Exhibit 10.113

 

EXECUTION COPY

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of December 13,
2019, is between IDEANOMICS, INC., a company incorporated under the laws of the
State of Nevada, with headquarters located at 55 Broadway, 19th Floor, New York,
New York 10006 (the “Company”), and each of the investors listed on the Schedule
of Buyers attached hereto (individually, the “Buyer” and collectively the
“Buyers”).

 

WITNESSETH

 

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

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Buyer(s), as provided
herein, and the Buyer(s) shall purchase from the Company, units consisting of
secured convertible debentures in the form attached hereto as “Exhibit A” (the
“Convertible Debentures”), which shall be convertible into shares of the
Company’s Common Stock (as defined herein) (as converted, the “Conversion
Shares”), and shares of the Company’s Common Stock, up to an aggregate of
$5,000,000. The purchase and sale of the units shall take place in three
closings, of which $2,000,000 of Convertible Debentures and 1,424,658 shares of
Common Stock shall be purchased upon the signing this Agreement (the “First
Closing”), $1,000,000 of Convertible Debentures and 712,329 shares of Common
Stock shall be purchased upon the filing with the U.S. Securities and Exchange
Commission (the “SEC”) of a Registration Statement in accordance with that
certain Registration Rights Agreement (the “RRA”) of even date herewith (the
“Second Closing”), and $2,000,000 of Convertible Debentures and 1,424,658 shares
of Common Stock shall be purchased on or about the date the Registration
Statement has first been declared effective by the SEC (the “Third Closing”)
(each of the First Closing, Second Closing and Third Closing individually
referred to as a “Closing” and collectively referred to as the “Closings”), for
a total purchase price equal to 96% of the face amount of each Convertible
Debenture (up to an aggregate of $4,800,000 (the “Purchase Price”) in the
respective amounts set forth opposite each Buyer(s) name on Schedule I (the
“Subscription Amount”);

 

WHEREAS, contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering the RRA pursuant to which the
Company has agreed to provide certain registration rights under the Securities
Act and the rules and regulations promulgated there under, and applicable state
securities laws;

 

WHEREAS, contemporaneously with the execution and delivery of this Agreement,
the Buyer, the Company, and each subsidiary of the Company are executing and
delivering a Guaranty (the “Guaranty”) and a Security Agreement (the “Security
Agreement”) pursuant to which the Company and its wholly owned subsidiaries
agree to secure the payment and performance of all obligations of the Company to
the Buyer and to secure such obligations by granting to the Buyer a security
interest in Pledged Property (as this term is defined in the Security
Agreement); and

 

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WHEREAS, contemporaneously with the execution and delivery of this Agreement,
the Company is delivering to the Buyer Irrevocable Transfer Agent Instructions
(the ‘‘Irrevocable Transfer Agent Instructions”);

 

WHEREAS, contemporaneously with the execution and delivery of this Agreement,
the Company is delivering to the Buyer Warrants (the “Warrants”) to purchase up
to 1,666,667 and 1,000,000 shares (the “Warrant Shares”) of the Company’s Common
Stock at exercise prices of $1.50 and $1.00 per share, respectively; and

 

WHEREAS, the Convertible Debentures and the Conversion Shares, the Warrants and
the Warrant Shares, and the shares of Common Stock to be issued at each Closing
are collectively referred to herein as the “Securities.”

 

AGREEMENT

 

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

 

1.            PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.

 

(a)            Purchase of Convertible Debentures. Subject to the satisfaction
(or waiver) of the conditions set forth in Sections 6 and 7 below, the Company
shall issue and sell to each Buyer, and each Buyer severally, but not jointly,
agrees to purchase from the Company at each Closing Convertible Debentures in
amounts corresponding with the Subscription Amount set forth opposite each
Buyer’s name on Schedule of Buyers attached as Schedule I hereto, plus the
number of shares of Common Stock specified in the recitals hereto.

