities laws and other
applicable legal requirements.
 
3.2           Representations and Warranties of each Purchaser. Each Purchaser
hereby represents and warrants as of the date hereof and as of the Closing Date
to the Company as follows:
 
(a)           Legal Power; Due Execution. Each Purchaser has the requisite
individual, corporate, partnership, limited liability company, trust, or
fiduciary power, as appropriate, and is authorized, if such Purchaser is a
corporation, partnership, limited liability company, or trust, to enter into
this Agreement, to purchase the Securities hereunder, and to carry out and
perform its obligations under the terms of this Agreement or any other
Transaction Documents to which it is a party. Each of the Transaction Documents
have been duly executed by each Purchaser, and when delivered by each Purchaser
in accordance with the terms hereof, will constitute the valid and legally
binding obligation of each Purchaser, enforceable against it in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by other equitable principles of general application.
 
(b)           No Conflicts. The execution, delivery and performance by each
Purchaser of this Agreement and the Warrant Agreement and the consummation by
each Purchaser of the transactions contemplated hereby and thereby will not
(i) result in a violation of the organizational documents of each Purchaser,
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which each Purchaser is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws) applicable to each
Purchaser, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of each Purchaser to perform its obligations hereunder.
 
(c)           Investment Intent. Each Purchaser understands that the Securities
are “restricted securities” and have not been registered under the Securities
Act or any applicable state securities law and is acquiring the Securities as
principal for its own account and not with a view to, or for distributing or
reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities laws, provided, however, that by making the
representations herein, each Purchaser does not agree to hold any of the
Securities for any minimum period of time and reserves the right, subject to the
provisions of this Agreement and the Warrant Agreement, at all

 
 

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times to sell or otherwise dispose of all or any part of such Securities
pursuant to an effective registration statement under the Securities Act or
under an exemption from such registration and in compliance with applicable
federal and state securities laws. Each Purchaser is acquiring the Securities
hereunder in the ordinary course of its business. Each Purchaser does not
presently have any agreement, plan or understanding, directly or indirectly,
with any Person to distribute or effect any distribution of any of the
Securities (or any securities which are derivatives thereof) to or through any
person or entity.
 
(d)           Reliance. The Company will be entitled to rely upon this Agreement
and are irrevocably authorized to produce this Agreement or a copy hereof to
(A) any regulatory authority having jurisdiction over the Company and its
affiliates and (B) any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby, in
each case, to the extent required by any court or governmental authority to
which the Company is subject, provided that the Company provides each Purchaser
with prior written notice of such disclosure to the extent practicable and
allowed by applicable law.
 
(e)           Purchaser Status. At the time each Purchaser was offered the
Securities, it was, and at the date hereof it is, an “accredited investor” as
defined in Rule 501(a) under the Securities Act.
 
(f)           General Solicitation. Each Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general advertisement.
 
(g)           Experience of each Purchaser. Each Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Each Purchaser is able to
bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment. Further, Purchaser
understands that no representation is being made as to the future trading value
or trading volume of the Common Stock.
 
(h)           Access to Information. Each Purchaser acknowledges that it has had
the opportunity to review the Disclosure Materials and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of each Purchaser or its representatives or counsel shall modify,
amend or affect each Purchaser’s right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company’s representations and
warranties contained in the Transaction Documents.
 
(i)           Brokers and Finders. No Person will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company or each Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of t each Purchaser.

 
 

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(j)           Independent Investment Decision. Each Purchaser has independently
evaluated the merits of its decision to purchase Securities pursuant to the
Transaction Documents. Each Purchaser understands that nothing in this Agreement
or any other materials presented by or on behalf of the Company to each
Purchaser in connection with the purchase of the Securities constitutes legal,
tax or investment advice. Each Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Securities.
 
(k)           Reliance on Exemptions. Each Purchaser understands that the
Securities being offered and sold to it in reliance on specific exemptions from
the registration requirements of U.S. federal and state securities laws and that
the Company is relying in part upon the truth and accuracy of, and each
Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgements and understandings of each Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of each
Purchaser to acquire the Securities.
 