 

(b)            Closing Dates. Each Closing of the purchase of Convertible
Debentures and shares of Common Stock by the Buyers shall occur at the offices
Yorkville Advisors Global, LP, 1012 Springfield Avenue, Mountainside, NJ 07092.
The date and time of each Closing shall be as follows: (i) the First Closing
shall be 10:00 a.m., New York time, by the fifth (5th) Business Day on which the
conditions to the Closing set forth in Sections 6 and 7 below are satisfied or
waived (or such other date as is mutually agreed to by the Company and each
Buyer) (the “First Closing Date”), (ii) the Second Closing shall be 10:00 a.m.,
New York time, by the fifth (5th) Business Day after the date on which the
Company files the Registration Statement with the SEC in accordance with the RRA
(the “Second Closing Date”), and (iii) the Third Closing shall be 10:00 a.m.,
New York time, by the fifth (5th) Business Day after the date on which the
Registration Statement is first declared effective by the SEC, provided the
conditions to the Closing set forth in Sections 6 and 7 below are satisfied or
waived (or such other date as is mutually agreed to by the Company and each
Buyer) (the “Third Closing Date”, and collectively with the First Closing Date
and the Second Closing Date referred to as the “Closing Dates”). As used herein
“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to
remain closed.

 

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(c)            Form of Payment; Deliveries. Subject to the satisfaction of the
terms and conditions of this Agreement, on each Closing Date, (i) the Buyers
shall deliver to the Company such aggregate cash proceeds for the Convertible
Debentures and shares of Common Stock to be issued and sold to such Buyer at
such Closing, minus the fees to be paid directly from the proceeds of such
Closing as set forth herein, and (ii) the Company shall deliver to each Buyer,
Convertible Debentures which such Buyer is purchasing at such Closing in amounts
indicated opposite such Buyer’s name on Schedule I and shares of Common Stock,
duly executed on behalf of the Company.

 

2.            BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer, severally and not jointly, represents and warrants to the Company
with respect to only itself that, as of the date hereof and as of each Closing
Date:

 

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

 

(b)            Accredited Investor Status. The Buyer is an “Accredited Investor”
as that term is defined in Rule 501(a)(3) of Regulation D. The Buyer has such
knowledge, skill and experience in business, financial and investment matters
that the undersigned is capable of evaluating the merits and risks of an
investment in the Securities. The Buyer has considered the suitability of the
Securities as an investment in light of its own circumstances and financial
condition and the Buyer is able to bear the risks associated with an investment
in the Securities and its authority to invest in the Securities.

 

(c)            Reliance on Exemptions. The Buyer understands that the Securities
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and such
Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities. The Buyer acknowledges that neither the Company nor
any other person offered to sell the Securities to it by means of any form of
general solicitation or advertising, including but not limited to: (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio or
(ii) any seminar or meeting whose attendees were invited by any general
solicitation or general advertising.

 

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(d)            Information. The Buyer and its advisors (and his or its counsel),
if any, have been furnished with all materials relating to the business,
finances and operations of the Company and information he deemed material to
making an informed investment decision regarding his purchase of the Securities,
which have been requested by such Buyer. The Buyer and its advisors, if any,
have reviewed the Company’s reports, statements and registration statements on
file in the SEC’s EDGAR system or delivered to it by the Company, and they have
been afforded the opportunity to ask questions of the Company and its
management. Neither such inquiries nor any other due diligence investigations
conducted by such Buyer or its advisors, if any, or its representatives shall
modify, amend or affect such Buyer’s right to rely on the Company’s
representations and warranties contained in Section 3 below. The Buyer
understands that its investment in the Securities involves a high degree of
risk. The Buyer has sought such accounting, legal and tax advice, as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities. The Buyer represents that it is not relying on
(and will not at any time rely on) any communication (written or oral) of the
Company as investment advice or as a recommendation to purchase the Securities,
it being understood that information and explanations related to the terms and
conditions of the Securities shall not be considered investment advice or a
recommendation to purchase the Securities. The Buyer confirms that the Company
has not (i) given any guarantee or representation as to the potential success,
return, effect or benefit (either legal, regulatory, tax, financial, accounting
or otherwise) of an investment in the Securities or (ii) made any representation
to the Buyer regarding the legality of an investment in the Securities under
applicable legal investment or similar laws or regulations. In deciding to
purchase the Securities, the Buyer is not relying on the advice or
recommendations of the Company and the Buyer has made its own independent
decision that the investment in the Securities is suitable and appropriate for
the Buyer.

 

(e)            Transfer or Resale. The Buyer understands that: (i) the
Securities have not been registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, (B) such Buyer shall have
delivered to the Company an opinion of counsel, in a generally acceptable form,
to the effect that such Securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such registration
requirements, or (C) such Buyer provides the Company with reasonable assurances
(in the form of seller and broker representation letters) that such Securities
can be sold, assigned or transferred pursuant to Rule 144 promulgated under the
Securities Act, as amended (or a successor rule thereto) (collectively,
“Rule 144”), in each case following the applicable holding period set forth
therein; and (ii) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and further, if Rule 144 is
not applicable, any resale of the Securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder.

 

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

 

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

 

Certificates evidencing the Conversion Shares shall not contain any legend
(including the legend set forth above), (i) while a registration statement
covering the resale of such security is effective under the Securities Act
(provided that any such Conversion Share certificates issued prior to the
effectiveness of such registration statement are properly presented by the
holder thereof for removal of the legend), (ii) following any sale of such
Conversion Shares pursuant to Rule 144, (iii) if such Conversion Shares are
eligible for sale under Rule 144, or (iv) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the SEC), exclusive of
legends arising under agreements between a Buyer and a third-party other than
the Company or a Subsidiary (as defined herein). The Buyer agrees that the
removal of restrictive legend from certificates representing Securities as set
forth in this Section 2(f) is predicated upon the Company’s reliance that the
Buyer will sell any Securities pursuant to either the registration requirements
of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Securities are sold
pursuant to a registration statement, they will be sold in compliance with the
plan of distribution set forth therein.

 

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

 

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

 

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

 

(j)            Certain Trading Activities. The Buyer has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with the Buyer, engaged in any transactions in the securities of
the Company (including, without limitation, any Short Sales (as defined below)
involving the Company’s securities) during the period commencing as of the time
that the Buyer first contacted the Company or the Company’s agents regarding the
specific investment in the Company contemplated by this Agreement and ending
immediately prior to the execution of this Agreement by such Buyer. The Buyer
hereby agrees that it shall not directly or indirectly, engage in any Short
Sales involving the Company’s securities during the period commencing on the
date hereof and ending when no Convertible Debentures remain outstanding. “Short
Sales” means all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the 1934 Act (as defined below). The Buyer is aware that
Short Sales and other hedging activities may be subject to applicable federal
and state securities laws, rules and regulations and the Buyer acknowledges that
the responsibility of compliance with any such federal or state securities laws,
rules and regulations is solely the responsibility of the Buyer.

 

3.            REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

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

 

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(a)            Organization and Qualification. The Company and each of its
Subsidiaries are entities duly formed, validly existing and in good standing
under the laws of the jurisdiction in which they are formed, and have the
requisite power and authority to own their properties and to carry on their
business as now being conducted and as presently proposed to be conducted. The
Company and each of its Subsidiaries is duly qualified as a foreign entity to do
business and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not reasonably be expected to have a Material Adverse Effect
(as defined below). As used in this Agreement, “Material Adverse Effect” means
any material adverse effect on (i) the business, properties, assets,
liabilities, operations (including results thereof), condition (financial or
otherwise) or prospects of the Company and its Subsidiary, taken as a whole,
(ii) the transactions contemplated hereby or in any of the other Transaction
Documents or any other agreements or instruments to be entered into by the
Company in connection herewith or therewith or (iii) the authority or ability of
the Company to perform any of its obligations under any of the Transaction
Documents (as defined below) provided, however, that “Material Adverse Effect”
shall not include any event, occurrence, fact, condition or change, directly or
indirectly, arising out of or attributable to: (1) general economic or political
conditions; (2) conditions generally affecting the industries in which the
Company operates; (3) any changes in financial, banking or securities markets in
general, including any disruption thereof and any decline in the price of any
security or any market index or any change in prevailing interest rates;
(4) acts of war (whether or not declared), armed hostilities or terrorism, or
the escalation or worsening thereof; (5) any action required or permitted by the
Transaction Documents (as defined herein) or any action taken (or omitted to be
taken) with the written consent of or at the written request of a Buyer; (6) any
changes in applicable laws, rules or regulations, or in accounting
rules (including GAAP), or changes in the enforcement, implementation or
interpretation thereof; (7) the announcement, pendency or completion of the
transactions contemplated by this Agreement, or the identity of the Buyer,
including losses or threatened losses of employees, customers, suppliers,
distributors or others having relationships with the Company; (8) any natural or
man-made disaster or acts of God; (9) any failure by the Company to meet any
internal or published projections, forecasts or revenue or earnings predictions
(provided that the underlying causes of such failures (subject to the other
provisions of this definition) shall not be excluded); (10) any matter which the
Company has identified as non-core or non-strategic assets or business in its
SEC Documents (as defined herein) or on Schedule 3(a). “Subsidiaries” means any
Person in which the Company, directly or indirectly, owns a majority of the
outstanding capital stock having voting power or holds a majority of the equity
or similar interest of such Person, and each of the foregoing, is individually
referred to herein as a “Subsidiary”.