(l)           No Governmental Review. Each Purchaser understands that no U.S.
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
 
(l)           Residency. Each Purchaser’s office in which its investment
decision with respect to the Securities was made are located at the address
immediately below each Purchaser’s name on its signature page hereto.
 
The Company and each Purchaser acknowledge and agree that no party to this
Agreement has made or makes any representations or warranties with respect to
the transactions contemplated hereby other than those specifically set forth in
this Article III and the Transaction Documents.
 
ARTICLE IV.
 
OTHER AGREEMENTS OF THE PARTIES
 
4.1           Transfer Restrictions.
 
(a)           Compliance with Laws. Notwithstanding any other provision of this
Article IV, each Purchaser covenants that the Securities may be disposed of only
pursuant to an effective registration statement under, and in compliance with
the requirements of, 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 compliance with any applicable state, federal or foreign
securities laws.  In connection with any transfer of the Securities other than
(i) pursuant to an effective registration statement, (ii) to the Company or
(iii) pursuant to Rule 144 (provided that the transferor provides the Company
with reasonable assurances (in the form of seller and broker representation
letters) that such securities may be sold pursuant to such rule), the Company
may require the transferor thereof to provide to the Company and the Transfer
Agent, at the transferor’s expense, an opinion of counsel selected by the
transferor and reasonably acceptable to the Company and the Transfer Agent, the
form and substance of which opinion shall be reasonably satisfactory to the
Company and the Transfer Agent, to the effect that such transfer does not
require registration of such transferred Securities under the Securities
Act.  As a condition of transfer (other than pursuant to clauses (i), (ii) or
(iii) of the preceding sentence), any such transferee shall agree in writing to
be

 
 

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bound by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement with respect to such transferred Securities.
 
(b)           Legends. Certificates evidencing the Shares shall bear any legend
as required by the “blue sky” laws of any state and a restrictive legend in
substantially the following form, until such time as they are not required under
Section 4.1(c) or applicable law:
 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT (1)
PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS
EFFECTIVE UNDER THE SECURITIES ACT OR TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES AND (2) IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
 
 
(c)           Removal of Legends. The restrictive legend set forth in Section
4.1(b) above shall be removed and the Company shall issue a certificate without
such restrictive legend or any other restrictive legend to the holder of the
applicable Shares upon which it is stamped or issue to such holder by electronic
delivery at the applicable balance account at the Depository Trust Company
(“DTC”), if (i) such Shares are registered for resale under the Securities Act,
(ii) such Shares are sold or transferred pursuant to Rule 144 (if the transferor
is not an Affiliate of the Company), or (iii) such Shares are eligible for sale
under Rule 144, without the requirement for the Company to be in compliance with
the current public information required under Rule 144 as to such securities and
without volume or manner-of-sale restrictions.  Following the date upon which
Rule 144 becomes available for the resale of Shares, without the requirement for
the Company to be in compliance with the current public information required
under Rule 144 as to the Shares and without volume or manner-of-sale
restrictions, upon written request by each Purchaser, the Company shall instruct
the Transfer Agent to remove the legend from the Shares and shall cause its
counsel to issue any legend removal opinion required by the Transfer Agent.  Any
fees (with respect to the Transfer Agent, Company counsel or otherwise)
associated with the issuance of such opinion or the removal of such legend shall
be borne by the Company.  If a legend is no longer required pursuant to the
foregoing, the Company will no later than three (3) Trading Days following the
delivery by each Purchaser to the Company or the Transfer Agent (with notice to
the Company) of a legended certificate or instrument representing such Shares
(endorsed or with stock powers attached, signatures guaranteed, and otherwise in
form necessary to affect the reissuance and/or transfer) and a representation
letter to the extent required by Section 4.1(a), (such third Trading Day, the
“Legend Removal Date”) deliver or cause to be delivered to each Purchaser a
certificate or instrument (as the case may be) representing such Shares that is
free from all restrictive legends.  The Company may not make any notation on its
records or give instructions to the Transfer Agent that enlarge the restrictions
on transfer set forth in this Section 4.1(c).  Certificates for Shares free from
all restrictive legends may be transmitted by the Transfer Agent to each
Purchaser by crediting the account of each Purchaser’s prime broker with DTC as
directed by each Purchaser.