 

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

 

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

 

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

 

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

 

(f)            Acknowledgment Regarding Buyer’s Purchase of Securities. The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company or any of its Subsidiaries, (ii) to its knowledge, an
“affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a
successor rule thereto) (collectively, “Rule 144”)) of the Company or any of its
Subsidiaries or (iii) to its knowledge, based solely on information provided by
the Buyer, a “beneficial owner” of more than 10% of the shares of Common Stock
(as defined for purposes of Rule 13d-3 of the 1934 Act). The Company further
acknowledges that no Buyer is acting as a financial advisor or fiduciary of the
Company or any of its Subsidiaries (or in any similar capacity) with respect to
the Transaction Documents and the transactions contemplated hereby and thereby,
and any advice given by a Buyer or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Buyer’s purchase of the
Securities. The Company further represents to each Buyer that the Company’s
decision to enter into the Transaction Documents to which it is a party has been
based solely on the independent evaluation by the Company and its
representatives.

 

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

 

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

 

(i)            Application of Takeover Protections; Rights Agreement. The
Company and its board of directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, interested
stockholder, business combination, poison pill (including, without limitation,
any distribution under a rights agreement), stockholder rights plan or other
similar anti-takeover provision under the Articles of Incorporation, Bylaws or
other organizational documents or the laws of the jurisdiction of its
incorporation or otherwise which is or could become applicable to any Buyer as a
result of the transactions contemplated by this Agreement, including, without
limitation, the Company’s issuance of the Securities and any Buyer’s ownership
of the Securities.

 

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

 

10

 

 

(k)            Absence of Certain Changes. Except as set forth on Schedule 3(k),
since the date of the Company’s most recent audited financial statements
contained in a Form 10-K, there has been no change or development that resulted
or would result in a Material Adverse Effect on the business, assets,
liabilities, properties, operations (including results thereof), condition
(financial or otherwise) or prospects of the Company or any of its Subsidiaries.
Since the date of the Company’s most recent audited financial statements
contained in a Form 10-K, except as set forth in the SEC Documents filed by the
Company following the Company’s most recently filed Form 10-K/A, neither the
Company nor any of its Subsidiaries has (i) declared or paid any dividends,
(ii) sold any material assets, individually or in the aggregate, outside of the
ordinary course of business or (iii) made any material capital expenditures,
individually or in the aggregate, outside of the ordinary course of business.
Neither the Company nor any of its Subsidiaries has taken any steps to seek
protection pursuant to any law or statute relating to bankruptcy, insolvency,
reorganization, receivership, liquidation or winding up, nor does the Company or
any Subsidiary have any knowledge or reason to believe that any of their
respective creditors intend to initiate involuntary bankruptcy proceedings or
any actual knowledge of any fact which would reasonably lead a creditor to do
so.

 

(l)            No Undisclosed Events, Liabilities, Developments or
Circumstances. Except as set forth on Schedule 3(1), no event, liability,
development or circumstance has occurred or exists, or is reasonably expected to
exist or occur specific to the Company, any of its Subsidiaries or any of their
respective businesses, properties, liabilities, prospects, operations (including
results thereof) or condition (financial or otherwise), that has not been
publicly disclosed and would reasonably be expected to have a Material Adverse
Effect.

 

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

 

11

 

 

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

 

(o)            Equity Capitalization.

 

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

 

(ii)            Authorized and Outstanding Capital Stock. As of the date hereof,
the authorized capital stock of the Company consists of (A) 1,500,000,000 shares
of Common Stock, of which 133,871,256 shares are issued and outstanding (and of
which none are reserved for issuance) and (B) 50,000,000 shares of preferred
stock, of which 7,000,000 shares of Series A Convertible Redeemable Preferred
Stock are outstanding.

 

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

  

12

 

 

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

 

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

 

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

 

13

 

 

(q)            Insurance. The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Except as set forth on Schedule 3(q), neither the Company nor any such
Subsidiary has any reason to believe that it will be unable to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.

 

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

 

(s)            Registration Eligibility. The Company is eligible to register the
resale of the Conversion Shares by the Buyers using Form S-1 promulgated under
the 1933 Act.

 

(t)            Shell Company Status. The Company has never been an issuer
identified in Rule 144(i)(1)(i).

 

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

 

(v)            Disclosure. The Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Buyers or their agents or
counsel with any information that constitutes or could reasonably be expected to
constitute material, non-public information concerning the Company or any of its
Subsidiaries, other than the existence of the transactions contemplated by this
Agreement and the other Transaction Documents and information in the Schedules
to this Agreement. The Company understands and confirms that each of the Buyers
will rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Buyers regarding the
Company and its Subsidiaries, their businesses and the transactions contemplated
hereby, including the schedules to this Agreement, furnished by or on behalf of
the Company or any of its Subsidiaries, taken as a whole, is true and correct
and does not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. All of
the written information furnished after the date hereof by or on behalf of the
Company or any of its Subsidiaries to each Buyer pursuant to or in connection
with this Agreement and the other Transaction Documents, taken as a whole, will
be true and correct in all material respects as of the date on which such
information is so provided and will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, liabilities, prospects, operations (including results
thereof) or conditions (financial or otherwise), which, under applicable law,
rule or regulation, requires public disclosure at or before the date hereof or
announcement by the Company but which has not been so publicly disclosed, except
for information in the Schedules to this Agreement. The Company acknowledges and
agrees that no Buyer makes or has made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in Section 2.

 

14

 

 

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

 

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

 

4.            COVENANTS.

 

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

 

(b)            Use of Proceeds. Except as set forth on Schdule 4(a) hereto,
neither the Company nor any Subsidiary will, directly or indirectly, use the
proceeds of the transactions contemplated herein to repay any loans to any
executives or employees of the Company. Neither the Company nor any Subsidiary
will, directly or indirectly, use the proceeds of the transactions contemplated
herein, or lend, contribute, facilitate or otherwise make available such
proceeds to any Person (i) to fund, either directly or indirectly, any
activities or business of or with any Person that is identified on the list of
Specially Designated Nationals and Blocker Persons maintained by OFAC, or in any
country or territory, that, at the time of such funding, is, or whose government
is, the subject of Sanctions Programs, or (ii) in any other manner that will
result in a violation of Sanctions Programs.

 

15

 

 

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

 

(d)            Pledge of Securities. Notwithstanding anything to the contrary
contained in this Agreement, the Company acknowledges and agrees that the
Securities may be pledged by the Buyer in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the
Securities, subject to Section 5(b). The pledge of Securities shall not be
deemed to be a transfer, sale or assignment of the Securities hereunder, and
except as set forth in Section 5(b), no Buyer effecting a pledge of Securities
shall be required to provide the Company with any notice thereof or otherwise
make any delivery to the Company pursuant to this Agreement or any other
Transaction Document. The Company hereby agrees to execute and deliver such
documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by a Buyer.

 

(e)            Disclosure of Transactions and Other Material Information. The
Company shall, on or before 9:30 a.m., New York time, on the first (1st)
Business Day after the date of this Agreement, issue a press release (the “Press
Release”) reasonably acceptable to the Buyers disclosing all the material terms
of the transactions contemplated by the Transaction Documents. On or before 9:30
a.m., New York time, on or before the fourth (4th) Business Day after the date
of this Agreement, the Company shall file a Current Report on Form 8-K
describing all the material terms of the transactions contemplated by the
Transaction Documents in the form required by the 1934 Act and attaching all the
required Transaction Documents (including, without limitation, this Agreement
(such Form 8-K, including all attachments, the “8-K Filing”). From and after the
filing of the 8-K Filing, the Company shall have disclosed all material,
non-public information (if any) provided to any of the Buyers by the Company or
any of its Subsidiaries or any of their respective officers, directors,
employees or agents in connection with the transactions contemplated by the
Transaction Documents. In addition, effective upon the filing of the 8-K Filing,
the Company acknowledges and agrees that any and all confidentiality or similar
obligations with respect to the transactions contemplated by the Transaction
Documents under any agreement, whether written or oral, between the Company, any
of its Subsidiaries or any of their respective officers, directors, affiliates,
employees or agents, on the one hand, and any of the Buyers or any of their
affiliates, on the other hand, shall terminate. The Company shall not, and the
Company shall cause each of its Subsidiaries and each of its and their
respective officers, directors, employees and agents not to, provide any Buyer
with any material, non-public information regarding the Company or any of its
Subsidiaries from and after the date hereof without the express prior written
consent of such Buyer (which may be granted or withheld in such Buyer’s sole
discretion).