 
 

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(d)           Buy-In. If the Company shall fail for any reason or for no reason
to issue to each Purchaser unlegended certificates within three (3) Trading Days
of receipt of all documents necessary for the removal of the legend set forth
above (the “Deadline Date”), then, in addition to all other remedies available
to each Purchaser, if on or after the Trading Day immediately following such
three (3) Trading Day period, each Purchaser purchases (in an open market
transaction or otherwise) shares of Common Stock (or a broker or trading
counterparty through which each Purchaser has agreed to sell shares makes such
purchase) to deliver in satisfaction of a sale by the holder of shares of Common
Stock that each Purchaser anticipated receiving from the Company without any
restrictive legend (a “Buy-In”), then the Company shall, within three
(3) Trading Days after each Purchaser’s request and in each Purchaser’s sole
discretion, either (i) pay cash to each Purchaser in an amount equal to each
Purchaser’s total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased (the “Buy-In Price”), at which point the
Company’s obligation to deliver such certificate (and to issue such shares of
Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver
to each Purchaser a certificate or certificates representing such shares of
Common Stock and pay cash to each Purchaser in an amount equal to the excess (if
any) of the Buy-In Price over the product of (a) such number of shares of Common
Stock, times (b) the Closing Bid Price on the Deadline Date.
 
4.2           Acknowledgment of Dilution.  The Company acknowledges that the
issuance of the Securities may result in dilution of the outstanding shares of
Common Stock.  The Company further acknowledges that its obligations under the
Transaction Documents, including without limitation its obligation to issue the
Securities pursuant to the Transaction Documents, are unconditional and absolute
and not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have
against each Purchaser and regardless of the dilutive effect that such issuance
may have on the ownership of the other stockholders of the Company.
 
4.3           Furnishing of Information. In order to enable each Purchaser to
sell the Securities under Rule 144 of the Securities Act, for a period of one
year from the Closing Date, the Company shall maintain the registration of the
Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act.  During such one year period, if the Company is
not required to file reports pursuant to such laws, it will prepare and furnish
to each Purchaser and make publicly available the information described in Rule
144(c)(2), if the provision of such information will allow resales of the
Securities pursuant to Rule 144.
 
4.4           Form D and Blue Sky. The Company agrees to timely file a Form D
with respect to the Securities as required under Regulation D.  The Company, on
or before the Closing Date, shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for or to
qualify the Securities for sale to each Purchaser at the Closing Date pursuant
to this Agreement under applicable securities or “Blue Sky” laws of the states
of the United States (or to obtain an exemption from such qualification). The
Company shall make all filings and reports relating to the offer and sale of the
Securities required under applicable securities or “Blue Sky” laws of the states
of the United States following the Closing Date.
 
4.5           No Integration. The Company shall not, and shall use its
commercially reasonable efforts to ensure that no Affiliate of the Company
shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in Section 2 of the Securities Act) that
will be integrated with the offer or sale of the Securities in a manner that
would require the registration

 
 

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under the Securities Act of the sale of the Securities to each Purchaser, or
that will be integrated with the offer or sale of the Securities for purposes of
the rules and regulations of any Trading Market such that it would require
stockholder approval prior to the closing of such other transaction unless
stockholder approval is obtained before the closing of such subsequent
transaction.
 
4.6           Non-Public Information. Except with respect to the material terms
and conditions of the transactions contemplated by the Transaction Documents,
and except with the express written consent of each Purchaser and unless prior
thereto each Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information, the Company shall not, and shall
cause each Subsidiary and each of their respective officers, directors,
employees and agents, not to, and each Purchaser shall not directly solicit the
Company, any of its Subsidiaries or any of their respective officers, directors,
employees or agents to provide each Purchaser with any material, non-public
information regarding the Company or any of its Subsidiaries from and after the
filing of the press release(s) announcing the transaction.
 
4.7           Indemnification.
 
(a)           Indemnification of Purchaser. The Company will indemnify and hold
each Purchaser and its directors, officers, stockholders, members, partners,
employees and agents (and any other Persons with a functionally equivalent role
of a Person holding such titles notwithstanding a lack of such title or any
other title), each Person who controls each Purchaser (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, stockholders, agents, members, partners or employees (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title) of such
controlling person (each, a “Purchaser Party”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys’ fees and costs of investigation that any such Purchaser Party may
suffer or incur as a result of (i) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (ii) any action instituted against a
Purchaser Party in any capacity, or any of them or their respective affiliates,
by any stockholder of the Company who is not an affiliate of such Purchaser
Party, with respect to any of the transactions contemplated by this Agreement. 
The Company will not be liable to any Purchaser Party under this Agreement to
the extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of any of the representations,
warranties, covenants or agreements made by such Purchaser Party in this
Agreement or in the other Transaction Documents.
 
(b)           Conduct of Indemnification Proceedings. Promptly after receipt by
any Person (the “Indemnified Person”) of notice of any demand, claim or
circumstances which would or might give rise to a claim or the commencement of
any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 4.8(a), such Indemnified Person shall promptly notify
the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided,
however, that the failure of any Indemnified Person so to notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
that the Company is actually and materially and adversely prejudiced by such
failure to notify. In any such proceeding, any Indemnified Person shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Person unless: (i) the Company and the
Indemnified Person shall have mutually agreed to the retention of such counsel;
(ii) the Company shall have failed promptly to assume the defense of

 
 

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such proceeding and to employ counsel reasonably satisfactory to such
Indemnified Person in such proceeding; or (iii) in the reasonable judgment of
counsel to such Indemnified Person, representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. The Company shall not be liable for any settlement of any
proceeding effected without its written consent, which consent shall not be
unreasonably withheld, delayed or conditioned. Without the prior written consent
of the Indemnified Person, which consent shall not be unreasonably withheld,
delayed or conditioned, the Company shall not affect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional release
of such Indemnified Person from all liability arising out of such proceeding.
 
4.8           Use of Proceeds. The Company intends to use the net proceeds from
the sale of the Securities hereunder for general corporate purposes and shall
not use such proceeds for the redemption of any shares of Common Stock (or
Common Stock Equivalents) or for the payment of any dividends on shares of
Common Stock (or Common Stock Equivalents).
 

4.9           Securities Laws Disclosure; Publicity. By 9:00 a.m., New York City
time, on the Trading Day immediately following the execution of this Agreement,
the Company may issue one or more press releases (each, a “Press Release”)
disclosing all material terms of the transactions contemplated hereby and any
other material, nonpublic information that the Company may have provided the
Purchaser at any time prior to the filing of the Press Release.  On or before
9:00 a.m., New York City time, on the fourth Business Day immediately following
the execution of this Agreement, the Company will file a Current Report on Form
8-K with the Commission describing the terms of the Transaction Documents (and
including as exhibits to such Current Report on Form 8-K the material
Transaction Documents (including, without limitation, this Agreement and the
Warrant)). Notwithstanding the foregoing, the Company shall not publicly
disclose the name of the Purchaser or any Affiliate or investment adviser of the
Purchaser, or include the name of the Purchaser or any Affiliate or investment
adviser of the Purchaser in any press release or filing with the Commission or
any regulatory agency or Trading Market, without the prior written consent of
the Purchaser, except (i) as required by federal securities law in connection
with the filing of final Transaction Documents with the Commission and (ii) to
the extent such disclosure is required by law, at the request of the Staff of
the Commission or Trading Market regulations, in which case the Company shall
provide the Purchaser with prior written notice of such disclosure permitted
under this subclause (ii).  From and after the issuance of the Press Release(s),
the Purchaser shall not be in possession of any material, non-public information
received from the Company, any Subsidiary or any of their respective officers,
directors or employees, that is not disclosed in the Press Release(s). The
Purchaser covenants that until such time as the transactions contemplated by
this Agreement are publicly disclosed by the Company as described in this
Section 4.9, the Purchaser will maintain the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and
terms of this transaction).