 

16

 

 

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

 

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

 

(h)            No Issuance of Variable Financings. So long as the Debenture is
outstanding, without the Buyer’s prior written consent, the Company covenants
and agrees that it shall not enter into any Variable Rate Transaction (as
defined below). For purposes hereof, “Variable Rate Transaction” means a
transaction in which the Company (i) issues or sells any securities convertible
or exercisable into shares of the Company’s common stock (collectively,
“Convertible Securities”) either (A) at a conversion, exercise or exchange rate
or other price that is based upon and/or varies with the trading prices of, or
quotations for, the shares of Common Stock at any time after the initial
issuance of such Convertible Securities, or (B) with a conversion, exercise or
exchange price that is subject to being reset at some future date after the
initial issuance of such Convertible Securities or upon the occurrence of
specified or contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock or (ii) enters into any agreement
(including, without limitation, an equity line of credit) whereby the Company
may sell securities at a future determined price (other than standard and
customary “preemptive” or “participation” rights”).

 

17

 

 

5.            REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.

 

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

 

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

 

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

 

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

 

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

 

(b)            Such Buyer and each other Buyer shall have delivered to the
Company the Purchase Price (less, in the case of any Buyer, the amounts withheld
pursuant to Section 1(c)) for the Convertible Debentures and shares of Common
Stock being purchased by such Buyer and each other Buyer at the Closing, by wire
transfer of immediately available funds in accordance with the Closing
Statement.

 

18

 

 

(c)            In the case of the Second Closing and Third Closing, the Buyers
shall have purchased all the Convertible Debentures and shares of Common Stock
offered for sale at the Closings prior thereto.

 

(d)            The representations and warranties of such Buyer shall be true
and correct in all material respects as of the date when made and as of each
Closing Date as though originally made at that time (except for representations
and warranties that speak as of a specific date, which shall be true and correct
as of such specific date), and such Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by such
Buyer at or prior to such Closing Date.

 

7.            CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

 

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

 

(a)            The Company shall have duly executed and delivered to such Buyer
each of the Transaction Documents to which it is a party and the Company shall
have duly executed and delivered to such Buyer such aggregate amount of
Convertible Debentures as is set forth opposite such Buyer’s name in column
(b) of the Schedule of Buyers for each Closing, against payment therefor.

 

(b)            Such Buyer’s designee shall have received a structuring fee of
$25,000, of which $12,500 was received in connection with the signing of the
Term Sheet. The balance of $12,500 shall be deducted by the Buyers pro-rata in
proportion to the amounts of the Convertible Debentures purchased from the
proceeds of the First Closing.

 

(c)            The average VWAP for the Company’s Common Stock for the ten
(10) Trading Days immediately prior to each Closing shall not be less than the
Floor Price.

 

(d)            Reserved.

 

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

 

19

 

 

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

 

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

 

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

 

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

 

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

 

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

 

(l)            From the date hereof to the applicable Closing Date, (i) trading
in the Common Stock shall not have been suspended by the SEC or the Principal
Market (except for any suspension of trading of limited duration agreed to by
the Company, which suspension shall be terminated prior to the Closing),
(ii) the closing price of the Common Stock on each such day shall be 120% above
the Floor Price (as defined in the Convertible Debentures), and (iii) at any
time prior to the Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported by such
service, or on the Principal Market, nor shall a banking moratorium have been
declared either by the United States or New York State authorities nor shall
there have occurred any material outbreak or escalation of hostilities or other
national or international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of each Buyer, makes it impracticable or inadvisable to
purchase the Securities at the Closing.

 

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

 

(n)            Solely with respect to the Second Closing, the Registration
Statement shall be filed with the SEC in accordance with the RRA.

 

20

 

 

(o)            Solely with respect to the Third Closing, the Registration
Statement shall be effective in accordance with the RRA.

 

8.            TERMINATION.

 

In the event that the First Closing shall not have occurred with respect to a
Buyer within five (5) days of the date hereof, then such Buyer shall have the
right to terminate its obligations under this Agreement with respect to itself
at any time on or after the close of business on such date without liability of
such Buyer to any other party; provided, however, (i) the right to terminate
this Agreement under this Section 8 shall not be available to such Buyer if the
failure of the transactions contemplated by this Agreement to have been
consummated by such date is the result of such Buyer’s breach of this Agreement
and (ii) the abandonment of the sale and purchase of the Convertible Debentures
shall be applicable only to such Buyer providing such written notice, provided
further that no such termination shall affect any obligation of the Company
under this Agreement to reimburse such Buyer for the expenses described herein.
Nothing contained in this Section 8 shall be deemed to release any party from
any liability for any breach by such party of the terms and provisions of this
Agreement or the other Transaction Documents or to impair the right of any party
to compel specific performance by any other party of its obligations under this
Agreement or the other Transaction Documents.