4.10           Registration Rights.

(a)           Whenever the Company proposes to register any of its shares of
Common Stock under the Securities Act for its own account or for the account of
any holder of Common Stock on a registration statement (except for the
registration of securities to be offered pursuant to an employee

 
 

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benefit plan on Form S-8 or pursuant to a registration made on Form S-4, or any
successor forms then in effect), pursuant to the Securities Act, in each case,
in a Public Offering (a “Registration Statement”), the Company will give prompt
written notice to all holders of Registrable Securities (in any event no later
than 30 days prior to the filing of the applicable registration statement) of
its intention to effect such a registration and of such holders’ rights under
this Section 4.10, which notice will be sent to the addresses set forth in the
Company’s records.  Upon the written request of any holder of Registrable
Securities (which request shall specify the Registrable Securities intended to
be disposed of by such holder and the intended method of disposition thereof),
the Company shall include in such Registration Statement (subject to the
provisions of this Agreement) all Registrable Securities requested to be
registered pursuant to this Section 4.10, subject to Section 4.10(b) and (c)
below, with respect to which the Company has received written requests for
inclusion therein within 20 days after the receipt of the Company’s notice;
provided that any such holder may withdraw its request for inclusion at any time
prior to executing the underwriting agreement or, if none, prior to the
applicable registration statement becoming effective.Notwithstanding any other
provision of this Agreement, if any SEC Guidance (as defined below) sets forth a
limitation on the number of Registrable Securities to be registered in a
Registration Statement (and the Company has used its reasonable best efforts to
advocate with the SEC for the registration of all or the maximum number of
Registrable Securities), the number of Registrable Securities to be registered
on such Registration Statement will be reduced on a pro rata basis with such
other securities being registered on the applicable registration after as full
an allocation as possible has been afforded for the securities for which the
registration statement has been filed. The Company shall file a new registration
statement as soon as reasonably practicable covering the resale by the Purchaser
of not less than the number of such Registrable Securities that are not
registered in the Registration Statement. For purposes of this Agreement, SEC
Guidance means (i) any publicly-available written guidance, or rule of general
applicability of the SEC staff, or (ii) oral or written comments, requirements
or requests of the SEC staff to the Company in connection with the review of a
Registration Statement.

(b)           Priority on Primary Registrations.  If a Registration Statement is
initiated as a primary underwritten or directed (placement agency) Public
Offering of securities by the Company and the managing underwriters or lead
placement agent advise the Company and the holders of Registrable Securities (if
any holders of Registrable Securities have elected to include Registrable
Securities in such Registration Statement) in writing that in their opinion the
number of Common Shares requested to be included in such Registration Statement
exceeds the number which can be sold in such offering without adversely
affecting the marketability of the offering (including an adverse effect on the
per share offering price), then the Company will include in such Registration
Statement (i) first, the number of Common Stock the Company proposes to sell,
(ii) second, the Registrable Securities permitted to be included in such
registration, pro rata from among the holders of such Registrable Securities
according to the number of Registrable Securities requested by them to be so
included, and (iii) third, the number of Common Stock requested to be included
in such Registration Statement, in such manner as the Company may determine.

(c)           Priority on Secondary Registrations.  If a Registration Statement
is an underwritten or directed (placement agency) Public Offering by holders of
Common Stock other than Registrable Securities, and the managing underwriters or
lead placement agent advise the Company and the holders of Registrable
Securities (if any holders of Registrable Securities have elected to include
Registrable Securities in such Registration Statement) in writing that in their
opinion the number of Common Stock to be included in such Registration Statement
exceeds the number which can be sold in such offering without adversely
affecting the marketability of the offering (including an

 
 

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adverse effect on the per share offering price), then the Company will include
in such Registration Statement (i) first, the number of Common Stock requested
to be included therein by the holders requesting such registration and by the
holders of Registrable Securities as to permitted amounts of Common Stock, pro
rata from among such holders according to the number of Common Stock (on a fully
diluted, as converted basis) and the number of Registrable Securities, as
applicable, requested by such holders to be so included, and (ii) second, other
Common Stock requested to be included in such Registration Statement, in such
manner as the Company may determine.
 
(d)           Expenses.  All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company,
whether or not any Registrable Securities are sold pursuant to the Registration
Statement.  The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with the trading market on which the Common Stock is then listed for
trading, and (B) in compliance with applicable state securities or Blue Sky laws
and (ii) fees and disbursements of counsel and independent public accountants
for the Company.

(e)           Indemnification.

(i)  By the Company.  The Company agrees to indemnify, to the fullest extent
permitted by law, each seller of Registrable Securities in a registration
statement of the Company, its officers, directors, members, managers, employees,
agents, stockholders, general and limited partners and Affiliates, each
underwriter, broker or other Person acting on behalf of such holder of
Registrable Securities, and each other Person, if any, who controls any of the
foregoing Persons within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any and all losses, claims, damages,
liabilities and expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof), joint or several, arising out of or based upon
any untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or any amendment thereof or supplement
thereto, together with any documents incorporated therein by reference, or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation or
alleged violation by the Company or any of its subsidiaries of any federal,
state, foreign or common law rule or regulation and relating to action or
inaction in connection with any such registration, disclosure document or other
document and shall reimburse such seller, its officer, director, member,
employee, agent, stockholder, partner, Affiliate or controlling Person for any
reasonable legal or other expenses, including any amounts paid in any settlement
effected with the consent of the Company, which consent will not be unreasonably
withheld or delayed, incurred by such seller, its officer, director, member,
employee, agent, stockholder, partner, Affiliate or controlling Person in
connection with the investigation or defense of such loss, claim, damage,
liability or expense, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by such holder expressly for
use therein.  In connection with an underwritten or directed Public Offering,
the Company will indemnify the underwriters, placement agents, their officers,
directors, agents and employees and each Person who controls such underwriters
(within the meaning of the Securities Act) to the same extent as provided above
with respect to the indemnification of the sellers of Registrable Securities.

(ii)           By the Purchasers.  In connection with any registration statement
in which a holder of Registrable Securities is participating, each such
Purchaser will furnish to the Company in

 
 

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writing such information and affidavits about such seller as the Company
reasonably requests for use in connection with any such registration statement
or prospectus and, to the extent permitted by law, will indemnify the Company,
its directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) and the other sellers of Registrable Securities
against any losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such seller
which authorizes its use in the applicable document; provided, that the
obligation to indemnify will be individual, not joint and several, for each
seller and will be limited to the gross amount of proceeds received by such
holder from the sale of Registrable Securities pursuant to such registration
statement.

 (iii) Conduct of Indemnification Proceedings.  Any person entitled to
indemnification hereunder shall (a) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (b) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (I) the indemnifying party
has agreed to pay such fees or expenses, or (II) the indemnifying party shall
have failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (III) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such claims (in
which case, if the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such person); and provided, further, that the failure of
any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation.  It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of
attorneys at any time for all such indemnified parties.  No indemnifying party
will, except with the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation.
 
(iv)  Contribution.  If for any reason the indemnification provided for in the
preceding paragraphs (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless, other than as expressly specified therein,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations.  No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the Securities Act shall be entitled to
contribution from any person not guilty of such fraudulent
misrepresentation.  In no event shall the contribution obligation of a holder of
Registrable Securities be greater in amount than the dollar amount of the
proceeds (net of all expenses paid by such holder in connection with

 
 

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any claim relating to this Section 4.10(e) and the amount of any damages such
holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission) received by it upon the sale
of the Registrable Securities giving rise to such contribution obligation.
 
(f)           Cooperation by Purchaser.  Each Purchaser shall furnish to the
Company such information regarding the Purchaser and the distribution proposed
by it as the Company may reasonably request in connection with any registration
or offering referred to in this Section 4.10.  Each Purchaser shall cooperate as
reasonably requested by the Company in connection with the preparation of the
registration statement with respect to such registration, and for so long as the
Company is obligated to file and keep effective such registration statement,
shall provide to the Company, in writing, for use in the registration statement,
all such information regarding the Purchaser and its plan of distribution of the
Registrable Securities included in such registration as may be reasonably
necessary to enable the Company to prepare such registration statement, to
maintain the currency and effectiveness thereof and otherwise to comply with all
applicable requirements of law in connection therewith.
 