 

9.            MISCELLANEOUS.

 

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

 

21

 

 

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

 

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

 

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

 

(e)            Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing by letter and email and will be deemed to have been delivered: upon the
later of (A) either (i) receipt, when delivered personally or (ii) one
(1) Business Day after deposit with an overnight courier service with next day
delivery specified, in each case, properly addressed to the party to receive the
same and (B) receipt, when sent by electronic mail with confirmed delivery.
Notices sent by email after 5 pm eastern time shall be deemed delivered on the
next Business Day. The addresses and e-mail addresses for such communications
shall be:

 

If to the Company, to: Ideanomics, Inc.   55 Broadway, 19th Floor   New York,
New York 10006   Telephone: 212-206-1216   Attention: Chief Executive Officer  
E-Mail: apoor@ideanomics.com

 

22

 

 

With Copy to: Ruskin Moscou Faltischek, P.C.   1425 RXR Plaza   East Tower, 15th
Floor   Uniondale, New York 11556   Telephone: 516-663-6514   Attention: Gavin
C. Grusd, Esq.   E-Mail: ggrusd@rmfpc.com

 

If to a Buyer, to its address, e-mail address and facsimile number set forth on
the Schedule of Buyers, with copies to such Buyer’s representatives as set forth
on the Schedule of Buyers,

 

With copy to: Troy J. Rillo, Esq.     c/o Yorkville Advisors Global, LP   1012
Springfield Avenue   Mountainside, NJ 07092   Email: legal@yorkvilleadvisors.com

 

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

 

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

 

23

 

 

(g)            Indemnification.

 

(i)            In consideration of each Buyer’s execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and in addition to
all of the Company’s other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless each Buyer and each
holder of any Securities and all of their stockholders, partners, members,
officers, directors, employees and direct or indirect investors and any of the
foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements
(the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or
arising out of, or relating to (i) any misrepresentation or breach of any
representation or warranty made by the Company in any of the Transaction
Documents, (ii) any breach of any covenant, agreement or obligation of the
Company or any Subsidiary contained in any of the Transaction Documents or
(iii) any cause of action, suit, proceeding or claim brought or made against
such Indemnitee by a third party (including for these purposes a derivative
action brought on behalf of the Company or any Subsidiary) or which otherwise
involves such Indemnitee that arises out of or results from (A) the execution,
delivery, performance or enforcement of any of the Transaction Documents,
(B) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, or (C) any
disclosure properly made by such Buyer pursuant to Section 3(f), or (D) the
status of such Buyer or holder of the Securities either as an investor in the
Company pursuant to the transactions contemplated by the Transaction Documents
or as a party to this Agreement (including, without limitation, as a party in
interest or otherwise in any action or proceeding for injunctive or other
equitable relief), except in the case of this clause (iii), any cause of action,
suit, proceeding or claim arising from the Indemnitee’s breach of any
representation or covenant of this Agreement or any other Transaction Document,
or willful or reckless misconduct. To the extent that the foregoing undertaking
by the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.

 

(ii)            Promptly after receipt by an Indemnitee under this
Section 9(g) of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving an Indemnified
Liability, such Indemnitee shall, if a claim in respect thereof is to be made
against the Company under this Section 9(g), deliver to the Company a written
notice of the commencement thereof, and the Company shall have the right to
participate in, and, to the extent the Company so desires, to assume control of
the defense thereof with counsel mutually reasonably satisfactory to the Company
and the Indemnitee; provided, however, that an Indemnitee shall have the right
to retain its own counsel with the fees and expenses of such counsel to be paid
by the Company if: (A) the Company has agreed in writing to pay such fees and
expenses; (B) the Company shall have failed promptly to assume the defense of
such Indemnified Liability and to employ counsel reasonably satisfactory to such
Indemnitee in any such Indemnified Liability; or (C) the named parties to any
such Indemnified Liability (including any impleaded parties) include both such
Indemnitee and the Company, and such Indemnitee shall have been advised by
counsel that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnitee and the Company (in which case, if such Indemnitee
notifies the Company in writing that it elects to employ separate counsel at the
expense of the Company, then the Company shall not have the right to assume the
defense thereof and such counsel shall be at the expense of the Company),
provided further, that in the case of clause (C) above the Company shall not be
responsible for the reasonable fees and expenses of more than one (1) separate
legal counsel for the Indemnitees. The Indemnitee shall reasonably cooperate
with the Company in connection with any negotiation or defense of any such
action or Indemnified Liability by the Company and shall furnish to the Company
all information reasonably available to the Indemnitee which relates to such
action or Indemnified Liability. The Company shall keep the Indemnitee
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. The Company shall not be liable
for any settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the Company shall not unreasonably
withhold, delay or condition its consent. The Company shall not, without the
prior written consent of the Indemnitee, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability in respect to such Indemnified
Liability or litigation, and such settlement shall not include any admission as
to fault on the part of the Indemnitee. Following indemnification as provided
for hereunder, the Company shall be subrogated to all rights of the Indemnitee
with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made. The failure to deliver written notice
to the Company within a reasonable time of the commencement of any such action
shall not relieve the Company of any liability to the Indemnitee under this
Section 9(g), except to the extent that the Company is materially and adversely
prejudiced in its ability to defend such action.