ARTICLE V.
 
CONDITIONS PRECEDENT TO CLOSING
 
5.1           Conditions Precedent to the Obligations of each Purchaser to
Purchase the Shares and the Warrants. The obligation of each Purchaser to
purchase the Shares and the Warrants on the Closing Date is subject to the
fulfillment to each Purchaser’s satisfaction, of each of the following
conditions, any of which may be waived by each Purchaser:
 
(a)           Representations and Warranties. The representations and warranties
of the Company contained herein shall be true and correct as of the date when
made and as of the Closing Date, as though made on and as of such date, except
for such representations and warranties that speak as of a specific date.
 
(b)           Performance. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by it at or prior to the Closing Date.
 
(c)           No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents.
 
(d)           Consents. On or prior to the Closing Date, the Company shall have
obtained in a timely fashion any and all consents, permits, approvals,
registrations and waivers necessary for consummation of the purchase and sale of
the Shares and the Warrants (including all Required Approvals), all of which
shall be and remain so long as necessary in full force and effect.
 
(e)           No Suspensions of Trading in Common Stock; Listing. The Common
Stock (i) shall be designated for quotation or listed on the Principal Trading
Market and (ii) shall not have been suspended, as of the Closing Date, by the
Commission or the Principal Trading Market from trading on the Principal Trading
Market nor shall suspension by the Commission or the Principal Trading Market
have been threatened, as of the Closing Date, either (A) in writing by the
Commission or the Principal Trading Market or (B) by falling below the minimum
listing maintenance requirements of the Principal Trading Market.

 
 

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(f)           Company Deliverables. The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a) prior to the Closing Date.
 
(g)           Compliance Certificate. The Company shall have delivered to each
Purchaser a certificate, dated as of the Closing Date with respect to the
Closing signed by its Chief Executive Officer or its Chief Financial Officer,
dated as of the applicable closing date, certifying to the fulfillment of the
conditions specified in Sections 5.1(a) and (b) in the form attached hereto as
Exhibit D.
 
5.2           Conditions Precedent to the Obligations of the Company to sell the
Shares and the Warrants. The Company’s obligation to sell and issue the Shares
and the Warrants on the Closing Date is subject to the fulfillment to the
satisfaction of the Company of each of the following conditions, any of which
may be waived by the Company:
 
(a)           Representations and Warranties. The representations and warranties
made by each Purchaser in Section 3.2 hereof shall be true and correct as of the
date when made, and as of the Closing Date, as though made on and as of such
date, except for representations and warranties that speak as of a specific
date.
 
(b)           Performance. Each Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by each Purchaser at or prior to the Closing Date.
 
(c)           No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents.
 
(d)           Consents. On or prior to the Closing Date, the Company shall have
obtained in a timely fashion any and all consents, permits, approvals,
registrations and waivers necessary for consummation of the purchase and sale of
the Shares and the Warrants, all of which shall be and remain so long as
necessary in full force and effect.
 
(e)           Purchaser Deliverables. Each Purchaser shall have delivered each
Purchaser Deliverables in accordance with Section 2.2(b) prior to the Closing
Date.
 

 

 

 
ARTICLE VI.
 
 
MISCELLANEOUS
 
6.1           Fees and Expenses.  The Company and each Purchaser shall each pay
the fees and expenses of their respective advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement.  The Company shall pay all Transfer Agent fees,
stamp taxes and other taxes and duties levied in connection with the sale and
issuance of the Securities to each Purchaser.
 

 
 

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6.2           Entire Agreement. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements,
understandings, discussions and representations, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules. At or after the Closing, and without further
consideration, the Company and each Purchaser will execute and deliver to the
other such further documents as may be reasonably requested in order to give
practical effect to the intention of the parties under the Transaction
Documents.
 
 

6.3           Notices.  All notices and other communications provided for
hereunder shall be in writing and personally delivered, delivered by
nationally-recognized overnight courier, mailed, or sent by facsimile, with
confirmation, if to the Company or to each Purchaser, to:

(i) if to the Company,

root9B Technologies, Inc.
4521 Sharon Road #300
Charlotte, NC  28211-3627
Attention:  Chief Financial Officer

 
With a copy to:

Ruskin Moscou Faltischek, P.C.
East Tower, 15th Floor
1425 RXR Plaza
Uniondale, NY 11556-1425
 
Telephone No.: (516) 663-6600

 
Facsimile No.:  (516) 663-6891

 
Attention:  Seth I. Rubin

(ii) if to each Purchaser, at the address shown on the signature page hereto,

 
or to such other address as the party to whom notice is to be given may have
furnished to the other in writing in accordance with the provisions of this
Section 6.3. Any such notice or communication will be deemed to have been
received: (A) in the case of telecopy or personal delivery, on the date of such
delivery; (B) in the case of nationally-recognized overnight courier, on the
next business day after the date sent; and (C) if by registered or certified
mail, on the third business day following the date postmarked.
 
6.4           Amendments; Waivers; No Additional Consideration. No provision of
this Agreement may be waived or amended except in a written instrument signed,
in the case of an amendment, by the Company and each Purchaser, or, in the case
of a waiver, by the party against whom enforcement of any such waiver is sought.
No waiver of any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such
right.

 
 

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6.5           Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.
 
6.6           Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of and be binding upon the parties and their successors and
permitted assigns. This Agreement, or any rights or obligations hereunder, may
not be assigned by the Company without the prior written consent of each
Purchaser.  Each Purchaser may assign its rights hereunder in whole or in part
to any Person to whom such Purchaser assigns or transfers any Securities in
compliance with the Transaction Documents and applicable law, provided such
transferee shall agree in writing to be bound, with respect to the transferred
Securities, by the terms and conditions of this Agreement that apply to such
“Purchaser”.
 
6.7           No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
 
6.8           Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law thereof. Each
party agrees that all Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the Delaware
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the Delaware Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such Delaware Court, or that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
6.9           Survival. Subject to applicable statute of limitations, the
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Shares and the Warrants.
 
6.10           Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become

 
 

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effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile signature page were an original thereof.
 
6.11           Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
 
           6.12           Replacement of Securities.  If any certificate or
instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for
and upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company and the Transfer Agent of such loss, theft or
destruction and the execution by the holder thereof of a customary lost
certificate affidavit of that fact and an agreement to indemnify and hold
harmless the Company and the Transfer Agent for any losses in connection
therewith or, if required by the Transfer Agent, a bond in such form and amount
as is required by the Transfer Agent. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Securities. If a
replacement certificate or instrument evidencing any Securities is requested due
to a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
 
6.13           Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each Purchaser
and the Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation (other than in connection with any
action for a temporary restraining order) the defense that a remedy at law would
be adequate.
 

 

 
[signature page follows]

 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
 
ROOT9B TECHNOLOGIES, INC.
 
By:_______________________________________
 
Name:
 
Title:
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
[SIGNATURE PAGES FOR PURCHASER FOLLOWS]
 

 
 

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[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

PURCHASE AMOUNT:  $__________
Number of Common Stock
_________                                                                           Number
of Warrants (50% coverage) ___________

Signature                                                                Signature
(if purchasing jointly)

Name Typed or
Printed                                                                           Name
Typed or Printed

Title (if Subscriber is an
Entity)                                                                           Title
(if Subscriber is an Entity)

Entity Name (if
applicable)                                                                           Entity
Name (if applicable

Address                                                                Address

City, State and Zip
Code                                                                City, State
and Zip Code

Telephone-Business                                                                           Telephone-Business

Telephone-Residence                                                                           Telephone-Residence

Facsimile-Business                                                                Facsimile-Business

Facsimile-Residence                                                                           Facsimile-Residence

Tax ID # or Social Security
#                                                                           Tax
ID # or Social Security #

E-Mail
Address                                                                           E-Mail
Address

Name in which securities should be
issued:                                                                           

Dated:               ___, 2015

 
 

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