 

24

 

 

(iii)            The indemnification required by this Section 9(g) shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, within ten (10) days after bills supporting the
Indemnified Liabilities are received by the Company.

 

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

 

(v)            The indemnity agreement contained herein shall not apply to the
RRA and instead the indemnity agreement contained in the RRA shall apply in
connection with the RRA.

 

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

 

[REMAINDER PAGE INTENTIONALLY LEFT BLANK]

 

25

 

 

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

 

  COMPANY:       IDEANOMICS, INC.         By: [tm205387d1_ex10-113img001.jpg]   
Name: Alfred P. Poor   Title: CEO

 

26

 

 

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

 

  BUYER:         YA II PN, LTD.         By: Yorkville Advisors Global, LP   Its:
Investment Manager           By: Yorkville Advisors Global II, LLC     Its:
General Partner           By: [tm205387d1_ex10-113img002.jpg]      Name: Troy
Rillo     Title: Sr. Managing Director

 

27

 

 

EXHIBIT A

 

FORM OF CONVERTIBLE DEBENTURES

 

28

 

 

SCHEDULE I

 

SCHEDULE OF BUYERS

 

      (b)            Principal   (c)        Amount of   Purchase Price  (a)    
Convertible   (96% of Face  Buyer     Debentures   Value)  YA II PN, Ltd.    
         1012 Springfield Avenue  First Closing:  $2,000,000.00   $1,920,000.00 
Mountainside, NJ 07092  Second Closing  $1,000,000.00   $960,000.00  Email:    
         Legal@yorkvilleadvisors.com  Third Closing  $2,000,000.00  
$1,920,000.00                    Aggregate:  $5,000,000.00   $4,800,000.00 

 

Legal Representative’s Address and E-Mail Address

Troy J. Rillo, Esq.

1012 Springfield Avenue

Mountainside, NJ 07092

Email: Legal@yorkvilleadvisors.com

 

29

 

 

SCHEDULE 3(a)

NON-CORE OR NON-STRATEGIC ASSETS OR BUSINESS

 

In addition to any non-core or non-strategic assets or business identified in
the Company’s SEC Documents, the following are non-core or non-strategic assets
or businesses:

 

Non-Core Assets

 

Fintech Village – West Hartford, Connecticut

Cryptocurrency holdings denominated on GTB, Bitcoin & Ethereum

Frequency Networks

HooXi

Comments Radar

Fintalk

Grapevine

 

30

 

 

SCHEDULE 3(k)

ABSENCE OF CERTAIN CHANGES

 

On August 31, 2019 the Company disposed of its majority ownership in its Amer
subsidiary. The Company retains a 10% equity stake.

 

31

 

 

SCHEDULE 3(1)

UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES

 

GTB Cryptocurrency holdings

 

The Company has GTB cryptocurrency with a value of $60 million on the balance
sheet classified as Intangible Assets. The value of GTB on the Asia EDX exchange
has declined significantly and it is possible that the Company will need to take
an impairment charge against the GTB.

 

Fintech Village

 

The Company is developing a 58 acre site in West Hartford, Connecticut. As part
of the development process the Company engaged Newman Architects to produce a
design for the redevelopment of the site. The architect is proposing to charge a
fee of $2.2M for the design work. The company is in negotiations with the
architects about the fees charged for the design work, if these negotiations are
not successful it is likely that the Company will commence litigation to resolve
the matter

 

32

 

 

SCHEDULE 3(q)

 

INSURANCE

 

D&O insurance premiums are anticipated to increase significantly when the
insurance policy is up for renewal in May, 2020.

 

33